For me, as a physician practicing in FL, another consideration is asset-protection. I need my non-retirement accounts to be titled JTE (Joint Tenancy by the Entireties). The internet banks (offering such higher yields) do not offer JTE titled accounts, and my local banks offer meager interest rates on comparable products. I'm ~5 yrs from retirement, thus willing to "park" much of my taxable fixed income in Muni's that barely keep up with inflation. I'm more aggressive with my tax-sheltered 401k and IRA fixed income investments (40% Total Bond Market index).Kevin M wrote:I don't see much sense in short-term munis. SEC yield of Vanguard short-term tax-exempt is only 0.3%, so even if marginal tax rate is 50% you're better off in a savings account earning 0.9% pre-tax. Limited-term tax-exempt SEC yield is 0.8%, but you can still beat that after-tax with a 5-year direct CD @2.3%, and with less term risk and no credit risk. The distribution yield of limited-term tax exempt is 1.63%, but the CD even beats that at a marginal tax rate of 28% (after-tax yield of 1.66%).
Kevin
If anybody knows of an internet bank offering JTE titling for CD's or MMA's, please share!