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Re: Diversification in practice: Investing from Australia

Just be careful not to drop dead. US tax law apparently has some usurious death-duties on any aliens (=non-US citizen human beings) holding any US domiciled assets over $60k or so.
by Tonen
Sat Sep 06, 2014 7:35 am
 
Forum: Investing - Theory, News & General
Topic: Diversification in practice: Investing from Australia
Replies: 22
Views: 1688

Re: Probability question

Your question is retrospective. The probability he would get it twice is simply 100%. Had you asked the question before the two years, it would be 1/144. Had you thought to ask it after the first year, it would be 1/12. But you didn't. You are asking the question in retrospect - data-mining if you w...
by Tonen
Sun Aug 31, 2014 5:05 am
 
Forum: Personal Consumer Issues
Topic: Probability question
Replies: 14
Views: 1146

Re: Diversification in practice: Investing from Australia

I am fortunate to have just an "execute only" transaction service for DFA access.
by Tonen
Sat Aug 30, 2014 4:11 am
 
Forum: Investing - Theory, News & General
Topic: Diversification in practice: Investing from Australia
Replies: 22
Views: 1688

Re: Angel Investing

I consider my small amount of Angel financing more like a capitalist version of charity than an investment. It is recorded at "$0" in my portfolio. If it ever happens to pay off that'd be a nice surprise, but it's more about giving what seems to be a really good and useful thing a bit of a...
by Tonen
Thu Aug 28, 2014 6:14 pm
 
Forum: Investing - Help with Personal Investments
Topic: Angel Investing
Replies: 6
Views: 772

Re: Diversification in practice: Investing from Australia

A great writeup daffyd. It's going in my bookmarks. Australian Real Estate Investment Trusts Another popular alternative is to include an allocation to Australian REITs. Note that these are already included in an ASX200 fund but at a much lower weight. Also, the tax implications require more keeping...
by Tonen
Sat Aug 23, 2014 8:05 pm
 
Forum: Investing - Theory, News & General
Topic: Diversification in practice: Investing from Australia
Replies: 22
Views: 1688

Re: When is a 3.75% load worth it?

If pimco will guarantee those results in perpetuity we all would gladly pay that load and expense ratio. But alas they cannot. And you are cherry picking a fund that has outperformed. The trick is to pick the funds before they outperform. But it is not possible. Not to nit pick but I suspect you'd ...
by Tonen
Mon Aug 18, 2014 8:40 am
 
Forum: Investing - Theory, News & General
Topic: When is a 3.75% load worth it?
Replies: 79
Views: 5390

Re: Investing in US from New Zealand

This NZ article from 2010 may be helpful. Start about 1/3 way in - where passive/ index is discussed.
http://www.maryholm.com/heraldholm.php?article=459
by Tonen
Wed Aug 13, 2014 4:51 pm
 
Forum: Investing - Help with Personal Investments
Topic: Investing in US from New Zealand
Replies: 21
Views: 1332

Re: Vanguard australia fees

On another note I'm confused about hedging. Do i need to hedge against currency with etfs? If so how? And what effect does it have? Short and sweet - don't hedge. Hedging.. 1) reduces diversification of overseas equities. Basically hedging kills the whole point of having overseas equities - they ar...
by Tonen
Sun Aug 10, 2014 8:13 am
 
Forum: Investing - Theory, News & General
Topic: Vanguard australia fees
Replies: 14
Views: 1051

Re: Vanguard australia fees

Another example of the "Australia Tax" - price gouging where identical items are way more expensive than OS irrespective of exchange rates and any reasonable costs of local distribution. We are considered dumb chumps who just put up with it. By way of illustration for U.S. readers, identic...
by Tonen
Sun Aug 10, 2014 1:49 am
 
Forum: Investing - Theory, News & General
Topic: Vanguard australia fees
Replies: 14
Views: 1051

Re: It won't matter if your password gets stolen

Biometrics are non-revokable, and are therefore not a serious security option. Once someone figures out some way to replicate your biometric, your compromised - forever.
It might involve less violence though - it'd be more profitable for a scammer to leave your eyeball in your head.
by Tonen
Sat Aug 09, 2014 9:10 am
 
Forum: Personal Consumer Issues
Topic: It won't matter if your password gets stolen
Replies: 20
Views: 2401

Re: Australian newbie needs your help with starting investin

Hi Cortez, and welcome. As well as starting an emergency fund, do you have adequate income protection insurance and life insurance in place? 1) Should I throw all my savings into first building an emergency fund before investing OR should I split my savings 50/50 and start investing in ETFs while bu...
by Tonen
Thu Jul 17, 2014 12:47 am
 
Forum: Investing - Help with Personal Investments
Topic: Australian newbie needs your help with starting investing
Replies: 11
Views: 1308

Re: Advice for a young Australian Investor

Hi Aussie Lad The older I get the simpler I with I had left things :happy . If I was just starting out again, I reckon I'd just go with LifeStrategy High Growth fund, and exercise benign neglect while regularly adding to it. Only thing to consider is that in 20-30 years time you will you want to win...
by Tonen
Tue Jul 01, 2014 10:03 pm
 
Forum: Investing - Help with Personal Investments
Topic: Advice for a young Australian Investor
Replies: 17
Views: 1142

Re: Investing from new zealand

As shown in the Vanguard paper listed above, calculating an appropriate home-bias is a pretty complex question. Its a more difficult decision for a small-market domiciled investors than one in the US whose market makes up a fair chunk of world weighting anyway. I think it would be a rare small-marke...
by Tonen
Sat Jun 28, 2014 6:40 pm
 
Forum: Investing - Help with Personal Investments
Topic: Investing from new zealand
Replies: 28
Views: 1872

Re: 2nd part of int'l diversification series on ETF.com

Suppose I want to just use total funds TSM, and TISM. Suppose I work in USA and earn US$, and spend US$. I understand the idea of starting with world market weighting, and then shifting towards TSM since I use US$. But how do I quantify that shift? How do I figure a TSM:TISM weighting? Does it depe...
by Tonen
Sat Jun 14, 2014 12:19 am
 
Forum: Investing - Theory, News & General
Topic: 2nd part of int'l diversification series on ETF.com
Replies: 18
Views: 1234

Re: Rational Expectations Kindle

Really enjoyed it!
I hadn't realised USA DFA'a are zero% REITS - Aussie Core DFA runs around 5-6% for example. Must be to do with local preferences - REIT's have always been a big deal here.
by Tonen
Mon Jun 09, 2014 7:05 am
 
Forum: Personal Finance (Not Investing)
Topic: Rational Expectations Kindle
Replies: 10
Views: 1879

Re: Investment Feedback Particularly Welcome. [Australia]

Aside from the investments, its important to think of the vehicle. Consider dropping a bunch into Superannuation depending on your marginal taxation rate (150k/year/ no tax?). 15% tax rate on earnings is attractive, and it also then gives you access to much cheaper life and income protection insuran...
by Tonen
Mon May 26, 2014 7:55 am
 
Forum: Investing - Help with Personal Investments
Topic: Investment Feedback Particularly Welcome. [Australia]
Replies: 13
Views: 504

Re: Looking at top 1% for actionable insight

My take on smart vs lucky, and wealth. Wage and salary earners that work hard, and are smart, disciplined and prudent can make it to the top with a reasonably narrow variance of expected outcomes, depending on their field of endeavour (= the work hard * smart paradigm). They are unlikely to be bankr...
by Tonen
Sat Apr 19, 2014 7:41 pm
 
Forum: Personal Finance (Not Investing)
Topic: Looking at top 1% for actionable insight
Replies: 73
Views: 9160

Re: Sustainable wage increases over the long term?

2% for 35 years sounds like pie in the sky to me. Australia has had one of the world's best economies over the last few decades, with no recession for I think 3 decades now. Even for the Goldilocks performance, it has only managed ~1.5% annual wage growth vs CPI. I imagine this is at least in the to...
by Tonen
Wed Mar 26, 2014 9:25 am
 
Forum: Personal Finance (Not Investing)
Topic: Sustainable wage increases over the long term?
Replies: 20
Views: 1710

How to convince family & friends to use Boglehead Method?

The situation is a little easier in Australia Most workers have a portion of their salary directed to a retirement account by law. Those moneys tend to end up in "default" investments - typically around 60/40 stock/ bonds at around 0.7% MER. Not perfect, but mostly there. The conversation ...
by Tonen
Sun Feb 23, 2014 4:53 pm
 
Forum: Investing - Theory, News & General
Topic: How to convince family & friends to use Boglehead Method?
Replies: 61
Views: 4771

Re: Advice for Australian Couple

Hi illmaster, and welcome. Contributions New annual Contributions $12160 his superannuation $6525 her superannuation $90000 taxable (for retirement, not short term goals) The "90k taxable" - do you mean you plan to save $90k/ year outside super? If so, consider upping total Super to $25k/ ...
by Tonen
Wed Jan 22, 2014 9:14 am
 
Forum: Investing - Help with Personal Investments
Topic: Advice for Australian Couple
Replies: 7
Views: 921

Re: Aussie Cash vs Govt Bonds

Thanks guys - most helpful.

Watty - they are taxed the same

At the moment then for Aussies it seems a CD ladder/ cash are a very reasonable alternative to government bonds.
by Tonen
Thu Jan 09, 2014 11:35 pm
 
Forum: Investing - Help with Personal Investments
Topic: Aussie Cash vs Govt Bonds
Replies: 9
Views: 489

Re: Aussie Cash vs Govt Bonds

So yes bonds have more risk, but in the long run, on average, they have higher returns. If you think the Australian Central Bank might cut rates in the future, then you will be stuck with an asset making you low or no return (or negative real return). Maybe I can try to be clearer by comparing CD v...
by Tonen
Thu Jan 09, 2014 9:17 am
 
Forum: Investing - Help with Personal Investments
Topic: Aussie Cash vs Govt Bonds
Replies: 9
Views: 489

Aussie Cash vs Govt Bonds

Cash for an Australian investor can yield around 3.8% - about the same as a 7 year Treasury bond, with zero risk/ same government guarantee. Given the general view is to keep coupon bond duration in the short to middling range anyway, is there any particular reason an Aussie should buy RBA coupon bo...
by Tonen
Thu Jan 09, 2014 4:22 am
 
Forum: Investing - Help with Personal Investments
Topic: Aussie Cash vs Govt Bonds
Replies: 9
Views: 489

Re: Home maintenance costs: Does 1% hold true?

What figure does USA tax department allow as depreciation for investors? That's likely to be close to a realistic number both for investors and home-owners. They don't give deductions away. In Australia it's 4%/ annum - that pretty much reflects what I spend per year on average to maintain our home....
by Tonen
Fri Jan 03, 2014 9:11 am
 
Forum: Personal Finance (Not Investing)
Topic: Home maintenance costs: Does 1% hold true?
Replies: 32
Views: 2727

Re: Asset Allocation for Middle Age

When its time is indeed a mystery - for me it was about age 45 - once the kids started leaving school it dawned on me that I really may well stop working in 15-20 years. Before that age, having a young family meant retirement felt a pretty abstract concept! I try to avoid the "getting fooled&qu...
by Tonen
Tue Dec 31, 2013 8:52 pm
 
Forum: Investing - Help with Personal Investments
Topic: Asset Allocation for Middle Age
Replies: 32
Views: 4388

Re: Lots of ? market timing on bonds

(Australia) CD's here are a no-brainer over government bonds irrespective of whether you want short or intermediate duration. Individual investors have it all over the institutions - CD's (at least as online accounts) are Government Guaranteed up to $250k/account, and generally yield around the same...
by Tonen
Sun Dec 29, 2013 10:51 pm
 
Forum: Investing - Theory, News & General
Topic: Lots of ? market timing on bonds
Replies: 20
Views: 1424

Re: slowly moving to 3 fund... role of REITs?

Residential real estate in Australia is estimated to be 3.5 times the value of our stock market - add in unlisted commercial property I guess may push that to over 4 times. Presumably the situation in the USA is similar. I don't have the time or interest to invest directly in real estate beyond owni...
by Tonen
Wed Dec 25, 2013 7:09 am
 
Forum: Investing - Help with Personal Investments
Topic: slowly moving to 3 fund... role of REITs?
Replies: 29
Views: 2361

Re: Commodities Funds: A Decade of Disaster

These things were originally flogged to the market mainly on the basis of "normal backwardation"/positive roll return claims, with less mention of diversification/ inflation protection. Essentially, roll returns + the collateralised returns were supposed to give similar returns to that of ...
by Tonen
Sun Dec 22, 2013 8:53 am
 
Forum: Investing - Theory, News & General
Topic: Commodities Funds: A Decade of Disaster
Replies: 196
Views: 13375

Re: misguided interest in div strategies

I personally agree high dividends are no advantage. Having said that, there are two things that do niggle, despite the evidence to the contrary. Firstly, agency risk - investors have arguably more interest in putting free cash flow (dividends) to good use than managers might with retained earnings. ...
by Tonen
Tue Dec 17, 2013 8:47 am
 
Forum: Investing - Theory, News & General
Topic: misguided interest in div strategies
Replies: 200
Views: 15438

Re: Resist temtatiion of leverage

Just a thought bubble Larry ... stocks also have embedded leverage by virtue of company borrowings. Though obviously different to what you are referring to here, do highly leveraged companies suffer similarly to what you describe? Have company leverage ratios been investigated in terms of factor inv...
by Tonen
Mon Dec 16, 2013 6:10 pm
 
Forum: Investing - Theory, News & General
Topic: Resist temptation of leverage
Replies: 7
Views: 867

Re: Where do Bogleheads call home?

Australia Low cost investing is getting easier and easier. Though the overall penetration of passive investing is less than in USA, there are better and better options becoming available. As a generalisation, for those willing to look, broad market products e.g. from Vanguard and DFA run at about 0....
by Tonen
Thu Dec 12, 2013 6:23 pm
 
Forum: Personal Consumer Issues
Topic: Where do Bogleheads call home?
Replies: 17
Views: 3090

Re: Tips and deflation

I realise that in times of deflation, that conventional bonds tend to outperform Tips. However, if a Tip is issued and guarantees that the capital will be preserved along with the interest payments, then theoretically it would seem that it would be of some benefit in deflationary periods. This is h...
by Tonen
Sun Dec 01, 2013 5:39 pm
 
Forum: Investing - Theory, News & General
Topic: Tips and deflation
Replies: 4
Views: 590

Re: How do you measure up to the super-rich?

It's an unpublished study unlikely to be statistically significant. "The data came from a research file" = immediate selection bias "the portfolios of 115 wealthy US households" = low numbers " the 10 per cent of families with the most wealth" = post-hoc subset analysis...
by Tonen
Thu Nov 21, 2013 3:36 am
 
Forum: Personal Finance (Not Investing)
Topic: How do you measure up to the super-rich?
Replies: 26
Views: 2809

Re: Putting Active Management to the Test

Two thoughts You can't assume outperformance and underperformance will be equal. "7/10" is irrelevant - what is relevant is overall portfolio return. No point having 7 winners if one of the other 3 is a complete stinker. In any case, you have a 17% chance of randomly having 7 or more funds...
by Tonen
Tue Nov 05, 2013 4:06 am
 
Forum: Investing - Theory, News & General
Topic: Putting Active Management to the Test
Replies: 91
Views: 9609

Re: The new safe withdrawal rate

Another slant on the SWR is to adjust it by age. In Australia, superannuation pensions are mandated to take the following minimum amounts out each year. The intent is to minimise forming large estates in a tax free environment. Of course you aren't required to spend it - just take this minimum out o...
by Tonen
Sun Oct 06, 2013 6:40 pm
 
Forum: Investing - Theory, News & General
Topic: The new safe withdrawal rate
Replies: 285
Views: 19024

Re: The new safe withdrawal rate

A 30 year TIPS ladder has a guaranteed safe withdrawal rate of 3.65%, albeit with no residual value. (at 0% CD interest vs 2.5% CPI for the missing years in the ladder - SWR is 3.75% if CD = CPI) If valuations are that the new SWR is 3%, anything but 100% TIPS is a tradeoff between a worse retiremen...
by Tonen
Sat Oct 05, 2013 10:17 pm
 
Forum: Investing - Theory, News & General
Topic: The new safe withdrawal rate
Replies: 285
Views: 19024

Re: The new safe withdrawal rate

I think it would would be helpful to calculate what is the base-case, i.e. a 100% guaranteed safe withdrawal rate using an inflation bond ladder. Is not the 30 year safe withdrawal rate for a hypothetical ladder of 0% Inflation Bonds 3.3%? The correct math to work out the 30-year guaranteed safe wit...
by Tonen
Fri Oct 04, 2013 8:45 pm
 
Forum: Investing - Theory, News & General
Topic: The new safe withdrawal rate
Replies: 285
Views: 19024

Re: Rebalancing Bands - Inflation vs Nominal Bonds

... you are rebalancing to reduce inflation risk. ... Thanks Chan va - that very nicely encapsulates the issue I failed to clarify in my original post. I carry a borderline paranoia about inflation (which I note seems the most relevant one of Bernstein's recently described "deep risks"). ...
by Tonen
Mon Sep 23, 2013 5:54 pm
 
Forum: Investing - Help with Personal Investments
Topic: Rebalancing Bands - Inflation vs Nominal Bonds
Replies: 8
Views: 748

Rebalancing Bands - Inflation vs Nominal Bonds

Accepting that there is no exact science to this, for those who run 50/50 inflation vs nominal bonds/cash, what rebalancing bands are a fair thing? I don't recall ever seeing this specifically addressed in rebalancing discussions here. Given the relatively low price volatility for bonds compared to ...
by Tonen
Sun Sep 22, 2013 9:09 am
 
Forum: Investing - Help with Personal Investments
Topic: Rebalancing Bands - Inflation vs Nominal Bonds
Replies: 8
Views: 748

Re: Retail Aussie Treasuries at wholesale rates

I agree this isn't actionable for most Bogleheads due to country of origin. Very few Aussies who could benefit from it have picked up on it either - daily volumes are minuscule - some days zero. It's a little surreal to see this seemingly perfect arrangement between Government and institutional mark...
by Tonen
Thu Sep 05, 2013 8:47 am
 
Forum: Investing - Theory, News & General
Topic: Retail Aussie Treasuries at wholesale rates
Replies: 4
Views: 588

Retail Aussie Treasuries at wholesale rates

This may be of interest to readers here as an example of a low-cost, very investor-friendly development. Retail investors now buy Australian Reserve Bank bonds on the share market, with Government appointed market makers providing liquidity, at prices and spreads that mirror the wholesale market. Th...
by Tonen
Wed Sep 04, 2013 10:15 pm
 
Forum: Investing - Theory, News & General
Topic: Retail Aussie Treasuries at wholesale rates
Replies: 4
Views: 588

Re: Jason Zweig Article on Shallow & Deep Risk

Hi All: 4) If your time horizon is much less than 20-30 years, you should still be more concerned with shallow than deep risk. Bill , This is a ightbulb moment for me. Bill are you implying its a fair thing to consider gradually decreasing deep risk (especially inflation) protection with advancing ...
by Tonen
Sat Aug 31, 2013 7:03 pm
 
Forum: Investing - Theory, News & General
Topic: Jason Zweig Article on Shallow & Deep Risk
Replies: 45
Views: 7421

Re: Next step: the no-index index fund

"A company for carrying on an undertaking of great advantage, but nobody to know what it is" was good enough to make a buck in 1720. Doesn't sound like things have changed much.
by Tonen
Fri Aug 09, 2013 8:36 am
 
Forum: Investing - Theory, News & General
Topic: Next step: the no-index index fund
Replies: 38
Views: 3097

Re: [Australia] Creating $200k income p/a [(per annum)]

Simplest and smartest thing I recall ever reading about leverage is that it multiplies potential risk more than it multiplies potential return. Whether the underlaying investment halves or doubles, with gearing/ leverage the eventual result has to be less than that, i.e., half or double, but always ...
by Tonen
Tue Jun 11, 2013 9:58 am
 
Forum: Investing - Help with Personal Investments
Topic: [Australia] Creating $200k income p/a [(per annum)]
Replies: 40
Views: 13115

Re: [Australia] Creating $200k income p/a [(per annum)]

Stick 450k of your 2M into super (as the 3-year non-concessional cap allows), using a cheap industry fund like SunSuper. What's the reason for putting taxed money into a super? Is that because gains are taxed at 15% in the super vs at the marginal tax rate outside a super? Yes, its tax advantaged. ...
by Tonen
Sun Jun 09, 2013 9:05 am
 
Forum: Investing - Help with Personal Investments
Topic: [Australia] Creating $200k income p/a [(per annum)]
Replies: 40
Views: 13115

Re: [Australia] Creating $200k income p/a [(per annum)]

I'm an Aussie The "get 5M first" comment posted above really nails the answer to your question. There is simply no way you can reliably aim to earn 10% a year income without draw-down on your capital, let alone maintaining your capital in real terms. Anybody that tells you different is jus...
by Tonen
Sat Jun 08, 2013 1:05 am
 
Forum: Investing - Help with Personal Investments
Topic: [Australia] Creating $200k income p/a [(per annum)]
Replies: 40
Views: 13115

Re: Are "Dark Pools" putting efficient markets at risk?

By regulation, trades in dark pools must be traded at prices between the national bid and ask on public exchanges. They cannot drift away from exchange prices. So dark pools could also offer efficiencies in lessening market impact costs by allowing parties to exchange huge chunks of stock off marke...
by Tonen
Tue Apr 02, 2013 11:11 am
 
Forum: Investing - Theory, News & General
Topic: Are "Dark Pools" putting efficient markets at risk?
Replies: 32
Views: 1800

Re: Are "Dark Pools" putting efficient markets at risk?

I bet ALL trades in dark pools are inside the buy/sell spreads of the open market. Who would trade with anyone outside that range knowing that the other party can move the stock on in less than a millisecond for an instant gain.
by Tonen
Tue Apr 02, 2013 10:35 am
 
Forum: Investing - Theory, News & General
Topic: Are "Dark Pools" putting efficient markets at risk?
Replies: 32
Views: 1800

Re: Mom and Pop Trampled by the Bulls

deleted duplicate post
by Tonen
Tue Apr 02, 2013 10:24 am
 
Forum: Investing - Theory, News & General
Topic: Mom and Pop Trampled by the Bulls
Replies: 76
Views: 7927
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