Mutual Funds/Bond Funds
Is a high yield fixed income mutual fund a good investment for an IRA?
I thank you for your reply.
ANSWER: Hi. From a tax perspective, placing a high yield bond fund in an IRA makes good sense as the income that is generated is sheltered from taxation as it gets paid. However, you should first decide if a high yield bond fund is a good addition to your overall investment strategy. This is difficult to comment on in a forum such as this since it is dependent on your tolerance for risk and the specific goals you have. Generally speaking, I do feel that high yield bonds are a good thing to have in an investment portfolio, as long is it is the right percentage and the right fund. I hope this helps.
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I want to thank you for your reply.
What type of bond funds would not be appropriate in an IRA account? Would a U.S. treasury fund be appropriate?
I thank you for your follow-up reply.
Hi. In deciding what time of investments to put into your IRA, you should first make sure that the investments you are considering fit into your overall strategy. Assuming they do, then I prefer to put bonds and bond equivalents into IRA accounts; treasury bonds could be included as part of this. However, in doing so, the assumption is that you are putting stocks and other investments in your non IRA accounts for a proper overall balance. If IRA assets are the majority of your investments, then a keener eye needs to be placed on making sure you have the right investment mix in general; which would more than likely include investments besides bonds only. I hope this helps.