3 Municipal Bond Funds for Rich, Tax-Friendly Yields

Municipal bond funds allow you to enjoy the benefits of tax-exempt income. By investing in CEFs, you can sweeten the pot even further.

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While stocks can supercharge a portfolio, getting income out of an all-stock portfolio is difficult. Withdrawing at the wrong time can cause an investor to sell at a significant loss, hurting long-term returns. Then there is the tax issue: With long-term capital gains taxes of up to 20%, many retirees will find themselves being squeezed by the IRS as they try to live off their life savings.

There is a solution to these problems: municipal bonds, and municipal bond funds.


Data is as of July 1. Distributions can be a combination of dividends, interest income, realized capital gains and return of capital. Distribution rate is an annualized reflection of the most recent payout and is a standard measure for CEFs. Fund expenses include interest expenses and are provided by Morningstar. Discount data provided by Nuveen's CEF Connect.

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Michael Foster
Contributing Writer, Kiplinger.com
Michael Foster is the Lead Research Analyst for Contrarian Outlook, where he writes CEF Insider. He has written on high-income assets, dividends, closed-end funds and exchange-traded funds for a number of publications including Forbes, Bankrate and SeekingAlpha. Michael finished his PhD in 2008 and has been advising investors since 2011.