What am I missing about bonds...

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aerosurfer
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What am I missing about bonds...

Post by aerosurfer »

Most of my money in my various type of accounts is at Schwab. I have some Wellington VWELX in both taxable and deferred accounts. I have been thinking lately of breaking that up to redirect that back into separate funds, elsewhere in my portfolio at lower ER via index and bonds. My AA is +90% s&p and I’d like to start bringing that down.

I have money in SWPPX and understand that. But looking through the Schwab bond funds I’m not sure what compares to the VG total bond fund, and in which accounts I really should keep them in. And looking at the rates, with savings quickly rising, why not just keep more cash in hand at savings? Will (should) they ever be more than the bond performance?

I have rollover, inherited Ira, Roth and taxable, plus company 401k

I’m 37 and with no plans to FIRE, and have mid 6 figure saved and excellent contribution projections going forward
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Re: What am I missing about bonds...

Post by Call_Me_Op »

What is the purpose of your 10% bond allocation? The answer will help to guide you.
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aerosurfer
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Re: What am I missing about bonds...

Post by aerosurfer »

Call_Me_Op wrote: Mon Aug 13, 2018 10:52 am What is the purpose of your 10% bond allocation? The answer will help to guide you.
What do you mean? It’s too low I’d like to get the overall ratio towards 80/20. If I’m breaking up a blended fund I can move some more of that money into bonds, and/or my future contributions.
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Re: What am I missing about bonds...

Post by livesoft »

aerosurfer wrote: Mon Aug 13, 2018 10:56 amWhat do you mean?
Is the purpose of your bond fund to make 30% a year on your investment in the bond fund?
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Re: What am I missing about bonds...

Post by vineviz »

aerosurfer wrote: Mon Aug 13, 2018 10:36 am My AA is +90% s&p and I’d like to start bringing that down.
I think the question we have is WHY do you want "to start bringing that down". In other words, what has changed that has made you decide the 90/10 allocation is no longer appropriate for you?

The answer to that question will definitely influence WHICH kind of fixed income investments are likely to be suitable, especially since 90% equity is a very normal allocation for the retirement savings of someone under age 40.

The general rule of thumb is that the duration of your bond funds should be roughly equivalent to your investment horizon, likely just a LITTLE less. For general retirement needs of a 37-year old, that would likely mean a long-term treasury index fund. But if you've got something else in mind, then a different choice is likely to be best.
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Re: What am I missing about bonds...

Post by Admiral »

The long-term difference between 80/20 and 90/10 is not likely to make a material difference in your portfolio until the numbers are quite large. Especially if you have no plans to stop work early, 10% bonds is probably fine for you.

That said: Wellington is a good fund, I just would not hold it in a taxable account because it holds about 33% bonds, which result in taxable distributions.
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Re: What am I missing about bonds...

Post by ofckrupke »

aerosurfer wrote: Mon Aug 13, 2018 10:36 am But looking through the Schwab bond funds I’m not sure what compares to the VG total bond fund
In a mutual fund, SWAGX. In an ETF, SCHZ.

And SWSBX is Schwab's counterpart to the VG short-term bond index fund VBIRX (admiral shares).
ETF-wise, SCHO is counterpart to to VG short-term treasury index VGSH (or VSBSX admiral shares).
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Re: What am I missing about bonds...

Post by dratkinson »

aerosurfer wrote: Mon Aug 13, 2018 10:36 am...
...And looking at the rates, with savings quickly rising, why not just keep more cash in hand at savings? Will (should) they ever be more than the bond performance?
...
I’m 37 and with no plans to FIRE, and have mid 6 figure saved and excellent contribution projections going forward
Bonds should out-perform cash over the long term so they have a better chance of keeping up with inflation. Plus, interest paid on cash equivalents is taxable*.

Simple action steps, if you think you need more cash. Keep 1yr in cash equivalents (your emergency funds), an appropriate allocation to the correct bonds*, and the rest in stocks.


To have more money at retirement, minimize your total costs. Total costs = loads, fees, and taxes.

* Assuming you are in a higher tax bracket, may want to avoid placing taxable bond funds/ETFs in your taxable account---to minimize taxes. In this case, a municipal bond fund/ETF may be a better option. And depending upon your home state and the selected fund, may be triple tax exempt: fed, state, city.

What are your federal and state income tax brackets? What is your home state?


Taxable account. Wellington uses taxable bonds so is not recommended in a higher tax bracket**. There will be a tax cost to replace it by component funds/ETFs. Until then, invest new money (+ Wellington's redirected distributions) into the component funds. Don't advance tax brackets when you sell Wellington. (** Wellington is appropriate in a tax-advantaged account.)

See Wiki topic: https://www.bogleheads.org/wiki/Princip ... _placement


Recommended book. The Only Guide to a Winning Investment Strategy You'll Ever Need, by Swedroe.
Last edited by dratkinson on Mon Aug 13, 2018 7:27 pm, edited 3 times in total.
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Re: What am I missing about bonds...

Post by billthecat »

Admiral wrote: Mon Aug 13, 2018 11:20 am That said: Wellington is a good fund, I just would not hold it in a taxable account because it holds about 33% bonds, which result in taxable distributions.
Everyone keeps saying this - except White Coat Investor. https://www.whitecoatinvestor.com/tag/bonds-in-taxable/
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Re: What am I missing about bonds...

Post by livesoft »

billthecat wrote: Mon Aug 13, 2018 6:59 pm
Admiral wrote: Mon Aug 13, 2018 11:20 am That said: Wellington is a good fund, I just would not hold it in a taxable account because it holds about 33% bonds, which result in taxable distributions.
Everyone keeps saying this - except White Coat Investor. https://www.whitecoatinvestor.com/tag/bonds-in-taxable/
Whatever you are implying suggests that you did not understand what WCI wrote.
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Re: What am I missing about bonds...

Post by billthecat »

livesoft wrote: Mon Aug 13, 2018 7:25 pm
billthecat wrote: Mon Aug 13, 2018 6:59 pm
Admiral wrote: Mon Aug 13, 2018 11:20 am That said: Wellington is a good fund, I just would not hold it in a taxable account because it holds about 33% bonds, which result in taxable distributions.
Everyone keeps saying this - except White Coat Investor. https://www.whitecoatinvestor.com/tag/bonds-in-taxable/
Whatever you are implying suggests that you did not understand what WCI wrote.
OK well, let me elaborate so you can understand what I'm implying: conventional wisdom is that bonds should not be in taxable accounts because of the taxation of distributions but WCI spells out the argument as to why bonds should be in taxable. Take a look at the articles at https://www.whitecoatinvestor.com/tag/bonds-in-taxable/. Essentially he's comparing the tax-adjusted returns, and treating traditional tax-deferred accounts as actually a Roth plus government account.

Perhaps you'd care to detail why you disagree with WCI?
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Re: What am I missing about bonds...

Post by livesoft »

I'm pretty sure that WCI says that bonds that pay taxable distributions do not belong in a taxable account of a taxpayer that pays a high marginal income tax rate.

Your post implied to me that WCI thought it was better than OK to have the Wellington fund with its 33% taxable bonds in a taxable account.
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Re: What am I missing about bonds...

Post by Admiral »

billthecat wrote: Mon Aug 13, 2018 10:34 pm
livesoft wrote: Mon Aug 13, 2018 7:25 pm
billthecat wrote: Mon Aug 13, 2018 6:59 pm
Admiral wrote: Mon Aug 13, 2018 11:20 am That said: Wellington is a good fund, I just would not hold it in a taxable account because it holds about 33% bonds, which result in taxable distributions.
Everyone keeps saying this - except White Coat Investor. https://www.whitecoatinvestor.com/tag/bonds-in-taxable/
Whatever you are implying suggests that you did not understand what WCI wrote.
OK well, let me elaborate so you can understand what I'm implying: conventional wisdom is that bonds should not be in taxable accounts because of the taxation of distributions but WCI spells out the argument as to why bonds should be in taxable. Take a look at the articles at https://www.whitecoatinvestor.com/tag/bonds-in-taxable/. Essentially he's comparing the tax-adjusted returns, and treating traditional tax-deferred accounts as actually a Roth plus government account.

Perhaps you'd care to detail why you disagree with WCI?
WCI's target audience is those paying 35% or more in federal tax.
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Re: What am I missing about bonds...

Post by billthecat »

Admiral wrote: Tue Aug 14, 2018 6:40 am
billthecat wrote: Mon Aug 13, 2018 10:34 pm
livesoft wrote: Mon Aug 13, 2018 7:25 pm
billthecat wrote: Mon Aug 13, 2018 6:59 pm
Admiral wrote: Mon Aug 13, 2018 11:20 am That said: Wellington is a good fund, I just would not hold it in a taxable account because it holds about 33% bonds, which result in taxable distributions.
Everyone keeps saying this - except White Coat Investor. https://www.whitecoatinvestor.com/tag/bonds-in-taxable/
Whatever you are implying suggests that you did not understand what WCI wrote.
OK well, let me elaborate so you can understand what I'm implying: conventional wisdom is that bonds should not be in taxable accounts because of the taxation of distributions but WCI spells out the argument as to why bonds should be in taxable. Take a look at the articles at https://www.whitecoatinvestor.com/tag/bonds-in-taxable/. Essentially he's comparing the tax-adjusted returns, and treating traditional tax-deferred accounts as actually a Roth plus government account.

Perhaps you'd care to detail why you disagree with WCI?
WCI's target audience is those paying 35% or more in federal tax.
Can you elaborate? Can you show the math, similar to what WCI did, that would show that bonds should not be in taxable, given a tax rate, soy, lower than 35%? WCI assumed a 33% marginal tax rate (15% for LTCG and dividends). It would seem like the smaller the gap between marginal income tax rate and the LTCG/dividends rate, the lower the penalty from having bonds in taxable.

As an aside, I don't understand how he calculated the cumulative dividends for the growing stock fund (someone asked in the comments, but he didn't answer).
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Re: What am I missing about bonds...

Post by Admiral »

billthecat wrote: Tue Aug 14, 2018 12:11 pm
Admiral wrote: Tue Aug 14, 2018 6:40 am
billthecat wrote: Mon Aug 13, 2018 10:34 pm
livesoft wrote: Mon Aug 13, 2018 7:25 pm
billthecat wrote: Mon Aug 13, 2018 6:59 pm

Everyone keeps saying this - except White Coat Investor. https://www.whitecoatinvestor.com/tag/bonds-in-taxable/
Whatever you are implying suggests that you did not understand what WCI wrote.
OK well, let me elaborate so you can understand what I'm implying: conventional wisdom is that bonds should not be in taxable accounts because of the taxation of distributions but WCI spells out the argument as to why bonds should be in taxable. Take a look at the articles at https://www.whitecoatinvestor.com/tag/bonds-in-taxable/. Essentially he's comparing the tax-adjusted returns, and treating traditional tax-deferred accounts as actually a Roth plus government account.

Perhaps you'd care to detail why you disagree with WCI?
WCI's target audience is those paying 35% or more in federal tax.
Can you elaborate? Can you show the math, similar to what WCI did, that would show that bonds should not be in taxable, given a tax rate, soy, lower than 35%? WCI assumed a 33% marginal tax rate (15% for LTCG and dividends). It would seem like the smaller the gap between marginal income tax rate and the LTCG/dividends rate, the lower the penalty from having bonds in taxable.

As an aside, I don't understand how he calculated the cumulative dividends for the growing stock fund (someone asked in the comments, but he didn't answer).
The issue is fairly simple: Given a choice of holding an investment like bonds (or bond funds), that makes regular, monthly coupon payments that are taxable at one's marginal rate--remember, these are not dividends, they are bond income, taxed at one's state and federal rates--should one hold such an investment in a taxable account or a tax-deferred retirement account? Should one pay the tax now or later? In a retirement account, presumably (for most people) the tax that will be eventually paid will be at a lower marginal rate, due to a lack of earned income. At the very least, they will have 75k worth of brackets to fill.

That is the issue.

WCI presumes (for the most part) that his audience will be at the same or possibly even higher marginal brackets when retired, due to very large portfolio balances at that time.

Now, all this is moot if one does not have access to tax-advantaged accounts, or if we are speaking of municipal bonds. However, Wellington's bonds are not munis.
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Re: What am I missing about bonds...

Post by PalmQueen »

Sorry flubbed the quote tool and don't see how to fix it, so I put the quote I'm referring to from Admiral in italics and my comment in bold.

The issue is fairly simple: Given a choice of holding an investment like bonds (or bond funds), that makes regular, monthly coupon payments that are taxable at one's marginal rate--remember, these are not dividends, they are bond income, taxed at one's state and federal rates--should one hold such an investment in a taxable account or a tax-deferred retirement account? Should one pay the tax now or later? In a retirement account, presumably (for most people) the tax that will be eventually paid will be at a lower marginal rate, due to a lack of earned income. At the very least, they will have 75k worth of brackets to fill.

WCI presumes (for the most part) that his audience will be at the same or possibly even higher marginal brackets when retired, due to very large portfolio balances at that time.



Thanks Admiral for this explanation. Makes sense.
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Re: What am I missing about bonds...

Post by livesoft »

Let me give a real-world example of why WCI's clickbait of "bonds in taxable" does not work for my single-earner family:

We pay 0% tax on long-term capital gains and 0% tax on qualified dividend income. If I don't want to pay income taxes, then tax-efficient equity funds go in taxable. Bond funds in taxable will create more taxes and a lower net worth in the long term for me. And tax-exempt bond funds in taxable just make things worse for me.

Furthermore, bonds in tax-deferred are also good for me. The income from bond funds is thus tax-deferred, but also my future RMDs should be lower and thus create less taxes because my bond funds are not expected to grow as much as my tax-efficient equity funds that I have in taxable.

I have stock funds not only in taxable, but also in tax-deferred accounts and in Roth accounts.
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Re: What am I missing about bonds...

Post by billthecat »

livesoft wrote: Tue Aug 14, 2018 2:25 pm Let me give a real-world example of why WCI's clickbait of "bonds in taxable" does not work for my single-earner family:

We pay 0% tax on long-term capital gains and 0% tax on qualified dividend income. If I don't want to pay income taxes, then tax-efficient equity funds go in taxable. Bond funds in taxable will create more taxes and a lower net worth in the long term for me. And tax-exempt bond funds in taxable just make things worse for me.

Furthermore, bonds in tax-deferred are also good for me. The income from bond funds is thus tax-deferred, but also my future RMDs should be lower and thus create less taxes because my bond funds are not expected to grow as much as my tax-efficient equity funds that I have in taxable.

I have stock funds not only in taxable, but also in tax-deferred accounts and in Roth accounts.
OK, I can see how paying zero taxes on the stock dividends could lead to an advantage to having your stock in taxable. How is your tax rate zero for your taxable holdings? Total is below deductions?
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Re: What am I missing about bonds...

Post by livesoft »

billthecat wrote: Tue Aug 14, 2018 2:47 pmOK, I can see how paying zero taxes on the stock dividends could lead to an advantage to having your stock in taxable. How is your tax rate zero for your taxable holdings? Total is below deductions?
No, income is low. People who have low income generally do not pay income taxes.

This is old and things are changed slightly under the changed tax laws, but it gives a hint of possibilities:
https://www.kitces.com/blog/understandi ... -in-basis/

And there is the ZERO taxes thread:
viewtopic.php?t=87471
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Re: What am I missing about bonds...

Post by billthecat »

livesoft wrote: Tue Aug 14, 2018 2:49 pm
billthecat wrote: Tue Aug 14, 2018 2:47 pmOK, I can see how paying zero taxes on the stock dividends could lead to an advantage to having your stock in taxable. How is your tax rate zero for your taxable holdings? Total is below deductions?
No, income is low. People who have low income generally do not pay income taxes.
Haha, so snarky.

In any event, your zero tax rate scenario may not be typical.
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Re: What am I missing about bonds...

Post by pkcrafter »

aerosurfer wrote: Mon Aug 13, 2018 10:36 am Most of my money in my various type of accounts is at Schwab. I have some Wellington VWELX in both taxable and deferred accounts. I have been thinking lately of breaking that up to redirect that back into separate funds, elsewhere in my portfolio at lower ER via index and bonds. My AA is +90% s&p and I’d like to start bringing that down.

I have money in SWPPX and understand that. But looking through the Schwab bond funds I’m not sure what compares to the VG total bond fund, and in which accounts I really should keep them in. And looking at the rates, with savings quickly rising, why not just keep more cash in hand at savings? Will (should) they ever be more than the bond performance?

I have rollover, inherited Ira, Roth and taxable, plus company 401k

I’m 37 and with no plans to FIRE, and have mid 6 figure saved and excellent contribution projections going forward
As already mentioned, SWAGX is Schwab's total bond fund. I agree that moving from 90/10 to 80/20 is a reasonable move. There is no problem moving out of VWELX. Balanced funds like this can create some difficulty in maintaining your overall AA, and I would not hold VWELX in taxable.

You seem concerned with rising rates, but you should not be readjusting your portfolio every time you hear something in the news. If you can't take the risk of total bond, then use Schwab's short-term bond index, SWSBX and some cash, but it's way out of wack to worry about total bond when you've got 80-90% in stocks. On the other hand, you aren't alone. There have been many posts expressing concerns for bonds from posters who hold large allocations to stocks. :?



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Re: What am I missing about bonds...

Post by livesoft »

billthecat wrote: Tue Aug 14, 2018 2:51 pmIn any event, your zero tax rate scenario may not be typical.
But the scenario of WCI is also not typical ... some might say it only applies to the 1%.
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Re: What am I missing about bonds...

Post by billthecat »

Admiral wrote: Tue Aug 14, 2018 1:07 pm
billthecat wrote: Tue Aug 14, 2018 12:11 pm
Admiral wrote: Tue Aug 14, 2018 6:40 am
billthecat wrote: Mon Aug 13, 2018 10:34 pm
livesoft wrote: Mon Aug 13, 2018 7:25 pm
Whatever you are implying suggests that you did not understand what WCI wrote.
OK well, let me elaborate so you can understand what I'm implying: conventional wisdom is that bonds should not be in taxable accounts because of the taxation of distributions but WCI spells out the argument as to why bonds should be in taxable. Take a look at the articles at https://www.whitecoatinvestor.com/tag/bonds-in-taxable/. Essentially he's comparing the tax-adjusted returns, and treating traditional tax-deferred accounts as actually a Roth plus government account.

Perhaps you'd care to detail why you disagree with WCI?
WCI's target audience is those paying 35% or more in federal tax.
Can you elaborate? Can you show the math, similar to what WCI did, that would show that bonds should not be in taxable, given a tax rate, soy, lower than 35%? WCI assumed a 33% marginal tax rate (15% for LTCG and dividends). It would seem like the smaller the gap between marginal income tax rate and the LTCG/dividends rate, the lower the penalty from having bonds in taxable.

As an aside, I don't understand how he calculated the cumulative dividends for the growing stock fund (someone asked in the comments, but he didn't answer).
The issue is fairly simple: Given a choice of holding an investment like bonds (or bond funds), that makes regular, monthly coupon payments that are taxable at one's marginal rate--remember, these are not dividends, they are bond income, taxed at one's state and federal rates--should one hold such an investment in a taxable account or a tax-deferred retirement account? Should one pay the tax now or later? In a retirement account, presumably (for most people) the tax that will be eventually paid will be at a lower marginal rate, due to a lack of earned income. At the very least, they will have 75k worth of brackets to fill.

That is the issue.

WCI presumes (for the most part) that his audience will be at the same or possibly even higher marginal brackets when retired, due to very large portfolio balances at that time.

Now, all this is moot if one does not have access to tax-advantaged accounts, or if we are speaking of municipal bonds. However, Wellington's bonds are not munis.
That doesn't really account for performance, which is WCI's point. You have to compare tax adjusted performance, Now, if like livesoft your tax rate is zero on stock dividends, then yes bonds seem to be better in tax-deferred. But since stock funds will grow much faster than bond funds, it doesn't take much tax for it to be worthwhile to have bonds in taxable. Your marginal tax rate on withdrawals from your retirement account is irrelevant because your retirement account is really a Roth plus a government fund. So a hypothetical $147K fund is really a $100k Roth plus a $47K government fund. And so the question becomes what to invest the $100K in.
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Re: What am I missing about bonds...

Post by billthecat »

livesoft wrote: Tue Aug 14, 2018 2:53 pm
billthecat wrote: Tue Aug 14, 2018 2:51 pmIn any event, your zero tax rate scenario may not be typical.
But the scenario of WCI is also not typical ... some might say it only applies to the 1%.
I don't know what is or isn't typical (why I put "may"...) but it would be handy if there were a calculator, to plug in the details about one's particular situation. I gather there isn't, which is surprising.
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Re: What am I missing about bonds...

Post by livesoft »

billthecat wrote: Tue Aug 14, 2018 3:00 pmI don't know what is or isn't typical (why I put "may"...) but it would be handy if there were a calculator, to plug in the details about one's particular situation. I gather there isn't, which is surprising.
Yes, it would be nice if there were a calculator, but I thought it was pretty well known that at least 45% of Americans pay no federal income tax, so I would say that paying no federal income tax is pretty typical:
https://www.npr.org/sections/money/2012 ... ne-graphic

We are not in that ~45% that pay no federal income taxes. We pay some income taxes, but not LTCG taxes nor taxes on our qualified dividend income.
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Re: What am I missing about bonds...

Post by Admiral »

billthecat wrote: Tue Aug 14, 2018 2:58 pm
Admiral wrote: Tue Aug 14, 2018 1:07 pm
billthecat wrote: Tue Aug 14, 2018 12:11 pm
Admiral wrote: Tue Aug 14, 2018 6:40 am
billthecat wrote: Mon Aug 13, 2018 10:34 pm

OK well, let me elaborate so you can understand what I'm implying: conventional wisdom is that bonds should not be in taxable accounts because of the taxation of distributions but WCI spells out the argument as to why bonds should be in taxable. Take a look at the articles at https://www.whitecoatinvestor.com/tag/bonds-in-taxable/. Essentially he's comparing the tax-adjusted returns, and treating traditional tax-deferred accounts as actually a Roth plus government account.

Perhaps you'd care to detail why you disagree with WCI?
WCI's target audience is those paying 35% or more in federal tax.
Can you elaborate? Can you show the math, similar to what WCI did, that would show that bonds should not be in taxable, given a tax rate, soy, lower than 35%? WCI assumed a 33% marginal tax rate (15% for LTCG and dividends). It would seem like the smaller the gap between marginal income tax rate and the LTCG/dividends rate, the lower the penalty from having bonds in taxable.

As an aside, I don't understand how he calculated the cumulative dividends for the growing stock fund (someone asked in the comments, but he didn't answer).
The issue is fairly simple: Given a choice of holding an investment like bonds (or bond funds), that makes regular, monthly coupon payments that are taxable at one's marginal rate--remember, these are not dividends, they are bond income, taxed at one's state and federal rates--should one hold such an investment in a taxable account or a tax-deferred retirement account? Should one pay the tax now or later? In a retirement account, presumably (for most people) the tax that will be eventually paid will be at a lower marginal rate, due to a lack of earned income. At the very least, they will have 75k worth of brackets to fill.

That is the issue.

WCI presumes (for the most part) that his audience will be at the same or possibly even higher marginal brackets when retired, due to very large portfolio balances at that time.

Now, all this is moot if one does not have access to tax-advantaged accounts, or if we are speaking of municipal bonds. However, Wellington's bonds are not munis.
That doesn't really account for performance, which is WCI's point. You have to compare tax adjusted performance, Now, if like livesoft your tax rate is zero on stock dividends, then yes bonds seem to be better in tax-deferred. But since stock funds will grow much faster than bond funds, it doesn't take much tax for it to be worthwhile to have bonds in taxable. Your marginal tax rate on withdrawals from your retirement account is irrelevant because your retirement account is really a Roth plus a government fund. So a hypothetical $147K fund is really a $100k Roth plus a $47K government fund. And so the question becomes what to invest the $100K in.
But one needs to compare specific holdings to do so (calculate tax-adjusted performance). I was speaking generally. The three fund portfolio specifies low cost, low tax, and efficient tax placement (see Wiki). Total Stock Market (TSM) for example has low expenses, low turnover, no capital gains (at least for a while) and SOME taxable distributions that are mostly qualified dividends that are not taxed like bond payments are. Of course stocks will outperform bonds on average over time but we have no way of knowing what the outperformance will be on a tax-adjusted basis in the future. All we know is how those holdings are taxed, and they are taxed differently, and particularly so depending on where they are held.

Like livesoft I hold stock funds in both taxable and tax-free/tax deferred, but see no reason to pay taxes on bond coupons now, when I am in a high tax bracket (and don't need the money). I also don't hold high-dividend funds or other stock funds that pay capital gains for the same reason. Why not control what taxes you pay, if you can do so?
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billthecat
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Re: What am I missing about bonds...

Post by billthecat »

Admiral wrote: Tue Aug 14, 2018 4:30 pm
billthecat wrote: Tue Aug 14, 2018 2:58 pm
Admiral wrote: Tue Aug 14, 2018 1:07 pm
billthecat wrote: Tue Aug 14, 2018 12:11 pm
Admiral wrote: Tue Aug 14, 2018 6:40 am

WCI's target audience is those paying 35% or more in federal tax.
Can you elaborate? Can you show the math, similar to what WCI did, that would show that bonds should not be in taxable, given a tax rate, soy, lower than 35%? WCI assumed a 33% marginal tax rate (15% for LTCG and dividends). It would seem like the smaller the gap between marginal income tax rate and the LTCG/dividends rate, the lower the penalty from having bonds in taxable.

As an aside, I don't understand how he calculated the cumulative dividends for the growing stock fund (someone asked in the comments, but he didn't answer).
The issue is fairly simple: Given a choice of holding an investment like bonds (or bond funds), that makes regular, monthly coupon payments that are taxable at one's marginal rate--remember, these are not dividends, they are bond income, taxed at one's state and federal rates--should one hold such an investment in a taxable account or a tax-deferred retirement account? Should one pay the tax now or later? In a retirement account, presumably (for most people) the tax that will be eventually paid will be at a lower marginal rate, due to a lack of earned income. At the very least, they will have 75k worth of brackets to fill.

That is the issue.

WCI presumes (for the most part) that his audience will be at the same or possibly even higher marginal brackets when retired, due to very large portfolio balances at that time.

Now, all this is moot if one does not have access to tax-advantaged accounts, or if we are speaking of municipal bonds. However, Wellington's bonds are not munis.
That doesn't really account for performance, which is WCI's point. You have to compare tax adjusted performance, Now, if like livesoft your tax rate is zero on stock dividends, then yes bonds seem to be better in tax-deferred. But since stock funds will grow much faster than bond funds, it doesn't take much tax for it to be worthwhile to have bonds in taxable. Your marginal tax rate on withdrawals from your retirement account is irrelevant because your retirement account is really a Roth plus a government fund. So a hypothetical $147K fund is really a $100k Roth plus a $47K government fund. And so the question becomes what to invest the $100K in.
But one needs to compare specific holdings to do so (calculate tax-adjusted performance). I was speaking generally. The three fund portfolio specifies low cost, low tax, and efficient tax placement (see Wiki). Total Stock Market (TSM) for example has low expenses, low turnover, no capital gains (at least for a while) and SOME taxable distributions that are mostly qualified dividends that are not taxed like bond payments are. Of course stocks will outperform bonds on average over time but we have no way of knowing what the outperformance will be on a tax-adjusted basis in the future. All we know is how those holdings are taxed, and they are taxed differently, and particularly so depending on where they are held.

Like livesoft I hold stock funds in both taxable and tax-free/tax deferred, but see no reason to pay taxes on bond coupons now, when I am in a high tax bracket (and don't need the money). I also don't hold high-dividend funds or other stock funds that pay capital gains for the same reason. Why not control what taxes you pay, if you can do so?
Looking ahead, to when you retire, if the tax scheme was the same, would you shift things around at retirement?

Also, how did you figure the 75K above? 12k standard deduction, 38.6K before LTCG are taxed...?
We cannot direct the winds but we can adjust our sails • It's later than you think • Ack! Thbbft!
Admiral
Posts: 5039
Joined: Mon Oct 27, 2014 12:35 pm

Re: What am I missing about bonds...

Post by Admiral »

billthecat wrote: Tue Aug 14, 2018 6:23 pm
Admiral wrote: Tue Aug 14, 2018 4:30 pm
billthecat wrote: Tue Aug 14, 2018 2:58 pm
Admiral wrote: Tue Aug 14, 2018 1:07 pm
billthecat wrote: Tue Aug 14, 2018 12:11 pm

Can you elaborate? Can you show the math, similar to what WCI did, that would show that bonds should not be in taxable, given a tax rate, soy, lower than 35%? WCI assumed a 33% marginal tax rate (15% for LTCG and dividends). It would seem like the smaller the gap between marginal income tax rate and the LTCG/dividends rate, the lower the penalty from having bonds in taxable.

As an aside, I don't understand how he calculated the cumulative dividends for the growing stock fund (someone asked in the comments, but he didn't answer).
The issue is fairly simple: Given a choice of holding an investment like bonds (or bond funds), that makes regular, monthly coupon payments that are taxable at one's marginal rate--remember, these are not dividends, they are bond income, taxed at one's state and federal rates--should one hold such an investment in a taxable account or a tax-deferred retirement account? Should one pay the tax now or later? In a retirement account, presumably (for most people) the tax that will be eventually paid will be at a lower marginal rate, due to a lack of earned income. At the very least, they will have 75k worth of brackets to fill.

That is the issue.

WCI presumes (for the most part) that his audience will be at the same or possibly even higher marginal brackets when retired, due to very large portfolio balances at that time.

Now, all this is moot if one does not have access to tax-advantaged accounts, or if we are speaking of municipal bonds. However, Wellington's bonds are not munis.
That doesn't really account for performance, which is WCI's point. You have to compare tax adjusted performance, Now, if like livesoft your tax rate is zero on stock dividends, then yes bonds seem to be better in tax-deferred. But since stock funds will grow much faster than bond funds, it doesn't take much tax for it to be worthwhile to have bonds in taxable. Your marginal tax rate on withdrawals from your retirement account is irrelevant because your retirement account is really a Roth plus a government fund. So a hypothetical $147K fund is really a $100k Roth plus a $47K government fund. And so the question becomes what to invest the $100K in.
But one needs to compare specific holdings to do so (calculate tax-adjusted performance). I was speaking generally. The three fund portfolio specifies low cost, low tax, and efficient tax placement (see Wiki). Total Stock Market (TSM) for example has low expenses, low turnover, no capital gains (at least for a while) and SOME taxable distributions that are mostly qualified dividends that are not taxed like bond payments are. Of course stocks will outperform bonds on average over time but we have no way of knowing what the outperformance will be on a tax-adjusted basis in the future. All we know is how those holdings are taxed, and they are taxed differently, and particularly so depending on where they are held.

Like livesoft I hold stock funds in both taxable and tax-free/tax deferred, but see no reason to pay taxes on bond coupons now, when I am in a high tax bracket (and don't need the money). I also don't hold high-dividend funds or other stock funds that pay capital gains for the same reason. Why not control what taxes you pay, if you can do so?
Looking ahead, to when you retire, if the tax scheme was the same, would you shift things around at retirement?

Also, how did you figure the 75K above? 12k standard deduction, 38.6K before LTCG are taxed...?
I was referring to the amounts below a current 25% marginal bracket that a family has to fill before their retirement income (like bond payments, since that's what we're discussing) will be taxed at the same rate as it is now. So, pay the tax now, or later? The current 25% bracket starts at $75,901, before deductions. So one would need quite a bit of income when retired to pay more tax on their bonds in the future than they would today...and particularly so for those above a 25% bracket. [EDIT: 24k alone in deductions for a married couple]

As I said, this is relevant to MOST people but not all.

When I retire, I will draw down taxable first to let my investments grow, then tax deferred, then tax free (which I probably won't have to touch due to SS/pension). If there is some point where there is no earned income b/w me and spouse, we might convert more money to Roth. Ten years out so hard to know.
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billthecat
Posts: 1052
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Location: USA

Re: What am I missing about bonds...

Post by billthecat »

Admiral wrote: Wed Aug 15, 2018 6:12 am
billthecat wrote: Tue Aug 14, 2018 6:23 pm
Admiral wrote: Tue Aug 14, 2018 4:30 pm
billthecat wrote: Tue Aug 14, 2018 2:58 pm
Admiral wrote: Tue Aug 14, 2018 1:07 pm

The issue is fairly simple: Given a choice of holding an investment like bonds (or bond funds), that makes regular, monthly coupon payments that are taxable at one's marginal rate--remember, these are not dividends, they are bond income, taxed at one's state and federal rates--should one hold such an investment in a taxable account or a tax-deferred retirement account? Should one pay the tax now or later? In a retirement account, presumably (for most people) the tax that will be eventually paid will be at a lower marginal rate, due to a lack of earned income. At the very least, they will have 75k worth of brackets to fill.

That is the issue.

WCI presumes (for the most part) that his audience will be at the same or possibly even higher marginal brackets when retired, due to very large portfolio balances at that time.

Now, all this is moot if one does not have access to tax-advantaged accounts, or if we are speaking of municipal bonds. However, Wellington's bonds are not munis.
That doesn't really account for performance, which is WCI's point. You have to compare tax adjusted performance, Now, if like livesoft your tax rate is zero on stock dividends, then yes bonds seem to be better in tax-deferred. But since stock funds will grow much faster than bond funds, it doesn't take much tax for it to be worthwhile to have bonds in taxable. Your marginal tax rate on withdrawals from your retirement account is irrelevant because your retirement account is really a Roth plus a government fund. So a hypothetical $147K fund is really a $100k Roth plus a $47K government fund. And so the question becomes what to invest the $100K in.
But one needs to compare specific holdings to do so (calculate tax-adjusted performance). I was speaking generally. The three fund portfolio specifies low cost, low tax, and efficient tax placement (see Wiki). Total Stock Market (TSM) for example has low expenses, low turnover, no capital gains (at least for a while) and SOME taxable distributions that are mostly qualified dividends that are not taxed like bond payments are. Of course stocks will outperform bonds on average over time but we have no way of knowing what the outperformance will be on a tax-adjusted basis in the future. All we know is how those holdings are taxed, and they are taxed differently, and particularly so depending on where they are held.

Like livesoft I hold stock funds in both taxable and tax-free/tax deferred, but see no reason to pay taxes on bond coupons now, when I am in a high tax bracket (and don't need the money). I also don't hold high-dividend funds or other stock funds that pay capital gains for the same reason. Why not control what taxes you pay, if you can do so?
Looking ahead, to when you retire, if the tax scheme was the same, would you shift things around at retirement?

Also, how did you figure the 75K above? 12k standard deduction, 38.6K before LTCG are taxed...?
I was referring to the amounts below a current 25% marginal bracket that a family has to fill before their retirement income (like bond payments, since that's what we're discussing) will be taxed at the same rate as it is now. So, pay the tax now, or later? The current 25% bracket starts at $75,901, before deductions. So one would need quite a bit of income when retired to pay more tax on their bonds in the future than they would today...and particularly so for those above a 25% bracket. [EDIT: 24k alone in deductions for a married couple]

As I said, this is relevant to MOST people but not all.

When I retire, I will draw down taxable first to let my investments grow, then tax deferred, then tax free (which I probably won't have to touch due to SS/pension). If there is some point where there is no earned income b/w me and spouse, we might convert more money to Roth. Ten years out so hard to know.
OK. Right now, my marginal tax rate is quite high - at least 32% federal. But looking ahead to retirement, I won't fall into what livesoft referred to as the 1%, or the 45% who don't pay taxes. I did some back of the napkin calculations, and I'm right on the border where any more income - bond dividends or stock dividends - would be taxed. My tax-deffered accounts are a small portion of my holdings, only 15% (late start). So no matter which approach I take, it can't hold my whole bond allocation. So with either approach, my taxable account will have a minimal level of both bonds and stock no matter what. That minimum level of holdings in my taxable account doesn't produce enough to get me to $38,600 income (after taking the standard and HSA deductions). Of course, it's a mix of ordinary income (from the bonds) and qualified dividends (from the stock) - mostly the stock dividends.

If I fill out the rest of my taxable account with stock, making my Roth all bond, it would produce about $36k (after taking the standard and HSA deductions). At that point, my marginal LTCG / qualified dividend rate is still 0%, but only a couple of more thousand would push the marginal to 15% (but the average would still be low).

And if instead I filled out the rest of my taxable account with bonds, making my Roth all stock, it would produce about $42k (after taking the standard and HSA deductions).

Again, my tax-deferred account is only capable of holding 15% of my assets, and less than 50% of my bonds. Either way, I will have ordinary income from the bond dividends (taxed at 10-12%) and about enough additional qualified dividends to put me just below or just over the $38,600 threshold.
We cannot direct the winds but we can adjust our sails • It's later than you think • Ack! Thbbft!
Admiral
Posts: 5039
Joined: Mon Oct 27, 2014 12:35 pm

Re: What am I missing about bonds...

Post by Admiral »

billthecat wrote: Wed Aug 15, 2018 10:12 pm
Admiral wrote: Wed Aug 15, 2018 6:12 am
billthecat wrote: Tue Aug 14, 2018 6:23 pm
Admiral wrote: Tue Aug 14, 2018 4:30 pm
billthecat wrote: Tue Aug 14, 2018 2:58 pm

That doesn't really account for performance, which is WCI's point. You have to compare tax adjusted performance, Now, if like livesoft your tax rate is zero on stock dividends, then yes bonds seem to be better in tax-deferred. But since stock funds will grow much faster than bond funds, it doesn't take much tax for it to be worthwhile to have bonds in taxable. Your marginal tax rate on withdrawals from your retirement account is irrelevant because your retirement account is really a Roth plus a government fund. So a hypothetical $147K fund is really a $100k Roth plus a $47K government fund. And so the question becomes what to invest the $100K in.
But one needs to compare specific holdings to do so (calculate tax-adjusted performance). I was speaking generally. The three fund portfolio specifies low cost, low tax, and efficient tax placement (see Wiki). Total Stock Market (TSM) for example has low expenses, low turnover, no capital gains (at least for a while) and SOME taxable distributions that are mostly qualified dividends that are not taxed like bond payments are. Of course stocks will outperform bonds on average over time but we have no way of knowing what the outperformance will be on a tax-adjusted basis in the future. All we know is how those holdings are taxed, and they are taxed differently, and particularly so depending on where they are held.

Like livesoft I hold stock funds in both taxable and tax-free/tax deferred, but see no reason to pay taxes on bond coupons now, when I am in a high tax bracket (and don't need the money). I also don't hold high-dividend funds or other stock funds that pay capital gains for the same reason. Why not control what taxes you pay, if you can do so?
Looking ahead, to when you retire, if the tax scheme was the same, would you shift things around at retirement?

Also, how did you figure the 75K above? 12k standard deduction, 38.6K before LTCG are taxed...?
I was referring to the amounts below a current 25% marginal bracket that a family has to fill before their retirement income (like bond payments, since that's what we're discussing) will be taxed at the same rate as it is now. So, pay the tax now, or later? The current 25% bracket starts at $75,901, before deductions. So one would need quite a bit of income when retired to pay more tax on their bonds in the future than they would today...and particularly so for those above a 25% bracket. [EDIT: 24k alone in deductions for a married couple]

As I said, this is relevant to MOST people but not all.

When I retire, I will draw down taxable first to let my investments grow, then tax deferred, then tax free (which I probably won't have to touch due to SS/pension). If there is some point where there is no earned income b/w me and spouse, we might convert more money to Roth. Ten years out so hard to know.
OK. Right now, my marginal tax rate is quite high - at least 32% federal. But looking ahead to retirement, I won't fall into what livesoft referred to as the 1%, or the 45% who don't pay taxes. I did some back of the napkin calculations, and I'm right on the border where any more income - bond dividends or stock dividends - would be taxed. My tax-deffered accounts are a small portion of my holdings, only 15% (late start). So no matter which approach I take, it can't hold my whole bond allocation. So with either approach, my taxable account will have a minimal level of both bonds and stock no matter what. That minimum level of holdings in my taxable account doesn't produce enough to get me to $38,600 income (after taking the standard and HSA deductions). Of course, it's a mix of ordinary income (from the bonds) and qualified dividends (from the stock) - mostly the stock dividends.

If I fill out the rest of my taxable account with stock, making my Roth all bond, it would produce about $36k (after taking the standard and HSA deductions). At that point, my marginal LTCG / qualified dividend rate is still 0%, but only a couple of more thousand would push the marginal to 15% (but the average would still be low).

And if instead I filled out the rest of my taxable account with bonds, making my Roth all stock, it would produce about $42k (after taking the standard and HSA deductions).

Again, my tax-deferred account is only capable of holding 15% of my assets, and less than 50% of my bonds. Either way, I will have ordinary income from the bond dividends (taxed at 10-12%) and about enough additional qualified dividends to put me just below or just over the $38,600 threshold.
I think you are confused, or I am not understanding your post. The $38,600 threshold is for your TOTAL income (like from a W2) not from just your investment income. If you are at a 32% marginal rate, trust me, you are (or should be) paying tax on your taxable investments that generate any income whatsoever.
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billthecat
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Re: What am I missing about bonds...

Post by billthecat »

Admiral wrote: Thu Aug 16, 2018 6:12 am
billthecat wrote: Wed Aug 15, 2018 10:12 pm
Admiral wrote: Wed Aug 15, 2018 6:12 am
billthecat wrote: Tue Aug 14, 2018 6:23 pm
Admiral wrote: Tue Aug 14, 2018 4:30 pm

But one needs to compare specific holdings to do so (calculate tax-adjusted performance). I was speaking generally. The three fund portfolio specifies low cost, low tax, and efficient tax placement (see Wiki). Total Stock Market (TSM) for example has low expenses, low turnover, no capital gains (at least for a while) and SOME taxable distributions that are mostly qualified dividends that are not taxed like bond payments are. Of course stocks will outperform bonds on average over time but we have no way of knowing what the outperformance will be on a tax-adjusted basis in the future. All we know is how those holdings are taxed, and they are taxed differently, and particularly so depending on where they are held.

Like livesoft I hold stock funds in both taxable and tax-free/tax deferred, but see no reason to pay taxes on bond coupons now, when I am in a high tax bracket (and don't need the money). I also don't hold high-dividend funds or other stock funds that pay capital gains for the same reason. Why not control what taxes you pay, if you can do so?
Looking ahead, to when you retire, if the tax scheme was the same, would you shift things around at retirement?

Also, how did you figure the 75K above? 12k standard deduction, 38.6K before LTCG are taxed...?
I was referring to the amounts below a current 25% marginal bracket that a family has to fill before their retirement income (like bond payments, since that's what we're discussing) will be taxed at the same rate as it is now. So, pay the tax now, or later? The current 25% bracket starts at $75,901, before deductions. So one would need quite a bit of income when retired to pay more tax on their bonds in the future than they would today...and particularly so for those above a 25% bracket. [EDIT: 24k alone in deductions for a married couple]

As I said, this is relevant to MOST people but not all.

When I retire, I will draw down taxable first to let my investments grow, then tax deferred, then tax free (which I probably won't have to touch due to SS/pension). If there is some point where there is no earned income b/w me and spouse, we might convert more money to Roth. Ten years out so hard to know.
OK. Right now, my marginal tax rate is quite high - at least 32% federal. But looking ahead to retirement, I won't fall into what livesoft referred to as the 1%, or the 45% who don't pay taxes. I did some back of the napkin calculations, and I'm right on the border where any more income - bond dividends or stock dividends - would be taxed. My tax-deffered accounts are a small portion of my holdings, only 15% (late start). So no matter which approach I take, it can't hold my whole bond allocation. So with either approach, my taxable account will have a minimal level of both bonds and stock no matter what. That minimum level of holdings in my taxable account doesn't produce enough to get me to $38,600 income (after taking the standard and HSA deductions). Of course, it's a mix of ordinary income (from the bonds) and qualified dividends (from the stock) - mostly the stock dividends.

If I fill out the rest of my taxable account with stock, making my Roth all bond, it would produce about $36k (after taking the standard and HSA deductions). At that point, my marginal LTCG / qualified dividend rate is still 0%, but only a couple of more thousand would push the marginal to 15% (but the average would still be low).

And if instead I filled out the rest of my taxable account with bonds, making my Roth all stock, it would produce about $42k (after taking the standard and HSA deductions).

Again, my tax-deferred account is only capable of holding 15% of my assets, and less than 50% of my bonds. Either way, I will have ordinary income from the bond dividends (taxed at 10-12%) and about enough additional qualified dividends to put me just below or just over the $38,600 threshold.
I think you are confused, or I am not understanding your post. The $38,600 threshold is for your TOTAL income (like from a W2) not from just your investment income. If you are at a 32% marginal rate, trust me, you are (or should be) paying tax on your taxable investments that generate any income whatsoever.
You’re confused - I’m distinguishing between today and in retirement. Today my marginal tax rate is high. In retirement, I won’t have the W2 income, just the ordinary income from the bond dividends and LTCG/qualified dividends from the stock. The point is that I would be right around the $38;600 line. Just under it if my Roth is bonds (and have more stock in taxable), just over it if it’s stock (and have more bonds in taxable). It will probably be just over either way as I accumulate a bit more.

So I can’t just look at my tax rates today, because that will change. And I can’t just simply say that in retirement the amount at issue is taxed at my marginal rate, because the amount straddles the zero tax that livesoft pays and the 15% (for the LTCG/qualified dividends) that WCI assumes applies to the full amount.
We cannot direct the winds but we can adjust our sails • It's later than you think • Ack! Thbbft!
Admiral
Posts: 5039
Joined: Mon Oct 27, 2014 12:35 pm

Re: What am I missing about bonds...

Post by Admiral »

billthecat wrote: Thu Aug 16, 2018 8:30 am
Admiral wrote: Thu Aug 16, 2018 6:12 am
billthecat wrote: Wed Aug 15, 2018 10:12 pm
Admiral wrote: Wed Aug 15, 2018 6:12 am
billthecat wrote: Tue Aug 14, 2018 6:23 pm

Looking ahead, to when you retire, if the tax scheme was the same, would you shift things around at retirement?

Also, how did you figure the 75K above? 12k standard deduction, 38.6K before LTCG are taxed...?
I was referring to the amounts below a current 25% marginal bracket that a family has to fill before their retirement income (like bond payments, since that's what we're discussing) will be taxed at the same rate as it is now. So, pay the tax now, or later? The current 25% bracket starts at $75,901, before deductions. So one would need quite a bit of income when retired to pay more tax on their bonds in the future than they would today...and particularly so for those above a 25% bracket. [EDIT: 24k alone in deductions for a married couple]

As I said, this is relevant to MOST people but not all.

When I retire, I will draw down taxable first to let my investments grow, then tax deferred, then tax free (which I probably won't have to touch due to SS/pension). If there is some point where there is no earned income b/w me and spouse, we might convert more money to Roth. Ten years out so hard to know.
OK. Right now, my marginal tax rate is quite high - at least 32% federal. But looking ahead to retirement, I won't fall into what livesoft referred to as the 1%, or the 45% who don't pay taxes. I did some back of the napkin calculations, and I'm right on the border where any more income - bond dividends or stock dividends - would be taxed. My tax-deffered accounts are a small portion of my holdings, only 15% (late start). So no matter which approach I take, it can't hold my whole bond allocation. So with either approach, my taxable account will have a minimal level of both bonds and stock no matter what. That minimum level of holdings in my taxable account doesn't produce enough to get me to $38,600 income (after taking the standard and HSA deductions). Of course, it's a mix of ordinary income (from the bonds) and qualified dividends (from the stock) - mostly the stock dividends.

If I fill out the rest of my taxable account with stock, making my Roth all bond, it would produce about $36k (after taking the standard and HSA deductions). At that point, my marginal LTCG / qualified dividend rate is still 0%, but only a couple of more thousand would push the marginal to 15% (but the average would still be low).

And if instead I filled out the rest of my taxable account with bonds, making my Roth all stock, it would produce about $42k (after taking the standard and HSA deductions).

Again, my tax-deferred account is only capable of holding 15% of my assets, and less than 50% of my bonds. Either way, I will have ordinary income from the bond dividends (taxed at 10-12%) and about enough additional qualified dividends to put me just below or just over the $38,600 threshold.
I think you are confused, or I am not understanding your post. The $38,600 threshold is for your TOTAL income (like from a W2) not from just your investment income. If you are at a 32% marginal rate, trust me, you are (or should be) paying tax on your taxable investments that generate any income whatsoever.
You’re confused - I’m distinguishing between today and in retirement. Today my marginal tax rate is high. In retirement, I won’t have the W2 income, just the ordinary income from the bond dividends and LTCG/qualified dividends from the stock. The point is that I would be right around the $38;600 line. Just under it if my Roth is bonds (and have more stock in taxable), just over it if it’s stock (and have more bonds in taxable). It will probably be just over either way as I accumulate a bit more.

So I can’t just look at my tax rates today, because that will change. And I can’t just simply say that in retirement the amount at issue is taxed at my marginal rate, because the amount straddles the zero tax that livesoft pays and the 15% (for the LTCG/qualified dividends) that WCI assumes applies to the full amount.
So you're worried about possibly having to pay 0-15% tax at some point in the future (not sure of your age) after a massive tax savings now? :confused Why don't you simply use a back-door Roth (assuming your income puts you above the phaseout for a direct contribution) to move taxable money into a sheltered account? Then buy bonds. If you are already maxing it out, then you should be exchanging stocks for bonds in that space until you reach your desired AA across all account types.

There is no law that says one cannot hold bonds in a taxable account. I was simply pointing out that doing so creates a tax drag that may not be necessary. YMMV. Good luck with whatever you decide!
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