Assuming a person is in their late 30s, high federal/state tax brackets. This person is maximizing their tax advantaged savings opportunities and has leftover $ for investments in taxable accounts.
1. What situations would favor putting bonds (tsy or index fixed income fund) in a tax advantaged account vs taxable account?
2. Are there any specific factors that should be considered on an individual basis that may change your generic answer to #1 above?
thank you
1. Low interest rates. At very low rates bonds are often better held in taxable, the opposite of the rule of thumb.
2. Sure, lots of stuff. Like whether you're likely to ever realize capital gains. If not, that favors stocks in taxable even more.
Remember that you don't want to ask "should bonds go in taxable?" you want to ask "Of all of my investments, which ones should go into taxable first if they must?" We have lots of our bonds in taxable, but they weren't the first asset classes to go in there.
Statistics: Posted by White Coat Investor — Fri Aug 16, 2024 8:56 pm