11:00 am
July 28, 2017

Municipal Bonds

Dear Mr. Berko: I’ve been reading your column for 35 years and in all that time I don’t ever recall that you wrote about municipal bonds. What can you tell me about them? Last year, I had a taxable income of $229,000 and because I’ve been single since 2012, my tax bracket is 33 percent. It will be about the same in future years, though I may marry again. I have $53,000 to invest for long-term income and my broker recommended Goldman Sachs Dynamic Municipal Bond Fund, which has a 3.3 percent current yield. Is this good to buy or do you recommend a better municipal bond? — JC: Oklahoma City, OK

Dear JC: According to Oscar Wilde, your first marriage is “the triumph of imagination over intelligence.” And if you marry again some would call a second marriage the “triumph of hope over experience,” but it would lower your tax bracket from 33 percent to 28 percent.

I can tell you more than you need to know. But to start, it’s an active and fluid market with innumerous active participants. Municipal bonds (often shortened to muni or muni bonds) are debt securities issued by state and local governments to finance a wide range of public and private sector projects — and the interest income is not federally taxable. For our purposes we’re only discussing municipal bonds that are not subject to federal taxation.

In 1975, the aggregate principal value of all outstanding muni bonds was just under $245 billion, which represented about 7,000 different issuers. Today’s $4 trillion municipal bond market represents 44,000 state and local government agencies, and is hugely diverse. Issuers include states, counties, cities, townships, villages and special purpose entities like highway, school district, water and sewer authorities, economic development bonds, hospital, government housing, airport and seaports bonds. About 55 percent of these municipal bonds are owned by individual investors, 30 percent by individuals through mutual funds and money market accounts, and the remaining 15 percent is owned by banks, trust accounts and corporations. On an average, $13.4 billion of muni bonds are traded each day. By comparison, there are about 51,000 corporate bond issues outstanding with a principal value of about $12.7 trillion and some $25 billion are traded daily.

The Goldman Sachs fund (GSMIX) fund owns $800 million in muni bonds, has a current yield of 3.3 percent, an annual expense ratio of 1.01 percent and the broker will decamp with a $1,987.50 commission (3.75 percent of $53,0000) after peddling it to you. The first year’s cost of $2,522.80 (management fee plus commission) to own this is absurdly larger that your first year’s interest income of $1,749. And that’s obscene especially since the monthly dividend has declined 20 percent since 2011. But for someone in your bracket, that’s equivalent to a 4.9 percent taxable return. Still GSMIX’s one-year, three-year and five-year total returns are 7.3 percent, 4.8 percent and 5.5 percent, which are certainly better than any bank CD.

But tell your broker to “stuff it,” and then open an account with a discount brokerages in OKC. Then for a total $7.95 commission charge, purchase $53,000 of SPDR Nuveen S&P High Yield Municipal Bond Exchange Traded Fund (HYMB-$59.68) This $485 million tax free ETF tracks the high-yield municipal bond market while the tax-free 4.3 percent yield is equivalent to a 6.4 percent taxable return. And HYMB is considered one of the Street’s three best high-yield municipal bond funds even though the income has declined 10 percent since 2011. The expense ratio is 0.50 percent and HYMB’s one-year, three-year and five-year total returns of 6.7 percent, 12.84 percent and 8.48 percent are impressively superior to Goldman’s GSMIX.

On many occasions, I’ve recommended municipals to readers as a substitute to long-term treasuries. The yields are higher and they’re tax free. But taxes must rise in the coming years to pay for government-sponsored programs (Obamacare, college tuition, Medicaid, and myriad additional entitlement agendas) and an increased demand for municipals may push prices higher and yields lower.

Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email him at mjberko@yahoo.com. To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

COPYRIGHT 2016 CREATORS.COM

140 comments

  • Hello Web Admin, I noticed that your On-Page SEO is is missing a few factors, for one you do not use all three H tags in your post, also I notice that you are not using bold or italics properly in your SEO optimization. On-Page SEO means more now than ever since the new Google update: Panda. No longer are backlinks and simply pinging or sending out a RSS feed the key to getting Google PageRank or Alexa Rankings, You now NEED On-Page SEO. So what is good On-Page SEO?First your keyword must appear in the title.Then it must appear in the URL.You have to optimize your keyword and make sure that it has a nice keyword density of 3-5% in your article with relevant LSI (Latent Semantic Indexing). Then you should spread all H1,H2,H3 tags in your article.Your Keyword should appear in your first paragraph and in the last sentence of the page. You should have relevant usage of Bold and italics of your keyword.There should be one internal link to a page on your blog and you should have one image with an alt tag that has your keyword….wait there’s even more Now what if i told you there was a simple WordPress plugin that does all the On-Page SEO, and automatically for you? That’s right AUTOMATICALLY, just watch this 4minute video for more information at. Seo Plugin

    Reply
  • I blog often and I really appreciate your information. The article has truly peaked my
    interest. I will take a note of your site and keep
    checking for new information about once per week.
    I opted in for your RSS feed too.

    Reply
  • Hey! I understand this is sort of off-topic however I needed to ask.
    Does running a well-established website such as yours require a lot of work?
    I am brand new to blogging but I do write in my journal daily.
    I’d like to start a blog so I will be able to share my experience and feelings online.
    Please let me know if you have any ideas or tips for brand new aspiring blog owners.
    Thankyou!

    Reply
  • Howdy very cool site!! Man .. Beautiful ..
    Amazing .. I will bookmark your blog and take the feeds also?

    I’m satisfied to seek out numerous useful info here in the submit, we want work out more techniques in this
    regard, thank you for sharing. . . . . .

    Reply
  • Greate pieces. Keep writing such kind of info on your page.

    Im really impressed by your site.
    Hi there, You have performed a fantastic job. I’ll definitely
    digg it and for my part suggest to my friends.
    I am confident they’ll be benefited from this web site.

    Reply
  • Awesome blog! Do you have any hints for aspiring writers?
    I’m planning to start my own site soon but I’m a little lost on everything.
    Would you suggest starting with a free platform like WordPress or go for a paid option? There
    are so many options out there that I’m completely overwhelmed
    .. Any ideas? Thanks a lot!

    Reply
  • you’re in point of fact a just right webmaster. The
    website loading pace is amazing. It kind of feels
    that you are doing any distinctive trick. Moreover, The contents are masterpiece.

    you’ve done a excellent process in this subject!

    Reply
  • whoah this blog is excellent i love reading your articles.
    Stay up the great work! You understand, many individuals
    are hunting round for this information, you
    can help them greatly.

    Reply
  • Have you ever considered about including a little bit more
    than just your articles? I mean, what you say is important and all.
    But just imagine if you added some great visuals or videos to give your posts more, “pop”!
    Your content is excellent but with pics and clips, this website could definitely be one of the best
    in its field. Excellent blog!

    Reply
  • You actually make it appear really easy along with your presentation but
    I find this topic to be actually one thing that
    I feel I’d by no means understand. It sort of feels too complex and extremely vast for me.
    I am looking ahead for your subsequent publish, I will try to get the dangle of it!

    Reply
  • I will right away seize your rss as I can not to
    find your e-mail subscription link or newsletter service.
    Do you’ve any? Kindly allow me recognize so that I may subscribe.
    Thanks.

    Reply
  • With havin so much written content do you ever run into any problems of plagorism or copyright violation? My blog has
    a lot of completely unique content I’ve either authored myself or outsourced but it
    looks like a lot of it is popping it up all over the internet without my
    permission. Do you know any ways to help reduce content from
    being ripped off? I’d definitely appreciate it.

    Reply
  • Nice post. I used to be checking constantly this blog and I
    am inspired! Very useful info specially the final part :) I take care of such info much.

    I was looking for this certain information for a very long time.
    Thanks and best of luck.

    Reply
  • Hi there just wanted to give you a quick heads
    up. The text in your content seem to be running off the screen in Internet explorer.
    I’m not sure if this is a formatting issue or something to do with internet browser compatibility but I figured I’d post to let you know.
    The design look great though! Hope you get the problem fixed soon. Kudos

    Reply
  • Hi! I know this is kind of off-topic however I
    needed to ask. Does operating a well-established blog like yours require a large amount of work?
    I’m completely new to running a blog but I do write in my diary daily.
    I’d like to start a blog so I can easily share
    my experience and views online. Please let me know if you have any
    ideas or tips for brand new aspiring blog owners. Thankyou!

    Reply
  • Hello there, just became alert to your blog through
    Google, and found that it’s really informative. I am gonna watch out for brussels.
    I’ll be grateful if you continue this in future. Many people will
    be benefited from your writing. Cheers!

    Reply
  • Hi, I do think this is a great web site. I stumbledupon it ;
    ) I’m going to come back once again since i have book-marked it.
    Money and freedom is the best way to change, may you be
    rich and continue to guide other people.

    Reply
  • Hey! Someone in my Myspace group shared this website with us so I came to take a look.
    I’m definitely enjoying the information. I’m book-marking and will be tweeting this to
    my followers! Outstanding blog and superb design.

    Reply
  • I’m really impressed with your writing skills and also with the layout on your weblog.
    Is this a paid theme or did you customize it yourself?
    Either way keep up the excellent quality writing, it’s rare to see a nice blog
    like this one nowadays.

    Reply
  • I absolutely love your site.. Great colors & theme.
    Did you build this website yourself? Please reply back as I’m looking to create my very
    own site and would love to know where you got this from
    or just what the theme is named. Kudos!

    Reply
  • Attractive component of content. I simply stumbled upon your web site
    and in accession capital to say that I get in fact enjoyed account your weblog posts.
    Any way I’ll be subscribing to your augment or even I achievement you get right of entry
    to constantly fast.

    Reply
  • Thanks on your marvelous posting! I seriously enjoyed reading it, you are a great
    author.I will make sure to bookmark your blog and will eventually come
    back in the foreseeable future. I want to encourage continue
    your great writing, have a nice morning!

    Reply
  • I’m not sure exactly why but this blog is loading extremely slow for
    me. Is anyone else having this problem or is it a issue on my end?

    I’ll check back later and see if the problem still exists.

    Reply
  • I blog quite often and I seriously appreciate your information. This article has really peaked
    my interest. I’m going to book mark your site and keep checking for new details about once per week.
    I subscribed to your Feed as well.

    Reply
  • It’s a pity you don’t have a donate button! I’d without a doubt donate to this superb
    blog! I suppose for now i’ll settle for book-marking and adding your RSS feed to my Google account.
    I look forward to brand new updates and will share this website with my Facebook group.
    Chat soon!

    Reply
  • Very great post. I simply stumbled upon your blog and wanted to say that I’ve really enjoyed surfing around your weblog posts.
    In any case I will be subscribing for your rss feed and I’m hoping you write again very soon!

    Reply
  • Hey very cool site!! Man .. Excellent .. Amazing ..
    I will bookmark your website and take the feeds additionally?

    I am satisfied to find numerous useful information here in the post,
    we’d like develop extra strategies on this regard, thank you for sharing.
    . . . . .

    Reply
  • Hi! This is kind of off topic but I need some guidance
    from an established blog. Is it tough to set
    up your own blog? I’m not very techincal but I can figure things
    out pretty fast. I’m thinking about creating my
    own but I’m not sure where to start. Do you have any ideas or suggestions?
    Cheers

    Reply
  • I used to be recommended this website through my cousin. I am now
    not certain whether this submit is written by him as nobody
    else realize such specified about my difficulty.
    You are amazing! Thank you!

    Reply
  • This is the right blog for anybody who hopes to understand
    this topic. You know a whole lot its almost hard to argue with you (not that I actually would want to…HaHa).

    You definitely put a brand new spin on a subject that’s been discussed for a long time.
    Excellent stuff, just wonderful!

    Reply
  • Right here is the perfect web site for everyone who wishes to understand this topic.
    You understand so much its almost tough to argue with you (not that I actually would want to…HaHa).

    You certainly put a brand new spin on a subject which has been discussed for decades.
    Excellent stuff, just great!

    Reply
  • Have you ever thought about writing an e-book or guest authoring
    on other websites? I have a blog based on the same
    ideas you discuss and would really like to have you share
    some stories/information. I know my subscribers would value your work.
    If you’re even remotely interested, feel free to
    send me an e-mail.

    Reply
  • I don’t even know how I finished up right here, but I believed
    this put up was great. I don’t understand who you are however definitely you
    are going to a famous blogger should you aren’t already.
    Cheers!

    Reply
  • Hi there! I know this is somewhat off topic but I was wondering which blog platform are you using for this site?
    I’m getting sick and tired of WordPress because I’ve had problems with
    hackers and I’m looking at options for another platform.
    I would be fantastic if you could point me in the
    direction of a good platform.

    Reply
  • Have you ever thought about adding a little bit more than just your articles?
    I mean, what you say is valuable and all. But think about
    if you added some great graphics or videos to give your posts more,
    “pop”! Your content is excellent but with images
    and video clips, this website could certainly be one of the most beneficial in its niche.
    Very good blog!

    Reply
  • I am extremely inspired together with your writing abilities as well as with the format in your blog.
    Is this a paid subject or did you customize it yourself?
    Either way stay up the excellent quality writing, it’s rare to see a great blog like this one these days..

    Reply
  • I would like to thank you for the efforts you’ve
    put in writing this blog. I’m hoping to view the same high-grade content from you in the future as well.
    In truth, your creative writing abilities has motivated me to get
    my very own website now 😉

    Reply
  • Nice post. I learn something new and challenging on blogs I stumbleupon on a daily basis.

    It will always be useful to read articles from other authors and use something from other web sites.

    Reply
  • Hey! I understand this is somewhat off-topic however I had to ask.
    Does operating a well-established website such as yours require a lot of work?
    I am completely new to writing a blog but I
    do write in my diary daily. I’d like to start a blog so
    I can share my personal experience and views online.
    Please let me know if you have any kind of recommendations or tips for new aspiring blog owners.
    Thankyou!

    Reply
  • When someone writes an paragraph he/she retains the image of a
    user in his/her brain that how a user can be aware of it.
    So that’s why this post is perfect. Thanks!

    Reply
  • Hmm it appears like your blog ate my first comment (it was
    extremely long) so I guess I’ll just sum it
    up what I had written and say, I’m thoroughly enjoying your blog.
    I as well am an aspiring blog writer but I’m still new to
    everything. Do you have any points for beginner blog writers?
    I’d really appreciate it.

    Reply
  • Superb blog! Do you have any helpful hints for aspiring writers?
    I’m hoping to start my own blog soon but I’m a little lost on everything.
    Would you propose starting with a free platform like WordPress
    or go for a paid option? There are so many choices out there that I’m completely overwhelmed ..

    Any ideas? Cheers!

    Reply
  • When I originally commented I clicked the “Notify me when new comments are added” checkbox and now each time a comment is added I get several emails with the same comment.
    Is there any way you can remove people from that service?
    Thanks!

    Reply
  • This is really interesting, You’re a very skilled blogger.
    I’ve joined your rss feed and look forward to seeking more of your magnificent post.

    Also, I have shared your website in my social networks!

    Reply
  • If you are going for most excellent contents like I do, just pay a visit
    this website all the time since it provides quality
    contents, thanks

    Reply
  • I don’t know if it’s just me or if everyone else experiencing issues with your blog.
    It appears as though some of the text within your content
    are running off the screen. Can somebody else please comment and let me know if this is happening to them as well?
    This may be a issue with my web browser because I’ve had this
    happen previously. Cheers

    Reply
  • Sweet blog! I found it while searching on Yahoo
    News. Do you have any suggestions on how to get listed in Yahoo News?
    I’ve been trying for a while but I never seem to get there!
    Thank you

    Reply
  • You’re so interesting! I do not believe I’ve truly read through
    anything like that before. So good to discover somebody with genuine thoughts on this subject matter.
    Really.. many thanks for starting this up. This site is something that is
    needed on the web, someone with a bit of originality!

    Reply
  • Hey! I know this is kind of off topic but I was wondering if you knew where I could locate a captcha plugin for my comment form?
    I’m using the same blog platform as yours and I’m having trouble finding one?
    Thanks a lot!

    Reply
  • When I initially commented I seem to have clicked the
    -Notify me when new comments are added- checkbox and now every time a comment is added I recieve four emails with the exact
    same comment. Perhaps there is a means you can remove me from that service?
    Thanks!

    Reply
  • This is very attention-grabbing, You’re an excessively skilled blogger.
    I’ve joined your feed and look ahead to looking for more of your excellent post.
    Also, I have shared your web site in my social networks

    Reply
  • Hey! I know this is kinda off topic but I was wondering
    which blog platform are you using for this website? I’m getting tired of WordPress because
    I’ve had problems with hackers and I’m looking at alternatives for another platform.
    I would be awesome if you could point me in the direction of a good platform.

    Reply
  • I’m amazed, I have to admit. Rarely do I encounter a blog that’s equally educative and engaging, and let me
    tell you, you have hit the nail on the head. The issue is something that too few folks
    are speaking intelligently about. I’m very happy I came across this during
    my hunt for something relating to this.

    Reply
  • Hello are using WordPress for your site platform? I’m new to the blog world
    but I’m trying to get started and create my own. Do you need any coding expertise to make your own blog?
    Any help would be really appreciated!

    Reply
  • My partner and I stumbled over here from a different
    page and thought I might check things out.
    I like what I see so i am just following you.
    Look forward to looking over your web page again.

    Reply
  • We are a gaggle of volunteers and opening a new scheme in our community.
    Your website offered us with helpful information to work on. You’ve done an impressive task and our whole neighborhood can be grateful to
    you.

    Reply
  • Undeniably consider that which you stated. Your favorite justification seemed to be on the internet the easiest factor
    to understand of. I say to you, I definitely get irked at the same time as other
    folks think about issues that they plainly do not understand about.
    You managed to hit the nail upon the top and outlined out the entire thing with no need side-effects
    , other people could take a signal. Will probably be back to get more.
    Thank you

    Reply
  • Hey there just wanted to give you a quick heads up and let you know a few of the pictures aren’t loading properly.
    I’m not sure why but I think its a linking issue. I’ve tried it in two different web browsers and both show the same results.

    Reply
  • Aw, this was an incredibly good post. Spending some time and actual effort to
    create a superb article… but what can I say… I put things off a lot and never seem to get nearly anything done.

    Reply
  • Have you ever thought about creating an ebook or guest authoring on other websites?
    I have a blog based on the same information you discuss and would love to have you
    share some stories/information. I know my visitors would enjoy your work.
    If you’re even remotely interested, feel free to send me an e-mail.

    Reply
  • Usually I don’t learn article on blogs, but I would like to say
    that this write-up very forced me to try and do so!

    Your writing style has been surprised me. Thank you, very nice article.

    Reply
  • Attractive section of content. I just stumbled upon your
    site and in accession capital to assert that I acquire in fact enjoyed
    account your blog posts. Any way I will be subscribing to
    your augment and even I achievement you access consistently rapidly.

    Reply
  • What i do not understood is in fact how you’re
    now not actually much more smartly-favored than you may be now.

    You are very intelligent. You recognize therefore considerably on the
    subject of this subject, made me personally believe it from numerous varied angles.
    Its like women and men aren’t involved until it is one thing to accomplish with Girl gaga!
    Your own stuffs outstanding. Always care for it up!

    Reply
  • Awesome blog! Do you have any tips and hints for aspiring writers?
    I’m hoping to start my own blog soon but I’m a little lost on everything.
    Would you suggest starting with a free platform like WordPress or
    go for a paid option? There are so many options out there that I’m totally confused ..

    Any ideas? Kudos!

    Reply
  • Thanks for another excellent post. The place else
    may anybody get that kind of information in such a perfect means
    of writing? I have a presentation next week, and I am on the look
    for such information.

    Reply
  • I have been browsing online more than three hours today, yet I never found any interesting article
    like yours. It is pretty worth enough for me. Personally, if all webmasters and bloggers made good content as you did, the
    net will be a lot more useful than ever before.

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *