The Smart Way To Buy Munis
A broker's profit on municipal bonds comes from the spread - the gap between the price the firm pays and the marked-up price for which the bond is sold to investors.
Smaller purchases tend to have higher markups, resulting in lower yields.
To evaluate the deal your broker is offering you, go to www.investinginbonds.com, which lists all recent sales, as well as information on the bonds' yields. Click on Municipal Market at-a-glance and plug in the bond's CUSIP, it's alphanumeric ID. If the yield you're quoted doesn't look fair compared to what other customers are getting for similar-size transactions, your broker has some explaining to do!
NOTE: If you buy an individual muni, plan to hold until maturity so you can avoid worrying about the spread on a sale.
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Smaller purchases tend to have higher markups, resulting in lower yields.
To evaluate the deal your broker is offering you, go to www.investinginbonds.com, which lists all recent sales, as well as information on the bonds' yields. Click on Municipal Market at-a-glance and plug in the bond's CUSIP, it's alphanumeric ID. If the yield you're quoted doesn't look fair compared to what other customers are getting for similar-size transactions, your broker has some explaining to do!
NOTE: If you buy an individual muni, plan to hold until maturity so you can avoid worrying about the spread on a sale.
* * * * *
posted by Bob Moser at
2:30 PM
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