This can be a bit hard to precisely quantify... Municipal bonds can default, but it's not very common. If I recall correctly it's less than 1% that default, which is why holding a bond fund with thousands of different CA bonds is helpful. Holding individual munis is a riskier approach.How much more risk does it carry
Also, if you have a good taxable bond index fund in a 401k plan, you can use that to supplement your tax-exempt muni bonds held in your taxable account. A general rule of thumb seems to be to hold no more than half your bond money in municipal bonds.
Another way to diversify your muni bond portfolio is to hold a nationally focused muni bond fund like the Vanguard Limited Term bond fund VMLUX. It has a shorter duration than the intermediate fund (i.e. less volatile when interest rates change) and it's exempt from Federal, but not CA income tax.
Regards,
Statistics: Posted by retired@50 — Sat May 11, 2024 9:53 am — Replies 7 — Views 336