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  • Drop it into MD Drop it into MD 
    Participant
    Status: Physician
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    I have a need to put either more cash or bonds into my brokerage account.  I live in NYS and I am in the 24% federal tax bracket.  Does anyone have any experience with the NY tax exempt fund.  I am not too keen on its long duration.    I also consider the Short term tax exempt.  (Realizing this is only federal exemption.) But I think I would do better keeping it in cash with the Prime MM account.  What am I missing?

    Is it fair to compare the yield of a MMF with the SEC yield of a bond fund like VWSTX?

    Sorry if this is basic.  I am new to this and very new to bond funds.  They seem more complicated then stock index funds.

    #159627 Reply
    The White Coat Investor The White Coat Investor 
    Keymaster
    Status: Physician
    Posts: 4601
    Joined: 05/13/2011

    You could do half in the NY fund and half in the ST tax exempt to get some state benefit and shorten the overall duration.

    Did you actually run the numbers to be sure a tax-free and not a taxable bond fund is right for you? It might not be in the 24% tax bracket.

    The bond fund vs MMF fund question is a different question from the taxable vs tax exempt question. Decide them separately.

    Site/Forum Owner, Emergency Physician, Blogger, and author of The White Coat Investor: A Doctor's Guide to Personal Finance and Investing
    Helping Those Who Wear The White Coat Get A "Fair Shake" on Wall Street since 2011

    #159634 Reply
    Drop it into MD Drop it into MD 
    Participant
    Status: Physician
    Posts: 440
    Joined: 09/20/2018

    That is a good point.  For the NY fund considering state taxes and since it is a high yield fund it would work in my favor at my bracket but the Short term tax exempt would not yield any more then a short term investment grade.

    thanks for the help.

    #159649 Reply
    Avatar Peds 
    Moderator
    Status: Physician
    Posts: 4671
    Joined: 01/08/2016

    with a duration of 6.9 years, i wouldnt worry that much. VWIUX is 5.3 if it really bothers you and you would still come out ahead of total bond.

    what % of your FI is this?

    i dont pick state specific funds for the majority of my holdings, i would max out at like 50% and trade the cost for diversification.

    #159771 Reply

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