Tradional IRA Bonds

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irishguy
Posts: 68
Joined: Fri Jul 26, 2013 11:11 pm

Tradional IRA Bonds

Post by irishguy »

Hey Bogleheads,

I'm still trying to nail down how our traditional IRA's should be structured as we have just bonds in those and take RMD's to supplement social security (i.e. don't draw from anywhere else).

Curious what people are doing who have just bonds in their traditional IRA''s and only use them to supplement social security or pensions. How do you allocate between short term, intermediate, long term, inflation protected, etc., or do you just just keep it simple and use Total Bond Market Index?
jebmke
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Location: Delmarva Peninsula

Re: Tradional IRA Bonds

Post by jebmke »

We have short-term investment grade bond fund, a bit of intermediate-grade bond fund and some individual tips.
When you discover that you are riding a dead horse, the best strategy is to dismount.
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CAsage
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Re: Tradional IRA Bonds

Post by CAsage »

I hold Vanguard Corporate Intermediate VCIT ETF (most of IRA) and Vanguard Corporate Short term ETF VCSH (2 years worth) just because at one point I thought it paid a little better than BND. I invested my Mom's IRA in BND just because it was easy and perfectly adequate. CDs were better over some recent years, but that's hindsight.
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p1db
Posts: 136
Joined: Sun Dec 04, 2016 10:54 pm
Location: Northern California

Re: Tradional IRA Bonds

Post by p1db »

I am working towards building a 10 year TIPS ladder in my IRA with TIPS maturing every year starting 2029 when I am likely to start taking my RMDs.

I have no other bonds in my IRAs, rest of it is in S&P500 index fund.
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Electron
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Joined: Sat Mar 10, 2007 7:46 pm

Re: Tradional IRA Bonds

Post by Electron »

My IRA is currently holding Vanguard Intermediate-Term Investment-Grade (VFIDX).

Corporate bonds have a higher yield than Treasury or Government bonds but also have higher risk. Compare the charts in periods of market stress such as 2008 and 2020.

Some investors in the forum prefer to hold only Treasury and Government bonds. Corporate bonds have a higher correlation with equities.

Vanguard has a large selection of Intermediate Term Bond funds. One fund I like is Vanguard Intermediate-Term Bond Index Fund (VBILX). This fund holds 50% in Government bonds and 50% in Corporate bonds.
RyeBourbon
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Re: Tradional IRA Bonds

Post by RyeBourbon »

I don't have only bonds in my tIRA, but all my bonds are in my tIRA. I do have T-bills in taxable but I will be spending the cash as they mature.

I have a TIPS ladder to provide inflation-protected money until we start SS.
I have a CD/STRIPS ladder to cover my mortgage payment for the next 25 years (nearly to payoff). Since that's a nominal liability, I'm using nominal bonds. The yield on these bonds exceeds the interest rate on my mortgage, so the cost to purchase the ladder was about 85% of the payoff on my mortgage.
The remainder of my fixed income allocation is in FXNAX (Fidelity® U.S. Bond Index Fund).
The rest of my tIRA is in FZROX (Fidelity ZERO® Total Market Index Fund)

Each year, I will convert to Roth some of the bonds and some FZROX according to my tax strategy. Then spend from Roth.
Retired June 2023. LMP (TIPS Ladder/SS Bridge) 25%/Risk Portfolio 75%, AA = 60/30/10
jimkinny
Posts: 1925
Joined: Sun Mar 14, 2010 1:51 pm

Re: Tradional IRA Bonds

Post by jimkinny »

I use a short term and intermediate term TIPS funds for 2-4 and 4-10+ years respectively. I use a money market fund for years 1-2. TIPS are Treasuries with all of the same risks of any bond except for unexpected inflation. The recent inflation was not expected in 2019.
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