Municipal Bond Funds

[firehawkocean]

Hello all,

My last attempt at this post was worded very confusing, so here it goes again.

I own a lot of Vanguard California Intermediate-Term Tax-Exempt Fund Admiral Shares (VCADX). It is a municipal bond fund. I owned it because, up until February, I was a California resident. And, since they are federal & state tax free, it made sense to own it.

However, now I am a Texas resident. And, Texas has no personal income tax. Vanguard has a Vanguard Interm-Term Tx-Ex Adm (VWIUX) municipal bond fund.

I am thinking that I should invest in federal level bonds through Vanguard instead.

Any thoughts?

[lorraineb]

It would make sense if you could find something with similar risk paying a higher amount. Unless I found something that would pay more for similar risk, there is no reason to change if this is part of your overall portfolio diversification plan.

[jpg7n16]

Hello all,

My last attempt at this post was worded very confusing, so here it goes again.

I own a lot of Vanguard California Intermediate-Term Tax-Exempt Fund Admiral Shares (VCADX). It is a municipal bond fund. I owned it because, up until February, I was a California resident. And, since they are federal & state tax free, it made sense to own it.

However, now I am a Texas resident. And, Texas has no personal income tax. Vanguard has a Vanguard Interm-Term Tx-Ex Adm (VWIUX) municipal bond fund.

Welcome to Texas

But we have no personal STATE income tax. We're still subject to Federal tax here in the great state of Texas.

I am thinking that I should invest in federal level bonds through Vanguard instead.

Any thoughts?

What do Federal bonds have to do with your municipal funds you posted?

Federal bonds are subject to Federal tax, and exempt from state. But as Texas has no state tax, there is no additional benefit to you of buying them (short of the low default risk).

If you want to avoid Federal income tax too, then you still need munis. If you don't care, or are in a low Federal bracket, then you would make more by using corporate bonds.


From what I'm guessing is your situation (high Federal tax, now no state tax -- woohoo!), I would consider switching to the national muni fund. Why? Better diversification, lower risk, and all states are tax free here in Texas.

[firehawkocean]

Thanks for all the info guys.

I decided to exchange all my municipal bond funds shares for VWIUX. Makes the most sense.