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Re: Investing my nonretirement money?

Qualified Dividends and Capital Gains are taxed at favorable rates especially if you qualify for the 0% QD & CG bracket. If you are single your pension plus other ordinary income minus deductions and exemptions likely has you above the top of the 15% bracket. A portion of the dividends declared ...
by Electron
Sun Dec 21, 2014 2:54 pm
 
Forum: Investing - Help with Personal Investments
Topic: Investing my nonretirement money?
Replies: 7
Views: 879

Re: What "actively" managed funds do you own?

If an actively managed fund is placed in a taxable account, I would recommend looking carefully at portfolio turnover and recent distributions. I hold a Mutual Series fund that has made very large distributions over the last several years. It has been a long term holding and the unrealized capital g...
by Electron
Sat Dec 20, 2014 11:49 pm
 
Forum: Investing - Help with Personal Investments
Topic: What "actively" managed funds do you own?
Replies: 77
Views: 3750

Re: MM expense Ratio [Money Market]

So if Vanguard waves it's entire management fee it still is not enough to get the yield to above zero unless they somehow raise the pre-expense return by about 0.02%. The 0.0% expense figure was very likely a mistake of some sort. The key information is in the latest annual report on page 25 (note ...
by Electron
Sat Dec 20, 2014 1:42 pm
 
Forum: Investing - Theory, News & General
Topic: MM expense Ratio [Money Market]
Replies: 15
Views: 1591

Re: MM expense Ratio

I also saw the apparently incorrect banner this morning and questioned it at the time. In checking the annual report again, it stated that the actual expenses for Vanguard Prime MM were 0.16% in the specified period but they were reduced to 0.14% to provide a positive yield for the fund. Vanguard wa...
by Electron
Fri Dec 19, 2014 10:40 pm
 
Forum: Investing - Theory, News & General
Topic: MM expense Ratio [Money Market]
Replies: 15
Views: 1591

Re: MM expense Ratio

The latest annual report on the Vanguard Money Market funds indicated that some expenses were being absorbed by Vanguard in order to pay a positive yield. It is in the footnotes. They also indicated that the policy could change in the future. Let's hope that the yield remains above zero.
by Electron
Fri Dec 19, 2014 6:34 pm
 
Forum: Investing - Theory, News & General
Topic: MM expense Ratio [Money Market]
Replies: 15
Views: 1591

Re: Value Question VVIAX or VASVX

The Morningstar Performance tab lets you compare the past performance of several funds over the last 15 years. The Value Index has outperformed in the three most recent periods shown below. VIVAX is the Investor Shares version of the Value Index fund. One issue with an actively managed fund is that ...
by Electron
Fri Dec 19, 2014 1:03 am
 
Forum: Investing - Help with Personal Investments
Topic: Value Question VVIAX or VASVX
Replies: 3
Views: 433

Re: Tax-inefficient total return investing ideas

The theme here seems to be that many of the obvious candidates for income-generating investments (from a tax perspective) also happen to be relatively low risk, so it’s surprisingly hard to build a tax-inefficient portfolio that is anywhere nearly as high-returning as an equity-heavy diversified po...
by Electron
Thu Dec 18, 2014 6:29 pm
 
Forum: Investing - Theory, News & General
Topic: Tax-inefficient total return investing ideas
Replies: 5
Views: 454

Re: Evaluating a stable value fund

Here is an article about one stable value fund that suffered losses in 2008. Investors did not lose any money but the return for the full year was reduced by 1.7 percentage points. http://www.wsj.com/articles/SB123146951198967057 The next document has a wealth of information about stable value funds...
by Electron
Thu Dec 18, 2014 12:31 am
 
Forum: Investing - Help with Personal Investments
Topic: Evaluating a stable value fund
Replies: 8
Views: 1058

Re: Evaluating a stable value fund

Two key questions would involve the transfer restrictions that are mentioned and whether all purchases and redemptions are at a stable unit price of $1.00. With an average maturity of 11.9 years, the portfolio value could drop significantly if rates rise. Stable Value funds maintain a market to book...
by Electron
Wed Dec 17, 2014 5:48 pm
 
Forum: Investing - Help with Personal Investments
Topic: Evaluating a stable value fund
Replies: 8
Views: 1058

Re: Evaluating a stable value fund

If I were trying to evaluate a stable value fund such as this one: https://www.nrsflorida.com/iApp/rsc/profileView.x?fundId=10000002 using Larry's criteria based off of only this information, is there enough information available to evaluate it? It's not clear to me if that fund is a stable value f...
by Electron
Wed Dec 17, 2014 3:42 pm
 
Forum: Investing - Help with Personal Investments
Topic: Evaluating a stable value fund
Replies: 8
Views: 1058

Re: Deductions!

Debt: 20,000 student loans at 2.75% 8,000 for itemized deduction (state taxes withheld) 92,250 taxable income It has not been mentioned but student loan interest is not deductible if income is above a certain limit. In this case, the deduction is phased out with MAGI between $60K and $75K. If the $...
by Electron
Tue Dec 16, 2014 2:04 pm
 
Forum: Personal Finance (Not Investing)
Topic: Deductions!
Replies: 31
Views: 2582

Re: Over witholding in Roth Conversion

I think the question asked in the original post is answered by referring to IRS Form 8606 and Form 8606 Instructions. That form is filed when doing a Roth Conversion and any penalty would show up. As already noted IRS Publication 590 contains all the key information for IRAs. The original question c...
by Electron
Tue Dec 16, 2014 1:32 pm
 
Forum: Personal Finance (Not Investing)
Topic: Over witholding in Roth Conversion
Replies: 14
Views: 683

Re: Over witholding in Roth Conversion

The question really is this a backdoor technique to penalty free withdrawals if under 59-1/2? I don't believe there is any opportunity for penalty free withdrawals if under age 59.5. The normal 60 day rollover period is still in play and a penalty would apply if all assets do not get transferred to...
by Electron
Tue Dec 16, 2014 12:51 am
 
Forum: Personal Finance (Not Investing)
Topic: Over witholding in Roth Conversion
Replies: 14
Views: 683

Re: Over witholding in Roth Conversion

There are two basic ways to do a Traditional IRA to Roth IRA Conversion. You can pay the taxes from the TIRA which results in a smaller balance transferring to the Roth IRA. The second option is to pay the conversion taxes from separate taxable assets. In this case all assets transfer from the TIRA ...
by Electron
Tue Dec 16, 2014 12:30 am
 
Forum: Personal Finance (Not Investing)
Topic: Over witholding in Roth Conversion
Replies: 14
Views: 683

Re: Deductions!

The Deductible IRA would be an excellent idea but I believe taxable income in this case is over the Deductible IRA threshold. It looks as though income exceeds the top of the 25% bracket by $2900. I estimate California income taxes at a little over $7135 before exemption credit. Unless state withhol...
by Electron
Sun Dec 14, 2014 2:02 pm
 
Forum: Personal Finance (Not Investing)
Topic: Deductions!
Replies: 31
Views: 2582

Re: Deductions!

I would make an estimate of my 2014 California income taxes and see if the current withholdings cover the taxes. If not you can make an estimated payment before December 31 to increase your itemized deductions. You can also overpay although that would have some impact on 2015 taxes. Also look for an...
by Electron
Sat Dec 13, 2014 1:05 pm
 
Forum: Personal Finance (Not Investing)
Topic: Deductions!
Replies: 31
Views: 2582

Re: If you don't need the Soc Sec, when to start taking it?

Waiting until age 70 to collect Social Security results in an 8% benefit increase per year after age 66. The total increase would be 32%. The higher benefit could be very significant if a person is in good health and can collect for many years. Cost of living increases would also be larger in dollar...
by Electron
Fri Dec 12, 2014 2:26 pm
 
Forum: Personal Finance (Not Investing)
Topic: If you don't need the Soc Sec, when to start taking it?
Replies: 39
Views: 4256

Re: Non-deductible IRA now for future backdoor Roth

Does anyone have any advice on these options? If it is likely that you will be able to convert the Non-Deductible IRA to a Roth IRA in a few years, that should be a viable option. I would invest according to my defined investment policy. Taxes on gains should not be a great concern and you would ha...
by Electron
Fri Dec 12, 2014 2:08 pm
 
Forum: Investing - Help with Personal Investments
Topic: Non-deductible IRA now for future backdoor Roth
Replies: 7
Views: 826

Re: How does turnover increase costs?

Would you mind explaining how turnover increases costs in the two funds listed in the OP if you have a moment please? Or offer an example of your own so I can better understand please - I would appreciate that. Thank you. Morningstar shows turnover of 5% for VTIAX and 6% for FSGDX. It may be that t...
by Electron
Wed Dec 10, 2014 5:17 pm
 
Forum: Investing - Theory, News & General
Topic: How does turnover increase costs?
Replies: 12
Views: 508

Re: How does turnover increase costs?

Portfolio turnover results in commissions being paid and you also lose on the bid-ask spread for each security. The bid-ask spread can vary a lot depending on the types of securities involved and the liquidity of the particular market segment. These costs are not reflected in the expense ratio. I th...
by Electron
Wed Dec 10, 2014 4:07 pm
 
Forum: Investing - Theory, News & General
Topic: How does turnover increase costs?
Replies: 12
Views: 508

Re: Trying to understand compounding as it relates to my por

Morningstar provides charts and performance tables that show compounded returns over time. It is worth getting familiar with all the capabilities provided. Here is the chart for FSTVX showing the growth of $10K over ten years. You can add symbols for other funds. http://quotes.morningstar.com/chart/...
by Electron
Tue Dec 09, 2014 2:33 pm
 
Forum: Investing - Theory, News & General
Topic: Trying to understand compounding as it relates to my portfol
Replies: 5
Views: 744

Re: Wellesley acutally outperforms Total Market/Intermed. Ta

Keep in mind that you are comparing different types of securities. Wellesley invests in corporate bonds and dividend paying large company value stocks. The Total Stock Market Index fund includes growth and value stocks across a wide capitalization range. The tax exempt bond fund invests in municipal...
by Electron
Mon Dec 08, 2014 3:56 pm
 
Forum: Investing - Help with Personal Investments
Topic: Wellesley acutally outperforms Total Market/Intermed. Tax Ex
Replies: 5
Views: 953

Re: Hypothetical - Mutual Funds Don't Exist

Here are some very interesting comments from Burton Malkiel about the first few years of the Vanguard Index Trust.

http://www.forbes.com/sites/quora/2014/ ... a-startup/
by Electron
Sat Dec 06, 2014 4:59 pm
 
Forum: Investing - Theory, News & General
Topic: Hypothetical - Mutual Funds Don't Exist
Replies: 26
Views: 1858

Re: Hypothetical - Mutual Funds Don't Exist

I'll add a few more comments that might be of interest. 1. As a result of the capitalization weighting, the top 10 stocks in the S&P 500 represent about 18% of the index. The top 50 stocks should be close to 40%. The S&P 100 represents 57% of the S&P 500 and 45% of the Total Stock Market...
by Electron
Sat Dec 06, 2014 1:17 pm
 
Forum: Investing - Theory, News & General
Topic: Hypothetical - Mutual Funds Don't Exist
Replies: 26
Views: 1858

Re: Hypothetical - Mutual Funds Don't Exist

If no Mutual Funds or Index Funds existed, we wouldn't know that passively holding the broad stock market would outperform the average investor over time. In that case, some investors might be value investors based on Graham and Dodd, while others would attempt to pick growth stocks that they think ...
by Electron
Fri Dec 05, 2014 1:38 pm
 
Forum: Investing - Theory, News & General
Topic: Hypothetical - Mutual Funds Don't Exist
Replies: 26
Views: 1858

Re: Does investing in a 401k actually save any money?

I decided to take a detailed look at the Deductible IRA, Non-Deductible IRA, and Taxable Account alternative in a spreadsheet. The results are quite interesting and I'll pass along a few key observations. 1. In a Deductible IRA or 401K, one definitely needs to invest the tax savings. The tax savings...
by Electron
Wed Dec 03, 2014 5:22 pm
 
Forum: Investing - Theory, News & General
Topic: Does investing in a 401k actually save any money?
Replies: 75
Views: 9672

Re: Why do we like dividends?

Dividends are forced payouts on a schedule you can't control. If the companies didn't pay a dividend, you could just sell shares of equal value to the former dividends and get the same effect, but now YOU'RE in control. I now understand your point. In other words, we would be better off investing i...
by Electron
Wed Dec 03, 2014 1:43 pm
 
Forum: Investing - Theory, News & General
Topic: Why do we like dividends?
Replies: 114
Views: 8319

Re: Will Vanguard ever offer a passbook savings account?

To offer an online savings account competitive with the online banks would require that they lend money at current market rates. That sounds like a major undertaking. I think Vanguard will be happy when short term rates rise enough for Money Market funds to pay yields above the current 0.01%. If you...
by Electron
Tue Dec 02, 2014 6:12 pm
 
Forum: Investing - Help with Personal Investments
Topic: Will Vanguard ever offer a passbook savings account?
Replies: 36
Views: 2365

Re: Why do we like dividends?

Not true -- capital gains can be deferred. In the long run, this can reduce the effective tax rate to half, or even zero if gains are disposed of through donations or inheritance. So capital gains are taxed more favorably. My main point was that some investors want the qualified dividend income to ...
by Electron
Tue Dec 02, 2014 2:13 pm
 
Forum: Investing - Theory, News & General
Topic: Why do we like dividends?
Replies: 114
Views: 8319

Vanguard Corporate Bond Funds - A Few Random Comments

1. The 30 day SEC Yield on Vanguard Short Term Investment Grade (VFSTX) increased quite a bit in late November. Any thoughts on what might have changed in the fund? DATE NAV SEC YIELD 11/14/2014 $10.72 1.42% 11/17/2014 $10.71 1.44% 11/18/2014 $10.72 1.44% 11/19/2014 $10.71 1.44% 11/20/2014 $10.71 1....
by Electron
Tue Dec 02, 2014 1:20 pm
 
Forum: Investing - Theory, News & General
Topic: Vanguard Corporate Bond Funds - A Few Random Comments
Replies: 0
Views: 362

Re: Why do we like dividends?

1) Do we, as investors, generally like seeing our account values go up due to dividends vs stock price appreciation? The answer in tax advantaged accounts is that we are indifferent, and in taxable accounts we generally prefer stock price appreciation due to the favorable tax treatment. 2) Given th...
by Electron
Tue Dec 02, 2014 12:54 pm
 
Forum: Investing - Theory, News & General
Topic: Why do we like dividends?
Replies: 114
Views: 8319

Re: Does investing in a 401k actually save any money?

I'm trying to work out how realistic the scenario is. I was worried that assuming a high marginal rate was unfairly penalizing the tIRA, but it occurs to me that a person contributing to a non-deductible tIRA likely will get significant retirement income from a 401(k) or pension, so this might be p...
by Electron
Sun Nov 30, 2014 3:18 pm
 
Forum: Investing - Theory, News & General
Topic: Does investing in a 401k actually save any money?
Replies: 75
Views: 9672

Re: Does investing in a 401k actually save any money?

This chart shows the total balance of a $1000 initial investment over time, assuming it grows at an annual rate of 8% (for the sake of the argument, let's say the gain is 100% capital gains). It shows three different types of accounts: traditional, Roth and taxable, and breaks the balance up into t...
by Electron
Sat Nov 29, 2014 3:28 pm
 
Forum: Investing - Theory, News & General
Topic: Does investing in a 401k actually save any money?
Replies: 75
Views: 9672

Re: Why do we like dividends?

Try an Internet search on Dividend Aristocrats. The companies on the list have raised their dividend every year for the last 25 years or longer. I looked, but they do not have a list for the next 25 years. A list for the next 25 years would be great but those stocks wouldn't necessarily outperform ...
by Electron
Sat Nov 29, 2014 2:40 pm
 
Forum: Investing - Theory, News & General
Topic: Why do we like dividends?
Replies: 114
Views: 8319

Re: Why do we like dividends?

I left out a comment on dividend increases in my earlier posting. Dividend increases have been considerable over the years since dividends have a relationship to corporate earnings. Try an Internet search on Dividend Aristocrats. The companies on the list have raised their dividend every year for th...
by Electron
Fri Nov 28, 2014 5:33 pm
 
Forum: Investing - Theory, News & General
Topic: Why do we like dividends?
Replies: 114
Views: 8319

Re: Does investing in a 401k actually save any money?

So while getting some tax deferral along the way (which will feel good at the time), isn't he essentially giving up a 15% tax for the right to pay a much higher 28% tax in this scenario? What am I missing here that makes 401ks so wonderful??? (Assume no employer match for this situation.) I believe...
by Electron
Fri Nov 28, 2014 4:11 pm
 
Forum: Investing - Theory, News & General
Topic: Does investing in a 401k actually save any money?
Replies: 75
Views: 9672

Re: Why do we like dividends?

If you look at long term stock returns, a large percentage of that return comes from dividends and reinvested dividends. I believe the percentage is actually over 50%.

Think in terms of a continuing stream of dividends over the years and not just a single dividend paid in the latest quarter.
by Electron
Fri Nov 28, 2014 3:51 pm
 
Forum: Investing - Theory, News & General
Topic: Why do we like dividends?
Replies: 114
Views: 8319

Re: Does investing in a 401k actually save any money?

One could place bonds and REITs into the 401K and a tax efficient equity investment into the taxable account. Take advantage of the 401K for investments that generate ordinary income and also get any 401K match. The Total Stock Market Index fund currently has a dividend yield of less than 2% which w...
by Electron
Wed Nov 26, 2014 5:35 pm
 
Forum: Investing - Theory, News & General
Topic: Does investing in a 401k actually save any money?
Replies: 75
Views: 9672

Re: Apple Stock - Seems great, right?

I have not read the entire thread but would be interested to know what the 3, 5, and 10 year performance of the highest market cap stock traded in the US has been going forward. Take a look at the Morningstar site using the Performance tab. http://performance.morningstar.com/stock/performance-retur...
by Electron
Tue Nov 25, 2014 12:17 am
 
Forum: Investing - Theory, News & General
Topic: Apple Stock - Seems great, right?
Replies: 116
Views: 11103

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

Here's how it's stated for iShares inv-grade corp fund, LQD: SECURITY TRANSACTIONS AND INCOME RECOGNITION Security transactions are accounted for on trade date. Realized gains and losses on investment transactions are determined using the specific identification method. Interest income, including a...
by Electron
Mon Nov 24, 2014 3:44 pm
 
Forum: Investing - Theory, News & General
Topic: SEC Yield, YTM, Distribution Yield, Current Yield
Replies: 68
Views: 8332

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

As I pointed out, other bond funds, specifically some bond ETFs I own or have owned, don't declare dividends daily. As with any other fund that doesn't do so, the value of the accrued dividend is reflected in the fund share price. This is the way it is for unrealized capital gains even with the VG ...
by Electron
Sun Nov 23, 2014 5:20 pm
 
Forum: Investing - Theory, News & General
Topic: SEC Yield, YTM, Distribution Yield, Current Yield
Replies: 68
Views: 8332

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

Kevin - Thanks for your latest comments. I also noticed that Vanguard provides the accrued dividends on all seven days of the week. Regarding the daily accrued dividends, they really had to handle it that way as otherwise a shareholder could be penalized depending on the date of redemption. There mi...
by Electron
Sat Nov 22, 2014 12:57 am
 
Forum: Investing - Theory, News & General
Topic: SEC Yield, YTM, Distribution Yield, Current Yield
Replies: 68
Views: 8332

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

Here is some data for those curious about the daily accrued dividends in Vanguard Bond funds. I extracted actual data from my account and then scaled the daily change to equal $20.00 at the start of the period for each fund. The table below shows the daily dividend accrued for Vanguard California In...
by Electron
Fri Nov 21, 2014 3:40 pm
 
Forum: Investing - Theory, News & General
Topic: SEC Yield, YTM, Distribution Yield, Current Yield
Replies: 68
Views: 8332

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

I guess this is another reason a bond fund must hold a certain amount of cash; i.e., to pay out accrued-but-not-received interest monthly. As of 7/31, temporary cash was 2.6% of fund. Thanks for the latest analysis. I agree on the cash required for month-end dividend payments, and in the case of Va...
by Electron
Thu Nov 20, 2014 3:46 pm
 
Forum: Investing - Theory, News & General
Topic: SEC Yield, YTM, Distribution Yield, Current Yield
Replies: 68
Views: 8332

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

The first set of numbers is coupons only, so doesn't factor in amortization/accretion of premium/discount, but I wouldn't think factoring that in would smooth out the distribution pattern that much, so maybe dividends are paid out on an accrual basis. My statement about the accrued interest is like...
by Electron
Thu Nov 20, 2014 12:38 am
 
Forum: Investing - Theory, News & General
Topic: SEC Yield, YTM, Distribution Yield, Current Yield
Replies: 68
Views: 8332

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

Yes, I was puzzled by raising to 6th power and multiplying by two until I dug more into how bond yields are expressed in annualized form, and yes, I think it is related to bond coupons typically every six months. I assume that bond funds pay their monthly dividends based on the accrued interest of ...
by Electron
Wed Nov 19, 2014 4:27 pm
 
Forum: Investing - Theory, News & General
Topic: SEC Yield, YTM, Distribution Yield, Current Yield
Replies: 68
Views: 8332

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

Huh? I use distribution yields provided directly by Vanguard (just copied/pasted from the Distributions tab into the spreadsheet). Can you explain further what you're talking about? I was referring to your definition of Distribution Yield in that thread. "Distribution yield is determined by di...
by Electron
Tue Nov 18, 2014 12:17 am
 
Forum: Investing - Theory, News & General
Topic: SEC Yield, YTM, Distribution Yield, Current Yield
Replies: 68
Views: 8332

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

Kevin - I just ran across something that could be a factor in the confusing SEC yields that we have seen at times. Note the formula for SEC Yield presented by Wikipedia. It uses the offering price on the last day of the period. That could have significant effect. I'll assume that a fund uses bond ac...
by Electron
Mon Nov 17, 2014 4:38 pm
 
Forum: Investing - Theory, News & General
Topic: SEC Yield, YTM, Distribution Yield, Current Yield
Replies: 68
Views: 8332

Re: Junk bond fund NAVs

It was mentioned that the bid-ask spread in High Yield bonds is one of several factors that has contributed to the long term decline in NAV. Wouldn't that apply to some degree to most types of bond funds? The effect may have been masked by the trend of lower interest rates over the last thirty years...
by Electron
Mon Nov 17, 2014 1:48 pm
 
Forum: Investing - Theory, News & General
Topic: Junk bond fund NAVs
Replies: 91
Views: 7185

Re: No more year-end paper statement option?

Why do you need copies? They should be available from Vanguard etc. for as long as you might need them. Thanks for the suggestions. Vanguard does appear to provide statements for quite a few previous years but I think there is a limit. Our records requirements are limited in terms of general IRS re...
by Electron
Sun Nov 16, 2014 3:33 pm
 
Forum: Investing - Theory, News & General
Topic: No more year-end paper statement option?
Replies: 19
Views: 2229
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