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Re: Why does Vanguard use average return iso compound annual

I feel the need, as the OP, to jump in before getting a reply from Vanguard's Portfolio Review Group (BTW I seriously doubt that the Portfolio Review Group is the right department within Vanguard to respond to my request for clarification). This thread seems to have veered away from the real issue ...
by FinancialDave
Wed Apr 16, 2014 1:33 pm
 
Forum: Investing - Theory, News & General
Topic: Why does Vanguard use average return iso compound annual?
Replies: 99
Views: 3990

Re: Why does Vanguard use average return iso compound annual

Actually all Vanguard would have to do is add that ONE little word TOTAL, to their description, and they would be in exact compliance with the SEC wording, which is by the way what I tried to point out last year to no avail.

Will it take another 100 posts, or is this 80 enough already!

fd
by FinancialDave
Wed Apr 16, 2014 12:12 am
 
Forum: Investing - Theory, News & General
Topic: Why does Vanguard use average return iso compound annual?
Replies: 99
Views: 3990

Re: Why does Vanguard use average return iso compound annual

KyleAAA wrote: But if you label it correctly, the laymen who intuitively assume average annual return = CAGR would be confused. Hmm, maybe. I think if you use anything but average annual return the "laymen" would be confused, call the SEC and ask why they are using some confusing term. Wh...
by FinancialDave
Tue Apr 15, 2014 11:39 pm
 
Forum: Investing - Theory, News & General
Topic: Why does Vanguard use average return iso compound annual?
Replies: 99
Views: 3990

Re: Why does Vanguard use average return iso compound annual

But if you label it correctly, the laymen who intuitively assume average annual return = CAGR would be confused. All else being equal, I'd rather keep things simple for them than the math nerds on this forum. I doubt the SEC or Vanguard picked the verbiage randomly. If you start throwing around ter...
by FinancialDave
Tue Apr 15, 2014 12:52 pm
 
Forum: Investing - Theory, News & General
Topic: Why does Vanguard use average return iso compound annual?
Replies: 99
Views: 3990

Re: Why does Vanguard use average return iso compound annual

Really, at this point, aren't we all in vehement agreement? ⋅ The phrase "average annual total return" is a slight misnomer, because the world "average" all by itself is ambiguous, and because in ordinary usage in a non-financial context it usually means the arithmetic...
by FinancialDave
Tue Apr 15, 2014 12:02 am
 
Forum: Investing - Theory, News & General
Topic: Why does Vanguard use average return iso compound annual?
Replies: 99
Views: 3990

Re: Why does Vanguard use average return iso compound annual

I thought I remembered pointing this out about a year ago that they are really CAGR returns - so I am not sure why everyone thinks this is new news? http://www.bogleheads.org/forum/viewtopic.php?f=10&t=118008&newpost=1725112 My point was that Vanguard could in fact change their wording a lit...
by FinancialDave
Mon Apr 14, 2014 11:48 pm
 
Forum: Investing - Theory, News & General
Topic: Why does Vanguard use average return iso compound annual?
Replies: 99
Views: 3990

Re: Income Investing

So as far as this strategy having a long term history, it has not, but I feel pretty confident, with the amount of cash I have in the dividend account, that I can shore up any bad actors, but you could certainly make the case that the verdict is still out in that regard. Buying individual stocks is...
by FinancialDave
Fri Apr 11, 2014 1:07 pm
 
Forum: Investing - Theory, News & General
Topic: Income Investing
Replies: 19
Views: 1680

Re: Income Investing

Also, don't be fooled by my 98% allocation to stocks in both of my accounts (dividend and growth.) As Bogle points out you need to consider pensions & SS (which I am not drawing on yet) as a fixed income allocation and to that regard my allocation is probably somewhere greater than 50% for the f...
by FinancialDave
Thu Apr 10, 2014 8:41 pm
 
Forum: Investing - Theory, News & General
Topic: Income Investing
Replies: 19
Views: 1680

Re: Income Investing

Do you mind sharing how you allocate between your taxable and tax-deferred accounts? For your 6% yield, I cannot imagine creating one that high of a yield because of all the income and dividend based funds, including reits, have yields of around 4%. Are you buying individual reits and high dividend...
by FinancialDave
Thu Apr 10, 2014 8:36 pm
 
Forum: Investing - Theory, News & General
Topic: Income Investing
Replies: 19
Views: 1680

Re: Income Investing

What if instead you took the portfolio payout of the dividend portfolio and used that as your base payout for a total market portfolio - then you get the best of both worlds, efficient portfolio construction that isn't over-weighting to an attribute that has weak correlation to future returns and a...
by FinancialDave
Thu Apr 10, 2014 2:39 pm
 
Forum: Investing - Theory, News & General
Topic: Income Investing
Replies: 19
Views: 1680

Re: Annuities

Whether an annuity such as an immediate annuity is right for you, is a matter of your personal financial picture and risk profile. There are actually an infinite number of ways for you to handle this, but in most cases you are going to have some combination of what might be called guaranteed income ...
by FinancialDave
Thu Apr 10, 2014 2:06 pm
 
Forum: Investing - Theory, News & General
Topic: Annuities
Replies: 59
Views: 3708

Re: Lump Sum vs Annuity: A New Question?

Dave, I don't think you can say that with any certainty. Within reason, I'd rather rely on my own investing skills than some desparate pension fund shooting for the stars. And besides, pensions are starting to invest like we do--indexing. The fact is, we don't know what the future holds. What we do...
by FinancialDave
Thu Apr 10, 2014 12:12 pm
 
Forum: Investing - Theory, News & General
Topic: Lump Sum vs Annuity: A New Question?
Replies: 62
Views: 3091

Re: Lump Sum vs Annuity: A New Question?

What you have to realize is that these risks are in no way equal. In fact it is quite easy to see when you stop and think about it, that if you take the lump sum, the risk is orders of magnitude larger for a loss than if an insurance company and the PBGC are backing the money. The longer you hang o...
by FinancialDave
Wed Apr 09, 2014 3:58 pm
 
Forum: Investing - Theory, News & General
Topic: Lump Sum vs Annuity: A New Question?
Replies: 62
Views: 3091

Re: Lump Sum vs Annuity: A New Question?

Big John: many of the posters are focused on the credit risk of your pension - where a failure by your employer would result in you taking a serious haircut in your monthly payments. Here is how I see the pro's and the con's of this decision: a) When you take the Lump Sum, you eliminate that credit...
by FinancialDave
Tue Apr 08, 2014 9:58 pm
 
Forum: Investing - Theory, News & General
Topic: Lump Sum vs Annuity: A New Question?
Replies: 62
Views: 3091

Re: Lump Sum vs Annuity: A New Question?

BigJohn, After re-reading your details and the amount of other money you have in taxable account and 401k, I definitely feel your best bet is to take the pension. Your situation is very similar to mine, but with a lot of extra money, such that either choice you make you will be totally fine, even if...
by FinancialDave
Tue Apr 08, 2014 1:03 am
 
Forum: Investing - Theory, News & General
Topic: Lump Sum vs Annuity: A New Question?
Replies: 62
Views: 3091

Re: How are you preparing for the coming bear market

That chart is not looking good for us. Is there anything about this time that is different? https://philosophicaleconomics.wordpress.com/2013/12/13/shiller/ Good article -- all you need to do is skim down to the last paragraph, where the point is made that the Schiller CAPE is a poorly constructive...
by FinancialDave
Sun Apr 06, 2014 9:10 pm
 
Forum: Investing - Theory, News & General
Topic: How are you preparing for the coming bear market
Replies: 104
Views: 7757

Re: How are you preparing for the coming bear market

I stay prepared by holding a comfortable cushion of bonds and cash and resisting the allure of the bull market. Is there any other way that works? Bear markets should be a welcome event for "accumulators" - though I realize some do not see it as so and derail their future, when they shoul...
by FinancialDave
Sat Apr 05, 2014 2:31 pm
 
Forum: Investing - Theory, News & General
Topic: How are you preparing for the coming bear market
Replies: 104
Views: 7757

Re: How are you preparing for the coming bear market

I stay prepared by holding a comfortable cushion of bonds and cash and resisting the allure of the bull market. Is there any other way that works? Bear markets should be a welcome event for "accumulators" - though I realize some do not see it as so and derail their future, when they shoul...
by FinancialDave
Sat Apr 05, 2014 2:17 pm
 
Forum: Investing - Theory, News & General
Topic: How are you preparing for the coming bear market
Replies: 104
Views: 7757

Re: Lump Sum vs Annuity: A New Question?

BigJohn, Your SS tax will definitely increase on any retirement income you receive that puts you above the threshold, from either pension or IRA distributions. You can easily work this out in TurboTax - just install the SS amount and add one 1099R and play with the taxable amount of income in it and...
by FinancialDave
Fri Apr 04, 2014 2:24 pm
 
Forum: Investing - Theory, News & General
Topic: Lump Sum vs Annuity: A New Question?
Replies: 62
Views: 3091

Re: American Funds?

So far the replies have basically missed the point, the decision tree as it were. First, who is going to manage the money, aunt, you, or a "professional". If one of you, then you obviously by default end up with vanguard, fidelity, etc. If a professional, then you have to decide business ...
by FinancialDave
Thu Apr 03, 2014 7:59 pm
 
Forum: Investing - Theory, News & General
Topic: American Funds?
Replies: 37
Views: 2851

Re: American Funds?

Good thread. I wanted to go beyond the rhetoric and find the specific, hard data on fund returns with and without the FE loads and so googled for the latest American Funds Advisors Guide (Feb 2014) (page 18). I have selected two of the funds discussed above and would be interested in continuing thi...
by FinancialDave
Wed Apr 02, 2014 7:42 pm
 
Forum: Investing - Theory, News & General
Topic: American Funds?
Replies: 37
Views: 2851

Re: American Funds?

Also, what not everyone realizes, is that there is one A class share that you could insist the broker put her into and there would be no load due. No long term growth prospects, but no 5.75% loss, or market risk - which is not a bad think for a 70 year old of questionable health. This is the Americ...
by FinancialDave
Mon Mar 31, 2014 11:19 pm
 
Forum: Investing - Theory, News & General
Topic: American Funds?
Replies: 37
Views: 2851

Re: American Funds?

Also, what not everyone realizes, is that there is one A class share that you could insist the broker put her into and there would be no load due. No long term growth prospects, but no 5.75% loss, or market risk - which is not a bad think for a 70 year old of questionable health. This is the Americ...
by FinancialDave
Mon Mar 31, 2014 10:57 pm
 
Forum: Investing - Theory, News & General
Topic: American Funds?
Replies: 37
Views: 2851

Re: American Funds?

Also, what not everyone realizes, is that there is one A class share that you could insist the broker put her into and there would be no load due. No long term growth prospects, but no 5.75% loss, or market risk - which is not a bad think for a 70 year old of questionable health. This is the America...
by FinancialDave
Mon Mar 31, 2014 7:12 pm
 
Forum: Investing - Theory, News & General
Topic: American Funds?
Replies: 37
Views: 2851

Re: American Funds?

Aunt is in 70's and not in great health - even though AF has reasonable ER's, the front-end loads or utilizing their higher ER classes that bypass front-end loads make them a less attractive choice for her. RM Someone who understands the zoo of share classes--A, B, C, F-1, F2, etc. maybe can explai...
by FinancialDave
Mon Mar 31, 2014 6:59 pm
 
Forum: Investing - Theory, News & General
Topic: American Funds?
Replies: 37
Views: 2851

Re: American Funds?

Aunt is in 70's and not in great health - even though AF has reasonable ER's, the front-end loads or utilizing their higher ER classes that bypass front-end loads make them a less attractive choice for her. RM Someone who understands the zoo of share classes--A, B, C, F-1, F2, etc. maybe can explai...
by FinancialDave
Mon Mar 31, 2014 6:52 pm
 
Forum: Investing - Theory, News & General
Topic: American Funds?
Replies: 37
Views: 2851

Re: American Funds?

This is not an endorsement of AF, but only a statement of some of the facts, since others seem to be a little void of them. Besides being the biggest, they are also one of the oldest, and if ranked on total return they would have 3-4 of their funds on the list of best returns from inception of any f...
by FinancialDave
Mon Mar 31, 2014 6:49 pm
 
Forum: Investing - Theory, News & General
Topic: American Funds?
Replies: 37
Views: 2851

Re: American Funds?

My aunt is in her 70s and not in the best of health. She called me because her broker recently recommended she move some money into American Funds. I was not familiar with this company, soI tried to find some info online - seems they are big, right behind Fidelity and Vanguard - but shun publicity ...
by FinancialDave
Mon Mar 31, 2014 5:05 pm
 
Forum: Investing - Theory, News & General
Topic: American Funds?
Replies: 37
Views: 2851

Re: Is there ever a reason to prefer taxable over tax advant

I still say that the answer to the original question, "Is there ever a reason to prefer taxable over tax advantaged" is "Yes" depending on circumstances. I think what may be more appropriate to say is "Yes" there might be a reason, but only if you are good at telling t...
by FinancialDave
Mon Mar 31, 2014 4:58 pm
 
Forum: Investing - Theory, News & General
Topic: Is there ever a reason to prefer taxable over tax advantaged
Replies: 48
Views: 4506

Re: Retirement portfolio rebalancing

I'm in the pretty early stage of my retirement portfolio rebalancing. Currently I have two 401k's (old job and new job) and a Roth IRA. What I'm trying to figure out is how to properly balance Roth IRA vs 401k money; since money in Roth IRA have already been taxed $1 in RothIRA is worth more than $...
by FinancialDave
Sat Mar 29, 2014 1:54 pm
 
Forum: Investing - Help with Personal Investments
Topic: Retirement portfolio rebalancing
Replies: 3
Views: 372

Re: Qualified dividends - where is the rate applied

.... And looking at fund info to make sure most or all dividends have been qualified in prior years. Where or how would I find that for - a specific stock - a specific mutual fund - prior to investing ? Also when I go to Dividend.com and do a search of stocks based on their ex-dividend date, I noti...
by FinancialDave
Thu Mar 27, 2014 10:23 pm
 
Forum: Investing - Theory, News & General
Topic: Qualified dividends - where is the rate applied
Replies: 10
Views: 886

Re: Qualified dividends - where is the rate applied

.... And looking at fund info to make sure most or all dividends have been qualified in prior years. Where or how would I find that for - a specific stock - a specific mutual fund - prior to investing ? Ask your broker, or the company you want to invest in. Most all US companies that are not REITS ...
by FinancialDave
Thu Mar 27, 2014 10:15 pm
 
Forum: Investing - Theory, News & General
Topic: Qualified dividends - where is the rate applied
Replies: 10
Views: 886

Re: Are master limited partnerships worthwhile?

I have also heard some comments that for some oil services MLP you could end up filing multiple state income taxes in states that the MLP operates in.

fd
by FinancialDave
Thu Mar 27, 2014 10:02 pm
 
Forum: Investing - Theory, News & General
Topic: Are master limited partnerships worthwhile?
Replies: 25
Views: 1440

Re: Is there ever a reason to prefer taxable over tax advant

I am 26 years old, and have built up about $110k in retirement accounts with my wife. I am now building up a taxable account as well, so that I can access some extra funds before retirement age (in 20 years or so.) So I think it has the advantage of being "available" before tax advantaged...
by FinancialDave
Thu Mar 27, 2014 12:51 pm
 
Forum: Investing - Theory, News & General
Topic: Is there ever a reason to prefer taxable over tax advantaged
Replies: 48
Views: 4506

Re: Is there ever a reason to prefer taxable over tax advant

Yes. That is exactly what I was saying. All earnings in a traditional IRA are taxed upon withdrawal. That is at odds with the statement in a previous post, Actually they tax you later on your original wages - whether that rate is more or less in the future is not-specified. But the earnings on the ...
by FinancialDave
Thu Mar 27, 2014 12:08 pm
 
Forum: Investing - Theory, News & General
Topic: Is there ever a reason to prefer taxable over tax advantaged
Replies: 48
Views: 4506

Re: Statement of the Retirement Funding Problem

Well, I guess the "annuity puzzle" article agrees with me - in a much more eloquent way of course.

fd
by FinancialDave
Thu Mar 27, 2014 11:53 am
 
Forum: Investing - Theory, News & General
Topic: Statement of the Retirement Funding Problem
Replies: 89
Views: 5655

Re: Statement of the Retirement Funding Problem

To re-iterite, my thesis is that an inflation-indexed annuity, or something with equivalent or similar characteristics, solves the retirement funding problem once and for all. The key ideas are inflation-indexed and guaranteed for life . But isn't number 2 what life insurance is all about? Maybe th...
by FinancialDave
Thu Mar 27, 2014 11:47 am
 
Forum: Investing - Theory, News & General
Topic: Statement of the Retirement Funding Problem
Replies: 89
Views: 5655

Re: 3-to-1 Odds Favor Index Investors (SPIVA)

Doc, I think by not including loaded funds you are not addressing the cost issue correctly for maybe at least half the investing public that can purchase loaded funds in their 401k without the load fee. Neither the study presented by Rick nor a Morningstar screen tells the whole story - but I suspec...
by FinancialDave
Tue Mar 25, 2014 1:21 pm
 
Forum: Investing - Theory, News & General
Topic: 3-to-1 Odds Favor Index Investors (SPIVA)
Replies: 15
Views: 1702

Re: Jim Cramer's Index Embrace

I thought he was very much against passive investing. I remember reading a thread here not that long ago about this. He is not against it per se -- passive investing is for your core holdings. He is attempting to add some value to your "mad money," which of course no "hard core"...
by FinancialDave
Tue Mar 25, 2014 1:12 pm
 
Forum: Investing - Theory, News & General
Topic: Jim Cramer's Index Embrace
Replies: 11
Views: 1762

Re: Jim Cramer's Index Embrace

I stumbled upon Cramer's show within the past two days as I channel plowed, and paused because his print-out on the screen advocated low cost index funds. This may not be news but I don't follow him and was a bit surprised since his CNBC show has been geared to helping people stock pick, as far as ...
by FinancialDave
Tue Mar 25, 2014 1:05 pm
 
Forum: Investing - Theory, News & General
Topic: Jim Cramer's Index Embrace
Replies: 11
Views: 1762

Re: Statement of the Retirement Funding Problem

Here is the retirement funding problem. Suppose you started working in 1974, age 27. You worked for 40 years until age 67 and collect a paycheck to pay your living expenses. Let's say your minimum required living expenses are $50,000 in 2014. After 2014, you can no longer work. But you still have b...
by FinancialDave
Tue Mar 25, 2014 12:33 pm
 
Forum: Investing - Theory, News & General
Topic: Statement of the Retirement Funding Problem
Replies: 89
Views: 5655

Re: Looking at Total Bond vs Malkiel/Ellis div stocks + EM b

I don't have a written IPS, but I'm curious how many people that do have an interest rate repression clause, that tells them when to time in and out of this new strategy. Or more specifically, I'm curious how many people had such a clause before M&E jumped on the bandwagon. In reality me, you, ...
by FinancialDave
Tue Mar 25, 2014 12:57 am
 
Forum: Investing - Theory, News & General
Topic: Looking at Total Bond vs Malkiel/Ellis div stocks + EM bonds
Replies: 32
Views: 1963

Re: Morningstar Discussion On Roth Conversions

I like that with the same contribution limits, you can invest more using a Roth. This is of course the common misconception that many people make - especially those that earn more than enough to fill up all their retirement buckets. Certainly, I concede that $17,500 in a Roth is worth more to you i...
by FinancialDave
Mon Mar 24, 2014 2:46 pm
 
Forum: Investing - Theory, News & General
Topic: Morningstar Discussion On Roth Conversions
Replies: 11
Views: 1140

Re: Morningstar Discussion On Roth Conversions

As I think converting an IRA to a Roth for the benefit of children who will inherit it as the best reason to do conversions, I thought this point raised by Kitces was important to keep in mind: The reality was, we've seen scenarios where mom and dad converted at 40% tax rates, they could have given...
by FinancialDave
Mon Mar 24, 2014 1:18 pm
 
Forum: Investing - Theory, News & General
Topic: Morningstar Discussion On Roth Conversions
Replies: 11
Views: 1140

Malkiel: Bond Indexing Bad

On the back page of the Feb 2014 Independent Advisor, by Wiener, the "Quotable" story relates to a Malkiel / Bogle interview in November 2013 on CNBC. Malkiel believes that the old 60/40 portfolio is way over-simplified and, in the current low-interest rate environment, dangerous. It goes ...
by FinancialDave
Mon Mar 24, 2014 3:02 am
 
Forum: Investing - Theory, News & General
Topic: Looking at Total Bond vs Malkiel/Ellis div stocks + EM bonds
Replies: 32
Views: 1963

Re: Morningstar Discussion On Roth Conversions

Some people also think that their retirement tax rate is governed by year 1 of their retirement. When you stop and think that retirement could cover 30 years or more, you might realize that predicting tax rates that far in the future is quite ridiculous. The best plan is to have both Roth and Tradit...
by FinancialDave
Mon Mar 24, 2014 2:20 am
 
Forum: Investing - Theory, News & General
Topic: Morningstar Discussion On Roth Conversions
Replies: 11
Views: 1140

Re: Is yield on cost (YOC) a useful metric?

I started this thread because YOC doesn't make a whole lot of sense to me, yet it is widely discussed among the dividend investing crowd. Although it seems to me that YOC involves some sort of cognitive bias (perhaps anchoring?), the possibility exists that my reasoning and thinking is flawed and t...
by FinancialDave
Sat Mar 22, 2014 2:00 pm
 
Forum: Investing - Theory, News & General
Topic: Is yield on cost (YOC) a useful metric?
Replies: 36
Views: 1249

Re: Is yield on cost (YOC) a useful metric?

I think it is more clear to state: how much income you get is directly affected by the number of shares you purchase and current amount of the dividend. This is in fact the definition of your cash flow. However, my experience, and I think yours too, would tell you that current cash flow is not a ve...
by FinancialDave
Sat Mar 22, 2014 1:48 pm
 
Forum: Investing - Theory, News & General
Topic: Is yield on cost (YOC) a useful metric?
Replies: 36
Views: 1249

Re: Is yield on cost (YOC) a useful metric?

I will submit again that your initial purchase price, and even the dividend history of any holding over a particular period of time, will do nothing to enable you to choose the "correct" option going forward Randolph, I will actually agree that there is little I can do to pick the "c...
by FinancialDave
Fri Mar 21, 2014 8:56 pm
 
Forum: Investing - Theory, News & General
Topic: Is yield on cost (YOC) a useful metric?
Replies: 36
Views: 1249

Re: Help me settle a debate -- Risk in Retirement

Leesbro63 wrote:When in doubt, I generally split the difference. So your middle approach would appeal to me (although I, personally, would not want the hassle of rental property, especially as I aged)


Sometimes the first response is the best, however, I am not a fan of rental property either.

fd
by FinancialDave
Fri Mar 21, 2014 6:40 pm
 
Forum: Investing - Theory, News & General
Topic: Help me settle a debate -- Risk in Retirement
Replies: 61
Views: 4210
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