| How do I research individual municipal bonds? |
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jlucero
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| question on municipal bonds (individual) |
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anyone have alot of experience with these?
does anyone know how i would research whether a school district or community college muni is good? besides just looking at the ratings?
is buying a AA underlying insured california school district zero coupon muni that is insured by FSA/AGC worry anyone? the maturity is long, around 20 years, but i dont need the income for that long. also, i dont mind the volatility, as long as it doesnt default, i plan to hold until maturity. are these safe?
how do one go about researching munis?
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Fri Mar 18, 2011 4:35 pm |
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coaster
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jiucero, I thought your post would be better off in its own thread, as it's a new question, and won't get any exposure where you posted it. I hope that helps.
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Sat Mar 19, 2011 6:54 am |
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Offshore-Wealth.com
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| Re: question on municipal bonds (individual) |
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quote:
Originally posted by jlucero
anyone have alot of experience with these?
does anyone know how i would research whether a school district or community college muni is good? besides just looking at the ratings?
is buying a AA underlying insured california school district zero coupon muni that is insured by FSA/AGC worry anyone? the maturity is long, around 20 years, but i dont need the income for that long. also, i dont mind the volatility, as long as it doesnt default, i plan to hold until maturity. are these safe?
how do one go about researching munis?
Good question,
With regards to validating if a municipal bond is a good investment, personally, I wouldn't touch one with a ten foot pole. None are safe, and given 47 states are technically bankrupt, and this problem filters down to local municiplaities who depend on state money, how safe could they be, and again, if a collapse were to happen, how could FSA/AGC back them all given the exposure.
Just look at what is happening in all government issued bond market to get a clear picture, none are safe any longer, including treasury bonds, so talk about high risk, it doesn't get any higher in my opinion when you know the truth about the financial condition of all gov. agencies.
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Sat Mar 19, 2011 8:46 pm |
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jlucero
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none are safe? come on, that is a ridiculous comment. is a AAA rated school bond from texas not safe?
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Wed Mar 23, 2011 6:22 am |
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coaster
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I have to agree. No one individual bond is safe. The definition of safe is, to pretty much all investors, no risk of loss of principal, the amount of risk being the amount of possible loss. Perhaps the probability of loss from a muni bond is low, but the risk is 100%. If the bond defaults, you've lost every penny.
I think that for an individual investor to tie up any significant portion of net worth in individual bonds of any kind isn't wise. If holding bonds in the portfolio is desirable, then it's best done through a bond fund, where the risk is spread, and where if any one bond defaults, the loss to the investor is very, very small.
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Wed Mar 23, 2011 7:16 am |
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jlucero
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wow, that is interesting sentiment. while there is huge headline risk in todays world, this risk is largely overblown. i would much rather have a 200K diversified muni bond portfolio than mess with the stock market. in 10 years, there is no telling if you will lose principal in the stock market as well. the only way i lose money in a muni bond is if it defaults (assuming i hold to maturity).
i would like to hear if anyone else shares this sentiment.
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Thu Mar 24, 2011 4:42 pm |
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vaultwholesale
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Is this affordable to the every day college student?
Another thing, this seems extremely risky well over 200% of risk and many other aspects. Do you find this a good indicator of health?
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Thu Mar 24, 2011 5:57 pm |
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jlucero
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quote:
Originally posted by coaster
I have to agree. No one individual bond is safe. The definition of safe is, to pretty much all investors, no risk of loss of principal, the amount of risk being the amount of possible loss. Perhaps the probability of loss from a muni bond is low, but the risk is 100%. If the bond defaults, you've lost every penny.
I think that for an individual investor to tie up any significant portion of net worth in individual bonds of any kind isn't wise. If holding bonds in the portfolio is desirable, then it's best done through a bond fund, where the risk is spread, and where if any one bond defaults, the loss to the investor is very, very small.
coaster, isnt every investment besides treasuries and CD's have 100% risk? you can lose all your money in investments. esp stocks!
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Mon Apr 11, 2011 7:37 pm |
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coaster
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Yes, any one individual investment has 100% risk. When collected into a portfolio of diversified and non-correlated investments, the risk goes down considerably. Which was the point I tried to make above about a bond mutual fund being a more appropriate choice for individual investors. Obviously if you have enough capital to assemble a diversified portfolio of bonds, then the risk is much reduced. There's still the correlation risk, however.
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Tue Apr 12, 2011 3:46 am |
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