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Chasing Muni Yields Carries Risks
Those 5% yields look inviting, but investing in municipal bonds comes with risk.
 
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Posted 1:40 PM EST May 12, 2008
Posted by: Pegasus42
Buying a single municipal bond for the yield would not be prudent just as buying a single stock would not be prudent. There exists event risk in every investment. However, investing in a fund of bonds should diversify away this event risk just as investing in a stock fund provides diversification. I agree that municipalities will have struggles with the credit crunch and that the inherent risk of any single bond has risen lately. But I still feel that municipal bond funds still have a place in a diversified portfolio.
Posted 3:16 PM EST May 10, 2008
Posted by: BlueHavenCapital
I think if you are uncomfortable with the asset allocation you have, then it is the wrong allocation for you. Talk to whomever you are working with and restructure things a bit...and yes...perhaps you need to talk to someone that is better versed in bonds.
Posted 9:39 PM EST May 09, 2008
Posted by: Fidelity_Investments
At your age, you should be 100% in cash.
Posted 7:48 PM EST May 09, 2008
SamLasley31 SmartMoney Insiders
48 Comments
I am 77 years old and have 1.2 mil in equities and 500K in muni bonds, but they are bond funds such as Fidelity, DWS Scudder, Legg Mason etc.. I think I am still too heavy in equities for my age and too light in fixed income like bonds. What do you think?
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