BeachOrCity
Full time employment: Posting here.
- Joined
- Jun 1, 2016
- Messages
- 889
Retired about 1 year, age 54, and have decided that TIPS should be a big part of my bond allocation. Hoping that folks more experienced with bonds and TIPS can give me some good advice.
Because of tax issues w/ TIPS trying to put the TIPS in my Non Roth 401K. I am not that experienced with fixed income or bonds in general.
I have never been entirely comfortable w/ bond funds or tips funds because I feel I don't have that "value at maturity" the way I do w/ individual bonds or TIPS. And with TIPS, I feel there is this "X Factor" that if some black swan event happens and everyone moves to TIPS, the pricing of my TIPS fund will be impacted significantly because of all the cash inflows and the effect on average yield and pricing.
I am allowed to do a partial withdraw / rollover from my 401K to an IRA (will most likely use Fidelity), and am thinking about pro's / con's for rolling over a big chunk of my bond allocation to an IRA and then making a TIPS ladder with it. Ladder would probably start in 2025 and build it out over time to say 2040 or maybe even further.
Some thoughts / facts:
-- My 401K is w/ Mega-corp and has best in class fund options with super low fees (the TIPS fund is 0.02%).
-- I can never get the money back in the 401K after I take it out, so the decision is permanent.
-- Not particularly thrilled about current TIPS real yields (but at least they are not negative). Given projected inflation the real yield about matches or exceeds regular treasuries and I get the inflation protection bonus.
-- I really like the idea of knowing I can buy a TIPS that matures in Jan 2030 and KNOW it will be the worth the amount I start at plus inflation, plus the minimal yield.
Questions:
-- Do folks think that the benefits of individual TIPS are significant enough to warrant pulling this money from 401K (given 401K low costs).
-- Is fidelity IRA a good place for these (seems like they charge $0 for secondary TIPS, but maybe they do a yield spread markup I can't see)?
-- Since I can make 401K withdraws (or partial rollovers) up to 4 times a year, do people feel that building this over time makes sense (i.e. DCA from bond funds to individual TIPS over 2-3 years or something).
-- Is my thinking on how a black swan could effect a TIPS fund sound?
-- Anything else that is key that I am not presently considering?
Because of tax issues w/ TIPS trying to put the TIPS in my Non Roth 401K. I am not that experienced with fixed income or bonds in general.
I have never been entirely comfortable w/ bond funds or tips funds because I feel I don't have that "value at maturity" the way I do w/ individual bonds or TIPS. And with TIPS, I feel there is this "X Factor" that if some black swan event happens and everyone moves to TIPS, the pricing of my TIPS fund will be impacted significantly because of all the cash inflows and the effect on average yield and pricing.
I am allowed to do a partial withdraw / rollover from my 401K to an IRA (will most likely use Fidelity), and am thinking about pro's / con's for rolling over a big chunk of my bond allocation to an IRA and then making a TIPS ladder with it. Ladder would probably start in 2025 and build it out over time to say 2040 or maybe even further.
Some thoughts / facts:
-- My 401K is w/ Mega-corp and has best in class fund options with super low fees (the TIPS fund is 0.02%).
-- I can never get the money back in the 401K after I take it out, so the decision is permanent.
-- Not particularly thrilled about current TIPS real yields (but at least they are not negative). Given projected inflation the real yield about matches or exceeds regular treasuries and I get the inflation protection bonus.
-- I really like the idea of knowing I can buy a TIPS that matures in Jan 2030 and KNOW it will be the worth the amount I start at plus inflation, plus the minimal yield.
Questions:
-- Do folks think that the benefits of individual TIPS are significant enough to warrant pulling this money from 401K (given 401K low costs).
-- Is fidelity IRA a good place for these (seems like they charge $0 for secondary TIPS, but maybe they do a yield spread markup I can't see)?
-- Since I can make 401K withdraws (or partial rollovers) up to 4 times a year, do people feel that building this over time makes sense (i.e. DCA from bond funds to individual TIPS over 2-3 years or something).
-- Is my thinking on how a black swan could effect a TIPS fund sound?
-- Anything else that is key that I am not presently considering?