Search found 1205 matches

Return to advanced search

Re: Total Bond: 23 years of SEC yield and distribution yield

I've always wondered why the turnover rate on a fund indexing the entire bond market would be so high. The turnover percentage in the Total Bond Market Index fund might be deceptive even after removing the mortgage dollar roll activity. I have a feeling that the turnover in intermediate and long te...
by Electron
Fri Jan 30, 2015 2:28 pm
 
Forum: Investing - Theory, News & General
Topic: Total Bond: 23 years of SEC yield and distribution yield
Replies: 32
Views: 3097

Re: Total Bond: 23 years of SEC yield and distribution yield

Thanks all for the comments on several of my posts. In regards to my example of a bond rolling down a steep and straight yield curve, here is my data from Excel. As Kevin mentioned, it is not realistic to expect a yield curve to remain static for ten years, but it is still interesting to see the eff...
by Electron
Fri Jan 30, 2015 12:33 am
 
Forum: Investing - Theory, News & General
Topic: Total Bond: 23 years of SEC yield and distribution yield
Replies: 32
Views: 3097

Re: Total Bond: 23 years of SEC yield and distribution yield

This discussion is making it too complex. One primarily needs to remember two things: 1) SEC Yield is based on the current yield-to-maturity (or call) of the bonds in the portfolio. 2) Distribution yield is based on what the YTM/YTC of the bonds were at the time the fund purchased them . When the y...
by Electron
Thu Jan 29, 2015 4:42 pm
 
Forum: Investing - Theory, News & General
Topic: Total Bond: 23 years of SEC yield and distribution yield
Replies: 32
Views: 3097

Re: Selecting a Medigap Policy with 28 Choices

Have there been any improvements to this in the last four years? The official Medicare booklet does not help. I have twice contacted SHIP without any response. Does one still have to go to each company's web site and speak with their agents? I used the Nevin & Witt Insurance Agency which has of...
by Electron
Thu Jan 29, 2015 1:32 pm
 
Forum: Personal Finance (Not Investing)
Topic: Selecting a Medigap Policy with 28 Choices
Replies: 30
Views: 2314

Re: Total Bond: 23 years of SEC yield and distribution yield

You're comparing a $110K investment with a $100K investment here. The former would return 10% more dollar-wise than the later. And that's what happens. 8881/8074 = 1.1. Thanks for the correction. I will update my earlier post. Here is another link with more information on amortization. http://www.i...
by Electron
Tue Jan 27, 2015 1:56 am
 
Forum: Investing - Theory, News & General
Topic: Total Bond: 23 years of SEC yield and distribution yield
Replies: 32
Views: 3097

Re: Total Bond: 23 years of SEC yield and distribution yield

The purpose of amortization/accretion accounting is to level the playing field. IRS Publication 550 has an Amortization Example on page 34. http://www.irs.gov/pub/irs-pdf/p550.pdf Here is an online version. http://taxmap.ntis.gov/taxmap/pubs/p550-015.htm They look at a 7 year bond purchased for $11...
by Electron
Tue Jan 27, 2015 12:55 am
 
Forum: Investing - Theory, News & General
Topic: Total Bond: 23 years of SEC yield and distribution yield
Replies: 32
Views: 3097

Re: Total Bond: 23 years of SEC yield and distribution yield

To look at a longer time period, I grabbed December dividends from Yahoo Finance, December prices and SEC yields from Vanguard, and used Vanguard's method to calculate distribution yield. Since Vanguard provides SEC yield back to 1993, this allows us to view the comparison for 23 years. Very nice c...
by Electron
Mon Jan 26, 2015 6:52 pm
 
Forum: Investing - Theory, News & General
Topic: Total Bond: 23 years of SEC yield and distribution yield
Replies: 32
Views: 3097

Re: Initial SEC yield and subsequent 5yr and 10yr returns

Based on that, do you expect to continue to receive $37.60/year? If not, would you expect to receive more or less than $37.60 (no need to quantify)? The $37.60 figure was based on only the December dividend so I would not necessarily expect that to continue. You may want to address two cases. 1. In...
by Electron
Mon Jan 26, 2015 2:42 pm
 
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 129
Views: 6280

Re: Long term cap gains tax rate for 15% bracket

The best way to understand the 0% bracket is to identify any empty space remaining in the 10% and 15% brackets after accounting for only ordinary income after deductions and exemptions. Remember that ordinary income is handled separately from capital gains in the tax calculations. When you use the c...
by Electron
Mon Jan 26, 2015 1:48 pm
 
Forum: Investing - Help with Personal Investments
Topic: Long term cap gains tax rate for 15% bracket
Replies: 17
Views: 1724

Re: Initial SEC yield and subsequent 5yr and 10yr returns

Do you expect to continue receiving $37.60 per year? If not, approximately how much do you expect to receive in cash each year? I would review the actual dividend payout in dollars per share and notice that it varies over time. It also varies with the number of days in the month. Also keep in mind ...
by Electron
Sun Jan 25, 2015 6:04 pm
 
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 129
Views: 6280

Re: Long term cap gains tax rate for 15% bracket

If you really want to see how it works, just go through the Schedule D Tax Worksheet near the end of Appendix D in the Form 1040 Instructions. I have my taxes in a spreadsheet and had to replicate the method in that worksheet. In fact, I need to make some updates now that they added a 20% Capital Ga...
by Electron
Sun Jan 25, 2015 5:42 pm
 
Forum: Investing - Help with Personal Investments
Topic: Long term cap gains tax rate for 15% bracket
Replies: 17
Views: 1724

Re: Initial SEC yield and subsequent 5yr and 10yr returns

For estimation of long term yield, I still think the assumption of holding to maturity is a potential source of error in the SEC yield. I'll comment on this point since it relates to your concern as well as Kevin's original topic. The SEC Yield was put into place to allow a more realistic compariso...
by Electron
Sat Jan 24, 2015 5:22 pm
 
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 129
Views: 6280

Re: Some RMD Questions

bertilak wrote:Born 11/23/1945.

Since you are not 70 yet, it's likely that the Vanguard site will not let you set up the RMD at this time.

You should be able to set things up at age 69.5.
by Electron
Sat Jan 24, 2015 4:42 pm
 
Forum: Investing - Help with Personal Investments
Topic: Some RMD Questions
Replies: 28
Views: 1510

Re: Some RMD Questions

Here is the information currently on the Vanguard site. https://personal.vanguard.com/us/help/FAQRetirementRMDContent.jsp#i "What are my options for reinvesting my RMD? How can I set up reinvestments?" "If you don't need your RMD for current living expenses, you can keep it working fo...
by Electron
Sat Jan 24, 2015 3:56 pm
 
Forum: Investing - Help with Personal Investments
Topic: Some RMD Questions
Replies: 28
Views: 1510

Re: Some RMD Questions

That would seem to imply it can't be automated, but if you are set up to automate it then there is a mystery. I really do need to call VG! When I stated that Vanguard could direct my RMD to the taxable fund of my choice I was only talking about existing Vanguard funds within my related accounts. Yo...
by Electron
Sat Jan 24, 2015 3:41 pm
 
Forum: Investing - Help with Personal Investments
Topic: Some RMD Questions
Replies: 28
Views: 1510

Re: Initial SEC yield and subsequent 5yr and 10yr returns

Correct me if I'm wrong, but premiums on bonds are amortized over the remaining life of the bonds held by a mutual fund aren't they? If that's the case how does the amortized yield result in a higher distribution yield than for a par bond? Doesn't the process of amortizing a premium put the distrib...
by Electron
Sat Jan 24, 2015 3:25 pm
 
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 129
Views: 6280

Re: Some RMD Questions

If you defer the first RMD to 2017 you must take the RMD by April 1. If the RMDs are reasonably large, two RMDs in the same year may result in a higher tax bracket or other consequences. I believe most people avoid taking two RMDs in the same year. I have an IRA at Vanguard and the RMD is directed t...
by Electron
Sat Jan 24, 2015 2:41 pm
 
Forum: Investing - Help with Personal Investments
Topic: Some RMD Questions
Replies: 28
Views: 1510

Re: Initial SEC yield and subsequent 5yr and 10yr returns

BTW - the SEC formula does indeed compound for 6 months and then multiplies by two to get the annual. Not sure how they arrived at that formula, but it mathematically has compounding built into it (the 30-day gain is raised to the 6th power). I think the 6th power is used because coupon bonds typic...
by Electron
Sat Jan 24, 2015 12:28 am
 
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 129
Views: 6280

Re: Initial SEC yield and subsequent 5yr and 10yr returns

SEC yield is based on yield to maturity and YTM calculations assume that all coupon payments are reinvested at the same rate as the current yield Take a look at this link. http://en.wikipedia.org/wiki/Yield_to_maturity "All the coupons are reinvested at an interest rate equal to the yield-to-m...
by Electron
Fri Jan 23, 2015 2:42 pm
 
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 129
Views: 6280

Re: Initial SEC yield and subsequent 5yr and 10yr returns

But even if I did, SEC Yield would yield the wrong answer since it assumes compounding, which is not happening with me. Here are the basic details on the 30 day SEC yield calculation. I don't believe it assumes any compounding from reinvestment. http://en.wikipedia.org/wiki/30-day_yield The SEC has...
by Electron
Fri Jan 23, 2015 2:20 pm
 
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 129
Views: 6280

Re: Initial SEC yield and subsequent 5yr and 10yr returns

The charts posted are of special interest to me in the period 2004 through 2006. That is the most recent period when the Federal Reserve hiked short term rates. The link below shows a total of seventeen 0.25% increases in the Fed Funds Rate from June 2004 through June 2006. The trend then reversed w...
by Electron
Fri Jan 23, 2015 1:51 pm
 
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 129
Views: 6280

Re: Treasury Fund Returns? Same Duration, Different Maturit

With Morningstar charts I always start with an open ended fund and then add the ETF. The key is to make sure that total return is displayed for all funds and not NAV. http://quotes.morningstar.com/chart/fund/chart?t=FIBAX&region=usa&culture=en-US&dataParams=%7B%22zoomKey%22%3A8%2C%22vers...
by Electron
Thu Jan 22, 2015 12:14 am
 
Forum: Investing - Help with Personal Investments
Topic: Treasury Fund Returns? Same Duration, Different Maturities
Replies: 2
Views: 245

Re: Initial SEC yield and subsequent 5yr and 10yr returns

It is definitely worth knowing the limitations of the Initial SEC Yield as a predictor of future bond fund returns. The model is presented in John Bogle's book "Common Sense on Mutual Funds" along with a simple model for predicting stock returns. The stock model is actually quite interesti...
by Electron
Wed Jan 21, 2015 11:11 pm
 
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 129
Views: 6280

Re: Adjusted Closing Price

See all the little blue ticks. That's 20 years. Thanks for that information pertaining to the Morningstar charts. I had to click Dividend under Events to see the dividends. Unfortunately, the dividends appear to have been rounded to numbers such as $0.02. Vanguard shows three more significant digits.
by Electron
Wed Jan 21, 2015 6:23 pm
 
Forum: Investing - Theory, News & General
Topic: Adjusted Closing Price
Replies: 29
Views: 1337

Re: Adjusted Closing Price

The fund closed on 1/20 at 235.92 which gives me a current dollar value of $11,712.55 or a 17.1255% increase in value in just under 3 months. The increase in their adjusted closing price from 201.14 to 235.92 is 17.2914%, very close to the actual cash value increase in my investment. I think the di...
by Electron
Wed Jan 21, 2015 6:09 pm
 
Forum: Investing - Theory, News & General
Topic: Adjusted Closing Price
Replies: 29
Views: 1337

Re: Adjusted Closing Price

I really appreciate the post by CyberBob. I originally started this thread because I was thinking about making the closing adjustments for the missing dividends as a percentage instead of an absolute dollar amount. The link he provided shows me exactly how Yahoo calculates and uses that percentage....
by Electron
Wed Jan 21, 2015 4:05 pm
 
Forum: Investing - Theory, News & General
Topic: Adjusted Closing Price
Replies: 29
Views: 1337

Re: Trying to understand index funds

Index funds have several factors working in their favor. See "Common Sense on Mutual Funds" by John Bogle. 1. Picking stocks and timing the market do not enhance returns for the average fund relative to the corresponding index. 2. The expense ratio for actively managed funds reduces return...
by Electron
Wed Jan 21, 2015 3:29 pm
 
Forum: Investing - Theory, News & General
Topic: Trying to understand index funds
Replies: 14
Views: 1202

Re: Adjusted Closing Price

As far as I know, Morningstar only provides total returns numerically for the last few years (for free anyway). The total return charts don't provide a convenient way to pull annual return numbers for analysis. If I'm missing something, would appreciate a link that shows long-term annual total retu...
by Electron
Wed Jan 21, 2015 2:48 pm
 
Forum: Investing - Theory, News & General
Topic: Adjusted Closing Price
Replies: 29
Views: 1337

Re: Adjusted Closing Price

I will add to my previous post that only earlier prices are adjusted. The latest close is always the exact latest close as mentioned. The whole idea of the earlier price adjustments is to reflect total return when prices are displayed on a chart. This is very noticeable with bond funds where NAV oft...
by Electron
Wed Jan 21, 2015 1:01 am
 
Forum: Investing - Theory, News & General
Topic: Adjusted Closing Price
Replies: 29
Views: 1337

Re: Trying to understand index funds

In the case of the S&P 500 Index, an Index Fund can hold every security in the index if desired. If the index holds a very large number of securities, an Index Fund will sample the index and still be able to closely track the index. Capitalization weighted indexes are typically the best type of ...
by Electron
Wed Jan 21, 2015 12:44 am
 
Forum: Investing - Theory, News & General
Topic: Trying to understand index funds
Replies: 14
Views: 1202

Re: Adjusted Closing Price

Stockcharts adjusts the prices of many securities and mutual funds to reflect dividends and capital gains. Earlier prices are adjusted downward. You can see the unadjusted chart by preceding the symbol with an underscore. Here are two charts for the High Yield Bond ETF with symbol HYG. The second ch...
by Electron
Wed Jan 21, 2015 12:14 am
 
Forum: Investing - Theory, News & General
Topic: Adjusted Closing Price
Replies: 29
Views: 1337

Re: good fit for short term, semi risky

In regards to a 2-4 year investment, there is always the risk of a significant decline just before you need the assets. Here is a ten year chart showing the performance of Vanguard Wellesley Income, Vanguard Short Term Investment Grade, and Vanguard Short Term Treasury. The 2008-09 experience was ex...
by Electron
Tue Jan 20, 2015 11:06 pm
 
Forum: Investing - Help with Personal Investments
Topic: good fit for short term, semi risky
Replies: 15
Views: 652

Re: RMD withdrawals.

Assume a .25 income tax rate and .15 cap gains tax rate. If you withdraw late in the year, then you eventually get to consume .75 of the year's gain on the RMD. But if withdraw early, then you only get to consume .75*.85 of those gains. And, it's a loser for all fixed rates, not just the ones I quo...
by Electron
Tue Jan 20, 2015 2:51 pm
 
Forum: Personal Finance (Not Investing)
Topic: RMD withdrawals.
Replies: 43
Views: 3235

Re: Capital Gains help

It might be a good idea to check the cost basis carefully to make certain that all purchases and reinvested distributions have been included. You could then calculate your breakeven NAV by dividing cost basis by the current share balance. I would then make note of that NAV for future reference. Hold...
by Electron
Tue Jan 20, 2015 12:23 am
 
Forum: Investing - Theory, News & General
Topic: Capital Gains help
Replies: 18
Views: 949

Re: Initial SEC yield and subsequent 5yr and 10yr returns

The thing is you have to go back to the 1950s, and preferably 1940s to see an environment in which we had a prolonged period of low rates, comparable to today's low rates, followed by rising rates at some point. I think it's more educational to look at a period like that to get an idea of what coul...
by Electron
Mon Jan 19, 2015 7:12 pm
 
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 129
Views: 6280

Re: Capital Gains help

You could sell in increments now depending on your tax situation. If you have any space left in the 15% bracket (after all ordinary income, deductions and exemptions) you would qualify for the 0% capital gains tax rate for that remaining space. Any balance might be taxed at 15% or higher depending o...
by Electron
Mon Jan 19, 2015 6:09 pm
 
Forum: Investing - Theory, News & General
Topic: Capital Gains help
Replies: 18
Views: 949

Re: RMD withdrawals.

The RMD in dollars is the same but the RMD as a percentage of the account could have large excursions. Isn't leaving the RMD invested all year at your IRA AA investing short term money inappropriately? You could end up at the end of the year having to withdraw 8% instead of 4% of the account, for e...
by Electron
Mon Jan 19, 2015 5:59 pm
 
Forum: Personal Finance (Not Investing)
Topic: RMD withdrawals.
Replies: 43
Views: 3235

Re: RMD withdrawals.

The RMD in dollars is the same but the RMD as a percentage of the account could have large excursions. Isn't leaving the RMD invested all year at your IRA AA investing short term money inappropriately? You could end up at the end of the year having to withdraw 8% instead of 4% of the account, for e...
by Electron
Mon Jan 19, 2015 1:52 pm
 
Forum: Personal Finance (Not Investing)
Topic: RMD withdrawals.
Replies: 43
Views: 3235

Re: RMD withdrawals.

If you are talking about an annual strategy, taking the RMDs at the end of the year should let you take maximum advantage of tax deferred compounding in the IRA. Note that on average you should have more ordinary income to report on your tax returns compared with taking the RMDs at the beginning of ...
by Electron
Sun Jan 18, 2015 5:29 pm
 
Forum: Personal Finance (Not Investing)
Topic: RMD withdrawals.
Replies: 43
Views: 3235

Re: In-kind transfer

The following page on the Vanguard site lists all the outside fund groups available in a Vanguard brokerage account.

https://investor.vanguard.com/non-vanguard-funds/

Click on the fund family box to see the list.
by Electron
Thu Jan 15, 2015 12:49 am
 
Forum: Investing - Help with Personal Investments
Topic: In-kind transfer
Replies: 6
Views: 358

Re: Large capital gain this year

Well, 2014 is over and my experiment is over. Here are the results. Thanks for the summary and glad to hear that the strategy was successful. REITs had an impressive year with the Vanguard REIT Index fund (VGSLX) returning 30.32% for the year. It's a little surprising that a fair number of REITs we...
by Electron
Wed Jan 14, 2015 2:10 pm
 
Forum: Investing - Help with Personal Investments
Topic: Large capital gain this year
Replies: 81
Views: 5072

Re: SEC Yield, YTM, Distribution Yield, Current Yield

Doc - I misinterpreted your post on the first read and removed the reference in my reply. Here is a very interesting article from 1988 on the SEC Yield when it first came into use. http://articles.philly.com/1988-07-11/business/26238111_1_yields-robert-plaze-chicago-based-fund It appears that the SE...
by Electron
Tue Jan 13, 2015 5:46 pm
 
Forum: Investing - Theory, News & General
Topic: SEC Yield, YTM, Distribution Yield, Current Yield
Replies: 104
Views: 13883

Re: Need help informing my father he is making a mistake

Here are three additional thoughts. 1. Suggest a friendly contest between your father's portfolio and one or more of your mutual funds over the next year or longer. That could be quite interesting to both sides. 2. Find a way to get your father interested in monitoring this forum and hopefully posti...
by Electron
Tue Jan 13, 2015 3:55 pm
 
Forum: Investing - Help with Personal Investments
Topic: Need help informing my father he is making a mistake
Replies: 58
Views: 4916

Re: Need help informing my father he is making a mistake

Dale Carnegie wrote an excellent book called "How to Win Friends and Influence People". One of the key messages is to never tell a person that they are wrong. That approach is not the correct psychology and the other person will strongly defend their position. The recommended approach is t...
by Electron
Tue Jan 13, 2015 1:36 pm
 
Forum: Investing - Help with Personal Investments
Topic: Need help informing my father he is making a mistake
Replies: 58
Views: 4916

Re: Fidelity Intermediate Tax Exempt

The Morningstar Fund Investor that I used to read in the library always thought quite highly of the municipal bond team at Fidelity. They typically recommended Fidelity Tax Free Bond (FTABX) and Fidelity Municipal Income (FHIGX). Both of those funds are somewhat longer in duration than the intermedi...
by Electron
Mon Jan 12, 2015 5:02 pm
 
Forum: Investing - Help with Personal Investments
Topic: Fidelity Intermediate Tax Exempt
Replies: 10
Views: 645

Re: Vanguard Short Term TIPS fund puzzle

Recent economic reports have been quite positive suggesting that interest rates might move up earlier than expected. Note the recent jump in the Constant Maturity One Year Treasury yield. http://research.stlouisfed.org/fred2/series/DGS1 Here is a chart showing Constant Maturity Five Year TIPS. http:...
by Electron
Mon Jan 12, 2015 12:33 am
 
Forum: Investing - Theory, News & General
Topic: Vanguard Short Term TIPS fund puzzle
Replies: 10
Views: 1497

Re: SEC Yield, YTM, Distribution Yield, Current Yield

The use of derivatives at Vanguard appears to be both conservative and limited. Here is a statement from the prospectus for the Total Bond Market Index fund. A link is provided below. "Each Fund may invest in derivatives only if the expected risks and rewards of the derivatives are consistent w...
by Electron
Sun Jan 11, 2015 6:14 pm
 
Forum: Investing - Theory, News & General
Topic: SEC Yield, YTM, Distribution Yield, Current Yield
Replies: 104
Views: 13883

Re: Sanity check: turnover of my active management vs. Vangu

I also have management fees, which are roughly 0.75% of principal, but the tax hit just adds insult to injury. The management fees are undesirable if they can be avoided. Capital gains, capital gains distributions, and dividends have several factors to consider. If you don't need the income, they c...
by Electron
Sun Jan 11, 2015 1:44 pm
 
Forum: Investing - Help with Personal Investments
Topic: Sanity check: turnover of my active management vs. Vanguard?
Replies: 11
Views: 1786

Re: Sanity check: turnover of my active management vs. Vangu

Thus, the percentage of realized capital gains + income for vanguard is less than 1% of the principal, whereas with the active funds, it is around 6.5% of the principal. So my question is: is this amount of turnover typical? Those numbers do look typical. The Morningstar site is very helpful in reg...
by Electron
Sat Jan 10, 2015 1:45 pm
 
Forum: Investing - Help with Personal Investments
Topic: Sanity check: turnover of my active management vs. Vanguard?
Replies: 11
Views: 1786

Re: SEC Yield, YTM, Distribution Yield, Current Yield

But that's not what the data shows for the months of July through September 2003. Price, dividend, and SEC yield all dropped together in July and August, then went up together in September. But as you've pointed out, VBMFX tracked the total return of the index almost perfectly during this time. I t...
by Electron
Fri Jan 09, 2015 5:35 pm
 
Forum: Investing - Theory, News & General
Topic: SEC Yield, YTM, Distribution Yield, Current Yield
Replies: 104
Views: 13883
Next

Return to advanced search