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Re: What is the present value of future payments?

I'm trying to simulate how an annuity with a guarantee withdrawal benefit would have performed during period 1968 to 1997. This was the worst retirement period according to the 1992 Bengen study that gave us the 4% withdrawal rate. Unrelated to the OP...how can a study done in 1992 use data from 19...
by Kelly
Thu Nov 27, 2014 12:45 pm
 
Forum: Investing - Theory, News & General
Topic: What is the present value of future payments?
Replies: 8
Views: 429

Re: What is the present value of future payments?

Thanks Bobcat. I'm trying to simulate how an annuity with a guarantee withdrawal benefit would have performed during period 1968 to 1997. This was the worst retirement period according to the 1992 Bengen study that gave us the 4% withdrawal rate. The annuity allows you to withdraw 5% of the account ...
by Kelly
Thu Nov 27, 2014 10:12 am
 
Forum: Investing - Theory, News & General
Topic: What is the present value of future payments?
Replies: 8
Views: 429

What is the present value of future payments?

Folks, Can someone please double check my math? Scenario is two streams of income. $1000 per year. One stream is inflation adjusted (real payments) one is a nominal payment. Both go on for 30 years. I assumed each these payments are risk free so the appropriate discount rate is inflation. What is th...
by Kelly
Wed Nov 26, 2014 1:39 pm
 
Forum: Investing - Theory, News & General
Topic: What is the present value of future payments?
Replies: 8
Views: 429

Re: legalities of bypass trust funding question

The bypass is to avoid MD state taxes at second death. The estate lawyer says we can pick and choose which assets go the trust while the custodian says you can't pick. Rather 50% of each position goes to the trust. If that's the case, the stepped up shares be moved to the trust?

Many thanks

Kelly
by Kelly
Tue Nov 18, 2014 10:32 am
 
Forum: Personal Finance (Not Investing)
Topic: legalities of bypass trust funding question
Replies: 6
Views: 552

legalities of bypass trust funding question

Folks I bypass trust funding question I can't find the answer to. By way of simple example: couple jointly holds, within a family trust, 100 shares each of company ABC and XYZ which have a combined FMV of $50,000 on the day the husband dies. ABC has a high cost basis and XYZ has a low cost basis. Th...
by Kelly
Tue Nov 18, 2014 8:59 am
 
Forum: Personal Finance (Not Investing)
Topic: legalities of bypass trust funding question
Replies: 6
Views: 552

Taxation of fund dividends

Folks, A relative has the Franklin Income fund (FKINX) which is comprised of value stocks and junk bonds. Templeton told me that the distributions are all dividends and is reported as such on the 1099. Then where is the bond interest going? Why isn't the bond interest broken out on the 1099? Any ide...
by Kelly
Fri Nov 14, 2014 11:40 am
 
Forum: Investing - Theory, News & General
Topic: Taxation of fund dividends
Replies: 3
Views: 435

Re: Christine Benz Interviews Bill Bernstein

If you want gold just invest in gold itself.


Gold or shares backed by the metal are taxed as collectibles at 28%. Here http://www.bloomberg.com/news/2013-05-21/gold-etf-sellers-facing-tax-surprises-at-28-gains-rate.html
by Kelly
Tue Nov 04, 2014 11:22 am
 
Forum: Investing - Theory, News & General
Topic: Christine Benz Interviews Bill Bernstein
Replies: 33
Views: 3862

Re: Int'l value fund question

I meant to say "why is the int'l fund lagging"

Kelly
by Kelly
Thu Oct 23, 2014 8:40 am
 
Forum: Investing - Theory, News & General
Topic: Int'l value fund question
Replies: 3
Views: 427

Int'l value fund question

In Bill Bernstein's excellent new book Rational Expectations he lists recommended funds. In the international value space he lists: Powershares FTSE RAFI developed markets ex US (PXF) but omits Vanguard Int'l (VTRIX) value and iShares MSCI Value Index (EFV). However PXF has been lagging both. The US...
by Kelly
Thu Oct 23, 2014 7:44 am
 
Forum: Investing - Theory, News & General
Topic: Int'l value fund question
Replies: 3
Views: 427

Re: Why are 401k plans expensive?

I read a study that showed that 86% of plan participants bear ALL of the cost of the plan. The avg cost is 1%.

PBS did a documentary on it http://www.pbs.org/wgbh/pages/frontline ... nt-gamble/
by Kelly
Wed Oct 15, 2014 7:13 am
 
Forum: Investing - Theory, News & General
Topic: Why are 401k plans expensive?
Replies: 39
Views: 3122

Re: Does anyone know of a college FASFA expert?

The student is now 16.
by Kelly
Fri Sep 19, 2014 12:31 pm
 
Forum: Personal Finance (Not Investing)
Topic: Does anyone know of a college FASFA expert?
Replies: 13
Views: 1011

Does anyone know of a college FASFA expert?

Folks,

Does anyone know of someone who specializes and planning for college financial aid? I know there are some planning designations out there but I've learned that these are often used to get folks in the door so they can push products.

Many thanks

Kelly
by Kelly
Fri Sep 19, 2014 11:40 am
 
Forum: Personal Finance (Not Investing)
Topic: Does anyone know of a college FASFA expert?
Replies: 13
Views: 1011

Re: How much value can an advisor add for the average invest

You might look for a NAPFA (NAPFA.ORG) fee only CFP who is willing to do hourly work. Better than the ongoing advisor expense.
by Kelly
Wed Sep 10, 2014 7:16 am
 
Forum: Investing - Theory, News & General
Topic: How much value can an advisor add for the average investor?
Replies: 71
Views: 5096

Re: Can estimated tax replace withholding?

Term insurance is expensive at that age and whole life rarely makes sense if there's an alternative. Whole life lapse rates are horrible.
by Kelly
Sat Sep 06, 2014 4:45 pm
 
Forum: Personal Finance (Not Investing)
Topic: Can estimated tax replace withholding?
Replies: 11
Views: 691

Can estimated tax replace withholding?

Folks, Is it permissible for someone to make estimated tax payments instead of having the employer withhold taxes? I believe the answer is no as IRS Pub 505 says You can claim only the number of allowances to which you are entitled. I'm helping in an unusual situation in which husband is the benefic...
by Kelly
Sat Sep 06, 2014 2:35 pm
 
Forum: Personal Finance (Not Investing)
Topic: Can estimated tax replace withholding?
Replies: 11
Views: 691

Re: Excel RATE set up question

Yup, that's it!

Many thanks

Kelly
by Kelly
Wed Aug 27, 2014 9:40 am
 
Forum: Personal Finance (Not Investing)
Topic: Excel RATE set up question
Replies: 4
Views: 323

Excel RATE set up question

I can't figure out how to set up this TMV question. The case facts are that a $100,000 liability grows at 3% per years for 5 years and is then paid off with a 5% loan over the ensuing 5 years. What's the weighted interest rate over the course of the ten years? I've made several attempts with excel R...
by Kelly
Wed Aug 27, 2014 7:12 am
 
Forum: Personal Finance (Not Investing)
Topic: Excel RATE set up question
Replies: 4
Views: 323

Re: International allocation

You don't want too much Int'l since you spend US dollars.
by Kelly
Sun Aug 24, 2014 10:01 am
 
Forum: Investing - Theory, News & General
Topic: International allocation
Replies: 81
Views: 5326

Re: International allocation

I just read Bill Bernstein's Rational Expectations in which he advocates a 60/40 US/Int'l split. The rational is that the US is over it's historic valuation while the rest of the world is at or under.
by Kelly
Sun Aug 24, 2014 6:25 am
 
Forum: Investing - Theory, News & General
Topic: International allocation
Replies: 81
Views: 5326

Re: How to ensure military members don't get ripped off

It's possible someone already posted this. FINRA set up a website as part of a settlement with the criminals at First Command (used to be known as USPIRA). I call them criminal since it is fact: On 15 December 2004, the U.S. Securities and Exchange Commission (SEC) determined that First Command had ...
by Kelly
Fri Aug 15, 2014 7:27 pm
 
Forum: Investing - Theory, News & General
Topic: How to ensure military members don't get ripped off
Replies: 71
Views: 4771

Favorite portfolio tracking software

Folks, I've been keeping my portfolio in balance using excel for years. Now, I have too many accounts (inherited IRA, TSP, 401k, ibonds, etc) and was starting to look at portfolio management software like quicken, etc. Does anyone have a recommendation. I'd like it to handle reinvested dividends and...
by Kelly
Sat Jul 19, 2014 3:19 pm
 
Forum: Investing - Theory, News & General
Topic: Favorite portfolio tracking software
Replies: 14
Views: 1904

Analysis of Money magazine stock picks

The current Journal of Financial Planning has an analysis of the stock picks provided by the largest personal finance magazines vs. a market index. No surprises but good to see that someone has scientifically analyzed it. I wonder if the magazines will report on it? http://www.onefpa.org/journal/Pag...
by Kelly
Wed Jul 09, 2014 6:59 am
 
Forum: Investing - Theory, News & General
Topic: Analysis of Money magazine stock picks
Replies: 7
Views: 1478

Re: B Bernstein on Vgd Mid Cap Value vs Large Value Idx

Hub wrote:As someone on my first read through of Four Pillars, I very much appreciate this discussion.


The Investing for Adults series is also very valuable. There's also tons of good stuff on his online journal were I got hooked http://www.efficientfrontier.com/ef/index.shtml
by Kelly
Sun Jun 22, 2014 4:20 pm
 
Forum: Investing - Theory, News & General
Topic: B Bernstein on Vgd Mid Cap Value vs Large Value Idx
Replies: 25
Views: 2985

Re: B Bernstein on Vgd Mid Cap Value vs Large Value Idx

Powershares are new to me and I just noticed that they have a large value fundamental index PXLV with a value loading of 0.59 vs. 0.39 and 0.63 for Powershares FTSE RAFI 1000 and DFA Large Value respectively. I don't want to keep bugging Bill and wonder if anyone knows why PXLV wouldn't be a better ...
by Kelly
Sun Jun 22, 2014 3:25 pm
 
Forum: Investing - Theory, News & General
Topic: B Bernstein on Vgd Mid Cap Value vs Large Value Idx
Replies: 25
Views: 2985

Re: B Bernstein on Vgd Mid Cap Value vs Large Value Idx

Kelly: You're right, looking just at regression statistics, that statement is not strictly true. The deeper truth of the matter, too complex to put in a footnote, is that Vanguard's methodology of splitting large cap stocks into value and growth is by market cap, half in value, half in growth. Sinc...
by Kelly
Sun Jun 22, 2014 12:34 pm
 
Forum: Investing - Theory, News & General
Topic: B Bernstein on Vgd Mid Cap Value vs Large Value Idx
Replies: 25
Views: 2985

B Bernstein on Vgd Mid Cap Value vs Large Value Idx

In Bill Bernstein's EXCELLENT new book, Rational Expectations (here: http://tinyurl.com/qcxb9cc ), he provides a list of funds for different asset classes in Table 6 which is labeled "Recommended US Equity Funds." Interestingly, for large value he recommends Vanguard Mid Cap Value (VMVIX) ...
by Kelly
Sun Jun 22, 2014 10:15 am
 
Forum: Investing - Theory, News & General
Topic: B Bernstein on Vgd Mid Cap Value vs Large Value Idx
Replies: 25
Views: 2985

Re: Financial math question

That's it! Many thanks! The change in amount owed in 4 yrs escaped me so I couldn't figure out how to account for ending value in the Rate formula.

Your other posts are equally helpful.

Best

Kelly
by Kelly
Sat Jun 21, 2014 11:21 am
 
Forum: Investing - Theory, News & General
Topic: Financial math question
Replies: 10
Views: 1012

Re: Financial math question

Ralph gave me an idea. I set up a spreadsheet and used the IRR function. The $7000 prepayment required to eliminate the mortgage insurance reduced the annual interest expense by an increasing amount. The IRR of the interest stream saved works out to 4.47% over the next 27 years as measured at the 27...
by Kelly
Fri Jun 20, 2014 8:21 pm
 
Forum: Investing - Theory, News & General
Topic: Financial math question
Replies: 10
Views: 1012

Re: Financial math question

From a purely financial sense your return is much higher. The $7065 is not actually an expense, because it goes to reduce the principal of your loan, and if the payments stay the same, your loan will be paid off sooner. In addition, each months payment now contains less interest and more principal....
by Kelly
Fri Jun 20, 2014 6:16 pm
 
Forum: Investing - Theory, News & General
Topic: Financial math question
Replies: 10
Views: 1012

Financial math question

Folks This is a simple problem with a very small pay off but the math is bugging me. If I pay an additional $7065 toward my mortgage I can eliminate a small $324/yr mortgage insurance premium. The requirement for this insurance would have gone away through amortization by Jan 2017. My simple math is...
by Kelly
Fri Jun 20, 2014 5:43 pm
 
Forum: Investing - Theory, News & General
Topic: Financial math question
Replies: 10
Views: 1012

Re: Can someone explain B Bernstein's math

Very nice thread. The point I make repeatedly in the book (as well as in Ages of the Investor) is that it's nearly meaningless to talk about the "risk" of stocks without specifying the ratio of human capital to investment capital. If that ratio is high, that implies you're saving periodic...
by Kelly
Tue Jun 17, 2014 11:39 am
 
Forum: Investing - Theory, News & General
Topic: Can someone explain B Bernstein's math
Replies: 42
Views: 4319

Can someone explain B Bernstein's math

Folks, I just finished Bill Bernstein's OUTSTANDING new book, Rational Expectations. I couldn't put it down and now I'm rereading it. Excellent! There's a passage where he explains that stock investing does not become less risky over time. This is an area I've been interested in. Zvi Bodie argues it...
by Kelly
Tue Jun 17, 2014 7:14 am
 
Forum: Investing - Theory, News & General
Topic: Can someone explain B Bernstein's math
Replies: 42
Views: 4319

Re: Question: Prof Ang on small premium

Kelly By market risk he means BETA, so they have a beta of more than one But be very careful, while Ang is correct it is bad analysis IMO Basically you had huge bubble in small stocks from 75-83 massive outperformance and very high valuations resulted. So of course you then get lower expected retur...
by Kelly
Tue Jun 10, 2014 11:18 am
 
Forum: Investing - Theory, News & General
Topic: Question: Prof Ang on small premium
Replies: 13
Views: 914

Re: Question: Prof Ang on small premium

Thanks Richard. This makes sense. On the other hand value has more return than can be explained by it's risk which I think would be defined as its beta.

I just stated B Bernstein's Rational Expectations and I'm hoping he can shed more insight on these issues.

Kelly
by Kelly
Tue Jun 10, 2014 9:19 am
 
Forum: Investing - Theory, News & General
Topic: Question: Prof Ang on small premium
Replies: 13
Views: 914

Question: Prof Ang on small premium

I just finished Prof Andrew Ang's online finance text book. Can anyone help me understand this passage from ch 14 Factor Investing, pg 22-23? Since the mid-1980s, however, there has been no size premium after adjusting for market risk (see Chapter 7). That is, small stocks do have higher returns tha...
by Kelly
Tue Jun 10, 2014 7:41 am
 
Forum: Investing - Theory, News & General
Topic: Question: Prof Ang on small premium
Replies: 13
Views: 914

Re: Corp bond question (Ang's online textbook)

Why does the Sharpe ratio of an asset class in isolation matter? To the extent Sharpe ratio is at all meaningful, wouldn't it be much more important to know the Sharpe ratio of your entire portfolio? This is where the answer lies. In Four Pillars Bill Bernstein uses short term corporate bonds in hi...
by Kelly
Tue Jun 03, 2014 7:40 pm
 
Forum: Investing - Theory, News & General
Topic: Corp bond question (Ang's online textbook)
Replies: 7
Views: 611

Re: Corp bond question (Ang's online textbook)

Yes, you're correct. "Crossover" bonds, those rated BBB or BB, have historically offered the highest absolute and risk-adjusted returns. Many thanks for your insight. I've never heard the term "cross over bonds". I google search retrieved many hits. There's lots of info written ...
by Kelly
Tue Jun 03, 2014 5:52 pm
 
Forum: Investing - Theory, News & General
Topic: Corp bond question (Ang's online textbook)
Replies: 7
Views: 611

Corp bond question (Ang's online textbook)

Folks I've been reading Prof Andrew Ang's unpublished (but I believe soon to be) textbook which is available at his website here: http://www.columbia.edu/~aa610/ The fixed income chapter has a table-14 on page 48 which shows the excess returns for AAA, Aa, A, Baa, Caa corp bonds over treasuries for ...
by Kelly
Tue Jun 03, 2014 4:25 pm
 
Forum: Investing - Theory, News & General
Topic: Corp bond question (Ang's online textbook)
Replies: 7
Views: 611

VGD Intermediate corp bond vs total bond

I'm trying to determine the downside of choosing the Intermediate Corp Bond Index Fund (VICSX) over the total bond index. Both are investment grade although the latter is 65% gov't bonds. The corp has a yield that is 1.2% more and one more year duration. It looks like the extra yield is due to the c...
by Kelly
Mon Jun 02, 2014 8:44 am
 
Forum: Investing - Theory, News & General
Topic: VGD Intermediate corp bond vs total bond
Replies: 7
Views: 602

Re: The Mega Backdoor Roth IRA

Unless I'm misunderstanding your (2cents) post you still have to deal with the contribution limit on a transfer directly from the VCP to Roth. That would be a Roth contribution as I understand it . Unless there's some special provision allowing a VCP to Roth transfer you still have to make the stop ...
by Kelly
Sun May 18, 2014 8:26 pm
 
Forum: Personal Finance (Not Investing)
Topic: The Mega Backdoor Roth IRA
Replies: 180
Views: 28921

Re: Question about TIPS yield

I missed your response last month. Thanks for clarifying!

Kelly
by Kelly
Sun May 18, 2014 3:14 pm
 
Forum: Investing - Theory, News & General
Topic: Question about TIPS yield
Replies: 3
Views: 663

Re: The Mega Backdoor Roth IRA

They've streamlined this procedure a little bit. You can send your (after tax) voluntary contributions directly to your Roth and send your VCP earnings into your TSP. My understanding is that while the form has these boxes you still have to be qualified to make the Roth transfer as you would a cont...
by Kelly
Sun May 18, 2014 2:14 pm
 
Forum: Personal Finance (Not Investing)
Topic: The Mega Backdoor Roth IRA
Replies: 180
Views: 28921

Re: Lawyer recommends trust

I didn't want my kids to get a few million when they turned 18. Can you imagine? A trust also has creditor protection (for failed marriages too). An important tool if you have kids.
by Kelly
Sun May 18, 2014 12:21 pm
 
Forum: Personal Finance (Not Investing)
Topic: Lawyer recommends trust
Replies: 81
Views: 5546

Re: Question about applying FF regression

The argument is, that unless there's a statistically significant alpha, an investor could duplicate those returns by creating an index portfolio with equal factor loadings. Not necessarily. One of the reasons index funds don't realize the FF premia in practice is they can't practically track what F...
by Kelly
Sun May 18, 2014 12:00 pm
 
Forum: Investing - Theory, News & General
Topic: Question about applying FF regression
Replies: 3
Views: 271

Re: The Mega Backdoor Roth IRA

If you are a gov't CSRS or CSRS offset employee you can make a mega roth contribution. Write a check to the Voluntary Contribution Program equal to a max of 10% of your lifetime earnings. You can then roll this to an IRA and convert it to a Roth. A great deal. If you have other IRAs with deferred gr...
by Kelly
Sun May 18, 2014 11:52 am
 
Forum: Personal Finance (Not Investing)
Topic: The Mega Backdoor Roth IRA
Replies: 180
Views: 28921

Question about applying FF regression

I find Portfolio Visualizer (written by some bogleheads) to be a fascinating tool. I'd like to get better at using it. From what I understand the FF regression will tell me if the fund manager produced a return in excess (alpha) of his portfolio loadings (SMB, HML, momentum). The argument is, that u...
by Kelly
Sun May 18, 2014 10:35 am
 
Forum: Investing - Theory, News & General
Topic: Question about applying FF regression
Replies: 3
Views: 271

Question about TIPS yield

Folks, Can anyone explain the difference in yields between two TIPS as listed on this Dec 18, 2013 WSJ data board? The Jan 15 TIP has a yield of 2.8% while the Apr 2015 yields -0.27%. Here http://online.wsj.com/mdc/public/page/2_3020-tips-20131218.html?mod=mdc_pastcalendar Why the large spread? Than...
by Kelly
Thu Apr 10, 2014 9:13 am
 
Forum: Investing - Theory, News & General
Topic: Question about TIPS yield
Replies: 3
Views: 663

401k early 10% penatly exception

Folks,

There's an exception to the 10% penalty for pre 59 1/2 401k withdrawals if someone is over 55 and is separated from the company. I've learned that box 7 (distribution codes) must have a 2 in it. 2 means that the 10% penalty does not apply. Can anyone confirm this?

Thanks,

Kelly
by Kelly
Wed Mar 19, 2014 2:57 pm
 
Forum: Personal Finance (Not Investing)
Topic: 401k early 10% penatly exception
Replies: 4
Views: 415

Re: Where to get highest value loading?

few thoughts First, you can get idea by simply using M* to find value metrics for a fund, look at p/b, p/cf IMO are the best two using M* Second, be careful because the more you load on value the more you have negative MOM loading. What DFA and Bridgeway do to address this is to screen out negative...
by Kelly
Fri Feb 28, 2014 3:22 pm
 
Forum: Investing - Theory, News & General
Topic: Where to get highest value loading?
Replies: 5
Views: 523

Where to get highest value loading?

Folks, I just reread Bill Bernstein's take on factor investing. Here http://www.efficientfrontier.com/ef/702/3FM-10.htm In this paper he mentions that Vanguard Large Cap Value Idx (VIVAX) does not have the value loading that DFA Large Value (DFVLX). I checked this at Portfolio Visualizer http://www....
by Kelly
Fri Feb 28, 2014 2:05 pm
 
Forum: Investing - Theory, News & General
Topic: Where to get highest value loading?
Replies: 5
Views: 523
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