Altfest Insights

ArticleMunicipal Bonds Offer Fantastic Yields, Especially in These Four High-Tax States



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You can earn high yields on municipal bonds right now, while avoiding risk in the stock market.

If you are an investor, assumptions built up during decades of low bond yields now have to go out the window. Interest rates are now high enough that you can get compelling returns on municipal bonds, if you take tax advantages into account.

This assumes of course that you are paying high-enough income taxes that avoiding them is worthwhile. Early in October we looked at exchange-traded funds that invest in municipal bonds paying interest that is exempt from federal income taxes. We also dug into two high-tax states, because if you (or your ETF) hold tax exempt bonds issued within your state, the interest is also exempt from state and local income taxes.

Read: How to tell if it is worth avoiding taxes with a municipal-bond ETF

But bond funds also have fluctuating share prices. If you hold an individual bond until maturity (or until it is called, as explained below), you don’t have to worry about how much its market value fluctuates. (Bond prices fall as interest rates rise and vice versa.) You know the price you will pay, so your only risk is that of default, which is rare for municipal bonds. And that risk can be mitigated by sticking with investment-grade-rated securities.

According to Lewis Altfest, CEO of Altfest Personal Wealth Management in New York, municipal bonds “are very attractive right now.”

“The spreads have narrowed between Treasury bonds and munis,” he said during an interview with MarketWatch.

Dan Genter CEO of RNC Genter Capital Management in Los Angeles, also talked about the dynamic bond market in a separate interview with MarketWatch: “It is pretty amazing. In 17 months you went back to where you were 17 years ago. It is nice to have some income and have some yield — to be in a situation where you’re making money.”

Altfest and Genter provided examples of investment-grade bonds issued in four high-tax states: California, New York, New Jersey and Illinois.

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At Altfest, we stand ready to help you find the most suitable ways to protect your personal assets from liability. We know everyone’s scenario is unique, so reach out to our firm with any asset protection or financial or estate planning questions you may have. Altfest advisors will review your circumstances and offer ideas about which asset protection strategies could best serve you and your family.

If you’re not yet an Altfest client, please book some time for a complimentary consultation.

Investment advisory services provided by Altfest Personal Wealth Management (“APWM”). All written content on this site is for information purposes only. Opinions expressed herein are solely those of APWM, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. All investing involves risk, including the potential for loss of principal. There is no guarantee that any investment plan or strategy will be successful.

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