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Re: Is investing more risky today today than before the inte

There's an easy argument to be made that in the Information Age, market pricing more efficiently incorporates information. So more of the expected returns are captured in the current price (people are willing to pay more for returns they see as certain). This would effectively reduce future returns....
by Harold
Thu Nov 20, 2014 11:03 am
 
Forum: Investing - Theory, News & General
Topic: Is investing more risky today today than before the internet
Replies: 30
Views: 2758

Re: How much is saved by taking mass transit to work?

Thinking beyond yourself, you could also consider your impact on others. By driving less, you'd reduce pollution and related negative health effects, and you'd reduce limited resources you are consuming (and the impact of providing those resources to you). In addition, you'd directly be making the s...
by Harold
Thu Nov 20, 2014 10:40 am
 
Forum: Personal Consumer Issues
Topic: How much is saved by taking mass transit to work?
Replies: 51
Views: 3394

Re: "Life Ins Imputed Income Offset"?

If your employer has its payroll system set up to account for a charitable institution being designated -- your W-2 simply won't show that imputed income as taxable. If your employer doesn't have such a setup, you will have to interact with payroll to ensure your taxable income is correctly reported...
by Harold
Mon Nov 03, 2014 9:35 pm
 
Forum: Personal Finance (Not Investing)
Topic: "Life Ins Imputed Income Offset"?
Replies: 7
Views: 1559

Re: 401k millionaire

Not quite right. Limits for 403(b), including employer contributions and both mandatory and optional employee contributions, are up around $53K per year, all tax sheltered. I came close to the limits my last few working years, when they were around $50,000 per year... 401(k) and 403(b) have the sam...
by Harold
Fri Oct 31, 2014 8:29 pm
 
Forum: Personal Finance (Not Investing)
Topic: 401k millionaire
Replies: 27
Views: 5012

Re: lump sum now vs pension later?

Look, I've given you all an easy to apply and accurate method for making this decision. Someone (e.g. #Cruncher) who loves spreadsheets could easily set up the calculation. You all can use this information or not., but I don't particularly care to argue about it. I will address statements made in th...
by Harold
Wed Oct 22, 2014 6:12 pm
 
Forum: Personal Finance (Not Investing)
Topic: lump sum now vs pension later?
Replies: 45
Views: 4233

Re: lump sum now vs pension later?

I offered an accurate approach to calculating IRR only because it was the direction the thread took before my arrival. While it would work, it probably overly complicates the decision. There's no need to make the decision complicated, since there's a completely straightforward approach. Choose appro...
by Harold
Wed Oct 22, 2014 8:19 am
 
Forum: Personal Finance (Not Investing)
Topic: lump sum now vs pension later?
Replies: 45
Views: 4233

Re: lump sum now vs pension later?

By IRR, I'm referring to the interest component only. To come up with an interest/mortality IRR, you're back to using life expectancy rather than probabilities of survival -- which is fine, but less accurate. Yeah, Jensen's Inequality is certainly in that textbook. That concept (whether from Actuari...
by Harold
Mon Oct 20, 2014 8:14 pm
 
Forum: Personal Finance (Not Investing)
Topic: lump sum now vs pension later?
Replies: 45
Views: 4233

Re: lump sum now vs pension later?

The way a pension actuary would quantify which choice was numerically better would be to compare the $101,040 to the actuarial present values of the three given annuity options. (This is somewhat equivalent to the oft-proferred advice to see what the cost of buying the annuity on the open market is....
by Harold
Mon Oct 20, 2014 6:27 pm
 
Forum: Personal Finance (Not Investing)
Topic: lump sum now vs pension later?
Replies: 45
Views: 4233

Re: Why not 100% Stocks?

Thank you. Maybe a better way to phrase my question is as such. If you had capital that you did not need for 15-30 years, what would your allocation be on THAT capital? If corporations (particularly US) have demonstrated, historically, to be a superior investment over long stretches AND if you beli...
by Harold
Mon Oct 13, 2014 4:31 pm
 
Forum: Investing - Theory, News & General
Topic: Why not 100% Stocks?
Replies: 274
Views: 21392

Re: Why not 100% Stocks?

I didn't read much of the thread, so I don't know the level of belittling. It might have been due to your original statement being somewhat loaded with essentially false presumptions. One thing I don't quite understand is why not weight the portfolio almost exclusively in stocks. Their return over t...
by Harold
Mon Oct 13, 2014 4:14 pm
 
Forum: Investing - Theory, News & General
Topic: Why not 100% Stocks?
Replies: 274
Views: 21392

Re: Buffett Says ‘No-Brainer’ to Get a Mortgage to Short Rat

The price of a home implicitly includes an assumption of future rent increases (as with any investment, it’s worth the present value of future cash flows). So a homebuyer pays rent (net of ongoing expenses) with expected inflation up front. What a homebuyer is paying over time is ongoing expenses, w...
by Harold
Sat Oct 11, 2014 7:48 am
 
Forum: Personal Finance (Not Investing)
Topic: Buffett Says ‘No-Brainer’ to Get a Mortgage to Short Rates
Replies: 77
Views: 9712

Re: Why do so many think their home is a foolproof investmen

A home is similar to a tax free, inflation adjusted, perpetual annuity. Its "payout" is equal to equivalent rent minus the cost of ownership. A 0.2% real return would just be icing on the cake. Deflation is probably its greatest enemy. But once it's paid for, even that is a secondary conc...
by Harold
Sun Sep 14, 2014 3:01 pm
 
Forum: Investing - Theory, News & General
Topic: Why do so many think their home is a foolproof investment?
Replies: 125
Views: 6607

Re: The Annuity Puzzlement

There's also the reality that people are very bad at assessing risk. Without their risk profile changing, they could go from a starry-eyed assessment of the returns from risky investments -- to a panicked assessment of how they could possibly live if something were to happen to those risky investmen...
by Harold
Sat Sep 13, 2014 3:20 pm
 
Forum: Investing - Theory, News & General
Topic: The Annuity Puzzlement
Replies: 95
Views: 7182

Re: Why do so many think their home is a foolproof investmen

Johno wrote:An owner occupied home is obviously an investment.

I didn't say it wasn't. What I wrote holds whether one considers it an investment or not.
by Harold
Sat Sep 13, 2014 1:18 pm
 
Forum: Investing - Theory, News & General
Topic: Why do so many think their home is a foolproof investment?
Replies: 125
Views: 6607

Re: Why do so many think their home is a foolproof investmen

It runs far deeper. Vast numbers of otherwise smart people view housing under an incorrect financial framework where they consider a mortgage payment as their rent -- hence since a mortgage payment “builds equity”, renters are “throwing money away”. That leads them to viscerally feel that buying a h...
by Harold
Sat Sep 13, 2014 11:23 am
 
Forum: Investing - Theory, News & General
Topic: Why do so many think their home is a foolproof investment?
Replies: 125
Views: 6607

Re: Interest rates - Bond effects?

If looked at in terms of prices, the mystery of interest rates falls away a bit. An issuer of a bond is promising future payments in exchange for current cash. The issuer of the bond would like as much cash as he can get, and the buyer of the bond would like to part with as little cash as possible. ...
by Harold
Fri Sep 12, 2014 2:49 pm
 
Forum: Investing - Help with Personal Investments
Topic: Interest rates - Bond effects?
Replies: 7
Views: 981

Re: Why invest in bonds?

I was imagining an investor who holds more in stocks but doesn't decrease her contributions. This results in a larger portfolio at retirement, which lets the investor's older self have a lower withdrawal rate and/or hold more bonds that if her younger self had been taken less risk. So then risk cle...
by Harold
Mon Sep 01, 2014 6:07 pm
 
Forum: Investing - Theory, News & General
Topic: Why invest in bonds?
Replies: 103
Views: 6773

Re: Why invest in bonds?

There's a misconception that high-equity allocations are only there to juice returns. They can also be used as a way of transferring risk from an investor's older self to her younger self. This often makes sense because young innovators have more options (working longer and saving more). Excessivel...
by Harold
Mon Sep 01, 2014 11:19 am
 
Forum: Investing - Theory, News & General
Topic: Why invest in bonds?
Replies: 103
Views: 6773

Re: Neighbor's Fireworks

livesoft wrote:Actually, you want his kids on your lawn cleaning up the fireworks debris.

Nice, I missed that. "Clean up your dad's trash -- then get off my lawn!"
by Harold
Sat Jul 05, 2014 5:50 pm
 
Forum: Personal Consumer Issues
Topic: Neighbor's Fireworks
Replies: 50
Views: 4749

Re: Neighbor's Fireworks

XtremeSki2001 wrote:Our roof was replaced on July 3rd

Maybe replace it on July 5th next time :wink:

In the meantime, you could get back at him by sitting on your porch and yelling at his kids to get off your lawn.
by Harold
Sat Jul 05, 2014 5:25 pm
 
Forum: Personal Consumer Issues
Topic: Neighbor's Fireworks
Replies: 50
Views: 4749

Re: Urban garden bed--ideas to deter dog owners

livesoft wrote:^But pooping in the gutter should not preclude a dog owner from scooping it up and disposing of it properly. I suspect though that many owners would think that having it in the gutter is sufficient

Yes of course they should still pick it up, I didn't mean to imply otherwise.
by Harold
Fri Jul 04, 2014 10:59 pm
 
Forum: Personal Consumer Issues
Topic: Urban garden bed--ideas to deter dog owners
Replies: 44
Views: 4407

Re: Is deferring 75% of your paycheck Roth 401(k) even doabl

I've encountered this while frontloading contributions/stock purchase/etc. at the beginning of the year.

Although I tried to get it exact, I was a little off and my employer simply reduced the contribution to the extent needed to ensure enough was available for the required payroll deductions.
by Harold
Fri Jul 04, 2014 10:56 pm
 
Forum: Investing - Help with Personal Investments
Topic: Is deferring 75% of your paycheck Roth 401(k) even doable?
Replies: 14
Views: 2058

Re: Urban garden bed--ideas to deter dog owners

I am not a city person and never understood what "curb" meant I am a city person and can speak to this. In its purest sense, it means that dog owners should train their dogs to use the curb (or gutter), which is the part of our shared space that has the least impact on everyone else (and ...
by Harold
Fri Jul 04, 2014 10:33 pm
 
Forum: Personal Consumer Issues
Topic: Urban garden bed--ideas to deter dog owners
Replies: 44
Views: 4407

Re: POLL: Mortgage as a negative bond

Oh, there are certainly risks involved with homeownership. My point was that mixing all this stuff into a single number is meaningless. I analyze my situation in a complete way. Knowing I'm 175% stocks vs 143% - that number - just doesn't have meaning. You may just be more sophisticated than the ty...
by Harold
Wed Jul 02, 2014 2:13 pm
 
Forum: Personal Finance (Not Investing)
Topic: POLL: Mortgage as a negative bond
Replies: 89
Views: 3124

Re: POLL: Mortgage as a negative bond

Not my reality. Say I have $100K in stocks. I buy a $300K house with a $200K mortgage. I pay the mortgage off, just like making rent payments, over 30 years. Where was the "massive risk shift"? ... When stocks crashed in 2009, my "one number" went from 125% stocks to 175% stocks...
by Harold
Wed Jul 02, 2014 10:21 am
 
Forum: Personal Finance (Not Investing)
Topic: POLL: Mortgage as a negative bond
Replies: 89
Views: 3124

Re: POLL: Mortgage as a negative bond

There are two clear advantages to the negative bond concept: 1) It helps people have a better understanding of their actual risk. - People are indignantly resistant to the notion of their asset allocation being 120/-20 or whatever. But that's an accurate reflection of the massive risk shift that occ...
by Harold
Wed Jul 02, 2014 7:29 am
 
Forum: Personal Finance (Not Investing)
Topic: POLL: Mortgage as a negative bond
Replies: 89
Views: 3124

Re: Interesting artcle on inflation and mortgages

The price for every set of cash flows already includes an inflation assumption. That's true for stocks, bonds, real estate -- and for mortgages. With any of those, the current rate "locks in" assumed inflation (which is a market consensus). Actual inflation will certainly differ, but you'r...
by Harold
Sat May 31, 2014 11:09 am
 
Forum: Investing - Theory, News & General
Topic: Interesting artcle on inflation and mortgages
Replies: 14
Views: 1259

Re: Rent vs Buy Calculator NY Times

It always bothers me that there is no value assigned to liquidity for renters. The value of being able to move to a great job, with little friction, is not 0. Another intangible has occurred to me during the recent runup in San Francisco rents/prices. Renters under rent control gain "equity&qu...
by Harold
Sat May 24, 2014 7:58 am
 
Forum: Personal Finance (Not Investing)
Topic: Rent vs Buy Calculator NY Times
Replies: 7
Views: 769

Re: Hotels and parking in NYC

Under $200 for a Manhattan Hotel room? Do you know where they are located? Such a cheap rate sounds like it would have a catch, especially during the height of tourist season in NYC. My brother stayed in a modest hotel on West 35th St. near Macys and it still cost him over $350 a night as I recall....
by Harold
Fri May 23, 2014 9:43 am
 
Forum: Personal Consumer Issues
Topic: Hotels and parking in NYC
Replies: 19
Views: 1199

Re: Question for renters that are happily renting..

Sure, in the long run it might be better financially to own The cult of homeownership has made it pretty much impossible for most Americans to accurately view housing costs in the context of their personal finances. Somehow they view it as magical wealth creation -- when in reality it's not an econ...
by Harold
Sun May 18, 2014 1:41 pm
 
Forum: Personal Consumer Issues
Topic: Question for renters that are happily renting..
Replies: 44
Views: 7828

Re: How to have a life if you can't save 6months expenses?

Whatever your salary is, someone is living on 20% less. If you think saving is important, you'll live like that person. If you don't think saving is important, you won't. (Can replace 20% with whatever the desired savings goal is.) This equation of course changes if you're at/near the poverty line. ...
by Harold
Sun May 18, 2014 10:47 am
 
Forum: Personal Finance (Not Investing)
Topic: How to have a life if you can't save 6months expenses?
Replies: 20
Views: 2242

Re: More evidence of the predicted bond apocolypse

Put another way, this only makes the apocalypse even more nigh. :wink:
by Harold
Fri May 16, 2014 12:03 pm
 
Forum: Investing - Theory, News & General
Topic: More evidence of the predicted bond apocalypse
Replies: 38
Views: 4070

Re: Timing Belt Change - Months or Miles if car is old?

I find it mildly amusing that folks who would seem to normally not trust anything a mechanic or financial advisor told them, seem to put lots more faith in timing suggestions for timing belt replacement without any concrete real evidence for such a suggestion. In my case, it's because the consequen...
by Harold
Fri May 16, 2014 10:19 am
 
Forum: Personal Consumer Issues
Topic: Timing Belt Change - Months or Miles if car is old?
Replies: 81
Views: 8499

Re: Timing Belt Change - Months or Miles if car is old?

I faced the same decision about a year ago on my 2002 Honda Civic. Only had about 50,000 or so miles but was at that time 10 years old. I went ahead and replaced the timing belt, water pump, etc. Every since then it has made a noise which I can hear at low speed or at idle when the motor is turning...
by Harold
Fri May 16, 2014 10:15 am
 
Forum: Personal Consumer Issues
Topic: Timing Belt Change - Months or Miles if car is old?
Replies: 81
Views: 8499

Re: Poll test

Why in the world did you not pick Tomato/Tomahto for your test poll?
by Harold
Fri May 16, 2014 10:11 am
 
Forum: Forum Issues and Administration
Topic: Poll test
Replies: 16
Views: 770

Re: Is 6 months of savings needed?

For example, I'm 28 and have little money yet I keep $3,000 in my EF. I assume some folks would be screaming about how that should be invested in equities and I could be getting an average of 7%/year! Well, 7% of $3,000 is $210. So, in effect, I'm paying $210/year for the comfort of knowing that I ...
by Harold
Sat May 10, 2014 11:12 am
 
Forum: Personal Finance (Not Investing)
Topic: Is 6 months of savings needed?
Replies: 33
Views: 3869

Re: Article on Pricey Wedding Attendance

I've learned that when people want to do something fun, they generally figure out a way to come up with the money. About weddings in particular, I realized that when a grieving family couldn't afford the headstone for their deceased husband/father and I was asked to buy it. Since it seemed a shame f...
by Harold
Fri May 09, 2014 8:32 pm
 
Forum: Personal Consumer Issues
Topic: Article on Pricey Wedding Attendance
Replies: 15
Views: 2198

Re: Philly/Boston in May: Recommendations Please

denovo wrote:I was looking for hotel reccomendations for Philly.

I almost always use Priceline for personal travel to big cities. Center City is currently showing winning bids in the $80-90 range for 4-star hotels.
by Harold
Wed May 07, 2014 8:40 am
 
Forum: Personal Consumer Issues
Topic: Philly/Boston in May: Recommendations Please
Replies: 26
Views: 1617

Re: Invest to pay off the mortgage?

Any good calculators to run the scenarios for the likelihood of Option 2 beating Option 1, and by how much? One of the things that doesn't get enough discussion is that risk not only means a chance of underperformance or loss... an important aspect of financial risk is that you don't actually even ...
by Harold
Tue May 06, 2014 8:21 am
 
Forum: Personal Finance (Not Investing)
Topic: Invest to pay off the mortgage?
Replies: 10
Views: 1362

Re: Retirement Savings - Gross vs. Net Savings

What you're really saying is that the recommended savings percentage should be less than 15%. To me, "take home pay" is an oddly artificial concept-- which I suspect comes from those who live roughly paycheck to paycheck. Taxes are an expense, and it's kind of arbitrary to have metric wher...
by Harold
Mon May 05, 2014 9:23 am
 
Forum: Investing - Theory, News & General
Topic: Retirement Savings - Gross vs. Net Savings
Replies: 14
Views: 1797

Re: Rent vs buy again ... but with a twist

We shouldn't underestimate transactions costs in this. I believe the usual US agent fee is 5%? That plus all the other closing costs is a significant chunk of change and regardless of who 'pays' it in cash terms, it comes out of the purchase price (in the end, on average)-- the seller gets less and...
by Harold
Mon May 05, 2014 9:07 am
 
Forum: Personal Finance (Not Investing)
Topic: Rent vs buy again ... but with a twist
Replies: 10
Views: 1552

Re: Philly/Boston in May: Recommendations Please

Both Philadelphia and Boston have easy train connections from the airport to the center city We must have different definitions for Boston ... A bus from the terminal (spinning past a couple of terminals) to the "airport" subway station to a change in the city to a different line dragging...
by Harold
Sun May 04, 2014 7:12 pm
 
Forum: Personal Consumer Issues
Topic: Philly/Boston in May: Recommendations Please
Replies: 26
Views: 1617

Re: Philly/Boston in May: Recommendations Please

As a big city dweller, let me just say -- for god's sake, please don't rent a car. (The more drivers there are, the more unhealthy/dangerous it is to city residents-- and you'd probably just be annoyed by the traffic/parking situation.) Both Philadelphia and Boston have easy train connections from t...
by Harold
Sun May 04, 2014 6:31 pm
 
Forum: Personal Consumer Issues
Topic: Philly/Boston in May: Recommendations Please
Replies: 26
Views: 1617

Re: Rent vs buy again ... but with a twist

There's a structured financial approach to organizing your thoughts that will help you answer your question. The current value of any investment can be seen as the estimated present value of the future income it provides. For stocks/bonds that income is earnings/dividends -- and for real estate that...
by Harold
Sun May 04, 2014 6:21 pm
 
Forum: Personal Finance (Not Investing)
Topic: Rent vs buy again ... but with a twist
Replies: 10
Views: 1552

Re: True cost of owning a house

What alternative words should I have used? It's the tone. A well-meaning poster made a good faith effort to outline the costs of owning a home and comparing to where he would have ended up if he rented. A number of well-meaning respondents then tried to parse his information and give him a useful r...
by Harold
Thu May 01, 2014 8:36 am
 
Forum: Personal Finance (Not Investing)
Topic: True cost of owning a house
Replies: 47
Views: 3555

Re: True cost of owning a house

Please continue and complete the analysis. In other words, what figure would/should OP have come up with for the hypothetical renting scenario that would be comparable to the 36.8% you derived above? You should reread my original post. There is no comparable rent analysis. The relevant comparison i...
by Harold
Wed Apr 30, 2014 10:27 am
 
Forum: Personal Finance (Not Investing)
Topic: True cost of owning a house
Replies: 47
Views: 3555

Re: San Francisco Restaurant Recommendations

I've learned when I go to Yelp to immediately discount any highly rated restaurants where the highly rating reviewers are all from out of town. This thread is making me think of that. Not to be arrogant or anything, but there's something about being in a tourist state of mind where you go to popular...
by Harold
Wed Apr 30, 2014 9:06 am
 
Forum: Personal Consumer Issues
Topic: San Francisco Restaurant Recommendations
Replies: 44
Views: 3036

Re: Health of Defined Benefit Pension Plan

Is the Funding Target Attainment Percentage the most relevant piece of information? Quite honestly, the fact that your benefit is insured by the PBGC is the most relevant piece of information. Your plan sponsor is holding the risk of providing your benefit, and the PBGC is insuring that risk. To so...
by Harold
Wed Apr 30, 2014 8:49 am
 
Forum: Personal Finance (Not Investing)
Topic: Health of Defined Benefit Pension Plan
Replies: 11
Views: 1098

Re: True cost of owning a house

Given the numbers presented, I see $167,456 in outlay for the house and $178,600 returned when it was sold. The actual return would depend on the timing of the costs. Again given the numbers presented, I see $79,582 in outlay for the renter plus $87,874 invested, which gives $142,971 at the end. So ...
by Harold
Tue Apr 29, 2014 12:46 pm
 
Forum: Personal Finance (Not Investing)
Topic: True cost of owning a house
Replies: 47
Views: 3555

Re: POLL: the WORST financial advice you've given/received?

People are mentioning the obviously horrendous financial advice, and the poll results reflect that. They aren't mentioning the mainstream don't through away your money on rent kind of bad (or at least incomplete, inaccurately stated, and potentially destructively acted upon) financial advice that we...
by Harold
Sun Apr 27, 2014 4:46 pm
 
Forum: Investing - Theory, News & General
Topic: POLL: the WORST financial advice you've given/received?
Replies: 61
Views: 15384
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