Sunseter, personally I have a variety of mutual funds but I also buy some individual stocks. If you are less than familiar with investing, I would agree with Plex that index funds or ETFs would be best for the equity portion. But if you have big business experience and are very familiar with reading and understanding annual reports and analyst reports, you can do nicely with a few individual stocks as an addition to your mutual funds.
For the munis I have been buying the bonds themselves at yields of about 5%. I have picked up some AAA and AA rated California munis (our intended retirement location is California so that's what I am buying into). I had already decided that my muni strategy would be to buy and hold, rather than trade. With muni bond funds, you do run some risk of having short term cap gains which will be taxed at a higher rate, and possibly a higher yield, but possibly a lower yield. With munis themselves (as opposed to the funds) you invest your money and you know what you are going to get out of them each year and at the end of the term. Everyone has their own needs, opinions, and strategy around this, but the above is what I have chosen.
Regarding the withdrawl strategy Plex mentions, this is why I have gotten into some higher dividend yield individual stocks in addition to the mutual funds, plus the munis. I am in fact trying to engineer a 3.3-3.5% overall yield including dividends and muni/mm/cash interest, but not the capital gains (you need the cap gains to be re-invested in order for the nest egg to grow and generate larger cash flows in future years - to cover inflation).
I don't have a spreadsheet handy that I can post, but with my situation is not too far from your own (age and dollar terms), and with the calculations I have done, I think you would be able to have a 15% +/- effective tax rate on the divvies and interest in an allocation as I have described, provided it is in a taxable account. If it is in a 401k or IRA, then your taxes will be much higher. In my case, I have not been able to participate in the 401k or IRA for most of my career, so most of my FIRE funding is in taxable accounts.
Hope this helps. If you like I can put together a simple spreadsheet that will illustrate what I am talking about. PM me if you like.
R