Holding bonds in taxable account

[murphy_p_t]

thoughts on holding TLT in taxable account as opposed to the 30 year bond....reason being that you don't need to sell the bond when there's 20 years left and buy the 30 year bond, and have a potential capital gain?

Alternatively, assuming that at some point during the next 5-10 years the bond will fall in value...so you sell it then and purchase a fresh 30 year treasury?

Basically, a nice feature of TLT in taxable seems to be avoiding the need to sell and realize a capital gain.

[hoost]

I haven't looked into it, but I would think that TLT is still subject to capital gains tax, probably every year, because they should be constantly selling 20 year duration bonds and buying 30 year.  So I think that it could be a moot point.  Again, I haven't looked into it, just a thought.

[Greg]

I believe hoost is right that you will pay capital gains on the TLT every year. Interesting though, if you hold a 30-year bond in taxable and rates go up, you can do tax-loss harvesting. It's perhaps harder to do that with TLT since it is trying to keep a constant maturity every year. Also less counterparty risk with a 30-year bond and at least on Fidelity super simple to buy.

Just like that awesome cooking oven, you just set it and forget it.

[Kriegsspiel]

It's very easy on Vanguard, too.