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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
Sat Feb 28, 2015 1:09 pm
 
Forum: Investing - Theory, News & General
Topic: Buy and Hold Forever Stocks
Replies: 96
Views: 6528

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
Mon Feb 16, 2015 7:51 pm
 
Forum: Investing - Theory, News & General
Topic: Average amount saved for retirement by age
Replies: 133
Views: 27344

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
Fri Feb 13, 2015 7:33 pm
 
Forum: Investing - Theory, News & General
Topic: Social Security as a bond?
Replies: 47
Views: 3177

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 11:39 pm
 
Forum: Investing - Theory, News & General
Topic: Dave Ramsey says you shouldn't own bonds?
Replies: 64
Views: 8803

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
Sat Feb 07, 2015 4:58 pm
 
Forum: Investing - Theory, News & General
Topic: Dave Ramsey says you shouldn't own bonds?
Replies: 64
Views: 8803

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 7:29 pm
 
Forum: Investing - Theory, News & General
Topic: 401k/IRA: Roth, Traditional, or Both
Replies: 10
Views: 945

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
Fri Feb 06, 2015 7:22 pm
 
Forum: Investing - Theory, News & General
Topic: Dave Ramsey says you shouldn't own bonds?
Replies: 64
Views: 8803

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 11:52 pm
 
Forum: Investing - Theory, News & General
Topic: Successful investing: Is it luck or skill?
Replies: 26
Views: 2565

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
Wed Feb 04, 2015 11:44 pm
 
Forum: Investing - Theory, News & General
Topic: Successful investing: Is it luck or skill?
Replies: 26
Views: 2565

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 5:00 pm
 
Forum: Investing - Theory, News & General
Topic: "Retiring in a Low-Return Environment"
Replies: 71
Views: 7323

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
Thu Jan 29, 2015 11:57 am
 
Forum: Investing - Theory, News & General
Topic: "Retiring in a Low-Return Environment"
Replies: 71
Views: 7323

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
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: 7146

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
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: 7146

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 11:11 pm
 
Forum: Investing - Theory, News & General
Topic: Surviving the Tax Bite of RMD Withdrawals in Retirement
Replies: 79
Views: 7146

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 11:01 pm
 
Forum: Investing - Theory, News & General
Topic: Surviving the Tax Bite of RMD Withdrawals in Retirement
Replies: 79
Views: 7146

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 10:45 pm
 
Forum: Investing - Theory, News & General
Topic: Surviving the Tax Bite of RMD Withdrawals in Retirement
Replies: 79
Views: 7146

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 8:05 pm
 
Forum: Investing - Theory, News & General
Topic: Surviving the Tax Bite of RMD Withdrawals in Retirement
Replies: 79
Views: 7146

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 6:59 pm
 
Forum: Investing - Theory, News & General
Topic: Surviving the Tax Bite of RMD Withdrawals in Retirement
Replies: 79
Views: 7146

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 6:44 pm
 
Forum: Investing - Theory, News & General
Topic: Surviving the Tax Bite of RMD Withdrawals in Retirement
Replies: 79
Views: 7146

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
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: 7146

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 7:29 pm
 
Forum: Investing - Theory, News & General
Topic: Surviving the Tax Bite of RMD Withdrawals in Retirement
Replies: 79
Views: 7146

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 7:20 pm
 
Forum: Investing - Theory, News & General
Topic: Surviving the Tax Bite of RMD Withdrawals in Retirement
Replies: 79
Views: 7146

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 7:10 pm
 
Forum: Investing - Theory, News & General
Topic: Surviving the Tax Bite of RMD Withdrawals in Retirement
Replies: 79
Views: 7146

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
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: 7146

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
Sun Jan 11, 2015 11:23 pm
 
Forum: Investing - Theory, News & General
Topic: Bogleheads 2015 Hedge Fund Contest
Replies: 126
Views: 11338

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
Fri Jan 09, 2015 8:34 pm
 
Forum: Investing - Theory, News & General
Topic: 2015 BOGLEHEAD CONTEST REGISTRATION
Replies: 556
Views: 19922

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 2:25 pm
 
Forum: Investing - Theory, News & General
Topic: Can you make money betting on random coin flips?
Replies: 295
Views: 16762

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
Tue Jan 06, 2015 12:49 pm
 
Forum: Investing - Theory, News & General
Topic: 2014 BOGLEHEAD CONTEST WINNER
Replies: 23
Views: 2458

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,...
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: 2486

Re: Bogleheads 2015 Hedge Fund Contest

Name: One Gas Wonder Hedge Fund

Long:
LNG
by FinancialDave
Mon Jan 05, 2015 1:10 am
 
Forum: Investing - Theory, News & General
Topic: Bogleheads 2015 Hedge Fund Contest
Replies: 126
Views: 11338

Re: Modified Dietz (but not TWR, IRR) to measure performance

@ pradador, longinvest, financialdave Sorry, the OP was not clear as you all compared IRR against TWR. I edited the OP to clarify that Modified Dietz is not TWR. ace, The difference is not as clear as you make it out, and I tend to side with the group that identifies the modified Dietz and it's clo...
by FinancialDave
Sat Jan 03, 2015 2:18 pm
 
Forum: Investing - Theory, News & General
Topic: Modified Dietz (but not TWR, IRR) to measure performance
Replies: 6
Views: 728

Re: Modified Dietz method to measure investment performance

A top contributor at reddit/r/investing argued that XIRR (IRR, DWR) is a wrong method to measure the investment performance. Instead, he proposes the Modified Dietz method. http://en.wikipedia.org/wiki/Modified_Dietz_method I'm curious what BHs think about XIRR vs Modified Dietz. It depends on your...
by FinancialDave
Sat Jan 03, 2015 3:23 am
 
Forum: Investing - Theory, News & General
Topic: Modified Dietz (but not TWR, IRR) to measure performance
Replies: 6
Views: 728

Re: Eight Lazy Portfolios. Eight roads to Dublin.

Bogleheads: Paul Farrell is a senior investment columnist for MarketWatch who prefers "Lazy Portfolios." Below are ten-year annualized returns ending today for 8 portfolios recommended by 8 different investment authorities.[/u] Aronson Family Taxable ------------6.62% Fundadvice Ultimate ...
by FinancialDave
Fri Jan 02, 2015 4:19 pm
 
Forum: Investing - Theory, News & General
Topic: Eight Lazy Portfolios. Eight roads to Dublin.
Replies: 14
Views: 2456

Re: 2014 BOGLEHEAD CONTEST WINNER

you should be telling us how much your news letter is going to cost


pk, you are tooo funny!

:sharebeer
by FinancialDave
Fri Jan 02, 2015 2:04 am
 
Forum: Investing - Theory, News & General
Topic: 2014 BOGLEHEAD CONTEST WINNER
Replies: 23
Views: 2458

Re: 2014 BOGLEHEAD CONTEST WINNER

S&P 500 Blew the Top Off Wall Street’s Expectations in 2014 http://blogs.wsj.com/moneybeat/2015/01/01/sp-500-blew-the-top-off-wall-streets-expectations-in-2014/ Most of Wall Street didn’t see 2014’s stock surge coming. With its close at 2058.90 Wednesday, the S&P 500 ended the year up 211 p...
by FinancialDave
Thu Jan 01, 2015 5:09 pm
 
Forum: Investing - Theory, News & General
Topic: 2014 BOGLEHEAD CONTEST WINNER
Replies: 23
Views: 2458

Re: 2014 BOGLEHEAD CONTEST WINNER

Ah, FinancialDave, congratulations! What is your secret forecast formula? Alisa, I'll leave you with a quote I found from Bill Bernstein on another thread: As always in finance, there's no right answer. Anyway, if I told you my secret formula, it would then be my fault for those who follow it! :D I...
by FinancialDave
Thu Jan 01, 2015 4:59 pm
 
Forum: Investing - Theory, News & General
Topic: 2014 BOGLEHEAD CONTEST WINNER
Replies: 23
Views: 2458

Re: 2014 BOGLEHEAD CONTEST WINNER

Wow, I just took a look at the contest and still can't believe it -- I had to do a screen capture just in case the closing price turns out to be a mistake! Speechless is the only thing I can come up with at the moment.

Dave
by FinancialDave
Thu Jan 01, 2015 2:27 am
 
Forum: Investing - Theory, News & General
Topic: 2014 BOGLEHEAD CONTEST WINNER
Replies: 23
Views: 2458

Re: Bogleheads 2015 Hedge Fund Contest

So, just to be clear, we can have 1-6 stocks in our account (no more than 3 long or short) - or maybe just put it all in cash (0 stocks) -- I could have done better with that option this year.
:happy
by FinancialDave
Tue Dec 30, 2014 5:29 pm
 
Forum: Investing - Theory, News & General
Topic: Bogleheads 2015 Hedge Fund Contest
Replies: 126
Views: 11338

Re: Where do stock dividends go before distributed by a fund

When a mutual fund recieves a dividend payment from a holding, where does the dividend go before it is distributed by the fund? Lets say, for (rough) approximate example, that ⋅ Apple generates a 47 cent dividend on November 10th ⋅ Apple stock was worth $108.83 each on November ...
by FinancialDave
Fri Dec 19, 2014 4:07 pm
 
Forum: Investing - Theory, News & General
Topic: Where do stock dividends go before distributed by a fund?
Replies: 5
Views: 768

Re: Please debunk this CNN Money article on dividend investi

http://www.fool.com/investing/general/2014/12/17/how-to-pick-the-best-dividend-stocks.aspx Wrote: "According data from Goldman Sachs, dividend stocks tend to outperform their nondividend-paying counterparts by a considerable margin over time. A $10,000 investment in nondividend stocks in 1972 ...
by FinancialDave
Fri Dec 19, 2014 3:47 pm
 
Forum: Investing - Theory, News & General
Topic: Please debunk this CNN Money article on dividend investing
Replies: 42
Views: 5063

Re: Beta vs Excess Returns

Valuethinker, That's what I meant - If the Beta is less than one, but the returns of the stock are greater than the SP500 (most frequently used reference), then not all of the excess returns could have been predicted by just using the Beta alone. In other words you can't generalize that lower Beta s...
by FinancialDave
Thu Dec 18, 2014 5:09 pm
 
Forum: Investing - Theory, News & General
Topic: Beta vs Excess Returns
Replies: 3
Views: 480

Re: White Coat Investor in Forbes

James,

Well done!

Big time baby!

:sharebeer
by FinancialDave
Thu Dec 18, 2014 12:36 pm
 
Forum: Investing - Theory, News & General
Topic: White Coat Investor in Forbes
Replies: 37
Views: 6469

Beta vs Excess Returns

I am trying to resolve in my mind the following quote from the Wiki on Beta: Eugene F. Fama and Kenneth R. French found that on average, a portfolio’s beta explains about 70% of its actual returns. For example, if a portfolio were up 10%, about 7% of the return can be explained by the advance of all...
by FinancialDave
Thu Dec 18, 2014 12:11 pm
 
Forum: Investing - Theory, News & General
Topic: Beta vs Excess Returns
Replies: 3
Views: 480

Re: Comparing Results from VPW, RMD, & 4% Rule Withdrawals

This is a very interesting analysis, thanks Financialdave for sharing. One challenge noted in the column is calculating an RMD rate prior to age 70. Using a flat 3.65% withdrawal rate from limited time period between ages 65-70 seems reasonable given the results shown here, but what of a longer per...
by FinancialDave
Sat Dec 13, 2014 1:15 pm
 
Forum: Investing - Theory, News & General
Topic: Comparing Results from VPW, RMD, & 4% Rule Withdrawals
Replies: 40
Views: 2306

Re: Comparing Results from VPW, RMD, & 4% Rule Withdrawals

Actually, the article's 65-years-old retiree with $250K is possibly receiving $15K (or more) in Social Security payments. In 1973, his income would have started at $27,500 using VPW+SS, instead of $25,000 using a 4% SWR+SS (and less using RMD+SS). It would have gone down a little during the high-in...
by FinancialDave
Fri Dec 12, 2014 8:04 pm
 
Forum: Investing - Theory, News & General
Topic: Comparing Results from VPW, RMD, & 4% Rule Withdrawals
Replies: 40
Views: 2306

Re: Comparing Results from VPW, RMD, & 4% Rule Withdrawals

This thread is largely arguing semantics. So in my opinion - So in my opinion, the thread has gone off the original topic - at least to some degree. The results from my study seem to indicate that variable withdraws at least in both the 1973 & 1975 case, provided MORE than a 50% improvement of ...
by FinancialDave
Fri Dec 12, 2014 5:45 pm
 
Forum: Investing - Theory, News & General
Topic: Comparing Results from VPW, RMD, & 4% Rule Withdrawals
Replies: 40
Views: 2306

Re: Comparing Results from VPW, RMD, & 4% Rule Withdrawals

A fluctuating income in retirement is just fine so long as it exceeds your needs by 50% or more. A portion of my own income is from a variable annuity adjusted monthly, hence never the same paycheck twice... You guys are just missing the whole concept of an emergency fund or a large cash balance in...
by FinancialDave
Fri Dec 12, 2014 4:10 pm
 
Forum: Investing - Theory, News & General
Topic: Comparing Results from VPW, RMD, & 4% Rule Withdrawals
Replies: 40
Views: 2306

Re: Comparing Results from VPW, RMD, & 4% Rule Withdrawals

FinancialDave, Thanks for the reference to the VPW speadsheet, but I must forward your thanks to the awesome Bogleheads team behind Simba's backtesting spreadsheet for providing the data on which you based the backtests of your article. Simba's backtesting spreadsheet actually contains a much riche...
by FinancialDave
Fri Dec 12, 2014 11:33 am
 
Forum: Investing - Theory, News & General
Topic: Comparing Results from VPW, RMD, & 4% Rule Withdrawals
Replies: 40
Views: 2306

Re: Building a new Excel spreadsheet

In a tax advantaged account there is no need to track dividends and capital gains. Just update the number of shares. Don't create work you don't need. That's exactly right, I failed to notice both the accounts were tax-advantaged. There is no need to track the cost basis, unless you also want to ad...
by FinancialDave
Thu Dec 11, 2014 11:33 pm
 
Forum: Investing - Theory, News & General
Topic: Building a new Excel spreadsheet
Replies: 33
Views: 3095
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