The discount to the net asset value in the three muni bond ETFs I mentioned on July 1 got smaller, and in the case of the iShares national muni bond ETF, largely disappeared.
|ETF||Discount to NAV|
|iShares S&P National Municipal Bond Fund (MUB)||0.34%|
|iShares California AMT-Free Muni Bond ETF (CMF)||1.48%|
|iShares S&P New York Municipal Bond Fund (NYF)||1.32%|
* Source: iShares, as of market close on July 11, 2013.
It shows once again a temporary dislocation in the market doesn’t last long. Efficient market eventually takes it away.
I read these interesting articles this week:
Medicaid Planning: Protecting Your Assets, Including the House by Michael at Financial Ramblings
I’m sorry to hear Michael’s parent is having health problems. Medicaid planning, and estate planning in general, are controversial because one private family’s careful planning is completely at the cost of taxpayers.
Reducing estate tax takes away expected revenue from the taxpayers. Medicaid planning puts a direct cost onto the taxpayers. Although economically they are the same, people feel more strongly about Medicaid planning.
The reality is, that nobody is completely on their own. What did the President say? "You didn’t build that." I don’t have a problem with paying taxes when you are productive and getting assistance when you are old.
Tax Planning for Affordable Care Act Subsidies by Mike Piper at Oblivious Investor
This falls along the same lines as Medicaid planning and estate planning. Should the wealthy be able to arrange their income to get health care subsidies? Or defer claiming Social Security until age 70 in order to get a higher-than-market inflation adjusted annuity from the taxpayers?
What about companies such as Apple and GE arranging their income to pay lower taxes?
Investing in Real Estate by Darrow Kirkpatrick at Can I Retire Yet?
Is your home an investment or just consumption, or both? It’s a very complex subject. What’s an investment and what’s consumption anyway? Maybe I will finally tackle the subject in slow summer months.
Reflections on Home Ownership: 12 Months In by Leigh at Leigh’s Financial Journey
Speaking of home ownership, Leigh is on a 5-year payoff trajectory. That’s even more impressive considering she’s in her 20s. Look at her financial stats. Who says today’s young generation can’t get ahead? Follow her example.
Actual Results of my First Time Betting Against a Company by Evan at My Journey to Millions
Evan gave a very detailed account of his experience in buying and holding a put option on a stock. It’s more risk than I’m willing to take. I’m glad it worked out alright. The stock hit its low in the year on the date of option expiration. I only sell put options on ETFs at prices I’m willing to buy anyway.
Retiree Paralysis: Can I Spend My Money? at Squared Away Blog
It’s hard to figure out how much one can spend because you don’t know how long you will live and what unexpected expenses you will have. If you base spending on a percentage of the current value of your assets, not the value years ago or what you spent last year, you are guaranteed not to run out of money. That requires flexibility in your spending, which is the ultimate weapon against depleting your nest egg.
Investment mistakes your neighbors won’t tell you about by Karin Risi at Vanguard Blog
You won’t have that problem by reading this blog. Mistakes are often only realized in hindsight. I share what I’m doing with my money as it happens or shortly after, when it’s not obvious it will be a mistake. If something turns out to be a mistake, you would already know about it.
A Reminder to All Investors: Bonds Are Not Safe by Zachary Karabell at The Atlantic
Right. Define safe. FDIC-insured CDs are safe from the loss of nominal value but not safe from inflation. I Bonds are safe from both interest rate risk and inflation before taxes but not safe from them after taxes. I like the closing paragraph of the article:
The search for riskless investing is like the search for the fountain of youth, alluring but ultimately fruitless and worse, a trap. … … Risk is part of the sea in which we all swim. You can have too much, but you can’t have none.
Next up: New 10-year TIPS to be auctioned July 18, 2013 by David Enna at TIPS Watch
TIPS yield jumped almost 1% in a short period of time. Is it time to buy? I say not yet.
Solving The Annuity Puzzle – Inflexibility For Handling Potential Health Care Shocks In Retirement by Michael Kitces at Nerd’s Eye View
New research explains why it may be rational not to buy annuity. I wonder whether potential health care shocks are better handled by insurance than by reserving one’s own money.
[Photo credit: Flickr user psd]