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Bond allocation in California

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  • Bond allocation in California

    Dear forum,

    I live in high-tax California and became an attending just this year.  My non-retirement holdings are in a taxable account based on the Boglehead three-fund portfolio.  I currently have some bonds in my taxable account.

    I had previously been using VBTLX (Vanguard Total Bond Market Index Fund) for my bond allocation.  Based on my tax bracket, however, I would be ahead by about 1% yield if I instead used the Vanguard California Intermediate-Term Tax Exempt Fund.  I am a little unnerved, though, with putting all of my bonds into CA.  (California is great, but I have more faith in the US.)  I was thinking putting 70% into the CA tax exempt fund and the rest into VBTLX.

    Does that sound reasonable?

  • #2
    If Cali goes, US will go too IMHO.

    Being fresh out; your holdings in bonds should be minimal unless using that as your intermediate Emergency fund.

     

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    • #3
      I use the vanguard intermediate muni fund. I don't overconcentrate my state either. There has been one large municipal bankruptcy in my state.

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      • #4
        Ah, OK.  Thank you for your input.  I use the taxable fund as something of an intermediate emergency fund / potential house nest egg in case buying for one reason or another becomes a reality in the next few to several years.

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        • #5




          Ah, OK.  Thank you for your input.  I use the taxable fund as something of an intermediate emergency fund / potential house nest egg in case buying for one reason or another becomes a reality in the next few to several years.
          Click to expand...


          Emergency funds and house nest egg are 2 different savings goals but that's really just semantics   Any specific needs in the next 5 years should really be kept liquid unless you have other resources if the market is down when you need your funds.

          When low interest rates are ok

          Curious for your need for a bond allocation fresh out of residency. Might you need to take $ out of your retirement accounts in the next 5 years, also? Do you fear your emotions will overtake you in the next bear market and/or correction and you will not be able to prevent yourself from self-harm if the market drops more than you can tolerate? If the answer to either is yes, then bonds might need a place in your portfolio. If the answer is no, then I recommend you ask yourself the purpose for them. Everything in your portfolio should have a reason for being there.

          With thanks to PoF for continuing to keep this 2-part series on his blog:
          Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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          • #6
            The Fourth Turning! Oh no! Sounds so mysterious.
            Helping those who wear the white coat get a fair shake on Wall Street since 2011

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            • #7
              Neil Howe is going to be pretty upset when someone comes out with The Fifth Turning!

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              • #8







                The Fourth Turning! Oh no! Sounds so mysterious.
                Click to expand…


                Seriously, you’re not aware of the Fourth Turning? It’s the Kondratieff Wave through a sociological/demographic lens.



                “We Are 8 Years Into the Fourth Turning” What’s Next?

                 

                Real Conversations with Neil Howe, Historian and Author of “The Fourth Turning”

                 

                Neil Howe: The really big crisis has yet to arrive

                 

                 
                Click to expand...


                I'll bet this forum is the only thing our reading lists have in common.
                Helping those who wear the white coat get a fair shake on Wall Street since 2011

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                • #9
                  Johanna,

                  Bonds in that account are an emotional buffer to prevent from self-harm and because my 5-year house-buying timeframe is flexible.  Thanks for your response and for the links.  For now, I'll stick to reading about Bonds: What are they good for? before moving onto the Fourth Turning.

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