Tax-free municipal bond funds in the era of Obamanomics

It's very likely that the Nov. 4 election results mean we'll see higher taxes for people who make $100,000 or more. So what do you do if you are fortunate enough to earn that kind of money? Where can you look for a safe harbor from potentially higher taxes?

There's phenomenal opportunity right now in tax-free municipal bonds -- which is where state or local governments issue a bond that comes with a lower rate of interest but your earnings are exempt from federal taxes. So even though the yield is lower, the tax-free status makes for a higher effective yield.

Clark recommends tax-free municipal bond funds instead of individual bond choices. That's because the buy/sell spread costs involved with the latter can be too high. Look for intermediate-term bond funds, which usually require a minimum investment of $3,000. And no big surprise here, but Clark thinks Vanguard is a great place to get into a tax-free municipal bond fund.

Still want to buy individual bonds? There are 2 main things to know. First, make sure the bond is not subject to alternative minimum tax (AMT). Second, you must know if the bond is "callable," which means that the state can cash you out prematurely even if you agreed to a longer term.

Finally, Clark believes there will be great opportunity in emerging markets and Third World countries. These funds have done horribly as of late, so that makes them an attractive option since you can buy low. Clark recommends having about 5% or 10% of your portfolio in the international realm.