I might be a bit of a contrarian, but I’m not a big fan of municipal bonds unless you are in one of the top tax brackets.
Municipal bonds get sold to the highest bidder, and people in the highest tax bracket will pay the most, because they derive the most tax benefit. Lower tax bracket investors pay the same price, even though the bond is worth less to them.
If municipal bonds offer the same after-tax return as comparable corporate bonds to the highest tax bracket investors, then investors in lower tax brackets may be getting inferior after-tax returns with municipal bonds.
There are diversification beneftis to muni bonds, because Vanguard’s standard total bond fund holds less than 1% muni bonds.