Category Archives: Bonds

Are Municipal Bonds A (Good) Hedge For You?

Bond rates and yields

Bonds, rates and yields – municipal and otherwise.

With the stocks trading with price/earnings multiples as lofty as they are, it would be prudent to consider other investments that may provide solid returns while weathering potential market corrections.

It seems everyone is on the edge of their seats wondering about when the Fed will raise interest rates. It’s almost inevitable because, well, they’ve said so and because it’s not like rates can really go any  lower. Unless you’re Europe. Then you can, apparently, go below zero.

Anyway, it appears that municipal bonds (“munis”) are one area that may (and I caution may) provide a hedge against stocks. Priced as they are, the market currently seems to regard the act of buying them with only slight preference to placing one’s hand on a loaded mousetrap.

What They Are

Bonds generally have terms of more than one year, often decades in duration (debt instruments for periods of less than a year are referred to as notes).

Municipal bonds are issued by state, county and city governments or other local government entities to fund general operating obligations or specific public projects such as airports, public utilities, toll roads and schools.
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Let Your Cash Hit the Road

Successful investing requires vision and strategy for the long road ahead

Develop your investment strategy for the long haul – Photo courtesy Chance Buell

Investments are like passenger seats in which to passively park money while receiving a solid return, more so than a place to actively drive it on a day-to-day basis like a business or occupation. Of course no investment is completely passive, but the idea is that it should only require a small degree of time and attention relative to the return.
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