The great recession and ongoing recovery hasn't been very good to retirees living on a fixed income and savers who put money in a savings account. Bank yields have been pretty low and supposedly that is going to change with the improving economy and rising interest rates. People have had to go invest to other investments to maintain a decent standard of living. Other alternatives options include buying real estate, investing in the stock market, investing in your business, art, precious metals, and other items that can appreciate. California Tax Free bonds are a good investment to put a portion of your nest egg if you live in this high tax state to reduce your tax liability. It's a good balance against the high stock market (currently the Dow's at 19,780) on 1/18/2017. For example, as a single individual in 2017, Additionally, living in the state of California, means that any income from $51,531 to $262,222 is taxed at 9.3%.
Anyone who is making above $191,650 should definitely look into CA Tax Free Funds. Any income you make over that is effectively taxed at 42.3%. CA Tax Free Bond Funds allow you to not pay any federal or state tax on the income generated by these financial instruments. Currently, many top rated CA mutual funds are returning over 4% and one would need to find an taxable equivalent investment yielding over 6.9% at this income level to be comparable. There's an expense fee associated with these funds that could be as high as .9 or as low as .2. Vanguard is usually the lowest and you could get fees down to 0.12% with their Admiral Shares.
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