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Originally Posted by Catalina36
Keeping ALL of your hard earned cash savings in a bank savings account is a joke. The interest the banks are paying is an insult. I would only keep a enough cash in a bank savings account to access in case of an emergency. Open a brokerage account with TD Ameritrade, Fidelity, or Schwab. Theres a municipal Bond Fund that trades like a stock and pays approx. 5.7% annual interest FEDERAL TAX FREE. Best of All, pays a monthly interest on the first of every month. Yes, the Bond price goes up and down. But really, 5.7% Fed tax Free and a monthly payout. I have been following this Municipal Bond fund for 7 years. I truly believe it's a great fund that should be in your portfolio. Check it out the symbol is IIM.
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IIM is a closed end bond fund, which means that you cannot buy new shares, so you must buy them on the open market. It has a relative high expense ratio of 1.44 percent. It has provided average returns over the years compared to similar funds, but I wouldn't call it great.
An alternative fund would be the Vanguard Tax-Exempt Bond Index Fund Admiral Shares, which has an expense ratio of only 0.09 percent. Another alternative is the Vanguard Long-Term Tax-Exempt Fund, which has an expense ratio of 0.17 percent. These are not a closed end funds, so you can buy new shares directly from Vanguard, with no commission. To me, the Vanguard funds are a better alternative for a tax exempt investment. Vanguard also has three other tax exempt bond funds.
Comparing the total returns for IIM and the two Vanguard funds, IIM performed slightly better than the Vanguard index fund, but not as well as the Vanguard long term fund.