I'm in the camp of investing in tax exempt bond funds in a taxable account as I'm fortunate enough to be in the top bracket currently, and I don't see the need to risk this money along the way to retirement in an equity fund, especially since I'm fully in equities in retirement accounts and I'm not sure when and if I'll want to use the taxable account money for a multitude of purposes (such as pay mortgage off early, etc).
In this vain I've been in VWIUX (Vanguard intermediate term tax exempt admiral) for months now, which Dan Weiner has a "buy" rating on currently. But recently I've thought that VWALX (Vanguard high yield tax exempt admiral) may be a better way to go. It shows a current yield significantly higher than the intermediate fund (2.26 vs 1.34). Weiner has a "hold" on this high yield fund.
Can anybody tell me why it's not smarter to go with the higher yielding fun, if I don't plan on using any principal in the next five years at least. I understand the price may fluctuate more, but my understanding is that for a bond fund the price mostly reverts back to the mean and it's really the tax free dividends that make up most of what you earn. Am I missing something?
In this vain I've been in VWIUX (Vanguard intermediate term tax exempt admiral) for months now, which Dan Weiner has a "buy" rating on currently. But recently I've thought that VWALX (Vanguard high yield tax exempt admiral) may be a better way to go. It shows a current yield significantly higher than the intermediate fund (2.26 vs 1.34). Weiner has a "hold" on this high yield fund.
Can anybody tell me why it's not smarter to go with the higher yielding fun, if I don't plan on using any principal in the next five years at least. I understand the price may fluctuate more, but my understanding is that for a bond fund the price mostly reverts back to the mean and it's really the tax free dividends that make up most of what you earn. Am I missing something?
Comment