Should I keep cash in 4.88% money market or move to muni funds?
Should I keep cash in 4.88% money market or move to muni funds?
I have about $80k cash at the moment primarily from payout of a land sale in my family. It's in a Vio money market that currently has a 4.88% APY. In order to stay within my AA bands, when I invest it, I need to move some of it to equities and some to my muni funds, in my brokerage. Reason being, my Roth is all equities and I don't want to hold any bonds there, and my 401k is all bonds.
My question is, when I invest some of the cash in equities, should I keep the rest of it where it is, since it's earning 4.88%? My muni funds, Vanguard NY munis and Vanguard natl tax exempt, are at 1.52% and 0.0% YTD.
My tax liability is high. Fed tax rate this year is 35%. My city and state are 10.7%.
My question is, when I invest some of the cash in equities, should I keep the rest of it where it is, since it's earning 4.88%? My muni funds, Vanguard NY munis and Vanguard natl tax exempt, are at 1.52% and 0.0% YTD.
My tax liability is high. Fed tax rate this year is 35%. My city and state are 10.7%.
- White Coat Investor
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Re: Should I keep cash in 4.88% money market or move to muni funds?
Requires a crystal ball to answer this question correctly. If rates stay like they are or rise, the answer is MMF. If rates fall, the answer is bonds. Whether you choose the muni or non-muni flavor is an unrelated question and you shouldn't conflate the two. That question has more to do with the current rate differential between the two and your tax bracket.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy |
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Re: Should I keep cash in 4.88% money market or move to muni funds?
Vanguard NY Muni bond fund is paying 3.57% completely tax free for you for the investor class, and 3.65% for admiral class. That’s way higher than your 4.88% becomes after-tax on the money market
Vanguard national muni ETF, VTEB, is yielding 3.44%, which is again more yield than your money market
Furthermore, if this money is for retirement rathe than an upcoming purchase, it should be longer duration than a money market anyway
Vanguard national muni ETF, VTEB, is yielding 3.44%, which is again more yield than your money market
Furthermore, if this money is for retirement rathe than an upcoming purchase, it should be longer duration than a money market anyway
Crom laughs at your Four Winds
- Hacksawdave
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Re: Should I keep cash in 4.88% money market or move to muni funds?
Well, as you are in the 35% bracket you also are assessed the NIIT tax at 3.8% for non-municipal investment income. So, we are now taxed at 49.5% or half of what an ordinary income fund will produce.
Let’s take a look at last month’s distribution per share and yield (not the SEC stated yield) of a few funds with that $80K accounting for 2022 USGOs and minus taxes.
Fund Per Share $ Gross Div. Minus Taxes After Tax
VMRXX Cash Res MM $0.004256 $340.48 $168.54 $171.94
N/A Taxable CD $0.004067 $325.36 $161.05 $164.31
VMSXX Nat TF MM $0.002645 $211.60 $18.44 $193.16
VYFXX NY TF MM $0.002599 $207.92 $207.92
VNYUK NY TF Longs $0.028435 $213.00 $213.00
If it is long term money, the Vanguard NY long-term bond admiral class is the highest after-tax return. If it is for shorter term, then the NY MM is the beast place.
Let’s take a look at last month’s distribution per share and yield (not the SEC stated yield) of a few funds with that $80K accounting for 2022 USGOs and minus taxes.
Fund Per Share $ Gross Div. Minus Taxes After Tax
VMRXX Cash Res MM $0.004256 $340.48 $168.54 $171.94
N/A Taxable CD $0.004067 $325.36 $161.05 $164.31
VMSXX Nat TF MM $0.002645 $211.60 $18.44 $193.16
VYFXX NY TF MM $0.002599 $207.92 $207.92
VNYUK NY TF Longs $0.028435 $213.00 $213.00
If it is long term money, the Vanguard NY long-term bond admiral class is the highest after-tax return. If it is for shorter term, then the NY MM is the beast place.
Re: Should I keep cash in 4.88% money market or move to muni funds?
I think the math says the muni funds are the right answer, but be ready for some swings.
Your situation makes me appreciate living in Tennessee. The current money market rates are a wonderful boon I'm enjoying. My emergency fund and next car sinking fund are giving me some more money each month to throw at VTSAX.
Re: Should I keep cash in 4.88% money market or move to muni funds?
Where do you get the 3.57%/3.65% from?muffins14 wrote: ↑Fri Jun 09, 2023 10:00 am Vanguard NY Muni bond fund is paying 3.57% completely tax free for you for the investor class, and 3.65% for admiral class. That’s way higher than your 4.88% becomes after-tax on the money market
Vanguard national muni ETF, VTEB, is yielding 3.44%, which is again more yield than your money market
Furthermore, if this money is for retirement rathe than an upcoming purchase, it should be longer duration than a money market anyway
Re: Should I keep cash in 4.88% money market or move to muni funds?
I hear ya. State+city is brutal. Now that I'm working remotely and it's so commonplace, I've contemplated relocating, at least to avoid city tax. I enjoy NYC but I've lived here a long time now.btq96r wrote: ↑Fri Jun 09, 2023 1:36 pmI think the math says the muni funds are the right answer, but be ready for some swings.
Your situation makes me appreciate living in Tennessee. The current money market rates are a wonderful boon I'm enjoying. My emergency fund and next car sinking fund are giving me some more money each month to throw at VTSAX.
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Re: Should I keep cash in 4.88% money market or move to muni funds?
Vanguard New York Long-Term Tax-Exempt Fund Investor SharesAguilar wrote: ↑Fri Jun 09, 2023 6:55 pmWhere do you get the 3.57%/3.65% from?muffins14 wrote: ↑Fri Jun 09, 2023 10:00 am Vanguard NY Muni bond fund is paying 3.57% completely tax free for you for the investor class, and 3.65% for admiral class. That’s way higher than your 4.88% becomes after-tax on the money market
Vanguard national muni ETF, VTEB, is yielding 3.44%, which is again more yield than your money market
Furthermore, if this money is for retirement rathe than an upcoming purchase, it should be longer duration than a money market anyway
Vanguard New York Long-Term Tax-Exempt Fund Admiral Shares
Taxable Equivalent Yield
Time is your friend; impulse is your enemy - John Bogle |
Learn every day, but especially from the experiences of others, it's cheaper! - John Bogle
Re: Should I keep cash in 4.88% money market or move to muni funds?
These are the SEC yields of the funds, which are the best estimates of the yields looking forward. Regardless of what a bond did in the past, if its current yield to maturity is 4%, then you will earn 4% if you hold that bond to maturity and it does not default. The SEC yield of a muni fund is the average yield to maturity (or yield to call if a bond is likely to be called) of all its bonds, minus the expense ratio.Aguilar wrote: ↑Fri Jun 09, 2023 6:55 pmWhere do you get the 3.57%/3.65% from?muffins14 wrote: ↑Fri Jun 09, 2023 10:00 am Vanguard NY Muni bond fund is paying 3.57% completely tax free for you for the investor class, and 3.65% for admiral class. That’s way higher than your 4.88% becomes after-tax on the money market
Vanguard national muni ETF, VTEB, is yielding 3.44%, which is again more yield than your money market
Furthermore, if this money is for retirement rather than an upcoming purchase, it should be longer duration than a money market anyway
In general, I recommend that investors in a high tax bracket in NYC hold NY munis in taxable and stocks in tax-deferred, in preference to stocks in taxable and taxable bonds in tax-deferred. The reason is that they pay much higher tax than most investors on taxable stock investments (15% or 20% federal + 10.7% city and state + 3.8% NIIT = 28.5% or 33.5%), so they get a larger benefit than usual from tax deferral; meanwhile, they get no more benefit from tax-deferring bonds than any other investors, as long as the bonds are NY munis.
Re: Should I keep cash in 4.88% money market or move to muni funds?
The Vanguard website pages for each investment show the yieldAguilar wrote: ↑Fri Jun 09, 2023 6:55 pmWhere do you get the 3.57%/3.65% from?muffins14 wrote: ↑Fri Jun 09, 2023 10:00 am Vanguard NY Muni bond fund is paying 3.57% completely tax free for you for the investor class, and 3.65% for admiral class. That’s way higher than your 4.88% becomes after-tax on the money market
Vanguard national muni ETF, VTEB, is yielding 3.44%, which is again more yield than your money market
Furthermore, if this money is for retirement rathe than an upcoming purchase, it should be longer duration than a money market anyway
Crom laughs at your Four Winds
Re: Should I keep cash in 4.88% money market or move to muni funds?
As an FYI, at lower income levels than 500k, you get a property tax deduction. Even moreso when you are a senior. Additionally there is no NY tax on social security and the first 20k or so of retirement income is also not taxedAguilar wrote: ↑Fri Jun 09, 2023 6:57 pmI hear ya. State+city is brutal. Now that I'm working remotely and it's so commonplace, I've contemplated relocating, at least to avoid city tax. I enjoy NYC but I've lived here a long time now.btq96r wrote: ↑Fri Jun 09, 2023 1:36 pmI think the math says the muni funds are the right answer, but be ready for some swings.
Your situation makes me appreciate living in Tennessee. The current money market rates are a wonderful boon I'm enjoying. My emergency fund and next car sinking fund are giving me some more money each month to throw at VTSAX.
Crom laughs at your Four Winds
Re: Should I keep cash in 4.88% money market or move to muni funds?
It doesn't matter what the YTD returns are.
The question you need to answer is:
- What duration do you want for the non-equity funds?
The only "Vanguard NY muni bond" fund I see is VNYTX (Vanguard New York Long-Term Tax-Exempt Fund Investor Shares), with an average maturity of 16.2 years and average duration of 7.4 years.
Note that there is also VYFXX (Vanguard New York Municipal Money Market Fund), which is currently earning 3.13%. That's effectively a duration of zero.
So... do you want money market or do you want intermediate/long-term?
Answer the duration question and then invest accordingly.
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next." ~Ursula LeGuin
Re: Should I keep cash in 4.88% money market or move to muni funds?
I intend to hold the investment at least 15 years.Beensabu wrote: ↑Fri Jun 09, 2023 11:40 pmIt doesn't matter what the YTD returns are.
The question you need to answer is:
- What duration do you want for the non-equity funds?
The only "Vanguard NY muni bond" fund I see is VNYTX (Vanguard New York Long-Term Tax-Exempt Fund Investor Shares), with an average maturity of 16.2 years and average duration of 7.4 years.
Note that there is also VYFXX (Vanguard New York Municipal Money Market Fund), which is currently earning 3.13%. That's effectively a duration of zero.
So... do you want money market or do you want intermediate/long-term?
Answer the duration question and then invest accordingly.
Re: Should I keep cash in 4.88% money market or move to muni funds?
Thanks for the explanation.grabiner wrote: ↑Fri Jun 09, 2023 9:35 pm
These are the SEC yields of the funds, which are the best estimates of the yields looking forward. Regardless of what a bond did in the past, if its current yield to maturity is 4%, then you will earn 4% if you hold that bond to maturity and it does not default. The SEC yield of a muni fund is the average yield to maturity (or yield to call if a bond is likely to be called) of all its bonds, minus the expense ratio.
In general, I recommend that investors in a high tax bracket in NYC hold NY munis in taxable and stocks in tax-deferred, in preference to stocks in taxable and taxable bonds in tax-deferred. The reason is that they pay much higher tax than most investors on taxable stock investments (15% or 20% federal + 10.7% city and state + 3.8% NIIT = 28.5% or 33.5%), so they get a larger benefit than usual from tax deferral; meanwhile, they get no more benefit from tax-deferring bonds than any other investors, as long as the bonds are NY munis.
Considering you pay cap gains on equity sales held over a year (and not taxes based on your marginal income tax rate), why would it be better for a NYC resident, in general, to hold stocks in tax-deferred vs their taxable account?
My taxable account is mainly equities, plus some munis, and my entire 401k is bonds.
Re: Should I keep cash in 4.88% money market or move to muni funds?
There you go then.
It's almost perfect for that time period, isn't it? Average maturity almost matches and average duration is about half.
VNYTX (Vanguard New York Long-Term Tax-Exempt Fund Investor Shares), with an average maturity of 16.2 years and average duration of 7.4 years
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next." ~Ursula LeGuin
Re: Should I keep cash in 4.88% money market or move to muni funds?
For CA residents in a very similar tax bracket (and NIIT), are VCLAX (3.52%) and VCITX (3.44%) the equivalent funds? I'm currently invested in VCAIX (which seem to be intermediate funds as opposed to long term) which shows 3.08%. Should I swap out into the long term funds?
Also another question is I don't have a Vanguard account, only Etrade, which doesn't have the two admiral funds. I don't have an account at Merrill Edge, but was considering opening an account with them (for Preferred Rewards). The admiral funds show up on the Merrill Edge site if I search for them, but it's not clear if they allow buying these funds there. Can anyone confirm?
Thank you!
Also another question is I don't have a Vanguard account, only Etrade, which doesn't have the two admiral funds. I don't have an account at Merrill Edge, but was considering opening an account with them (for Preferred Rewards). The admiral funds show up on the Merrill Edge site if I search for them, but it's not clear if they allow buying these funds there. Can anyone confirm?
Thank you!
Re: Should I keep cash in 4.88% money market or move to muni funds?
Tax efficiency is relative; the investments you should hold in your taxable account are those which lose the least to taxes.Aguilar wrote: ↑Sat Jun 10, 2023 8:20 amThanks for the explanation.grabiner wrote: In general, I recommend that investors in a high tax bracket in NYC hold NY munis in taxable and stocks in tax-deferred, in preference to stocks in taxable and taxable bonds in tax-deferred. The reason is that they pay much higher tax than most investors on taxable stock investments (15% or 20% federal + 10.7% city and state + 3.8% NIIT = 28.5% or 33.5%), so they get a larger benefit than usual from tax deferral; meanwhile, they get no more benefit from tax-deferring bonds than any other investors, as long as the bonds are NY munis.
Considering you pay cap gains on equity sales held over a year (and not taxes based on your marginal income tax rate), why would it be better for a NYC resident, in general, to hold stocks in tax-deferred vs their taxable account?
The tax cost of holding munis in a taxable account is the difference between yields on taxable and tax-exempt bonds of comparable risk. My rule of thumb is that this is about 25% of the taxable yield; if you hold a taxable bond fund yielding 4% in an IRA, you could hold a muni fund yielding 3% in a taxable account without taking more risk. The current yield on Admiral shares of Vanguard NY Long-Term Tax-Exempt is 3.66%, which suggests a 1.22% tax cost for holding munis.
The tax cost of holding stocks in a taxable account is the tax on the dividends, and the tax on the capital gains when you sell. If you are paying 33.5% tax on qualified dividends and long-term gains, and your fund has a 2% yield, you lose 0.67% to taxes every year. In addition, you lose 33.5% of your gains to capital-gains tax when you sell. If you sell after 20 years for a gain that is 2/3 of your share price, that is another 22.3% lost to taxes, which is an annualized loss of 1.25% (slightly more than 1/20 of the total loss because of negative compounding). So you are looking at a 1.92% annual loss for holding stocks in a taxable account.
Now consider the same calculation for an investor in a no-tax state who is not in the top bracket for qualified dividends and long-term gains. They pay 18.8% tax on qualified dividends and long-term gains, so the annual tax cost of the stock investment is 0.38%, and the tax when sold, if it is 12.5%, is another 0.67%. This is a total tax cost of 1.05%, which is less than the current tax cost on munis. Therefore, at current bond yields, I recommend that such investors buy stock in a taxable account. (The situation is similar for investors who do pay state income tax and have no low-cost muni fund for their state; the state tax has comparable effect on both stocks and out-of-state munis.)
(edited to fix quoting)
Last edited by grabiner on Sun Jun 11, 2023 7:34 pm, edited 1 time in total.
Re: Should I keep cash in 4.88% money market or move to muni funds?
I think it may differ a little depending on when one retires and what income they are making.
For example in 20 years maybe one is retired, getting 15% capital gains and 10% state tax for capital gains in taxable vs 22% federal tax plus 10% state tax for an IRA withdrawal. I imagine that reduces the benefit of your scenario, perhaps?
In NY, 20k of IRA withdrawals are also tax-free
For example in 20 years maybe one is retired, getting 15% capital gains and 10% state tax for capital gains in taxable vs 22% federal tax plus 10% state tax for an IRA withdrawal. I imagine that reduces the benefit of your scenario, perhaps?
In NY, 20k of IRA withdrawals are also tax-free
Crom laughs at your Four Winds
- Hacksawdave
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- Joined: Tue Feb 14, 2023 4:44 pm
Re: Should I keep cash in 4.88% money market or move to muni funds?
I own all three of the Vanguard CA tax-exempt funds. If you are planning on a large holding in the future, it makes sense to use the Admiral Class issues as they are almost half the cost. A $500,000 investment would have a $400 annual difference between the share classes. It would be a personal preference if you decided less statements are worth paying more for. I don’t know how Merrill works.diyer1 wrote: ↑Sat Jun 10, 2023 8:02 pm For CA residents in a very similar tax bracket (and NIIT), are VCLAX (3.52%) and VCITX (3.44%) the equivalent funds? I'm currently invested in VCAIX (which seem to be intermediate funds as opposed to long term) which shows 3.08%. Should I swap out into the long term funds?
Also another question is I don't have a Vanguard account, only Etrade, which doesn't have the two admiral funds. I don't have an account at Merrill Edge, but was considering opening an account with them (for Preferred Rewards). The admiral funds show up on the Merrill Edge site if I search for them, but it's not clear if they allow buying these funds there. Can anyone confirm?
Thank you!
As I don’t see enough information, I don’t know what your profile is like on age, holdings, or taxes. If you are young and hitting the NIIT tax already, the longs do make sense to start buying. I built my tax-exempt holdings over time (1997 for the MM and Intermediates) but did not purchase the Longs until 2018 before I was retired.
Some more info would be helpful.
Re: Should I keep cash in 4.88% money market or move to muni funds?
Now I understand. Since moving existing equities in my taxable to tax deferred would require selling the equity fund shares for munis, I'd incur a huge tax bill. what do you recommend I do?grabiner wrote: ↑Sat Jun 10, 2023 8:30 pmTax efficiency is relative; the investments you should hold in your taxable account are those which lose the least to taxes.Aguilar wrote: ↑Sat Jun 10, 2023 8:20 amThanks for the explanation.grabiner wrote: In general, I recommend that investors in a high tax bracket in NYC hold NY munis in taxable and stocks in tax-deferred, in preference to stocks in taxable and taxable bonds in tax-deferred. The reason is that they pay much higher tax than most investors on taxable stock investments (15% or 20% federal + 10.7% city and state + 3.8% NIIT = 28.5% or 33.5%), so they get a larger benefit than usual from tax deferral; meanwhile, they get no more benefit from tax-deferring bonds than any other investors, as long as the bonds are NY munis.
Considering you pay cap gains on equity sales held over a year (and not taxes based on your marginal income tax rate), why would it be better for a NYC resident, in general, to hold stocks in tax-deferred vs their taxable account?
The tax cost of holding munis in a taxable account is the difference between yields on taxable and tax-exempt bonds of comparable risk. My rule of thumb is that this is about 25% of the taxable yield; if you hold a taxable bond fund yielding 4% in an IRA, you could hold a muni fund yielding 3% in a taxable account without taking more risk. The current yield on Admiral shares of Vanguard NY Long-Term Tax-Exempt is 3.66%, which suggests a 1.22% tax cost for holding munis.
The tax cost of holding stocks in a taxable account is the tax on the dividends, and the tax on the capital gains when you sell. If you are paying 33.5% tax on qualified dividends and long-term gains, and your fund has a 2% yield, you lose 0.67% to taxes every year. In addition, you lose 33.5% of your gains to capital-gains tax when you sell. If you sell after 20 years for a gain that is 2/3 of your share price, that is another 22.3% lost to taxes, which is an annualized loss of 1.25% (slightly more than 1/20 of the total loss because of negative compounding). So you are looking at a 1.92% annual loss for holding stocks in a taxable account.
Now consider the same calculation for an investor in a no-tax state who is not in the top bracket for qualified dividends and long-term gains. They pay 18.8% tax on qualified dividends and long-term gains, so the annual tax cost of the stock investment is 0.38%, and the tax when sold, if it is 12.5%, is another 0.67%. This is a total tax cost of 1.05%, which is less than the current tax cost on munis. Therefore, at current bond yields, I recommend that such investors buy stock in a taxable account. (The situation is similar for investors who do pay state income tax and have no low-cost muni fund for their state; the state tax has comparable effect on both stocks and out-of-state munis.)
(edited to fix quoting)
Age: 41
My tax liability: Fed tax rate in 2023 is 35%. My city and state are 10.7%. Plus NIIT.
My portfolio:
Account / Fund / Value / Type
401k (vested balance) Fid US Bond Index $349,162.30 Bond Market
Brokerage VFWAX $163,000.00 Equities: Intl
Brokerage VMLTX $124,500.00 Bonds: Munis Natl
Brokerage VNYTX $129,500.00 Bonds: Munis NY
Brokerage VTIAX $27,000.00 Equities: Intl
Brokerage VTSAX $1,124,600.00 Equities: US
Roth IRA IXUS $37,969.00 Equities: Intl
Roth IRA VFIAX $73,781.00 Equities: US
Roth IRA VTIAX $19,295.00 Equities: Intl
Roth IRA VTSAX $160,680.00 Equities: US
iBonds $25,000.00 Bonds: iBonds
Treasury Bonds $2,000.00 Bonds: Treasury
Vio Bank MM (4.88% APY) $98,573.00 Cash
BofA Checking/Savings $3,600.00 Cash
TOTAL $2,338,660.30
Target AA: 72/28 (age-13)
Stocks $1,606,325.00 71.82%
Bonds $630,162.30 28.18%
(Cash excluded from AA calc)
US Stocks $1,359,061.00 84.61%
Intl Stocks $247,264.00 15.39%
Cash $102,173.00
My tentative plan is to transfer $90k cash to my brokerage in 3 installments over the next 3 months. To maintain my AA, I'd put 72% of the $90k into VTSAX and the rest in my two muni funds, split evenly. The rest (including new work earnings) would remain in cash as my roughly $20k emergency fund.
My brokerage is with eTrade and they don't offer admiral shares of all my funds, which is why I have some investor shares. I was originally with Vanguard and 4 years ago switched to eTrade to get a generous promotional offer from them, not realizing at the time that they didn't have Admiral shares for all my funds. Unfortunately, when I made the switch I unknowingly locked in average cost basis for all covered shares of VTSAX, which sucks. My other equity funds were set to Specific ID. All my covered shares for my equity funds since the move to eTrade are set to Specific Lot. I could move my brokerage back to Vanguard, to get access to Admiral shares again. Worth it?
Re: Should I keep cash in 4.88% money market or move to muni funds?
I wouldn't sell any taxable stocks for a capital gain, as this eliminates the tax benefit. For new money and dividends, invest in a bond fund. You can also use your taxable stocks for charitable contributions.
The benefit of Admiral shares is a saving of eight basis points on the muni funds. With your current holding of $250K, eight basis points is $200 per year (and going up as you add new money); you can decide whether that is worth it.My brokerage is with eTrade and they don't offer admiral shares of all my funds, which is why I have some investor shares. I was originally with Vanguard and 4 years ago switched to eTrade to get a generous promotional offer from them, not realizing at the time that they didn't have Admiral shares for all my funds. Unfortunately, when I made the switch I unknowingly locked in average cost basis for all covered shares of VTSAX, which sucks. My other equity funds were set to Specific ID. All my covered shares for my equity funds since the move to eTrade are set to Specific Lot. I could move my brokerage back to Vanguard, to get access to Admiral shares again. Worth it?
Re: Should I keep cash in 4.88% money market or move to muni funds?
Are you suggesting I invest new money and dividends in munis in my taxable account, and exchange bond fund for equities in my 401k to maintain my AA? I had some equities in my 401k and just finished exchanging all of them for bonds, actually.
Re: Should I keep cash in 4.88% money market or move to muni funds?
To maintain your asset allocation, you may need to do things the other way around. If you invest all your new taxable money in bonds, then you will be overweighted in bonds and may have to move some of your 401(k) from bonds to equities.Aguilar wrote: ↑Tue Jun 20, 2023 7:55 amAre you suggesting I invest new money and dividends in munis in my taxable account, and exchange bond fund for equities in my 401k to maintain my AA? I had some equities in my 401k and just finished exchanging all of them for bonds, actually.
Re: Should I keep cash in 4.88% money market or move to muni funds?
Thanks. That's what I'll do.grabiner wrote: ↑Tue Jun 20, 2023 10:18 pmTo maintain your asset allocation, you may need to do things the other way around. If you invest all your new taxable money in bonds, then you will be overweighted in bonds and may have to move some of your 401(k) from bonds to equities.Aguilar wrote: ↑Tue Jun 20, 2023 7:55 amAre you suggesting I invest new money and dividends in munis in my taxable account, and exchange bond fund for equities in my 401k to maintain my AA? I had some equities in my 401k and just finished exchanging all of them for bonds, actually.
Up until now I invested about equally in NY munis and natl limited term tax exempt. Do you recommend I keep investing in both equally, or am I better off leaning on NY munis?
Re: Should I keep cash in 4.88% money market or move to muni funds?
If you hold bonds in your 401(k), then you have some diversification out of NY state even without the limited-term fund. My usual recommendation to hold half your bonds in a national muni fund applies to investors who have a lot of bonds, all in the taxable account.
Re: Should I keep cash in 4.88% money market or move to muni funds?
Oh I see. Considering I have a lot of my bonds in my 401k, do you recommend I make new contributions to NY muni and leave my limited term tax exempt shares be?grabiner wrote: ↑Mon Jun 26, 2023 8:03 pmIf you hold bonds in your 401(k), then you have some diversification out of NY state even without the limited-term fund. My usual recommendation to hold half your bonds in a national muni fund applies to investors who have a lot of bonds, all in the taxable account.
If I’m getting more tax benefits with NY muni, should I exchange some of my limit term for NY muni?
Re: Should I keep cash in 4.88% money market or move to muni funds?
BumpAguilar wrote: ↑Tue Jun 27, 2023 5:55 pmOh I see. Considering I have a lot of my bonds in my 401k, do you recommend I make new contributions to NY muni and leave my limited term tax exempt shares be?grabiner wrote: ↑Mon Jun 26, 2023 8:03 pmIf you hold bonds in your 401(k), then you have some diversification out of NY state even without the limited-term fund. My usual recommendation to hold half your bonds in a national muni fund applies to investors who have a lot of bonds, all in the taxable account.
If I’m getting more tax benefits with NY muni, should I exchange some of my limit term for NY muni?