For much of the past 12 months, we've encouraged readers to take a position in municipal bonds. And for much of the past 12 months, it's been an incredible idea. Thank the rich...When a state or local government needs to borrow extra money for projects like highways and water systems, it does so in the form of municipal bonds. To encourage folks to "loan American," the federal government does not tax the interest earned in "munis."
Now that the old saw "nothing is certain but death and taxes" has been amended to "death and higher taxes," wealthy people are racing to these legal tax shelters like ants to a picnic.
For proof, have a look at the muni bond fund (MCA), mentioned by our colleague Dr. David Eifrig back in June. The fund is up 20% since then – which is a huge move higher for a boring basket of bonds. MCA is no outlier. The charts of nearly every single muni bond fund in America look just the same. Want to know where the rich are putting their money?
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