Municipal Bond Forum
Key is net-after-tax return
Q
I’m 66 and retired. I’m selling my house and will have about $500,000 to $600,000 to invest in a fixed-return investment. I live in Washington with no income tax and was interested in whether you recommend munis over Treasury bills. I’m of course looking for the highest return on my money as I have no other income and don’t see being able to reinvest any of the interest.
A
James A. Klotz responds:
The answer to your question is likely to be that you need both.
Investing in taxable Treasuries might push you into a tax bracket that would warrant owning some municipal bonds. The key is to achieve the best “net after tax” return. This would probably mean utilizing a blend of Treasuries and munis in the optimum proportions.
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