High-yield municipal bonds combine higher income with tax advantages: Their federally tax-exempt income can produce tax-equivalent yields that rival many taxable high-yield corporate bond funds.
HYMU and HYD take different approaches: HYMU emphasizes active management and higher yields, while HYD prioritizes somewhat stronger credit quality, lower duration, and passive index tracking.
Pay attention to credit quality and duration, not just yield: Lower-rated issuers increase credit risk, while longer-duration portfolios are more sensitive to interest rate changes, making both important considerations before investing.
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I'm generally not a fan of high-yield corporate bond ETFs for retirees, and it has very little to do with credit risk. My bigger concern is taxes. Unless you hold them inside a tax-advantaged account such as a Roth IRA, the interest they generate is typically taxed as ordinary income at the federal level and, in many cases, at the state and local levels as well.
HYMU and HYD take different approaches: HYMU emphasizes active management and higher yields, while HYD prioritizes somewhat stronger credit quality, lower duration, and passive index tracking.
Pay attention to credit quality and duration, not just yield: Lower-rated issuers increase credit risk, while longer-duration portfolios are more sensitive to interest rate changes, making both important considerations before investing.
Don't wait: the ***** yst who called NVIDIA in 2010 just revealed his top 10 AI stocks. See the full list FREE now.
I'm generally not a fan of high-yield corporate bond ETFs for retirees, and it has very little to do with credit risk. My bigger concern is taxes. Unless you hold them inside a tax-advantaged account such as a Roth IRA, the interest they generate is typically taxed as ordinary income at the federal level and, in many cases, at the state and local levels as well.
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