Investing in out-of-state municipal bonds
We're thinking about purchasing muni bonds from outside of our state. Does FMSbonds have an article about this? I understand munis would be taxed at the federal level, but if we bought Treasuries, for example, there would also be state tax.
For residents who reside in states with substantial income taxes, we think there is a compelling argument for buying out-of-state bonds.Our rule of thumb is simple: If your out-of-state purchases have a greater after-tax return than bonds of the same quality from your state (California, in your case), then the out-of-state bonds provide additional income and also add diversity to your portfolio.For additional perspective, please read our article, “Finding Bonds When the Muni Supply is Tight.”