With this discussion in mind, and assuming the need for cash liquidity, would it be reasonable to choose a short term municipal bond over a high yield savings account? E.g. expecting to make a large cash down payment for a home in 12 months.
It seems like the potential tax savings would favor a muni bond
That could be a great argument for muni bonds. However, for a home purchase, I’d likely favor a HYSA since you may find the ‘perfect home’ sooner than expected (which has happened to several of my real estate clients). If your funds are tied up in less liquid muni bonds, you might have to sell at an inopportune time, potentially incurring a loss.
With this discussion in mind, and assuming the need for cash liquidity, would it be reasonable to choose a short term municipal bond over a high yield savings account? E.g. expecting to make a large cash down payment for a home in 12 months.
It seems like the potential tax savings would favor a muni bond
That could be a great argument for muni bonds. However, for a home purchase, I’d likely favor a HYSA since you may find the ‘perfect home’ sooner than expected (which has happened to several of my real estate clients). If your funds are tied up in less liquid muni bonds, you might have to sell at an inopportune time, potentially incurring a loss.