Retirement income and Bonds
Retirement income and Bonds
Hi new to this site and seems like there are some veteran investors.
My question is if I have 60,000 to invest in a Vanguard bond market
Should I split that up ?
Now my portfolio is 75% stock and 25% cash as I hold no bond funds.
My wife is 2 years away from retirement so we don't need the income until then. We are in the 25% tax bracket. Would like to stay with Vanguard because of all our holdings with them and the low cost fees.
Thanks for your time and advice.
Wife is a little risk 1 or 2
I am more of a moderate risk 3
My question is if I have 60,000 to invest in a Vanguard bond market
Should I split that up ?
Now my portfolio is 75% stock and 25% cash as I hold no bond funds.
My wife is 2 years away from retirement so we don't need the income until then. We are in the 25% tax bracket. Would like to stay with Vanguard because of all our holdings with them and the low cost fees.
Thanks for your time and advice.
Wife is a little risk 1 or 2
I am more of a moderate risk 3
Re: Retirement income and Bonds
There is no should that you should split up your bond investment. People do hold more than one bond fund though.
I am a little confused on your statements about risk. 75% stocks is a risky portfolio, but your wife is agreeing to that? and you are? I assume you mean on a scale of 5.
For a good thought about the overall plan for stocks and bonds see the 3 fund portfolio: https://www.bogleheads.org/wiki/Three-fund_portfolio
It is possible that going to getting started in the Wiki and doing some reading would answer a lot of questions you might or could or should have:
https://www.bogleheads.org/wiki/Getting_started
I am a little confused on your statements about risk. 75% stocks is a risky portfolio, but your wife is agreeing to that? and you are? I assume you mean on a scale of 5.
For a good thought about the overall plan for stocks and bonds see the 3 fund portfolio: https://www.bogleheads.org/wiki/Three-fund_portfolio
It is possible that going to getting started in the Wiki and doing some reading would answer a lot of questions you might or could or should have:
https://www.bogleheads.org/wiki/Getting_started
Re: Retirement income and Bonds
If you hold Total Bond Market, you get the same benefit as if you split across multiple funds, because Total Bond Market has almost all types of bonds.
There is no 25% tax bracket now, unless you are paying 22% plus 3% state tax; check your actual marginal tax rate. If you are paying 24% tax plus 3.8% Net Investment Income tax (total income over $250K), and the bonds must be in a taxable account, this is a high enough tax rate that you might consider municipal bonds.
The one situation in which I specifically recommend splitting bond funds is if Vanguard has a muni fund for your high-tax state. If you live in CA, you might not want to hold all your bonds in CA munis, even though that might be best for taxes. Instead, I recommend a 50/50 split between Vanguard Limited-Term Tax-Exempt and CA Long-Term Tax-Exempt, so that only half your bonds are in CA but more than half the bond interest is exempt from CA tax.
There is no 25% tax bracket now, unless you are paying 22% plus 3% state tax; check your actual marginal tax rate. If you are paying 24% tax plus 3.8% Net Investment Income tax (total income over $250K), and the bonds must be in a taxable account, this is a high enough tax rate that you might consider municipal bonds.
The one situation in which I specifically recommend splitting bond funds is if Vanguard has a muni fund for your high-tax state. If you live in CA, you might not want to hold all your bonds in CA munis, even though that might be best for taxes. Instead, I recommend a 50/50 split between Vanguard Limited-Term Tax-Exempt and CA Long-Term Tax-Exempt, so that only half your bonds are in CA but more than half the bond interest is exempt from CA tax.
Re: Retirement income and Bonds
Thanks
Sorry about the missing information.
Tax rate 24%
Colorado is 4.63 %
Myself 68 retired. SS 32,000
Wife is 60 her income 96,000
House in Denver owe 100,000
Value 625,000
House in Navarre FL owe 62,000
Value 355,000
Wife 401. 115,000
Myself 401 88,000
Holdings
Cash 182,000
Vanguard
VDIGX 84,000
VWENX 200,000
VWANX 250,000
Individual holdings
KIM 145,000
AEE. 189,000
We will both retire in 3 to 4 years to Florida.
My concern is we have no bonds in our portfolio. Also should I go with the Vanguard financial advisor with the low fees and their knowledge.
We seem to be all over the board on funds.
Thanks
Sorry about the missing information.
Tax rate 24%
Colorado is 4.63 %
Myself 68 retired. SS 32,000
Wife is 60 her income 96,000
House in Denver owe 100,000
Value 625,000
House in Navarre FL owe 62,000
Value 355,000
Wife 401. 115,000
Myself 401 88,000
Holdings
Cash 182,000
Vanguard
VDIGX 84,000
VWENX 200,000
VWANX 250,000
Individual holdings
KIM 145,000
AEE. 189,000
We will both retire in 3 to 4 years to Florida.
My concern is we have no bonds in our portfolio. Also should I go with the Vanguard financial advisor with the low fees and their knowledge.
We seem to be all over the board on funds.
Thanks
Re: Retirement income and Bonds
Please add the names to the ticker symbols; most of us don’t know what VWANX is. And which money is taxable versus tax-deferrec(or in a Roth).
Click on the small pencil at the upper right of your post to make revisions.
If you also include your other income sources and expected expenses, you’ll get better advice.
As you’ve probably gathered, people on this forum prefer to have the full picture of a poster’s finances before making recommendations.
Click on the small pencil at the upper right of your post to make revisions.
If you also include your other income sources and expected expenses, you’ll get better advice.
As you’ve probably gathered, people on this forum prefer to have the full picture of a poster’s finances before making recommendations.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
Re: Retirement income and Bonds
It's probably not a very Boglehead comment, but right now I'd be less concerned about bonds vs. cash than at most times. I could be wrong if interest rates suddenly drop to -5% or something but otherwise it's just hard to get excited about the difference between what I'd consider cash (like a high-yield savings account, etc.) right now. If you have an employer account (401k, etc.) and it offers a fixed account, you might find a favorable no-interest-rate-risk option there. If you have taxable money and want to deal with savings bonds, that's another possibility for some of the cash.
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Re: Retirement income and Bonds
What's the plan with the CO house? Sell before moving to FL? Asking as this is a sizable chunk of your net worth. Maybe others will agree/disagree, but the house value is more bond-like than stock-like. So you may already have a considerable amount in bonds (assuming you agree with that assessment).
"Anyone who claims to understand quantum theory is either lying or crazy" -- Richard Feynman
Re: Retirement income and Bonds
Interesting
Never thought of it that way.
Thing was to sell main house in Colorado but buy smaller more land in the area of Trinidad, Colorado too beautiful to leave. Pay cash for that purchase and I always heard to keep a mortgage for the deduction. It's just I am overloaded in stock and would like to use cash to buy the right bond funds. Maybe short term since we both are in our sixties. Also my wife's not too crazy about here hours and stress at work but she like the money.
Would having a Vanguard FP be a good fit. I know that the more I read and research the more confusing it gets. I am in awe of the people on this forum. Thanks
Never thought of it that way.
Thing was to sell main house in Colorado but buy smaller more land in the area of Trinidad, Colorado too beautiful to leave. Pay cash for that purchase and I always heard to keep a mortgage for the deduction. It's just I am overloaded in stock and would like to use cash to buy the right bond funds. Maybe short term since we both are in our sixties. Also my wife's not too crazy about here hours and stress at work but she like the money.
Would having a Vanguard FP be a good fit. I know that the more I read and research the more confusing it gets. I am in awe of the people on this forum. Thanks
Re: Retirement income and Bonds
There’s a good chance that the standard deduction will be greater than your mortgage interest deduction plus other items, especially given today’s low interest rates and the limits on other deductions.JIMX7 wrote: ↑Tue Sep 21, 2021 1:21 pm Interesting
Never thought of it that way.
Thing was to sell main house in Colorado but buy smaller more land in the area of Trinidad, Colorado too beautiful to leave. Pay cash for that purchase and I always heard to keep a mortgage for the deduction. It's just I am overloaded in stock and would like to use cash to buy the right bond funds. Maybe short term since we both are in our sixties. Also my wife's not too crazy about here hours and stress at work but she like the money.
Would having a Vanguard FP be a good fit. I know that the more I read and research the more confusing it gets. I am in awe of the people on this forum. Thanks
Just another piece of the puzzle…
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
Re: Retirement income and Bonds
What would you do ?
Like
Vanguard BND
Wells Fargo WFCMX
I don't need the funds for 2 or 3 years
Have 75,000 to split or are the funds too similar?
I currently have no bonds in our portfolio.
Thanks
Like
Vanguard BND
Wells Fargo WFCMX
I don't need the funds for 2 or 3 years
Have 75,000 to split or are the funds too similar?
I currently have no bonds in our portfolio.
Thanks
Re: Retirement income and Bonds
If you are really going to spend all the money within the time period 2 years to 3 years from now I would probably just take out a two year CD and after that put it in a savings account. Getting more return does not even help if you have no time for the return to compound. Also one year from now 2-3 becomes 1-2 and two years from now it becomes 0-1.
Money on a 2-3 year timeline is not really even in your portfolio in the usual sense.
Re: Retirement income and Bonds
Not spending it in 2 or 3 years.
Trying to draw a little income.
Hey but thanks for your insight.
Big help pal.
Let me know if you are ever in Denver or the Florida panhandle would like to buy you a beer.
Trying to draw a little income.
Hey but thanks for your insight.
Big help pal.
Let me know if you are ever in Denver or the Florida panhandle would like to buy you a beer.