Asset Allocation: Where to put future contributions for bonds?

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petrisunset
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Joined: Sat Feb 28, 2015 4:02 pm

Asset Allocation: Where to put future contributions for bonds?

Post by petrisunset » Wed Apr 19, 2017 11:30 pm

Hi Bogleheads,
I am having a lazy three portfolio spread over 401k (all bonds), a Roth-IRA (domestic & international stocks) and a taxable account (domestic & international stocks). My AA is 60/40 for stocks/bonds. Contributions into 401k and Roth-IRA are already maxed out for the year. Every pay-check a few hundred bucks go into the taxable account. I reached now the point where the 40% bonds of my AA are in the Total Bond Market Index within my 401k and that is the only holding in the 401k. How do I best maintain the 60/40 AA with the regular future contributions into the taxable account? Buying bonds regularly in the taxable account or keep the taxable account at 100% stocks and rebalance regularly more bonds within the Roth-IRA as the taxable account is growing? Or any other suggestions?
Thank you very much in advance.

nlecaros
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Re: Asset Allocation: Where to put future contributions for bonds?

Post by nlecaros » Wed Apr 19, 2017 11:41 pm

I always have a mix of stocks and bonds in all my accounts precisely because of this reason.

For retirement accounts: 60/40 stock/bond ratio
For taxable accounts: 40/60 bond ratio

Depending on the relative size of your accounts, you can tweak your AAs in each to come up with the desired total portfolio AA.
For the taxable accounts, I use the total stock and total international stock funds for the stock portion and short- and intermediate-term munis on the bond portion.

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ruralavalon
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Re: Asset Allocation: Where to put future contributions for bonds?

Post by ruralavalon » Thu Apr 20, 2017 11:15 am

petrisunset wrote:Hi Bogleheads,
I am having a lazy three portfolio spread over 401k (all bonds), a Roth-IRA (domestic & international stocks) and a taxable account (domestic & international stocks). My AA is 60/40 for stocks/bonds. Contributions into 401k and Roth-IRA are already maxed out for the year. Every pay-check a few hundred bucks go into the taxable account. I reached now the point where the 40% bonds of my AA are in the Total Bond Market Index within my 401k and that is the only holding in the 401k. How do I best maintain the 60/40 AA with the regular future contributions into the taxable account? Buying bonds regularly in the taxable account or keep the taxable account at 100% stocks and rebalance regularly more bonds within the Roth-IRA as the taxable account is growing? Or any other suggestions?
Thank you very much in advance.
What is your marginal tax bracket, both federal and state?

In my opinion it's probably better to exchange some stock funds to a bond fund in your Roth IRA, and continuing to buy stock index funds in your taxable account.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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goodenyou
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Re: Asset Allocation: Where to put future contributions for bonds?

Post by goodenyou » Thu Apr 20, 2017 3:26 pm

Buy VWIUX in taxable when needed.
"Ignorance more frequently begets confidence than does knowledge" | "The best years you have left are the ones you have right now"

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