Does it ever make sense to purchase muni-bonds from a municipality you do NOT live in?
Answers
541 points
Creezy answered 7 months ago …
Depends on if you have a city tax or not. If you do, then it probably only makes the most sense to buy muni's from your local gov't. Otherwise, you're still getting hit with the local tax on any income from the other bonds.
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698 points
7million7years answered 7 months ago …
A special type of MUNI bond can have a special place in a special portfolio:
1. The Special Portfolio: a retirement portfolio (you want income + protection of capital against inflation)
2. The Special Place: OUTSIDE of your ROTH IRA (or other tax vehicle)
3. The Special Type: An Inflation-Protectected MUNI (not all MUNI's have these)
All three of these conditions must exist ... basically, if you have too much money to sit inside a tax-protected vehicle, then inflation protected MUNI' are useful, because they are tax-free (Feb and State) as DIRECT investments whereas TIPS (Inflation-Protected Treasury Bonds) are ONLY tax exempt in something like a ROTH IRA.
If your prime concern is NOT retirement AND inflation-protection ... don't bother! There are far better uses for your money than bonds ... esp. MUNI's.
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