So, I'm looking at maintaining a reasonable balance in a normal savings account, steadily increasing contributions to a 401k, and maxing a ROTH each year.

I may have some additional cash after the retirement accounts that I would like to save for a shortish term timeframe (maybe 10 years or so) but I want to maintain access to it and keep my taxable income low. I was considering after a $10kish balance in my savings account, I'd like to open a brokerage account and invest in a municipal bond mutual fund. I want to retain access to the cash if I need it so CDs and bonds are out, earn a better yield than a savings/money market account, and I don't want much fluctuation in the principal value if interest rates are whacky.

I'm really leaning towards muni bonds since the dividends would be non-taxable. I'm assuming I would still pay capital gains tax on the increase in fund value when I liquidate?

Anyone know of any funds that might fit the bill (prefereably NL/NTF)?

I was looking at:

SFBDX
PRFHX (a little too volatile)
VWLTX (also a little volatile)

So far the first one looks the most promising and trades a slightly lower rate of growth for a more stable value which is ideal for what I'm looking for. Basically, this would be long term savings, but I don't want to see a big drop in share price due to rising rates (some drop is ok) just in case I need to access the funds prior to my 10 year ideal time frame. I would be using the funds for something like paying off the house, buying land, or buying a new home etc.

I'm not a muni trader so I can't make any specific recommendations, but there are a few things you should know/be aware of.

First of all, if you have a 10-year investment horizon as stated, stocks are where you should be if you want to maximize your return.  Bonds have a very specific place in an overall investment strategy, and it doesn't sound like you are in that position, that position being where you must live off of your investments (in the near term) rather than still putting them away for the future (10 years in your stated case).

The second thing to consider is that even if you invest in an equity mutual fund/exchange traded fun, most of your investment will not be taxed until/unless you sell your shares and, if held longer than 12 months, which if you are investing with a 10 year horizon, should be no problem, that will be taxed at the long term capital gains rate.  Your long term capital gains rate will be 0, 15 or 20% depending on whether your personal income tax rate (see below).  So there is the potential that you won't be taxed, even on an equity investment.  I said most above because mutual funds/ETFs typically have semi or annual capital gains and dividend distributions but, on a $10k investment, you would probably be getting a distribution of around 3-5% maximum...so negligible in the big scheme of things.

Long term capital gains versus personal income tax rate:

 0% if in the 10-15% bracket.
15% if in the 25-35 brackets.
20% if in the 39.6% bracket.

If you are determined to go the muni route, you should invest in a VA muni fund; typically states do not tax their own munis and thus you will avoid both fed and state income taxes.  TRowePrice and USAA to name two, both offer VA tax-free funds.

If you decide to invest in a non-VA fund, then the best you can do is single (fed) tax avoidance.

However, be advised that, as with any tax-avoidance scheme, you save your bracket on whatever it is you avoid the tax on.  Thus the higher your tax bracket, the more you effectively avoid in taxes.

Market forces being what they are, the interest rate on tax-free munis favors those in the highest tax bracket so unless you fall into that category (good on ya, mate!) munis are not an effective tax avoidance instrument...that is unless you just want to avoid paying taxes even if if you make less in the long run.

In summary, and my opinion only, unless you are setting up a bond ladder and you intend to live off of the income starting today and you are in the highest personal income tax bracket, muni bonds are neither effective/efficient investment nor tax avoidance instruments.

I have FHIGX,  has done about  6.5 over the life of the fund and 5.58 over last five years. Keep enough in there to pay property taxes  and money I don't need but might need in a week or so without worrying about market fluctuations. Also selling it is not going to trigger a huge tax hit. Ten year money needs to be in the market though. It kicks off about $120 a month tax free which just builds.

Those are some good points. Thank you.

I am definitely NOT in the highest bracket and I did not realize the cap gains tax rate changes by bracket. I thought the rule of thumb for stocks was for time horizons 10 years and beyond. I do want to retain access to the cash without worrying about taking money out in a down market, so I think either way I will avoid stocks for this particular part of my portfolio, but I didn't realize that munis are only non-taxable to the state for your state of residence. That will certainly affect my choice. That being the case I may just look at a standard bond MF and not worry as much about the non-taxable aspect.

All munis are exempt from federal tax.  Munis from your own state (VA in this case) would be exempt from both federal and VA state income tax.  You can hold a mixed (various) state munis but they would only be free from federal tax; you would still be taxed at the state level.

It's single/fed tax free or double/fed+state if you hold only bonds issued by municipalities within your state.

10 years is a long time in the investing world.  Look at what happened in 2008/9:  even then it only took 4 or so years to go from the bottom to a new record high.  Granted, there was a lot of financial manipulation going on but such would probably be the case if we had another market "crisis".

Not a muni but have you ever consider BRK.B? I had a similar account and invested in BRK.B because there's no tax liability until you sell it. I made a mistake a sold it for a small profit. I should have held it longer term. I think it's a good choice for a taxable account if you don't need the money right away.