Tax Free Monthly Income at a Discount

per share price is $15.37. Then point four gives the discount (negative number) or premium (positive number) to the current market price: $13.40/$15.37 = .8718. The formula says that we can buy this at 87.2 cents on the dollar.

Source Morningstar
Source Morningstar

So it appears there are many benefits to owning this security.

With every opportunity, risks exist. To the right of 4, we note that this security has traded, on average, at a discount to the market for some time. And, it may stay at a discount. However, markets do discover discounts and remove them when it believes pricing is unwarranted.

The discount is one of the variables I look at and evaluate to overall risk in light of value.

Another risk, is interest rate risk.  If the Fed or market starts raising the rates, it may put pressure on the price of this security.

These and other risks must be considered in light of one’s personal situation.

In closing, volatile markets scare people. Fear creates opportunity for the prepared.  If you keep your eye on a hand full of quality securities, the market will probably afford you an opportunity to acquire them at a discount – the key is knowing the asset. This is a great tool to add to your monthly income stream.

This article is for educational purposes. Each individual must research and make his own investment and business decisions.



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