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.