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Why TIPS for high tax bracket investors?
penny 08-08-2007, 1:44 PM | Post #204481 | 
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I noticed that some of the posters are holding TIPS in their tax exempt accounts even when they are in the highest tax bracket eg: Larry Swedroe and others. I don't quite understand why. It seems to me that if you are in the highest tax bracket (and in a state with high taxes)then munis are, by far, the way to go. A rough calculation on the current yields with tax equivalency taken into account suggests that these individuals would need to earn more than 7.5% on their other bond investments to equal the return on a vanguard muni fund. I understand that there may be some advantage to diversifying one's bond holdings but are there any other compelling reasons to stray from munis when the tax brackets are high?

Originally posted in thread: 59937
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