Good job on trash cost reduction. We reduced our trash bin size and added compost bin (huge, holds yard waste as well a kitchen scaps) - biweekly pickup, alternates with recycle weeks. Saves us $6/month. We could save even more if we did biweekly pickup on the small trash bin.
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For those who want to learn more - this is a good article/Op Ed - I came across:
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Someone who is not familiar enough to understand the intricacies of municipal bonds VS other investments and the risk/return does need to have professional guidance.
I am not a fan of bonds, and we have reduced our portfolio risk with annuities - which have been selected at the right time for the particular annuity. Our cash stream in retirement from our investments is from the non-penalized monthly withdrawals from our annuities. We believe the insurance companies (who our annuities are through) will stay solid, but the ones selected are high rated/less likely to ever fold. Munis can default as well.
Our 401k, which holds all stock funds (several flavors of groups of stocks, all with the best long-term return) is having the ups and downs of the current situation. But we SWAN because our overall holdings are fine.
New term for me, FUD. A good one with talking about the markets and investments.
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As with anything else, the above article notes that they donāt have a good vision of what might happen in the future.
I still sayā¦a diversified retirement portfolio is the best thing to have.
And I donāt mind paying a CFP for their sound advice (we really like ours).
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We did munis for many years. It was a managed laddered account. They only invested in local ones so we would not have to pay state taxes on the earnings. Sold them all off when we moved out of that state. Current state has lower income tax and so we switched into mostly CDs and T-bills. We are already retired and like very conservative investments at this time.
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Will disagree here. Theyāre much simpler than equities.
But Iām simply providing info. It was an article op/ed - I did not expect it to elicit such a response. I think some peopleās thoughts toward me color their view of anything I say - thatās their choice, of course.
Theyāre a ballast - another words, a safe cushion where you can sleep and a great part of a diversified portfolio - that for older people, who need reliable income, work wonderfully.
I feel otherwise than you. Annuities have fees, etc. so Iām not a fan - nor are they assured.
That you have a good cash stream is whatās important though - so if it works for you, than itās great. We all have things we prefer.
My 401K is also all equities - and Iāve not made it more āconservativeā because I have the secondary income - plus Iāll have a small pension. I had a second pension but I just took a buyout offered.
Fortunately, I put 83% of the money actually in federal agency bonds - so taxable, from Fed agencies like Farm Credit Bureau. Unfortunately, the rest I put into high dividend stocks - big big big mistake - at least short term as it was 3 months ago and that money is down 30% or so. I wish I had it all in bonds - so I could sleep.
FUD - when I was in the telecom industry (when you paid to make long distance calls), we used to say that about AT&T. Everyone was using their network but they didnāt want to lose customers in deregulation so yes, they charged more and told their clients - the MCIs, Sprints, Alltels, Frontiers stink - they were using the FUD tactic - i.e. Fear, Uncertainy and Doubt. Itās been a strategy, sometimes winning, forever. Probably came out of some MBA class 
Yes @thumper1 - nobody knows the future - nobody. If we did, weād be billionaires, not regular people - but we know what is out there today, what works, etc. I hope my stocks work overall and thanks to Microsoft historically - they have - and yet itās way down. Disney, Carnival Cruises, other stalwarts are down well over 50% from their highs and thatās not a last 3 month thing- and thatās the point - for those who choose, they can diversify.
As I showed, thereās a reason Bill Gates, the Walton familyā¦the Kroc family, Linda McMahon, heck - even that louse Bernie Madoff - piled into munis. Thatās their diversification
You can continue to doubt - thatās not why I posted the article.
I posted the article because it provides a good basis of ātodayā - and for those interested, I thought a good read. For you, you doubt and like paying someone and thatās fine too. Education is simply thatā¦
You say this:
āI still sayā¦a diversified retirement portfolio is the best thing to have.ā
For me, itās not the case - but thatās because of the bonds that are not in my retirement portfolio - except the taxable bonds I just bought with my pension buyout - but I do agree diversification is the best thing to have overall - and I have it overall. But if youāre over looking a key part of diversification, than you are actually limiting your level of it.
It sounds like @SOSConcern has it too - they are using annuities for their fixed income investment - so they are betting on an insurance company vs. say DFW Airport or the state of Arkansas - or even my alma mater (Syracuse U) that has issued a bond I own. Thatās a choice they are making, similar to the choice that I make - and as long as each of us likes that choice, then great.
Good luck to all. Itās simply an article/op ed - and itās for education.
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But they do provide a historical perspectiveā¦
āYields on 30-year munis recently hit 4.85%, their highest level since 2011ā
That means anyone purchasing Munis over the last several years is now receiving a lower interest rate than the market dictates today. Stated differently they are loosing investment returns.
By example if 30 year munis are currently at 4.85% per the article and you bought them at 3.50% your portfolio is producing 1.35% less cash flow than the current market clearing level.
That market clearing level has spiked as the expectation for tariff related inflation has increased. Those who invested in muniās in those lower interest rate environments will likely suffer income shortfalls relative to the economic environment.
Certainly a great way to preserve capital but diversification remains the market proven best practice.
Lastly because Linda McMahonās $900k of reported muni income keeps being mentioned consider her reported net worth of $3+ billion. Assuming a 4% muni, $900k is associated with a total investment of around $22.5mm municipal bonds or less than 1% of the total portfolio. Meaning the muni portion of her portfolio is a modest element of a diversified portfolio of assets.
Muniās are undeniably one of many great investment tools to be considered but they come with risks and should be considered accordingly.
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Munis can be called when rates go down. As towns will refinance their debt at a better rate.
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I have noted many times that when you buy a bond, you are locking in a yield today.
6 or 8 years ago, you could only get 3% - as an example.
I made the choice uncomfortably, to continue to buy. The reason in my case is that I had enough muni income to pay my expenses an buy more.
The āpriceā of the muni is always set based on the rates of today.
So that bond that I have at 3% - is - depending on how close to maturity, in the 70s or 80s price wise. I might have paid 100. I donāt care. Every 6 months, on say a $10,000 paper, itās paying me $150 federal and in Tennessee with no income tax, state tax free.
When it matures, I will get 100 - regarldess of if I paid 80 or 120.
Now I also had interest rate risk - if inflation was 5% and I earned 3%, my money was losing 2% a year - no different than a CD would, etc.
Itās less likely to be called - meaning paid off early - because itās got a rate lower than is needed today. Often times, an issuer has a right to ācallā a bond or pay it off early - and they will when itās beneficial to them. Still, many have what are called āsinkingā funds - which means they have to pay off a certain amount early - so it can still get called.
What the article is saying - and rightfully so - that today, someone buying a bond - is getting a higher rate than they have in many many many years.
If you buy a 4.5% today at 100 and in a year, rates are lower and the prevailing rate is 4%, then your price will go over 100 - and if you wanted to sell, youād make a profit. Or you can continue to earn that 4.5% (which is what I would personally do) and when it matures or is called, youād get 100. Sometimes calls are set higher than 100, at like 102 if they pay it off early - the prospectus will tell you that.
So yes, you are locking in a rate today - and that rate will stay the same for the duration of that bondās life - whether rates go up or down.
But if you have $100K of income and your expenses are $50K, now you have another $50K to buy more income - so next year your $100K becomes $102K, etc.
Everyone has a different strategy in life - mine is not capital appreciation per se although I want that. My true goal is to have income at a higher level than my expenses.
And thatās what this accomplishes.
Again, everyone is assuming Iām saying buy muni bonds and thatās it. I donāt care if you do or not - Iām not your advisor.
But for many doubters, you are missing a great and SAFE way to add another dimension to your portfolio.
I bought so many high income stocks in the past few years - I was a āchaserā and while many of the dividends have continued, the share prices are down so so so very much.
Utilities and other 'safe" equities. Stocks Buffet is heavy in like Kraft Heinz.
Those mayā¦or may notā¦recover. The munis simply provide an alternative, a diversifier.
If you donāt want to learn about them, then simply avoid the post.
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Yes most muni bonds are callable. In bond parlance that is called negative convexity.
āImagine a bond that typically gains value when interest rates fall. With negative convexity, this bond might not gain as much as youād expect when rates go down, and it could even lose value. Conversely, it might lose more value than expected when interest rates rise. This difference in price movement due to interest rate changes is what characterizes negative convexity.ā
To truly understand a fixed income portfolios dynamic performance scenarios an understanding of this concept is required.
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100% correct- thatās why rather than buying a higher coupon with a lesser call, Iām looking at 2035 calls - so at least to buy me 10 years at the current rates. So instead of taking 4.5% and paying 100 with a 2028 call, I might take a 4% at 94 with a 2035 call. Of course, if today is the high point, and we donāt know, just because a bond has a call doesnāt mean it will be - or to your point, if the rates are higher than when issued, thereās far less likely to be a call. But I donāt try to predict - I simply buy long calls so I donāt have to worry. Iām laddering if you will so every two months or six months - whenever I have money, Iām buying - and yes, Iām buying equities too (my 401K, which buys every two weeks - timing without emotion).
btw - your CD, corporate bonds, and taxable federal bonds also have calls if you will. CDs donāt go that long or pay less a taxable rate than the tax free bonds pay tax free. And the federal bonds are great - but you are lucky if you get a 1 year call.
So you are correct - but thatās another advantage of munis vs. other fixed income instruments.
btw - Linda McMahonās net worth is unknown - what is tied with Vince is $3 billion but given they are married but not married, we donāt know how her assets/investments are set up on an individual basis. But Iām guessing sheās not diversified but rather has her money tied to the organization thatās made her wealth. Bill Gates, on the other hand, very diversified in equities and fixed income as is Mr. Buffett - or at least the company he controls The Walton Family less so - although theyāre huge in the muni word - but also their net worth is mostly generated from one company.
Talk to any high net worth advisor - you can be rest assured they likely have munis in their clients portfolios.
Again, education - and nothing more.
And @kiddie you are correct. Thatās why I manage for that.
My federal 5.7%5 taxable I bought with my pension - itās likely to get called in a year and I have to go through that every year at whatever the prevailing rates are - so thatās a concern - but I bought one year of safety. Thatās why I buy long calls on the munis - to give me assurance for a much longer time.
No one - not me, not any poster, not even our government, knows where rates will be in a year, five, ten - just like we donāt know about equities - but man, people used to own things like Kodak and Dell Computer and still own blue chips down over many many many years.
Iām simply offering a perspective that allows one to take risk off the table.
For all that want to fight a reality, thatās your choice - and I have no issue.
No investment is for everyone - but if you want to learn rather than fight, I have offered you an opportunity to do so. What you do with that knowledge, if you decide to expand your horizons, is up to you.
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I can do an āanalysisā of the rates our various (5) annuities are earning, but it is relatively strong. Our FA and we review returns, and at our next 6-month appointment (we schedule after the semi-annual āstate of the marketsā meeting) I will go with overview on performances. We get some performance data - and annually we have āchoicesā on what we want to do with the upcoming year. Our FA also receives the annual āchoicesā and advises us when to make a change.
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There is āriskā with any investment. That is why a diversified portfolio is recommended. Thatās what we have.
I think everyone wants to have their retirement income cover their living expenses, right?
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If you have equities (various types and classes) and fixed income (which includes munis), then you do.
There are many levels of diversification - including collectibles, commodities and more.
You likely own bonds if you are truly diversified - and you, in a taxable account, likely own munis.
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When I buy market CDs I only get non-callable ones. Also, your regular investment CDs from your bank are also non-callable. As you are outlining with your discussion, if your muni bonds are not being managed (and most brokers will mange them for you for a fee), you need to review and reinvest on a regular basis. So they are not a sit back and let it just earn for you type of investment.
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My sister has done very conservative investing and does some CDs which I think makes her feel she is actively involved. She has a local Edward Jones guy who āmanagesā their stuff - I donāt think he does a very good job, but sister and her husband are conservative and also accept his recommendations w/o knowing much and having trust in him. BIL has retirement income, she has retirement income. BIL could not live at home w/o my sister (he is soon to be 87 and she is 70). Hopefully BIL can continue to live at home and sister can manage with perhaps care coming in if needed (which is more affordable than him going to skilled care). BIL would drive me nuts because he is a whiner - and the last few years sis has been complaining a bit about his āneedinessā. Sis is hosting her whole family (two sons/families) for Easter - she enjoys doing that, and also BIL has the time with the family. Eventually we do expect BIL to expire, and perhaps sis will analyze fully what her situation is and if the Edward Jones person needs to change things or if she needs to dump him. IDK how much her sons can guide her or how much she is willing to change, with keeping at her risk profile but having better returns.
We are with single DD2 and her BF for Easter and enjoying our time together. One day by car to get to them. DD2 is busy with her work and taking a course to take the final exam to become a PE.
We never had the incomes to consider Backdoor Roth for example. DHās company didnāt have Roth IRAs either, but we did some conversions to Roth and are doing some from 401k to Roth IRA prior to RMDs (we both turn 68 this year). I had an 18-year gap in employment, had earlier 401k funds go to IRAs and then to Roth IRAs; sunset career 401k I cashed out after age 65 - did well with matching and investment, but rather than roll it into Roth IRA we had use for the funds and it made sense tax-wise.
Neither DH or I have any pensions (well DH does get about $100/month which is a lifetime annuity - not sure if there are survivor benefits, due to a cash out from a pension when the company was sold and IRS approved the plan). He had pensions with several former iterations of the company, but the last one for his last 15 years before retirement had no pension, just some matching to 401k.
You are a very sophisticated person when it comes to investments, and obviously have an interest to manage your own destiny.
Agree that we pay a fee, for FA and also for the annuities - but we āmake up for itā in that we are happy with our returns and SWAN.
Our equities are āsimpleā for our 401k in that we have these investment choices and I look at the data. That is how our āmixā with 401k has āoutperformedā S&P 500 for some annual returns (Jan-Dec). FA has our Roth IRAs and they are doing fine. We get a lot of updates from FA as they keep their clients informed on how they are keeping up with all the things going on with financial markets.
You donāt find long term CDs was my point - and would you rather buy a 3 month at 4% taxable, or something 4% tax free. When you go out longer on CDs today (2-5 years), your rates are lower than the short term (3-6 months today) because the banks have priced rate cuts into their models - they think rates are going lower.
With individual munis, investment grade, you donāt need to watch - thatās the point.
In 2022, for example, per Moodyās, there was one defaultā¦a student housing project. I own lots of them - but I only buy them at public universities, not private.
Bonds come rated - for S&P, AAA to D and if you are in the As and Bs, you are investment grade - but today you get great rates for AA bonds - which often (not always) are also backed by an insurance company - such as Assured Guaranty (great stock historically, btw - AGO) and BAM - which started in 2012 but is the preferred insurance provider financial guaranty insurance on debt for member municipalities of the National League of Cities.
But you are buying debt from cities, states, airports, public universities and more. Is University of Illiniois or the state of Kentucky going to go bankrupt? Or your local utility? Or LAX?
Unfortunately, I own a boat load of different stocks and canāt keep track. Bonds - I donāt watch at all. I simply check my account once a month to see if any calls were announced (although Schwab emails me if one is announced) and I check to make sure all my payments came in - I keep a spreadsheet.
But thereās nothing to monitor - as opposed to my stocks, which I should but donāt.
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We have some bonds within our equity group choices (401k has various funds to choose from, and these are diversified). DH and I do not purchase bonds directly. Same holds true with FA managing our Roth IRAs.
From your posts, you learned over time how to best utilize Municipal or other bonds in your investment portfolio. You enjoy managing your investments and seem to be quite good at getting the returns you desire. Thank you for sharing your expertise on this thread. Food for thought.
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Iām a simpleton - I buy what I understand.
Bitcoin. Nope
Options - and i know you can make a lot - nope
Annuities and Life Insurance - nope.
Stocks and bonds - thatās it - and equity mutual funds through my 401k.
But thanks
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