Best Roth IRA investments?

MiggySprat

MiggySprat

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I’ve set up a traditional IRA specifically for my fixed income and dividend investments. I’m in my mid-50s, and the account currently holds $200k, all invested in VFMXX.

I’m looking for suggestions on where to invest this money. I’d prefer options with a duration of less than 10 years and a solid dividend yield.

If you have any ideas or know of good websites for research, I’d really appreciate the help!
 
Within an IRA, the benefits of a dividend-focused strategy are reduced since all withdrawals are taxed the same way, regardless of the source.
 
MiggySprat said:
I’ve set up a traditional IRA specifically for my fixed income and dividend investments. I’m in my mid-50s, and the account currently holds $200k, all invested in VFMXX.

I’m looking for suggestions on where to invest this money. I’d prefer options with a duration of less than 10 years and a solid dividend yield.

If you have any ideas or know of good websites for research, I’d really appreciate the help!
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It seems like you're just looking for bonds?
 
My focus is on total return from investments. I’m aiming to grow the overall balance, not just focusing on dividends or generating income. Any dividends would be reinvested.
 
For context, I divide my total market holdings into more growth funds in taxable accounts (which usually have smaller dividends) and more value funds in tax-advantaged accounts (which tend to have larger dividends). I'm not sure if my split is market cap weighted, but I'm not intentionally favoring one side over the other. It’s just a small strategy I use to reduce taxes for now. It probably doesn’t make a big difference at my current balances, but I hope it will be more meaningful down the line.
 
Flip_2K said:
It seems like you're just looking for bonds?
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I’m considering bonds or other options besides just equity investing (which I already do in other accounts). I’m exploring alternatives that could help grow this account, other than stocks.
 
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MiggySprat said:
I’m considering bonds or other options besides just equity investing (which I already do in other accounts). I’m exploring alternatives that could help grow this account, other than stocks.
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When considering bonds, you have the option of brokered CDs, bond funds, and individual bonds.

If you stick with investment-grade bonds (which is highly recommended), you have two main choices:
  1. Duration – the length of time until the bonds mature.
  2. Individual bonds vs. bond funds – Individual bonds or bond funds are the primary options.
Investment-grade bond funds with the same duration, regardless of the provider, will generally have similar returns, especially after accounting for expenses.

Buying individual corporate bonds isn't typically recommended for most retail investors. The best bonds are often picked up by professionals, leaving the less desirable ones for individual investors. Additionally, selling individual bonds before maturity can result in a significant loss.

In general, REITs are not considered a unique asset class in the context of bonds.
 
It seems like many of the responses are overlooking that the question is focused on bond funds, not equities.

I’m not necessarily recommending this, but what I do is split my traditional IRA into several bond funds: high yield (junk), floating rate, and emerging markets. For emerging markets, I have a smaller-than-market-weight position in EM equities, so I’m taking on that risk through bonds instead. I also still hold some high-dividend-yield equity funds and developed market funds in one traditional IRA, but I’m gradually converting the rest to Roth over the next few years. I haven’t invested in typical investment-grade bond funds (like total bond, corporate bonds, or GNMA) in years—since yields dropped below around 3%. Instead, I moved that money into TIAA traditional in a deferred employer account.
 
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