Author Topic: Help me pick a bond fund  (Read 2327 times)

Jags4186

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Help me pick a bond fund
« on: March 02, 2015, 12:14:12 PM »
Hello all,

I have decided to allocate 20% of my portfolio to bonds.

I have 3 investment accounts:

401k (Mass Mutual) (155k)
Roth IRA (TD Ameritrade) (45k)
Taxable Account (TD Ameritrade) (30k)

I am aware that my bond portfolio should be in a tax advantaged account.  I'm also aware that the Roth IRA is likely to be the last money I ever use so I probably would want to keep that in stocks--especially since I'd have to convert that entirely to bonds to get to 20%.  That leaves me with putting my bond portion into my 401k.

Here's the rub though...I have 4 bond options in my 401k and they look pretty awful to me.  Help me pick:

401k options:
Goldman Sachs Government Inc R   GSORX   1.16%
PIMCO Real Return R                   PRRRX   1.13%
PIMCO Total Return R                   PTRRX   1.10%
Putnam High Yield Advantage R   PFJAX   1.29%

robotclown

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Re: Help me pick a bond fund
« Reply #1 on: March 02, 2015, 06:27:33 PM »
I kind of want to say you'd be better off with a .10% ER fund in the taxable account than picking any of those. 

MrMoogle

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Re: Help me pick a bond fund
« Reply #2 on: March 02, 2015, 07:01:57 PM »
My Roth contributions are the first money I will use, along with using up my taxable for my 5 year gap before the Roth ladder.  Roth earnings are the last money you'll use, as you need to be old (59 1/2) to use those :P

If you want to get to 20% bonds, I'd do it in Roth.  I don't touch anything with 1% ER...

GGNoob

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Re: Help me pick a bond fund
« Reply #3 on: March 02, 2015, 07:30:09 PM »
I'd stick to stocks :)

You have any balanced funds in the 401k to choose from?

Dodge

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Re: Help me pick a bond fund
« Reply #4 on: March 02, 2015, 08:12:35 PM »
It's all one big account, doesn't matter where the bonds go. Just make sure to use tax exempt bonds in taxable:

https://personal.vanguard.com/us/funds/snapshot?FundId=0042&FundIntExt=INT

and stay away from high-fee funds in your 401k.


TreeTired

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Re: Help me pick a bond fund
« Reply #5 on: March 02, 2015, 08:54:26 PM »
And same logic says don't own us treasury bonds in a tax free account.  (Even though I do own treasuries in my IRA, but I am a dope!)    US Treasury bond interest is exempt from state income tax,   so I will end up paying state income tax on this interest when I withdraw funds from my IRA.    Interesting that one of your 401k choices is the GS "Govt Inc"  fund.

johnny847

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Re: Help me pick a bond fund
« Reply #6 on: March 02, 2015, 09:12:38 PM »
I am aware that my bond portfolio should be in a tax advantaged account.  I'm also aware that the Roth IRA is likely to be the last money I ever use so I probably would want to keep that in stocks--especially since I'd have to convert that entirely to bonds to get to 20%.  That leaves me with putting my bond portion into my 401k.

Tax adjust your allocation, and this whole "avoid bonds in Roth for maximum growth" goes away. http://www.bogleheads.org/wiki/Tax-adjusted_asset_allocation

That being said, your bond expense ratios are so high that I'd just buy tax exempt bonds in a taxable.

Jags4186

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Re: Help me pick a bond fund
« Reply #7 on: March 02, 2015, 09:15:31 PM »

I'd stick to stocks :)

You have any balanced funds in the 401k to choose from?

I have only one fund in my 401k with under 1% expense ratio--an S&P 500 index fund with a .58% ratio. I have 100% invested in that.