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Re: LT Bonds for 29 year old?

Hello Bogleheads, I am a long time reader. I'll get right to it: I am 29 years old, have a high risk tolerance (and investment discipline), and an investment time frame of roughly 20-30years before I plan to draw on these funds. I currently have more than enough room within my IRA to hold the bond ...
by Carpe
Wed Nov 06, 2013 12:53 pm
 
Forum: Investing - Help with Personal Investments
Topic: LT Bonds for 29 year old?
Replies: 20
Views: 1895

Re: UK/International Bonds or Cash?

Two Intermediate Class Bond funds used by Bogleheads in the US are (1) the Total Bond Market Index fund, and (2) the Intermediate Bond Index Fund. Their durations are currently 5.3 years and 6.5 years, respectively. There is no direct (Vanguard UK) equivalent to the Total Bond Market Index, which c...
by Carpe
Mon Nov 04, 2013 11:01 am
 
Forum: Investing - Help with Personal Investments
Topic: UK/International Bonds or Cash?
Replies: 8
Views: 580

Re: Nov 2013 I Bond Rate - 1.38% (0.20% Fixed)

As has already been stated, 0.2% on $10k is $20. Putting this into further context: - As of 10/29, the real yield on a 10 year TIPS is 0.40% (real rate realized and term risk avoided if held to maturity) - As of 10/29, the real yield on a 20 year TIPS is 1.03% (real rate realized and term risk avoi...
by Carpe
Fri Nov 01, 2013 8:20 pm
 
Forum: Investing - Theory, News & General
Topic: Nov 2013 I Bond Rate - 1.38% (0.20% Fixed)
Replies: 94
Views: 7634

Re: Nov 2013 I Bond Rate - 1.38% (0.20% Fixed)

As has already been stated, 0.2% on $10k is $20. Putting this into further context: - As of 10/29, the real yield on a 10 year TIPS is 0.40% (real rate realized and term risk avoided if held to maturity) - As of 10/29, the real yield on a 20 year TIPS is 1.03% (real rate realized and term risk avoi...
by Carpe
Fri Nov 01, 2013 2:14 pm
 
Forum: Investing - Theory, News & General
Topic: Nov 2013 I Bond Rate - 1.38% (0.20% Fixed)
Replies: 94
Views: 7634

Re: Nov 2013 I Bond Rate - 1.38% (0.20% Fixed)

As has already been stated, 0.2% on $10k is $20. Putting this into further context: - As of 10/29, the real yield on a 10 year TIPS is 0.40% (real rate realized and term risk avoided if held to maturity) - As of 10/29, the real yield on a 20 year TIPS is 1.03% (real rate realized and term risk avoid...
by Carpe
Fri Nov 01, 2013 1:18 pm
 
Forum: Investing - Theory, News & General
Topic: Nov 2013 I Bond Rate - 1.38% (0.20% Fixed)
Replies: 94
Views: 7634

Re: 30 year TIPs auction announcement October 17

That's roughly $40 (in todays money) over 30 years for every $1k invested, give or take a few months. Don't you mean $400 , Carpe? That's about what I get for each $1,000 of face value assuming the 0.625% coupon is reinvested at the 1.330% yield: Case 1 Case 2 -------- -------- (829.43) (829.43) Un...
by Carpe
Thu Oct 24, 2013 7:56 pm
 
Forum: Investing - Theory, News & General
Topic: 30 year TIPs auction announcement October 17
Replies: 44
Views: 3913

Re: 30 year TIPs auction announcement October 17

The yield came in at 1.330% at the auction today. Here is the Auction Results PDF file . The yield was up slightly from yesterday's close and down about 0.1% point from the June auction of this same TIPS: 1.304% - Yesterday's close - see last row of WSJ TIPS Quotes 10/23/2013 1.420% - June auction ...
by Carpe
Thu Oct 24, 2013 2:45 pm
 
Forum: Investing - Theory, News & General
Topic: 30 year TIPs auction announcement October 17
Replies: 44
Views: 3913

Re: 30 year TIPs auction announcement October 17

grok87 wrote:yield now at 1.33%. not the 1.5% I was hoping for. I'm still buying at Thursdays auction though.
if others are interested I would get your orders in today or tomorrow. Not sure when the cutoff is...
cheers,


Thanks for the reminder. Just placed my order.
by Carpe
Tue Oct 22, 2013 11:52 am
 
Forum: Investing - Theory, News & General
Topic: 30 year TIPs auction announcement October 17
Replies: 44
Views: 3913

Re: Social Security as a Bond [Bogleheads Panel]

What follows is a second attempt, if you will, to explain a concept which I failed to explain very well during today's panel discussion. Background: One of the questions that was posed to the panel was how we each feel about the idea of including Social Security as a bond in one's asset allocation....
by Carpe
Fri Oct 18, 2013 10:51 pm
 
Forum: Investing - Theory, News & General
Topic: Social Security as a Bond [Bogleheads Panel]
Replies: 96
Views: 6116

Re: A tip on TIPS allocation

There surely is a sliding scale here, and the problem is not likely to be limited to TIPS either. The same argument can also be applied to nominals v equities. Well, that is true. If one is counting on a 4% withdrawal rate for thirty years one of the surest ways to sabotage that result is by not ho...
by Carpe
Mon Oct 14, 2013 2:53 pm
 
Forum: Investing - Theory, News & General
Topic: A tip on TIPS allocation
Replies: 73
Views: 6497

Re: A tip on TIPS allocation

Should you spend all your risk allocation on unanticipated inflation? I think that's over-hedging one risk at the expense of all others. Rick, could you please explain what are the other risks one incurs by investing in TIPS? I try to explain above in this post why TIPS don't suffer from deflation ...
by Carpe
Mon Oct 14, 2013 1:48 pm
 
Forum: Investing - Theory, News & General
Topic: A tip on TIPS allocation
Replies: 73
Views: 6497

Re: 30 year TIPs auction announcement October 17

Yes. Currently, no constraints on yield level - just an incremental addition based on existing plan. Slàinte, thanks. so you're a buyer even at negative real yields? just curious... A negative real yield is certainly not preferred, but I so have some 10 Year TIPs with -ve YTM. These were purchased ...
by Carpe
Mon Oct 14, 2013 10:47 am
 
Forum: Investing - Theory, News & General
Topic: 30 year TIPs auction announcement October 17
Replies: 44
Views: 3913

Re: A tip on TIPS allocation

I agree with #Cruncher during normal times and most of us think of using TIPS in normal times and for long periods. But they might not provide risk free like performance as well as nominal Treasuries in short term crisis. In order to get short term variance risk protection as well as longer term in...
by Carpe
Wed Oct 09, 2013 11:11 am
 
Forum: Investing - Theory, News & General
Topic: A tip on TIPS allocation
Replies: 73
Views: 6497

Re: Has anyone added a Foreign Bond position

The references above to Dr. Swensen appear correct but are limited. There is more information and basis for his conclusion to stay away from this asset class than what is noted. In addition, I attended a lecture and met Dr. Swensen. He was very clear when discussing the asset classes to avoid and i...
by Carpe
Wed Oct 09, 2013 10:21 am
 
Forum: Investing - Theory, News & General
Topic: Has anyone added a Foreign Bond position
Replies: 41
Views: 3980

Re: A tip on TIPS allocation

No, I disagree. Conventional treasuries of the same maturity should have the same expected return as TIPS. That's the definition of the market's expectation of inflation (currently about 2%). If inflation is below this then nominal treasuries are the better investment. If inflation is higher than t...
by Carpe
Tue Oct 08, 2013 11:13 pm
 
Forum: Investing - Theory, News & General
Topic: A tip on TIPS allocation
Replies: 73
Views: 6497

Re: A tip on TIPS allocation

Safety and more certainty at lower expected return, or the prospect of higher return at the expense of higher risk. The proportion of TIPS (and Ibonds) in fixed income will clearly define where each investor is positioned on this issue. Not sure how you would come to that conclusion. VAIPX(Vanguard...
by Carpe
Tue Oct 08, 2013 10:41 pm
 
Forum: Investing - Theory, News & General
Topic: A tip on TIPS allocation
Replies: 73
Views: 6497

Re: A tip on TIPS allocation

My own view is that 20% of ones bond portfolio in TIPS is way too low. And here is why: ⋅ The bond portion of ones portfolio should be low risk. ⋅ Two major types of risk are credit risk and inflation risk. ⋅ One minimizes both of these with TIPS. ⋅  Thus , o...
by Carpe
Tue Oct 08, 2013 1:02 pm
 
Forum: Investing - Theory, News & General
Topic: A tip on TIPS allocation
Replies: 73
Views: 6497

Re: Has anyone added a Foreign Bond position

In fact, Vanguard hides the complexity of the hedging process, to the point that it just becomes a component of whatever E/R is being charged by that fund. Are the costs really that much? For what you get, really? Actually, the hedging costs are in addition to the E/R and won't show up explicitly a...
by Carpe
Mon Oct 07, 2013 5:16 pm
 
Forum: Investing - Theory, News & General
Topic: Has anyone added a Foreign Bond position
Replies: 41
Views: 3980

Re: Has anyone added a Foreign Bond position

As Arnold would say "No Chance"! For us, David Swensen's thoughts and arguments in the excellent book Unconventional Success has had a big impact on our investing strategy. He has a very compelling argument to exclude this asset class from a portfolio. If you have not already done so, I w...
by Carpe
Mon Oct 07, 2013 4:02 pm
 
Forum: Investing - Theory, News & General
Topic: Has anyone added a Foreign Bond position
Replies: 41
Views: 3980

Re: Has anyone added a Foreign Bond position

Ours is a multi-national family, and our family investments include a UK sub-portfolio. This was transitioned from 100% equities earlier this year to an Equity/Bond mix consistent with our US investments. We are using Vanguard’s UK Government Bond Index, and are now adding/phasing in their more rece...
by Carpe
Mon Oct 07, 2013 12:02 pm
 
Forum: Investing - Theory, News & General
Topic: Has anyone added a Foreign Bond position
Replies: 41
Views: 3980

Re: 30 year TIPs auction announcement October 17

Hi Bogleheads, Just a heads up that there is a 30 year TIPS auction coming up later this month. The auction will be announced on October 17th- that's when you can start placing your orders. The actual auction date is October 24th. I'm hoping for a 1.5% real yield. But I fear with all that is going ...
by Carpe
Fri Oct 04, 2013 12:15 pm
 
Forum: Investing - Theory, News & General
Topic: 30 year TIPs auction announcement October 17
Replies: 44
Views: 3913

Re: 30 year TIPs auction announcement October 17

The price of the 2043 Feb 15 0.625% has fallen to 81.28/82.06 in order to yield 1.364% http://online.wsj.com/mdc/public/page/2_3020-tips.html If you buy the next 30-year TIP at YTM=1.3%, and then rates rise to 2%, it's price will also fall a lot, like -20%. Of course, rates can fall back to 0.6% an...
by Carpe
Fri Oct 04, 2013 12:01 pm
 
Forum: Investing - Theory, News & General
Topic: 30 year TIPs auction announcement October 17
Replies: 44
Views: 3913

Re: What FI% guaranteed would replace bonds for you?

My 457 plan has a 4% guaranteed general account, and I use that for 50% of my 457 contributions and roughly 20% of my portfolio as a bond allocation. It is a blessing and a curse. Because it is such a great rate right now, my company will not look into changing providers or be allowed a Self-Direct...
by Carpe
Wed Oct 02, 2013 11:41 am
 
Forum: Investing - Theory, News & General
Topic: What FI% guaranteed would replace bonds for you?
Replies: 7
Views: 1089

Re: the importance of rebalancing

http://www.cbsnews.com/8301-505123_162-57604576/the-importance-of-rebalancing/ The example demonstrates that what many think of as conventional wisdom about the impact of rebalancing is (or can be) wrong Best wishes Larry Hi Larry, If I remember correctly, you sold out your REITs allocation a year ...
by Carpe
Thu Sep 26, 2013 10:52 am
 
Forum: Investing - Theory, News & General
Topic: the importance of rebalancing
Replies: 12
Views: 1161

Re: TIPS - Going Down with the Ship?

Who would want the complexity compared to a simple bond fund? I believe you are referring to administrative complexity. There are also other forms of complexity, such as the complexity of the instrument being used, or the complexity (and uncertainty) of outcome. So, in the case of inflation protect...
by Carpe
Wed Sep 18, 2013 10:15 am
 
Forum: Investing - Help with Personal Investments
Topic: TIPS - Going Down with the Ship?
Replies: 112
Views: 13300

Re: IBonds role in AA

How do IBonds count towards asset allocations in one's portfolio? Are they generally considered part of the "bonds" allocation, or would they be considered "cash on hand", similar to a CD ladder or high-interest savings account that people use for their EF? I'm finding that it's...
by Carpe
Tue Sep 17, 2013 3:27 pm
 
Forum: Investing - Help with Personal Investments
Topic: IBonds role in AA
Replies: 7
Views: 678

Re: TIPS - Going Down with the Ship?

Those who expect to live more than 30 years who want a TIPS ladder are going to have to roll that ladder for at least some number of years. Not necessarily. A non-rolling ladder of 30 year TIPS could certainly be constructed that establishes individual TIPS maturing across the retirement timeframe....
by Carpe
Tue Sep 17, 2013 10:59 am
 
Forum: Investing - Help with Personal Investments
Topic: TIPS - Going Down with the Ship?
Replies: 112
Views: 13300

Re: Allan Roth compares PIMCO TBR to Van TBM

2) How does one decide on the appropriate amount of risk to take on the bond side? Larry Swedroe says "take your risk in equities," and that's all well and good and I agree with it, <snip> There is a certain contradiction between the idea of diversification and the idea that it's not appr...
by Carpe
Sun Sep 15, 2013 11:10 am
 
Forum: Investing - Theory, News & General
Topic: Allan Roth compares PIMCO TBR to Van TBM
Replies: 18
Views: 1598

Re: TIPS - Going Down with the Ship?

abuss368 wrote:I wonder what Vanguard's long term plans are for the intermediate term fund now that the short term fund has been introduced (as an index offering too).


Or create your own equivalent by combining the two that they already have.
by Carpe
Fri Sep 13, 2013 7:25 pm
 
Forum: Investing - Help with Personal Investments
Topic: TIPS - Going Down with the Ship?
Replies: 112
Views: 13300

Re: TIPS - Going Down with the Ship?

How does all this fit in for a taxable account investor? It may not make sense to hold a TIPS fund. Given your concerns about TIPS funds going down in value, you might consider Ibonds - they don't. They would also extend your tax deferred space, allow for the possibility of shifting tax burden to a...
by Carpe
Fri Sep 13, 2013 9:32 am
 
Forum: Investing - Help with Personal Investments
Topic: TIPS - Going Down with the Ship?
Replies: 112
Views: 13300

Re: TIPS - Going Down with the Ship?

A ladder of TIPS held to maturity and a rolling ladder are not the same thing. The basic dividing line is between a portfolio of more or less constant average maturity and one with a declining average maturity. Funds and rolling ladders fit on one side of the line, while individual bonds and ladder...
by Carpe
Thu Sep 12, 2013 1:53 pm
 
Forum: Investing - Help with Personal Investments
Topic: TIPS - Going Down with the Ship?
Replies: 112
Views: 13300

Re: TIPS - Going Down with the Ship?

OK, since we are discussing extremes: If you are maintaining a ladder, you can "wash" the coupon payments into your next purchase. Or if you're investing in a fund, you can wash the payments into your next purchase. There's little if any meaningful difference in this context between a rol...
by Carpe
Thu Sep 12, 2013 10:21 am
 
Forum: Investing - Help with Personal Investments
Topic: TIPS - Going Down with the Ship?
Replies: 112
Views: 13300

Re: TIPS - Going Down with the Ship?

PJW, TIPS pay cash interest in addition to the inflation adjustment. There's reinvestment risk on that cash interest. VT is correct. Right. Extreme example: Year 0: Buy a 30-year TIPS with a coupon rate of 1.500% at par. Real yield is therefore 1.5000%. Next day, the yield on your TIPS drops to 0.0...
by Carpe
Wed Sep 11, 2013 3:58 pm
 
Forum: Investing - Help with Personal Investments
Topic: TIPS - Going Down with the Ship?
Replies: 112
Views: 13300

Re: TIPS - Going Down with the Ship?

Intermediate Term TIPS Fund - This drop is incredible! Updated performance figures on Vanguard's website: YTD - (9.45%) 1 year - (7.43%) Total Bond Market has now pulled ahead for the YTD, 1 Year, 5 Year, and the 10 Year is not that far off. It really does appear to be a reversion to the mean and t...
by Carpe
Tue Sep 10, 2013 11:37 am
 
Forum: Investing - Help with Personal Investments
Topic: TIPS - Going Down with the Ship?
Replies: 112
Views: 13300

Re: What Should You Do With Your TIPS?

On page 2 of the article Rick Ferri is quoted as saying: I've never been in the school of high TIPS allocations as others have advocated. My view has always been to hold between 10% and 20% of a fixed-income portfolio in TIPS or I-Bonds as a hedge against unanticipated inflation. Any more than that...
by Carpe
Mon Sep 02, 2013 10:49 am
 
Forum: Investing - Theory, News & General
Topic: What Should You Do With Your TIPS?
Replies: 34
Views: 4116

Re: YOUR QUESTIONS FOR THE EXPERTS PANEL

Normal distribution is as relevant to the stock market as age-in-bonds is to personal asset allocation. It sort-of fits some of the time. :happy Sorry, couldn't hold back! Rick Ferri Indeed, but not very insightful. :oops: Sort-of fitting some of the time is problem. Sorry, I couldn't hold back eit...
by Carpe
Fri Aug 30, 2013 12:02 pm
 
Forum: Investing - Theory, News & General
Topic: YOUR QUESTIONS FOR THE EXPERTS PANEL
Replies: 63
Views: 8655

Re: YOUR QUESTIONS FOR THE EXPERTS PANEL

This questions can be addressed to all members of the panel: Benoit Mandelbrot has questioned the validity of normal distributions in financial risk assessment, yet the ubiquitous and foundational nature of Gaussian statistics in education has resulted in this tool being widely used in both professi...
by Carpe
Fri Aug 30, 2013 11:13 am
 
Forum: Investing - Theory, News & General
Topic: YOUR QUESTIONS FOR THE EXPERTS PANEL
Replies: 63
Views: 8655

Re: Personal Rate of Return

I find it hilarious that Bolgeheads recommend a set-it-and-forget-it investing strategy -- they're more obsessive than most! Cheers, Guys -- gotta be one to know one! :sharebeer Not set it and forget it. Just that personal rate of return (historical results) is not the criterion for making changes....
by Carpe
Tue Aug 27, 2013 8:31 am
 
Forum: Investing - Help with Personal Investments
Topic: Personal Rate of Return
Replies: 19
Views: 1971

Re: WSJ Interview re: Emerging Markets

I'm guessing she doesn't need to talk to anyone anymore: http://online.wsj.com/article/SB10001424127887323980604579027222952335770.html So, retail investors are "bolting" in a typical behavioural way, or those that have / maintain an allocation in EM can purchase at lower cost with a high...
by Carpe
Thu Aug 22, 2013 10:44 am
 
Forum: Investing - Theory, News & General
Topic: WSJ Interview re: Emerging Markets
Replies: 11
Views: 1477

Re: Children & Capital Gains - Tax Filing Requirements

I'm trying to resolve whether or not capital gains realized by a child, from the sale of appreciated stock, always result in a separate tax return being needed for the child. More specifically, by keeping capital gains below a particular threshold, can the need for filing a separate tax return for ...
by Carpe
Wed Aug 21, 2013 3:25 pm
 
Forum: Personal Finance (Not Investing)
Topic: Children & Capital Gains - Tax Filing Requirements
Replies: 6
Views: 371

Re: Children & Capital Gains - Tax Filing Requirements

Grt2bOutdoors wrote:http://www.irs.gov/publications/p929/ar02.html#en_US_2012_publink1000203810

View the example on figuring child's income.


Thanks, but the examples use "capital gain distributions" and not "capital gains". My question relates to the consequence of "capital gains"
by Carpe
Wed Aug 21, 2013 2:36 pm
 
Forum: Personal Finance (Not Investing)
Topic: Children & Capital Gains - Tax Filing Requirements
Replies: 6
Views: 371

Children & Capital Gains - Tax Filing Requirements

I'm trying to resolve whether or not capital gains realized by a child, from the sale of appreciated stock, always result in a separate tax return being needed for the child. More specifically, by keeping capital gains below a particular threshold, can the need for filing a separate tax return for t...
by Carpe
Wed Aug 21, 2013 2:02 pm
 
Forum: Personal Finance (Not Investing)
Topic: Children & Capital Gains - Tax Filing Requirements
Replies: 6
Views: 371

Re: Bad idea to buy i-bond now?

Given the low rate of i-bond now, is it still a good idea to buy i-bond for emergency fund? The rate is so low, although I think the actual inflation is higher than that, and the there is one -year restriction. So it is not attractive to me at all. But cannot think of a better alternative for emerg...
by Carpe
Fri Aug 09, 2013 10:26 am
 
Forum: Investing - Help with Personal Investments
Topic: Bad idea to buy i-bond now?
Replies: 39
Views: 4150

Re: International Driving Permit

We are going to Ireland in September for two weeks with a likely side trip to England and Scotland. Its been suggested we get an International Driving Permit. I checked with Irish Car Rental and they said my license is fine as long as its in Roman Script. I have not yet checked the other rental age...
by Carpe
Wed Jul 24, 2013 2:14 pm
 
Forum: Personal Consumer Issues
Topic: International Driving Permit
Replies: 30
Views: 1689

Re: Heavy Reading

Fama has some discussion on the distribution of returns in his "Foundations of Finance" book. The whole book is available in PDF format on his teaching website: http://faculty.chicagobooth.edu/eugene.fama/research/index.htm Chapter 1 starts the discussion on return distributions. He shows...
by Carpe
Fri Jun 07, 2013 9:51 am
 
Forum: Investing - Theory, News & General
Topic: Heavy Reading
Replies: 12
Views: 1628

Re: Argument for a 100% stock allocation for 20 yr horizon

There are less then 5 non-overlapping 20 year periods in your sample. How confident can you be based on that? How confident can I be about what? When you invest, if you do not base your asset allocation on past history of returns of bonds vs. stocks, what do you base it on? Ideally, you would be ma...
by Carpe
Sun Jun 02, 2013 9:15 am
 
Forum: Investing - Theory, News & General
Topic: Argument for a 100% stock allocation for 20 yr horizon
Replies: 112
Views: 8470

Re: VG Total International Bond Fund is open

For anyone interested, outside the US Vanguard aleady provides a fund based on the "Barclays Global Aggregate Float Adjusted Bond Index". This particular fund includes US bonds , and there are various institutional classes, demoniniated in different currencies - including USD and USD-hedge...
by Carpe
Fri May 31, 2013 2:28 pm
 
Forum: Investing - Theory, News & General
Topic: VG Total International Bond Fund is open
Replies: 82
Views: 11973

Re: Mountain America Credit Union 5-Year IRA CD

So I have total bond market in a Roth IRA at Vanguard. I could "transfer" that Roth IRA to Mountain in order to take advantage of the CD being discussed? Thanks Xram Yes. You can do a partial or complete transfer of your Vanguard IRA (Roth or Traditional) to another custodian, such as MAC...
by Carpe
Wed May 22, 2013 7:19 pm
 
Forum: Investing - Theory, News & General
Topic: Mountain America Credit Union 5-Year IRA CD
Replies: 57
Views: 5983

Re: Spending on Food / Drink Indulgences

investingdad, if you get over to Munich area please visit the Weihenstephan brauerei. It is the oldest active brewery in the world, founded in 1040! It is in the town of Freising near MUC airport. It also has a wonderful biergarten with excellent food as well as gardens and hiking trails. I took my...
by Carpe
Tue May 14, 2013 3:40 pm
 
Forum: Personal Consumer Issues
Topic: Spending on Food / Drink Indulgences
Replies: 25
Views: 2408

Re: 100% equities, anyone?

I do apologize. Given your resistance to my comments on 100% equities, I just assumed that you were advocating 100% equities. It was certainly a good opportunity to highlight some of the issues with such a strategy. I'm pretty comfortable with my understanding of the article, related mathematical c...
by Carpe
Mon May 13, 2013 12:18 pm
 
Forum: Investing - Theory, News & General
Topic: 100% equities, anyone?
Replies: 149
Views: 9939
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