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Is Now a Good Time to Buy Municipal Bonds and Why?

May 5, 2009

I was told that this would not be a good time to buy bonds because if the Fed raises rates then treasury yields will go up. If Treasury yields go up then bond yields will follow upward. Because muni yields and muni prices have an inverse relationship bond prices will go down and I loss money. I want to buy muni’s, please explain why I should. Thank you.

Investments, Stocks, Bonds and All About The Money

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squadfix May 5, 2009 at 6:46 pm

you should only buy munis if 1) your investor profile dictates that bonds should be a part of your portfolio, and 2) if your tax bracket is so high that your return from the munis will be higher than your after-tax return on other types of bonds, like t bills. muni hlders are exempt from paying federal income tax on interest income paid by muni bond issuers. that is their main benefit.

when it comes to individual investors, they are marketed towards high net worth individuals.

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