Municipal bonds are popular among retirees and near-retirees who want to cut their tax bills and reduce market risk. Investing in municipal bond mutual and exchange-traded funds is one approach to diversify this market. Investors poured a record-breaking $96.8 billion into the stock market in 2021 alone. 1
Many investors may benefit from reduced municipal bond prices and greater yields this year, since interest rates are forecast to climb. In addition, muni bond interest is exempt from federal taxes and, in some situations, state and municipal taxes. 2
Bonds having a shorter maturity are less vulnerable to interest rate rises. Long-term bonds, on the other hand, benefit from growing interest rates and may be a smart alternative for retirees looking for long-term income. 3
Bonds or bond funds may be an excellent alternative for your portfolio if you haven’t relocated a portion of your assets to a more cautious allocation. We’d be pleased to assess your financial condition to see if bonds are a good fit for your objectives and timing. Please do not hesitate to contact us.
Bond prices may be favorable this year because certain municipalities may need to take in projected climate change charges as part of their bond issuing strategy in the future. Municipalities that are expected to be hit by rising sea levels or an increase in wildfires, for example, may increasingly need to recognize that municipal bond repayment sources are closely linked to local economic conditions. Bond prices are more likely to rise as the likelihood of climate change disasters rises. However, according to a recent analysis of this impact, the chance of default owing to variables like increasing sea levels is still statistically low. 4
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We have a strong team of professionals helping ensure you receive all the assistance you need not only in developing your retirement income strategy, but in maintaining it throughout your retirement. Contact us today at 559-230-1648 or visit us today at Soutas Financial to get your retirement plans on track for success!
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333 W. Shaw Avenue Suite 106
Fresno, CA 93704
Content prepared by Kara Stefan Communications.
1,2 Kate Dore. CNBC. Jan. 24, 2022. “How rising interest rates may affect muni bond investors.” https://www.cnbc.com/2022/01/06/how-rising-interest-rates-may-affect-muni-bond-investors.html. Accessed Feb. 5, 2022.
3 Kate Dore. CNBC. Jan. 19, 2022. “Here’s how rising interest rates may affect your bond portfolio in retirement.” https://www.cnbc.com/2022/01/19/heres-how-rising-interest-rates-may-affect-your-bond-portfolio-.html. Accessed Feb. 5, 2022.
4 Knowledge@Wharton. Jan. 25, 2022. “How Sea Level Rise Exposure Is Priced into Municipal Bonds.” https://knowledge.wharton.upenn.edu/article/sea-level-rise-risk-priced-municipal-bonds/. Accessed Feb. 5, 2022.
Investment advisory services made available through AE Wealth Management, LLC (AEWM). AEWM and Soutas Financial & Insurance Solutions, Inc. are not affiliated companies. California Insurance License # OK48173. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial or investment advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference. 6/22-1355069