VTEB (intermediate munis) has an annualized 30-day trailing yield of 3.43%. In a 4.95% state bracket, the after-tax yield is 3.26%
VGIT (intermediate treasuries) has an annualized 30-day trailing yield of 4.08%. In a 24% Federal tax bracket, the after-tax yield is 3.1%.
An extra 16 basis points of yield would not be enough extra compensation for me to take the extra risks of munis (call risk, liquidity risk, default risk). Default risk can materialize by the yield spread widening (and bond prices going down) in response to increased default risk without having an actual default.
But maybe some other BH's would take the extra 16bps.
VGIT (intermediate treasuries) has an annualized 30-day trailing yield of 4.08%. In a 24% Federal tax bracket, the after-tax yield is 3.1%.
An extra 16 basis points of yield would not be enough extra compensation for me to take the extra risks of munis (call risk, liquidity risk, default risk). Default risk can materialize by the yield spread widening (and bond prices going down) in response to increased default risk without having an actual default.
But maybe some other BH's would take the extra 16bps.
Statistics: Posted by Northern Flicker — Thu Nov 07, 2024 1:13 am