Investing and Taxes

What types of factors do investors normally consider when trying to choose between tax-exempt and taxable investments?

Investors often have to choose between investing in tax-exempt securities such as municipal bonds, and taxable investments such as equities. But because of the tax-free nature of certain investments, investors are willing to part with higher returns in order to take advantage of the lower tax consequences of tax-free investing. So each individual’s tax status may determine how attractive a tax-exempt investment may be.


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