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by FinancialDave
Mon Apr 20, 2015 4:49 pm
Forum: Investing - Theory, News & General
Topic: Pay taxes for parent to convert to Roth?
Replies: 4
Views: 601

Re: Pay taxes for parent to convert to Roth?

I think the best plan is if family members do not get involved (unless they have to) in other's financial matters, as the best intentions can find a way to end badly and this can strain family relations. Best to leave it alone IMHO. Just hope that your parents live a very long life and spend every n...
by FinancialDave
Thu Apr 09, 2015 11:39 am
Forum: Investing - Theory, News & General
Topic: Why is VDIGX Dividend Payout Always Small in 1st quarter?
Replies: 4
Views: 812

Re: Why is VDIGX Dividend Payout Always Small in 1st quarter

The March distribution is not a real dividend, it is an "Oops, we got more income in 2014 than we previously had thought, so we are dumping out that extra income now." Here's an article about it: https://personal.vanguard.com/us/insights/article/supplemental-fund-distributions-032015 This...
by FinancialDave
Wed Apr 08, 2015 5:41 pm
Forum: Investing - Theory, News & General
Topic: Why is VDIGX Dividend Payout Always Small in 1st quarter?
Replies: 4
Views: 812

Why is VDIGX Dividend Payout Always Small in 1st quarter?

When looking at the VDIGX dividend only portion of the payout each March for the last couple years I notice it is about 1/10th the size of the dividend payout during the other 3 quarters. Does anyone know the technical reason for this? Is it just Vanguard being overly conservative for the total year...
by FinancialDave
Mon Mar 30, 2015 4:49 pm
Forum: Personal Finance (Not Investing)
Topic: RMDs for 25-year-old - take out enough to fund annual Roth?
Replies: 38
Views: 2074

Re: RMDs for 25-year-old - take out enough to fund annual Ro

What is the definition of "full-time"? 1. The student must be enrolled for the number of hours or courses the school considers full-time, during "some" part of 5 calendar months -- the months do not need to be consecutive. 2. The school can be elementary school, high school, uni...
by FinancialDave
Mon Mar 30, 2015 4:25 pm
Forum: Personal Finance (Not Investing)
Topic: RMDs for 25-year-old - take out enough to fund annual Roth?
Replies: 38
Views: 2074

Re: RMDs for 25-year-old - take out enough to fund annual Ro

It might make sense to use the RMD to contribute to the Roth and then make an additional contribution to a traditional IRA without taking a distribution. Especially if the income is near $25k it can allow one to capture a higher Saver's Credit. And yes, grad student TA's can do this. I did it in th...
by FinancialDave
Mon Mar 30, 2015 12:32 am
Forum: Personal Finance (Not Investing)
Topic: RMDs for 25-year-old - take out enough to fund annual Roth?
Replies: 38
Views: 2074

Re: RMDs for 25-year-old - take out enough to fund annual Ro

Just to throw another twist on this story, I have no problem with funding the Roth, but not necessarily if "M" is taking out student loans accruing interest at 7-9% to fund grad school. In the case of student loans, I may just use the minimum RMD to pay down the loan and "book" a...
by FinancialDave
Fri Mar 27, 2015 11:59 pm
Forum: Investing - Theory, News & General
Topic: "Filling Your 401k with Company Stock"
Replies: 20
Views: 1680

Re: "Filling Your 401k with Company Stock"

I was just saying IMHO there is no difference between Enron and ANY other company, at the time. Hindsight is always 20/20, but just about everyone, even those inside Enron were totally fooled until it was too late. My philosophy from the first day I ever invested in a stock has always been that any ...
by FinancialDave
Fri Mar 27, 2015 11:09 pm
Forum: Investing - Theory, News & General
Topic: "Filling Your 401k with Company Stock"
Replies: 20
Views: 1680

Re: "Filling Your 401k with Company Stock"

victorb wrote:I think you should be very careful on how much goes into company stock.
However, there is a big difference between Enron and a company like 3M.


What about Kodak, or many other companies that have been in the DOW over the last hundred years and are now gone?

fd
by FinancialDave
Fri Mar 27, 2015 10:58 pm
Forum: Personal Finance (Not Investing)
Topic: Change W-4 after paying off mortgage
Replies: 11
Views: 909

Re: Change W-4 after paying off mortgage

Or maybe an additional $1100 in taxes owed is not such a big deal You should try to get the taxes owed down to less than $1000 to avoid possible penalties, but if you get to 90% of your tax or 100% of last years tax, those are a couple of "safe harbor" targets that will avoid a penalty. fd
by FinancialDave
Fri Mar 27, 2015 10:52 pm
Forum: Personal Finance (Not Investing)
Topic: Change W-4 after paying off mortgage
Replies: 11
Views: 909

Re: Change W-4 after paying off mortgage

One other very non-technical way that I always used was to just use what I call the iteration method. Make a change to your withholding, look at your next paycheck stub and see how much it changed the withholding. Do some math on how much withholding you need, vs how many weeks have already gone by ...
by FinancialDave
Thu Mar 26, 2015 10:36 am
Forum: Personal Finance (Not Investing)
Topic: Variable spending strategies paper by Pfau
Replies: 37
Views: 4054

Re: Variable spending strategies paper by Pfau

Hi Wade, thanks for coming back to me. I appreciate your patience and eagerness to discuss. I looked at PMT-based and G-K methods quite in depth, using historical backtesting under various conditions, and looking at many individual cycles. And it is very clear that those methods can go through up a...
by FinancialDave
Thu Mar 26, 2015 10:23 am
Forum: Personal Finance (Not Investing)
Topic: Better place to keep money than savings account?
Replies: 20
Views: 3301

Re: Better place to keep money than savings account?

Thanks for the correction. i-Bond rates can go to zero and stay there but the principle stays intact. Whereas TIPS can loose interest and principle during deflation. Just to be even more clear - TIPS can lose money just like any other bonds when interest rates move -- fyi the Vanguard Intermediate ...
by FinancialDave
Wed Mar 25, 2015 1:47 pm
Forum: Personal Finance (Not Investing)
Topic: Better place to keep money than savings account?
Replies: 20
Views: 3301

Re: Better place to keep money than savings account?

I'm not really comfortable losing any of it. This is the key to your answer -- there have been a number of suggestions for which your capital is protected, or 99% protected (you may lose a miniscule amount if you cash out an I-bond early.) I would (and do) spread the money around a bit, in the diff...
by FinancialDave
Tue Mar 24, 2015 11:04 pm
Forum: Personal Finance (Not Investing)
Topic: Better place to keep money than savings account?
Replies: 20
Views: 3301

Re: Better place to keep money than savings account?

I'm not really comfortable losing any of it. This is the key to your answer -- there have been a number of suggestions for which your capital is protected, or 99% protected (you may lose a miniscule amount if you cash out an I-bond early.) I would (and do) spread the money around a bit, in the diff...
by FinancialDave
Tue Mar 24, 2015 10:51 pm
Forum: Personal Finance (Not Investing)
Topic: Variable spending strategies paper by Pfau
Replies: 37
Views: 4054

Re: Variable spending strategies paper by Pfau

So let me re-assert my previous claim: the most spendable money for my hypothetical couple would be from constant dollar withdrawals. Second, on what amounts should the couple base their retirement plans? Certainly, not on the potentially higher amounts available through variable withdrawals, becau...
by FinancialDave
Mon Mar 23, 2015 11:50 pm
Forum: Personal Finance (Not Investing)
Topic: Variable spending strategies paper by Pfau
Replies: 37
Views: 4054

Re: Variable spending strategies paper by Pfau

When all is said and done, my hypothetical couple are probably best off with the old fashioned, constant dollar, "safe withdrawal" strategy approach. It actually gives them the most spendable money since it gives them an amount on which to do longer term planning ("yes, we can afford...
by FinancialDave
Mon Mar 23, 2015 12:41 am
Forum: Personal Finance (Not Investing)
Topic: Variable spending strategies paper by Pfau
Replies: 37
Views: 4054

Re: Variable spending strategies paper by Pfau

Sigh. I had hoped for a lot better. What this article and others neglect is to provide any measure of the year to year volatility in spending. In a bad year, they need all of their investment returns to cover their medical care expenses, taxes, insurance, basic food expenses and utilities. What cou...
by FinancialDave
Sun Mar 22, 2015 7:11 pm
Forum: Personal Finance (Not Investing)
Topic: Variable spending strategies paper by Pfau
Replies: 37
Views: 4054

Re: Variable spending strategies paper by Pfau

Beliavsky wrote: Looking at the tables in the paper, no spending strategy stands out as the best to me. Maybe that is the point -- there are trade-offs. If you think about it, you will realize every investing/withdrawing decision involves trade-offs and compromise. You cannot know what optimal will...
by FinancialDave
Sun Mar 15, 2015 2:26 am
Forum: Investing - Theory, News & General
Topic: Bernstein: 2% investment returns over next 20 years
Replies: 216
Views: 23755

Re: Bernstein: 2% investment returns over next 20 years

Is that the total return on investment real estate ie price return plus 'cap rate' (cash rent minus cash expenses), or the just price return of owned homes (excluding non cash imputed rent and cash expenses)? I believe it was the price return and it is really the only portion of real estate ownersh...
by FinancialDave
Sat Mar 14, 2015 3:27 pm
Forum: Investing - Theory, News & General
Topic: Bernstein: 2% investment returns over next 20 years
Replies: 216
Views: 23755

Re: Bernstein: 2% investment returns over next 20 years

I could say 'if expected returns of stocks are low, I'd just pull my money out and put it in real estate'. I do have some of my money in rental RE, but it's quite apparent that expected returns in real estate are also depressed. That's a bit problematic at best since Berstein points out that the re...
by FinancialDave
Sat Mar 14, 2015 2:28 pm
Forum: Investing - Theory, News & General
Topic: Bernstein: 2% investment returns over next 20 years
Replies: 216
Views: 23755

Re: Bernstein: 2% investment returns over next 20 years

I love Dr. Bernstein, but his ability to predict is no better then anyone else's crystal ball. What staythecourse said! But 4% real on stocks does not seem to be any more depressing (or not depressing depending on your viewpoint) than many other recent times. That would equal 7-8% nominal for stock...
by FinancialDave
Sat Feb 28, 2015 1:09 pm
Forum: Investing - Theory, News & General
Topic: Buy and Hold Forever Stocks
Replies: 101
Views: 8764

Re: Buy and Hold Forever Stocks

Buy & Hold forever is really a mistake that if you do it long enough will end up costing you money. Maybe if you have enough diversification (and enough money) you can survive relatively unscathed, but it is no reason to through money away. As long as you aren't of the crowd that believes you wo...
by FinancialDave
Mon Feb 16, 2015 7:51 pm
Forum: Investing - Theory, News & General
Topic: Average amount saved for retirement by age
Replies: 133
Views: 28250

Re: Average amount saved for retirement by age

I've read a number of articles about the average amount an individual has saved for retirement by age and the numbers seem ridiculously low. This doesn't include social security, pensions, or ones primary residence. The following is in the ball park of the majority of my findings... < 35: $6,306 35...
by FinancialDave
Fri Feb 13, 2015 7:33 pm
Forum: Investing - Theory, News & General
Topic: Social Security as a bond?
Replies: 47
Views: 3424

Re: Social Security as a bond?

Isn't SS referred to as a bond in Commom Sense, along with pensions, or am I remembering it incorrectly? You are exactly correct, on page 88 (2010 version Common Sense on Mutual Funds ) John Bogle calls pensions & SS "bondlike" investments. IMO if they are bondlike then you should tre...
by FinancialDave
Sat Feb 07, 2015 11:39 pm
Forum: Investing - Theory, News & General
Topic: Dave Ramsey says you shouldn't own bonds?
Replies: 64
Views: 9603

Re: Dave Ramsey says you shouldn't own bonds?

So I went to his website. On Dave's website, it says that HE does not own bonds. This is probably the greater truth here. I don't know why everyone get's so worked up over a talk radio program. It's not like he is an investment advisor. My experience is that most people don't just get their investm...
by FinancialDave
Sat Feb 07, 2015 4:58 pm
Forum: Investing - Theory, News & General
Topic: Dave Ramsey says you shouldn't own bonds?
Replies: 64
Views: 9603

Re: Dave Ramsey says you shouldn't own bonds?

His rationale was that bond funds are as risky as stock funds... Such a ludicrous proposition would be enough to put all of his future comments into the "noise" bucket for me and just tune him out. (We need ever-increasingly large buckets to contain the noise. Meaningful advice seems to f...
by FinancialDave
Fri Feb 06, 2015 7:29 pm
Forum: Investing - Theory, News & General
Topic: 401k/IRA: Roth, Traditional, or Both
Replies: 10
Views: 1002

Re: 401k/IRA: Roth, Traditional, or Both

Irrespective of any reasons for having a Roth or not having a Roth, they boil down (at least mathematically) to comparing your tax rates now to later or making some assumption to that affect. This is NOT knowable, so my suggestion is to always have some of both, and I'm pretty sure at some point in ...
by FinancialDave
Fri Feb 06, 2015 7:22 pm
Forum: Investing - Theory, News & General
Topic: Dave Ramsey says you shouldn't own bonds?
Replies: 64
Views: 9603

Re: Dave Ramsey says you shouldn't own bonds?

Yes, you are correct that Ramsey does not recommend investing in bonds. You are also correct that the broad consensus among just about everyone else is that most people should hold bonds, in some amount, in their retirement portfolio. This is one of the many points on which Dave's advice differs fr...
by FinancialDave
Wed Feb 04, 2015 11:52 pm
Forum: Investing - Theory, News & General
Topic: Successful investing: Is it luck or skill?
Replies: 26
Views: 2711

Re: Successful investing: Is it luck or skill?

Investing ain't rocket science, and unskilled people can do just as well as those who imagine they are skilled at this game. It's an equal-opportunity sport. Investing is not quite that simplistic either. What you are implying is that someone that knows nothing about investing (the unskilled) can d...
by FinancialDave
Wed Feb 04, 2015 11:44 pm
Forum: Investing - Theory, News & General
Topic: Successful investing: Is it luck or skill?
Replies: 26
Views: 2711

Re: Successful investing: Is it luck or skill?

There are many ways to be a successful loser in the market -- day trading is one of them. Putting all your money into one stock is another. Buying a bunch of down trending stocks and selling them the next day at a lower price. Buying a bunch of out of the money options and losing all your investment...
by FinancialDave
Thu Jan 29, 2015 5:00 pm
Forum: Investing - Theory, News & General
Topic: "Retiring in a Low-Return Environment"
Replies: 71
Views: 7675

Re: "Retiring in a Low-Return Environment"

I am just not sure how using the current CAPE ratio (something that has been in existence for how many years?) is better than 100 years of market data! fd The CAPE numbers use those 100 years of market data. Over the past 100 years or so stocks have varied between 6% and 13% (average is just under ...
by FinancialDave
Thu Jan 29, 2015 11:57 am
Forum: Investing - Theory, News & General
Topic: "Retiring in a Low-Return Environment"
Replies: 71
Views: 7675

Re: "Retiring in a Low-Return Environment"

I am just not sure how using the current CAPE ratio (something that has been in existence for how many years?) is better than 100 years of market data!

fd
by FinancialDave
Mon Jan 26, 2015 2:24 pm
Forum: Investing - Theory, News & General
Topic: Surviving the Tax Bite of RMD Withdrawals in Retirement
Replies: 79
Views: 7332

Re: Surviving the Tax Bite of RMD Withdrawals in Retirement

Given the base assumptions made in the analysis are so completely blue sky, I am not seeing how it is applicable to any BH. The article was not written for the BH community per se but I do think there are some lessons to be learned which I outline in a rather lengthy post elsewhere in this thread. ...
by FinancialDave
Sat Jan 24, 2015 1:24 pm
Forum: Investing - Theory, News & General
Topic: Surviving the Tax Bite of RMD Withdrawals in Retirement
Replies: 79
Views: 7332

Re: Surviving the Tax Bite of RMD Withdrawals in Retirement

I am just pleased that I converted all of my traditional 401ks and IRAs to a Roth in the last 6 years. I would rather have the Roth working for me tax free than a percentage in taxable and RMDs. My situation may be different than for most posters. I do not expect my taxes to go down. This is a good...
by FinancialDave
Fri Jan 23, 2015 11:11 pm
Forum: Investing - Theory, News & General
Topic: Surviving the Tax Bite of RMD Withdrawals in Retirement
Replies: 79
Views: 7332

Re: Surviving the Tax Bite of RMD Withdrawals in Retirement

In 5 years of taking RMD, the first chart shows total income of almost $1.8M! I did read the whole article. It is easy; as hinted, just disable the cookies for that site in your browser. I think maybe you misunderstood the chart, the bar chart covers 30 years in time, in blocks of 5 years each, so ...
by FinancialDave
Fri Jan 23, 2015 11:01 pm
Forum: Investing - Theory, News & General
Topic: Surviving the Tax Bite of RMD Withdrawals in Retirement
Replies: 79
Views: 7332

Re: Surviving the Tax Bite of RMD Withdrawals in Retirement

Dave - I know that distracts from your point, but since I really don't get your point I wander off into distractions. Christine, Look two posts up from your post --- a lengthy post that I hope explains a lot of my reasoning. It is not a point (trying to live off only the income from a bunch of divi...
by FinancialDave
Fri Jan 23, 2015 10:45 pm
Forum: Investing - Theory, News & General
Topic: Surviving the Tax Bite of RMD Withdrawals in Retirement
Replies: 79
Views: 7332

Re: Surviving the Tax Bite of RMD Withdrawals in Retirement

Dave - Any chance on another source for that article? You can say no, but please at least answer the question. SA basically owns the article, but I think I can put it on my own website - try this link and let me know if it works: https://financialdave.files.wordpress.com/2015/01/retirement-and-taxe...
by FinancialDave
Fri Jan 23, 2015 8:05 pm
Forum: Investing - Theory, News & General
Topic: Surviving the Tax Bite of RMD Withdrawals in Retirement
Replies: 79
Views: 7332

Re: Surviving the Tax Bite of RMD Withdrawals in Retirement

Oh I see; you chose JNJ because of that particular timeframe! I was wondering why you did not select say Google or Apple!! Come on, you know how unrealistic your example is. If you had selected GM, the numbers would be vastly different. If you had at least picked S&P or Vanguard Index, it would...
by FinancialDave
Fri Jan 23, 2015 6:59 pm
Forum: Investing - Theory, News & General
Topic: Surviving the Tax Bite of RMD Withdrawals in Retirement
Replies: 79
Views: 7332

Re: Surviving the Tax Bite of RMD Withdrawals in Retirement

Also why are people treating tax bracket as if the entire income gets taxed at the higher rate? Only the income above the bracket amount gets taxed at the higher rate. So if your income goes up by $10K which puts you in to the higher bracket, only the portion of that $10K which goes in to higher br...
by FinancialDave
Fri Jan 23, 2015 6:44 pm
Forum: Investing - Theory, News & General
Topic: Surviving the Tax Bite of RMD Withdrawals in Retirement
Replies: 79
Views: 7332

Re: Surviving the Tax Bite of RMD Withdrawals in Retirement

I've read the article through 3 times now, and I still don't understand a bunch of it. The calculation that gives the 50% effective tax rate makes no sense to me at all. Let's start by translating my statement in the article into maybe something that is a little clearer: The effective tax rate is c...
by FinancialDave
Fri Jan 23, 2015 6:04 pm
Forum: Investing - Theory, News & General
Topic: Surviving the Tax Bite of RMD Withdrawals in Retirement
Replies: 79
Views: 7332

Re: Surviving the Tax Bite of RMD Withdrawals in Retirement

I still want to know how does one start with $250K to come up with $9.5M as a retired couple :-) Because the modern Roth did not come into existence until the tax relief act of 1997, what I am going to say is just an example, but because I have been questioned on how does one get paid dividends of ...
by FinancialDave
Thu Jan 22, 2015 7:29 pm
Forum: Investing - Theory, News & General
Topic: Surviving the Tax Bite of RMD Withdrawals in Retirement
Replies: 79
Views: 7332

Re: Surviving the Tax Bite of RMD Withdrawals in Retirement

Qualified dividends are taxed at the same rate as capital gains. Non-qualified dividends and interest are taxed at your marginal tax rate. Not in an IRA. In there they get taxed just like everything else. In the article, for those who didn't read it, the investor who wanted to take the RMD's and no...
by FinancialDave
Thu Jan 22, 2015 7:20 pm
Forum: Investing - Theory, News & General
Topic: Surviving the Tax Bite of RMD Withdrawals in Retirement
Replies: 79
Views: 7332

Re: Surviving the Tax Bite of RMD Withdrawals in Retirement

Can someone really put a group of high growth dividend paying stocks in an IRA and expect to live off the dividends only The results are extremely disheartening for those who actually would live to an older age of say 99 (where my study goes.) It seems that over half of that dividend income is eate...
by FinancialDave
Thu Jan 22, 2015 7:10 pm
Forum: Investing - Theory, News & General
Topic: Surviving the Tax Bite of RMD Withdrawals in Retirement
Replies: 79
Views: 7332

Re: Surviving the Tax Bite of RMD Withdrawals in Retirement

Can't read the article since it is behind a pay wall but losing sleep over high RMDs is a waste of time. It means you have money. If your taxes are higher now than when you were working, odds are you are making more money than when you were working. That is a problem you can live with. I understand...
by FinancialDave
Thu Jan 22, 2015 12:38 pm
Forum: Investing - Theory, News & General
Topic: Surviving the Tax Bite of RMD Withdrawals in Retirement
Replies: 79
Views: 7332

Surviving the Tax Bite of RMD Withdrawals in Retirement

Recently due to some unforeseen luck in a Boglehead Contest, Taylor sent me the following message: Your winning statistics and our messages should make a good article for your website. I hope you will post a link to your article with a new post on the Bogleheads Forum While I saw not much appeal to ...
by FinancialDave
Sun Jan 11, 2015 11:23 pm
Forum: Investing - Theory, News & General
Topic: Bogleheads 2015 Hedge Fund Contest
Replies: 146
Views: 14762

Re: Bogleheads 2015 Hedge Fund Contest

Hey,
And thanks for using the same website addresses as last year for both the contests -- that's all that's important!

:sharebeer
by FinancialDave
Fri Jan 09, 2015 8:34 pm
Forum: Investing - Theory, News & General
Topic: 2015 BOGLEHEAD CONTEST REGISTRATION
Replies: 556
Views: 21035

Re: 2015 BOGLEHEAD CONTEST REGISTRATION

Bogleheads: Financial Dave won our 2014 Boglehead Contest with his remarkably close guess of 2057.36 . He has chosen Mr. Bogle's excellent book, Don't Count On It. "Don't Count On It" that sounds like an excellent theme for 2015. Well, I heard a few had asked "how did I do it," ...
by FinancialDave
Tue Jan 06, 2015 2:25 pm
Forum: Investing - Theory, News & General
Topic: Can you make money betting on random coin flips?
Replies: 296
Views: 17551

Re: Can you make money betting on random coin flips?

Browser wrote:I think I'll retitle this thread to "Fun With Numbers" :D


Browser,

Maybe you can tell me where I can go in Vegas where I can double my money on a "spin" (which has a 50/50 odds) if I win, and only loose half my money when I lose!

Sign me up baby!

:moneybag

fd
by FinancialDave
Tue Jan 06, 2015 12:49 pm
Forum: Investing - Theory, News & General
Topic: 2014 BOGLEHEAD CONTEST WINNER
Replies: 23
Views: 2532

Re: 2014 BOGLEHEAD CONTEST WINNER

Uh, does this mean the S&P500 will be up 1 point this year? The way it's going so far, that may very well be true Dave, you should not be speechless, you should be telling us how much your news letter is going to cost. Paul Paul, I know you were just "poking fun" but now that I think ...
by FinancialDave
Mon Jan 05, 2015 1:22 am
Forum: Investing - Theory, News & General
Topic: Airlines: Could 2015 be another great year?
Replies: 16
Views: 2508

Re: Airlines: Could 2015 be another great year?

I agree with Andy. At the beginning of 2014, almost no one anticipated the rapid drop in oil prices - it was not priced into airline stocks at the beginning of 2014 and so they did well as this information became apparent and incorporated into valuations of airline stocks. At the beginning of 2015,...

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