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Re: Need help deciding whether to sell inherited business

All good points, jimb. Another question to be determined is whether the brother with 50% ownership is working the business and getting pay and fringe benefits in excess of fair and reasonable compensation, thereby resulting in a paper loss.
by Frugal Al
Tue Jul 29, 2014 12:12 pm
 
Forum: Personal Finance (Not Investing)
Topic: Need help deciding whether to sell inherited business
Replies: 10
Views: 414

Re: Best way to reach initial allocation in a bull market?

Leerar, you need to learn how the Sharpe ratio works before using it to make a point.
by Frugal Al
Tue Jul 29, 2014 11:58 am
 
Forum: Investing - Theory, News & General
Topic: Best way to reach initial allocation in a bull market?
Replies: 28
Views: 2427

Re: Pension Lump Sum vs Immediate Annuity

I know there are a ton of other personal factors in the decision, all of which require consideration, of course. These seem to have been well covered in previous topics. In my case, the "retirement" annuity is to be purchased by my employer from an insurance company and seems to be compet...
by Frugal Al
Mon Jul 28, 2014 9:43 am
 
Forum: Personal Finance (Not Investing)
Topic: Pension Lump Sum vs Immediate Annuity
Replies: 4
Views: 556

Re: Vanguard quietly adds longevity annuities

In addition to TIPS, the insurance companies are also able to hedge annuity longevity risk and inflation risk through the sale of life insurance. In general, the insurance companies are long life insurance and high inflation, as was mentioned above, reduces the life insurance payments in real dolla...
by Frugal Al
Mon Jul 28, 2014 8:41 am
 
Forum: Investing - Theory, News & General
Topic: Vanguard quietly adds longevity annuities
Replies: 76
Views: 5086

Re: Ditch car and commute to work in 250cc scooter in Raleig

Wow i'm shocked at how many people say not to get a motorbike due to safety. In Europe these are very very common. Their popularity in Europe and Asia makes them safer--drivers are more aware of cyclists around them. Also the commutes are generally much shorter in those regions, and at slower speed...
by Frugal Al
Sat Jul 26, 2014 6:50 am
 
Forum: Personal Consumer Issues
Topic: Ditch car and commute to work in 250cc scooter in Raleigh?
Replies: 73
Views: 5319

Re: $32k Subaru Outback or $14k Mitsubishi Outlander Sport

In my department of 20 we've now got 4 Outback owners, and they all seem to love them. As with GM, Honda, and Toyota, Subaru is not without its issues. They are apparently suffering teething problems with the FB series, 4 cyl, engine they introduced in 2010/2011 http://www.nj.com/news/index.ssf/201...
by Frugal Al
Wed Jul 23, 2014 7:41 am
 
Forum: Personal Consumer Issues
Topic: $32k Subaru Outback or $14k Mitsubishi Outlander Sport
Replies: 38
Views: 4069

Re: What about the 2015 Volvo XC60?

Browser, I think the XC-60 looks pretty good. It has had a few issues with oil consumption complaints, but they are not widespread--hopefully those issues have been resolved (rings/seals). I wouldn't touch the new for 2015 4 cyl engines and trannies--too new. I suspect if you stick with the 6 cyl ve...
by Frugal Al
Tue Jul 22, 2014 9:51 am
 
Forum: Personal Consumer Issues
Topic: What about the 2015 Volvo XC60?
Replies: 6
Views: 770

Re: Poll - Do you use Quicken?

Windows version. Been using it about 20 years--no problems. I had a couple glitches when my bank changed their system, but was able to recreate data due to diligent back-up protocol. I use all features. I find the fingertip history, charting, graphing, cashflows, balance sheets, aggregation, etc., t...
by Frugal Al
Tue Jul 22, 2014 7:27 am
 
Forum: Personal Finance (Not Investing)
Topic: Poll - Do you use Quicken?
Replies: 66
Views: 3286

Re: SPIA quotes from Vanguard

3) This has no meaning in the absence of a comparative context. It is equally valid to say "Take joy in the low cost of guarantees." I actually agree somewhat with this point (see my edit). My point is that all guarantees come with a price, and often it's quite high. Today, over an averag...
by Frugal Al
Sun Jul 20, 2014 1:51 pm
 
Forum: Personal Finance (Not Investing)
Topic: SPIA quotes from Vanguard
Replies: 8
Views: 1135

Re: SPIA quotes from Vanguard

With caveats: * The internal rate of return of a SPIA is meaningless. In the context that we don't know when we might pass on, thus making the time element rather nebulous. * It is the monthly/yearly guaranteed lifetime income that's important. Guaranteed up to the given state's solvency fund, usua...
by Frugal Al
Sun Jul 20, 2014 1:27 pm
 
Forum: Personal Finance (Not Investing)
Topic: SPIA quotes from Vanguard
Replies: 8
Views: 1135

Re: Cash out pension?

OP used 4% real, which I would not necessarily call the "optimistic view." It seems like a good, middle-of-the-road estimate to me. I didn't have time to crunch the numbers but it looks like it is probably best to take the lump. I do think using 4% real is too optimistic an estimate going...
by Frugal Al
Fri Jul 18, 2014 4:58 pm
 
Forum: Investing - Help with Personal Investments
Topic: Cash out pension?
Replies: 30
Views: 1645

Re: Whole Life Conundrum

IRR = 2.066% worst case. You are also getting the death benefit which you need. It's not a total disaster... You're right, just a partial disaster. Only in our current interest rate environment would this seem reasonable. Bluemarlin's suggestion to 1035 it to a low cost Vanguard annuity is a good o...
by Frugal Al
Thu Jul 17, 2014 9:59 am
 
Forum: Personal Finance (Not Investing)
Topic: Whole Life Conundrum
Replies: 22
Views: 1644

Re: Newbie whole life insurance policy question

"Life insurance adds a layer of safety next to your investments. I was in this business in 2008 as the world fell apart. I saw first-hand older clients tell us that they were so happy they had CV that did not lose value when they watched their investments dip close to 40%. Every one of them wi...
by Frugal Al
Thu Jul 17, 2014 5:16 am
 
Forum: Investing - Help with Personal Investments
Topic: Newbie whole life insurance policy question
Replies: 30
Views: 2333

Re: Oil Change due: Synthetic vs Regular Oil

Realistically if the car doesn't normally see cold starts approaching zero F or lower, the difference in cold start performance relating to engine life of a dino vs synthetic is probably 650,000 miles vs. 700,000 miles. IE, something else will fail on your car before oil related wear takes it out. ...
by Frugal Al
Wed Jul 16, 2014 9:30 am
 
Forum: Personal Consumer Issues
Topic: Oil Change due: Synthetic vs Regular Oil
Replies: 33
Views: 2786

Re: Oil Change due: Synthetic vs Regular Oil

It's actually been found that synthetic oil will prevent "wear matting " not so sure this is an issue with today's engines , but the reason why I don't use synthetics in cars that the manufacture do not recommend using it . I think you mean wear "mating," not matting. The claim ...
by Frugal Al
Wed Jul 16, 2014 7:34 am
 
Forum: Personal Consumer Issues
Topic: Oil Change due: Synthetic vs Regular Oil
Replies: 33
Views: 2786

Re: Newbie whole life insurance policy question

This is his reply to me, I post it just to know how to respond to his questions. You don't have to respond to his questions and you don't have to meet with him. I'm not saying to be rude, but to rebut his arguments is an act in futility for a layperson--they are well indoctrinated. He may truly bel...
by Frugal Al
Wed Jul 16, 2014 5:26 am
 
Forum: Investing - Help with Personal Investments
Topic: Newbie whole life insurance policy question
Replies: 30
Views: 2333

Re: Oil Change due: Synthetic vs Regular Oil

How many miles are you driving between oil changes? My concern for you is your short trip usage and only changing every 6 to 8 months. A significant number of short trips constitutes severe use. Severe use and only changing twice a year may not be optimal, depending on the number of miles you're dri...
by Frugal Al
Mon Jul 14, 2014 2:21 pm
 
Forum: Personal Consumer Issues
Topic: Oil Change due: Synthetic vs Regular Oil
Replies: 33
Views: 2786

Re: Ditch car and commute to work in 250cc scooter in Raleig

freebeer wrote:Kymco is #1 brand in Taiwan and high quality - no need to pay the Honda/Yamaha/etc.

Agreed, Kymco makes an excellent scooter. I've ridden them many times. My only reservation is that they don't have the parts distribution in the US that Honda/Yamaha/Suzuki have.
by Frugal Al
Mon Jul 14, 2014 1:20 pm
 
Forum: Personal Consumer Issues
Topic: Ditch car and commute to work in 250cc scooter in Raleigh?
Replies: 73
Views: 5319

Re: Ditch car and commute to work in 250cc scooter in Raleig

I would never consider a 250cc scooter, too slow and the dinky wheels are not great for stability. Everything in vehicle design is a compromise. There's more to motorcycle/scooter stability than just the wheel size: rake/trail, wheelbase, suspension compliance. Many of the the larger scooters have ...
by Frugal Al
Mon Jul 14, 2014 1:11 pm
 
Forum: Personal Consumer Issues
Topic: Ditch car and commute to work in 250cc scooter in Raleigh?
Replies: 73
Views: 5319

Re: SPIA pricing and risk beyond 30 years

I'm wondering if my assumptions of how annuities are priced are wrong, or if the SPIA market is really this competitive? The best SPIA prices are, indeed, very competitive and efficient, but you are also cherry-picking the most competitive prices, and perhaps with little regard to a company's finan...
by Frugal Al
Mon Jul 14, 2014 8:16 am
 
Forum: Investing - Theory, News & General
Topic: SPIA pricing and risk beyond 30 years
Replies: 5
Views: 1162

Re: Imputed income (rent) Owner occupied houses.

I am simply fascinated that Bogleheads who analyze investment portfolios to multiple decimal places do not analyze their imputed income and its related housing expenses. I'm certain there are many Bogleheads who DO analyze imputed income and housing expenses, especially those who are nearing retire...
by Frugal Al
Sun Jul 13, 2014 7:26 am
 
Forum: Investing - Theory, News & General
Topic: Imputed income (rent) Owner occupied houses.
Replies: 21
Views: 2368

Re: Ditch car and commute to work in 250cc scooter in Raleig

- I would never consider a scooter based on 'manly' reasons. I'm sorry, but that fails the man test unless you're < 17 or over 70. If you want a small bike, get a 250cc. I know a few Harley riders that also ride scooters occasionally--they're different experiences. I also know which one I'd prefer ...
by Frugal Al
Sat Jul 12, 2014 12:05 pm
 
Forum: Personal Consumer Issues
Topic: Ditch car and commute to work in 250cc scooter in Raleigh?
Replies: 73
Views: 5319

Re: Ditch car and commute to work in 250cc scooter in Raleig

I used to have a 250cc Honda Helix scooter that would go about 80 mph or so, two-up, with no problem. I believe that model has been discontinued. There is a replacement that has just been released I believe. There's also the Suzuki Burgman line that would be no problem in traffic. Having said that, ...
by Frugal Al
Sat Jul 12, 2014 8:14 am
 
Forum: Personal Consumer Issues
Topic: Ditch car and commute to work in 250cc scooter in Raleigh?
Replies: 73
Views: 5319

Re: Repair or replace old Taurus?

The car is done, kaput, rolling scrap iron. You've gotten good value out of it. Time to move on.
by Frugal Al
Fri Jul 11, 2014 10:52 am
 
Forum: Personal Consumer Issues
Topic: Repair or replace old Taurus?
Replies: 32
Views: 2765

Re: $47,000 cash now or $330 per month for life

Really, the rate he should have considered was the 5.395%, which is the rate that makes the $47,000 equal to the $330 monthly annuity over 19 years. Really, the rate to be considered should, at a minimum, be the rate Cruncher pointed out, 5.75%, as the life expectancy per the SSA Life Expectancy ta...
by Frugal Al
Fri Jul 11, 2014 8:31 am
 
Forum: Investing - Help with Personal Investments
Topic: $47,000 cash now or $330 per month for life
Replies: 33
Views: 4955

Re: $47,000 cash now or $330 per month for life

It's theoretical in the sense that you are calculating the value based on a never ending stream of payments (perpetuity), but in reality the stream of payments is finite (annuity) as it only goes to the end of ones life. Music_man, with all due respect, I think you are the only one calling it theor...
by Frugal Al
Thu Jul 10, 2014 2:28 pm
 
Forum: Investing - Help with Personal Investments
Topic: $47,000 cash now or $330 per month for life
Replies: 33
Views: 4955

Re: $47,000 cash now or $330 per month for life

Good points on the longevity expectation, Cruncher. And given that the SSA life expectancy tables includes a necessarily broad demographic, we might even assume slightly better than average longevity since the subject 64 year-old is noted to be in good health. At just 22 years longevity, the IRR inc...
by Frugal Al
Thu Jul 10, 2014 10:47 am
 
Forum: Investing - Help with Personal Investments
Topic: $47,000 cash now or $330 per month for life
Replies: 33
Views: 4955

Re: $47,000 cash now or $330 per month for life

It's also important to note, that 8.4% is really theoretical. It's not at all theoretical; it's the annuity payout rate: $330*12/47000=0.084. Can't get simpler than that. I never said it was the IRR. As for the IRR over an average lifespan, 5.5% tests very nicely against historical average inflatio...
by Frugal Al
Thu Jul 10, 2014 8:17 am
 
Forum: Investing - Help with Personal Investments
Topic: $47,000 cash now or $330 per month for life
Replies: 33
Views: 4955

Re: $47,000 cash now or $330 per month for life

Definitely hard to come up with an argument NOT to take the $330 annuity, unless reasonable longevity is an issue. Even if one anticipates more normalized payout rates in the future, say 8.0% for a 65 year old male, the 8.4% payout available today at age 64 far outpaces that.
by Frugal Al
Thu Jul 10, 2014 7:17 am
 
Forum: Investing - Help with Personal Investments
Topic: $47,000 cash now or $330 per month for life
Replies: 33
Views: 4955

Re: Using a variable annuity to pre-fund an SPIA

Shop extensively. I discovered that annuity cos change features-pricing fairly often and rapidly. Take a month or two to shop, get some free dinners, and you will thoroughly understand their workings. This is actually questionable advice; some annuity peddlers can be very persuasive. The best way t...
by Frugal Al
Tue Jul 01, 2014 12:06 pm
 
Forum: Investing - Help with Personal Investments
Topic: Using a variable annuity to pre-fund an SPIA
Replies: 30
Views: 1347

Re: Buy A New Windows Computer Now?

My 2010 Dell computer works great and has never needed any repairs. That being said, I like new technology and my experience has been that it's a huge PITA if you wait for a hard drive crash to replace your machine. I would like to get a new computer with solid state hard drive.Any thoughts? You ha...
by Frugal Al
Thu Jun 26, 2014 8:58 am
 
Forum: Personal Consumer Issues
Topic: Buy A New Windows Computer Now?
Replies: 53
Views: 2853

Re: SPIA and Inflation Interview

First and foremost, if possible, one should maximize the best inflation indexed annuity there is: Social Security.
by Frugal Al
Thu Jun 26, 2014 8:38 am
 
Forum: Investing - Help with Personal Investments
Topic: SPIA and Inflation Interview
Replies: 9
Views: 693

Re: Why is lump sum payout for pension so low?

The discount rates have been tinkered with in recent years because the fed has suppressed interest rates, and corporations and other pension providers sought relief from the lump sum "inflation" that was pushing the lump sums up quite high. A new rule was passed to allow the use of corpor...
by Frugal Al
Thu Jun 26, 2014 8:00 am
 
Forum: Personal Finance (Not Investing)
Topic: Why is lump sum payout for pension so low?
Replies: 20
Views: 1774

Re: Pension - lump sum or leave it

...the interest "look-back" provision of the pension plan does impact the lump sum amount but it's not something that is controllable by the participant and the particular rate set for a particular "look-back" month varies over time just like any other month, i.e. you can't &quo...
by Frugal Al
Mon Jun 23, 2014 11:57 am
 
Forum: Personal Finance (Not Investing)
Topic: Pension - lump sum or leave it
Replies: 40
Views: 3600

Re: Pension - lump sum or leave it

Just wanted to re-visit this post briefly since I felt the OP was being steered toward a benefit at 65 and I don't think it's a slam dunk... I don't think it's a slam dunk either,but the OP can't even take the lump for two years or so. The look-back month can have an impact when rates are so change...
by Frugal Al
Sat Jun 21, 2014 6:14 pm
 
Forum: Personal Finance (Not Investing)
Topic: Pension - lump sum or leave it
Replies: 40
Views: 3600

Re: ? Best car for a new driver

Livesoft, I love the narrative driving concept. It really drives home (pun intended) the fact that there's more to driving than the mechanics of driving, memorizing the traffic laws, and keeping your eyes on the car ahead. Too many drivers think they can do other things while driving because they ar...
by Frugal Al
Sat Jun 21, 2014 6:01 pm
 
Forum: Personal Consumer Issues
Topic: ? Best car for a new driver
Replies: 41
Views: 1334

Re: synthetic motor oil?

Speaking of Subauru maintenence, my wife was told the other day that the upcoming Outback 30000 mile service runs about $600. This includes replacing brake fluid, air filter, fuel filter, anti-freeze, differential fluid and spark plugs. Hard to believe those have be done at 30K, although air filter...
by Frugal Al
Sat Jun 21, 2014 9:41 am
 
Forum: Personal Consumer Issues
Topic: synthetic motor oil?
Replies: 17
Views: 1197

Re: Pension decision: Monthly benefit vs. lump sum

+1 Sbashore, the lump sums are a poor deal; moreover, the OP would seem to have little need for it. Over 35 years they'd need about an 8% return to make the lump sum worthwhile--better off with the full pension.
by Frugal Al
Fri Jun 20, 2014 9:00 am
 
Forum: Investing - Help with Personal Investments
Topic: Pension decision: Monthly benefit vs. lump sum
Replies: 10
Views: 842

Re: Pension Lump Sum - Impact of Higher Corporate Rate

After reading everyone's input, it does appear that an outside annuity may cost more than the lump sum offered to the employee. That is quite an interesting situation and I would think that companies should now be happy when one takes the lump sum. However, one also wonders if my company has a busi...
by Frugal Al
Tue Jun 17, 2014 8:55 am
 
Forum: Personal Finance (Not Investing)
Topic: Pension Lump Sum - Impact of Higher Corporate Rate
Replies: 16
Views: 1277

Re: Annuitizing for retirement - what if the market is down?

To be financially independent (and have the option for ER) by somewhere between age 45 (2019) and 50 (2024)... SPIAs are relatively efficient even with minimal mortality credits at this age because there is no strong bequest motivation . I wouldn't say they are that efficient, and I'd actually say ...
by Frugal Al
Tue Jun 17, 2014 6:09 am
 
Forum: Investing - Help with Personal Investments
Topic: Annuitizing for retirement - what if the market is down?
Replies: 43
Views: 3899

Re: Talk me out of buying a Porsche Convertible. DISASTER!!!

I specifically asked him for a pre-purchase inspection. I specifically asked if there was anything wrong with the car besides the clutch. The seller, and the shop told me there was nothing wrong with the car. In the other thread you said the car had a known IMS bearing problem in addition to needin...
by Frugal Al
Tue Jun 17, 2014 5:20 am
 
Forum: Personal Consumer Issues
Topic: Talk me out of buying a Porsche Convertible. DISASTER!!!
Replies: 45
Views: 6380

Re: Annuitizing for retirement - what if the market is down?

(1) Do you agree with the conclusions above regarding SPIAs being the best choice for my situation? Or have I failed to consider a better approach to fully matching the non-discretionary expense floor in a taxable account in (potentially) early retirement? I don't think we know what your situation ...
by Frugal Al
Mon Jun 16, 2014 5:51 am
 
Forum: Investing - Help with Personal Investments
Topic: Annuitizing for retirement - what if the market is down?
Replies: 43
Views: 3899

Re: Annuitizing for retirement - what if the market is down?

Delaying the purchase in the hopes that interest rates will rise thereby increasing his payout will also result in his joining the pool after some percentage of deaths have already occurred resulting in a lower payout from a lower mortality credit (after having adjusted the payout for the higher le...
by Frugal Al
Fri Jun 13, 2014 10:48 am
 
Forum: Investing - Help with Personal Investments
Topic: Annuitizing for retirement - what if the market is down?
Replies: 43
Views: 3899

Re: Any [iPhone] "Apps" you like?

HP12C emulator app (12E), or even the HP17BII app.
by Frugal Al
Thu Jun 12, 2014 12:01 pm
 
Forum: Personal Consumer Issues
Topic: Any [iPhone] "Apps" you like?
Replies: 50
Views: 3987

Re: Annuitizing for retirement - what if the market is down?

We plan to buy a 10 year deferred SPIA at 50, a 5 year deferred at 55, and an immediate at 60. Why? We plan to retire by 55, longevity risk is high for us so SPIAs make sense, they also allow us to maximize our spend rate early in retirement without worrying about running out of money at 90. We wil...
by Frugal Al
Thu Jun 12, 2014 4:47 am
 
Forum: Investing - Help with Personal Investments
Topic: Annuitizing for retirement - what if the market is down?
Replies: 43
Views: 3899

Re: Pension - lump sum or leave it

I'd like to think the numbers are computer generated, but I wonder if they got retyped. The 4 falls just under the 7 on a numeric keypad. The age 65 lump sum of $310.766.55 would be contingent on interest rates at that time. Is there an explanation in the paperwork stating that?
by Frugal Al
Tue Jun 10, 2014 3:18 pm
 
Forum: Personal Finance (Not Investing)
Topic: Pension - lump sum or leave it
Replies: 40
Views: 3600

Re: NY Times: interest rising in deferred-income annuities

Also in the article, Milevsky makes a good point about not loading up annuities with guarantees, which undoes the very features that make them a useful financial tool. “What worries me is a lot of people are buying a life annuity under the guise of longevity insurance,” Professor Milevsky said, “but...
by Frugal Al
Sun Jun 08, 2014 8:26 am
 
Forum: Investing - Theory, News & General
Topic: NY Times: interest rising in deferred-income annuities
Replies: 35
Views: 2416

Re: Pension - lump sum or leave it

At age 65, this is $22,824 per year, or a payout of 7.35%, which is quite good (in today's terms). (I get 6.8% at immediateannuities.com) And just a few weeks ago the payout at Immediate Annuities for a 65 year old male was 7.1%--not much different than the 7.35% pension payout. Who knows what it m...
by Frugal Al
Sun Jun 08, 2014 7:52 am
 
Forum: Personal Finance (Not Investing)
Topic: Pension - lump sum or leave it
Replies: 40
Views: 3600

Re: Pension - lump sum or leave it

Leerar, you are assuming the company is going through a de-risking process, which doesn't seem to be the case. Once again, it doesn't have to automatically be a win/lose situation for a company to offer a lump sum alternative. For the OP, there's probably no need to make the decision right now. I do...
by Frugal Al
Sat Jun 07, 2014 7:33 am
 
Forum: Personal Finance (Not Investing)
Topic: Pension - lump sum or leave it
Replies: 40
Views: 3600

Re: does frugality result in lower career ambition?

I'd say the frugality effect on career ambition varies from individual to individual, but generally it probably does result in reduced career ambition. For many consumers, the utility of income curve would tend to be very convex. I suspect for the very frugal it's concave. For those who are lucky en...
by Frugal Al
Wed Jun 04, 2014 8:48 am
 
Forum: Personal Finance (Not Investing)
Topic: does frugality result in lower career ambition?
Replies: 113
Views: 8370
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