Fixed Income Investments
13 Jul 2023
There are fixed income investments like CDs, treasury bonds, and municipal bonds that are taxed differently. Treasuries are state tax exempt and municipal bonds are exempt from both state and federal tax. CDs are FDIC insured while municipal bonds have more risk.
There are 7 US federal tax brackets and 10 California state tax brackets. When considering which fixed income investment to use, you should take into account the after tax earnings.
The equivalents to a 3.1% muni bond would be
| Income | CD Yield | Treasury Yield |
|---|---|---|
| 100k | 4.64% | 4.08% |
| 200k | 5.28% | 4.56% |
| 400k | 5.67% | 4.77% |
| 1M+ | 6.11% | 4.92% |
Currently treasuries look the best out of the 3 fixed income investments since the yield curve is inverted.