In case you haven’t noticed - Butler Financial, LTD
Important Tax FAQs


In case you haven’t noticed

Doug Drabik discusses fixed income market conditions and offers insight for bond investors.

In general, portfolios can be split into growth assets and principal protecting assets. Growth assets tend to have greater risk coupled with greater income/reward. These assets potentially “grow” your wealth. Principal protecting assets tend to provide less growth with less risks and are meant to keep your wealth intact.

The S&P 500 Index, a gauge for the equity market which is a primary indicator for most growth allocations, has an annualized total return of 6.87% since the turn of the century (23.68 years – 2000 through August 2023).

An investor in the highest federal tax bracket (37%) can buy a 23-year tax-exempt bond with a tax-equivalent yield ranging from 6.4% to greater than 8.0% depending on one’s state of residency and the bond’s state of issuance. An investor can nearly match, or in some cases exceed tax-equivalent yields associated with long-term, growth asset holding periods with more conservative wealth-sustaining assets.

Interest rates have recently reached levels not seen in 15 years. Locking into current yields with individual bonds can sustain your wealth and possibly grow it too, a great secondary benefit. We don’t typically endorse timing the market since judicious investment portfolio management dictates balanced asset allocation regardless of interest rate environments, but current market conditions seem highly favorable to shore up fixed income positions.

Practice proper diversification of asset classes (stock and bonds) and maintain diversified holdings within each class. Timing markets is typically reserved for total return tactical operations but take heed at what the yield curves are offering for fixed income investors. This fixed income window of opportunity may stay open only as long as the Fed maintains its tightening policy.

The author of this material is a Trader in the Fixed Income Department of Raymond James & Associates (RJA), and is not an Analyst. Any opinions expressed may differ from opinions expressed by other departments of RJA, including our Equity Research Department, and are subject to change without notice. The data and information contained herein was obtained from sources considered to be reliable, but RJA does not guarantee its accuracy and/or completeness. Neither the information nor any opinions expressed constitute a solicitation for the purchase or sale of any security referred to herein. This material may include analysis of sectors, securities and/or derivatives that RJA may have positions, long or short, held proprietarily. RJA or its affiliates may execute transactions which may not be consistent with the report’s conclusions. RJA may also have performed investment banking services for the issuers of such securities. Investors should discuss the risks inherent in bonds with their Raymond James Financial Advisor. Risks include, but are not limited to, changes in interest rates, liquidity, credit quality, volatility, and duration. Past performance is no assurance of future results.

Investment products are: not deposits, not FDIC/NCUA insured, not insured by any government agency, not bank guaranteed, subject to risk and may lose value.

To learn more about the risks and rewards of investing in fixed income, access the Financial Industry Regulatory Authority’s website at and the Municipal Securities Rulemaking Board’s (MSRB) Electronic Municipal Market Access System (EMMA) at

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