Why municipal bonds are making a comeback for investors

As the stock market surges to record highs, some investors are turning to a lesser-known but time-tested asset class: municipal bonds. Josh Herlan, founder and CEO of Future You Financial, joined Your Money Matters to explain why these fixed-income investments are getting renewed attention.

Why are municipal bonds making a comeback for investors?

“Gold can help mitigate some volatility. But gold can also be very volatile. And further it's not going to produce any income. Right,” Herlan said. “So another thing to look at right now is we're doing with a lot of clients, is considering more of a investment into municipal bonds.”

According to Herlan, municipal bonds can be especially beneficial for higher net worth clients: “Municipal bonds are simply, you know, giving in disparity, loaning them some money for a fixed period of time, and then they pay you back. And it's the income is federally tax free. And if you buy them within the state of Oklahoma, for example, like Oklahoma Turnpike Authority bonds, the state income tax is also tax free.”

Herlan said bonds are offering better yields now due to the recent run-up in interest rates. “We've had the highest run up and interest rates in the last 40 years or the last couple of years. The markets have held on really strong, and it's really impressive and kind of economic miracle that the markets have done so well.”

As for why bonds are appealing right now: “When interest rates go down, the price of these bonds should come back up.”