Why buying NYC bonds could pay off even if Zohran Mamdani becomes mayor

A crazed socialist who knows little about private sector employment because he never held a real job could be running New York City – which seems like the biggest sell signal imaginable if you’re one of those Gothamites who own “tax-free” municipal bonds issued by the Big Apple.But there’s a good case to be made for playing an investment long game even if Zohran Mamdani becomes mayor.Full disclosure: I hold NYC bonds, so I’ve done more than a little work on this issue.Muni’s — as they are known in the market – don’t get the respect they deserve from investment advisers because of the business media’s obsession with the stock market and the next hot tech company.But they deserve your consideration: If you have a few bucks, they offer immense tax advantages.

They are triple-tax free — free of city, state and federal taxes — when you buy a bond issued by the city or town where you live.Given the high-taxes in New York City, and New York State, you can see why they’re a good deal.If you hold to the time they mature, you don’t have to worry about any adverse market moves.

You just sit back and clip coupons.NYC muni returns seem a lot lower than stocks, but remember they’re not taxed.Here’s where things can get dicey if you’re a muni holder.

It’s rare but municipalities have been known to file for bankruptcy and screw bond holders.Puerto Rico did that not too long ago, same with Detroit and Orange County, Calif., back in the 1990s.

NYC came close in the 1970s during the infamous financial crisis, but it avoided a full-on default.The city’s budget under Eric Adams is pretty solid today for all Gotham’s problems.But remember defaults do occur when fiscal leaders spend more than they have.Mamdani, if you take him at his word, wants to spend money like crazy and tax rich people and businesses so much that they will have little choice but to keep moving to Florida.

It should be a recipe for default, and at least lower muni-bond pr...