Re: Federal Bonds vs. State Bonds

From: "L. Chen" <am302@FreeNet.Buffalo.EDU>
Subject: Re: Federal Bonds vs. State Bonds
Date: Thu, 21 May 1998 00:43:08 -0400 (EDT)

Next Article (by Author): Re: Roth v. Traditional IRA. "L. Chen"
Previous Article (by Author): 'Discounted' Stock Trade Commissions Jrice45515
Articles sorted by: [Date] [Author] [Subject]

> My Mom lives in New York.  Recently, quite a few bonds were called in a
> taxable account she has.  The broker recommended Treasury bonds, with a
> current yield of around 5%.  But they are taxable, providing a net yield of
> 4% to 4.5%.
> 
> My Dad (deceased, and therefore no longer available for advice) seemed to
> favor New York State bonds and NYC bonds, which were not taxable.  The
> broker seems to feel that these are riskier bonds.

Your mom should focus on the net yield (after tax) -- as opposed to whether it
is taxable or not.  Municipal bonds generally provides a higher after-tax
yield only to people at the top margin tax brackets.

I don't believe NYS or NYC bonds are yielding more than 4%.  And I agree with
the broker that U.S. Treasurys are far safer than state bonds.

Chen




- -

Go to Jeff Salisbury LWGate Home Page.