Re-Upping. The Time for Municipals is NOW.
I got my start in tax free municipal bonds, partly so because my parents, who my company is named for, had invested their own funds into.
Back then, there were muni bond specialists like J.B Hanauer, Lebenthal and Glickenhaus. But they faded away as their business model couldn’t support the expense of their operations.
The death blow came when the 2008 crisis hit. It made no sense to buy munis with the Fed having zeroed out interest rates. Personally, I couldn’t even think of offering 2% yields on paper that matured in 20 years. But now, that tide has turned.
But this presents a fresh opportunity in the municipal space. For example, if you're a New Yorker, and you’re in the top Federal bracket, that would also place you in a high State bracket, so tax equivalent yields can be had in the high 8% range. This, with a measure of government backed safety that is hard to match anywhere else.
My parents’ example was never lost on me. The ability to generate a reliable income stream through hell or high water, and preserve a family’s assets no matter what the markets or the economy were doing, makes for a compelling investment.
This is one of those moments where one asset class surpasses another: right now, tax equivalent yields on munis practically exceed those of corporate junk bonds without a fraction of the risk.
In the old days, bond brokers used mark ups in price to earn their commissions. That was costly to the investor, not just in commissions, but the higher price charged reduced the yield the customer received over the life of the bond.
My business model avoids any conflict with the client, and assures them they get all the yield they’re entitled to. Bonds are never marked up and the client has total price transparency.
No one can say how long this opportunity will last or or how good it will ultimately be. But to this old hand, this appears to be a great time to invest.
Speaking of which, the Federal Reserve's long stretch of zero interest rates has created a vacuum in the muni retail space. People who came up in the industry over the past 10 years had little interest in pursuing the space, and the bitcoin and token era pre-occupied them. Once again, you can see how that worked out. The older players have retired or aged out of the space.
There are few practitioners left in the industry. If you're in a high tax bracket, contact me at 516-234-5490 to discuss what tax frees can do to provide security and income for you and your family.