Video Reports

Embed this video

Copy Code

Link to this video

Get LinkEmbedLicenseRecommend (-)Print
Bookmark and Share

By Christine Benz and Jeremy Glaser | 02-18-2016 04:00 PM

Benz: My Favorite Funds for IRAs

Whether you're nearing retirement or still accumulating, these Morningstar analyst-approved holdings are great candidates for tax-sheltered accounts.

Note: This video is part of Morningstar's February 2016 Tax Relief Week special report.

Jeremy Glaser: For Morningstar, I'm Jeremy Glaser. It's Tax Relief Week here on Here to talk to fund investors about how they should think about filling their IRAs is Christine Benz, our director of personal finance.

Christine, thanks for joining me.

Christine Benz: Jeremy, it's great to be here.

Glaser: First off, before we get into some specific fund ideas that you have, how should we even think about selecting investments that go into a tax-advantaged account like an IRA.

Benz: The key thing you need to think about is your time horizon for that money. So, for younger people who are accumulating assets for retirement and don't expect that they will tap that money for another 20 or 30 years or more, by all means they'd want to have their IRA predominantly invested in stocks. For people who are using their IRAs to take advantage of that tax-sheltered wrapper and maybe are getting a little bit closer to retirement--which would mean they might want to begin accumulating safer types of assets--IRAs are an ideal receptacle for bonds, because that bond income is taxed at your ordinary income rate. So, your taxable accounts tend to be a bad place to hold taxable bonds. IRAs shelter you from those year-to-year income distributions, so they're a good place to house income-producing assets.

Finally, I would say that investors who have already well-diversified portfolios and are using their IRA contributions to diversify the already well-diversified equity-and-bond piece of their portfolios, they might think about using their IRAs to use some diversifying asset types that are also tax-inefficient. Here, I'm thinking of categories like real estate perhaps, commodities, and other areas that diversify that plain-vanilla stock/bond portfolio.

Read Full Transcript
{0}-{1} of {2} Comments
{0}-{1} of {2} Comment
  • This post has been reported.
  • Comment removed for violation of Terms of Use ({0})
    Please create a username to comment on this article
    Content Partners