Expert: Doug Ingram - 4/26/2011

Question
If someone is 60 years old and wants to add bond mutual funds to their portfolio, wouldn't an IRA bond fund be the way to go, since it's tax deferred and there are no withdrawal penalties at this age? Or would there somehow be advantages to investing in a regular bond fund instead?  Thanks

Answer
Lee,

It depends upon many other factors, but first I will tell you this is not a bond question, but rather one for an accountant!

The IRA won't help you with current income (if you need it), but it and other investments within are tax deferred.

There are muni funds that would be 'tax free' and provide some current income outside of an IRA.

After 60, it is prudent to add more bonds to the mix, but how you do that (the proper mix) is better addressed by your financial advisor (or your accountant).

If you don't need current income, I would continue to fund the IRA and increase the bond mix over time.  However, that's my generic opinion - and doesn't address your particular needs and objectives.

You might also want to reduce the bond fund's (or bond) maturities as you close in on 70.

All the best!