My financial adviser called me today and said I should sell my 5 corporate bonds (84k face value). He said I am above par on nearly all of them, and I would reap a nice profit. But, if I just hold on to them, they will lose value if and when interest rates rise, so I don't want to miss this rare opportunity.
The problem is that I max out my Roth IRA every year with the interest payments from these bonds. The money gets deposited straight into my checking account, which then gets electronically transferred to my Vanguard Roth IRA in January of every year.
If I sell my bonds, where can I invest my money so that I can have the same setup as I do now?
My financial adviser said that I can purchase corporate bonds again to replace the ones I sold, since I could get them significantly below par. Would this make sense?
I was considering purchasing a Vanguard Lifestrategy or Vanguard Target date fund, instead, which would be held outside of my retirement accounts.
Would this work? Would I get penalized for taking my returns instead of reinvesting them? Would they be more tax efficient than holding corporate bonds? Any other suggestions?
*I bought all these corporate bonds below par.
*I bought my first corporate bond in 2010, and my last one last year.
I own:
-Goldman Sachs (GS); YTM 6.935%; maturity date, Feb 15, 2034 (Cusip 38143VAA7)
-Selective Insurance Group (SIGI) YTM 7.45%; maturity date, Nov 11, 2035 (Cusip 816300AG2)
-Sara Lee (SLE) YTM 6.725%; maturity date, Nov 1, 2032 (Cusip 803111AM5)
-Tenneco Packaging (formerly "Pactiv Corp"- PTV) YTM 8.7%; maturity date, Apr 15, 2035 (Cusip 880394AE1)
-Genworth Financial (GNW) YTM 7.831%; maturity date Sep 24, 2021 (Cusip 37247DAP1)
*I would make a profit on all these bonds except Tenneco Packaging. I would lose about $700 from the price I paid for it. However, my financial adviser said this would be good for taxes, as it would partially offset the capital gains from the sale of the other bonds (tax harvesting).
FYI: I live in Brooklyn, New york, and I already max out my 401k and 457b every year.