After looking for quite a while (and getting the daily list of new offerings from a broker), I decided to take the plunge and buy some Municipal Bonds. Since I live in New York City and pay such high local and state taxes (and am in the 33% tax bracket) I did the math and figured that muni bonds were the best bet. The biggest reason for buying these bonds is for tax free income. I don't have too much of my portfolio in bonds and I'm reluctant to buy bond funds that are volatile (we've already seen most bond funds drop in the current market).
I figured that an actual bond would suit me just right if:
a) I was comfortable with the yield
b) I was willing to hold it until maturity
After that, it wouldn't matter if the price went up or down since at the end I would get the face value back (and all the interest over its life).
I ended up getting form the offering:
- 50 New York St Thruway Authority - General Highway and Bridge Trust Fund with a 4% coupon that matures in 4/01/2016
- 50 New York St Thruway Authority - General Highway and Bridge Trust Fund with a 4.4% coupon that matures in 4/01/2019
I was able to get them under par (less than the offer price of $100) at $99.22 and $99.72, respectively. During an offering, like an IPO, the final price is determined on the day of issuance. The value has already gone up (ignore what I said above about not mattering :) ) to about $102 each. Can't argue with that!
I'l see how this goes and when I get more comfortable I look to purchase some more.
