Tuesday, February 12, 2008

investment advice

There's a simple investment move you should make now if you're invested in bonds. Shift some or all over to top quality municipal bonds.

The difference between regular bonds and muni bonds is muni bonds aren't taxable. Usually this means you get a significantly lower % return from them to compensate (since after the government takes a third of the yield a 6% bond, it's comparable to a 4% muni bond). Yet all of the chaos in the bond market means people are shunning them, and for now muni bonds are yielding nearly the same as taxable bonds. Yet the top quality ones face little chance of default. Buffett offering to guarantee them today only furthers that idea.

Moves this obvious don't come along often......


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