Balancing College Costs and Retirement Needs
The Johnsons, aged 42 and 44, have a combined income of $450,000 and $2.1 million in retirement accounts. With three children aged 8, 12, and 15, they are facing the dual challenge of funding future college educations and ensuring a comfortable retirement. They felt their current bond portfolio was underperforming and not properly aligned with their risk tolerance and financial objectives.
Using the Bond Yield Calculator, Golden Door Asset identified undervalued municipal bonds with a tax-equivalent yield significantly higher than their current taxable bonds. By reallocating $200,000 of their portfolio into these municipal bonds, boasting an average yield of 4%, they stand to generate an additional $8,000 in annual tax-free income. The Tax Equivalent Yield Calculator was used to compare the after-tax returns to other taxable fixed income investments. The Credit Spread Calculator was used to assess the risk premium associated with the selected bonds, ensuring they aligned with the Johnson's risk profile.
The Bond Yield Calculator enabled a precise comparison of various bond offerings, factoring in coupon rates, maturity dates, and market prices to determine the most advantageous investments for the Johnsons. Data was sourced from reputable financial data providers and cross-validated for accuracy.
$8,000 in additional annual tax-free income, plus optimized portfolio risk management.
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