Municipal Bond Forum
Why it’s helpful to ignore prognosticators
Q
We received an e-mail warning bondholders of higher interest rates and strategies to make a lot of money quickly. More than half of our retirement portfolio is with FMSbonds. We entrusted our funds with you in the hope that we do not have to worry about the future, regardless of interest rates, etc.
A
James A. Klotz responds:
Over the term that you will own your bonds, at times they will be worth more than you paid for them and at times less. Neither situation will likely prompt a sale. You are buying bonds for the income and they mature at 100.00 (face value).
Regarding the article you sent, the people who wrote it said they’ve been warning investors for four years, which must mean they’ve been wrong for the past three. What happened to the people who followed their advice then?
These people also promise a “quick 164% windfall” and a “safe 10.58% annual yield.” In this low-interest rate environment, one should be very wary of such assurances.
Start here.
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