Question on fixed income assets in portfolio

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TracyC
Posts: 10
Joined: Sun Mar 27, 2016 4:59 pm

Question on fixed income assets in portfolio

Post by TracyC »

Thanks in advance for any advice you can give me on the 2 questions I have put at the end!

Emergency funds: About 6 months of expenses in cds/cash (4.3% of portfolio)
Debt: Mortgage 10 year 1.875% about 9 years and 400k left
Tax Filing Status: Married Filing Jointly
Tax Rate: 35% Federal, 5% State
State of Residence:MA
Age:spouse 59/me 57
Desired Asset allocation: 65% stocks / 35% bonds
Desired International allocation:

approximate size of total portfolio: $3.2M excluding real estate asset

Current retirement assets (cash is remaining 4.3%)

Taxable both

VMATX 7.5%
VWALX 5%
VOO 36%
Crypto .07%
Ibonds .62%

His 401k

MIP II CL 3 stable value 19%
Spartan S&P index fund 10%
Fidelity ® Growth Company Commingled Pool Class 2 3%
T. Rowe Price New Horizons Fund I Class .3%
Old 401k mostly stock .22%

His Roth IRA -holding a bank stock
Stock 7.5%

Her Roth IRA- holding a bank stock
Stock 1.5%

Her Traditional IRA- holding a bank stock
Stock 4%

HSA his
fxaix 1%

HSA hers
fxaix .1%

95.82%

My main concern is that 1) maybe we should be loading up on fixed income mutual funds in the 401(k) instead of holding so much in taxable in the municipal bond funds. They’re currently at a loss in taxable so we could take the loss and then shift money from the stock funds inside the 401(k). 2) if we do this do we put it all to the stable value fund or one of the other bond funds inside the 401k?


PIM TOTAL RT INST (PTTRX)
05/11/1987
Bond/Managed Income Intermediate-Term Yes 0.47% No additional fees apply.
VANG INFL PROT INST (VIPIX)
06/29/2000
Bond/Managed Income Intermediate-Term Yes 0.07% No additional fees apply.
VANG INST TOT BD MKT
04/12/2019
Bond/Managed Income Intermediate-Term Yes 0.025% No additional fees apply.
JPM HIGH YIELD R6 (JHYUX)
11/13/1998
Bond/Managed Income High-Yield Yes 0.6% No additional fees apply.
Investments you currently own MIP II CL 3
04/20/1993
7 day yield as of
07/31/2022 1.50%
Bond/Managed Income Stable Value Yes 0.25% No additional fees apply.
niagara_guy
Posts: 706
Joined: Tue Feb 11, 2020 8:32 am

Re: Question on fixed income assets in portfolio

Post by niagara_guy »

I agree with the view that it's better to hold stocks in taxable than bonds and hold bonds in pretax accounts like a t-ira or 401k.

Here's a link:

https://www.bogleheads.org/wiki/Tax-eff ... _placement

in taxable I hold VFIAX (vanguard s&p 500 index fund), most of the dividends are qualified so taxed at a lower rate that normal income. For me (pretty low income) that means zero taxes on these dividends. I am sure there are other funds that are as good for taxable as VFIAX but I don't know the details.
dbr
Posts: 41905
Joined: Sun Mar 04, 2007 9:50 am

Re: Question on fixed income assets in portfolio

Post by dbr »

Right, it usually makes no sense to hold munis in taxable when you can hold bonds in a 401k. Getting stocks out of the 401k will put the growth in stocks at cap gains tax rates and possible basis step up in taxable rather than getting large RMDs from the 401k.

In my opinion, not necessarily shared by everyone, an investor your age could well put all 35% in TIPS (VIPIX).
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