Municipal Bond Forum
Market says its smart to hold your bonds
Q
I read your article, “Don’t Try this at Home,” and was wondering whether I should sell bonds that have appreciated and use the profits to buy other bonds, or just hold the bonds I own.
A
James A. Klotz responds:
There is rarely a good reason to sell bonds at a profit because the results are not beneficial. Market factors will not allow you to buy new bonds that produce as much income as you were earning on the bonds you are selling; worse, you will pay a tax on the gains, leaving you with even less proceeds to reinvest.
As with any general rule, however, there are exceptions. For example, we describe a current opportunity to sell your bonds in the article, “The Upside of Lower Rates”.
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This report is produced solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. This report is based on information obtained from sources believed to be reliable but no independent verification has been made, nor is its accuracy or completeness guaranteed.