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Hi, I wanted to float a quick question I haven't seen addressed. I am debating which mutual funds to hold in my ROTH IRA account. Conventional wisdom (Bernstein; Larimore, Lindauer and LeBoeuf's investment book; Ferri; Swedroe; and others) says put bond funds in the IRA and, if there is extra room, REITs. End of story. However, I believe my situation, given my long investment time horizon, low tax bracket, and preference for bonds with tax advantages built into them, warrants a closer look. I'm in my mid 20s, safely inside the 25% federal tax bracket, and don't plan to spend my savings for another 40+ years. Also, because I work as a public school teacher it's hard to imagine ever surpassing the 28% tax bracket. After reading Swendroe's new bond book ("The Only Guide to a Winning Bond Strategy You'll Ever Need"), I plan to keep my bond exposure split between Short Term Treasuries, TIPS, and very high quality international debt (probably American Century International Bond Fund and perhaps a slice of the more aggressive Loomis Sayles Global Bond Fund LSBRX). I prefer Treasuries and TIPs to high quality short term corporate debt funds because Treasuries and TIPs enjoy low correlation with equities when things get ugly for stocks and they provide superior protection against inflation. However, that said, Treasuries and TIPS have tax advantages built into them that seem unnecessary if they are held inside a ROTH IRA account. Also, while Treasuries and TIPs, according to Swendroe, are better diversifiers in a equity tilted portfolio (I plan to have an 80% equity, 20% bond portfolio), they aren't THAT much better than high quality short term corporate debt (even Swendroe himself seemed to confirm this in a previous conversation). So my question. I'm starting to feel that I would be better served by placing tax inefficient equity funds in my ROTH account and place the bonds in my taxable account. Also, a 1995 study conducted by T. Rowe Price (referenced in a few Morningstar articles) seemed to confirm this gut level feeling. Given my low tax bracket (as well as relatively low projected tax bracket), long investment time horizon, and preference for bonds with tax advantages built into them am I correct to fill my ROTH account with REIT, small cap value, and value equity funds? Any information or this matter or links to studies/articles would be extremely helpful. Thanks. Originally posted in thread: 57647

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