Search found 150 matches

by LMK5
Tue Jun 23, 2015 9:35 pm
Forum: Investing - Help with Personal Investments
Topic: Need Advice on Rebalancing Equity Subclasses in Taxable Account
Replies: 13
Views: 556

Re: Need Advice on Rebalancing Equity Subclasses in Taxable Account

One thing not mentioned here is the buy-low-sell-high aspect of rebalancing--adding to sectors that have done relatively poorly and reducing those that have done better. Don't the expected gains from this principle nullify at least a portion of the tax liability that one might incur by rebalancing i...
by LMK5
Tue Jun 23, 2015 9:32 pm
Forum: Investing - Help with Personal Investments
Topic: Need Advice on Rebalancing Equity Subclasses in Taxable Account
Replies: 13
Views: 556

Re: Need Advice on Rebalancing Equity Subclasses in Taxable Account

Here is what I have in my Investment Policy Statement, making a distinction between major asset classes (US stock, foreign stock, bonds, real estate) and subclasses (such as large-cap emerging markets). I will pay capital gains tax to rebalance in a taxable account only if a major asset class or su...
by LMK5
Tue Jun 23, 2015 9:10 pm
Forum: Investing - Help with Personal Investments
Topic: Need Advice on Rebalancing Equity Subclasses in Taxable Account
Replies: 13
Views: 556

Re: Taxable Account Rebalance: Need Advice on Minimizing Damage

BL wrote:Are you using Specific Id for your basis? This allows you to pick the lots that have small gains when you sell.


No, unfortunately I'm using the average method. This is what gets reported from the fund companies.
by LMK5
Tue Jun 23, 2015 7:23 pm
Forum: Investing - Help with Personal Investments
Topic: Need Advice on Rebalancing Equity Subclasses in Taxable Account
Replies: 13
Views: 556

Taxable Account Rebalance: Need Advice on Minimizing Damage

[Thread merged into here, see below. --admin LadyGeek] My current equity balance is at 60% and I want to bring it down to 50%. Within the equity allocation, I have specific allocations I've been maintaining for large cap, midcap, small cap, international, and natural resources equities. My major pr...
by LMK5
Tue Jun 23, 2015 5:57 pm
Forum: Investing - Help with Personal Investments
Topic: Best Advice [Best single piece of advice to give a new investor]
Replies: 56
Views: 4927

Re: Best Advice [Best single piece of advice to give a new investor]

1) Invest automatically and mechanically.
2) Max out your 401k from day 1.
3) Set a 50/50 asset allocation and just forget about it. Practice the incredibly successful strategy of benign neglect.
by LMK5
Tue Jun 23, 2015 3:11 pm
Forum: Investing - Help with Personal Investments
Topic: Need Advice on Rebalancing Equity Subclasses in Taxable Account
Replies: 13
Views: 556

Re: Need Advice on Rebalancing Equity Subclasses in Taxable Account

Generally, I do not cause a tax liability when rebalancing. I will let my asset allocation among equities to drift a little bit before I will incur a tax liability. Do you have some tax-loss harvesting opportunities? For instance, in large-caps which you are not thinking of selling now? If you do w...
by LMK5
Tue Jun 23, 2015 2:48 pm
Forum: Investing - Help with Personal Investments
Topic: Need Advice on Rebalancing Equity Subclasses in Taxable Account
Replies: 13
Views: 556

Need Advice on Rebalancing Equity Subclasses in Taxable Account

My current equity balance is at 60% and I want to bring it down to 50%. Within the equity allocation, I have specific allocations I've been maintaining for large cap, midcap, small cap, international, and natural resources equities. My major problem is that my midcap and small cap allocations have t...
by LMK5
Fri May 15, 2015 2:42 pm
Forum: Investing - Theory, News & General
Topic: Best Asset Allocation if you've "won the game"
Replies: 86
Views: 9165

Re: Best Asset Allocation if you've "won the game"

When I retired 12 years ago at the age of 55, and determined that the main goal of my portfolio was capital conservation, I changed my allocation to: 30% Equities (a Global equity index fund plus small allocation of a Emerging Markets index fund) 55% Bonds (2 total return bond funds) 15% 5 year bon...
by LMK5
Fri May 15, 2015 2:39 pm
Forum: Investing - Theory, News & General
Topic: Best Asset Allocation if you've "won the game"
Replies: 86
Views: 9165

Re: Best Asset Allocation if you've "won the game"

How much in assets relative to what you'd need on a yearly basis? Do you care about how much you'd have left when you die? (to pass on) If you're just turtling in capital preservation mode, I would think something closer to 30/70 than 50/50 is appropriate. I could probably get by withdrawing 4% of ...
by LMK5
Fri May 15, 2015 2:34 pm
Forum: Investing - Theory, News & General
Topic: Best Asset Allocation if you've "won the game"
Replies: 86
Views: 9165

Re: Best Asset Allocation if you've "won the game"

Some actual numbers: for someone planning on $2M drawing $80k/year annually, if the market falls 50% and stays there, your choice is to keep 4% SWR and living on $40k/year or keeping on plan and hoping a few years of 8% draw downs don't deplete the account. Assuming the bond market is flat, only ha...
by LMK5
Fri May 15, 2015 10:14 am
Forum: Investing - Theory, News & General
Topic: Best Asset Allocation if you've "won the game"
Replies: 86
Views: 9165

Best Asset Allocation if you've "won the game"

At 54, I feel like if I can keep my total assets about where they are, I could retire at 60. I am presently at 55/40/5 (stocks/bonds/cash). Is there an optimal asset allocation when you feel that you don't need to take much risk to get to the finish line? Also, my annual retirement contributions are...
by LMK5
Wed May 13, 2015 3:08 pm
Forum: Investing - Help with Personal Investments
Topic: Corporate bond defined maturity funds
Replies: 26
Views: 1714

Re: Corporate bond defined maturity funds

What else are you supposing the mutual fund is investing in other than the one 10-year over the period? Does it hold it to maturity? What about interest rates? Anyway, the contribution of an asset to total return is the same if you hold it or you have it indirectly through a mutual fund. But for a ...
by LMK5
Wed May 13, 2015 2:18 pm
Forum: Investing - Help with Personal Investments
Topic: Corporate bond defined maturity funds
Replies: 26
Views: 1714

Re: Corporate bond defined maturity funds

Here's the type of scenario one needs to pencil out--perhaps you can help. For 10-year treasurys, the current rate is 2.16%. The long term mean is 4.62%. If rates should climb over, let's say, a 2-year period close to the mean level and stay there, what would the fund be worth after 10 years? Certa...
by LMK5
Tue May 12, 2015 7:00 pm
Forum: Investing - Help with Personal Investments
Topic: Corporate bond defined maturity funds
Replies: 26
Views: 1714

Re: Corporate bond defined maturity funds

P.S: one other thing I meant to say is that the reason it's not IMHO worth targetting future expenses with fixed income alone in whatever way (even CDs) is the stock allocation, which may contribute an unknown amount towards those expenses, or require an unknown amount for rebalancing. Both unknown...
by LMK5
Tue May 12, 2015 3:33 pm
Forum: Investing - Help with Personal Investments
Topic: Corporate bond defined maturity funds
Replies: 26
Views: 1714

Re: Corporate bond defined maturity funds

LMK5: there are two basic misunderstandings about bonds that I'm guessing are making you much too wary of bond funds. These are not uncommon (so don't feel too bad), but at the same time they are "bond 101" and one really should get this right before venturing into anything like individua...
by LMK5
Tue May 12, 2015 1:46 pm
Forum: Investing - Help with Personal Investments
Topic: Corporate bond defined maturity funds
Replies: 26
Views: 1714

Re: Corporate bond defined maturity funds

I have kids going to college in the next 2-5 years. I am seriously thinking of putting a good percentage of my fixed income assets in a defined maturity fund to help fund this. Two things I am concerned about is low volume on some of these funds and premium to NAV. The Guggenheim fund you site does...
by LMK5
Tue May 12, 2015 10:56 am
Forum: Investing - Help with Personal Investments
Topic: Corporate bond defined maturity funds
Replies: 26
Views: 1714

Re: Corporate bond defined maturity funds

I don't oppose the building of a ladder, but I do want to address the misconception that using a ladder protects you from losses that you would have with a bond fund holding a similar portfolio. It seems to me that the clear advantage of a defined maturity fund is when you have a specific need date...
by LMK5
Tue May 12, 2015 9:46 am
Forum: Investing - Help with Personal Investments
Topic: Corporate bond defined maturity funds
Replies: 26
Views: 1714

Re: Corporate bond defined maturity funds

I don't oppose the building of a ladder, but I do want to address the misconception that using a ladder protects you from losses that you would have with a bond fund holding a similar portfolio. It seems to me that the clear advantage of a defined maturity fund is when you have a specific need date...
by LMK5
Sun Dec 01, 2013 12:42 am
Forum: Investing - Theory, News & General
Topic: Counting SS as Part Of Bond Allocation
Replies: 7
Views: 582

Counting SS as Part Of Bond Allocation

Most investors calculate their asset allocation based on their holdings of equities and fixed income investments. Wouldn't it be more accurate to attribute future expected SS benefits as part of your fixed income allocation, even before receiving those benefits? This would significantly increase wei...
by LMK5
Sat Nov 30, 2013 11:55 am
Forum: Investing - Theory, News & General
Topic: Vanguard Portfolio Watch Bug
Replies: 11
Views: 789

Re: Vanguard Portfolio Watch Bug

I think Portfolio Watch is generally pretty buggy. I actually called and asked about an unremitting bug recently--after working fine for months, Portfolio Watch suddenly decided that several of my individual equities were actually Canadian, which stayed that way for several weeks. I finally called ...
by LMK5
Sat Nov 30, 2013 11:23 am
Forum: Investing - Theory, News & General
Topic: Vanguard Portfolio Watch Bug
Replies: 11
Views: 789

Re: Vanguard Portfolio Watch Bug

Has anyone run into this error and notified Vanguard of it. They didn't seem to care too much about it when I told them via phone. There are so many things related to IT that Vanguard covers poorly, it makes me both angry and sad, then again I'm fairly resigned to it, like Livesoft. I rely on Vangu...
by LMK5
Sat Nov 30, 2013 12:36 am
Forum: Investing - Theory, News & General
Topic: Vanguard Portfolio Watch Bug
Replies: 11
Views: 789

Vanguard Portfolio Watch Bug

There is a bug in the Portfolio Watch Tool. It gives me the following message when I try to analyze my Vanguard 529 accounts which are listed as "Outside Investments" in "Balances and Holdings": "You have outside investments that are being classified as "Other." We...
by LMK5
Thu Jul 11, 2013 10:47 am
Forum: Investing - Help with Personal Investments
Topic: Rebalancing in Taxable Accounts
Replies: 15
Views: 2186

Re: Rebalancing in Taxable Accounts

Thanks for the excellent info. In your example though, when you sell stocks in the taxable account to raise cash you still have to pay CG tax. Also, if you exchanged bonds for the same amount of stock in your tax advantaged account that you sold in your taxable account, the AA would be different th...
by LMK5
Thu Jul 11, 2013 9:11 am
Forum: Investing - Help with Personal Investments
Topic: Rebalancing in Taxable Accounts
Replies: 15
Views: 2186

Re: Rebalancing in Taxable Accounts

You need to look at whole portfolio as one. Use fresh/new money to re-balance your account. Are you contributing to 401k every 2 weeks ? Why don't tilt to all bonds for few cycle in 401K account. Also as other mentioned, don't reinvest dividends in taxable account, let it go to MM or saving. There ...
by LMK5
Thu Jul 11, 2013 9:10 am
Forum: Investing - Help with Personal Investments
Topic: Rebalancing in Taxable Accounts
Replies: 15
Views: 2186

Re: Rebalancing in Taxable Accounts

How did you fair emotionally during the crash of 2008-2009? Did that event not spur you into making your taxable accounts less risky in spite of them being less tax efficient? I don't know your age, but if you are retirement or very close then I guess it doesn't matter that much. I'm about 10 years...
by LMK5
Thu Jul 11, 2013 9:04 am
Forum: Investing - Help with Personal Investments
Topic: Rebalancing in Taxable Accounts
Replies: 15
Views: 2186

Re: Rebalancing in Taxable Accounts

Like livesoft, my taxable account is all stocks with a little bit of cash (collected dividends etc). IMO, Money is money whether it is in your left pocket (taxable) or right pocket (tax advantaged). Stocks will be volatile whether they are held in taxable or tax advantaged. If there is a substantia...
by LMK5
Wed Jul 10, 2013 4:16 pm
Forum: Investing - Help with Personal Investments
Topic: Rebalancing in Taxable Accounts
Replies: 15
Views: 2186

Re: Rebalancing in Taxable Accounts

What I mean by "equity heavy" is when my taxable accounts have more equity exposure than the total portfolio does. I like to keep my taxable accounts a little safer than my retirement accounts because any short term needs would be paid from the taxable accounts. So, if I have an overall A...
by LMK5
Wed Jul 10, 2013 1:54 pm
Forum: Investing - Help with Personal Investments
Topic: Rebalancing in Taxable Accounts
Replies: 15
Views: 2186

Re: Rebalancing in Taxable Accounts

My experience is that one rebalances less frequently than annually if one uses bands. I don't know if it has been analyzed, but it might even be a good idea to avoid taxes by using somewhat larger bands when one is positioned to have to rebalance in taxable accounts. Rebalancing on a calendar sched...
by LMK5
Wed Jul 10, 2013 1:50 pm
Forum: Investing - Help with Personal Investments
Topic: Rebalancing in Taxable Accounts
Replies: 15
Views: 2186

Re: Rebalancing in Taxable Accounts

This is all probably a personal choice. Our taxable accounts are 100% equity, so I am not sure what you mean by "but when I see my taxable accounts getting too equity-heavy". For us, we would only put non-equity in a taxable account if our tax-advantaged accounts were already 100% fixed i...
by LMK5
Wed Jul 10, 2013 9:04 am
Forum: Investing - Help with Personal Investments
Topic: Rebalancing in Taxable Accounts
Replies: 15
Views: 2186

Rebalancing in Taxable Accounts

It's that time of year for me to do my annual rebalance. I look at my whole portfolio, including taxable and non-taxable retirement accounts, then rebalance to my objectives. I usually do this by rebalancing in the retirement accounts to avoid capital gains taxes, but when I see my taxable accounts ...
by LMK5
Fri Apr 05, 2013 9:00 am
Forum: Personal Finance (Not Investing)
Topic: Can I file form 8814 for child's K-1 income?
Replies: 9
Views: 1188

Re: Can I file form 8814 for child's K-1 income?

You need to file individual returns for the kids. A return reporting income from the trust will include Sched E page 2 identifying the trust as the source of the income. I disagree. Leaving aside the issue of any foreign tax credits, there is no reason a parent cannot file Form 8814 in this situati...
by LMK5
Fri Apr 05, 2013 12:26 am
Forum: Personal Finance (Not Investing)
Topic: Can I file form 8814 for child's K-1 income?
Replies: 9
Views: 1188

Re: Can I file form 8814 for child's K-1 income?

You need to file individual returns for the kids. A return reporting income from the trust will include Sched E page 2 identifying the trust as the source of the income. I disagree. Leaving aside the issue of any foreign tax credits, there is no reason a parent cannot file Form 8814 in this situati...
by LMK5
Thu Apr 04, 2013 9:06 am
Forum: Personal Finance (Not Investing)
Topic: Can I file form 8814 for child's K-1 income?
Replies: 9
Views: 1188

Re: Can I file form 8814 for child's K-1 income?

You need to file individual returns for the kids. A return reporting income from the trust will include Sched E page 2 identifying the trust as the source of the income. Since these children are presumably subject to the "kiddie tax" and their unearned income exceeds $1900, their returns ...
by LMK5
Wed Apr 03, 2013 10:03 am
Forum: Personal Finance (Not Investing)
Topic: Can I file form 8814 for child's K-1 income?
Replies: 9
Views: 1188

Can I file form 8814 for child's K-1 income?

My 3 kids each receive K-1s from a testamentary trust each year. On the K-1 it shows ordinary dividends, qualified dividends, and foreign taxes paid, all from mutual fund investments. For years I have been filing separate returns for them, but it is time consuming. Am I eligible to file a form 8814 ...
by LMK5
Tue Mar 13, 2012 2:22 pm
Forum: Investing - Help with Personal Investments
Topic: Kids receive a Schedule K-1: Must they file individually?
Replies: 3
Views: 475

Kids receive a Schedule K-1: Must they file individually?

My kids receive some income from a trust which is detailed in a Schedule K-1 they receive each year. The income is strictly from dividends and capital gains. I have been filing individual returns for each of them for years, but I'm wondering if I could save some time by reporting their income via a ...
by LMK5
Sat Nov 26, 2011 11:00 am
Forum: Investing - Theory, News & General
Topic: Defined Maturity ETFs vs. Traditional Bond Funds
Replies: 9
Views: 1566

Re: Defined Maturity ETFs vs. Traditional Bond Funds

Interesting product. But I wouldn't buy it. Now lets consider the Bulletshares 2015 Corporate ETF. We are talking about 4 year bonds here. No one issues 4 year bonds. (usually 3, 5, and 10 years are issued). So no ability to buy new issues. And say a "bid list" of corporate bonds comes ou...
by LMK5
Thu Nov 24, 2011 10:47 am
Forum: Investing - Theory, News & General
Topic: Defined Maturity ETFs vs. Traditional Bond Funds
Replies: 9
Views: 1566

Defined Maturity ETFs vs. Traditional Bond Funds

I was looking at Guggenheim's Defined Maturity ETFs and thought they filled an obvious need. With interest rates almost certain to rise over the next 10 years, it seems to me that bond mutual fund investors are going to get hurt. Are defined maturity ETFs the answer? I'd like to know what the outcom...
by LMK5
Tue Dec 28, 2010 12:47 pm
Forum: Investing - Theory, News & General
Topic: Is there really a penalty for taking too little risk?
Replies: 42
Views: 4404

If you put that in the bank you wouldn’t even realize you were taking “risk”.


Well put.
by LMK5
Tue Dec 28, 2010 12:44 pm
Forum: Investing - Theory, News & General
Topic: Is there really a penalty for taking too little risk?
Replies: 42
Views: 4404

Absolutely. I have two friends who used to be husband and wife. They both worked with me and we all owned property together so I know a lot about their finances. She is very conservative financially and he is a risk taker and entrepreneur. They split up back in the 1980s over money and risk taking ...
by LMK5
Tue Dec 28, 2010 10:33 am
Forum: Investing - Theory, News & General
Topic: Is there really a penalty for taking too little risk?
Replies: 42
Views: 4404

Is there really a penalty for taking too little risk?

I read and hear about people all the time who took too much risk with their investments and who now have to continue working instead of retiring the way they had planned. 2008-9 certainly expanded the population of people in this group. Does anyone know of a retiree who felt they took too little ris...
by LMK5
Thu Dec 23, 2010 1:04 am
Forum: Investing - Theory, News & General
Topic: What's Your Allocation to High Yield Bonds?
Replies: 80
Views: 8518

What's Your Allocation to High Yield Bonds?

My allocation is 8% of my total portfolio. If you don't have an allocation at all, could you share your reasoning?

Larry
by LMK5
Sun Dec 19, 2010 1:29 pm
Forum: Investing - Theory, News & General
Topic: Why do midcaps seem to be missing from model portfolios?
Replies: 20
Views: 2752

Why do midcaps seem to be missing from model portfolios?

Most example or model portfolios I see include both large cap and small cap stocks, but very few contain an allocation to midcaps. Some years ago, midcaps were a common slice of a broad-based portfolio. Are midcaps too highly correlated with either the large cap or small cap sector to be considered ...
by LMK5
Thu Dec 16, 2010 10:16 am
Forum: Investing - Theory, News & General
Topic: Do the Indexes Get Rebalanced?
Replies: 2
Views: 481

Do the Indexes Get Rebalanced?

I couldn't help but notice that Apple now comprises just under 20% of the Nasdaq 100 index, and Google, the next largest component, makes up under 5 %. Is Apple's market value so much higher than the other components? Even so, do these indexes get periodically rebalanced, and if not, why not? Wouldn...
by LMK5
Fri Nov 19, 2010 9:52 am
Forum: Investing - Theory, News & General
Topic: Old 401k: Keep it or Transfer to Rollover IRA?
Replies: 7
Views: 1006

Old 401k: Keep it or Transfer to Rollover IRA?

Are their any advantages to keeping money in an old 401k instead of transferring it to an existing rollover IRA? I'd like to transfer for consolidation purposes, but if there is a present or future advantage to retaining the 401k then I'd keep it. Any suggestions?

LMK5
by LMK5
Sun Nov 14, 2010 12:29 am
Forum: Personal Finance (Not Investing)
Topic: Who pays the estate tax, beneficiaries or the estate?
Replies: 21
Views: 3280

Who pays the estate tax, beneficiaries or the estate?

I'm a little confused as to who pays the estate tax, the beneficiaries or the etate itself. Can someone explain the mechanics of who pays the tax for the situation when the estate has assets over the non-taxable limit and also for the case where the bequests bring the estate down to a level below th...
by LMK5
Sat Nov 06, 2010 10:34 am
Forum: Investing - Theory, News & General
Topic: Is Indexing the New "Conventional Wisdom"?
Replies: 16
Views: 1785

Thanks for all the good inputs.
by LMK5
Sat Nov 06, 2010 9:27 am
Forum: Investing - Theory, News & General
Topic: Is Indexing the New "Conventional Wisdom"?
Replies: 16
Views: 1785

Is Indexing the New "Conventional Wisdom"?

Is indexing getting too popular? Is it like any other technique that stops working when too many people use it as their investment strategy? I would dare to say that half the investment books out there are instructing readers on the joys of MPT and indexing. The way I see it, in order for indexing t...
by LMK5
Mon Nov 01, 2010 11:52 pm
Forum: Investing - Theory, News & General
Topic: China Bubble?
Replies: 15
Views: 1685

Echos of Japan

China gets talked about in much the same way that Japan was discussed in the 80's. In fact, the fear of the growth of the Japanese economy was worse because they were seen as technological innovators, not a pool of low cost labor. They also were buying up lots of trophy real estate in the US, which ...
by LMK5
Sat Oct 30, 2010 10:02 am
Forum: Investing - Theory, News & General
Topic: Sustainable Withdrawals and Leaving Principal Untouched
Replies: 31
Views: 4514

I'm hoping someone could set me straight on this: Studies I've seen for the 1926-2000 period show that for, let's say, a 60/40 stock/bond portfolio, you can withdraw about 5% per year and have a very high probability of not running out of cash over a period of 30 years. From what I could see, this ...
by LMK5
Sat Oct 30, 2010 9:22 am
Forum: Investing - Theory, News & General
Topic: Sustainable Withdrawals and Leaving Principal Untouched
Replies: 31
Views: 4514

Re: Sustainable Withdrawals and Leaving Principal Untouched

I'm hoping someone could set me straight on this: Studies I've seen for the 1926-2000 period show that for, let's say, a 60/40 stock/bond portfolio, you can withdraw about 5% per year and have a very high probability of not running out of cash over a period of 30 years. From what I could see, this ...

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