MercyMe
Recycles dryer sheets
- Joined
- May 7, 2022
- Messages
- 227
I've been following Freedom56's We are entering a "Golden Period" for fixed income investing thread since it started and have become thoroughly interested in learning how to evaluate individual bonds. I spent about 20 hours reading everything I could and well I just don't think I'll ever fully get it.
As I was confessing to a friend that I felt so stupid about this, he asked me a question that I thought the forum might be able to comment on.
My spouse and I are currently in the top tax bracket, but when we retire next year (at age 53-ish) we will be spending down from our taxable accounts for many years and thus our tax bracket will probably be very low for a good while - even with some Roth conversions in there. One strategy we have now for our fixed income investments is to use MYGA's. An "A" rate insurer is paying about 4.4% right now for a 5-year product. What we like about these annuities is that the tax is not due on these until they mature. For us, they will mature when we are in a much lower tax bracket.
Considering that a reasonably safe bond now is paying around 35 basis points more than a MYGA, and in light of the tax timing, doesn't it even make sense for us to invest in individual bonds?
As I was confessing to a friend that I felt so stupid about this, he asked me a question that I thought the forum might be able to comment on.
My spouse and I are currently in the top tax bracket, but when we retire next year (at age 53-ish) we will be spending down from our taxable accounts for many years and thus our tax bracket will probably be very low for a good while - even with some Roth conversions in there. One strategy we have now for our fixed income investments is to use MYGA's. An "A" rate insurer is paying about 4.4% right now for a 5-year product. What we like about these annuities is that the tax is not due on these until they mature. For us, they will mature when we are in a much lower tax bracket.
Considering that a reasonably safe bond now is paying around 35 basis points more than a MYGA, and in light of the tax timing, doesn't it even make sense for us to invest in individual bonds?