Bogleheads.org

I knew a guy who slept in a tree, not too far from a school gym where he showered, kept his stuff in a locker, etc.

Extending the principle to the 6th dimension is left as a [ knotty ] exercise for the reader. A dead cat bounce into hyperspace? Or maybe Schrodinger's cat playing with a ball of string. Back to the original question, I see that my original response has been misinterpreted by at least one person. T...

IlliniDave wrote:The most general definition I've heard is that any deferral of current consumptive spending to offset future needs is an investment. It gives an interesting perspective as well.

That's essentially the economic definition of savings.

An investor exchanges current money for future money (e.g. business profits, stock/bond dividends, rental income, etc.) The amount that should be exchanged for those future cash flows depends on factors such as those mentioned by Rick. If no future cash flows are involved, and you are just relying o...

*poof* There is no abracadabra. If based on interest/mortality assumptions, $208K is needed at retirement for an income stream (valued either through what an insurer is pricing an annuity at, or doing your own math the way an insurer would) -- and if you had $200K with stock/bond expected return as...

Liability matching is a specific strategy for hedging risks. What I was describing works for any strategy. And doesn't require bonds/cash for income either. It's merely an approach for choosing an asset allocation, based on expected returns, to generate the assets needed for retirement. It's not a f...

I think I misunderstood what Harold was saying a while back--I though he was saying there was a way to compute an AA as a function required income, and based on the discussion since then it seems as though in general there is not. Sure there is. Most people investing for retirement are investing fo...

You cannot get a risk free 3.25% return. You have to compare paying off the mortgage with a risk free investment to make it apples to apples. You do? You can NEVER guarantee a riskier investment will beat the risk-free return. With that thinking, no one would ever invest in anything but risk-free a...

It's just absurd to advocate that a retiree with 110% of their income met by pension/SS (like 2beachcombers) should be at the same AA as one living entirely on their nest egg. Your frustration may come from misunderstanding what people are saying. Those two people have different retirement income n...

IlliniDave wrote:So my apologies If I seem obtuse or especially dense.

No apologies needed. You seemed neither obtuse nor dense. To the contrary, your comments were very thoughtful.

I am about to head to Canada. I will have a Chase Sapphire card and a Capital One Venture card (neither of which has chip and PIN, incidentally). Neither is subject to foreign transaction fees. My intention was to use the Chase card because I don't really have the inclination to work the Capital One...

Hi Dave, a couple of thoughts. I haven't heard anyone argue it's more precise, it's just a different vantage point. If someone is worried about converting back to the income stream, why wouldn't they just use the current estimate from SSA that they would have derived the PV from? I should have worde...

How much different is this investing compared to personal investing (I understand different regulations, management and such, but Im thinking of general theory)? The theory is that pension plans aren't independent of the overall financial structure of the firms, and that firms should decide on the ...

Clearly many reasonable and thoughtful people are uneasy with the idea Rather than "unease", it probably just comes down to two main observations: 1) Despite appearances to the contrary, for most people asset allocation isn't the goal -- retirement income is. Social Security is already a ...

Don't hold your breath. And while Quickfoot's advice is applicable to more experienced runners This contradicts itself (as an experienced runner, I'm a bit curious whether this idea has any merit). Frankly, I don't see myself making holding my breath part of my routine. But if something's ultimatel...

#3 Breathe properly, if you are breathing correctly you will not get lactic acid build up. Your breathing / heart rate should NEVER feel out of control, if you start panting / gasping for air you will oxygen starve your muscles, cramp up and have to stop running. While running breath in through you...

NorCalDad wrote:It is rare in high school.

You are right. I must have just seen it happening a couple of times, and assumed it was happening all the time.

As someone who runs ~40 miles a week, runs marathons, etc -- I figured I should chime in. I thought Quickfoot's list was very good. Though I wouldn't necessarily agree with every bit of it, it's a much better and more thorough list than I would have come up with. I'm actually going to try the breath...

In general, employees are not seeing reductions in the actuarial value of their vested accrued benefit. Any entities attempting to cut such benefits will face stiff legal challenges. You may be correct -- in general. I'd just like to reiterate that you are mistaken about Connecticut. I don't know h...

Look, I'm not going to take the time to hash out details here. But what you are seeing is entities wrestling with the immensely difficult problem of providing benefits without proper funding, and with legal constraints to not cut the benefits that have been truly accrued. You're seeing probing in al...

It will most likely perform better than an actively traded, developing market, high-yield bond fund. The science of market behavior tells us that, and that is a perfectly reasonable scientific response. Even that is an open question (essentially a version of the equity premium puzzle). What you're ...

And public sector schemes are also under threat, and it's hard to price for that, as (contrary to what I had thought) existing benefits vested are not necessarily protected. I'll back you up on that. In Connecticut, with the astonishingly fervent support of the huge national unions representing pub...

Complicating things are that private sector DB/ Final Salary schemes are under huge threat I believe-- I think IBM was the poster child for moving everyone to 'cash balance' schemes at a significant loss to some employees? There is a huge misnomer associated with this line of thinking. It is probab...

This is a good analogy. But the difference is the accuracy of the predictions (and incorporating underlying fundamentals, rather than merely the patterns found in data). Clearly extensive effort has been put into creating impressive models, but that's only part of what makes science. Maybe it'll ev...

Sigh... The point I am trying to make is that I think a CASH BALANCE pension plan is a very different animal from a traditional pension plan, and that is the issue I am trying to understand better. A cash balance plan is much more akin to an IRA than a traditional pension plan, I believe. It is inc...

Weather is quite unpredictable and likely chaotic; there is no way to tell how many hurricanes we will get this year. We cannot tell when a man may die until very near the event itself. The simultaneous position and velocity of an electron are proven to be unknowable. Yet meteorology, actuarial pre...

Quite obviously not science – or at least if it is science, it’s more like the rudimentary days of alchemy and phlogiston, rain following the plow, the liver circulating blood, etc. The financial industry expends great efforts creating an illusion of a great body of science that eager investors are ...

Is that normally the preferred option? I guess I assumed that I'd get better returns with it by rolling it over and investing it manually, however since it currently returns 3.280%, and says it will always return the 30 year US treasury rate, maybe this isn't a bad option to leave as is after all.....

I have the option of both annuity payments or lumpsum. However since I'm in my late twenties I think the likelihood that I'll stay with this employer until retirement is low. Assuming I do leave and go work somewhere else I would take the current lumpsum balance and roll it into an IRA. By doing th...

If it is indeed defined benefit as your link describes then does that mean this is in fact as risky as a traditional pension plan? You have it backwards. With a defined benefit plan, the plan sponsor retains the risk of providing the benefit (i.e. it is "as risky", but that's less risky t...

It wouldn't be for psychological reasons; I want to optimize financially. Presuming someone has already established how much risk to take with his investments, paying it off is generally going to be the optimal financial decision (unless borrowing to invest is part of his plan -- in which case the ...

Emotional/psychological self gratification for the tipper This is the answer (along with the ability of merchants to impose a feeling of shame and obligation on the customer). People feel like they've done good once they have tipped -- gives them a small glow. And an astute observation I picked up ...

I'm not seeing why avoiding a car should be an objective. The concepts are not as unrelated as one might think. Cars are a constant danger to pedestrians -- and the presence of cars is directly counter to the mission of a safe walkable environment. Tens of thousands of walkers are injured or killed...

first, the US DOL says that your plan is a defined benefit plan (DBP) Noting that a cash balance plan is a defined benefit plan is important because the plan sponsor retains risk that is otherwise held by a bondowner. The account balance of a participant in a cash balance plan providing interest cr...

I will say that "walkable" sometimes equates to crowded and congested and business district and lots of traffic noise (see New York, London, Amsterdam, Hong Kong). The irony is that what you are describing reflects the reality that the truly walkable areas are largely defiled by so many w...

Similar to what staythecourse wrote, an illuminating way to look at is that it doesn't matter . Well, of course it matters because one is going to do better over your investing lifetime than the other. But the reality is that we just do not know which. Taken to a little bit deeper level, across all ...

There really is a (conceptually) simple way to view owning a home. As with any investment not purely speculative in nature, it can be considered the present value of future cash flows. In the case of a home, that means the present value of future rents. By buying a home, you are effectively prepayin...

Miss Manners wrote: There is no such thing as an invoice for a wedding present. Close, but actually Miss Manners' article is entitled: " A wedding invitation is not an invoice ." Your "correction" was incorrect. Mine was a direct quote. More is below: There is no such thing as a...

It may not be obvious from a subway map of Boston, but you can get to/from the airport easily using mass transit. To get to the airport, take the subway to "South Station" and, from there, find the Silver line heading towards Logan airport. It will be a bus. Your 7 day pass will allow you...

momar wrote:Why do you think this is a new phenomenon?

Partly because traditional manners experts (Emily Post, Miss Manners, etc.) are appalled by the practice, and it runs counter to general principles of hospitality.

I honestly have no idea when it started (and am curious).

There is no such thing as an invoice for a wedding present. I am fascinated by the extent to which weddings are viewed through the lens of a financial transaction. I mean, pretty much by definition it's always been a financial transaction between the couple getting married. But now we're seeing eve...

Because I’m an investor not a speculator. There’s a fundamental difference between exchanging your money for defined income (bonds), anticipated earnings/dividend streams (stocks), or future rents (real estate) – and exchanging your money for nothing but metal (gold). Pure investing is buying cash f...

Valuethinker wrote:He was a failure as First Sea Lord.

And as the Atlantic points out, in that role he had a major effect on the 20th century and beyond. (The Churchill part is only the first four paragraphs.)

http://www.theatlantic.com/magazine/archive/2013/05/what-if-we-never-run-out-of-oil/309294/

MAP-21' which was part of a transportation bill The reason pensions are part of MAP-21 is because the law was intended to be "revenue-neutral". That is, government spending had to be exactly offset by government savings. Congress saw a way to get pension plan sponsors to temporarily pay m...

Good summary by cherijoh, but one point of clarification: This is done with a contract through an insurance company. Therefore the company is not taking on the risk that some of the posters have implied. They are confusing this with a traditional "guaranteed benefit" pension plan. Cash bal...

Are Discobunny's calculations reasonable? No. What Discobunny's calculations are is a recognition that investing with an assumed rate of return higher than 30-year treasury rates will yield more than investing at 30-year treasury rates -- that's simply arithmetic. In reality, you are currently (or ...

Why shouldn't the OP opt for the $30,000 now? Because he has assessed how much overall risk he would like to take (i.e. an asset allocation) and includes bonds to reduce risk. (That is, his bonds may return lower than "the average 60/40", which is okay because he's not taking as much risk...

tfb wrote:The only question is whether the interest rate credited by the plan is good enough. What is it now? What is it tied to?

Soccer888 wrote:Interest is accrued based on your Account balance at the end of the prior quarter and the 30-year Treasury rate in effect for November of the preceding year.

What do people think Based on what you have said -- the clear answer is for you to keep the pension. You've decided on a 60/40 allocation, which tells me you've put some thought into the risk you'd like to take on, and realize bonds have a place in your portfolio. With your pension, you're getting ...

I'd take the money and run--very little to lose This is the reverse of the truth. At the moment, you could lose nothing -- whereas if you cash out you could lose it all. Your prior employer currently holds the risk of providing a defined benefit to you, which is fully insured by the PBGC (since you...

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