All of us at Thomas Financial keep municipal bonds top of mind. Most especially for our clients in the higher tax brackets, these bonds can pursue federally tax-free compounding of income. Federal taxes go away, and often state taxes as well.

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We also look for bonds that improve the quality of life for Kansas communities, improvements such new roads, new hospitals, new water and sewage systems – the necessary infrastructure of daily life all made possible by what are called “general obligation” bonds. These bonds are considered low in risk, but it is true that lower yields inevitably accompany GO bonds.

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You’re probably familiar with the computation for taxable-equivalent yields; that is, the tax advantages accruing to the bond often makes it a better investment than a corporate bond yielding a higher rate. Because municipal bond prices respond to changes in interest rates, we routinely counsel our clients toward certain bonds and their reduced vulnerability to volatile interest rates.

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We monitor our clients’ bond investments constantly, ensuring that holdings are aligned with your goals and risk tolerance.

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Call us anytime for a discussion of federally tax-free bonds and their place in your investment plan, their dynamic balance of potential growth and stability.

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Municipal bonds are subject to availability and change in price. They are subject to market and interest rate risk if sold before maturity. Bond values will decline as interest rates rise. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply. If sold before maturity, capital gains tax could apply.