Hi, I have a bonds question. Here are the details:
Currently own $100k of SWAGX (Schwab US Aggregate Bond Index). The other portion of my portfolio (75%) is in SWPPX.
It's all in a non-retirement Schwab brokerage account.
My marginal Tax Bracket: 24%
I live in CA.
Now learning that SWAGX is not the most tax-efficient bond I could hold in that account. I'm obviously new at bonds.
GPT did some math based on this info and recommended I consider SWCAX instead (CA Tax-Free Bond), to avoid ALL federal and state taxes on it. One argument was that the higher potential yields from SWAGX are eaten away by federal and state taxes, so that SWCAX is probably a better net result.
However, the net amount of tax on SWAGX (according to GPT) aren't massive. Around $1400 per year, which is worth avoiding -- but not the end of the world for me.
Does anyone have an argument for keeping SWAGX? Or anything else I'm overlooking? Before I re-allocate the $100k to SWCAX I'd love any words of advice.
Thank you!
Ape86