How To Liquidate Municipal Bond Portfolio ?
Municipal bonds are primarily debt obligations that are issued by state or local governments to raise money for public projects like building schools, universities, hospitals, highways and roads. Municipal bonds are attractive for investors because all the bonds are exempt from federal income tax and sometimes, they are also exempt from state and local income taxes. |
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Usually municipal bonds are great demand because of the tax exemption feature, and that is why an investor should not have a problem if he wants to liquidate his bond portfolio.
There is no central location to sell bonds. Therefore, when you want to liquidate your municipal bond portfolio, you would have to locate a dealer or broker in the secondary market. This market is also known as the over-the-counter (OTC) market. However, make sure that you only deal with brokers who are registered with Municipal Securities Rulemaking Board.
Once you have located a dealer, inform him that you want to liquidate your municipal bond portfolio. This will prompt the dealer to place your bonds for sale in the secondary market and he will accept the offer from the highest bidder.
However, you should only sell your municipal bond portfolio if you are sure you realize profits. The only way to do this is to check the prevailing interest rates. Remember, when interest rates are high, the value of your bonds will fall. And when interest rates are low, the value of your municipal bonds will increase. Therefore, you should be looking to sell your portfolio only when the interest rates are low.
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