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by Kevin M
Sun May 03, 2015 4:08 pm
Forum: Investing - Theory, News & General
Topic: What do you consider "cash"
Replies: 27
Views: 1288

Re: What do you consider "cash"

A brokered CD is very much like a bond. It fluctuates in value depending on interest-rate changes, and it provides an income stream. A direct CD is unique--especially in the environment of the last few years. Now, and for the last few years, you generally earn a higher rate than a Treasury of compar...
by Kevin M
Sun May 03, 2015 2:52 pm
Forum: Investing - Help with Personal Investments
Topic: Is there any stable value funds that returns ~3% outside of a 401k?
Replies: 8
Views: 855

Re: Is there any stable value funds that returns ~3% outside of a 401k?

^Well, if we're going to branch out from SV funds, one can also earn 3% on up to $15K or $20K in a reward checking account (RCA). There actually is one offering up to 4.09% and 5.09% with some extra work (but the last tier requires giving up more in 2% cash back credit card purchases than you'll mak...
by Kevin M
Sun May 03, 2015 2:38 pm
Forum: Investing - Help with Personal Investments
Topic: Everyone is saying to get out of Bond Funds? Ignore?
Replies: 38
Views: 3294

Re: Everyone is saying to get out of Bond Funds? Ignore?

Nice post, Dodge, but one correction, and some clarification: If you're invested in Vanguard's Total Bond Index Fund , your average maturity date is 7.8 years. This makes your "Point of indifference" about 2.5 years. After that, you are better off with the higher interest rates. Looking at...
by Kevin M
Sat May 02, 2015 11:10 pm
Forum: Investing - Help with Personal Investments
Topic: Is there any stable value funds that returns ~3% outside of a 401k?
Replies: 8
Views: 855

Re: Is there any stable value funds that returns ~3% outside of a 401k?

The only one I know about is the Colorado 529 Stable Value Plus, earning 3.09% for 2015. It's a great option if you want to earmark some funds for qualified educational purposes, and since money is fungible, you could also invest in stocks in a taxable account for longer-term educational goals.

Kevin
by Kevin M
Sat May 02, 2015 11:00 pm
Forum: Investing - Help with Personal Investments
Topic: S&P heavy 401k - Asset Allocation Across Accounts
Replies: 19
Views: 1414

Re: S&P heavy 401k - Asset Allocation Across Accounts

Thanks for the suggestions. Where can I find recommended portfolio % per asset class? Ex. How much REITS and Small Cap Value Index to hold. I personally don't know much about REITS and if they are necessary. I would just stick with a total market-cap type of approach until you've thoroughly researc...
by Kevin M
Sat May 02, 2015 10:02 pm
Forum: Investing - Help with Personal Investments
Topic: There's a monster under my bed... [CDs instead of bonds?]
Replies: 27
Views: 2686

Re: There's a monster under my bed... [CDs instead of bonds?]

In addition to the PenFed 3% CD (3.05% APY), the only CD I've purchased at that rate or better over last 4.5 years was a PenFed 7-year CD at 3.49% APY, purchased on 11/16/2010. Closest runner-ups were PenFed 5-year at 2.75% on 12/14/2010, and Ally 5-year at 2.74% on 9/15/2010.

Kevin
by Kevin M
Sat May 02, 2015 8:48 pm
Forum: Investing - Help with Personal Investments
Topic: There's a monster under my bed... [CDs instead of bonds?]
Replies: 27
Views: 2686

Re: There's a monster under my bed... [CDs instead of bonds?

I have a couple of brokered CD's but the majority are directly with banks. Thanks. Wow, we have a lot in common. I also have a couple of brokered CDs earning 5%, but the rest are held directly with banks and credit unions. I also have a 30/70 stock/fixed portfolio target. So our biggest difference ...
by Kevin M
Sat May 02, 2015 8:02 pm
Forum: Investing - Help with Personal Investments
Topic: There's a monster under my bed... [CDs instead of bonds?]
Replies: 27
Views: 2686

Re: There's a monster under my bed... [CDs instead of bonds?]

I believe fixed income diversity is somewhat important so I urge people who feel Total Bond is all they need to consider broadening their fixed income choices a bit. I urge those that are all CDs to consider broadening their choices also - especially if they seem to have unreasonable fear of moving...
by Kevin M
Fri May 01, 2015 7:04 pm
Forum: Investing - Help with Personal Investments
Topic: Can you improve this constructed portfolio?
Replies: 34
Views: 2076

Re: Can you improve this constructed portfolio?

To clarify this, Trev H would often use the present tense, incorrectly, when the past tense was appropriate to describe back-testing. "When you *add* x% of y, it *does* z," would be used instead of "When I *added* x% of y, it *did* z." His assertion, it seemed, was that the same...
by Kevin M
Fri May 01, 2015 6:59 pm
Forum: Investing - Help with Personal Investments
Topic: There's a monster under my bed... [CDs instead of bonds?]
Replies: 27
Views: 2686

Re: There's a monster under my bed... [CDs instead of bonds?

Cash like products/CDs are "safe" as far as no loss of nominal value but are lucky to barely keep up with inflation. A bond fund earning 2% will not keep up with inflation any better than a CD earning 2%. Some allocation to intermediate an bond fund usually provides a sweet spot - better ...
by Kevin M
Fri May 01, 2015 3:08 pm
Forum: Investing - Help with Personal Investments
Topic: There's a monster under my bed... [CDs instead of bonds?]
Replies: 27
Views: 2686

Re: Excellent post!

Thank you for your excellent post comparing bonds and CDs. Best wishes. Taylor Thanks for the acknowledgement Taylor. Best wishes to you as well! To me once one is operating in the intermediate duration area it is pretty much a wash. Granted, all rates are pitifully low now, but for Bogleheads who ...
by Kevin M
Fri May 01, 2015 1:20 pm
Forum: Investing - Help with Personal Investments
Topic: Best way to add Small Cap and REITs
Replies: 13
Views: 900

Re: Best way to add Small Cap and REITs

Tilting with extended market to get the stock style to 25% small would also increase the mid caps to roughly 32% - would need to look into that further... The question is, how much does it matter? Below is a link to a great online tool called PortfolioVisualizer, that you can use to evaluate how di...
by Kevin M
Fri May 01, 2015 12:48 pm
Forum: Investing - Help with Personal Investments
Topic: Help with Assett Allocation in Semi-Retirement
Replies: 10
Views: 768

Re: Help with Assett Allocation in Semi-Retirement

<snip> we don't need to take on a lot of risk now, but could if we wanted to. Our yearly expenses are less that our yearly income now, so our strategy now should be more about preservation of our assets. You have absorbed the inputs here very well, and have summarized them very accurately and succi...
by Kevin M
Fri May 01, 2015 12:28 pm
Forum: Investing - Help with Personal Investments
Topic: There's a monster under my bed... [CDs instead of bonds?]
Replies: 27
Views: 2686

Re: There's a monster under my bed... [CDs instead of bonds?

...and it's spelled B-O-N-D-S! For whatever reason, I've never been comfortable pulling the trigger and adding bonds to my portfolio. I've always considered CD's as MY bonds. I'm a conservative investor (30% equities/70% CD's/cash). At present, my CD's are earning an average of 3%. I've got some ca...
by Kevin M
Thu Apr 30, 2015 10:48 pm
Forum: Investing - Theory, News & General
Topic: Holding long-term bond to increase rebalancing bouns?
Replies: 11
Views: 665

Re: Holding long-term bond to increase rebalancing bouns?

Just looking at worst calendar years, not maximum drawdowns, here is what we see for S&P 500, 3-month T.bills, and 10-year Treasuries: Year S&P500 3moTB 10yrTB ---- ------- ----- ------ 1931 -43.84% 2.31% -2.56% 2008 -36.55% 1.59% 20.10% 1937 -35.34% 0.30% 1.38% 1974 -25.90% 7.78% 1.99% 1930...
by Kevin M
Thu Apr 30, 2015 10:27 pm
Forum: Investing - Help with Personal Investments
Topic: Total Bond Index Fund or Other?
Replies: 14
Views: 1222

Re: Total Bond Index Fund or Other?

And I probably shouldn't say that my view is the same as Swedroe's, as I know I one time said that he favored Treasury-only portfolios and he promptly posted and told me I was wrong. Yeah, and I'm pretty sure that he's mentioned several times that he and his firm like CDs too. And although he has p...
by Kevin M
Thu Apr 30, 2015 10:21 pm
Forum: Investing - Help with Personal Investments
Topic: Help with Assett Allocation in Semi-Retirement
Replies: 10
Views: 768

Re: Help with Assett Allocation in Semi-Retirement

It seems like the basic question is whether or not to take more risk in stocks because of the bond-like, safe income of the pension. This is a common question. Although there is debate about how much you should think of your pension or SS as a bond, there is pretty good consensus that having reliabl...
by Kevin M
Thu Apr 30, 2015 9:50 pm
Forum: Investing - Help with Personal Investments
Topic: Total Bond Index Fund or Other?
Replies: 14
Views: 1222

Re: Total Bond Index Fund or Other?

^I'm referring specifically to a paper that I understand he co-authored. Have you read that paper?

Kevin
by Kevin M
Thu Apr 30, 2015 9:47 pm
Forum: Investing - Help with Personal Investments
Topic: S&P heavy 401k - Asset Allocation Across Accounts
Replies: 19
Views: 1414

Re: S&P heavy 401k - Asset Allocation Across Accounts

My first inclination would be to use a VG Target Retirement fund in your 401k. The slightly higher ER is worth the wonderful diversification and simplicity you get in the one fund, IMO. Generally a 500 index fund is used in a 401k because there are no good alternatives that give exposure to the othe...
by Kevin M
Thu Apr 30, 2015 9:29 pm
Forum: Investing - Help with Personal Investments
Topic: Best way to add Small Cap and REITs
Replies: 13
Views: 900

Re: Best way to add Small Cap and REITs

If you want to overweight small-caps, the best way to do this might be to add more of Extended Market in the 401(k), replacing some Institutional Index. Currently, you hold the two funds in a 4:1 ratio, which matches the total stock market. I like this idea. To elaborate, if you look at historical ...
by Kevin M
Thu Apr 30, 2015 9:24 pm
Forum: Investing - Help with Personal Investments
Topic: Total Bond Index Fund or Other?
Replies: 14
Views: 1222

Re: Total Bond Index Fund or Other?

When it comes to bonds, Total Bond is almost never the wrong answer even if it might not be the perfect answer. For an 80/20 portfolio, I would personally prefer a Treasury-only portfolio (i.e. going the opposite direction of Bogle) as I've found Larry Swedore's arguments in favor of this approach ...
by Kevin M
Thu Apr 30, 2015 9:21 pm
Forum: Investing - Theory, News & General
Topic: Holding long-term bond to increase rebalancing bouns?
Replies: 11
Views: 665

Re: Holding long-term bond to increase rebalancing bouns?

I would advise caution in relying on a backtest during a period when rates were mostly falling from historically high levels, providing a nice boost in the price-change component of bond returns. That cannot happen starting from current, historically low interest rates. On the other hand, Larry Swed...
by Kevin M
Thu Apr 30, 2015 8:57 pm
Forum: Investing - Theory, News & General
Topic: Do REITs really offer effective portfolio diversification?
Replies: 108
Views: 8796

Re: Do REITs really offer effective portfolio diversificatio

^Why don't you redraw that graph for 2000-2003? Beware recency bias.

Kevin
by Kevin M
Thu Apr 30, 2015 8:53 pm
Forum: Investing - Help with Personal Investments
Topic: Total Bond Index Fund or Other?
Replies: 14
Views: 1222

Re: Total Bond Index Fund or Other?

For an 80/20 allocation, Total Bond is fine, especially to the extent simplicity is desired over optimizing the return from the fixed-income portion of the portfolio. The stock portion dominates the expected return and risk (including volatility), so what you do with the fixed-income portion is not ...
by Kevin M
Thu Apr 30, 2015 8:35 pm
Forum: Investing - Theory, News & General
Topic: Do REITs really offer effective portfolio diversification?
Replies: 108
Views: 8796

Re: Do REITs really offer effective portfolio diversificatio

With respect to REITs being characterized as more bond-like prior to 2008, here is one reference. In Unconventional Success , published in 2005, David Swensen says: Real estate returns and risks fall between those of bonds and equities. With bond-like rental streams and equity-like residual values, ...
by Kevin M
Thu Apr 30, 2015 8:16 pm
Forum: Investing - Theory, News & General
Topic: Do REITs really offer effective portfolio diversification?
Replies: 108
Views: 8796

Re: Do REITs really offer effective portfolio diversificatio

Kevin wrote: So I would consider my house more like my stocks than like my bonds. So, my house is a stock? Where is the evidence for this? You have to consider the context in which I wrote that. The context is that a house is a risky asset and stocks are risky assets, so a house is more like stocks...
by Kevin M
Thu Apr 30, 2015 7:51 pm
Forum: Investing - Theory, News & General
Topic: Anyone have an asset allocation not based on percentages?
Replies: 26
Views: 2285

Re: Anyone have an asset allocation not based on percentages

I arrived at my (conservative) retirement AA using the ability/willingness/need to take risk paradigm, but after learning about the LMP/RP paradigm from Bill Bernstein, I can think about my portfolio in that way as well. During the 2008/2009 fiasco, which occurred shortly after I retired, I was thin...
by Kevin M
Thu Apr 30, 2015 7:40 pm
Forum: Investing - Theory, News & General
Topic: Anyone have an asset allocation not based on percentages?
Replies: 26
Views: 2285

Re: Anyone have an asset allocation not based on percentages

Yall aren't looking at this from a modern portfolio theory perspective. There's a mix of stocks and bonds that has a higher risk-adjusted return than 100% stocks, True, but the problem is that we don't know what this portfolio is going forward; we can only know what it was looking backward. But it ...
by Kevin M
Thu Apr 30, 2015 7:32 pm
Forum: Investing - Help with Personal Investments
Topic: VFSUX or 2 year CD?
Replies: 4
Views: 546

Re: VFSUX or 2 year CD?

Gonna invest a small amount of money in our short-term bucket. The nominal time horizon for this bucket is 3-4 years, but there's a very good chance the money will be invested much longer than that. 30 day SEC yield on VFSUX (short term investment grade bonds) is 1.6%, and the 2 year raise-your-rat...
by Kevin M
Thu Apr 30, 2015 7:14 pm
Forum: Investing - Help with Personal Investments
Topic: Can you improve this constructed portfolio?
Replies: 34
Views: 2076

Re: Can you improve this constructed portfolio?

Take care bogleheads, I'll never be back. In addition to the post 7 minutes later, a quick search shows that dcarste had not left us as of yesterday! Also, it appears that dcarste may have learned something here, since dcarste's portfolio appears to have changed between April 27 and April 28: My ve...
by Kevin M
Thu Apr 30, 2015 6:28 pm
Forum: Investing - Help with Personal Investments
Topic: Vanguard Extended Market Versus Separate Mid and Small Cap
Replies: 6
Views: 634

Re: Vanguard Extended Market Versus Separate Mid and Small C

If the goal is to approximate total US stocks, I would use lower-cost Extended Market fund in taxable or an IRA in preference to a higher cost small/mid-cap fund(s) in the 401k. I would use them in about an 80/20 ratio, but anything between 75/25 and 85/15 is fine. However, it's not going to make th...
by Kevin M
Thu Apr 30, 2015 5:47 pm
Forum: Investing - Help with Personal Investments
Topic: Is $700/yr too much to pay Vanguard to have VSMGX?
Replies: 28
Views: 3086

Re: Is $700/yr too much to pay Vanguard to have VSMGX?

Could not find Mike Piper's specific article on the one-fund solution with this link. What am I missing? I used this search: "one fund" site:www.obliviousinvestor.com, and one of the links is: Are We Still Using the LifeStrategy Growth Fund? I didn't try to backtrack to Mike's earlier pos...
by Kevin M
Thu Apr 30, 2015 3:41 pm
Forum: Investing - Theory, News & General
Topic: Asset allocation during RMD years-unneeded but required wd's
Replies: 13
Views: 1055

Re: Asset allocation during RMD years-unneeded but required

I think you are thinking too much in terms of growth and not enough in terms of risk. You say you have read all about the LMP/RP idea, but what you say does not reflect that you embrace that approach, unless we take at face value your original comment about not needing your RMDs, which you seem to h...
by Kevin M
Thu Apr 30, 2015 2:18 pm
Forum: Personal Finance (Not Investing)
Topic: Turbo IRS Audit [anyone use audit defense?]
Replies: 2
Views: 474

Re: Turbo IRS Audit [anyone use audit defense?]

I have experience dealing with correction notices, both by myself and with Audit Defense. In all cases, I've been successful at defending the original tax return (in one case got a small check from the IRS), but haven't done it in a few years. One nice thing about Audit Defense is that they handle a...
by Kevin M
Thu Apr 30, 2015 2:02 pm
Forum: Investing - Theory, News & General
Topic: Asset allocation during RMD years-unneeded but required wd's
Replies: 13
Views: 1055

Re: Asset allocation during RMD years

If you really want to go with the LMP approach, then you will put enough to cover all of your minimum residual expenses (necessary expected expenses after SS and pension) for the rest of your lives--not just seven years. Using another framework--ability, willingness, and need to take risk--your abil...
by Kevin M
Thu Apr 30, 2015 1:42 pm
Forum: Investing - Help with Personal Investments
Topic: Is $700/yr too much to pay Vanguard to have VSMGX?
Replies: 28
Views: 3086

Re: Is $700/yr too much to pay Vanguard to have VSMGX?

I personally wouldn't do it, but if I wanted a super-simple solution, and/or wanted it as a damper on my urge to tinker, I would do it. My understanding is that forum member, author, and blogger Mike Piper, went with a one-fund solution for exactly the latter reason. Here is a link to his blog if yo...
by Kevin M
Thu Apr 30, 2015 1:38 pm
Forum: Investing - Theory, News & General
Topic: Transfer or Rollover
Replies: 5
Views: 216

Re: Transfer or Rollover

I have done many IRA transfers, and have always done trustee-to-trustee. You may be able to transfer in kind to transfer the fund to Vanguard, but that would require opening a Vanguard brokerage account, and that may involve additional fees for a small account. Perhaps you could open a brokerage acc...
by Kevin M
Thu Apr 30, 2015 1:32 pm
Forum: Investing - Help with Personal Investments
Topic: Humbly Seeking Guidance
Replies: 9
Views: 660

Re: Humbly Seeking Guidance

I vote for Vanguard. Schwab has some good mutual funds and ETFs, and minimums are lower, so good for a smaller account. However, the whole Schwab vibe is much more active-management, stock-picking focused than Vanguard. If you ignore that, you can be OK there, but any interactions with Schwab reps a...
by Kevin M
Thu Apr 30, 2015 1:16 pm
Forum: Personal Finance (Not Investing)
Topic: How do I calculate depreciation/basis for rental?
Replies: 38
Views: 2067

Re: How do I calculate depreciation/basis for rental?

Depreciation is only suppose to offset rental income correct? Not necessarily. Depreciation is reported on Schedule E along with other rental expenses and rental income. For rental real estate activity in which you actively participate (the typical case), the net gain or loss is transferred to form...
by Kevin M
Wed Apr 29, 2015 9:52 pm
Forum: Investing - Help with Personal Investments
Topic: Bond question
Replies: 13
Views: 1092

Re: Bond question

Thanks Kevin, incredibly informative. You're welcome! Looks like I need to take a closer look at CD's. Honestly I know nothing about them and am trying my best to establish a proxy of a four core portfolio across four different investment vehicles: my 401k (which I zero control over...can't choose ...
by Kevin M
Wed Apr 29, 2015 9:19 pm
Forum: Investing - Theory, News & General
Topic: Do REITs really offer effective portfolio diversification?
Replies: 108
Views: 8796

Re: Do REITs really offer effective portfolio diversificatio

I believe that owning real estate in the form of home ownership can made a significant difference in how we invest. For example, a home-owner, if necessary, can sell or take out a mortgage to turn equity into cash. This allows the home-owner to consider more risky investments than a non-owner. Inte...
by Kevin M
Wed Apr 29, 2015 5:31 pm
Forum: Investing - Help with Personal Investments
Topic: Bond question
Replies: 13
Views: 1092

Re: Bond question

Sorry...typo. I make roughly $90,000 per year with overtime included. So, yep, in the 28% tax bracket. If you are single, top of 25% bracket for 2015 is $90,750, standard deduction is $6,300 and personal exemption is $4,000. So considering only earned income, you have $90,750 - (90,000 - 6,300 - 4,...
by Kevin M
Wed Apr 29, 2015 1:59 pm
Forum: Personal Finance (Not Investing)
Topic: revising a living trust vs. new one..
Replies: 8
Views: 597

Re: revising a living trust vs. new one..

In my case, what I did was use 2009 Nolo Living Trust Maker, then cut and pasted some items into it, that were required for VG as a successor trustee, and some language a lawyer gave me on a child subtrust. , so what Nolo created was NOT the final Trust. I just use the templates provided with the N...
by Kevin M
Wed Apr 29, 2015 12:29 pm
Forum: Personal Finance (Not Investing)
Topic: Updated opinions about Ally Bank?
Replies: 79
Views: 12761

Re: Updated opinions about Ally Bank?

It's in increments of $100, for instance if your checking balance is $0 and you write a check for $1,050, $1,100 would be transferred over from savings, this guy wrote about it, he has a screen shot showing an overdraft transfer of $3,300: http://www.mymoneyblog.com/ally-bank-checking-update-after-...
by Kevin M
Wed Apr 29, 2015 11:24 am
Forum: Investing - Help with Personal Investments
Topic: 1 year short term investments
Replies: 14
Views: 1165

Re: 1 year short term investments

Once again, you can do better than 1% with a reward checking account (RCA). I earn 3% on up to $45,000 in two RCAs. A great resource for RCAs, savings accounts, and CDs is DepositAccounts.com . For RCAs: Reward Checking Account Rates | High Yield Rewards Checking Accounts . With one you can earn 5.0...
by Kevin M
Tue Apr 28, 2015 7:08 pm
Forum: Personal Finance (Not Investing)
Topic: Updated opinions about Ally Bank?
Replies: 79
Views: 12761

Re: Updated opinions about Ally Bank?

^As I recall, they told me that the overdraft amounts were limited to $100 each, which makes it not very useful to me; for example, an overdraft of $600 would use up all six free transfers from savings. But as long as your overdraft amounts fit within these limits, I would think you'd be fine.

Kevin
by Kevin M
Tue Apr 28, 2015 2:58 pm
Forum: Investing - Help with Personal Investments
Topic: How to best utilize TSP in retirement, particularly G Fund
Replies: 22
Views: 1487

Re: How to best utilize TSP in retirement, particularly G Fu

ccf, are you and your in-laws familiar with the concept of having a Liability Matching Portfolio (LMP) of safe assets to fund residual expenses (after SS and pensions) in retirement? If not, I strongly recommend that you and they read this book: The Ages of the Investor: A Critical Look at Life-cycl...
by Kevin M
Tue Apr 28, 2015 1:59 pm
Forum: Investing - Help with Personal Investments
Topic: bond allocation as retirement nears
Replies: 20
Views: 1277

Re: bond allocation as retirement nears

Good point Kevin Thank you! I have to counter by adding that Vanguard research shows using Total Bond Market and sticking with it while interest rates rise actually benefits you, if you stick it out over 4 to 5 years (research is on vanguard to look up). This is true. I have shared hundreds of post...
by Kevin M
Mon Apr 27, 2015 10:04 pm
Forum: Investing - Help with Personal Investments
Topic: bond allocation as retirement nears
Replies: 20
Views: 1277

Re: bond allocation as retirement nears

dcarste already has a thread on dcarste's portfolio: Bogleheads • View topic - Can you improve this constructed portfolio?. I suggest any discussion of dcarste's portfolio be directed there. Let's not hijack the OP's thread too much.

Kevin
by Kevin M
Mon Apr 27, 2015 9:49 pm
Forum: Investing - Help with Personal Investments
Topic: bond allocation as retirement nears
Replies: 20
Views: 1277

Re: bond allocation as retirement nears

I'd like to provide some balance to counter what I think is some bad information being shared here. I am retired, have a portfolio of 30/70 stock/fixed-income, and about 70% of my fixed income is in direct CDs, so about 50% of my total portfolio. What you (OP) do is up to you, but seeing another pos...

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