Should a resident go into municipal bonds or regular bonds?

[sliceofbread136]

Is it better to go into a regular taxable bond fund and then transition to a municipal bond fund when you start getting an attending salary? Or just buy and hold a municipal bond fund now???

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[sliceofbread136]

And just to clarify I’m keeping the percent low like 10% for now. I know I could get buy with 0% of my investments in bonds but having the 10% would help me feel a bit better about volatility

 

[NITRAS]

Remember long term capital gains tax rate is 15% until your incomes gets really high. Then it’s 20%.

I don’t recommend bonds. that’s not the question you asked. Municipal bonds are just crummy investments.

 

[BoolaHI]

If it’s security and a better tax position, then it’s municipal bonds—why— regular bonds are generally issues by larger companies s to raise capital. When a company issues bonds, it agrees to pay its bondholders a certain amount of interest over a preset period of time and then repay their principal investments at a predetermined date. As an investor, you can make money by collecting those interest payments for as long as you hold your bonds. However, those interest payments will be subject to taxes. This means that if you buy corporate bonds paying $800 in interest annually and your effective tax rate is 25%, you'll lose $200 of that income to taxes.