Intermediate Tax exempt Bond Fund or money market fund
Hi Terry
I have a diversified brokerage account that contains 75% stock mutual funds 25% money market fund, and no bond funds. I am thinking about putting some of the money market funds into an intermediate term tax exempt bond fund The equivalent tax free yield on the bond fund is less than the yield on the money market fund. I am in the 24% tax bracket and no matter which way I go, I would stay in this tax bracket. Does it make sense to open a tax exempt bond fund? Thank you.
Terry Says
No. It doesn’t make sense unless the low-yielding, but tax-free income works out to your benefit because you are in a high tax bracket. But you knew that!
Maybe open a TreasuryDirect.gov account and buy some 2-year Treasury notes.
Read this, only instead of selecting T-bills, buy slightly longer-term notes.
https://www.terrysavage.com/t-bills-beat-cds/
