So if I want to reduce my allocation from 100% stocks, what do you think if its the IRA portion that I take out of the market?

[sengsational]

Target date funds should not be confused with target maturity ETFs.

As to the recentcy bias against bond funds, my BIL said individual bonds were fine, bond funds not fine in 1984. It took me a while to realize he was spot on. I think it was 1988 when everything, including bond funds, dropped like a stone. You'd have been much better off with individual bonds, but my money was in the 401k, and didn't have many vehicles to choose from. When the flight to cash happens, bond funds get pummelled.

 

[pb4uski]

+1 The problem with bond funds is that when you redeem you effectively sell a sliver of every bond in the portfolio which includes bonds near maturity and bonds a long way from maturity whose prices are sensitive to interest rates and you can't hold to maturity in a bond fund.

With individual bonds or or a ladder of target-maturity bond ETFs if you need cash you have choices and can select the securites closer to maturity and minimize any interest rate losses.

 

[Digger1000]

How much de-risking do you want to do and what AA would you like to end up with? You are now 100/0. You could get as low as 57/43 if you converted yout tIRA and Roth to bonds. You could probably even get lower if you sold some of your taxable to utilize you $59k LTCL carryforward.

It's unclear what you are living on now, but that $59K LTCL carryforward gives you a lot of flexibility to raise cash from your taxable account with no tax consequences which is a great thing when you are managing income for ACA subsidies.

You might want to input your 2025 tax situation in IRS & State Tax Calculator | 2005 -- 2025 and then add in SS and RMDs and perhaps adjust taxable account income, assuming that you were currently 75 and see what the tax will be on your RMDs. If the tax on some or all of your RMDs will be 22%, then it might be worthwhile to Roth convert beyond the standard deduction plus $3,000. IOW, it may be better to pay 10% or 12% now rather than pay 22% later. In doing that, obviously you need to consider tax implications including reduced PTC as a supplement to the income tax consequences. It gets complicated.

I really think I would like to go 57-43 even though moving the roth out is not preferred or recommended by most people. At this point though I dont know anything about bonds so I'm not comfortable with that. So I probably would go with a MM fund at least to start.

 

[richardsok]

Well, since you ask ----

I'll let the tax savvy folks give you their excellent perspectives. For my part I suggest we focus on the bigger issues and the little probs will take care of themselves. In other words my opinion is to: LIGHTEN EQUITIES WITHOUT DELAY. (Is that specific enough for you?)

The bellweather fund I track daily: SCHD triggered and confirmed strong sell signals on 3/3 and bear-side indicators have been unanimous since. I continue owning near zero in US stocks but growing in commodities and energy. My uncertainty is how to handle bond funds and international equities. There's the puzzle.

I'll return to US equities when my low volatility indicators change. Not before.

We're already past $5.00 diesel, ergo another inflation driver dims hopes for interest rate cuts. . In fact, you cannot rule out 10-year Treasury rates climbing above 4.5% or even 5% ! Nor can you discount the possibility of a subsequent market crash.

Mis dos centavos.

 

[SnowballCamper]

OP here is something I wrote a while ago that might help with understanding bonds:

Most of the bonds The Treasury Department sells are subject to mar-
ket risk (and are not savings bonds). They have many different names
(bonds, bills, notes, etc.) related to the term of the loan and how fre-
quently they pay interest. I’ll refer to them all as treasuries. Treasuries
can be bought and sold through your retail brokerage account which
anyone can open with one of the big name firms. The market risk has
to do with the price that you can get when selling (or buying) a security.

Every transaction has a buyer and a seller that have to agree on a price,
even the government when it sells treasuries.
For example, on February 5, 2025 the Treasury Department announced
the sale of forty two billion dollars of ten year treasury notes to be auc-
tioned off on February 12th. The general public doesn’t participate in the
auction as bidders, but you can participate as a non-competitive bidder
through treasury direct. In the auction, competitive bidders tendered
$103 billion where each bid is for the amount the bidder wants to buy
and the minimum yield (interest) the bidder will accept. The Treasury
Department ranks the bids from lowest yield to highest, and accepts the
bids up to the amount it needs to borrow ($42 billion in this example). It
turns out the highest yield accepted was 4.632%.

This auction process ensures the government gets the best deal pos-
sible when borrowing money, but on a different day/month/year there
will certainly be a different highest yield accepted. Since treasuries have
a secondary market the general public can buy and sell them through a
brokerage. Over time the price will likely change, and your market risk is
the probability that the price will be depressed when you decide to sell,
relative to what it was when you bought the treasury (or any other secu-
rity).

To see how this works with treasuries (or any other bond) consider
this example: In February 2021 someone bought a ten year treasury from
the government that yields a fixed 1% interest. When we fast forward
to July 2024 and the owner wants to sell, the market has interest rates
around 4%. The treasury is just a loan to the government where the gov-
ernment agreed to a fixed interest rate. Now that the market rate is about
4%, the seller has to meet the market price in order to find a buyer. But
to do this, the price has to drop from the original in order to make up for
the difference in interest payments for the remaining term of the trea-
sury. Why? Because there is another seller in line willing to sell at the 4%
interest rate. As you can imagine there is some math going on here but
as a retail investor you don’t need to bother with it. The brokerage firm
does it all for you.

The main ideas to know:
• When interest rates go up on bonds, the prices go down.
• If you hold to maturity, you’ll get the money you expected when
you bought the bond and get it from the original issuer through
your brokerage account (provided the issuer doesn’t go bankrupt).
• If you decide to sell before maturity you can loose money (if in-
terest rates are higher) or make extra money (if interest rates are
lower).

This all seems pretty complicated. Wouldn’t it be easier to just buy a
mutual fund that holds bonds? It would be easier, but then you take the
additional risk of market losses when another shareholder of the mutual
fund sells shares when interest rates are high. This shows up as a lower
mutual fund price and persists until interest rates get going in the oppo-
site direction.

In summary, the way to reduce market risk with bonds is to hold them
directly (not in a fund) until maturity. There remains the possibility of de-
ciding to sell them at a loss, so great care should be made in selecting the
timing of their maturity dates to meet anticipated reasons for selling.

 

[Sunset]

I believe you are at Vanguard.

I find in my IRA it's very easy to buy Treasuries and TIPs from the Vanguard bond page.
I always pick auction (so I get the same good price Billionaires get).
You can even look at the pages without logging in to see what is available as the Treasury releases them over time each week or weeks.

Trade ETFs, stocks, Vanguard funds, and non-Vanguard funds

I click on Treasuries, then I select the Auction radio button and it shows me what I can buy and the expected (pretty accurate) interest rate. Currently for short term expected interest shows as 3.685% , and for a reopened 10 yr TIP shows 1.8% (note this is actually 1.8% + inflation rate which will vary).

I certainly think, it's wise for you to sell in your IRA (market is high) and buy various length terms of Treasuries or CDs for safety and security in case of market crash.

I increased my treasury holdings for the concern about the market.

 

[Pointby2]

This all seems pretty complicated. Wouldn’t it be easier to just buy a
mutual fund that holds bonds? It would be easier, but then you take the
additional risk of market losses when another shareholder of the mutual
fund sells shares when interest rates are high. This shows up as a lower
mutual fund price and persists until interest rates get going in the oppo-
site direction.

I'll never buy a traditional perpetual bond fund again. I remember looking at my bond fund as rates were rising. That $100,000 bond fund now shows a $10,000 loss. Yes, you're getting a higher interest rate, but now you're stuck. Selling that fund is going to wipe out any chance of a gain. If I'd have bought ten ten-thousand dollar individual bonds with staggered maturities, they'd be maturing without a loss and then you could go back into the market and buy new, higher rate bonds. That's what I do now.

(Unless it's an ultrashort bond fund that behaves more like a MMF, or target date fund.)

 

[pb4uski]

I really think I would like to go 57-43 even though moving the roth out is not preferred or recommended by most people. At this point though I dont know anything about bonds so I'm not comfortable with that. So I probably would go with a MM fund at least to start.

In your situation, I don't think it is bad having bonds as additional ballast in a Roth in your circumstances. Your taxable is very large in relation to the total compared to many. IMO it is good to have equities in taxable accounts... qualified dividends and LTCG get favorable tax rates and stepped up basis erases taxes on unrealized gains when you pass. And in your case the cherry on top is that you have that $59k tax loss carryforward that could be used to avoid taxes on $59k of realized gains.

I think starting out with the MM fund is a good start. Schwab's MM fund is yielding 3.49% which is pretty good and others will be in that ballpark. Who do you use for your tIRA and Roth?

Bonds are easy and hard. At their core, they are an IOU from the issuer to the investor along with a promise to pay interest at a stated rate, usually every six months, for the term of the bond. That's the plain vanillia version. After that it gets complicated.

I own the iBond target maturity bond ETFs. So take IBDT, the iShares® iBonds® Dec 2028 Term Corporate ETF as an example. It is a portfolio of 724 corporate bonds that mature in 2028. The portfolio yields 4.34% and the fund has a 0.10% expense ratio. The portfolio is all investment grade corporate bonds with ~54% rated BBB, ~38% rated A and ~8% rated A. Amongst the top 10 holdings are names like Sumitomo Mitsui, GM Financial, Apple, Amazon, Toronto-Dominion Bank, Aercap Ireland Capital, John Deere, Salesforce, Comcast and Banco Santander. I plan to hold to maturity and if I do then my expected return is 4.24% (4.34% yield to maturity less 0.10% expenses) if I buy at NAV (current market price is a penny more than NAV). I view it as owning a sliver of 724 investment grade corporate bonds that I will hold to maturity in 2028 and will pay me ~4.24% from now until then. While the price may fluctuate with changes in interest rates, since I plan to hold to maturity I can ignore those market fluctuations since they will decay between now and maturity.

https://www.blackrock.com/us/financial-professionals/products/304570/ishares-ibonds-dec-2028-term-corporate-etf#/

 

[Montecfo]

As to the recentcy bias against bond funds, my BIL said individual bonds were fine, bond funds not fine in 1984. It took me a while to realize he was spot on. I think it was 1988 when everything, including bond funds, dropped like a stone. You'd have been much better off with individual bonds, but my money was in the 401k, and didn't have many vehicles to choose from. When the flight to cash happens, bond funds get pummelled.

Well that was during one of the strongest long-term bull markets in bonds in history. Not sure your BIL was right.

Only down years for the Agg from 1980 2010 were 1994 ( when it lost 3% during what? That's right, a Fed rate hike cycle).and 1999 ( ditto, lost 1%).

 

[pb4uski]

I believe you are at Vanguard. ...

If you are with Vanguard, they are in the process of launching a series of target maturity bond ETFs so that may be more comfortable for you.

Vanguard is running a familiar playbook: arrive late to a fast-growing ETF category—then try to win investors over by undercutting everyone else on price.

This time, the target is the target-maturity bond ETF market.

Unlike traditional bond funds, target-maturity funds have a finish line. Each fund holds bonds that mature in a specific year, returning investors’ principal (in theory) when the portfolio winds down.

Two firms dominate this niche today: iShares, with its iBonds lineup, and Invesco, which offers BulletShares ETFs. But in November, Vanguard announced it was entering the race.

The fund giant filed with the SEC to launch 10 target-maturity corporate bond ETFs, covering maturities from 2027 through 2036:

• Target Maturity 2027 Corporate Bond ETF (VBCA)
• Target Maturity 2028 Corporate Bond ETF (VBCB)
• Target Maturity 2029 Corporate Bond ETF (VBCC)
• Target Maturity 2030 Corporate Bond ETF (VBCD)
• Target Maturity 2031 Corporate Bond ETF (VBCE)
• Target Maturity 2032 Corporate Bond ETF (VBCF)
• Target Maturity 2033 Corporate Bond ETF (VBCG)
• Target Maturity 2034 Corporate Bond ETF (VBCH)
• Target Maturity 2035 Corporate Bond ETF (VBCI)
• Target Maturity 2036 Corporate Bond ETF (VBCJ)

The ETFs were originally scheduled to launch on February 7, 2026, but Vanguard has already pushed the date back twice. I now expect them to launch on March 23, which coincidentally (or perhaps not) is when I expect the international growth and value ETFs I discussed last week to debut as well.

 

[Montecfo]

+1 The problem with bond funds is that when you redeem you effectively sell a sliver of every bond in the portfolio which includes bonds near maturity and bonds a long way from maturity whose prices are sensitive to interest rates and you can't hold to maturity in a bond fund.

True.

With individual bonds or or a ladder of target-maturity bond ETFs if you need cash you have choices and can select the securites closer to maturity and minimize any interest rate losses.

Well, sort of. But if rates rose during your holding period you missed out on higher rates during that time. If rates fell then you missed out on gains. No free lunch it seems.

The hold to maturity strategy is not a clear winner if you are reinvesting proceeds. These are largely psychic benefits (though still benefits).

 

[pb4uski]

... The hold to maturity strategy is not a clear winner if you are reinvesting proceeds. These are largely psychic benefits (though still benefits).

I guess that we'll need to agree to disagree on that.

 

[three putt]

+1 The problem with bond funds is that when you redeem you effectively sell a sliver of every bond in the portfolio which includes bonds near maturity and bonds a long way from maturity whose prices are sensitive to interest rates and you can't hold to maturity in a bond fund.

With individual bonds or or a ladder of target-maturity bond ETFs if you need cash you have choices and can select the securites closer to maturity and minimize any interest rate losses.

Which target-maturity bond ETFs are you currently in?

 

[pb4uski]

I have BlackRock iBonds. Current holdings are mix of the corporate bond and high-yield bond flavors. I am transitioning my individual bond holdings to these target-maturity ETFs to simplify things should something happen to me. I am currently at ~37 ndividual bonds and 14 target-maturity bond ETFs, As individual bonds are called or mature I use the proceeds to fill in the ladder as needed. When I'm done I hope to have a two 7 rung ladders of target-maturity ETFs rather than the ~54 individual bonds that I once had.

I'll concede that I'm probably giving up a little yield because the ETF bonds are not callable and many of my individual bonds are so I'm forgoing the callable premium but I go tired of managing a large to me bond portfolio.

2026​	IBDR​	iShares® iBonds® Dec 2026 Term Corporate ETF​
2027​	IBDS​	iShares® iBonds® Dec 2027 Term Corporate ETF​
2028​	IBDT​	iShares® iBonds® Dec 2028 Term Corporate ETF​
2029​	IBDU​	iShares® iBonds® Dec 2029 Term Corporate ETF​
2030​	IBDV​	iShares® iBonds® Dec 2030 Term Corporate ETF​
2031​	IBDW​	iShares® iBonds® Dec 2031 Term Corporate ETF​
2032​	IBDX​	iShares® iBonds® Dec 2032 Term Corporate ETF​
2026​	IBHF​	iShares® iBonds® 2026 Term High Yield and Income ETF​
2027​	IBHG​	iShares® iBonds® 2027 Term High Yield and Income ETF​
2028​	IBHH​	iShares® iBonds® 2028 Term High Yield and Income ETF​
2029​	IBHI​	iShares® iBonds® 2029 Term High Yield and Income ETF​
2030​	IBHJ​	iShares® iBonds® 2030 Term High Yield and Income ETF​
2031​	IBHK​	iShares® iBonds® 2031 Term High Yield and Income ETF​
2032​	IBHL​	iShares® iBonds® 2032 Term High Yield and Income ETF​

 

[three putt]

I have BlackRock iBonds. Current holdings are mix of the corporate bond and high-yield bond flavors. I am transitioning my individual bond holdings to these target-maturity ETFs to simplify things should something happen to me. I am currently at ~37 ndividual bonds and 14 target-maturity bond ETFs, As individual bonds are called or mature I use the proceeds to fill in the ladder as needed. When I'm done I hope to have a two 7 rung ladders of target-maturity ETFs rather than the ~54 individual bonds that I once had.

I'll concede that I'm probably giving up a little yield because the ETF bonds are not callable and many of my individual bonds are so I'm forgoing the callable premium but I go tired of managing a large to me bond portfolio.

2026​	IBDR​	iShares® iBonds® Dec 2026 Term Corporate ETF​
2027​	IBDS​	iShares® iBonds® Dec 2027 Term Corporate ETF​
2028​	IBDT​	iShares® iBonds® Dec 2028 Term Corporate ETF​
2029​	IBDU​	iShares® iBonds® Dec 2029 Term Corporate ETF​
2030​	IBDV​	iShares® iBonds® Dec 2030 Term Corporate ETF​
2031​	IBDW​	iShares® iBonds® Dec 2031 Term Corporate ETF​
2032​	IBDX​	iShares® iBonds® Dec 2032 Term Corporate ETF​
2026​	IBHF​	iShares® iBonds® 2026 Term High Yield and Income ETF​
2027​	IBHG​	iShares® iBonds® 2027 Term High Yield and Income ETF​
2028​	IBHH​	iShares® iBonds® 2028 Term High Yield and Income ETF​
2029​	IBHI​	iShares® iBonds® 2029 Term High Yield and Income ETF​
2030​	IBHJ​	iShares® iBonds® 2030 Term High Yield and Income ETF​
2031​	IBHK​	iShares® iBonds® 2031 Term High Yield and Income ETF​
2032​	IBHL​	iShares® iBonds® 2032 Term High Yield and Income ETF​

Thank you for the information!

 

[OK EE]

In general, you want your Roth and brokerage accounts growing as aggressively as possible. These are the best tax vehicles (no tax and LTCG).

You want your pretax (tIRA) account growing as slow as possible, within reason, so that the amount subject to eventual RMDs doesn't grow out of control. Remember that asset allocation is over your entire retirement portfolio. It doesn't matter where the money is from an allocation standpoint, only what effect taxes have on those amounts. This doesn't apply to you since you're over 59.5 already but for those of us pre59.9, we can sell out of brokerage and rebuy equities in tIRA to keep the AA the same and recover market gains there.

I do like VT over S&P 500 just to get better diversification in equities, but other than that I think you have the right idea.

 

[engineernerd]

[snip] Also what made you think I was emotion-riven in wanting to get out? [snip]

Obviously only you know your true motivations and emotions so apologies if I guessed wrong. But a sudden desire to go from 100% equities all the way to 0%, at a time when the general public is being bombarded with warnings of an imminent stock-market crash in mainstream media, was suggestive to me.

 

[Digger1000]

Obviously only you know your true motivations and emotions so apologies if I guessed wrong. But a sudden desire to go from 100% equities all the way to 0%, at a time when the general public is being bombarded with warnings of an imminent stock-market crash in mainstream media, was suggestive to me.

I have been thinking about doing this for 8-9 months which I didnt include in the OP so I understand where you could have thought that.

 

[pb4uski]

Obviously only you know your true motivations and emotions so apologies if I guessed wrong. But a sudden desire to go from 100% equities all the way to 0%, at a time when the general public is being bombarded with warnings of an imminent stock-market crash in mainstream media, was suggestive to me.

You misread his intention. Reread the OP. He intends to move from 100/0 to 57/43... NOT to 0/100. Given that equities have had such a great run and are richly valued based on common valuation metrics and that he is now retired, I think it is a sensible move.

What is atypical for the OP is that taxable accounts are 57% of his total and tax-deferred is 20% and tax-free is 23%... for many posters here tax-deferred are usually a much higher percentage of the total.

 

[Al18]

100/0 to 57/43 is a huge change. Just a suggestion - but you may want to spread that out over a year or 3.

 

[pb4uski]

^^^ Why delay?

 

[richardsok]

Indeed, WHY delay when equity trends are clearly bearish? The great advantage of dealing with lower volatility funds (like SCHD) is that if you heed trend changes your wrong moves cost you very little -- (like if you make a trade shortly before a market re-direction) -- but if you are correct, your gains or avoided losses can be prodigious.

 

[Al18]

Why spread out the changes? It’s hard to predict the future, and making changes based on these predictions.

 

[CalBird]

Buy some TIPS, it seems inflation is very sticky.

 

[Lorenzo]

I have BlackRock iBonds. Current holdings are mix of the corporate bond and high-yield bond flavors. I am transitioning my individual bond holdings to these target-maturity ETFs to simplify things should something happen to me. I am currently at ~37 ndividual bonds and 14 target-maturity bond ETFs, As individual bonds are called or mature I use the proceeds to fill in the ladder as needed. When I'm done I hope to have a two 7 rung ladders of target-maturity ETFs rather than the ~54 individual bonds that I once had.

I'll concede that I'm probably giving up a little yield because the ETF bonds are not callable and many of my individual bonds are so I'm forgoing the callable premium but I go tired of managing a large to me bond portfolio.

2026​	IBDR​	iShares® iBonds® Dec 2026 Term Corporate ETF​
2027​	IBDS​	iShares® iBonds® Dec 2027 Term Corporate ETF​
2028​	IBDT​	iShares® iBonds® Dec 2028 Term Corporate ETF​
2029​	IBDU​	iShares® iBonds® Dec 2029 Term Corporate ETF​
2030​	IBDV​	iShares® iBonds® Dec 2030 Term Corporate ETF​
2031​	IBDW​	iShares® iBonds® Dec 2031 Term Corporate ETF​
2032​	IBDX​	iShares® iBonds® Dec 2032 Term Corporate ETF​
2026​	IBHF​	iShares® iBonds® 2026 Term High Yield and Income ETF​
2027​	IBHG​	iShares® iBonds® 2027 Term High Yield and Income ETF​
2028​	IBHH​	iShares® iBonds® 2028 Term High Yield and Income ETF​
2029​	IBHI​	iShares® iBonds® 2029 Term High Yield and Income ETF​
2030​	IBHJ​	iShares® iBonds® 2030 Term High Yield and Income ETF​
2031​	IBHK​	iShares® iBonds® 2031 Term High Yield and Income ETF​
2032​	IBHL​	iShares® iBonds® 2032 Term High Yield and Income ETF​

As each rung matures, are you reinvesting in another rung?