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Re: Why invest in bonds?

It would be helpful if responders to these threads would include their years to/in retirement, perhaps add as part of their signature. :happy Retired 2011, age 69 Current Asset allocation: 55% stocks/45% Bonds, cash I am concerned stock allocation is too high, fixed income returns are too low. Not ...
by FinancialDave
Tue Sep 02, 2014 1:37 pm
 
Forum: Investing - Theory, News & General
Topic: Why invest in bonds?
Replies: 103
Views: 5673

Re: Why invest in bonds?

I also suspect that holding more stocks increases the amount an investor has in the worst case scenario . That's certainly true for using an increasing glide path instead of a traditional decreasing glide path. So probably true for fixed high allocation too. This is only true prior to retirement - ...
by FinancialDave
Mon Sep 01, 2014 11:18 pm
 
Forum: Investing - Theory, News & General
Topic: Why invest in bonds?
Replies: 103
Views: 5673

Re: Why invest in bonds?

It would be helpful if responders to these threads would include their years to/in retirement, perhaps add as part of their signature. :happy Retired 2011, age 69 Current Asset allocation: 55% stocks/45% Bonds, cash I am concerned stock allocation is too high, fixed income returns are too low. Not ...
by FinancialDave
Mon Sep 01, 2014 11:03 pm
 
Forum: Investing - Theory, News & General
Topic: Why invest in bonds?
Replies: 103
Views: 5673

Re: Pay Off Student Loans or Invest?

Some of the reasoning to pay down your student loans is not about the math, it is about what would commonly be called your "sleep index." You sound like you would be much happier if the loans were paid off, so my thought is that you need to aggressively stick with that plan. There is no wa...
by FinancialDave
Mon Sep 01, 2014 1:13 pm
 
Forum: Personal Finance (Not Investing)
Topic: Pay Off Student Loans or Invest?
Replies: 10
Views: 817

Re: Only need $315k non-retirement $ to retire at Age 43?

http://www.firecalc.com says you would fail about 60% of the time. You must be using different numbers, when I use $30k expenses, $715k nest egg, and 50 years, I get a 78% success rate or a 22% failure rate, not the 60% that you suggest?? What is very strange with this calculator is with a 40 year ...
by FinancialDave
Fri Aug 29, 2014 6:11 pm
 
Forum: Personal Finance (Not Investing)
Topic: Only need $315k non-retirement $ to retire at Age 43?
Replies: 36
Views: 5205

Re: Only need $315k non-retirement $ to retire at Age 43?

@FinancialDave - I guess I can understand your gut-reaction that a $15K annual SS payment (in TODAY'S dollars) received 20 years down the road even though OP won't be contributing to SS between now and then seemed excessive. That's exactly what my gut-reaction was initially and that's why I explain...
by FinancialDave
Fri Aug 29, 2014 4:38 pm
 
Forum: Personal Finance (Not Investing)
Topic: Only need $315k non-retirement $ to retire at Age 43?
Replies: 36
Views: 5205

Re: Only need $315k non-retirement $ to retire at Age 43?

I could probably buy into the $15k SS payment 20 years down the road -- which is roughly $690 per month in todays dollars. @FinancialDave - I guess I can understand your gut-reaction that a $15K annual SS payment (in TODAY'S dollars) received 20 years down the road even though OP won't be contribut...
by FinancialDave
Fri Aug 29, 2014 12:58 pm
 
Forum: Personal Finance (Not Investing)
Topic: Only need $315k non-retirement $ to retire at Age 43?
Replies: 36
Views: 5205

Re: Only need $315k non-retirement $ to retire at Age 43?

My runs assume no taxes paid -- ie taxes were included in the $30k figure, so more Roth conversions equal more taxes which drains the taxable account sooner -- remember worst case ran that account dry by age 49, which is cutting it close, since each conversion needs a 5 year waiting period. Also, a ...
by FinancialDave
Fri Aug 29, 2014 2:42 am
 
Forum: Personal Finance (Not Investing)
Topic: Only need $315k non-retirement $ to retire at Age 43?
Replies: 36
Views: 5205

Re: Only need $315k non-retirement $ to retire at Age 43?

Ok, I ran a few aftcasts using the $315k taxable account - worst case this account ran out of money at age 49 - if you run into some depression era years. Even starting in 1970, ran out of money in taxable account at age 52, or starting in 1960 you could actually make it to 58. If you neglect the pe...
by FinancialDave
Fri Aug 29, 2014 2:19 am
 
Forum: Personal Finance (Not Investing)
Topic: Only need $315k non-retirement $ to retire at Age 43?
Replies: 36
Views: 5205

Re: Only need $315k non-retirement $ to retire at Age 43?

Can someone help me out and explain why the SS payout at age 62 would be as high as $15k annually if OP quits working at age 43? Probably because the OP didn't read the fine print on his/her SS projection that said it was based on continuing to earn wages at the same salary (as last reported to SS ...
by FinancialDave
Fri Aug 29, 2014 1:12 am
 
Forum: Personal Finance (Not Investing)
Topic: Only need $315k non-retirement $ to retire at Age 43?
Replies: 36
Views: 5205

Re: Only need $315k non-retirement $ to retire at Age 43?

That aside, I don't care what the simulations say, you're not close to having enough to retire. Enough to fund some re-training? Yes, probably. +1 Also any simulator that would say the best chance of success is with 100% stocks should be thrown in the trash can - just one bad SOR and your done. And...
by FinancialDave
Fri Aug 29, 2014 1:05 am
 
Forum: Personal Finance (Not Investing)
Topic: Only need $315k non-retirement $ to retire at Age 43?
Replies: 36
Views: 5205

Re: pay health bill from HSA or from checking?

Letsgobobby, I certainly agree maximizing HSA's is a good thing, and it seems that you are agreeing that the wiser choice is to pay your expenses from the HSA rather than drag it out for 20 years. I seem to be missing something on the FICA tax issue. Are you saying that whether they pay the bill fro...
by FinancialDave
Thu Aug 28, 2014 5:45 pm
 
Forum: Personal Finance (Not Investing)
Topic: pay health bill from HSA or from checking?
Replies: 70
Views: 3865

Re: 100% stock AA-> At what age to add bonds?

Let's circle back to the original post by the OP and something that was said: At what age should he start adding Bonds? Maybe some feel this problem can be solved by just "throwing enough money at it." Well "maybe" a high savings rate can help - it certainly can't hurt can it? I ...
by FinancialDave
Wed Aug 27, 2014 1:11 pm
 
Forum: Investing - Theory, News & General
Topic: 100% stock AA-> At what age to add bonds?
Replies: 58
Views: 3679

Re: 100% stock AA-> At what age to add bonds?

Why is this thread an interrogation of me? I saved 20% of salary in a 401k plus SS plus a generous DB pension. Our savings can easily support our retirement plan (and, more important, the lifestyle we want to continue.) I will go back and emphasize: The reason for our success is our savings rate wh...
by FinancialDave
Wed Aug 27, 2014 12:18 pm
 
Forum: Investing - Theory, News & General
Topic: 100% stock AA-> At what age to add bonds?
Replies: 58
Views: 3679

Re: 100% stock AA-> At what age to add bonds?

The savings rate has everything to do with it, because you need some withdrawal amount, not a percentage. I more think I need a sabbatical. L. Can you tell us what "some withdrawal amount" is ? For me, $60,000 per year, until age 70 ( deferring SS for another 6 years), $20,000 per year th...
by FinancialDave
Tue Aug 26, 2014 8:17 pm
 
Forum: Investing - Theory, News & General
Topic: 100% stock AA-> At what age to add bonds?
Replies: 58
Views: 3679

Re: 100% stock AA-> At what age to add bonds?

The savings rate has everything to do with it, because you need some withdrawal amount, not a percentage. I more think I need a sabbatical. L. Can you tell us what "some withdrawal amount" is ? For me, $60,000 per year, until age 70 ( deferring SS for another 6 years), $20,000 per year th...
by FinancialDave
Tue Aug 26, 2014 8:11 pm
 
Forum: Investing - Theory, News & General
Topic: 100% stock AA-> At what age to add bonds?
Replies: 58
Views: 3679

Re: 100% stock AA-> At what age to add bonds?

Exactly my point, savings rate has nothing to do with it!
by FinancialDave
Tue Aug 26, 2014 7:31 pm
 
Forum: Investing - Theory, News & General
Topic: 100% stock AA-> At what age to add bonds?
Replies: 58
Views: 3679

Re: 100% stock AA-> At what age to add bonds?

I am a firm believer in at least 40% stocks and a maximum of 80% That said, I think people should forget about AA and realize that their savings rate is the biggest determinant of success. L. I agree that AA is a minor factor in whether people will have success in retirement - but it is not as much...
by FinancialDave
Tue Aug 26, 2014 6:58 pm
 
Forum: Investing - Theory, News & General
Topic: 100% stock AA-> At what age to add bonds?
Replies: 58
Views: 3679

Re: pay health bill from HSA or from checking?

Letsgobobby, It may be a factor, for larger income individuals who have already maxed out all other tax-deferred savings vehicles, but it is not huge for all, especially any benefactors of the HSA that would not be a spouse. The advantage, is only an advantage for the incremental earnings on the inv...
by FinancialDave
Tue Aug 26, 2014 6:52 pm
 
Forum: Personal Finance (Not Investing)
Topic: pay health bill from HSA or from checking?
Replies: 70
Views: 3865

Re: pay health bill from HSA or from checking?

I personally vote for paying from HSA. I really wouldn't want to store receipts for 20+ years. It's not just the receipts - the way I read the IRS pubs, you would open yourself up to 20 years of audits, so you need all receipts, because you have to be able to show that you have not deducted this ex...
by FinancialDave
Tue Aug 26, 2014 3:28 pm
 
Forum: Personal Finance (Not Investing)
Topic: pay health bill from HSA or from checking?
Replies: 70
Views: 3865

Re: Buying a home with aluminum wiring?

Is there really no other house that you can buy, or is it such a great house at an already high price that you are willing to rip out all the walls and rewire it - because truly I think that is the only way you will be able to sleep good at night, after reading all these posts. Why live with a cobbl...
by FinancialDave
Mon Aug 25, 2014 11:54 pm
 
Forum: Personal Consumer Issues
Topic: Buying a home with aluminum wiring?
Replies: 73
Views: 4574

Re: Real Estate Diversification question

Curious how people here calculate the % of net worth in real estate. Say I'm trying to get 25% of my net worth in real estate. Do you count your primary home or only other properties? I personally would count all properties Do you count the amount of down payments only or total real estate equity? ...
by FinancialDave
Mon Aug 25, 2014 11:09 pm
 
Forum: Investing - Theory, News & General
Topic: Real Estate Diversification question
Replies: 2
Views: 301

Re: Real Estate Diversification question

I would first calculate my total net worth by putting all my assets on one side of the balance sheet and any debts on the other side of the balance sheet - subtracting the debts from the assets, gives you the "net worth." To find the % RE, just take the equity you have in the real estate a...
by FinancialDave
Mon Aug 25, 2014 11:05 pm
 
Forum: Investing - Theory, News & General
Topic: Real Estate Diversification question
Replies: 2
Views: 301

Re: 100% stock AA-> At what age to add bonds?

gks,

Thanks for pointing out that I should fire my proofreader!

Updated my previous post.

:D
by FinancialDave
Mon Aug 25, 2014 7:42 pm
 
Forum: Investing - Theory, News & General
Topic: 100% stock AA-> At what age to add bonds?
Replies: 58
Views: 3679

Re: "The Bogleheads' Guide to Investing -- Second Edition"

Alright there are already 9 used copies on Amazon that are listed higher than the new price. The 9 of you come forward. That is something only a true Boglehead would do. That's probably Taylor trying to sell his author's copies. :D :D Hi Dave: I hope Taylor finds it amusing, too! That's very funny,...
by FinancialDave
Mon Aug 25, 2014 6:19 pm
 
Forum: Investing - Theory, News & General
Topic: "The Bogleheads' Guide to Investing -- Second Edition"
Replies: 42
Views: 6290

Re: 100% stock AA-> At what age to add bonds?

Age in bonds is still a pretty good starting point. "Pretty good" how? A general "rule of thumb" is what it is. A 30yo and a 60yo can have exactly the same financial & psychological ability to -- under all conditions -- carry out an exact investment plan. ← That is what matt...
by FinancialDave
Mon Aug 25, 2014 1:21 pm
 
Forum: Investing - Theory, News & General
Topic: 100% stock AA-> At what age to add bonds?
Replies: 58
Views: 3679

Re: Question on dividends

You can make all sorts of arguments about why a dividend is or is not appropriate. From an accounting standpoint, the shareholder is in the same position whether or not a dividend is paid. Gill My argument, if you read it closely, is not necessarily about a "dividend" per se. It is about ...
by FinancialDave
Mon Aug 25, 2014 1:10 pm
 
Forum: Investing - Theory, News & General
Topic: Question on dividends
Replies: 15
Views: 1327

Re: Question on dividends

Say you are the sole shareholder of a corporation with $100,000 in cash as its sole asset. You decide to pay yourself a dividend of $10,000. Now the corporation has $90,000 of assets and you have $10,000 less the tax you pay on the dividend. Do you feel you are now further ahead? Gill It depends. I...
by FinancialDave
Mon Aug 25, 2014 1:00 pm
 
Forum: Investing - Theory, News & General
Topic: Question on dividends
Replies: 15
Views: 1327

Re: Question on dividends

You really have gained nothing from a dividend and it is then taxed as ordinary income. Your interest in the corporation is reduced by the amount of the dividend. Gill Not sure where your logic is coming from. In the first place, ordinary qualified dividends are not taxed as ordinary income, they a...
by FinancialDave
Mon Aug 25, 2014 2:14 am
 
Forum: Investing - Theory, News & General
Topic: Question on dividends
Replies: 15
Views: 1327

Re: 100% stock AA-> At what age to add bonds?

Gambler, It is said that bonds are an "anchor" in a portfolio. My definition of an anchor is that it is something that prevents a ship from going anywhere. If a person wants to accrue the most, the best bet is to be 100% stocks until sometime when the money will be needed. The main thinki...
by FinancialDave
Sun Aug 24, 2014 7:25 pm
 
Forum: Investing - Theory, News & General
Topic: 100% stock AA-> At what age to add bonds?
Replies: 58
Views: 3679

Re: "The Bogleheads' Guide to Investing -- Second Edition"

Mel Lindauer wrote:
rec7 wrote:Alright there are already 9 used copies on Amazon that are listed higher than the new price. The 9 of you come forward. That is something only a true Boglehead would do.


That's probably Taylor trying to sell his author's copies. :D


:D
by FinancialDave
Sun Aug 24, 2014 7:03 pm
 
Forum: Investing - Theory, News & General
Topic: "The Bogleheads' Guide to Investing -- Second Edition"
Replies: 42
Views: 6290

Re: How to weather market downturn with a high chance of lay

DonCamillo wrote:

But I could be wrong. You can find a lot of misinformation on the Web.


:D

And in the movie world!

:oops:

And retirement simulations!

.....

.....

fd
by FinancialDave
Fri Aug 22, 2014 6:41 pm
 
Forum: Investing - Theory, News & General
Topic: How to weather market downturn with a high chance of layoff
Replies: 42
Views: 3187

Re: How to weather market downturn with a high chance of lay

Let's forget about the fact that as the market trends higher over time, there will be times when it's price will be at the same as it was 2 or 10 years before -- but are you a fortune teller such that you know when that will occur, not likely. fd Hi Dave, I agree that I cannot predict when the mark...
by FinancialDave
Thu Aug 21, 2014 11:44 am
 
Forum: Investing - Theory, News & General
Topic: How to weather market downturn with a high chance of layoff
Replies: 42
Views: 3187

Re: How to weather market downturn with a high chance of lay

Dividends come from the stocks in the index. For instance in 2006 VTSMX paid $.524 income on a year ending price of $34.09. About 1.5% dividend. In 2008 the income was $.586 on a $21.80 year end price. About 2.7% dividend. Let's forget about the fact that as the market trends higher over time, there...
by FinancialDave
Wed Aug 20, 2014 9:36 pm
 
Forum: Investing - Theory, News & General
Topic: How to weather market downturn with a high chance of layoff
Replies: 42
Views: 3187

Re: How to weather market downturn with a high chance of lay

The alternative is that we can still stick to buy-and-hold, but time our buy during major recessions. For example, during boom times I can sock my money away in a 0.9% CD or savings account, and only buy into index fund when the index is low. May be this alternative sucks Thank you! This would tell...
by FinancialDave
Wed Aug 20, 2014 8:00 pm
 
Forum: Investing - Theory, News & General
Topic: How to weather market downturn with a high chance of layoff
Replies: 42
Views: 3187

Re: How to weather market downturn with a high chance of lay

The alternative is that we can still stick to buy-and-hold, but time our buy during major recessions. For example, during boom times I can sock my money away in a 0.9% CD or savings account, and only buy into index fund when the index is low. May be this alternative sucks Thank you! This would tell...
by FinancialDave
Wed Aug 20, 2014 5:08 pm
 
Forum: Investing - Theory, News & General
Topic: How to weather market downturn with a high chance of layoff
Replies: 42
Views: 3187

Re: How to weather market downturn with a high chance of lay

I'm a firm believer in the superiority of buy-and-hold over day-trading. However, it is unclear to me how the tracking-the-index strategy works well given the fact that during boom years we tend to have more money to invest, whereas in downturns we tend to have less (due to layoffs, less work for f...
by FinancialDave
Wed Aug 20, 2014 5:02 pm
 
Forum: Investing - Theory, News & General
Topic: How to weather market downturn with a high chance of layoff
Replies: 42
Views: 3187

Re: How the rich stay/get richer??

What matters is that the spending is significantly less than the total growth per year. It makes no difference whether that growth comes from dividends or appreciation, or both. Thanks SD, This is essentially the story - you are only withdrawing 2% of your portfolio, when the "tipping point&qu...
by FinancialDave
Wed Aug 20, 2014 12:33 pm
 
Forum: Investing - Theory, News & General
Topic: [live off dividends?] How the rich stay/get richer??
Replies: 62
Views: 4932

Re: Bogleheads Featured in Money Article

I am sorry to all if I just don't buy into the TIPS fascination in retirement and not many in their 80's are going to be managing a TIPS ladder -- remember a ladder has to essentially go on to beyond age 100, because what are you going to do if the ladder runs out?? Even though a bond ladder or a TI...
by FinancialDave
Tue Aug 19, 2014 10:57 pm
 
Forum: Investing - Theory, News & General
Topic: Bogleheads Featured in Money Article
Replies: 21
Views: 3036

Re: Bogleheads Featured in Money Article

So for tip #3, the article (Mel) is recommending I-Bonds and TIPS for pre-retires. Is that regardless of timeframe and goals? I would think that TIPS and I-Bonds would be more important for retires than pre-retires. Actually, the article was supposedly aimed at retirees and near-retirees, and I res...
by FinancialDave
Tue Aug 19, 2014 2:57 pm
 
Forum: Investing - Theory, News & General
Topic: Bogleheads Featured in Money Article
Replies: 21
Views: 3036

Re: Bogleheads Featured in Money Article

So for tip #3, the article (Mel) is recommending I-Bonds and TIPS for pre-retires. Is that regardless of timeframe and goals? I would think that TIPS and I-Bonds would be more important for retires than pre-retires. I-bonds - sure these are "somewhat" of an inflation hedge because they tr...
by FinancialDave
Tue Aug 19, 2014 12:38 am
 
Forum: Investing - Theory, News & General
Topic: Bogleheads Featured in Money Article
Replies: 21
Views: 3036

Re: Bogleheads Featured in Money Article

It is a good article.

I hope she felt she needed a much safer topic than the "fire-storm" created by the "Stop Passing Up This Great Deal" article in the Aug magazine.

fd
by FinancialDave
Mon Aug 18, 2014 7:46 pm
 
Forum: Investing - Theory, News & General
Topic: Bogleheads Featured in Money Article
Replies: 21
Views: 3036

Re: Your biggest "Missed Money" event that still kills you?

Becoming a boglehead too late... The above is certainly true, but not buying into Microsoft at a now adjusted price of 7 CENTS, is one that still haunts me - only because I wanted to get into the IPO but could not and when it came out, it jumped up and didn't look back, so I just took it off my rad...
by FinancialDave
Mon Aug 18, 2014 11:55 am
 
Forum: Investing - Theory, News & General
Topic: Your biggest "Missed Money" event that still kills you?
Replies: 102
Views: 7970

Re: Online classes?

You might check out Coursera . The classes they offer are all through regular universities, and the one I took was both rigorous and excellent. They're also free, which is pretty amazing. This Personal Finance/Financial Planning course offered by Coursera starts this Wednesday, 8/20. Per the syllab...
by FinancialDave
Mon Aug 18, 2014 11:36 am
 
Forum: Investing - Theory, News & General
Topic: Online classes?
Replies: 14
Views: 1920

Re: Beat The Street's Permanent Portfolio

Beat The Street wrote:What a day to own long term STRIPS.....


It's all in your perspective - I would say "What a day to sell your long term STRIPS!"

:D

fd
by FinancialDave
Fri Aug 15, 2014 1:15 pm
 
Forum: Investing - Theory, News & General
Topic: Beat The Street's Permanent Portfolio
Replies: 36
Views: 3074

Re: Stop Passing Up This Great Deal - In Money Magazine

What matters is for tax purposes taking income when you might not want it. And to that point you should view those expected taxes on RMDs as one of your expenses and make sure you have safe liquid funds to pay for them just like you'd pay for food and housing. A better way to do this (IMHO) is to l...
by FinancialDave
Thu Aug 14, 2014 4:13 pm
 
Forum: Investing - Theory, News & General
Topic: Stop Passing Up This Great Deal - In Money Magazine
Replies: 80
Views: 11086

Re: Most Hated Brokerage Firm? [or one that you love]

When they talk about free trades it is only for a specific time frame (like 30 or 60 days) and it is only for so many trades (like 30 or 60 trades). That's wrong the Merrill Edge free trades are a certain number each month depending on the asset level: https://www.bankofamerica.com/preferred-reward...
by FinancialDave
Thu Aug 14, 2014 3:53 pm
 
Forum: Investing - Theory, News & General
Topic: Most Hated Brokerage Firm? [or one that you love]
Replies: 74
Views: 7377

Re: Beat The Street's Permanent Portfolio

Really, putting together a fund with 30% in 30 year treasuries - did pretty good in a bond bull market. I just don't see it doing so good in the next 20 and as you can see it seriously underperformed in 2013, which was just a little taste of an interest rate blip. Not for me, going forward. Let's ch...
by FinancialDave
Wed Aug 13, 2014 11:35 pm
 
Forum: Investing - Theory, News & General
Topic: Beat The Street's Permanent Portfolio
Replies: 36
Views: 3074

Re: Most Hated Brokerage Firm? [or one that you love]

I've only dealt with two brokerages, Vanguard and TD Ameritrade. I wouldn't say that I hated Vanguard, but I definitely preferred TD Ameritrade. The customer service at TD is way better. They give you cash and free trades for bringing money into your account. And VBS's web interface looks like it w...
by FinancialDave
Wed Aug 13, 2014 11:24 pm
 
Forum: Investing - Theory, News & General
Topic: Most Hated Brokerage Firm? [or one that you love]
Replies: 74
Views: 7377

Re: Short term vs Intermediate term bond funds

What are this forum's latest thoughts on short term bond funds (i.e. VBIRX and VTAPX) vs intermediate bond funds (i.e. VBTLX and VAIPX)..... I would venture to guess the "forum's latest thoughts" are the same as they were 6 months ago, last year, and the year before that. And this is docu...
by FinancialDave
Fri Aug 08, 2014 5:26 pm
 
Forum: Investing - Theory, News & General
Topic: Short term vs Intermediate term bond funds
Replies: 27
Views: 2537
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