Personal Investment & Financial Planning Q`s/Mutual fund investing


can you explain the pros & cons of investing in:
Rochester Muni Fund CL A SHS???
we are in our mid 40"s & have approx $150K to invest.
we heard this will produce interst/income as well as growth. true??
any down side to this investment?

Hi Darlene. You may have only been told 1/2 the story in regards to what to expect with this bond fund (or any bond fund for that matter) so I will try to explain in more detail. All bond funds have a potential return that is based on the amount of income they pay out (interest income) as well as an increase (or decrease) in the underlying value of the fund. As interest rates go up, the interest income you receive from the fund should go up accordingly. However, as interest rates go up, there is the possibility that the underlying value of the fund can go down. This potential price and value movement is based primarily on what is called the funds "duration". Duration is a measurement of sensitivity to interest rate movements. The longer the duration, the more sensitive a funds value change is to interest rates changes. For example, a fund with a 5 year duration would be expected to go down in value by 5% for every 1% increase in interest rates. A 3 year duration would result in a 3% decline and a 10 year duration would result in a 10% decline. With that being said, although there are other factors that could impact the value of the fund, the duration is a great place to start so you understand the risks associated with what will inevitably be higher interest rates. I hope this helps.

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John D Smith, CFP


I can answer detailed questions regarding mutual fund investing, retirement planning, education planning and related comprehensive wealth management and investment concerns.


I have been providing fee only investment management and comprehensive wealth management services for the past 19 years.

I have a degree in Financial Planning & Counseling and I am also a Certified Financial Planner practitioner.

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