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Re: Thinking of investing in muni bond fund, but in low tax bracket, worthwhile?

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It's really not possible to give you the 'best' option for your bond investments. It depends on how much risk you want to assume, among some other factors.

   I'm a junk bond investor.  Something like Fidelity Capital and Income will get you a 4.8% (30-day) yield (of course, taxable). Total return is over 5%. I don't know if that kind of fund would interest you.


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Thinking of investing in muni bond fund, but in low tax bracket, worthwhile?

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I am 61 yrs old, retired, no pension, plan on applying for SS at 67. Since I want to increase my bond allocation and I cannot put anymore in my tax deferred accounts, I guess I will have to add bond fund(s) to my taxable account. I live in Mass and was thinking of buying VMATX (Vanguard MA Tax Exempt) The 30 day SEC yield is 2.80% which translates to a tax equivalent yield of 3.353%. My federal rate is 12% and state, 5.1%

I read that muni funds are best for high tax bracket investors but when I compare VMATX to two other funds I was considering, VMATX is higher. The other funds were VSIGX (Vanguard Intermediate Term Treasury) 30 day yield of 2.52% and VTABX (Vanguard Total International Bond Index) 30 day yield of .93%

With my dividend income at present, I am not paying any federal tax. I do have 3-4 years expenses in CD's, savings account, etc. to ride out market corrections. Looking for advice as to what are my best options for bonds in taxable account and to possibly lower taxes paid to state.

Thanks

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