Fixed income/bonds in taxable investments today

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Wannaretireearly
Posts: 579
Joined: Wed Mar 31, 2010 4:39 pm

Fixed income/bonds in taxable investments today

Postby Wannaretireearly » Thu May 09, 2013 2:46 pm

Folks, a quick request:

Sold some ESPP and not sure what to do with it (~10% of the pie). My target AA (25% fixed/40% intl stock/35% dom stock), & my sanity, would demand putting this into 'fixed' income.

What taxable fixed income vehicle would you use? I dont plan to need the money til ER.
I'm not keen on splitting it between multiple areas. I would like to keep things simple and just add to my Vanguard portfolio (mostly an all stock combo of: small cap FTSE, large cap FTSE).

Traditional logic and guidance from this site would probably be: Vanguard Total Bond fund? or to move more bonds into my tax-deferred and buy more stock in taxable (not too keen on this idea at the moment. From other recent threads seems the net benefit of moving bonds to tax-deferred is minimal as yields are low.

What fixed income/bond fund/bond would you choose if you had to on the taxable side? It's a significant amount just shy of 6 figures.

FYI: I'm in California if any of those tax exempt funds would make sense.

Thanks for your help.

User avatar
Peter Foley
Posts: 2653
Joined: Fri Nov 23, 2007 10:34 am
Location: Lake Wobegon

Re: Fixed income/bonds in taxable investments today

Postby Peter Foley » Thu May 09, 2013 3:33 pm

If you are in the 25% tax bracket or higher I would use the Vanguard Intermediate term tax exempt as a bond fund in taxable.

User avatar
tfb
Posts: 7056
Joined: Mon Feb 19, 2007 5:46 pm
Contact:

Re: Fixed income/bonds in taxable investments today

Postby tfb » Thu May 09, 2013 3:55 pm

Wannaretireearly wrote:What fixed income/bond fund/bond would you choose if you had to on the taxable side? It's a significant amount just shy of 6 figures.

FYI: I'm in California if any of those tax exempt funds would make sense.

Buy the quota in I Bonds. Then one of those tax exempt funds. Either the CA fund for state tax benefit or the national fund for diversification or both.
Harry Sit, taking a break from the forums.

Wannaretireearly
Posts: 579
Joined: Wed Mar 31, 2010 4:39 pm

Re: Fixed income/bonds in taxable investments today

Postby Wannaretireearly » Thu May 09, 2013 6:41 pm

Thanks Peter and TFB. Would be great if you can expand a little on the justification for your respective recommendations.

Much appreciate all the help I get from everyone here....

Calm Man
Posts: 2917
Joined: Wed Sep 19, 2012 9:35 am

Re: Fixed income/bonds in taxable investments today

Postby Calm Man » Thu May 09, 2013 6:56 pm

OP, I would use the California tax exempt long term as long as you will hold for 5 years. The yield dropoff to intermediate is significant (2.2 to 1.5%) and the duration is not that much longer for long term.

John3754
Posts: 1181
Joined: Tue Mar 19, 2013 8:56 pm

Re: Fixed income/bonds in taxable investments today

Postby John3754 » Thu May 09, 2013 8:21 pm

Calm Man wrote:OP, I would use the California tax exempt long term as long as you will hold for 5 years. The yield dropoff to intermediate is significant (2.2 to 1.5%) and the duration is not that much longer for long term.


I've been thinking about doing something like this with part of my fixed income allocation. In an environment when everyone is talking about shortening duration, I'm thinking about lengthening due to my long time horizon.

Wannaretireearly
Posts: 579
Joined: Wed Mar 31, 2010 4:39 pm

Re: Fixed income/bonds in taxable investments today

Postby Wannaretireearly » Sun May 12, 2013 1:16 am

Calm Man wrote:OP, I would use the California tax exempt long term as long as you will hold for 5 years. The yield dropoff to intermediate is significant (2.2 to 1.5%) and the duration is not that much longer for long term.


Thank you. I think I'll go with this suggestion to use California tax exempt long term.
Seems like the reasonable option.

Cheers.

Wannaretireearly
Posts: 579
Joined: Wed Mar 31, 2010 4:39 pm

Re: Fixed income/bonds in taxable investments today

Postby Wannaretireearly » Wed May 29, 2013 3:59 pm

An update: bought about 2 weeks ago and already down 1% on the NAV :shock:

Oh well: bought 'long term tax exempt' for a reason & hope the 'higher' yields make it up!

Staying the course :sharebeer

gerrym51
Posts: 1679
Joined: Sat Apr 27, 2013 1:44 pm

Re: Fixed income/bonds in taxable investments today

Postby gerrym51 » Wed May 29, 2013 4:02 pm

muni funds in general


Return to “Investing - Help with Personal Investments”

Who is online

Users browsing this forum: awval999, ionisation and 18 guests