Page 1
Page 1
Started By
Message

muni and corporate bonds?

Posted on 7/1/14 at 7:02 am
Posted by ragacamps
Member since Jan 2011
2997 posts
Posted on 7/1/14 at 7:02 am
Anyone use these in their roth. Can someone explain if low rates mean its a good time for corporate bonds. Would call backs be less likely
Posted by Shepherd88
Member since Dec 2013
4573 posts
Posted on 7/1/14 at 8:48 am to
If your buying Muni's for the tax free income then you should not be putting it in a tax free account. Your defeating the purpose. Now if your buying them for the safety and want to justify that, then that's understanble.

But, to answer your question. When interest rates go up, the price on the bonds will fall. I think they are necessary for a well diversified portfolio but I would not go long term on bonds.
Posted by TheHiddenFlask
The Welsh red light district
Member since Jul 2008
18384 posts
Posted on 7/1/14 at 8:50 am to
There is absolutely no conceivable reason to have munis in a Roth.

ETA: and low interest rates mean that bonds are more expensive, so no to that as well.
This post was edited on 7/1/14 at 8:52 am
Posted by Cold Cous Cous
Bucktown, La.
Member since Oct 2003
15033 posts
Posted on 7/1/14 at 9:09 am to
quote:

Can someone explain if low rates mean its a good time for corporate bonds.

I would suggest starting here

LINK
Posted by ragacamps
Member since Jan 2011
2997 posts
Posted on 7/1/14 at 9:18 am to
Thanks
Posted by foshizzle
Washington DC metro
Member since Mar 2008
40599 posts
Posted on 7/1/14 at 11:41 am to
Bonds rates are low, yes, but rates work inversely with value. If the rates start picking up again, bond values drop.

As others have noted, having a muni in a Roth seems not very smart since Roth gains are tax-free anyway. That said, if you wanted to invest in a muni bond issue that people think is risky a Roth might be the place to do it. Detroit general obligation bonds, for example. If Detroit's bankruptcy works out the bonds could jump hugely. Or you could lose everything. That kind of volatile security is what you want in a Roth.
Posted by whodatigahbait
Uptown
Member since Oct 2007
1748 posts
Posted on 7/3/14 at 8:38 pm to
quote:

There is absolutely no conceivable reason to have munis in a Roth. ETA: and low interest rates mean that bonds are more expensive, so no to that as well.


that's not entirely true. while rare, there have been times in the last few years there when munis had higher yields nominal yields than treasuries of the same maturities. if you are looking for safety and want to get more yield than cash I could see putting some money in short term high quality munis in an IRA.

like I said very rare but conceivable.
Posted by foshizzle
Washington DC metro
Member since Mar 2008
40599 posts
Posted on 7/4/14 at 3:42 am to
quote:

if you are looking for safety and want to get more yield than cash I could see putting some money in short term high quality munis in an IRA.


That's still not a good reason. The interest on a muni is tax-free to start with, it doesn't matter what the rate is.

As I pointed out, there can be one reason, namely if it is a high-risk muni like Detroit's - because if you get lucky and have large capital gains that is not tax-free unless it's in the Roth.

You don't want your safe stuff in the Roth, you want the risky stuff there.
Posted by Big Scrub TX
Member since Dec 2013
33253 posts
Posted on 7/6/14 at 2:49 pm to
quote:

There is absolutely no conceivable reason to have munis in a Roth.


I disagree. If the Roth is the only place he has deployable cash AND munis become distressed, then I can see doing it. Munis were absolutely in the toilet this time last year and you could have made some great capital gains by scooping them up.
first pageprev pagePage 1 of 1Next pagelast page
refresh

Back to top
logoFollow TigerDroppings for LSU Football News
Follow us on Twitter, Facebook and Instagram to get the latest updates on LSU Football and Recruiting.

FacebookTwitterInstagram