Bond fund options

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Beanbone
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Bond fund options

Post by Beanbone »

LOL I have a crappy retirement plan that only has limited options. I’m trying to find something that tracks similar to Vanguard long term or intermediate bond funds. Does anyone recognize these funds and could anyone recommend something similar?Unfortunately these expense ratios range from .83 to 1.5

Transamerica stable value compass option
Loomis Sayles Bond Ret Opt
Loomis Sayles Investment Grade Bond Ret. Opt
PIMCO Total Return Ret Opt
State Street US bond Index Ret Opt
Amer Cent Inflation-Adj Bond Ret Opt
American Century Government Bond Ret Opt
PIMCO Real Return Ret Opt
MainStay High Yield Corportate Bond Ret Opt
Transamerica Partners High Yield Bond Ret Opt
Columbia Convertible Securities Ret Opt
Templeton Global Bond Ret Opt
lakpr
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Re: Bond fund options

Post by lakpr »

What are the options for Target Date funds in your retirement plan look like?

It's usually worth it to consider an "old date" Target Date fund as a proxy for bonds. By that I mean, do you have something like "Vanguard Target Retirement 2010" or "Vanguard Target Retirement Income" fund available? Such funds technically have about 20% stocks, but YOU can think of it as your bond allocation for 3-fund portfolio purposes. In fact, Risk Efficient Frontier theory suggests that a 20:80 blend has the same risk as 100% bonds portfolio, but will keep pace with inflation.
jimkinny
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Re: Bond fund options

Post by jimkinny »

Consider the stable value fund, what is it paying and what is the expense ratio?
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Beanbone
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Re: Bond fund options

Post by Beanbone »

lakpr wrote: Fri Aug 14, 2020 7:22 am What are the options for Target Date funds in your retirement plan look like?

It's usually worth it to consider an "old date" Target Date fund as a proxy for bonds. By that I mean, do you have something like "Vanguard Target Retirement 2010" or "Vanguard Target Retirement Income" fund available? Such funds technically have about 20% stocks, but YOU can think of it as your bond allocation for 3-fund portfolio purposes. In fact, Risk Efficient Frontier theory suggests that a 20:80 blend has the same risk as 100% bonds portfolio, but will keep pace with inflation.
I have this -

TA BlackRock Lifepath Index Retirement Ret Opt

It's about 30% stocks 70% bonds. Here are the top holdings with .85% expense

U.S. Debt Index Fund E 54.35
Russell 1000 Index Fund 21.53
BlackRock MSCI ACWI ex-US IMI Index Fd E 11.84
U.S. TIPS Fund E 5.87
Russell 2000 Index Fund 3.36
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nisiprius
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Re: Bond fund options

Post by nisiprius »

Beanbone wrote: Fri Aug 14, 2020 6:29 am LOL I have a crappy retirement plan that only has limited options. I’m trying to find something that tracks similar to Vanguard long term or intermediate bond funds. Does anyone recognize these funds and could anyone recommend something similar?Unfortunately these expense ratios range from .83 to 1.5
State Street US Bond Index, SSFDX is the obvious Bogleheadish choice, because of the word "index" in the name. It turns out to be a bond index fund tracking virutally the same index as the Vanguard Total Bond Market Index Fund. Total Bond is an intermediate-term, investment grade bond fund. Without being sure about ticker symbol, share class, and whether the plan adds something to the expense ratio it's hard to say anything about that, but apart from expenses I would expect this to be a near-equivalent to Total Bond.

It will do the same job in your portfolio; it will just earn you a little bit less because of higher expenses.

Here is State Street's own description: State Street Aggregate Bond Index Fund - Class I
The State Street Aggregate Bond Index Fund (the "Fund") seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of an index that tracks the U.S. dollar denominated investment grade bond market over the long term.
Clicking on "About This Benchmark" says, as expected that it tracks the Bloomberg Barclays U.S. Aggregate Bond Index.

For Vanguard, at Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX), under the "Portfolio & Management Tab," we read
Vanguard Total Bond Market Index Fund seeks to track the performance of a broad, market-weighted bond index.
and under Strategy and Policy,
The fund employs an indexing investment approach designed to track the performance of the Bloomberg Barclays U.S. Aggregate Float Adjusted Bond Index.
I don't want to go down the rabbit hole of the difference between the Aggregate Bond Index and the Float Adjusted Aggregate Bond Index except to say it's virtually nil.

So, the funds have been virtually identical in the past, state virtually identical objectives of tracking virtually identical indexes, and therefore ought to be virtually identical in the future.

Source

Image
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lakpr
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Re: Bond fund options

Post by lakpr »

Looks like even the target date funds are having .80% expense ration or higher for you, so I do not see any advantage in using the Target Retirement funds for bond allocation ...

@nisiprius suggestion about the State Street Bond Index fund sounds the best, under the circumstances.
Last edited by lakpr on Fri Aug 14, 2020 9:06 am, edited 1 time in total.
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Re: Bond fund options

Post by ruralavalon »

State Street US bond Index Ret Opt is the obvious choice for a bond fund. Can you post a link to the fact sheet for that fund?

It's sad that the expense ratios charged in your employer's 401k plan are 0.85% and up. Still it's probably worthwhile to use the plan.
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Beanbone
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Re: Bond fund options

Post by Beanbone »

nisiprius wrote: Fri Aug 14, 2020 8:57 am
Beanbone wrote: Fri Aug 14, 2020 6:29 am LOL I have a crappy retirement plan that only has limited options. I’m trying to find something that tracks similar to Vanguard long term or intermediate bond funds. Does anyone recognize these funds and could anyone recommend something similar?Unfortunately these expense ratios range from .83 to 1.5
State Street US Bond Index, SSFDX is the obvious Bogleheadish choice, because of the word "index" in the name. It turns out to be a bond index fund tracking virutally the same index as the Vanguard Total Bond Market Index Fund. Total Bond is an intermediate-term, investment grade bond fund. Without being sure about ticker symbol, share class, and whether the plan adds something to the expense ratio it's hard to say anything about that, but apart from expenses I would expect this to be a near-equivalent to Total Bond.

It will do the same job in your portfolio; it will just earn you a little bit less because of higher expenses.

Here is State Street's own description: State Street Aggregate Bond Index Fund - Class I
The State Street Aggregate Bond Index Fund (the "Fund") seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of an index that tracks the U.S. dollar denominated investment grade bond market over the long term.
Clicking on "About This Benchmark" says, as expected that it tracks the Bloomberg Barclays U.S. Aggregate Bond Index.

For Vanguard, at Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX), under the "Portfolio & Management Tab," we read
Vanguard Total Bond Market Index Fund seeks to track the performance of a broad, market-weighted bond index.
and under Strategy and Policy,
The fund employs an indexing investment approach designed to track the performance of the Bloomberg Barclays U.S. Aggregate Float Adjusted Bond Index.
I don't want to go down the rabbit hole of the difference between the Aggregate Bond Index and the Float Adjusted Aggregate Bond Index except to say it's virtually nil.

So, the funds have been virtually identical in the past, state virtually identical objectives of tracking virtually identical indexes, and therefore ought to be virtually identical in the future.

Source

Image

Thanks. This is very helpful. Unfortunately, The State Sreet fund has a 1.11% expense ratio with my plan.

I am confused about retirement investing in 401K. Why do I need an employer to sponser this? I have multiple vanguard accounts. Shouldn't I be able to direct pre-tax contributions through my employer to vanguard or make after take contributions to a Vanguard 401k (non IRA / Roth IRA) then take a deduction?
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ruralavalon
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Re: Bond fund options

Post by ruralavalon »

Thanks. This is very helpful. Unfortunately, The State Sreet fund has a 1.11% expense ratio with my plan.
What is the expense ratio on "PIMCO Total Return Ret Opt"?
I am confused about retirement investing in 401K. Why do I need an employer to sponser this? I have multiple vanguard accounts. Shouldn't I be able to direct pre-tax contributions through my employer to vanguard or make after take contributions to a Vanguard 401k (non IRA / Roth IRA) then take a deduction?
Do you have any income from self-employment?

What is your age? Does your employer's 401k plan permit an in-service rollover at age 59.5 and above?
Last edited by ruralavalon on Fri Aug 14, 2020 10:41 am, edited 1 time in total.
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Beanbone
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Re: Bond fund options

Post by Beanbone »

ruralavalon wrote: Fri Aug 14, 2020 10:37 am What is the expense ratio on "PIMCO Total Return Ret Opt"?
1.35%. maybe I should look for a new job.
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ruralavalon
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Re: Bond fund options

Post by ruralavalon »

Do you have any income from self-employment?

What is your age? Does your employer's 401k plan permit an in-service rollover at age 59.5 and above?
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
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Beanbone
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Re: Bond fund options

Post by Beanbone »

ruralavalon wrote: Fri Aug 14, 2020 10:41 am Do you have any income from self-employment?

What is your age? Does your employer's 401k plan permit an in-service rollover at age 59.5 and above?
51 years old. no income from self employment
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Re: Bond fund options

Post by dratkinson »

Beanbone wrote: Fri Aug 14, 2020 10:27 am ...

Thanks. This is very helpful. Unfortunately, The State Sreet fund has a 1.11% expense ratio with my plan.

I am confused about retirement investing in 401K. Why do I need an employer to sponser this? I have multiple vanguard accounts. Shouldn't I be able to direct pre-tax contributions through my employer to vanguard or make after take contributions to a Vanguard 401k (non IRA / Roth IRA) then take a deduction?
To consider placing bonds in your total investments, then we need to know your complete information. So please edit the bottom of your OP (original post, original poster) to add ALL of the information requested in the sticky "Asking Portfolio Questions". (Omitted information = missed options.)


The short answer. If you're earning enough to have multiple Vanguard accounts, then you may have the option to...
--Use only your employer's lower-cost equity options.
--And put your bonds in one of your Vanguard accounts.

Vanguard options. Put your bonds in...
--tIRA. Bonds will minimize growth/taxes when you convert to Roth after retirement.
--Taxable. Muni bonds: BH-preferred VWITX (IT national), VWLTX (LT national), or single-state muni.
--Taxable. If within 30yrs of retirement, then US savings bonds: electronic his ($10K), hers ($10K), trust ($10K) = $30K/yr. I/EE x2 = $60K/yr. Paper I tax refund ($5K). So $65K/yr if I'm remembering correctly.


Other suggestions may present themselves once we know your complete financial situation.
E.G.: Use your spouse's lower-cost employer's retirement plan options to hold your family bonds.

But such options only becomes apparent if you know ALL of your information.
d.r.a., not dr.a. | I'm a novice investor, you are forewarned.
lakpr
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Re: Bond fund options

Post by lakpr »

I'd actually argue that BECAUSE of the obscene costs in the 401k plan, all bonds -- being the asset class with the lowest expected returns -- should be placed here. Doing so would also minimize the tax that the OP would have to pay eventually when withdrawing.

With a 1.31% expense ratio on what is essentially an index fund, and the bond index *IS* yielding 1.4%, the effective yield for the OP is 0.1%. He is very likely to be better off with the Stable Value Fund, even if it returns only 0.3%.
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Re: Bond fund options

Post by grabiner »

lakpr wrote: Fri Aug 14, 2020 11:55 am I'd actually argue that BECAUSE of the obscene costs in the 401k plan, all bonds -- being the asset class with the lowest expected returns -- should be placed here. Doing so would also minimize the tax that the OP would have to pay eventually when withdrawing.
High expenses on all funds don't affect the bond-versus-stock decision. If you have 1% higher expenses in your 401(k), and you stay with the employer for ten years, $10,000 in the 401(k) is equivalent to $9044 in a deductible traditional IRA, no matter what you invest it in. After those ten years, you will roll the 401(k) into an IRA (or your new employer's plan) and have the equivalent of the low-cost growth of $9044.

What does matter is the relative costs of the stock and bond funds. Some 401(k) plans have a low-cost S&P 500 index and high-cost funds for everything else. If you have such a 401(k), then you should put the entire 401(k) in the S&P 500 if this is consistent with your risk tolerance, and hold bonds and international stocks in your IRA and taxable account. In contrast, if the costs of bonds and stocks in the 401(k) are comparable, this doesn't affect the decision of what to hold in the 401(k), only how much to invest in it (prefer an IRA, and a 529 if you are saving for children's college, once you have the full employer match).
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Beanbone
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Re: Bond fund options

Post by Beanbone »

dratkinson wrote: Fri Aug 14, 2020 11:51 am
Beanbone wrote: Fri Aug 14, 2020 10:27 am ...

Thanks. This is very helpful. Unfortunately, The State Sreet fund has a 1.11% expense ratio with my plan.

I am confused about retirement investing in 401K. Why do I need an employer to sponser this? I have multiple vanguard accounts. Shouldn't I be able to direct pre-tax contributions through my employer to vanguard or make after take contributions to a Vanguard 401k (non IRA / Roth IRA) then take a deduction?
To consider placing bonds in your total investments, then we need to know your complete information. So please edit the bottom of your OP (original post, original poster) to add ALL of the information requested in the sticky "Asking Portfolio Questions". (Omitted information = missed options.)


The short answer. If you're earning enough to have multiple Vanguard accounts, then you may have the option to...
--Use only your employer's lower-cost equity options.
--And put your bonds in one of your Vanguard accounts.

Vanguard options. Put your bonds in...
--tIRA. Bonds will minimize growth/taxes when you convert to Roth after retirement.
--Taxable. Muni bonds: BH-preferred VWITX (IT national), VWLTX (LT national), or single-state muni.
--Taxable. If within 30yrs of retirement, then US savings bonds: electronic his ($10K), hers ($10K), trust ($10K) = $30K/yr. I/EE x2 = $60K/yr. Paper I tax refund ($5K). So $65K/yr if I'm remembering correctly.


Other suggestions may present themselves once we know your complete financial situation.
E.G.: Use your spouse's lower-cost employer's retirement plan options to hold your family bonds.

But such options only becomes apparent if you know ALL of your information.

Emergency funds: Three to six months of expenses

Debt: $300,000 mortgage

Tax Filing Status: (Married Filing Jointly 1 Dependent Children)

Tax Rate: 24% Federal, 6.3% State

State of Residence: NJ

Age: 51

Desired Asset allocation: 60% stocks / 40% bonds
Desired International allocation: 30% of stocks


Current retirement assets (not including about $300K - $400K in home equity and $100K in 529 plan)

$750,000
44% U.S. Stocks
17% International Stocks
15% U.S. Bonds
6% Cash
19% Other (TREA real estate and TIAA Guarenteed)

About $350K of this is in taxable vanguard account. Most of this (80%) in VTI, rest in CD's.

Remaining 400K in various 403b's, 401k's and IRA's. as VTI, bonds, TREA real estate and TIAA Guarenteed.
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Re: Bond fund options

Post by vineviz »

Beanbone wrote: Fri Aug 14, 2020 4:55 pm About $500K of this is in taxable vanguard account. Most of this (80%) in VTI, rest in CD's.

Remaining $250K in various 403b's, 401k's and IRA's. as bonds, TREA real estate and TIAA Guarenteed.
Given the variety of accounts you have, I expect that the advice grabiner offered will be helpful:
grabiner wrote: Fri Aug 14, 2020 12:30 pm Some 401(k) plans have a low-cost S&P 500 index and high-cost funds for everything else. If you have such a 401(k), then you should put the entire 401(k) in the S&P 500 if this is consistent with your risk tolerance, and hold bonds and international stocks in your IRA and taxable account.
If the stock index funds in your 401k are cheaper than the bond funds, go 100% stock in the 401k and adjust your IRA/403b/other 401ks to compensate.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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Beanbone
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Re: Bond fund options

Post by Beanbone »

vineviz wrote: Fri Aug 14, 2020 5:03 pm
Beanbone wrote: Fri Aug 14, 2020 4:55 pm About $500K of this is in taxable vanguard account. Most of this (80%) in VTI, rest in CD's.

Remaining $250K in various 403b's, 401k's and IRA's. as bonds, TREA real estate and TIAA Guarenteed.
Given the variety of accounts you have, I expect that the advice grabiner offered will be helpful:
grabiner wrote: Fri Aug 14, 2020 12:30 pm Some 401(k) plans have a low-cost S&P 500 index and high-cost funds for everything else. If you have such a 401(k), then you should put the entire 401(k) in the S&P 500 if this is consistent with your risk tolerance, and hold bonds and international stocks in your IRA and taxable account.
If the stock index funds in your 401k are cheaper than the bond funds, go 100% stock in the 401k and adjust your IRA/403b/other 401ks to compensate.
I've been told to put most of my stocks in taxable (which I've done to reach my target of 60%), so I'm left with bonds and alternatives in tax free.
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Beanbone
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Re: Bond fund options

Post by Beanbone »

dratkinson wrote: Fri Aug 14, 2020 11:51 am
Beanbone wrote: Fri Aug 14, 2020 10:27 am ...

Thanks. This is very helpful. Unfortunately, The State Sreet fund has a 1.11% expense ratio with my plan.

I am confused about retirement investing in 401K. Why do I need an employer to sponser this? I have multiple vanguard accounts. Shouldn't I be able to direct pre-tax contributions through my employer to vanguard or make after take contributions to a Vanguard 401k (non IRA / Roth IRA) then take a deduction?
To consider placing bonds in your total investments, then we need to know your complete information. So please edit the bottom of your OP (original post, original poster) to add ALL of the information requested in the sticky "Asking Portfolio Questions". (Omitted information = missed options.)


The short answer. If you're earning enough to have multiple Vanguard accounts, then you may have the option to...
--Use only your employer's lower-cost equity options.
--And put your bonds in one of your Vanguard accounts.

Vanguard options. Put your bonds in...
--tIRA. Bonds will minimize growth/taxes when you convert to Roth after retirement.
--Taxable. Muni bonds: BH-preferred VWITX (IT national), VWLTX (LT national), or single-state muni.
--Taxable. If within 30yrs of retirement, then US savings bonds: electronic his ($10K), hers ($10K), trust ($10K) = $30K/yr. I/EE x2 = $60K/yr. Paper I tax refund ($5K). So $65K/yr if I'm remembering correctly.


Other suggestions may present themselves once we know your complete financial situation.
E.G.: Use your spouse's lower-cost employer's retirement plan options to hold your family bonds.

But such options only becomes apparent if you know ALL of your information.
This last suggestion is great. I will max out my wife's 403b (which is vanguard), and lower my contributions. What is the limit for contributions as a couple to her account as percentage of salary? Is it based on our combined salary or her salary? (which is $90K)
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Re: Bond fund options

Post by vineviz »

Beanbone wrote: Fri Aug 14, 2020 5:48 pm I've been told to put most of my stocks in taxable (which I've done to reach my target of 60%), so I'm left with bonds and alternatives in tax free.
Told by whom?

I mean, "stocks in taxable" might be reasonable if all other considerations are equal. But if you're paying 0.5% more to keep bonds in your 401k, that "stocks in taxable" rule might not necessarily be valid.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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Beanbone
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Re: Bond fund options

Post by Beanbone »

vineviz wrote: Fri Aug 14, 2020 5:55 pm
Beanbone wrote: Fri Aug 14, 2020 5:48 pm I've been told to put most of my stocks in taxable (which I've done to reach my target of 60%), so I'm left with bonds and alternatives in tax free.
Told by whom?

I mean, "stocks in taxable" might be reasonable if all other considerations are equal. But if you're paying 0.5% more to keep bonds in your 401k, that "stocks in taxable" rule might not necessarily be valid.
Vanguard advisor said bonds in taxable accounts are less efficient then stocks. Also mentions it in the boglehead wiki https://www.bogleheads.org/wiki/Tax-eff ... _placement
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Re: Bond fund options

Post by Actin »

Everything is more efficient in non taxable. You only have so much free space in non taxable each year. You have to sacrifice something to the taxable account.
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Re: Bond fund options

Post by grabiner »

Beanbone wrote: Fri Aug 14, 2020 8:10 pm
vineviz wrote: Fri Aug 14, 2020 5:55 pm
Beanbone wrote: Fri Aug 14, 2020 5:48 pm I've been told to put most of my stocks in taxable (which I've done to reach my target of 60%), so I'm left with bonds and alternatives in tax free.
Told by whom?

I mean, "stocks in taxable" might be reasonable if all other considerations are equal. But if you're paying 0.5% more to keep bonds in your 401k, that "stocks in taxable" rule might not necessarily be valid.
Vanguard advisor said bonds in taxable accounts are less efficient then stocks. Also mentions it in the boglehead wiki https://www.bogleheads.org/wiki/Tax-eff ... _placement
However, tax efficiency isn't everything; you want to minimize total costs, not just tax costs. If your 401(k) has a stock index with 0.1% expenses and a bond fund with 0.8% expenses, and the tax costs in a taxable account are 0.3% for a stock index and 0.6% for a bond fund, then you will get better returns on both your stocks and your bonds if you hold stocks in the 401(k) and bonds in the taxable account.

In addition, the tax costs depend on your own tax situation, and on the specific funds involved. The wiki article mentions that low-yielding bonds are tax-efficient. Currently, almost all bonds are low-yielding, so there isn't as much tax benefit from holding bonds in a tax-deferred account; in many tax situation, bonds in taxable (munis in a high tax bracket) may be better.
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Re: Bond fund options

Post by dratkinson »

Beanbone wrote: Fri Aug 14, 2020 5:50 pm
dratkinson wrote: Fri Aug 14, 2020 11:51 am...
Other suggestions may present themselves once we know your complete financial situation.
E.G.: Use your spouse's lower-cost employer's retirement plan options to hold your family bonds.

But such options only becomes apparent if you know ALL of your information.
This last suggestion is great. I will max out my wife's 403b (which is vanguard), and lower my contributions. What is the limit for contributions as a couple to her account as percentage of salary? Is it based on our combined salary or her salary? (which is $90K)
Data points.
--HER employer's retirement plan, so HER contribution limit. Believe that's $19.5K for 2020.
--Her past equity contributions can be sold (tax-free) to buy bonds, so you are not restricted to only new money to buy bonds to balance your (plural) AA.


Don't jump from the frying pan into the fire. If your (plural) tax bracket is high enough, or lower and you can withstand a little more risk, then...
--Keep equities in her 403b to increase tax-free growth.
--Put low-cost equities in your 401k to increase tax-free growth.
--Put muni bonds in taxable to get low-cost bonds. Muni bonds in taxable are better than taxable bonds in a tax-deferred account because you get monthly tax-free dividends, and sales can receive LTCG benefit. On the other hand, all withdrawals (principal+distributions) from tax-deferred are taxed as ordinary income, and LTCG benefit is lost. Advantage: munis in taxable; if they can be made to work for you.

--Or you can go the savings bond route and defer dividends until you redeem then in retirement; at which time they are state tax exempt.


Again, the best answer depends upon us knowing your (plural) complete financial situation. So until we know it all, don't use your wife's account to solve your (singular) bond problem.
d.r.a., not dr.a. | I'm a novice investor, you are forewarned.
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Beanbone
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Re: Bond fund options

Post by Beanbone »

dratkinson wrote: Sat Aug 15, 2020 3:09 am
Beanbone wrote: Fri Aug 14, 2020 5:50 pm
dratkinson wrote: Fri Aug 14, 2020 11:51 am...
Other suggestions may present themselves once we know your complete financial situation.
E.G.: Use your spouse's lower-cost employer's retirement plan options to hold your family bonds.

But such options only becomes apparent if you know ALL of your information.
This last suggestion is great. I will max out my wife's 403b (which is vanguard), and lower my contributions. What is the limit for contributions as a couple to her account as percentage of salary? Is it based on our combined salary or her salary? (which is $90K)
Data points.
--HER employer's retirement plan, so HER contribution limit. Believe that's $19.5K for 2020.
--Her past equity contributions can be sold (tax-free) to buy bonds, so you are not restricted to only new money to buy bonds to balance your (plural) AA.


Don't jump from the frying pan into the fire. If your (plural) tax bracket is high enough, or lower and you can withstand a little more risk, then...
--Keep equities in her 403b to increase tax-free growth.
--Put low-cost equities in your 401k to increase tax-free growth.
--Put muni bonds in taxable to get low-cost bonds. Muni bonds in taxable are better than taxable bonds in a tax-deferred account because you get monthly tax-free dividends, and sales can receive LTCG benefit. On the other hand, all withdrawals (principal+distributions) from tax-deferred are taxed as ordinary income, and LTCG benefit is lost. Advantage: munis in taxable; if they can be made to work for you.

--Or you can go the savings bond route and defer dividends until you redeem then in retirement; at which time they are state tax exempt.


Again, the best answer depends upon us knowing your (plural) complete financial situation. So until we know it all, don't use your wife's account to solve your (singular) bond problem.
Thank you for this. Extremely helpful. I'm re-posting my sticky information below again if that helps (Our tax bracket / savings / target allocation etc.). I do have access to TIAA traditional, which I could max to about 30% of my portfolio if needed.



Emergency funds: Three to six months of expenses

Debt: $300,000 mortgage

Tax Filing Status: (Married Filing Jointly 1 Dependent Children)

Tax Rate: 24% Federal, 6.3% State

State of Residence: NJ

Age: 51

Desired Asset allocation: 60% stocks / 40% bonds
Desired International allocation: 30% of stocks


Current retirement assets (not including about $300K - $400K in home equity and $100K in 529 plan)

$750,000
44% U.S. Stocks
17% International Stocks
15% U.S. Bonds
6% Cash
19% Other (TREA real estate and TIAA Guarenteed)

About $350K of this is in taxable vanguard account. Most of this (80%) in VTI, rest in CD's.

Remaining 400K in various 403b's, 401k's and IRA's. as VTI, bonds, TREA real estate and TIAA Guarenteed.
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ruralavalon
Posts: 19469
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Bond fund options

Post by ruralavalon »

Beanbone wrote: Mon Aug 17, 2020 7:52 amThank you for this. Extremely helpful. I'm re-posting my sticky information below again if that helps (Our tax bracket / savings / target allocation etc.). I do have access to TIAA traditional, which I could max to about 30% of my portfolio if needed.



Emergency funds: Three to six months of expenses

Debt: $300,000 mortgage

Tax Filing Status: (Married Filing Jointly 1 Dependent Children)

Tax Rate: 24% Federal, 6.3% State

State of Residence: NJ

Age: 51

Desired Asset allocation: 60% stocks / 40% bonds
Desired International allocation: 30% of stocks


Current retirement assets (not including about $300K - $400K in home equity and $100K in 529 plan)

$750,000
44% U.S. Stocks
17% International Stocks
15% U.S. Bonds
6% Cash
19% Other (TREA real estate and TIAA Guarenteed)

About $350K of this is in taxable vanguard account. Most of this (80%) in VTI, rest in CD's.

Remaining 400K in various 403b's, 401k's and IRA's. as VTI, bonds, TREA real estate and TIAA Guarenteed.
It is important to know is the details of your accounts and the plans offered by your employers.

What fund firm or brokerage is each IRA with? What funds for other investments do you have in each account? What funds are offered in each 401k and 403b plan? Please give fund names, tickers and expense ratios. See this for information needed and format: "Asking Portfolio Questions".
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
Angst
Posts: 2433
Joined: Sat Jun 09, 2007 11:31 am

Re: Bond fund options

Post by Angst »

A couple ideas, all of which might already have been suggested:

1) The forum's Wiki provides info regarding how to campaign at work for a better 401(k) plan

2) If you don't already contribute to a personal IRA, as long as doing so wouldn't sacrifice an available employer 401k match, do it instead of 401k dollars.

3) If there is a good, low-cost S&P 500-like option in your 401k, use it instead and get your bond exposure elsewhere, perhaps in a personal IRA. Consider only LT or even extended-duration Treasury (EDV), esp. if your space for fixed income is limited.
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dratkinson
Posts: 5038
Joined: Thu Jul 26, 2007 6:23 pm
Location: Centennial CO

Re: Bond fund options

Post by dratkinson »

ruralavalon wrote: Mon Aug 17, 2020 9:11 am
Beanbone wrote: Mon Aug 17, 2020 7:52 amThank you for this. Extremely helpful. I'm re-posting my sticky information below again if that helps

Tax Rate: 24% Federal, 6.3% State

State of Residence: NJ
It is important to know is the details of your accounts and the plans offered by your employers.

What fund firm or brokerage is each IRA with? What funds for other investments do you have in each account? What funds are offered in each 401k and 403b plan? Please give fund names, tickers and expense ratios. See this for information needed and format: "Asking Portfolio Questions".
Sorry, OP. I'm moving between machines and missed your update as I was only checking your OP (original post) for your updated information, and the last few new posts.


+1 We need all of your information. Please provide it in the format requested by the sticky "Asking Portfolio Questions".
--Copy sticky and paste into a Word document on your PC. Work on it offline. Overwrite sticky with your information. (Abbreviated information is insufficient.)
--Provide all of the information requested, broken down by every account you (plural) own.
--For every account, we need to know where the account is held (Vanguard, Fidelity,…), and any fees associated with using the account.
--For every fund in every account, we need to know: percentage you own, fund symbol, fund name, and ER.

When done editing your data, edit your OP and paste your data into the bottom of it. Why? Because your followers expect to find all of your information in your OP. It's a courtesy to those who want to help you.

Then post a new reply to tell everyone that you have updated your OP with your information. The system will send out "New Reply Received" emails to call us back. And your new reply ("I've updated my OP") will direct us to your information. Easy peasy.


We really do need all of your information.
--With your complete information (accounts, fund names, and ERs), we know what is available to you, and if it costs you fees to invest in the account.
--With your complete information (percentages), we know what you own, can verify your stock/bond ratio, and international allocation.
--With your complete information (fund symbols), if we need more information about a fund, we can use the fund symbol to research it.


With your complete information,
--We can suggest which funds in which accounts to sell (to reduce account and fund fees),
--and which funds in which accounts to buy (to minimize account and fund fees).
--Which is what you want to know to solve your bond problem and reduce your costs.


Option. From your new information, and if you can withstand a little more risk, you may have the option to use VNJTX (New Jersey LT tax-exempt bond fund).

Am I suggesting you use VNJTX? No. I'm saying you may have that option. But using it depends upon what Accounts you have, the Funds available in each account, and upon your Risk Tolerance.


Notice how, as more of your information is revealed, new options present themselves. This is why we need all of your information, in one place (in your OP), that completely describes everything you (plural) are investing in. With complete information, you will get our best effort, and the best options we can suggest. Then you pick the one(s) you like.


Take your time. We'll wait. Call us back when you are ready.
d.r.a., not dr.a. | I'm a novice investor, you are forewarned.
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