I'm at a point in my life / career where I have acquired a fair amount of wealth. I'm in a higher tax bracket and reside in California. I normally keep the majority of my stocks in tech and more speculative stocks and I'm looking to diversify some at this point.
My personal opinion is that I believe the stock market is now slightly overvalued and I've read a few articles that speculate the same. I know all the stimulus talks are keeping it afloat, but it still feel it's a bit high.
https://seekingalpha.com/article/4378438-stock-bubble
However, despite me believing it is slightly overvalued I'm not very keen on pulling out of my current holdings. I think they are all strong for 5-10 years. I would rather move for a brief make any new investments into something more stable (bonds). It seems to me that Municipal Bonds are more effective than other options (Treasury, Corporate, TIPs, etc) because they somewhat uniquely provide a good combination of
- Not likely to default
- Tax efficient (federal and state)
- Solid yields
I also read this article discussing some of the risks and benefits and helps explain how they help punch above their weight as you get into the higher tax brackets. I also thought it was interesting that they recommended diversifying state municipals during the pandemic in case of a risk of a State defaulting
Questions
- Should I worry about diversifying states in municipal bonds, or should I go all in California to take full advantage of State tax exemptions?
- Does anyone have any other strong considerations / worries about municipal bonds?
- Or should I focus on something else?
I'm not interested in actively hunting / looking for the best municipal bonds - I likely would pick one of these 3 ETFs
- MUB (Diversified with .07% expense)
- VTEB (Diversified with .06% expense)
- CMF (California focused with .25% expense)
Looking forward to hearing feedback, thank you!
Submitted October 23, 2020 at 06:45PM by cosmic_backlash https://ift.tt/3mfflv9
