Author Topic: equity to bond ratio for Inherited IRA  (Read 410 times)

olliebass

  • 5 O'Clock Shadow
  • *
  • Posts: 3
equity to bond ratio for Inherited IRA
« on: August 03, 2019, 09:09:59 PM »
I have an Inherited IRA and I have to take a Required Minimum Distribution yearly which I reinvest into my Roth IRA. I have the Inherited IRA invested in 100% equities(total Stock Market Index).
I am 43 years old and The Inherited IRA is currently valued around 70k.
Would you recommend adding some bonds to the Inherited IRA? Is so, what equity to bond ratio would you recommend to achieve the most optimal RMD?
Thank you.

Frankies Girl

  • Magnum Stache
  • ******
  • Posts: 3264
  • Age: 82
  • Location: The laboratory
  • Ghouls Just Wanna Have Funds!
Re: equity to bond ratio for Inherited IRA
« Reply #1 on: August 04, 2019, 02:38:56 AM »
No one can recommend anything specific since asset allocation needs to be based off of your individual needs, goals, etc... it really doesn't have anything to do with the type of account you're wanting to hold funds in other than making sure to hold things that are not tax efficient in the deferred accounts. So if you do decide to add any bonds to your asset allocation, then inside an IRA (inherited/traditional/Roth) is likely better than a taxable/brokerage account for instance.

You should figure out your investor policy statement first. This is your blueprint for what your goals are, what you are going to do to get to them, and what you do if this or that happens (things like life events - marriage/job changes/moves. Market fluctuations - what do you do if market goes waaay up or down? Answer could be "nothing" or could be check quarterly, rebalance if +/- %...).

Then once you know what you want as far as goals, what to do if x/y happens, and have your blueprint for all that stuff, THEN you figure out your asset allocation (stocks/bonds/international funds and what ratios) to match your risk profile and goals.


https://www.bogleheads.org/wiki/Investment_policy_statement

https://www.bogleheads.org/wiki/Asset_allocation

https://www.bogleheads.org/wiki/Principles_of_tax-efficient_fund_placement
« Last Edit: August 04, 2019, 07:25:12 AM by Frankies Girl »

terran

  • Magnum Stache
  • ******
  • Posts: 3006
Re: equity to bond ratio for Inherited IRA
« Reply #2 on: August 04, 2019, 06:07:23 AM »
It should be considered as part of your overall asset allocation, as @Frankies Girl says, but you may consider puttiing more bonds in the inherited IRA and less elsewhere with the theory that it should slow growth and therefore keep RMDs down.

MustacheAndaHalf

  • Magnum Stache
  • ******
  • Posts: 2942
Re: equity to bond ratio for Inherited IRA
« Reply #3 on: August 04, 2019, 07:30:42 AM »
You can peek at "target date funds" to see how they allocate between stocks and bonds.  For example, for someone planning to retire in ~20 or ~25 years you can peek at:
Vanguard Target 2040 is 16% bonds, 84% equities
Vanguard Target 2045 is 10% bonds, 90% equities