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Investing in Municipal Tax-Free Bond Funds
Old 08-12-2014, 05:40 PM   #1
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Investing in Municipal Tax-Free Bond Funds

Am thinking about investing in a Massachusetts municipal bond fund for its tax-free status, but after doing some research am less convinced. How do others feel about the safety of such a strategy? While there seems to be a low probability of a state defaulting, I can't get around the more than $100 billion of debt that the state has (and many other states are in similar situations). Also, prices could fall if there is fear of a state defaulting in absence of a default.

Also, what determines state tax-free status? If it is advertised as tax-free, does that imply no AMT, and other state funds are state and federally tax-free except for the AMT? How can I compare expense ratios/fees across companies, as I've already found different commissions depending on if the mutual fund is of the same company in which I open a brokerage account, and there are many places where I could open an account: Fidelity, Schwab, Oppenheimer, etc.
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