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Re: Can I get some alpha? (DFA / Wealthfront)

The trick to getting a return that exceeds the benchmark is to choose your benchmark carefully. Whether you should call this differential "alpha" is up to you.
by Garco
Wed Apr 09, 2014 1:46 pm
 
Forum: Investing - Theory, News & General
Topic: Can I get some alpha? (DFA / Wealthfront)
Replies: 58
Views: 2916

Re: What next after you have enough sort of.

So far, nobody who's laying out their retirement plan on this thread has mentioned insurance, specifically disability insurance. You can deplete your wealth pretty fast if you find yourself in need of long-term care. Your relatives, who in some cases you are planning to support through an inheritanc...
by Garco
Tue Apr 08, 2014 12:10 pm
 
Forum: Investing - Theory, News & General
Topic: What next after you have enough sort of.
Replies: 31
Views: 3344

Re: "The 4% rule and a dynamic retirement spending plan"

My "novel" (simple) plan is to use one or another version of a SWR based on all of the tax-deferred retirement funds that I've accumulated through my own work. I don't want the complication of a "dynamic retirement spending plan," and don't think I need it. But in light of the un...
by Garco
Sun Apr 06, 2014 11:36 am
 
Forum: Investing - Theory, News & General
Topic: "The 4% rule and a dynamic retirement spending plan"
Replies: 14
Views: 1605

Re: "The 4% rule and a dynamic retirement spending plan"

The canonical "4% SWR" (taking 4% in year 1 and incrementing the absolute dollar amount of the year 1 withdrawal by the rate of inflation) relies on two assumptions -- starting at age 65, and having 30 year end point. For someone who plans to retire at age 70, it's reasonable to set the en...
by Garco
Sun Apr 06, 2014 12:27 am
 
Forum: Investing - Theory, News & General
Topic: "The 4% rule and a dynamic retirement spending plan"
Replies: 14
Views: 1605

Re: [Poll] Which of These Types of Investments do you Own?

Among types of funds not mentioned, but which I own: Stable value fund, multi-asset fund.
by Garco
Tue Apr 01, 2014 11:11 am
 
Forum: Investing - Theory, News & General
Topic: [Poll] Which of These Types of Investments do you Own?
Replies: 24
Views: 2211

Re: Poll: how did you decide on stock/bond allocation?

I put "other" b/c I've been in the market ("retirement investing") for so long that I've handled this allocation decision differently in different eras. Because I'm approaching retirement soon, I have taken risk off but I am not at "age in bonds." Equities is about 50%,...
by Garco
Mon Mar 31, 2014 8:49 am
 
Forum: Investing - Theory, News & General
Topic: Poll: how did you decide on stock/bond allocation?
Replies: 35
Views: 1850

Re: First Speeding Ticket: What Would You Do?

I've been driving for more than 50 years, and have gotten about a ticket every 8-10 years. All for speeding. 1. Oregon, 2. Indiana. 3. Wisconsin. 4. New York. 5. Michigan. I do a lot of driving. Every one of these was a speed trap, i.e., a place where the speed limit either was not posted or changed...
by Garco
Mon Mar 31, 2014 12:11 am
 
Forum: Personal Finance (Not Investing)
Topic: First Speeding Ticket: What Would You Do?
Replies: 72
Views: 4093

Re: Statement of the Retirement Funding Problem

These days, I don't think anybody should absolutely count on their private or public pensions continuing to provide the same inflation-adjusted income over the entire period in retirement. At least not in America. and you certainly should not expect stocks or bonds to continue to exist, since they ...
by Garco
Fri Mar 28, 2014 1:42 pm
 
Forum: Investing - Theory, News & General
Topic: Statement of the Retirement Funding Problem
Replies: 89
Views: 5685

Re: Statement of the Retirement Funding Problem

I have a DB pension coming but it has no inflation protection and I'm not sure that was particularly common in corporate pensions. My father took his DB pension from Honeywell (then Allied Signal) at age 65. He lived to 95. Honeywell was a DJIA company (still in Fortune 100). The relative value of ...
by Garco
Wed Mar 26, 2014 11:32 am
 
Forum: Investing - Theory, News & General
Topic: Statement of the Retirement Funding Problem
Replies: 89
Views: 5685

Re: Are Vanguard Index Funds pure ??? Not So

Minor additional note. If you use the "completion index," i.e., VG extended market (VEXMX/VEMSX), it does not consist only of mid and small cap equities. According to M* X-Ray, it has 7% LC. So if you roll your own total market index, combining VFINX and VEXMX, you're blending two indexes ...
by Garco
Wed Mar 26, 2014 11:01 am
 
Forum: Investing - Theory, News & General
Topic: Are Vanguard Index Funds pure ??? Not So
Replies: 67
Views: 4261

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

I would divide my portfolio into two distinct parts. One part for my wife and me; the other part for our children. In my/my wife's part, I'd probably choose a portfolio with a moderate bent. In our children's portfolio, I'd choose an aggressive mix of assets, with a very high percentage of low cost...
by Garco
Fri Mar 21, 2014 1:01 pm
 
Forum: Investing - Theory, News & General
Topic: Help me settle a debate -- Risk in Retirement
Replies: 61
Views: 4218

Re: Do you love your job? What do you do?

I am now a Professor Emeritus If there is a better job in the world than being a Professor, its being Professor Emeritus. As to an research university academic career: There is no job in the world that can be as intellectually and personally challenging. But pay is lousy for the time spent in prepa...
by Garco
Mon Mar 17, 2014 8:56 am
 
Forum: Personal Finance (Not Investing)
Topic: Do you love your job? What do you do?
Replies: 134
Views: 10090

Re: How did you decide how much to save?

Our base savings rate has been 15% since 1975 -- in 401k. Beyond that, we saved enough to pay for two kids' private college education. Currently, as I'm edging toward retirement, we're saving about 75% of my salary in 401k and other supplemental tax deferred accounts. A key for us is that we never g...
by Garco
Fri Mar 14, 2014 9:37 am
 
Forum: Investing - Theory, News & General
Topic: How did you decide how much to save?
Replies: 119
Views: 9173

Re: Small Cap Tilting

All this effort to find the "G-spot" of asset allocation is fraught with problems for average investors, especially those like me who have a highly constrained set of choices in their 401k plan. If the funds that they have available aren't truly small or truly value, or if the premium real...
by Garco
Wed Mar 12, 2014 9:26 am
 
Forum: Investing - Theory, News & General
Topic: Small Cap Tilting
Replies: 84
Views: 6133

Re: Happy fifth birthday! [since the 2008-2009 market crash]

18.5% 5-year annualized rate for me (excluding my contributions from salary -- if those are included it's 19.6%). However, I prefer to reckon my gain from mid-October 2007, when my portfolio was at peak, rather than from March 9 when it was at bottom of the trough. I do pretty well from the mid-Octo...
by Garco
Mon Mar 10, 2014 11:40 am
 
Forum: Investing - Theory, News & General
Topic: Happy fifth birthday! [since the 2008-2009 market crash]
Replies: 54
Views: 3345

Re: Poll: Are you going to retire? And if so, when?

Your categories 50-60 and 60-70 overlap. If someone expects to retire at age 60, which category are they in? This is a common error in polls on this discussion board, despite the fact that Bogleheads are quite numerate. 50-59, 60-69, 70 or over would be better. I always assume this means [A, B) and...
by Garco
Mon Mar 10, 2014 12:26 am
 
Forum: Investing - Theory, News & General
Topic: Poll: Are you going to retire? And if so, when?
Replies: 38
Views: 2976

Re: Poll: Are you going to retire? And if so, when?

Darn it. I added an "undecided" option to the poll, and it got rid of the earlier responses. Please revote if you voted before the undecided option was available! Your categories 50-60 and 60-70 overlap. If someone expects to retire at age 60, which category are they in? This is a common ...
by Garco
Sun Mar 09, 2014 4:17 pm
 
Forum: Investing - Theory, News & General
Topic: Poll: Are you going to retire? And if so, when?
Replies: 38
Views: 2976

Re: Poll: Are you going to retire? And if so, when?

I will retire at age 70. I clicked the category 60-70 in the questionnaire. By "retire" I mean I will leave my principal place of employment, and I have no expectation of ever again doing any more work for pay -- either part-time or full-time. I read the "case for never retiring,"...
by Garco
Sun Mar 09, 2014 1:09 pm
 
Forum: Investing - Theory, News & General
Topic: Poll: Are you going to retire? And if so, when?
Replies: 38
Views: 2976

Re: Retirees: About your retirement

I never set retirement as a goal in my life. I set creative, productive, challenging work as a goal in my life. And I set having and raising a family as a goal in my life. Retirement was what would happen when I reached a point in career when I couldn't be as creative or productive as I had been, an...
by Garco
Sat Mar 08, 2014 9:38 am
 
Forum: Investing - Theory, News & General
Topic: Retirees: About your retirement
Replies: 55
Views: 5495

Re: To whom does the advice "max out your 401k" not apply?

Said another way - you were able to do all of it anyway, so the prioritization didn't matter. Yes. College is expensive. People complain about it constantly on the forum. I get it. No need to imply ignorance on my part to bolster your choices. it's a weird proposition not to maximize wealth. Anythi...
by Garco
Thu Mar 06, 2014 10:15 pm
 
Forum: Investing - Theory, News & General
Topic: To whom does the advice "max out your 401k" not apply?
Replies: 45
Views: 4713

Re: To whom does the advice "max out your 401k" not apply?

Lots of good advice, even ordered lists. Why exactly would you do the minimum on retirement savings and then prioritize kids college over the rest of it? Is that the catch all "reality" part? a. My basic goal was to arrive at point 6 with zero debt for me and everyone in my family (kids)....
by Garco
Thu Mar 06, 2014 4:20 pm
 
Forum: Investing - Theory, News & General
Topic: To whom does the advice "max out your 401k" not apply?
Replies: 45
Views: 4713

Re: Replace less than 80% of income in retirement?

To the OP. I'm just chiming in to reinforce the point that saving now is a lot more important than saving later, because of the magic of compound growth. If you can sustain 15-20% saving rate, as your salaries grow, your retirement "need" (80%, 70%) will simply take care of itself, if you'...
by Garco
Thu Mar 06, 2014 11:29 am
 
Forum: Investing - Theory, News & General
Topic: Replace less than 80% of income in retirement?
Replies: 52
Views: 3307

Re: [Nate Silver's] Message for Financial Advisors

Some time ago I also posted this note about Nate Silver, in which Silver offered a Serenity Prayer for Indexers:* "God give me the serenity to accept the things I cannot predict, the courage to predict the things I can, and the wisdom to buy index funds.” From IndexUniverse.com: http://www.etf....
by Garco
Thu Feb 27, 2014 2:11 pm
 
Forum: Investing - Theory, News & General
Topic: [Nate Silver's] Message for Financial Advisors
Replies: 38
Views: 2331

Re: Retirement: Protect Your Critical First Decade

Offshore wrote:Garco,

Would you define the 4 assets of you allocation?
I'm on the brink of retiring. But my portfolio is 50-25-15-10

Thank you.

Equities, real estate (not REIT), bond funds, stable value funds.
by Garco
Thu Feb 27, 2014 1:53 pm
 
Forum: Investing - Theory, News & General
Topic: Retirement: Protect Your Critical First Decade
Replies: 38
Views: 3556

Re: Retirement: Protect Your Critical First Decade

Anyhow, we discussed this topic when it first came out several weeks ago. Seems like a lot of Bogleheads are content to Stay The Course in retirement, often with close to 50/50 AA. Thus neither an Age In Bonds glidepath nor this new increased equity concept... Personally, I am one of the 50/50. It ...
by Garco
Thu Feb 27, 2014 1:03 pm
 
Forum: Investing - Theory, News & General
Topic: Retirement: Protect Your Critical First Decade
Replies: 38
Views: 3556

Re: Do you tilt? If so, how?

1. I have 73% domestic US, 27% international. 2. Of the total, 61% is LC, 39% is MC, SC (extended market). 3. Of the domestic only, 51% is LC, 49% is MC, SC (extended market). Story : I'm a "4 funder" (1 LC international, 2 LC domestic US, 1 MC-SC domestic US). My international percentage ...
by Garco
Tue Feb 25, 2014 8:09 am
 
Forum: Investing - Theory, News & General
Topic: Do you tilt? If so, how?
Replies: 44
Views: 3587

Re: Self protecting a SPIA against inflation

With a TIAA-CREF immediate annuity, you can mix in variable annuity funds (stock, real estate, bonds, etc.) with the basic or Traditional annuity, and this can provide inflation protection to the extent that the value of these other investments keeps up with inflation. This is what I've done, but t...
by Garco
Mon Feb 24, 2014 2:19 pm
 
Forum: Investing - Theory, News & General
Topic: Self protecting a SPIA against inflation
Replies: 47
Views: 2276

Re: Wade Pfau feautured in latest Money magazine

The article about Pfau and others is authored by Donna Rosato and Penelope Wang, and it's in the March 2014 issue (Vol. 43, Issue 2). Check your local library or newsstand. Abstract : "The article discusses retirement planning recommendations from retirement-planning experts as of February 2014...
by Garco
Mon Feb 24, 2014 1:46 am
 
Forum: Investing - Theory, News & General
Topic: Wade Pfau feautured in latest Money magazine
Replies: 8
Views: 2120

Re: Self protecting a SPIA against inflation

With a TIAA-CREF immediate annuity, you can mix in variable annuity funds (stock, real estate, bonds, etc.) with the basic or Traditional annuity, and this can provide inflation protection to the extent that the value of these other investments keeps up with inflation.
by Garco
Mon Feb 24, 2014 1:36 am
 
Forum: Investing - Theory, News & General
Topic: Self protecting a SPIA against inflation
Replies: 47
Views: 2276

Re: Front loading retirement plan contributions?

My contributions to a 457b are not limited to any specific amount per month or per pay period -- just by the annual allowable total, which is $23K given my age. As a result, I will have contributed $23K to my 457b by May. I'm doing the exact same thing with a supplemental 401k-type retirement accoun...
by Garco
Sun Feb 23, 2014 1:44 pm
 
Forum: Investing - Theory, News & General
Topic: Front loading retirement plan contributions?
Replies: 31
Views: 2489

Re: To whom does the advice "max out your 401k" not apply?

I think the application of common sense to general rules avoids any concerns like this. If you don't make enough to put a decent roof over your head, eat, live a little and max out retirement accounts, then this general rule does not apply to you. Realistically, in such a situation you don't need t...
by Garco
Sat Feb 22, 2014 11:32 am
 
Forum: Investing - Theory, News & General
Topic: To whom does the advice "max out your 401k" not apply?
Replies: 45
Views: 4713

Re: Where do you park cash?

"Cash" is cash for me. Immediately transferable/spendable. Demand deposit. Whatever the term might be. I keep a significant amount in a CMA with Fidelity, and I can quickly transfer cash into or out of this account to either my brokerage account or my bank (credit union) via electronic tra...
by Garco
Sat Feb 22, 2014 11:09 am
 
Forum: Investing - Help with Personal Investments
Topic: Where do you park cash?
Replies: 48
Views: 4980

Re: Estate Planning- Attorney fees $5.5K

We went through this entire process about 4 months ago. We chose an attorney (on advice of friends) from a middle-size full-service law firm that has a strong and long reputation in our community b/c we wanted good advice and continuity in case the particular lawyer retired or expired or departed th...
by Garco
Mon Feb 17, 2014 11:09 pm
 
Forum: Personal Finance (Not Investing)
Topic: Estate Planning- Attorney fees $5.5K
Replies: 34
Views: 3920

Re: To whom does the advice "max out your 401k" not apply?

Lots of good advice, even ordered lists. In my case, employer mandates plus reality meant. 1. Mandated 401k contribution (5%), overmatched by employer. 2. Save for house downpayment, purchased about 5 years into career with 30-yr mortgage. 3. Save for college educations (2 kids, no financial aid). ...
by Garco
Mon Feb 17, 2014 6:23 pm
 
Forum: Investing - Theory, News & General
Topic: To whom does the advice "max out your 401k" not apply?
Replies: 45
Views: 4713

Re: To whom does the advice "max out your 401k" not apply?

Lots of good advice, even ordered lists. In my case, employer mandates plus reality meant. 1. Mandated 401k contribution (5%), overmatched by employer. 2. Save for house downpayment, purchased about 5 years into career with 30-yr mortgage. 3. Save for college educations (2 kids, no financial aid). 4...
by Garco
Mon Feb 17, 2014 4:25 pm
 
Forum: Investing - Theory, News & General
Topic: To whom does the advice "max out your 401k" not apply?
Replies: 45
Views: 4713

Re: Safe Withdrawal Rate

This is interesting. I would have thought the purpose of setting a SWR was to determine how much one needed to save for retirement. [extended but very useful text omitted for sake of brevity here] A person's financial lifetime is an experience of successive approximations. Trying to engineer this f...
by Garco
Mon Feb 17, 2014 11:27 am
 
Forum: Investing - Theory, News & General
Topic: Safe Withdrawal Rate
Replies: 91
Views: 5730

Re: Safe Withdrawal Rate

I should call my approach the ""safe withdrawal rate"", because it is the basic approach that I'll apply to my tax deferred funds, which at this time are about 70% of my investment holdings. Because I will retire later than the age used in most SWR models, and because a substanti...
by Garco
Mon Feb 17, 2014 9:56 am
 
Forum: Investing - Theory, News & General
Topic: Safe Withdrawal Rate
Replies: 91
Views: 5730

Re: What was John Bogle thinking?!

Bogle's change of heart fits that old saw, "Necessity is the mother of invention." It's great that he gives due credit to serendipity, opportunity, and, well, ambition. Those are the kind of factors that I take into account when advising young people about their career choices.
by Garco
Mon Feb 10, 2014 12:30 pm
 
Forum: Investing - Theory, News & General
Topic: What was John Bogle thinking?!
Replies: 11
Views: 2723

Re: "The dangers of long-term care insurance"

Again, am I completely misguided here? LTCI might cover the probability aspect of the long tail (very rare events), but my understanding is that they all have a maximum total payout. You have a policy with a total maximum payout of $400,000 and go into a nursing home for 20 years, that policy not g...
by Garco
Sun Feb 09, 2014 12:01 pm
 
Forum: Personal Finance (Not Investing)
Topic: "The dangers of long-term care insurance"
Replies: 106
Views: 7562

Re: Your mortgage type, if any [POLL]

We had a 30-year conventional 8% mortgage, with 20% down payment, from 1976-2006. I was never tempted to pay it off, even at a time when everybody was refinancing and "taking money out" of their homes for other purposes (remodeling, college funds for kids, boats, cottages, etc.). When we b...
by Garco
Sun Feb 09, 2014 11:29 am
 
Forum: Personal Finance (Not Investing)
Topic: Your mortgage type, if any [POLL]
Replies: 63
Views: 3509

Re: omg, did I miss the buying opportunity in stocks?

The $500 I eagerly (IMPULSIVELY even) threw into my VG Extended Market fund at Monday's closing price is now up to $514.xx in value per my calculations. No expectation of "selling" anytime soon, but "buying low" is one half of the formula for great riches s... But I "bought...
by Garco
Sat Feb 08, 2014 2:03 pm
 
Forum: Investing - Help with Personal Investments
Topic: omg, did I miss the buying opportunity in stocks?
Replies: 54
Views: 6419

Re: omg, did I miss the buying opportunity in stocks?

There is no THE buying opportunity in stocks. 1. There are always numerous buying (and selling) opportunities -- over time, among markets, among market segments, among individual stocks, etc. 2. If you have no business increasing or overloading on stocks, one very good day in the market shouldn't ma...
by Garco
Sat Feb 08, 2014 1:31 pm
 
Forum: Investing - Help with Personal Investments
Topic: omg, did I miss the buying opportunity in stocks?
Replies: 54
Views: 6419

Re: What is your targeted annual retirement income in today'

Based on my current accumulation plus SS, using Firecalc I can safely project a target toward the upper end of the $100-150K range (gross annual income), inflation adjusted into the distant future. On the verge of retirement. Makes me happy. But not complacent.
by Garco
Sun Feb 02, 2014 9:56 pm
 
Forum: Investing - Theory, News & General
Topic: What is your targeted annual retirement income in today's $
Replies: 50
Views: 6251

Re: TIAA Real Estate and asset allocation -- REIT? Bond?

Good point, sscritic. I have looked at Yogibearbull's comments about TREA. He also has pointed out that TIAA has a net profit from the liquidity guarantee (insurance) that TREA purchases from the general account (that insurance is built into the expenses that all TREA holders must pay). IOW, both in...
by Garco
Sun Feb 02, 2014 3:26 pm
 
Forum: Investing - Theory, News & General
Topic: TIAA Real Estate and asset allocation -- REIT? Bond?
Replies: 64
Views: 2794

Re: TIAA Real Estate and asset allocation -- REIT? Bond?

I'm trying to market time this. 1. Green Street says in its Jan 7 press release that "Property appreciation has come to a virtual stop over the past several months, as the large increase in interest rates that occurred last summer continues to weigh on valuations." 2. TREA is nearing its ...
by Garco
Sun Feb 02, 2014 2:17 pm
 
Forum: Investing - Theory, News & General
Topic: TIAA Real Estate and asset allocation -- REIT? Bond?
Replies: 64
Views: 2794

Re: Small/Mid Cap Exposure

Pairing a US Total Market Index with the Extended Market Index is a great idea. This would enhance your allocation to both mid-cap and small-cap stocks. The US Total Stock Market Index has just over half of its market capitalization in the largest 100 companies! I am a big fan of the mid-cap area o...
by Garco
Sun Feb 02, 2014 1:12 pm
 
Forum: Investing - Theory, News & General
Topic: Small/Mid Cap Exposure
Replies: 27
Views: 2779

Re: Doing my taxes the first time - very confused

I've used TT for many years without any major problem. One thing I learned from past experience is that occasionally TT has a glitch or hasn't quite caught up with changes in tax law at federal or in particular state levels. For this reason I usually wait til mid-late February to do my taxes to give...
by Garco
Sun Feb 02, 2014 1:02 pm
 
Forum: Personal Finance (Not Investing)
Topic: Doing my taxes the first time - very confused
Replies: 15
Views: 1408

Re: TIAA Real Estate and asset allocation -- REIT? Bond?

The main reason why I plan to stay with TIAA-CREF when I retire is to hold TREA, and secondarily at this point to preserve my right to annuitize my TIAA Traditional holdings with their favorable "vintages" (which are based on the year the money was deposited in the fund). Transferring mone...
by Garco
Sun Feb 02, 2014 12:47 pm
 
Forum: Investing - Theory, News & General
Topic: TIAA Real Estate and asset allocation -- REIT? Bond?
Replies: 64
Views: 2794

Re: TIAA Real Estate and asset allocation -- REIT? Bond?

manwithnoname: I have no idea what you're talking about in that last paragraph. The fact that TREA is a distinct investment vehicle from the TIAA general account doesn't mean either one is leaching off the other, or being a "vampire squid," whatever the heck that glittering image means. Se...
by Garco
Sat Feb 01, 2014 6:17 pm
 
Forum: Investing - Theory, News & General
Topic: TIAA Real Estate and asset allocation -- REIT? Bond?
Replies: 64
Views: 2794

Re: TIAA Real Estate and asset allocation -- REIT? Bond?

As ResearchMed wrote.... There has long been (maybe always since TREA's inception in 1995?) a restriction on sales (withdrawal of money) from TREA to once per calendar quarter. You could take all your money out with a single phone call. You could take half of it out on March 31, and half out on Apri...
by Garco
Sat Feb 01, 2014 12:06 pm
 
Forum: Investing - Theory, News & General
Topic: TIAA Real Estate and asset allocation -- REIT? Bond?
Replies: 64
Views: 2794
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