Today I added a tax free muni fund to my portfolio.
- NEA: 110 shares @ $14.55 --- Yield 5.15% (Tax exempt)
Total capital invested is $1607.12 and will add $90.00 to my yearly dividends.
Munis have been on an insane run lately, but NEA has finally dropped about 4.5% in the last 3 days from $15.22 to the $14.50 range. I would love to further increase the position if a larger pullback happens.
Forward dividends are around $2750.
DEFY MEDIOCRITY
Nice addition, I already have a muni bond etf but this one looks a bit cheaper than mine. What are the fees on NEA ?
ReplyDeleteCaptain,
DeleteThe fees are pretty high at about 1.4%. It looks like NEA spiked 1.1% today to 14.73 so my fees are almost covered. Lol
In all seriousness, I plan to add more interest bearing assets to my portfolio in the coming years. I like the tax free aspect of NEA as my top personal tax rate has been in the 33% range during the last few years.
MDP
NEA looks great. Maybe they are Puerto Rican bonds? Or CHI?
ReplyDeleteNNL,
DeleteThey have 387 different bonds across a lot of municipalities.
http://portfolios.morningstar.com/fund/holdings?t=nea
Pretty good discount to NAV here. That is a great tax-equivalent yield.
ReplyDeleteI've been digging into CA muni CEFs lately and Nuveen was the winner for me too. You're right about the crazy run up in prices. The CA funds are even worse.
NAC is basically this same fund profile, but only California holdings so we get state income tax advantage too.
I'm going to use the sharebuilder automatic investing plan to average into the position over time with monthly funds I saved from recently refinancing the house. First investment is scheduled for next Tuesday.
I will have to keep an eye on the discount to NAV though. I can't let it run completely on autopilot. Blackrock has a pretty good one too (MCA) that still has a slight discount. I'll probably end up with a mix of different funds.
catfishwizard,
DeleteI will have to check MCA. I will probably treat NEA like my 401k investments and add to the position periodically to smooth things out. I like the tax free payments, yet fully understand a 20-30% move in either direction is entirely possible. Over time I certainly want more debt instruments in the portfolio so I will be looking at several different opportunities. I don't mention it much, but I also have about $6k investing in Lending Club notes as well.
MDP
MCA is another Cali fund. You're not in CA are you?
DeleteI really like the CEFA.com fund selector to learn about new CEFs. There are a ton of muni funds.
Careful though. Don't trust the published metrics (like yield)...they don't update frequently. Morningstar is more better for deeper dive.
Debt instruments are a good part of diversification... I believe even in the accumulation phase.
We put $3k into lending club as an experiment too. It's pretty neat. We'll see what it does in the next recession though. I kind of wonder if their algorithms are right.