Municipal Bond Forum
Priced too high?
Q
I may have to look for other investments. Bonds are getting priced too high.
A
James A. Klotz responds:
There is no denying that bonds are more expensive. As we have discussed, this really is not a surprise to us. We thought rates were headed down and will continue to do so.
The compelling reason to buy bonds, in this market, is that municipal bonds are actually inexpensive relative to other alternative investments. Even at 4 1/2% (and you can do better), your return would be comparable to more than 7 1/2% on a taxable investment, in your tax bracket. Where can you find this kind of return with the security of a AAA insured bond?
Start here.
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