Which Bond Funds for Taxable Account??

[A-Aron1]

Hi everyone,

This recent market volatility has me considering adding bonds to my taxable account once the market recovers. I’m currently in Fidelity total market index and international index. I’m not worried about being in all equities in my 401k and IRA as I’m only 32.

My question is: should I use a Fidelity total bond index fund??? Not real familiar with Bonds but I was thinking about trying to be at around 20% bonds to decrease the volatility when the next downturn happens. Currently have about 150k in taxable. Hoping someone can point me in the right direction. Thank you!

[kork13]

For reference, I'm 35. Personally, the only taxable bonds I have are I-Bonds (and even they are effectively tax-deferred, since I don't have to pay taxes on them until I sell them). In my retirement accounts, I keep roughly 20% bonds, primarily in Vanguard's Total Market Bond Fund, VBTLX.

Typical advice is to keep bonds in tax-advantaged accounts, due to the constant income distributions that can throw a wrench into your tax planning. But, that's just a rule of thumb, nothing hard & fast or obligatory.

[Jluke]

If you have 150k in taxable and want to move to a bond fund is that going to incur any capital gains or losses (I.e. taxable event)?

I have Wellington in taxable since that has some bonds. Not tax efficient but I don’t have a huge amount in that. Around 25k. But I do notice the difference come tax time with increased capital gains and dividends. So smaller refund.

BND is vanguards ETF for a bond fund. Can’t remember what fidelity’s version is.