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Sign the fiduciary standard petition

The DOL is going to take another whack at implementing a fiduciary standard. You can sign the petition at this site http://saveourretirement.com/ Background: Thanks to loopholes in the rules that govern advice about retirement investing, banks, brokers, mutual fund companies, and insurance agents ar...
by Kelly
Sun Jan 18, 2015 9:42 am
 
Forum: Investing - Theory, News & General
Topic: Sign the fiduciary standard petition
Replies: 0
Views: 225

Looking for book on currency exchange rates

Folks, I'm trying to broaden my financial literacy. I'm trying to better understand foreign exchange rates and how these mechanisms work. I'm reading Currency Wars but it assumes that the reader knows at least the basics of international monetary systems. Does anyone know of a more basic book? Kelly
by Kelly
Mon Jan 12, 2015 8:55 am
 
Forum: Investing - Theory, News & General
Topic: Looking for book on currency exchange rates
Replies: 1
Views: 235

Can annuity withdrawals be rolled to another IRA?

Someone I know crossed paths with an annuity salesman. They now have a fixed annuity in an IRA and they are still well into the surrender charge period. However, they can take 10% of the value out each year without a surrender charge. He's only 56 so he'd have a 10% penalty if he withdrew it. Does a...
by Kelly
Thu Jan 01, 2015 2:46 pm
 
Forum: Investing - Help with Personal Investments
Topic: Can annuity withdrawals be rolled to another IRA?
Replies: 2
Views: 204

Re: SS benefit for spouse and children at 62

pshonore wrote:I believe the Mother's (caretaker) benefit stops when the youngest child reaches 16 unless she is otherwise eligible for a spousal benefit.


This is true. If she's working she's subject to the earnings test so she may never get benefits.
by Kelly
Thu Jan 01, 2015 1:04 pm
 
Forum: Personal Finance (Not Investing)
Topic: SS benefit for spouse and children at 62
Replies: 9
Views: 647

Re: SS benefit for spouse and children at 62

He can also file and suspend at his SS full retirement age of 66 and some months (depending on year of birth), allow his own benefit to growth through delayed retirement credits but allow his children under 18 claim their benefit. File and suspend is not allowed until full retirement age. He should ...
by Kelly
Thu Jan 01, 2015 11:52 am
 
Forum: Personal Finance (Not Investing)
Topic: SS benefit for spouse and children at 62
Replies: 9
Views: 647

Re: Fixed Index Annuity Rate Advice

The "adviser" (I suspect salesman) has you in the fixed account since his commission was higher if he could get you to sign off on this. It's higher since the insurer knows their liability. The market returns most likely have caps like 3-4.5% (the rates you list may be the cap rates but th...
by Kelly
Tue Dec 23, 2014 8:51 am
 
Forum: Investing - Help with Personal Investments
Topic: Fixed Index Annuity Rate Advice
Replies: 8
Views: 1188

Re: Why do target date funds get so bond heavy?

I read Vgd's target date methodology and it shows that the target date fund attempts to solve for BOTH SPIA and systematic withdrawal. http://www.vanguard.com/pdf/s167.pdf They said that they are trying to solve for a replacement rate from non-Social Security sources of $19,200/yr. They say that it ...
by Kelly
Sun Dec 07, 2014 11:03 am
 
Forum: Investing - Theory, News & General
Topic: Why do target date funds get so bond heavy?
Replies: 39
Views: 2780

Re: Why do target date funds get so bond heavy?

P.S. It all gets a little silly because if you have, let's say, 30 years until retirement, and you start by investing in a target date fund, the changes are very slow and you have decades to think about it and adjust them to what you learn about your personal risk tolerance. It also gives three dec...
by Kelly
Sun Dec 07, 2014 9:25 am
 
Forum: Investing - Theory, News & General
Topic: Why do target date funds get so bond heavy?
Replies: 39
Views: 2780

Re: Why do target date funds get so bond heavy?

In addition to Richard's comment, you need to consider the behavioral (or emotional) aspect of investing. How would you feel as an 80 year-old with no human capital left, with 80% in equities during a replay of 2008-2009 - and not knowing if or when the losses will stop? Will you be able to enjoy l...
by Kelly
Sun Dec 07, 2014 8:49 am
 
Forum: Investing - Theory, News & General
Topic: Why do target date funds get so bond heavy?
Replies: 39
Views: 2780

Re: Why do target date funds get so bond heavy?

A large loss in your portfolio shortly after retirement can devastate the probability of portfolio survival. Yes, I understand this. But, the research has taken that into account. In fact new research shows that a rising equity glide path, starting a number of years after the target date path can i...
by Kelly
Sun Dec 07, 2014 8:13 am
 
Forum: Investing - Theory, News & General
Topic: Why do target date funds get so bond heavy?
Replies: 39
Views: 2780

Why do target date funds get so bond heavy?

Does anyone know the theory behind target date funds very heavy bond allocation at and after the target date has passed? Vanguard's 2010 fund is 62% bond. Research (Bengen, Pfau, etc) has shown that the safe withdrawal rate in retirement is maximized with a bond allocation of 50% to 70%. See page 12...
by Kelly
Sun Dec 07, 2014 7:54 am
 
Forum: Investing - Theory, News & General
Topic: Why do target date funds get so bond heavy?
Replies: 39
Views: 2780

New research on funds chasing dividends

Jason Zweig has an interesting article in the Journal this weekend. He describes how some funds will hold shares for only a few days to capture the dividend. Never hear of this before. Unable to pick stocks that outperform the market, dozens of mutual funds appear to be chasing higher dividend yield...
by Kelly
Sun Dec 07, 2014 7:34 am
 
Forum: Investing - Theory, News & General
Topic: New research on funds chasing dividends
Replies: 2
Views: 527

Re: POLL: Should investors have a separate emergency fund?

I voted no. Folks should have funds in a non retirement account but nothing says it cant be part of the allocation. Some take it to far and keep the emergency funds in cash. Last year the Journal of Financial Planning published a paper showing that a cash emergency fund would have made workers worse...
by Kelly
Wed Dec 03, 2014 8:51 am
 
Forum: Investing - Theory, News & General
Topic: POLL: Should investors have a separate emergency fund?
Replies: 58
Views: 3626

Where should I put my req'd distributions?

Folks, I hold a 60/40 portfolio, all Vanguard, all in an IRA: 15% Total Stk Idx 20% Value Idx 10% Total Int'l Idx 15% Int'l Value Fund 40% Total Bond Idx I don't need my required minimum distributions. If I put them in the Total Stk Index I'll have an annual tax loss of 0.4%=1.82% x (15% + 8%), wher...
by Kelly
Fri Nov 28, 2014 5:41 pm
 
Forum: Investing - Theory, News & General
Topic: Where should I put my req'd distributions?
Replies: 7
Views: 1383

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: 761

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: 761

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: 761

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: 666

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: 666

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: 450

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: 3993

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: 450

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: 450

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: 3251

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: 1040

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: 1040

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: 5233

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: 697

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: 697

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: 333

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: 333

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: 5561

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: 5561

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: 4945

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: 1946

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: 1523

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: 3069

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: 3069

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: 3069

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: 3069

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: 1016

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: 1016

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: 1016

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: 1016

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: 4351

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: 4351

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: 919

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: 919

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: 919

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: 626
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