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Opinions requested on the use of muni bonds (tax free) ladders to generate income in a taxable account
Do you use them?
Not yet, considering them though.
If no, why?
Would you ever use them? If yes, under what circumstances?
I'm close to retirement and I have a couple CDs but also considering laddering bonds as well.
I don't know enough to give advice, I'm reading up and learning.
My bank CDs are only around 2% seems like I should be able to get something that generates a bit more than that and nontaxable would be nice too.
I wouldn't buy individual munis because the bid-ask can be prohibitive. I suppose if you are 100% positive you would never need to sell them and the after-tax yield was good... well wait, even then I would just buy a low-cost muni bond fund.
I wouldn't buy individual munis because the bid-ask can be prohibitive. I suppose if you are 100% positive you would never need to sell them and the after-tax yield was good... well wait, even then I would just buy a low-cost muni bond fund.
After my father died, I became successor trustee because my mother has dementia. The trust has a large number of municipal bonds, along with some stocks and other holdings. This is a time consuming way of investing. When bond interest rates go down, the bonds are called at the call date. This requires purchasing new bonds. When the prospects for a stock are not good, the stock has to be sold, which creates capital gains. Since I am not taking money out of the brokerage account, this money has to come from the checking account.
And then there are the income tax forms. I took the HR Block income tax course to help me deal with it. If I hired someone to do the taxes, it would have to be someone experienced in investment income, rather than say, earned income credit. I would still have to gather the information, plus pay for the considerable amount of time it would take this person to do the taxes.
My own investments are index funds. The Vanguard Ohio Municipal Bond Index Fund I started last year for myself is much less of a hassle.
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