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Re: Legal Fees for Trusts and Wills

Also could you clarify by what you mean by Living Will? <snip> For privacy reasons I think it's much easier to hand the doctor or hospital a copy of your healthcare directive rather than a document that may list in detail your assets and who you want to take your dog. A living will is basically ano...
by Kevin M
Mon Mar 02, 2015 6:27 pm
 
Forum: Personal Finance (Not Investing)
Topic: Legal Fees for Trusts and Wills
Replies: 34
Views: 1937

Re: Looking for any final input on these IRA/401k allocation

^I like it! I probably would add Vanguard small-cap index fund in her 401k in an 80/20 ratio with the S&P 500 fund, which comes out to 28% S&P 500, 7% small-cap, but it's not going to make a huge difference.

Kevin
by Kevin M
Mon Mar 02, 2015 1:16 pm
 
Forum: Investing - Help with Personal Investments
Topic: Looking for any final input on these IRA/401k allocations
Replies: 9
Views: 460

Re: Dividends + LT/ST Capitol Gains for retiree (GES)

OK, so these may not be the most tax-efficient funds. What are your choices? If you have large capital gains, you may have to pay capital gain taxes to get rid of them and buy something more tax efficient. Do you have large capital gains? If so, do you have any capital losses carried forward from pr...
by Kevin M
Mon Mar 02, 2015 1:07 pm
 
Forum: Investing - Help with Personal Investments
Topic: Dividends + LT/ST Capitol Gains for retiree (GES)
Replies: 11
Views: 582

Re: Do you consider mortgage payments as savings?

I was shocked/glad to have banked this past year's surprising bond/muni outperformance, and the last 5 years running my bond returns (even after considering tax) have exceeded my discounted mortgage interest by more than 2% annually. Yes, this just validates the riskiness (less certain expected ret...
by Kevin M
Mon Mar 02, 2015 11:52 am
 
Forum: Personal Finance (Not Investing)
Topic: Do you consider mortgage payments as savings?
Replies: 215
Views: 8448

Re: Do you consider mortgage payments as savings?

I thought I said all I had to say on the topic back on page 1 or 2, but maybe not. In case it hasn't been brought up yet, it may be useful to think of your mortgage as a negative bond, since that's really what it is. You have sold a bond to the bank to fund the purchase of this risky asset. So the a...
by Kevin M
Mon Mar 02, 2015 4:37 am
 
Forum: Personal Finance (Not Investing)
Topic: Do you consider mortgage payments as savings?
Replies: 215
Views: 8448

Re: Looking for any final input on these IRA/401k allocation

One of Taylor's points is not to view your accounts separately, but instead as one big portfolio. For example, you could hold a total US stock fund in your 401k, a total international stock fund in her 401k, and a total bond fund in your IRA, if the percentages happened to work out to match your des...
by Kevin M
Mon Mar 02, 2015 4:15 am
 
Forum: Investing - Help with Personal Investments
Topic: Looking for any final input on these IRA/401k allocations
Replies: 9
Views: 460

Re: Taxes on DCA'd Backdoor Roth

I just looked at this post because I saw that Alan S. had replied. It is so great to have experts like Alan contributing to the forum.

Kevin
by Kevin M
Mon Mar 02, 2015 3:21 am
 
Forum: Personal Finance (Not Investing)
Topic: Taxes on DCA'd Backdoor Roth
Replies: 5
Views: 498

Re: Dividends + LT/ST Capitol Gains for retiree (GES)

Jerry55 wrote:I've been told that I should not hold these, as they're taxed because they're active funds.

Who told you this? Can you provide any details as to the rationale?

I don't think this is a problem. I am retired, and enjoy spending my dividends and interest (and occasionally my capital gains).

Kevin
by Kevin M
Mon Mar 02, 2015 3:09 am
 
Forum: Investing - Help with Personal Investments
Topic: Dividends + LT/ST Capitol Gains for retiree (GES)
Replies: 11
Views: 582

Re: Portfolio Questions

It seems to me that you have very little need to take risk, so I think that 65% in stocks is unnecessarily risky. On the other hand, the projections you've run indicate that you have high ability to take risk; i.e., even if stocks tank, you probably will be OK. I would let the lower of the ability, ...
by Kevin M
Mon Mar 02, 2015 2:39 am
 
Forum: Investing - Help with Personal Investments
Topic: Portfolio Questions
Replies: 1
Views: 197

Re: Please correct if my tax calculation is not accurate

I would review the tax forms and worksheets provided by the software to try and find your mistake. Either you are calculating it incorrectly, or you are entering something into the software incorrectly. There is nothing strange or unusual about your situation, so it should be very straightforward. I...
by Kevin M
Mon Mar 02, 2015 2:23 am
 
Forum: Personal Finance (Not Investing)
Topic: Please correct if my tax calculation is not accurate
Replies: 11
Views: 441

Re: Professional tax advice - when is it worth it?

As I recall, the tax guy I went to was running an ad about being able to reduce your taxes by more than his fee. I think that's why I never heard back from him. You might try the approach of just asking if they will review your return, offering to pay them their fee if they can save you more than th...
by Kevin M
Mon Mar 02, 2015 2:13 am
 
Forum: Personal Finance (Not Investing)
Topic: Professional tax advice - when is it worth it?
Replies: 21
Views: 1286

Re: Is Roth conversion too late for 2014?

Yes, the idea of marginal tax rate when tax is negative was confusing to me at first as well, but the concept still applies. I learned this in helping my niece do her taxes. If we can reduce her income by $100 and increase her tax credit by $25, then her marginal tax rate is 25%, even though she pay...
by Kevin M
Mon Mar 02, 2015 2:07 am
 
Forum: Investing - Help with Personal Investments
Topic: Is Roth conversion too late for 2014?
Replies: 8
Views: 520

Re: Nearing retirement and need the voice of experience

There are two ways I think about it, and they both lead to the same conclusion. The first paradigm is the one I learned from Larry Swedroe some years ago, which is to consider your ability, willingness, and need to take risk. It sounds like your need to take risk is very low, which points to a very ...
by Kevin M
Mon Mar 02, 2015 1:47 am
 
Forum: Investing - Help with Personal Investments
Topic: Nearing retirement and need the voice of experience
Replies: 3
Views: 570

Re: Professional tax advice - when is it worth it?

How about trying to find a competent tax professional and offer them $100 or $200 to review your situation? I once took my return to a local tax person, and told him he would have my business if he could save me any money on my taxes. I never heard back from him. On the other hand, I've seen people ...
by Kevin M
Mon Mar 02, 2015 1:29 am
 
Forum: Personal Finance (Not Investing)
Topic: Professional tax advice - when is it worth it?
Replies: 21
Views: 1286

Re: Is Roth conversion too late for 2014?

I'm a bit confused by the way you present the data; the way I usually analyze this type of thing is to increase/decrease income by $100 and see how much the tax due/refund changes. That tells me the marginal tax rate. For example, if I increase income by $100 by converting an extra $100 from traditi...
by Kevin M
Mon Mar 02, 2015 1:17 am
 
Forum: Investing - Help with Personal Investments
Topic: Is Roth conversion too late for 2014?
Replies: 8
Views: 520

Re: Can short term bonds rise in value when rates rise?

The problem is the vagueness of the notion "when interest rates rise". There is not a single interest rate that affects bond prices. For a specific bond, the interest rate that matters is the interest rate for the maturity of that bond. It would be useful to learn more about "the yiel...
by Kevin M
Mon Mar 02, 2015 12:52 am
 
Forum: Investing - Theory, News & General
Topic: Can short term bonds rise in value when rates rise?
Replies: 4
Views: 658

Re: Yale Endowment Report 2014

How can they get 36.1% annualized returns over a 20-year period on private equity!? Wow that is impressive! :greedy With Warren Buffett reporting somewhere around 23% or so annualized, it would be interesting to see how they achieve 36.1% annualized over a 20 year period. That's just on the private...
by Kevin M
Sun Mar 01, 2015 10:24 pm
 
Forum: Investing - Theory, News & General
Topic: Yale Endowment Report 2014
Replies: 26
Views: 2240

Re: Yale Endowment Report 2014

Wow. Definitely not a Boglehead portfolio model. Active management is highlighted as a key advantage in every asset class. Huge allocation to private equity. Domestic equity (US stocks) only a tiny fraction of the overall portfolio. There's got to be a Larry Swedroe article here. Yep, here's one: Sw...
by Kevin M
Sun Mar 01, 2015 10:23 pm
 
Forum: Investing - Theory, News & General
Topic: Yale Endowment Report 2014
Replies: 26
Views: 2240

Re: Irrevocable Trusts for Asset Protection

Not to hijack the thread, but does anyone have experience with setting up an irrevocable, asset protection trust in a state which allows them? Are there any low-cost corporate trustees which would administer such a trust & invest in index funds? Thanks in advance for any insight via Forum or pm...
by Kevin M
Sun Mar 01, 2015 9:52 pm
 
Forum: Personal Finance (Not Investing)
Topic: Legal Fees for Trusts and Wills
Replies: 34
Views: 1937

Re: You and Your Dumb Money

Have you increased your equity allocation? No. If anything, I've made a mental note to allow it to drift down from 30% to 25% if the market gods so dictate. Have you switched equity holdings? No. Can you be more specific? Have you maintained your portfolio and rebalanced? Yes. I've sold some indivi...
by Kevin M
Sun Mar 01, 2015 8:30 pm
 
Forum: Investing - Theory, News & General
Topic: You and Your Dumb Money
Replies: 17
Views: 3132

Re: Legal Fees for Trusts and Wills

Read the Nolo Press book on creating your own living trust. It's really quite easy; you can do it yourself for $0. The attorneys here will give you many reasons why you shouldn't do this, but read the book anyway, and then make up your own mind. I have settled three estates, two as successor trustee...
by Kevin M
Sun Mar 01, 2015 8:16 pm
 
Forum: Personal Finance (Not Investing)
Topic: Legal Fees for Trusts and Wills
Replies: 34
Views: 1937

Re: Portfolio Help and Tax Shelter

Kevin M. I really appreciate you sharing your knowledge and insight with me. I went ahead and put my reply standard format and changed the subject so others could more easily comment and hopefully I'm more clear. I guess my main question is should I just start over and sell ? Currently through abou...
by Kevin M
Sun Mar 01, 2015 2:10 pm
 
Forum: Investing - Help with Personal Investments
Topic: REIT Allocation and Bond Fund Types Help !
Replies: 12
Views: 1293

Re: Bond Funds vs Individual Bonds

If you want to be able to sell your bond early without risk of losing [much] principal, it's worth considering bank CDs, as you can break those and just pay the early withdrawal penalty. That should be a good cue for Kevin M to jump in. :happy Nah, this is about individual bonds vs. bond funds; I t...
by Kevin M
Sat Feb 28, 2015 10:02 pm
 
Forum: Investing - Theory, News & General
Topic: Bond Funds vs Individual Bonds
Replies: 11
Views: 664

Re: Maintaining a spreadsheet.

Kevin: How much time during the year do you spend maintaining your spreadsheet and making portfolio adjustments? Thank you and best wishes. Taylor Hi Taylor, Maintaining: pretty much no time, although I recently added columns for the percent changes relative to 52-week highs and lows, which gives m...
by Kevin M
Sat Feb 28, 2015 1:32 pm
 
Forum: Investing - Theory, News & General
Topic: Looking for good market dashboard
Replies: 6
Views: 577

Re: Do you consider mortgage payments as savings?

You can call it what you want, but the principal portion of the mortgage payment is increasing your equity share in a risky asset, and interest portion is an expense to service debt. Them's just the facts. A house is a less liquid asset than say a stock fund, but it is an asset.

Kevin
by Kevin M
Sat Feb 28, 2015 11:32 am
 
Forum: Personal Finance (Not Investing)
Topic: Do you consider mortgage payments as savings?
Replies: 215
Views: 8448

Re: Looking for good market dahsboard

I use a spreadsheet that uses the googlefinance function to retrieve quotes for ETFs. It includes daily change as well as percent above 52 week lows and percent below 52 week highs, percent above or below yesterday close for daily high and low, and high/low range for the day; conditional formatting ...
by Kevin M
Sat Feb 28, 2015 11:22 am
 
Forum: Investing - Theory, News & General
Topic: Looking for good market dashboard
Replies: 6
Views: 577

Re: Risk--Again. The common stepping stone

Look at the progression of William Bernstein's books, and his own acknowledgement that he started out too complex I loved Intelligent Asset Allocator ! Just saying... :happy Yeah, as did I. I was just reflecting on Bernstein's own words that I remember reading somewhere. He said something about eng...
by Kevin M
Wed Feb 25, 2015 8:53 pm
 
Forum: Investing - Theory, News & General
Topic: Risk--Again. The common stepping stone
Replies: 57
Views: 3216

Re: Risk--Again. The common stepping stone

There continues to be confusion here between the fundamental concept of investment risk, different types of investment risk, various measures of that risk, the validity of those measures, and other things such as behavioral risks (e.g., selling in a panic). I don't really understand what the goal is...
by Kevin M
Wed Feb 25, 2015 4:47 pm
 
Forum: Investing - Theory, News & General
Topic: Risk--Again. The common stepping stone
Replies: 57
Views: 3216

Re: REITs [Why did Vanguard's REIT lose 2% today?]

I usually don't ask why something has moved up or down, but whether or not it's enough of a move to trigger selling or buying based on my (somewhat flexible) investment policy. I think the market is complex enough that it's often hard to really know why a security or index moves the way it does, and...
by Kevin M
Wed Feb 25, 2015 1:52 pm
 
Forum: Investing - Theory, News & General
Topic: REITs [Why did Vanguard's REIT lose 2% today?]
Replies: 33
Views: 3296

Re: REIT Allocation and Bond Fund Types Help !

I want to emphasize a point that powermega already made: You can make your 2014 IRA contribution until April 15, 2015, and then you can make your 2015 contribution any time before April 15, 2016. So you could contribute up to $11,000 this year. This applies to either Roth IRA or Traditional IRA cont...
by Kevin M
Wed Feb 25, 2015 1:25 pm
 
Forum: Investing - Help with Personal Investments
Topic: REIT Allocation and Bond Fund Types Help !
Replies: 12
Views: 1293

Re: REIT Allocation and Bond Fund Types Help !

Welcome to the forum goaztecsfight ! You've shared much of the info already, but the standard recommendation is to post your situation in a standard format for asking portfolio questions. See link below in signature line. If you decide to follow this, you can simply edit your original post. You also...
by Kevin M
Wed Feb 25, 2015 12:43 pm
 
Forum: Investing - Help with Personal Investments
Topic: REIT Allocation and Bond Fund Types Help !
Replies: 12
Views: 1293

Re: Why Bonds With 20 Year Horizon?

It's a good question. Sounds like you have a high willingness to take risk. Ability to take risk is high based on expected investment horizon, but of course that's not guaranteed (possible disability, etc.). Unless you're already wealthy, there is not a lack of need to take risk. Note that Vanguard ...
by Kevin M
Tue Feb 24, 2015 3:17 pm
 
Forum: Investing - Theory, News & General
Topic: Why Bonds With 20 Year Horizon?
Replies: 26
Views: 2001

Re: Someone Else Filed My Tax Return

It happened to me too--about three years ago, IIRC. I just mailed the paper return; didn't contact the IRS or do any of the other stuff you mentioned. No problems since. I owed taxes, so I assume the IRS was happy to get the money. Maybe they've tightened up on the procedures since then.

Kevin
by Kevin M
Tue Feb 24, 2015 2:49 pm
 
Forum: Personal Finance (Not Investing)
Topic: Someone Else Filed My Tax Return
Replies: 29
Views: 2662

Re: A case for long term government bonds

Kevin - Thank you for that helpful explanation. Your're welcome. So when those longer term rates dropped so much during January, is it a mistake to attribute that drop in rates to investors buying those bonds? I'm no expert, but a general principle of economics is that price is driven by supply and...
by Kevin M
Tue Feb 24, 2015 2:22 pm
 
Forum: Investing - Theory, News & General
Topic: A case for long term government bonds
Replies: 40
Views: 3100

Re: A case for long term government bonds

Novice question here. Can anyone explain why has so much money gone into long term bonds despite the Fed expressing its intent to tighten? Since 12/31/13, the 10 year rate dropped from 3% down to 1.67% earlier this month and the 30 year dropped to 2.25%. Who is buying all these low-yielding long te...
by Kevin M
Tue Feb 24, 2015 1:03 pm
 
Forum: Investing - Theory, News & General
Topic: A case for long term government bonds
Replies: 40
Views: 3100

Re: Risk--Again. The common stepping stone

Thanks to all, very insightful feedback. I think part of my problem is that defining stock risk, bond risk, investing risk, do not cover all risks. Of course not. Investment risk is related to the uncertainty of expected return of an investment. That has nothing to do with risks like getting in a s...
by Kevin M
Tue Feb 24, 2015 12:40 pm
 
Forum: Investing - Theory, News & General
Topic: Risk--Again. The common stepping stone
Replies: 57
Views: 3216

Re: A case for long term government bonds

Check out chart #3 in this Forbes piece from 2013, illustrating outperformance of 25 year zero coupon vs. S&P 500. http://www.forbes.com/sites/investor/2013/10/22/is-the-bond-rally-of-a-lifetime-finally-over/ Yes, this is what we've been determining if we could validate. I posted a similar char...
by Kevin M
Tue Feb 24, 2015 3:50 am
 
Forum: Investing - Theory, News & General
Topic: A case for long term government bonds
Replies: 40
Views: 3100

Re: Risk--Again. The common stepping stone

I don't know. Having a significant exposure to statistics in a professional capacity before even looking at investing, I am not sure what the challenges are for a person not coming from that background. I know for sure that, for example, trained musicians hear and appreciate things in music that I ...
by Kevin M
Mon Feb 23, 2015 3:24 pm
 
Forum: Investing - Theory, News & General
Topic: Risk--Again. The common stepping stone
Replies: 57
Views: 3216

Re: Risk--Again. The common stepping stone

The above comments by Kevin are very good. I think there is truly less complication over risk than is made out to be. Thanks. I could tell from your previous comments that we are pretty much on the same page on this one. Part of Kevin's discussion assumes that a person has in mind a clear view of w...
by Kevin M
Mon Feb 23, 2015 2:49 pm
 
Forum: Investing - Theory, News & General
Topic: Risk--Again. The common stepping stone
Replies: 57
Views: 3216

Re: Risk--Again. The common stepping stone

The textbook definition of investment risk works well for me. The words may be slightly different from one book to another, but the fundamental concept is common. From one textbook (Reilly, 1994): Risk is the uncertainty that an investment will earn its expected rate of return. But then we need to b...
by Kevin M
Mon Feb 23, 2015 1:27 pm
 
Forum: Investing - Theory, News & General
Topic: Risk--Again. The common stepping stone
Replies: 57
Views: 3216

Re: A case for long term government bonds

All fixed income indices, including those published by Barclays (formerly Lehman Brothers), roll their constituents monthly, at month end. In the case of the 30-year benchmark index, the most recently auctioned 30-year at the end of each month is held in the index for the next month. From 2002 to 2...
by Kevin M
Mon Feb 23, 2015 12:04 pm
 
Forum: Investing - Theory, News & General
Topic: A case for long term government bonds
Replies: 40
Views: 3100

Re: A case for long term government bonds

Just to add to Kevin M's statistics, from 1981 (inclusive) to 2014: Great to have haginile join the conversation! 1) Barclays 30-year on-the-run Treasury index delivered a total return of 9.3% per year (geometric), annual volatility of 12.6% & information ratio of 0.7. Numbers for my series are...
by Kevin M
Sat Feb 21, 2015 3:10 pm
 
Forum: Investing - Theory, News & General
Topic: A case for long term government bonds
Replies: 40
Views: 3100

Re: Risk/Return Spectrum

^Or just use PortfolioVisualizer as I recommended. Modify the three portfolios to be 100% US stocks, 100% Total Bond, and 100% Money Market, as done here . http://s26.postimg.org/i3wjq0w55/Stocks_bonds_cash_cumulative_log.png And I still think it's useful to also show it on the linear scale, to help...
by Kevin M
Sat Feb 21, 2015 1:30 pm
 
Forum: Investing - Theory, News & General
Topic: Risk/Return Spectrum
Replies: 19
Views: 1061

Re: Risk/Return Spectrum

I am making a chart to show some young people about investing in different asset classes and to show them the importance of saving and starting to invest when they are young, volatility and the need to stay the course, and living within your means. Wow, a lot of stuff to get across in one chart! As...
by Kevin M
Sat Feb 21, 2015 12:11 pm
 
Forum: Investing - Theory, News & General
Topic: Risk/Return Spectrum
Replies: 19
Views: 1061

Re: Spreadsheet for backtesting (includes TrevH's data)

I believe the spreadsheet sources are the same as used by PortfolioVisualizer. The Frequently Asked Questions lists these data sources for gold:

Gold
KITCO returns (kitco.com) 1972-2004
GLD ETF 2004-2014

Kevin
by Kevin M
Sat Feb 21, 2015 10:45 am
 
Forum: Investing - Theory, News & General
Topic: Spreadsheet for backtesting (includes TrevH's data)
Replies: 645
Views: 399708

Re: A case for long term government bonds

I did some work on estimating returns on annually rolling 30-year zero-coupon bonds since 1981 or 1982. My calculations do show that it has returned more than S&P 500, but not 6.3X. I get 2.8X for 1981-2014 and 3.8X for 1982-2014. Note that changing the start date by only one year makes a huge d...
by Kevin M
Fri Feb 20, 2015 7:49 pm
 
Forum: Investing - Theory, News & General
Topic: A case for long term government bonds
Replies: 40
Views: 3100

Re: Risk/Return Spectrum

I am making a list of asset classes and ranking them by expected risk/return for a project and I would appreciate any feedback and more asset classes and feedback/changes on the rankings. Can you tell us about the project? Are you interested in historical returns or expected returns? What sources o...
by Kevin M
Fri Feb 20, 2015 1:08 pm
 
Forum: Investing - Theory, News & General
Topic: Risk/Return Spectrum
Replies: 19
Views: 1061

Re: A case for long term government bonds

But what caught my attention is the following statement: "In 1981, Shilling said we were “in for the bond rally of a lifetime.” Since then, a strategy of rolling a 30-year zero-coupon bond outperformed the S&P 500 by 6.3 times ." Is that right? I am trying to find data on the this bon...
by Kevin M
Thu Feb 19, 2015 4:59 pm
 
Forum: Investing - Theory, News & General
Topic: A case for long term government bonds
Replies: 40
Views: 3100

Re: Midcaps [Why does it seem to beat Total Stock Market?]

Sorry if this has already been posted: VIMSX or Vo (Vanguard Mid-cap) seems to always beat Total Stock market. This is not true. It's best understood by first understanding that Vanguard mid-cap fund is much more similar to VG small-cap fund than to a large-cap fund like Total Stock, 500 Index, or ...
by Kevin M
Tue Feb 17, 2015 3:20 pm
 
Forum: Investing - Theory, News & General
Topic: Midcaps [Why does it seem to beat Total Stock Market?]
Replies: 17
Views: 2440
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