IN THE NEWS
After a dismal 2 years of the Federal Reserve raising interest rates at a rate faster than at any other time in history, we saw these higher rates affect our Insured California Municipal Bonds.
As an indicator, one of the premier California Bond Funds was down nearly -23% over this time period, putting in a low on Halloween October 31st, 2023! Since then, California Municipal bonds have been rallying.
What does that mean for your Insured Cal Muni’s? The resale value of your bonds are increasing. We know that the principal invested in an Insured Cal Muni is insured by the insurance carrier, as well as all the interest payments. This is for peace of mind to ensure that the interest and principal will be paid by the insurance carrier if the city or county, for some reason, is not able to pay.
On a recent review of a client’s bond holdings, I saved them over $18,000 on one bond by buying an individual bond instead of putting that money into one of the premiere municipal bond mutual funds. Some of the bonds I have picked for you are 50% better than what you would have expected in a world-class Muni Bond Mutual Fund. This is to be expected. With the bond, you not only get the insurance, and the tax-free interest, but also the control of when, where, and if you sell the bond.
Meanwhile, the bond pays you cash in the form of interest. The bonds I picked with Premium pay you back your principal and your earned interest (decreasing the money invested thus decreasing your risk). The bonds are getting younger over time meaning they are closer to maturity. The Bond is fixed when you buy it, and as it slides down the yield curve getting closer to maturity, the bond becomes more attractive.
