debodun
SF VIP
- Location
- way upstate in New York, USA
Since the beginning of this year, my investment in tax-free municipal securities has been in free-fall. This past month alone, it lost almost $2000 in value. Anyone know the reason for this?
Investment value plummeting
- Thread starter debodun
- Start date
greece
With a US Territory like Puerto Rico about to default on it's bond debt and cities like Chicago in deep poop muni's aren't doing too well now. I heard one stat that 20% of US funds have these or other muni's/bonds in them that could be in just as much trouble. Tax free doesn't necessarily mean good yield. They should be part of one's investment but not the only thing.
Don't panic, pay attention and Good Luck!
With a US Territory like Puerto Rico about to default on it's bond debt and cities like Chicago in deep poop muni's aren't doing too well now. I heard one stat that 20% of US funds have these or other muni's/bonds in them that could be in just as much trouble. Tax free doesn't necessarily mean good yield. They should be part of one's investment but not the only thing.
Don't panic, pay attention and Good Luck!
According to the WSJ, many municipalities got on-board with issuing bonds. This caused two things to happen; 1. over issuance and 2. lower rates. In other words, right now there is a glut in the market of bonds and this has brought about lower prices. Volatility seems to be the word most used when describing what to expect from bonds for the remainder of this year. As for equities, until this Greece thing gets straightened out again and the Euro finds strength, or at least stability, stock traders will also be looking at volatility. Right now, the market is acting like it always has, up and down and down and up. Patience is the key in this type of environment.
Cali-Guy
New Member
- Location
- Los Angeles
The reason is you went to a non-fiduciary "adviser" who is actually a salesman who put his OWN interests ahead of yours by selling you individual bonds. Go with a total bond market index fund next time. Or IEI if you want a little less risk. Same with stocks. Pick an S&P 500 index fund like VOO or SPY.
Don M.
SF VIP
- Location
- central Missouri
The warnings about Bonds have been out there all year. Most cities and states...and especially, our Federal Govt...have gotten themselves so far in debt that their bonds are increasingly losing value. The Fed is keeping rates artificially low, because if bonds returned to a more normal 4 to 5% return, our entire Federal budget would be consumed just to pay the Interest on the National debt. Here's a couple of the warnings issued earlier this year....and coming true.
http://www.cnbc.com/id/100593043
http://www.thefiscaltimes.com/Columns/2015/01/15/Bond-Market-Warning-Huge-Trouble-Ahead