Just to clarify: you're talking about the coupon, right?sophie wrote:buy the lowest interest-rate option you can find, e.g. pick a 2.5% bond over a 3.25%.
Windfall Advice
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Re: Windfall Advice
Re: Windfall Advice
Ah thank you, I realized that maturity affects duration but I forgot the yield.
Is it true that we always want the highest duration bond (i.e. lowest yield for the longest maturity)? And is this also true in retirement accounts?
Is it true that we always want the highest duration bond (i.e. lowest yield for the longest maturity)? And is this also true in retirement accounts?
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Re: Windfall Advice
It's much simpler than that. You just want the lowest coupon rate for the maturity you are interested in.mukramesh wrote:Ah thank you, I realized that maturity affects duration but I forgot the yield.
Is it true that we always want the highest duration bond (i.e. lowest yield for the longest maturity)? And is this also true in retirement accounts?
Sophie had a really good exposition on it - but it boils down to market efficiency and taxes. The yield works out the same for a given maturity - regardless of which bond you buy. So buy the one where your gains will be taxed as long term capital expenses instead of as short term interest income.
Re: Windfall Advice
Took a while for the details to come in, but much of the money *is* in tax deferred accounts. A portion is in physical bullion (we're researching a safe now). Some is in the form of a refund from an annuity (why an annuity is being refunded is something I don't yet fully understand).stuper1 wrote:This is a very important question. If the money is coming from a tax-deferred retirement account, you may be able to roll some or all of it into a new tax-deferred account and let it continue to grow without paying taxes.
Having never inherited before, we're assuming this tax deferred money can be rolled over. We'll be consulting an expert.
Re: Windfall Advice
Only spouses can roll their deceased spouses Traditional IRAs over and keep going. Other heirs are given a time schedule during which you have to take distributions and pay taxes. But Roth IRAs you don't have to take a distribution on.
Best to get help from a CPA or Enrolled Agent.
Best to get help from a CPA or Enrolled Agent.