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Re: In your opinion, who is in a riskier financial position?

This is what got the banks in trouble partly. All debt is not equal to each other; neither are assets. I don't think this reasoning applies here. Banks are lenders, and here we're talking about borrowers. The quality of debt matters from a lender's (owners) perspective. As an owner of a bond fund, ...
by Kevin M
Fri Jul 25, 2014 2:05 pm
 
Forum: Personal Finance (Not Investing)
Topic: In your opinion, who is in a riskier financial position?
Replies: 27
Views: 1350

Re: In your opinion, who is in a riskier financial position?

From a leverage perspective, person A has more risk. Person A has asset/debt = 340/270 = 1.3, and net equity/debt = 70/270 = 0.26 Person B has asset/debt = 200K/100K = 2 and net equity/debt = 100/100 = 1. House value drops about 20%, and person a is wiped out. Stocks must drop 50% for person B to be...
by Kevin M
Thu Jul 24, 2014 7:56 pm
 
Forum: Personal Finance (Not Investing)
Topic: In your opinion, who is in a riskier financial position?
Replies: 27
Views: 1350

Re: Bonds beat stocks over the last 15 years

This is a good post to remind us not to confuse outcome with strategy, and that stocks are risky regardless of investment horizon. Thanks Robert.

Kevin
by Kevin M
Thu Jul 24, 2014 7:25 pm
 
Forum: Investing - Theory, News & General
Topic: Bonds beat stocks over the last 15 years
Replies: 46
Views: 3340

Re: The article on tax efficient placement needs to be rewri

learning_head, I don't know if you realize it, but you have provided a simplified summary of the Reichenstein paper. EDIT: Except one of your conclusions is somewhat different. Reichenstein concludes that bonds in taxable makes sense at low rates for investors with above average risk aversion, not i...
by Kevin M
Thu Jul 24, 2014 5:12 pm
 
Forum: Investing - Theory, News & General
Topic: The article on tax efficient placement needs to be rewri
Replies: 72
Views: 3367

Re: The article on tax efficient placement needs to be rewri

I took a longer look at the Reichenstein paper. It looks like they used a bond return of 5%. That's not a reasonable assumption in today's fixed income environment. Doc, if you look further down in the paper, you'll see that he does address the current low interest-rate environment. One of his scen...
by Kevin M
Thu Jul 24, 2014 5:08 pm
 
Forum: Investing - Theory, News & General
Topic: The article on tax efficient placement needs to be rewri
Replies: 72
Views: 3367

Re: Need Help and totally confused!!

As a banker, it's amusing how people obsess about making sure every last dollar of their cash is FDIC insured by spreading funds among multiple banks. Careful here. Perhaps all bankers don't understand the FDIC resolution process for failed banks. From FDIC: Resolutions Handbook (Chapter 2): Deposi...
by Kevin M
Thu Jul 24, 2014 4:59 pm
 
Forum: Investing - Help with Personal Investments
Topic: Need Help and totally confused!!
Replies: 28
Views: 1737

Re: "Asset Location Revisited"

This paper concludes by indicating that except in rare cases, investors should hold stocks in taxable accounts and bonds in retirement accounts . (underline mine) Thanks Taylor. For those still confused, here's a simple proof anyone should be able to follow/reproduce: Assumptions: Stock divs: 2%. S...
by Kevin M
Thu Jul 24, 2014 3:39 pm
 
Forum: Investing - Theory, News & General
Topic: The article on tax efficient placement needs to be rewri
Replies: 72
Views: 3367

Estate planning

I don't want to presume anything, so perhaps you could tell us whether or not you have an updated will, trust, advanced medical directive, etc. How about a special needs trust for your child (may or may not be appropriate)? Do you already have an attorney to help you with these things? Perhaps you u...
by Kevin M
Thu Jul 24, 2014 2:26 pm
 
Forum: Investing - Help with Personal Investments
Topic: Need Help and totally confused!!
Replies: 28
Views: 1737

401k

It's probably a little early to dig into your 401k. It's a relatively small portion of your "portfolio", and right now you probably want to pay attention to the forest and not get distracted too much by a few trees. I asked about it just to get a sense of how it is invested. It is spread a...
by Kevin M
Thu Jul 24, 2014 2:04 pm
 
Forum: Investing - Help with Personal Investments
Topic: Need Help and totally confused!!
Replies: 28
Views: 1737

Re: The article on tax efficient placement needs to be rewri

Nice post, stlutz. One of Taylor's often shared sayings comes to mind: "When experts disagree it is often because it doesn't matter". I like to share the blog posts of Bogleheads like tfb (TheFinanceBuff) and EmergDoc (WhiteCoatInvestor), as well as BH posts of folks like Doc, because they...
by Kevin M
Wed Jul 23, 2014 10:55 pm
 
Forum: Investing - Theory, News & General
Topic: The article on tax efficient placement needs to be rewri
Replies: 72
Views: 3367

Re: Need Help and totally confused!!

Sorry for your loss. You have come to a good place for some coaching on the financial aspects. let's see in my 401K I have 163,000 dollars. I am contributing 16% and my company matches dollar for dollar the first 7% What funds is this invested in? How much in each? What we'll eventually want to know...
by Kevin M
Wed Jul 23, 2014 10:38 pm
 
Forum: Investing - Help with Personal Investments
Topic: Need Help and totally confused!!
Replies: 28
Views: 1737

Re: Where is your brokerage account?

ETFs are a solid place for me to make short-term investments that beat my student loan rates (~4%) and allow me to save for a house.<snip> This is kind of scary. Where did you get the idea that any ETF could provide reliable, short-term returns in the 4% ballpark? A 4% guaranteed return would be go...
by Kevin M
Wed Jul 23, 2014 8:36 pm
 
Forum: Investing - Help with Personal Investments
Topic: Where is your brokerage account?
Replies: 37
Views: 1947

Re: The article on tax efficient placement needs to be rewri

Interesting paper linked by Taylor; perhaps a good reference for the Wiki article? Would be interested to hear Doc's thoughts on the paper. Not sure how sensitive the results are to tax-rate assumptions, but at least low interest rates are addressed: Recent asset location studies ask an excellent qu...
by Kevin M
Wed Jul 23, 2014 7:19 pm
 
Forum: Investing - Theory, News & General
Topic: The article on tax efficient placement needs to be rewri
Replies: 72
Views: 3367

Re: Where is your brokerage account?

Sorry to hijack this thread, but wanted to add small cap value ETF (VBR) to my Roth IRA with Vanguard and have been wondering if this makes sense, or should I just use the small cap value mutual fund instead to simplify things. The ER of the ETF is lower than the ER of investor shares, but with the...
by Kevin M
Wed Jul 23, 2014 6:26 pm
 
Forum: Investing - Help with Personal Investments
Topic: Where is your brokerage account?
Replies: 37
Views: 1947

Re: Where is your brokerage account?

Really? It seemed as though there was a two day delay through Vanguard. Maybe this is a one time thing for me. With a linked bank account, if you enter your mutual fund purchase order while the market is open, your purchase will be completed that day. There used to be a delay, but Vanguard implemen...
by Kevin M
Wed Jul 23, 2014 6:10 pm
 
Forum: Investing - Help with Personal Investments
Topic: Where is your brokerage account?
Replies: 37
Views: 1947

Re: The article on tax efficient placement needs to be rewri

I too challenged the conventional wisdom, as per the Wiki, in this May 2012 post: Bogleheads • View topic - Are We Overselling Tax-Efficient Asset Location? . My initial model was over-simplified, but so is the section on tax-efficient investing in "The Bogleheads Guide to Investing". For ...
by Kevin M
Wed Jul 23, 2014 5:35 pm
 
Forum: Investing - Theory, News & General
Topic: The article on tax efficient placement needs to be rewri
Replies: 72
Views: 3367

Re: International Allocation in some funds...

So what does a Boglehead consider to be part of an "international allocation" of their Portfolio? I use only index funds for equities, and I count my international stock index funds as 100% international, and my US stock index funds as 100% US. I believe this is what Vanguard does in its ...
by Kevin M
Wed Jul 23, 2014 4:13 pm
 
Forum: Investing - Theory, News & General
Topic: International Allocation in some funds...
Replies: 18
Views: 770

Re: International Allocation in some funds...

BigPrince wrote:We have a certain percentage of international stocks in mind that we would like to hold.

This is a good reason not to hold actively-managed funds. Index funds may not be perfect, but they are better if you are targeting a consistent percentage in specified asset classes.

Kevin
by Kevin M
Wed Jul 23, 2014 4:11 pm
 
Forum: Investing - Theory, News & General
Topic: International Allocation in some funds...
Replies: 18
Views: 770

Re: Where is your brokerage account?

I didn't actually answer the question asked in your post title. I have brokerage accounts at Vanguard, Fidelity and Wells Fargo, and have used other brokers in the past. If I had to pick one I'd pick Vanguard. Not because they're the greatest broker (they're not), but because they have everything I ...
by Kevin M
Wed Jul 23, 2014 3:53 pm
 
Forum: Investing - Help with Personal Investments
Topic: Where is your brokerage account?
Replies: 37
Views: 1947

Re: Where is your brokerage account?

I've owned mutual funds with Vanguard for a few months and now I want to purchase ETFs through Vanguard too. Why? Just trying to figure out if there is a consensus for what is most convenient/the quickest way to get your paycheck into investments. First, do you have access to a 401k or 403b, and if...
by Kevin M
Wed Jul 23, 2014 3:46 pm
 
Forum: Investing - Help with Personal Investments
Topic: Where is your brokerage account?
Replies: 37
Views: 1947

Re: Is there any downside to investing in bond futures?

Fascinating topic. Seems a little too complicated for me these days, but I have been taking advantage of 5-year direct CDs as a superior alternative to 5-year treasuries (which as pointed out gives one the similar retail-investor-arbitrage benefit).

Kevin
by Kevin M
Wed Jul 23, 2014 3:25 pm
 
Forum: Investing - Theory, News & General
Topic: Is there any downside to investing in bond futures?
Replies: 73
Views: 1737

Re: Do you split your VEU (into VEA+VWO) & VEA (into VGK+VPL

Intending to buy a 'market' portfolio with country weightings being as close to weighted avg market cap as possible. So was your original post incorrect? Do you want market cap weighting or tilt to small-cap international and EM? And if you want to tilt to small, why just in international and not a...
by Kevin M
Wed Jul 23, 2014 2:30 pm
 
Forum: Investing - Help with Personal Investments
Topic: Do you split your VEU (into VEA+VWO) & VEA (into VGK+VPL)?
Replies: 32
Views: 1429

Re: Inheritance: Cash or Investments?

One exception I'd make for taking cash would be any high yielding CDs. I also might continue to hold any highly-rated bonds that were reasonably close to maturity, since this will eliminate losses from commissions and bid/ask spreads. As mentioned, anything in an IRA should remain in an inherited IR...
by Kevin M
Tue Jul 22, 2014 9:12 pm
 
Forum: Personal Finance (Not Investing)
Topic: Inheritance: Cash or Investments?
Replies: 15
Views: 1292

Re: Reduce / Eliminate Emerging Market in Retirement?

I agree about just decreasing the percentage of portfolio in risky assets. I've been retired for about seven years, and it has never occurred to me to reduce my EM exposure below its market weight in total international (my exposure actually is a bit higher, due to some tax-loss harvesting). I think...
by Kevin M
Tue Jul 22, 2014 9:06 pm
 
Forum: Investing - Theory, News & General
Topic: Reduce / Eliminate Emerging Market in Retirement?
Replies: 11
Views: 1145

Re: Do you split your VEU (into VEA+VWO) & VEA (into VGK+VPL

chasiu209 wrote:Intending to buy a 'market' portfolio with country weightings being as close to weighted avg market cap as possible.

Then why not just use VTI + VXUS? These each are intended to represent close to total market weighting within each market.

Kevin
by Kevin M
Tue Jul 22, 2014 5:36 pm
 
Forum: Investing - Help with Personal Investments
Topic: Do you split your VEU (into VEA+VWO) & VEA (into VGK+VPL)?
Replies: 32
Views: 1429

Re: With all these recent posts regarding tilts, should I?

I don't think your thread title captures the essence of what you're asking. It seems that what you're really asking is whether you are tilted to large-cap US stocks, and if it makes sense to adjust your portfolio so that the US stock portion more closely represents total US stocks. What you have now...
by Kevin M
Mon Jul 21, 2014 10:05 pm
 
Forum: Investing - Theory, News & General
Topic: With all these recent posts regarding tilts, should I?
Replies: 14
Views: 1001

Re: years of investing and balances

Here is a link that shows you what you need to save at different ages. Hope it helps you. Don't get discouraged. It's not how you start but how you finish. Good Luck! http://www.linkedin.com/today/post/article/20140325152340-462880-want-to-retire-with-1-million-here-s-how-much-you-need-to-save-each...
by Kevin M
Mon Jul 21, 2014 4:19 pm
 
Forum: Investing - Help with Personal Investments
Topic: years of investing and balances
Replies: 23
Views: 1922

Re: years of investing and balances

<snip> your savings grow (over and above your contributions) at an average of 2% annually above inflation, you will end up with nearly $5.5M in today's dollars. <snip> A 2% growth rate is very conservative, by the way. You almost can get that now, just from dividends from a total bond index fund. &...
by Kevin M
Sun Jul 20, 2014 10:48 pm
 
Forum: Investing - Help with Personal Investments
Topic: years of investing and balances
Replies: 23
Views: 1922

Re: years of investing and balances

And assuming 0% real return and starting at $0, you will hit $1M in about 7 years. You can use a fancy tool, but you also can figure a lot of this out with a spreadsheet. Everything above was just multiplication and division, but if you want to get fancier, you can use functions like FV. For example...
by Kevin M
Sun Jul 20, 2014 10:28 pm
 
Forum: Investing - Help with Personal Investments
Topic: years of investing and balances
Replies: 23
Views: 1922

Re: years of investing and balances

Say for example my gross income is 400 K and our current monthly expense is about 10K including mortgage. So If I retire by say 65 ( 26-27 years from now) and want to have atleast the same life style if not better, whats my goal retirement savings. I have set my savings goal as 37% of gross income/...
by Kevin M
Sun Jul 20, 2014 10:18 pm
 
Forum: Investing - Help with Personal Investments
Topic: years of investing and balances
Replies: 23
Views: 1922

Re: years of investing and balances

rsbv wrote:Are there any good calculators online that tell you if you r on track

One that people here mention a lot is FIRECalc.

Kevin
by Kevin M
Sun Jul 20, 2014 10:05 pm
 
Forum: Investing - Help with Personal Investments
Topic: years of investing and balances
Replies: 23
Views: 1922

Re: Help me get on the right track with retirement

-SPTN TOT MKT IDX ADV (FSTVX) 0.07% -SPTN INTL INDEX ADV (FSIVX) 0.17% 1. So, should I attempt to replicate a 3 fund portfolio in each account, or invest in single funds in some accounts to achieve a 3 fund portfolio across all accounts? Option 2. The two funds above are good for the stock portion....
by Kevin M
Sun Jul 20, 2014 10:00 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help me get on the right track with retirement
Replies: 2
Views: 538

Re: years of investing and balances

I'm a new investor and starting very late ( 38 yrs) Just curious to know what ages did y'all start investing and how many years did it take for you to get to your 1st million. Seems like its going to take me forever... I was 31 when I started my first "real" job, and I retired when I was ...
by Kevin M
Sun Jul 20, 2014 9:29 pm
 
Forum: Investing - Help with Personal Investments
Topic: years of investing and balances
Replies: 23
Views: 1922

Re: Value Overvalued

Rebalancing tends to help with this kind of thing.

Kevin
by Kevin M
Sun Jul 20, 2014 9:19 pm
 
Forum: Investing - Theory, News & General
Topic: Value Overvalued
Replies: 23
Views: 2178

Re: how often do you look at your account

Many accounts, so the question isn't too relevant to me. I do have a spreadsheet with all of my accounts and approximate balances, but usually when I open it it's related to posting something here (like what % I have in a particular asset class). Don't pay much attention to balance or how much it's ...
by Kevin M
Sun Jul 20, 2014 9:09 pm
 
Forum: Investing - Help with Personal Investments
Topic: how often do you look at your account
Replies: 70
Views: 3544

Re: Ultimate Buy and Hold - 8 slices vs 4

I think TrevH has not posted in these forums for a couple of years and I have not found any postings under that user name. I will say that if you do a search, there is a large thread on the TrevH portfolio and backtesting that was done a couple of years ago. Trev H doesn't post as much as in the pa...
by Kevin M
Sun Jul 20, 2014 8:03 pm
 
Forum: Investing - Theory, News & General
Topic: Ultimate Buy and Hold - 8 slices vs 4
Replies: 596
Views: 205287

Re: POLL: Do you have a dedicated REIT allocation?

TnGuy wrote:In which one of Bill's recent books does he discuss precious metals, etc? Thank you.
David

"Rational Expectations", which I think he describes as an updated version of his first book, "The Intelligent Asset Allocator".

Kevin
by Kevin M
Sun Jul 20, 2014 7:57 pm
 
Forum: Investing - Theory, News & General
Topic: POLL: Do you have a dedicated REIT allocation?
Replies: 123
Views: 6905

Re: Do you "Tax Adjust" your Asset Allocation (Pre vs Roth,

<snip> so but the difference may not be as large with just tax-deferred and taxable accounts (i.e., no Roths). The tax adjustment for a taxable account is likely much smaller than for a tIRA/401k. Yes, that's what I was getting at (I edited my quote to say what I meant); thanks for adding the clari...
by Kevin M
Sun Jul 20, 2014 6:20 pm
 
Forum: Investing - Theory, News & General
Topic: Do you "Tax Adjust" your Asset Allocation (Pre vs Roth, etc)
Replies: 77
Views: 3391

Re: Can't decide to keep 401k with previous employer or move

I didn't realize this earlier, but the Extended Market fund is not a TSM like I had assumed - instead it is TSM minus S&P 500 stocks. So even in the new employer account I will need to do some wiggling to simulate a TSM fund. I was going to point this out, since in your first post you only ment...
by Kevin M
Sun Jul 20, 2014 6:13 pm
 
Forum: Investing - Help with Personal Investments
Topic: Can't decide to keep 401k with previous employer or move
Replies: 29
Views: 2252

Re: Poll: Has your AA changed in the last 18 months

<snip> However, this is 100% net stock; I could have paid cash for the condo and put all my investments in stock, but instead I borrowed (on a mortgage) and lent (bonds in my retirement plan) equal dollar amounts. I'm a little surprised that you've became more aggressive, even if only slightly. Not...
by Kevin M
Sun Jul 20, 2014 5:43 pm
 
Forum: Investing - Theory, News & General
Topic: Poll: Has your AA changed in the last 18 months
Replies: 51
Views: 2406

Re: Do you "Tax Adjust" your Asset Allocation (Pre vs Roth,

I don't tax-adjust my portfolio, because (1) I am math challenged to a great extent, and (2) It's too much trouble, at least for me. Given most of the responses in this thread, however, perhaps I should have a more aggressive allocation, since my rollover IRA consists entirely of fixed income. If y...
by Kevin M
Sun Jul 20, 2014 5:38 pm
 
Forum: Investing - Theory, News & General
Topic: Do you "Tax Adjust" your Asset Allocation (Pre vs Roth, etc)
Replies: 77
Views: 3391

Re: Poll: Has your AA changed in the last 18 months

No change to major asset class policy allocations, so voted no. However, I did recently move another 3% of portfolio from bond funds to a direct 5-year CD earning 2.3%. I also modified my REIT rebalancing band from -10%/+25% to -20%/+15% based in supposedly rich valuation. I also haven't been waitin...
by Kevin M
Sun Jul 20, 2014 5:28 pm
 
Forum: Investing - Theory, News & General
Topic: Poll: Has your AA changed in the last 18 months
Replies: 51
Views: 2406

Re: Do you "Tax Adjust" your Asset Allocation (Pre vs Roth,

Although I agree that mathematically it makes sense to tax-adjust, I'm too lazy to do it, so I voted 50/50 based on what I actually do. Similarly, I don't count part of my corporate bond (even high yield bond) allocation as equity. I just figure my portfolio is somewhat riskier than the unadjusted A...
by Kevin M
Sun Jul 20, 2014 5:02 pm
 
Forum: Investing - Theory, News & General
Topic: Do you "Tax Adjust" your Asset Allocation (Pre vs Roth, etc)
Replies: 77
Views: 3391

Re: RMDs on Vanguard Inherited IRA

Multiple individual beneficiaries . If as of September 30 of the year following the year in which the owner dies there is more than one beneficiary, the beneficiary with the shortest life expectancy will be the designated beneficiary if both of the following apply. •All of the beneficiaries are ind...
by Kevin M
Sun Jul 20, 2014 3:12 pm
 
Forum: Personal Finance (Not Investing)
Topic: RMDs on Vanguard Inherited IRA
Replies: 21
Views: 1075

Re: Ultimate Buy and Hold - 8 slices vs 4

Thus by holding all 4 boxes as opposed to just 2, you are hedging your bets more. The traditional econometric model assumes that returns are additively separable. That is, your portfolio returns is simply a linear function of your exposures to market, small, and value factors, plus some random nois...
by Kevin M
Sun Jul 20, 2014 3:00 pm
 
Forum: Investing - Theory, News & General
Topic: Ultimate Buy and Hold - 8 slices vs 4
Replies: 596
Views: 205287

Re: I was tempted to market time and didn't

I think playing with a "small money account" is fine for this kind of thing. You may learn something, and it won't help or hurt much. I would just be careful about letting any apparent success in the small money account convince you to try to do much market timing in your big money account...
by Kevin M
Sat Jul 19, 2014 11:07 pm
 
Forum: Investing - Theory, News & General
Topic: I was tempted to market time and didn't
Replies: 19
Views: 1807

Re: Vanguard Target retirement vs S&P500 indexing

I personally would favor the Target Retirement fund. It adds US small/mid-cap stocks (about 20% of US stock market) and 30% of stocks in international. Both of these modifications increase diversification, which Vanguard obviously thinks is a good thing. The 10% in bonds won't make much difference, ...
by Kevin M
Sat Jul 19, 2014 10:25 pm
 
Forum: Investing - Help with Personal Investments
Topic: Vanguard Target retirement vs S&P500 indexing
Replies: 7
Views: 1588

Re: Need advice on a bond fund for taxable account

I think these are fine funds, and use them both. How did you arrive at the 70/30 split? Some folks recommend avoiding CA completely (Larry Swedroe, I believe), while others recommend limiting state-specific funds to no more than 1/2 of tax-exempt bond funds (Bill Bernstein). I hold somewhat more tha...
by Kevin M
Sat Jul 19, 2014 10:15 pm
 
Forum: Investing - Help with Personal Investments
Topic: Need advice on a bond fund for taxable account
Replies: 9
Views: 736

Re: Move Morningstar Portfolio To Vanguard

In my experience, doing full or partial IRA transfers between custodians is pretty easy. I have done many. I can't think of any difference between Roth IRAs and traditional IRAs with respect to transfers. What problems have you heard about?

Kevin
by Kevin M
Sat Jul 19, 2014 10:08 pm
 
Forum: Investing - Help with Personal Investments
Topic: Move Morningstar Portfolio To Vanguard
Replies: 5
Views: 714

Re: RMDs on Vanguard Inherited IRA

Final questions -- 2 of them. So I found the Table of Single Life Expectancy for IRAs for beneficiaries. Good enough. Now, in year 2015 (the first year I have to take the RMD), I begin the year at age 62 and if I live will turn 63 during the year. From what I am reading it indeed seems that I would...
by Kevin M
Sat Jul 19, 2014 9:32 pm
 
Forum: Personal Finance (Not Investing)
Topic: RMDs on Vanguard Inherited IRA
Replies: 21
Views: 1075
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