Stan Richelson is a representative of Scarsdale Investment Group, a registered investment adviser based in Blue Bell, Pennsylvania, that specializes in fixed-income investments. Stan and Hildy Richelson are co-authors of several books on bonds, including “Bonds: The Unbeaten Path to Secure Investment Growth,” Second Edition (Bloomberg Press, 2011).
Hildy Richelson is president of Scarsdale Investment Group, a registered investment adviser based in Blue Bell, Pennsylvania, that specializes in fixed-income investments. Hildy and Stan Richelson are co-authors of several books on bonds, including “Bonds: The Unbeaten Path to Secure Investment Growth,” Second Edition (Bloomberg Press, 2011).


Discussion

Daniel Lamorte from SC posted over 2 years ago:

What do you think about Muni Bond ETF's? Nuveen has a few that I have been considering like NMA and NXZ.
These ETFs seem to spread the bond investments among several municipalities and therefore reduce the risk of a single municipal default.


James Hitchings from AZ posted over 2 years ago:

What is your thoughts on Convertible bonds such as CWB or vcvsx both have low costs and possible upside if stock appreciate.


James Hitchings from AZ posted over 2 years ago:

What is your thoughts on Convertible bonds such as CWB or vcvsx both have low costs and possible upside if stock appreciate.


Howard Winegarden from OR posted over 2 years ago:

In Oregon, we face a state income tax at approx 10%. This skews investments toward Oregon munis.
Don't believe you considered the state tax impact on decisions.


Larry Felder from FL posted over 2 years ago:

It seems tax free is the way to go..But, how much more capital appreciation be due to lowering of interest rates..Stocks do make a case for capital appreciation.
What should the balance be?


Larry Felder from FL posted over 2 years ago:

It seems tax free is the way to go..But, how much more capital appreciation be due to lowering of interest rates..Stocks do make a case for capital appreciation.
What should the balance be?


Larry Felder from FL posted over 2 years ago:

It seems tax free is the way to go..But, how much more capital appreciation be due to lowering of interest rates..Stocks do make a case for capital appreciation.
What should the balance be?


Nelson Burkholder from VA posted over 2 years ago:

Daniel,The Nuveen fund NXZ is a standard bond mutual fund, not an ETF. I own NXZ and my worry is that when interest rates start up I will lose principle. With bond funds there is no way to "hold to maturity". I suppose the same applies to bond ETFs.


Hendrik Bergen from Texas posted over 2 years ago:

Nice article, but very general as usual. Not only the State Tax is not considered, but if you get your $ 1.00 back in 15 - 23 years, the inflation has eaten it!


George from MS posted over 2 years ago:

why would anyone even consider investing, i.e. throw away money, in municipal "bombs" knowing the worthless office holders, at all levels, spending our tax monies and the principal proceeds from "municipal" bonds?


Don Bowers from PA posted over 2 years ago:

I have 2 of Stan and Hildy's books. I am done with one and now reading the second. These books are very, very good reading. You will learn a lot from them. I am a retirement/financial advisor and incorporate their logic in my practice. Get the books; they will help you. DB.


Charles Goodwin from PA posted over 2 years ago:

The article seems to focus on high tax bracket investors i.e. 33% and more. I understand the rationale, that being higher returns compared to taxable bonds and more "bang for the buck" the higher the bracket. BUT I expect that the far majority of retired readers are in lower brackets. Any words of advice for us (other than read the book, which I plan to do)?


Hildy Richelson from PA posted over 2 years ago:

First let me apologize for not getting back to you sooner.

To Daniel Lamorte:

If you want to invest in ETFs, I favor Vanguard issue due to the special nature of their funds. You can purchase them without a broker, I believe, and Vanguard generally makes a good product.

To James Hitchings:
Don't care much for convertible bonds because they are junk bonds and you are seriously risking your principle.
Yes, we accept the state impact in Oregon is significant. We would suggest that you purchase Oregon high quality bonds, but not exclusively. There are some benefits to diversification. I would prefer that you purchase all high quality Oregon bonds if you were to plan on diversifying into convertibles.

To Larry Felder:

We don't buy bonds for capital appreciation, though investors who purchased them in 2008-2011 have seen a lot of appreciation. We recommend that you purchase them for cash flow. Create a bond paycheck for yourself to support you in whatever you choose to do. Many stock investors have not gotten any appreciation, even when stocks have appreciated due to bad timing and taxes. Have you seriously and meticulously tracked your stock investments? That is the only way you will know if you made or lost money. Bonds at least provide a predictable cash flow so that you know what you earned every year.

To Hendrik Bergen:

The thing about bonds is that you keep getting interest payments, if you don't by zero coupon (deferred payment) bonds. If you don't consume your interest, but reinvest it, you have the opportunity to get an effective higher yield. We view a mild inflation as an upside, not a downside as the media always proclaims, because we can reinvest at higher yields. The maturity of a bond is reduced every year. You do not have to hold to maturity. You can sell if you want.

To George from Mississippi:

You might be interested to know that in July Florida legislature passed a law concerning "malfeasance, misfeasance, and neglect of duty" if members of a local governing body or a school district fail to resolve a state of financial emergency. They can be removed from office by the governor. If Florida set a precedent, other states might follow. You might send a note to your representatives suggesting that they might consider the same. Some states are much more fiscally responsible than others.

To Don Bowers:

Thank you for the recommendation of our book: Bonds: The Unbeaten Path to Secure Investment Growth. I hope that we can work with you in the future.

To Charles Goodwin:

If you are in a low tax bracket, I suggest you look at I-bonds available through TreasuryDirect.org, TIPs from the same source or your broker, taxable municipal bonds, highly rated corporate bonds (not many available currently) and agency bonds. We write about all of these types of bonds in our book.


John Andronaco from NJ posted over 2 years ago:

I am retiring to Florida with no state income tax. If I invest in muni bonds from other states I assume there will be no tax due in either jurisdiction.


Vaidy Bala from AB posted about 1 year ago:

I am not too familiar with bonds and Canadian Tax laws' cuts into returns. It appears good to have a steady and consistent cash flow, though small for retirees, strictly in short term situation. Is there Bond Alert site(s) which prompts bond investors of failures or early early warning of death of investments?


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