Quote Of The Week: When Are Muni Bonds The Best Choice?

“When adjusted for a tax rate of 26% or higher, municipal bonds outperformed taxable bonds 65% of the time.”

Fidelity Investments research, comparing annual tax-equivalent versus taxable municipal bond returns, for the twenty-year period 1992-2011.

The Takeaway: Municipal bonds usually pay less income than a comparable taxable bond.  But once taxes are taken into account, the tax-exempt municipal bond often leaves the investor with more after-tax income, making it a better investment. Fidelity’s research suggests that once your overall tax bracket reaches 26%, municipal bonds become very attractive investments.

About Mari Adam

Mari Adam, Certified Financial Planner™ and President of Adam Financial Associates Inc, has been helping individuals and families chart their financial futures for over twenty-five years. Have a question about your financial situation? Ask Mari!

Subscribe to our updates

Stay informed about financial planning and investing issues that impact your life today and tomorrow! (we respect your privacy)

No comments yet.

Leave a Reply