Municipal Bond Forum
Focus on why you buy muni bonds
Q
We are New York residents. Currently, our muni bonds are decreasing in value. Since January 2013, our portfolio has lost about 3% of its value. Our advisor has instructed us to stand pat as we are still receiving dividends. What would you suggest we do?
A
James A. Klotz responds:
If you hold individual bonds rather than mutual funds, we would never suggest selling them due to market fluctuations.
We know that over the life of long-term bonds, they will sometimes be worth more than you paid for them and sometimes less. It is really irrelevant.
Municipal bonds are purchased for the tax-free income, not capital gains. If your bonds are of good quality and are from New York state issuers, they will continue to provide the steady stream of triple-exempt income for which they were purchased.
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