Some people are so avid about avoiding taxes that they make big mistakes with their portfolios.
“I’m worried about the New Jersey municipal bonds that my father bought. I got them when he died in 2015.
Since a mid-December peak, the prices of long-term New Jersey tax-exempts have fallen not quite 10%, to judge from the asset value of the Vanguard New Jersey Long-Term Tax-Exempt Fund. There is no way for you to predict where the prices will go next. In the Vanguard New Jersey fund, Morningstar calculates, the average bond sports a 4.3% coupon and is priced at 113, or $1.13 per dollar of par value. When the bond is redeemed, you’re out the 13 cents. The true yield, allowing for erosion of principal, is scarcely half that 4.3%.
Console yourself that, in being fixated on state income taxes, you have plenty of company. Vanguard offers its low-cost single-state muni funds only for the bigger states. Elsewhere, tax-panicked investors flock into expensive single-state funds sold by lesser fund companies. They are saving at best a quarter of a percentage point in taxes but incurring mutual fund expenses of double or triple that amount. What a waste.
With corporate or municipal debt, though, you’ve got a problem. Diversification is imperative. You don’t want your life savings invested in the next Kmart or Detroit. Trading costs are very stiff, partly because there are tens of thousands of issues, each with peculiarities of credit quality and repayment terms.
Australia Latest News, Australia Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Standoff between Chicago Reader co-owner, staff leaves paper's future in doubtThe Chicago Reader has been serving the city for more than 50 years. But now, the future of it is in doubt.
Read more »
Lynn Nottage makes it work - Chicago ReaderIf you’re up for journeys to the suburbs this weekend, it’s possible to see two plays by Lynn Nottage; Sweat, which earned Nottage her second Pulitzer Prize in 2017, is closing Sunday in Aurora at Paramount Theatre’s new Copley black-box space. (Reader contributor Catey Sullivan called the production, directed by Andrea J. Dymond, “gripping” and […]
Read more »
Father Stu - Chicago Reader'Narratively though, the inspirational story loses inspiration as the film suffers from front-loading, and much of our time is spent in the buildup to Stu’s priesthood.' | acmkhatib
Read more »
Fitz's Opinion: Test your knowledge of Arizona politics with our reader quiz.Take this quiz to see if you truly are 'informed' citizen
Read more »
Del Hale, aka DJ Miss Twink USA of Rumors and Legion of Doom - Chicago Reader'Eventually, that brought me to playing Rumors for the first time when I was 18 or 19. That was my first club gig. I was so excited because it was the party I loved going to with my little fake ID.'
Read more »
Like Tinder in print - Chicago ReaderNationalLoversDay: A look back at the love stories that started in the pages of the Reader, no swiping necessary | itstarynallen ReaderArchives (2021)
Read more »