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All in Bond Fund for Retirement IRA?

By Terry Savage on November 10, 2019 | Investments

I just moved my $250k government TSP account over to a Schwab IRA account. They suggested I put all the money into an intermediate bond fund only available to those who have more than $250k that is actively managed and charges .65% per year. I pulled the money to Schwab so I would have more choices. This strategy seems too one-faceted – what do you think?

Terry Says

I agree! And I’m surprised that this was their recommendation! I’m assuming you’re retired, and looking for safety. I don’t know if this is ALL of your money, or what your time horizon is for needing to withdraw the money, or facing RMDs.
If you are retired and this is the majority of your savings, then I would put maybe 50 percent in the intermediate term govt bond fund, (where you’re earning very little and where you could face a loss of market value if interest rates do rise) perhaps 30 percent in an equity-income fund, and maybe 20 percent in a money market mutual fund, where you can get at it for withdrawals or RMDs. And if you do this on your own, without their “advice” you won’t be paying ANY advisory fees — much less 65 basis points! — and that will improve your return substantially!
Again, I’m so surprised not only at the allocation advice, but the fees they wanted to charge for this! Are you sure you’re directly at Schwab — or are you in the hands of an “investment advisor” who puts money AT Schwab??? Please write back and let me know.

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