So I've got $4500 in left over money
I've set up my emergency fund and maxed out my Roth IRA for the year.
I'm thinking of putting the money in either I-Bonds or in Vanguard Total Bond Index Fund (VBMFX), or something similar. Ideally, I want to place it in something with little to no risk, but better returns than a savings account or a CD.
I'm leaning towards the Vanguard Bond Index Fund (and later moving up to Admiral shares once I hit 10k).
Any ideas?
Posted Sep 17, 2014, 12:34 AM UTC
114
Heads up: if your IRA is a balanced fund, and you plan on keeping bonds in a taxable account, you're paying more in taxes than you need. Bonds are taxed as ordinary income.
See this wiki article.
I'm switching my IRA provider to Vanguard and purchasing on of their Target Retirement funds.
So basically, I shouldn't be looking at bonds if I really care about tax efficiency? I'm new to all this.
Bonds are find, but I'd put the bonds in the IRA, stocks outside, if that's an option.
So you'd recommend switching to a Vanguard Bond Fund in my IRA and putting my $4500 in a Stock Index fund? I think that's feasible for me.
It's going to depend on your specific tax situation, but it's something to consider.