Ask Terry Questions Muni bonds

Muni bonds

By Terry Savage on October 09, 2023 | Investments

I have about 217K invested in Muni bonds. 2 years ago I invested with Edward Jones @ 250K and its down to 217K. Hi mark this years was 224K. As you know the bond market has been terrible due to rising interest rates. Should I keep it there or move it into a CD getting 5%?

Terry Says

That’s a much larger question than I can answer here. First, you have to decide if you think interest rates are coming down at any time in the near future. If so, then the bond values will rise again.

Second, a lot depends on your tax picture. If you sell these funds, you will have a capital loss. You can only write off $3,000 against ordinary income — and then carry the rest forward to future years. But if you have capital gains you want to take, then you could write the losses off against them. That’s a discussion for you and your tax accountant.

Finally, remember that though you can get 5.5% now on a 6-month T-bill, if rates drop by next spring, you could be renewing at a lower rate! Then you’d be kicking yourself for selling the munis, and having to reinvest cash at lower returns!!

Up to you to decide.



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