Any muni investors here?


My husband and I have decided to invest some savings in municipal bonds. I’ve bought a couple of books to read, but I am curious here if anyone on this forum who has experience investing in munis can offer insights about what has worked, what hasn’t worked, and what we should watch out for. Many thanks!


I’m big on muni’s. Love the tax free income!! I get my muni exposure via Vanguards VWITX. 0.19% expense ratio, and ~2% tax free yield. Widely diversified, so any one city going bust isn’t going to crush the fund. Here’s the link to VWITX if you’re interested.


They are a very respectable asset class that are commonly used by taxable investors . Not much more to add to what Fritz said!


Thank you both! We like the idea of intermediate term munis and the tax free income they provide. Will definitely check out the Vanguard fund.


I also invest in VWITX!

The bank I work for does work crazy things with Munis to generate more income so even though it is a ‘bond’, it can definitely earn you more! :wink:


The biggest advice is wherever possible focus on munis only for your own state. Priced into the return is that most states only tax exempt their own states munis. So if you buy out of state your losing out on true inflation implied return. The second recommendation is diversify by buying funds. The spread on individual munis can eat you alive.

I hold a mix of individual munis and muni funds as part of my risk free account. I only hold my local state munis and they are a small relative position due to the lack of significant opportunities in my state.


Amazing Minds!! :slight_smile:


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.


Couldn’t agree more. Since I’m in a high tax bracket, they make sense for me. Absolutely correct in saying the way to evaluate them is to look at “Apples To Apples” comparison of AFTER tax return. Good addition to the discussion.


Yes, good point. We made the decision to invest in Munis after doing the calculations. They make sense for us as we are DINKS and recently got bumped into a higher tax bracket.