Skip to main content
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
If an investor has the choice, is it better to hold bonds or bond funds in a taxable or non-taxable account?
Print the post Back To Top
No. of Recommendations: 0
Author: mawhinney Date: 4/30/01 3:49 PM Number: 6598
If an investor has the choice, is it better to hold bonds or bond funds in a taxable or non-taxable account?

I think most people feel that it is better to hold bond funds in a non-taxable account while you are working, under the assumption that you
will be in a lower tax bracket after you retire, at which time you take the distributions and pay the taxes. Of course if the non-taxable account is a Roth IRA, all the distributions are tax-free, so that greatly increases the advantage of holding bonds in a Roth IRA before retirement.

If you are already retired, and it is a Roth IRA that you're talking about, then it would probably still make sense to hold the bonds in that account. However, if it is a traditional IRA, then I don't see any reason to hold bonds after retirement in it.

Russ
Print the post Back To Top
No. of Recommendations: 0
Bonds and/or Bond funds should be held in a tax deferred account to shelter income. Bonds take a hit when fed is increasing the rate..inverse relationship interest rate goes up bond price goes down.

Hope it helps
Tom Greeves, CFP
http://www.windsorwealth.com/

Print the post Back To Top