I need to purchase either muni bonds or index funds as we have NO debt and gross income over $250,000.
What muni bonds and index funds would you choose if you had 10 years to retire and in the 33% tax bracket?
Which one do you want to purchase? the muni bond or the index fund [I'm assuming to mean stock index funds here]? If you've still got room in your tax deferred accounts, I'd put the bonds in there, and use the taxable account for tax efficient index funds/etf's.
Vanguard has very tax efficient stock index funds:
VFINX [S&P 500 index fund]
VTSMX [total stock market fund]
VLACX [large cap index fund]
VTGIX [tax managed growth and income]
VMCAX [tax managed capital appreciation]
VTMGX [tax managed international]
VTMSX [tax managed small cap]
VTMFX [tax managed balanced]
on the MD muni bond side:
ewwww... Legg Mason's
LMMDX has an expense ratio of 0.70%. TRP's
MDXBX [int term bond] and
PRMDX [short term bond] are cheaper.
If I had to hold both stocks and bonds in a taxable account, I'd probably go with a combo of VTSMX [total stock market fund], VTMGX [tax managed international], and MDXBX. But it really depends on what complimentary holdings you've got in tax deferred.
- Alec
