What percent of Roth IRA should be in bonds if I am 38

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
NostraHistoria
Posts: 12
Joined: Sat May 01, 2021 2:53 pm

What percent of Roth IRA should be in bonds if I am 38

Post by NostraHistoria »

What do Bogleheads say? 38%
Makefile
Posts: 713
Joined: Fri Apr 22, 2016 11:03 pm

Re: What percent of Roth IRA should be in bonds if I am 38

Post by Makefile »

If you can, you might want to hold bonds in a Traditional account and reserve your Roth for stocks; see tax-efficient fund placement on the wiki.

"Age in bonds" or "age-10 in bonds" doesn't get thrown quite as much as it once was. There was actually a thread about what advice has changed the most over the years recently. For what it's worth Vanguard's Target Retirement 2045 fund is 10.5% bonds, and their LifeStrategy Growth fund is 19.1% bonds. 10 to 20 years from now one will be able to look back and see whether that was prudent or not.

You might consider going on the wiki and finding the template for portfolio questions and ask in that format.
yules
Posts: 327
Joined: Wed Nov 27, 2019 10:31 am

Re: What percent of Roth IRA should be in bonds if I am 38

Post by yules »

NostraHistoria wrote: Sun May 02, 2021 12:01 pm What do Bogleheads say? 38%
This isn't nearly as developed a question as to solicit useful, relevant advice. So the best I can say is to not (necessarily) consider the parts of your portfolio as different entities, but first consider your portfolio as a whole to determine how much stocks and bonds you want. Once you've done that, then you can determine how those percentages can be allocated across Roth IRA, 401k, taxable, etc.

For example, if you want 67% stocks and 33% bonds, you don't have to have that exact ratio in Roth IRA, 401k, and taxable. You could have 100% stocks Roth IRA, 50/50 stocks/in in 401k, and 100% stocks in taxable if taken together it matches your desired 67/33.

Yules
Big Dog
Posts: 2513
Joined: Mon Sep 07, 2015 4:12 pm

Re: What percent of Roth IRA should be in bonds if I am 38

Post by Big Dog »

For me at that age, it was zero, and that is what I recommended for my 30-something kids. (I didn't get into bonds until close to retirement.)
Hockey10
Posts: 910
Joined: Wed Aug 24, 2016 12:20 pm
Location: Philadelphia suburbs

Re: What percent of Roth IRA should be in bonds if I am 38

Post by Hockey10 »

Zero.
Xrayman69
Posts: 725
Joined: Fri Jun 01, 2018 8:52 pm

Re: What percent of Roth IRA should be in bonds if I am 38

Post by Xrayman69 »

Hockey10 wrote: Sun May 02, 2021 12:26 pmZero.
+1.

Minimizes the benefit of the ROTH compared to potentially higher capital appreciation opportunity of equities that would subsequently not be taxed on capital gains.
Topic Author
NostraHistoria
Posts: 12
Joined: Sat May 01, 2021 2:53 pm

Re: What percent of Roth IRA should be in bonds if I am 38

Post by NostraHistoria »

Interesting. Thanks. I will probably rebalance my Roth IRA tomorrow.
Topic Author
NostraHistoria
Posts: 12
Joined: Sat May 01, 2021 2:53 pm

Re: What percent of Roth IRA should be in bonds if I am 38

Post by NostraHistoria »

Makefile wrote: Sun May 02, 2021 12:06 pm If you can, you might want to hold bonds in a Traditional account and reserve your Roth for stocks; see tax-efficient fund placement on the wiki.

"Age in bonds" or "age-10 in bonds" doesn't get thrown quite as much as it once was. There was actually a thread about what advice has changed the most over the years recently. For what it's worth Vanguard's Target Retirement 2045 fund is 10.5% bonds, and their LifeStrategy Growth fund is 19.1% bonds. 10 to 20 years from now one will be able to look back and see whether that was prudent or not.

You might consider going on the wiki and finding the template for portfolio questions and ask in that format.
Can you give me a link?
Dandy
Posts: 6498
Joined: Sun Apr 25, 2010 7:42 pm

Re: What percent of Roth IRA should be in bonds if I am 38

Post by Dandy »

In your younger years the Roth should generally be your most aggressive allocation compared to taxable or IRA/401k. Many go very aggressive in the Roth I think my top was 65/35 but I was 55/45 at my highest overall.
User avatar
Stinky
Posts: 7540
Joined: Mon Jun 12, 2017 11:38 am
Location: Sweet Home Alabama

Re: What percent of Roth IRA should be in bonds if I am 38

Post by Stinky »

Xrayman69 wrote: Sun May 02, 2021 12:31 pm
Hockey10 wrote: Sun May 02, 2021 12:26 pmZero.
+1.

Minimizes the benefit of the ROTH compared to potentially higher capital appreciation opportunity of equities that would subsequently not be taxed on capital gains.
Absolutely correct.
It's a GREAT day to be alive! - Travis Tritt
User avatar
vineviz
Posts: 9837
Joined: Tue May 15, 2018 1:55 pm

Re: What percent of Roth IRA should be in bonds if I am 38

Post by vineviz »

NostraHistoria wrote: Sun May 02, 2021 12:01 pm What do Bogleheads say? 38%
If you have an average risk tolerance it’s doubtful that you should have any bonds.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
dru808
Posts: 1560
Joined: Sat Oct 15, 2011 2:42 pm
Location: mid pac

Re: What percent of Roth IRA should be in bonds if I am 38

Post by dru808 »

0-10% if you’re comfortable with that level of risk. 38-40% if you’re worried about the market and constantly checking your balance.
..../..../.../...&...
User avatar
anon_investor
Posts: 6119
Joined: Mon Jun 03, 2019 1:43 pm

Re: What percent of Roth IRA should be in bonds if I am 38

Post by anon_investor »

vineviz wrote: Sun May 02, 2021 1:45 pm
NostraHistoria wrote: Sun May 02, 2021 12:01 pm What do Bogleheads say? 38%
If you have an average risk tolerance it’s doubtful that you should have any bonds.
+1.
User avatar
Bogle7
Posts: 1036
Joined: Fri May 11, 2018 9:33 am
Location: Mountain state

Zero

Post by Bogle7 »

Hockey10 wrote: Sun May 02, 2021 12:26 pmZero.
+1
Old fart who does three index funds, baby.
User avatar
KingRiggs
Posts: 766
Joined: Wed Dec 12, 2018 12:19 pm
Location: Indiana

Re: What percent of Roth IRA should be in bonds if I am 38

Post by KingRiggs »

If you have access to all three “flavors” of investment accounts (tax-free, ie Roth, tax-deferred ie traditional IRA or 401k, and taxable brokerage account) the answer is zero.

Keep your Roth all equities (REITS count), keep your taxable as all equities (NO REITS HERE), and do your rebalancing in your tax-deferred account, assuming there’s enough room for the bonds you’d like to carry. Only after your traditional tax-deferred account is 100% bonds and you need to buy more would I consider municipal bonds in a taxable account.

Roth stays all equity, all the time.
Advice = noun | Advise = verb | | Roth, not ROTH
User avatar
BostonBoy
Posts: 158
Joined: Thu Dec 24, 2009 11:10 pm
Location: New Smyrna Beach

Re: What percent of Roth IRA should be in bonds if I am 38

Post by BostonBoy »

0% Put stocks in your Roth. I have mid-caps in my Roth.
Topic Author
NostraHistoria
Posts: 12
Joined: Sat May 01, 2021 2:53 pm

Re: What percent of Roth IRA should be in bonds if I am 38

Post by NostraHistoria »

I have mostly Fidelity's Zero funds in my Roth IRA: FNILX, FZILX, FZIPX, FZROX. I picked them over Vanguard index funds because they have zero expenses. Then, I have a little AAPL, AMZN, GOOG, SLV, and TSLA. I know that latter ones are not ones Bogleheads would support. Buffett just said in his annual meeting that the average investor should be 90% in index funds.
Last edited by NostraHistoria on Sun May 02, 2021 3:51 pm, edited 1 time in total.
User avatar
grabiner
Advisory Board
Posts: 29683
Joined: Tue Feb 20, 2007 11:58 pm
Location: Columbia, MD

Re: What percent of Roth IRA should be in bonds if I am 38

Post by grabiner »

Your risk tolerance determines what percentage of your portfolio should be in bonds. If your portfolio is 80% stock, you will lose 40% of the portfolio when the stock market loses half its value, whether the bonds are in an IRA, 401(k), or taxable account.

Therefore, the right question to ask first is, "What percent of my portfolio should be in bonds?" You can then determine, based on your tax situation and employer plan options, where the bonds should be. Usually, it is better to hold bonds in a 401(k) and stocks in a Roth IRA and taxable account, but this depends on your options. Some 401(k) plans have a low-cost S&P 500 index and everything else at high costs. If you have such a plan, you should hold the S&P 500 index in the 401(k), and find somewhere else to hold your bonds.
Wiki David Grabiner
User avatar
ruralavalon
Posts: 21087
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: What percent of Roth IRA should be in bonds if I am 38

Post by ruralavalon »

NostraHistoria wrote: Sun May 02, 2021 12:01 pm What do Bogleheads say? 38%
It is often better to coordinate investments among all accounts, treating all accounts together as a single unified portfolio, rather than treat each account separately. It's not necessary to have all components of the desired asset allocation in each account.

Bond funds are not very tax-efficient and ordinarily should be held in a tax-advantaged accounts, preferably tax-deferred accounts such as a traditional 401k or traditional IRA.

So in general hold stock funds in a Roth IRA, not bond funds.

Wiki article "Tax-efficient fund placement", link.
Last edited by ruralavalon on Sun May 02, 2021 4:05 pm, edited 1 time in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
User avatar
Toons
Posts: 13992
Joined: Fri Nov 21, 2008 10:20 am
Location: Hills of Tennessee

Re: What percent of Roth IRA should be in bonds if I am 38

Post by Toons »

38?
I say 0
When I was 38(1988)
The Dow was
2,061.48
Do the math
:wink:
:mrgreen:
Last edited by Toons on Sun May 02, 2021 4:09 pm, edited 1 time in total.
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
calwatch
Posts: 179
Joined: Wed Oct 02, 2013 1:48 am

Re: What percent of Roth IRA should be in bonds if I am 38

Post by calwatch »

Zero... I hold I and EE bonds, and bond funds for shorter term needs but those are in taxable, even though they may not be the best place for them tax wise, so my Roth can keep growing.
User avatar
GerryL
Posts: 3118
Joined: Fri Sep 20, 2013 11:40 pm

Re: What percent of Roth IRA should be in bonds if I am 38

Post by GerryL »

I think a better question would be "In which account(s) should I put the bond portion of my portfolio: tIRA, Roth or taxable?"

The idea is to invest according to your preferred asset allocation based on WHEN you expect to tap each of the accounts. In my case, I am in my 70s and all of my needs are met with SS and RMDs. My Roth is 100% in Total International Stock Index Fund.
MathWizard
Posts: 4750
Joined: Tue Jul 26, 2011 1:35 pm

Re: What percent of Roth IRA should be in bonds if I am 38

Post by MathWizard »

0%.

At your age you should have a high stock equity. Since you have a long time horizon.

Equities will generally return more, and Roth is already taxed.
Topic Author
NostraHistoria
Posts: 12
Joined: Sat May 01, 2021 2:53 pm

Re: What percent of Roth IRA should be in bonds if I am 38

Post by NostraHistoria »

Thanks to everyone for their wisdom. It looks like I need to read more about asset allocation.
User avatar
retired@50
Posts: 5477
Joined: Tue Oct 01, 2019 2:36 pm
Location: Living in the U.S.A.

Re: What percent of Roth IRA should be in bonds if I am 38

Post by retired@50 »

NostraHistoria wrote: Sun May 02, 2021 12:45 pm
Makefile wrote: Sun May 02, 2021 12:06 pm If you can, you might want to hold bonds in a Traditional account and reserve your Roth for stocks; see tax-efficient fund placement on the wiki.

"Age in bonds" or "age-10 in bonds" doesn't get thrown quite as much as it once was. There was actually a thread about what advice has changed the most over the years recently. For what it's worth Vanguard's Target Retirement 2045 fund is 10.5% bonds, and their LifeStrategy Growth fund is 19.1% bonds. 10 to 20 years from now one will be able to look back and see whether that was prudent or not.

You might consider going on the wiki and finding the template for portfolio questions and ask in that format.
Can you give me a link?
Tax efficient fund placement: https://www.bogleheads.org/wiki/Tax-eff ... _placement

Asking Portfolio Questions: viewtopic.php?f=1&t=6212

Regards,
This is one person's opinion. Nothing more.
international001
Posts: 1957
Joined: Thu Feb 15, 2018 7:31 pm

Re: What percent of Roth IRA should be in bonds if I am 38

Post by international001 »

grabiner wrote: Sun May 02, 2021 3:29 pm Your risk tolerance determines what percentage of your portfolio should be in bonds. If your portfolio is 80% stock, you will lose 40% of the portfolio when the stock market loses half its value, whether the bonds are in an IRA, 401(k), or taxable account.

Therefore, the right question to ask first is, "What percent of my portfolio should be in bonds?" You can then determine, based on your tax situation and employer plan options, where the bonds should be. Usually, it is better to hold bonds in a 401(k) and stocks in a Roth IRA and taxable account, but this depends on your options. Some 401(k) plans have a low-cost S&P 500 index and everything else at high costs. If you have such a plan, you should hold the S&P 500 index in the 401(k), and find somewhere else to hold your bonds.
But for the 100% rational folks that can are comfortable with whatever loss if it's rational

I thought the historic rule of thumb is that 20 years is the magic number where 100% stock will perform always better than any combination of stocks and bonds. So if you only need the money for retirement and you are sure you'll retire in 20+ years, 100% stocks is the rational choice.
stimulacra
Posts: 935
Joined: Wed Dec 21, 2016 3:50 pm
Location: Houston

Re: What percent of Roth IRA should be in bonds if I am 38

Post by stimulacra »

Outside of the M1 Hedgefundie play account, I don't keep any bonds in my Roth space. Bonds stay in my traditional and 401k.
averagedude
Posts: 1512
Joined: Sun May 13, 2018 3:41 pm

Re: What percent of Roth IRA should be in bonds if I am 38

Post by averagedude »

My Roth IRA will be my last bucket to tap and I will most likely be in my early eighties before I do so. My intention is to be 100% in stocks up until 10 years of withdrawing from it.
placeholder
Posts: 4579
Joined: Tue Aug 06, 2013 12:43 pm

Re: What percent of Roth IRA should be in bonds if I am 38

Post by placeholder »

I am 64 but my fixed income is only 40% and none of that in roth all in traditional 401k.
User avatar
dogagility
Posts: 1510
Joined: Fri Feb 24, 2017 6:41 am

Re: What percent of Roth IRA should be in bonds if I am 38

Post by dogagility »

At your age, I would recommend a Roth IRA contain only equity to maximize tax-free withdrawal balance.
All children spill milk. Learn to smile and wipe it up. -- A Farmer's Wife
Post Reply