Regular or taxexempt investing?

Your only real tax exempt investments are:

1. muni bond funds- these are only tax exempt at the federal level
2. Retirement account funding- and these are either tax deferred or use post tax dollars
3. Insurance products- these can take some finnegling so talk to a professional.

If you go with muni bonds here is the equation to figure out if it's worth it. Take the yield of the bond or bond fund and divide it by 1- your tax bracket. So if the yield was 3.5% and your tax bracket was

25% it would look like this: 3.5 / 1-.25 = 4.6 so in this case you would need to find an investment yielding 4.6% before tax to equal the 3.5% bond that is tax exempt. Hope this helps.

You should look at total gain after taxes. I'd rather pay 30% (inc state) on a 20% gain rather than nothing on a 4% gain.