Bonds and Fixed Income

[bar1080]

Last month, I did something I shouldn't have done. One of my "starving" brokers, who I almost never hear from, phoned to offer me some small quantities of several muni bonds from my state.

Generally, I stick with the large multi-state bond funds from Vanguard. For one thing, my income isn't that high anymore. Plus yield on munis vary wildly by state for a number of reasons... mostly due to quality. Tax exempt bonds from my state pay little more than taxable debt.

In any event, he sold me slivers of four or five issues, all rated AA- and above, with short maturities under about 6 years. For me, liquidity isn't an issue because I'll hold everything to maturity. My Dad invested like that. He had oddball amounts of most issues... $17,000, $39,000 etc. Selling them would have been very costly, but he never sold anything and never suffered a default.

But as a general rule, when a broker offers you something, you don't want it. That's especially true these days, and with munis where the market is so opaque. That broker who had worked with my Dad, and later my Mom, has always been reputable but still he's a Stock Broker!!! I should have made notes, thought it over and called him back an hour later with a well-reasoned decision. But I bought everything without hanging up the phone. Still, I think that's worked out due to a pretty solid muni bond market.