The bond composition of my portfolio is in VBTLX, the standard of most mustachians. However, I store this fund in my taxable account rather than tax-free accounts. I do this because I want to maximize long term portfolio value rather than simply reduce overall taxes. This concept has been discussed here before on this forum a few times.***
SO, my question is:
Since my bonds are in taxable accounts, would I be better off switching them to a tax-exempt bond fund (e.g. muni bond fund)? Generally, muni bond funds are more volatile than VBTLX, which is one trade off. But perhaps this warrants the tax advantages of VWIUX? VWIUX does not appear to be a terribly risky muni bond fund, so this idea wouldn't be as crazy as some of the other high-yield muni bond funds out there.
At this point, my VBTLX is down so I would harvesting tax losses (e.g. no capital gains to worry about).
*** (Generally speaking, i believe it is better to have your stocks in tax-free accounts rather than bonds, because this maximizes their long term growth potential, which tends to outweight the benefits of storing bonds (tax inefficient) in a tax free account. This is counter to a lot of common investing trends, but I believe this forum and others have often come to the consensus that it is overall better).
