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Third, your AA helps determine the magnitude of loss to your portfolio if you experience an immediate and prolonged drop in the Market. It should go without saying that a 50% Equity drop with 60/40 AA takes 30% of your account balance; with 40/60 AA it takes 20% of your account balance, etc. That's...

Take the 575K lump sum.

Immediately invest all 575K into a simple 3-fund portfolio:

Vanguard Total Stock Market Index
Vanguard Total Bond Index
Vanguard Total International

Do NOT let anyone convince you to put your savings at risk purchasing stocks unless you can afford to lose 50% of that savings. Do NOT let anyone convince you your savings will be wiped out by "inflation" unless you invest in risky stocks and bonds. Inflation is 2%. Have you ever heard tha...

I have not been on the forum ever since I set up my passive boglehead approach to investing. No need to be. Set it and forget it, right ? However, something has raised my curiosity. If the boglehead approach is based on simplicity, passive index investing and accepting market returns, why are the sa...

A regular IRA contribution can only be made with earned income, not MAGI. Thanks so much Alan. Sorry, my mistake. I meant "earned income", we only has $9590 in earned income. It also appears possible that your full deduction in 2011 was not necessary to reduce your taxable income to -0-. ...

It's also available on audio.

Some of your coding confusion can be traced to your looking at the 2013 1099R instructions. You should pull up the 2012 instructions, as that edition applies to your 2012 1099R. Now to the overall situation. It sounds like you contributed 6k to both a Roth and a TIRA for a total of 12k for 2011??? ...

I guess it's possible the code is incorrect, but if you don't mind, please explain the entire sequence. 1) Date you made the contributions and for which year and which type of IRA 2) You mentioned recharacterizing a contribution before withdrawing it. That's doable but why not just withdraw it from...

Just did it last November. Sold the car in one day. It was a very positive experience for both myself and the buyer. I always proceed cautiously on Craigslist but interestingly, all of the people we have met through Craigslist have been great.

sscritic wrote:I like reading instructions. Here is the one for code P.
See the explanation for Code 8.

Not sure what your reading, but that's not the explanation for 1099R code P.

When I filed my 2011 amended return explaining the return of the excess 2011 IRA contribution, I failed to create a dummy 1099R. This year my 2012 1099R shows the excess contribution as a distribution code 08 (even though it was returned prior to April 15,2012). The problem is now TurboTax is showin...

You might try searching this site for a similar question. I think I remember Alan S saying that the code R was for a recharacterization done the year after the contribution. For paper returns, I seem to recall that you would ignore the 1099R since you had written the narrative statement describing ...

Can you confirm what the distribution code in box 7 of your 1099-R? Assuming that box 7 has a P (most likely P1), the 1099-R is definitely taxable in the prior tax year from the year on the form. Turbo Tax should be excluding the 1099-R from this year's tax return once you indicate the distribution...

Last year I had to recharacterize a Roth IRA to a TIRA and also remove the excess contribution. That was reported on my amended 2011 tax return by way of an attached statement. The recharacterization and excess withdrawal was executed prior to April 15, 2012 so it was timely. While working on my 201...

At 59 and retired, I simply don't understand how of allocating 70% to total bond fund is safe for my time horizon.

Third, is this just a curiosity thing? Thanks YDNAL. Short answer is no. The longer answer is no, because I'm afraid of having too much allocated to bonds. (my risk profile recommends 70% bonds) So having read a couple of Swedroe's books, it occurred to me that his approach of taking more risk on t...

Are there any examples of how to construct a Swedroe small value tilt portfolio using Vanguard Index Funds ?

Thanks,
Bustoff

Johm221122 wrote:
Bustoff wrote:
MN Finance wrote: If you have 1M and you need 20k/yr, then no, you don't need a SPIA.

WHY ?

One reason would be 2% is an extremely safe withdraw rate, even over long time frames
John

At 2% annual inflation wouldn't you need a 4% withdraw rate ?

Maybe this is one of those periods where Gerald Loeb is correct.
"Willingness and ability to hold funds uninvested while awaiting real opportunities is a key to success in the battle for investment survival."

Vanguard has published an article explaining how mutual fund averages can change substantially from one period to the next depending upon the beginning and ending dates of the period. One important Implication for investors is this: If you're basing your investment decisions on past returns—even lon...

MN Finance wrote: If you have 1M and you need 20k/yr, then no, you don't need a SPIA.

WHY ?

Credit markets have been flashing red for a month...

Pound Foolish: Exposing the Dark Side of the Personal Finance Industry
by Helaine Olen

Have not read those.
I'm considering buying this book though.
Retirement Portfolios: Theory, Construction and Management, by Michael Zwecher

http://wpfau.blogspot.com/

http://www.fpanet.org/journal/ABroaderFrameworkforDetermininganEfficientFrontier/

Yield: TBM > TBM + TIPS > TIPS Risk : TBM > TBM + TIPS > TIPS So, TIPS are less risk but less reward while TBF is more risk but more reward. That I understand. What I don't understand is why Vanguard excludes TIPS from their recommended portfolios. They already told you. They are basing their recom...

Doc wrote:Yield: TBM > TBM + TIPS > TIPS
Risk : TBM > TBM + TIPS > TIPS

So, TIPS are less risk but less reward while TBF is more risk but more reward. That I understand.

What I don't understand is why Vanguard excludes TIPS from their recommended portfolios.

NAVigator wrote: When I received a Vanguard plan and a consultation with a CFP, they were not recommended. I added TIPS to my asset allocation. Do what you feel comfortable with.
Jerry

Just curious, what made you decide to add TIPS and how did you come up with the TIPS allocation ?

Porfolio: Only invested in three Vanguard funds Vanguard Intermediate-Term bond fund Investment-Grade Admiral Shares - 36% Vanguard Total Stock Market Index Fund Admiral Shares ----------------------- 36% Vanguard High-Yield Corporate bond Fund Admiral Shares --------------------- 28% Your thoughts...

I called Vanguard yesterday to ask why they excluded TIPS from the Financial Plan they prepared for me. (They recommended 30% TS and TI and the other 70% into the Total Bond Fund) The Vanguard CFP that I spoke with yesterday told me they generally don't recommend TIPS because the Total Bond Fund wil...

Clearly I need counseling.

45-16-08
22-04-02
01-01-01

I can't manage it now. I'm considering replacing bond allocation with SPIA. 50% stocks / 50% SPIA.

Wow, I get back and see these great explanations from nisiprius and learning_head . . . I wish I was smart enought to understand them. :confused So this means that even the anointed Total Bond Fund has a negative real yield. Worse, the TBF can lose NAV in a rising rate environment. So TBF has two st...

Thanks for the explanation #cruncher ! In light of this I'm even more concerned following Vanguards rec to assign my 70% bond allocation exclusively to Total Bond Fund. Let me see if I understand this correctly. Total Bond Fund's SEC yield is 1.54%. The current rate of inflation is 1.7%. So TBF's re...

On the other hand, you'd have to expend time yourself to manage directly held property, probably much more time than if you put the money into an equity index fund. The Vanguard Total US Stock index fund currently yields 1.9%, plus the payout ratios of stocks are much lower than that of REITs. Best...

Don't have the time to meticulously document this, but whereas the PE of the US stock market is high, implying lower long term returns, and bond yields are, as we know, very low rental yields on real estate are not looking bad: 5-6%. The US is through the housing crunch-- demand is now probably exc...

Can anyone explain this statement regarding TIPS: "You have to pay the government a half a point a year of interest in real terms in order to get the inflation compensation" The statement is from this short Bloomberg video below titled "Why We're Seeing Negative Yields on 10-Year TIPS...

Bustoff wrote:http://aging.senate.gov/events/hr222rma.pdf

see pg. 65-66

I forgot to include the tables on page 84.

http://aging.senate.gov/events/hr222rma.pdf

see pg. 65-66

If one buys $1,000 of the Feb 2043 TIPS yielding +0.6%, holds until maturity and reinvests the coupons at that yield, one ends up with $1,197 in current dollars (1000 X 1.006 ^ 30). I don't mean to intrude, but I'm reading the TIPS threads in an attempt to understand them. Is the above example sayi...

If one buys $1,000 of the Feb 2043 TIPS yielding +0.6%, holds until maturity and reinvests the coupons at that yield, one ends up with $1,197 in current dollars (1000 X 1.006 ^ 30). I don't mean to intrude, but I'm reading the TIPS threads in an attempt to understand them. Is the above example sayi...

ricb wrote: Lump sum or not into Risk Potfolio? I am aware of past forum discussions ....

You may have already seen this thread, but just in case:
http://www.bogleheads.org/forum/viewtopic.php?f=1&t=91972

79% loss in stocks (in the Great Depression) 55% loss in bonds (from 1940-1981, mainly due to inflation) 42% loss in cash (from 1932-1981, due to inflation) Patrick - were did you find your data ? I found this chart but could not find the data. http://4.bp.blogspot.com/_1TABhgDyVZs/ShlwgsPucBI/AAAA...

"What is the loss potential and or recovery time for those who are not reinvesting dividends ? Another dodge is the reply that "Oh, it depends on the bond fund and other factors". Okay, then use any bond fund, intermediate or otherwise, and give at least some examples. It can't be th...

If you want to use Vanguard's historical data as a reference, here is the info for a 100% bond portfolio from 1926 through 2011: 100% bonds Historical Risk/Return (1926–2011) Average annual return 5.6% Best year (1982) 32.6% Worst year (1969) –8.1% Years with a loss: 13 of 86 For retired investors,...

A piece of advice, though. If a person does not want their fixed income investment to lose market value having spent the interest, then one should not invest in bond funds at all. Alternatives are "cash" products such as CD's, I/E bonds, savings accounts, stable value funds, and individua...

Bustoff... Not sure this will help but in my 1970-2012 data set, I listed below the annual returns for Total Bond and CPI-U and also show the calculated difference in those returns. Looking at the worst period... 1973 - 1980 CAGR 5.84 = Total Bond 8.83 = CPI-U Trev H Thanks Trev - That's quite a se...

A piece of advice, though. If a person does not want their fixed income investment to lose market value having spent the interest, then one should not invest in bond funds at all. Alternatives are "cash" products such as CD's, I/E bonds, savings accounts, stable value funds, and individua...

Zero percent. There is no such a thing as a risk free asset. Keep in mind there are different types of risk. Also remember that what you really want to preserve is purchasing power. I have about 67% stocks versus 33% bonds and cash. Though bonds and cash are thought of as lower risk assets, they ru...

Adrian's rule re: stocks is simply based on historical observation. There's obviously no guarantee stock losses can be capped at 50%. To take a similar approach with bond losses, perhaps look at historical changes in interest rates (rates for whatever category of bonds you're looking at). For examp...

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