Municipal Bond Forum
Do munis make sense for lower tax brackets?
Q
Do individual tax free municipal bonds also reflect a good tax-free income for someone who is in a lower tax bracket than 35% (I’m in the 28%)? I visited a broker who suggested I invest in an individual tax-free municipal bond. They charge 1% to manage the bonds. I visited your Web site and am reluctant to let his firm purchase the muni bond for me since it appears I can buy an individual muni bond through you at a lesser fee and won’t have the ongoing 1% his company would charge me. Your opinion is appreciated.
A
James A. Klotz responds:
In the 28% bracket, your taxable equivalent returns result in better yields than can be currently achieved with a taxable bond. For instance, the Puerto Rico offerings we forwarded to you are equivalent to more than 8.00% in your tax bracket.
All prices quoted at FMSbonds.com are net to the investor. There are no additional fees or costs.
We believe investors should employ a buy and hold strategy when it comes to municipal bonds. Your bonds should be purchased for the tax-free income they produce, not for potential capital gains.
We assist our clients in choosing suitable bonds to meet their investment objective of providing a steady and dependable stream of tax-free interest.
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