Municipal bonds are now offering extremely attractive short term interest, beating out comparable Treasuries. They are a great source of tax free income. This is new and may not last very long.
Volatility in the market has created new opportunities. You no longer have to be in the highest income tax brackets to benefit from current municipal rates. Municipals offer Federal tax free income, and if they are from your state of residence, they are also free of State taxes. This makes a huge difference when you are looking for safe income at very good rates.
Today, it is possible to get 4% or more in yields from municipals going out fewer than 10 years. That's comparable to Treasury yields well over 6% (when you compensate for Federal taxes) even when you are in a 35% tax bracket.
Municipals have become a very good investment opportunity for a much larger number of people, at all tax brackets, than ever before.
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