My investing strategy has been to piece together a portfolio across my accounts that approximates the investments and allocation of a Vanguard target date fund. Vanguard allocates 5% of the portfolio to international bonds.
My 401k has a good total US bond fund, but nothing for international bonds. So to date I've been placing the international bonds into my ROTH to avoid taxes on the bonds. At this point my international bond position is getting large enough that I'm questioning whether this is a good idea - putting it into a tax deferred account is tax efficient, but offset by reducing growth in a tax free account compared to holding stocks.
I've been thinking maybe I should just keep it simple and buy more US bonds in the 401k and switch to a stock fund in the ROTH. I noticed Fidelity for example only holds 1.6% international bonds in the same target date, so I'm not sure there's much need to worry about this.
So I'm trying to decide between three options:
1) Keep 5% of the portfolio in international bonds in my ROTH
2) Keep 5% in international bonds but switch it to taxable
3) Redirect the 5% international bonds to US bonds in my 401k, changing that from bonds to stocks in the ROTH
Any opinions would be welcome