Two excellent posts on Muni bond defaults

[Ad Orientem]

The well-known story of municipal bond defaults...
https://self-evident.org/?p=951

Why Harrisburg’s bond deals need a criminal investigation
https://self-evident.org/?p=952

[dualstow]

3% of my (vp+pp) is in VPAIX aka Vanguard's Pennsylvania tax-exempt bond fund, which is long-duration munis.  :o

[Ad Orientem]

While the author makes a strong case in one of her posts that Munis are relatively low risk, I am still not a big fan. They don't give the kind of deflation protection that LTTs do and the yield is so discounted because of their tax exempt status that they are not usually attractive unless one is in the top income tax bracket. Even then most ordinary people will have a majority of their portfolios in some combination of 401k and or IRA where the income already receives tax preferences.

But yea, if I had eight figures or more (God I wish) in mostly taxable accounts I'd probably have to give Munis a hard look. In such a scenario I could afford the added volatility and the tax benefits would probably become meaningful. Until I am stricken with that problem though, I think I will just stick with the PP.

But for anyone like Dualstow who is wants to dip their toes in the Muni pond I would definitely go with a low cost diversified fund. As usual Vanguard sets the gold standard there and the risk level is admittedly pretty low.

[dualstow]

And, for the record, I am nowhere near those 8 figures.