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Re: Buying the most expensive house you can afford

While the posters mentioning all the perils of overbuying are absolutely correct, there's also a flip side to this, where you are penny wise but pound foolish. There are substantial transaction costs that are associated with moving, and buying a house that you will be likely to outgrow in 3 years ca...
by UALflyer
Thu Feb 06, 2014 2:09 pm
 
Forum: Personal Finance (Not Investing)
Topic: Buying the most expensive house you can afford
Replies: 101
Views: 7587

Re: How to weather the upcoming bond crash in my 401k

Intellectually, they know that it's a terrible idea but knowing something intellectually and seeing their balances plummeting before their very eyes are two very different things and the vast majority of investors just do not have the stomach to withstand the volatility. I think it goes further tha...
by UALflyer
Fri Jan 10, 2014 12:15 pm
 
Forum: Investing - Help with Personal Investments
Topic: How to weather the upcoming bond crash in my 401k
Replies: 81
Views: 5740

Re: How to weather the upcoming bond crash in my 401k

If you are not prone to this phenomenon, then mathematically, bonds do significantly and adversely affect your overall performance. Bonds adversely affect your return at the end of a good year for stocks. Bonds increase the return of your portfolio at the end of a bad year for stocks. So does liter...
by UALflyer
Fri Jan 10, 2014 11:37 am
 
Forum: Investing - Help with Personal Investments
Topic: How to weather the upcoming bond crash in my 401k
Replies: 81
Views: 5740

Re: How to weather the upcoming bond crash in my 401k

We're diverging a bit from the thread -- but I think no-one should be talking about absolute returns except as a numerator to be divided by risk. Again, given the possibility of cheap leverage or simply investing in the riskiest stocks it's a pretty meaningless concept. The OP's message didn't read...
by UALflyer
Thu Jan 09, 2014 6:46 pm
 
Forum: Investing - Help with Personal Investments
Topic: How to weather the upcoming bond crash in my 401k
Replies: 81
Views: 5740

Re: How to weather the upcoming bond crash in my 401k

I have bonds for the same reason anyone else has bonds - to reduce volatility in an otherwise risky portfolio. That's just a very general answer, but in what specific way is volatility a problem in your particular situation? I am not trying to suggest an answer by asking this question. For instance...
by UALflyer
Thu Jan 09, 2014 6:38 pm
 
Forum: Investing - Help with Personal Investments
Topic: How to weather the upcoming bond crash in my 401k
Replies: 81
Views: 5740

Re: How to weather the upcoming bond crash in my 401k

ogd wrote:If you do use risk-adjusted returns, bonds in a portfolio actually improve them.
That's exactly right, but we are talking about absolute returns here.
by UALflyer
Thu Jan 09, 2014 6:17 pm
 
Forum: Investing - Help with Personal Investments
Topic: How to weather the upcoming bond crash in my 401k
Replies: 81
Views: 5740

Re: How to weather the upcoming bond crash in my 401k

... rest assured that trying to guess your way to wealth won't work. That's true, but you can also rest assured that blindly following some asset allocation formula that you saw somewhere without understanding the rationale behind it and ensuring its applicability to your specific situation won't w...
by UALflyer
Thu Jan 09, 2014 6:16 pm
 
Forum: Investing - Help with Personal Investments
Topic: How to weather the upcoming bond crash in my 401k
Replies: 81
Views: 5740

Re: How to weather the upcoming bond crash in my 401k

At your age it's a good idea to have 20-30% of bonds in your portfolio. This is the threshold issue, isn't it? People keep bonds in their portfolios for quite a few reasons. Depending on those reasons, a person in the OP's situation may be well advised to shorten their duration or to move his money...
by UALflyer
Thu Jan 09, 2014 6:03 pm
 
Forum: Investing - Help with Personal Investments
Topic: How to weather the upcoming bond crash in my 401k
Replies: 81
Views: 5740

Re: How many square feet is your home?

We know quite a few couples with 1-3 kids who have 6,000 sq. ft. to 10,000 sq. ft. of living space (when you count finished basements) and are quite happy with it. You do realize how wealthy your friends must be. Anything above 6,000 sq. ft. puts your house in the top 0.5% percent of homes by size,...
by UALflyer
Mon Oct 21, 2013 11:42 am
 
Forum: Personal Consumer Issues
Topic: How many square feet is your home?
Replies: 162
Views: 10628

Re: How many square feet is your home?

I think 2000 sq ft per person is about right. Anything less is crowded. I mean, how do you get away from your spouse and kids? Go to a bar? I can't tell if that's sarcastic or not...but if it's not...I think it's WAY off from what many out there would consider to be "enough space" without...
by UALflyer
Thu Oct 17, 2013 12:26 pm
 
Forum: Personal Consumer Issues
Topic: How many square feet is your home?
Replies: 162
Views: 10628

Re: Stock-heavy AA -- Does it matter?

#1. When the (not if, but when) the market tanks 35% or 40% you will be using what exactly to load up the truck for the fire sale? So, you are suggesting that investors should sell their bonds during severe market downturns and load up on equities, thereby making their positions more aggressive? On...
by UALflyer
Thu Oct 17, 2013 12:05 pm
 
Forum: Investing - Help with Personal Investments
Topic: Stock-heavy AA -- Does it matter?
Replies: 43
Views: 2967

Re: California affordable care act rates for 2014 released

The most important part of any health insurance policy is the annual maximum expense... Please tell me that you aren't making these types of statements to your clients. If you have two hypothetical plans (for comparison purposes, let's assume that they are otherwise identical in their networks, mon...
by UALflyer
Wed May 29, 2013 3:19 pm
 
Forum: Personal Finance (Not Investing)
Topic: California affordable care act rates for 2014 released
Replies: 143
Views: 12384

Re: California affordable care act rates for 2014 released

Okay, I get where you are coming from now. Note that I said "for equivalent coverage." It is you who are comparing apples to oranges. You are comparing cheap, crummy, low benefit, high deductible individual plans to the exchange plans. If you compare to an equivalent of the silver plan in...
by UALflyer
Wed May 29, 2013 1:29 pm
 
Forum: Personal Finance (Not Investing)
Topic: California affordable care act rates for 2014 released
Replies: 143
Views: 12384

Re: 100% equities, anyone?

I do apologize. Given your resistance to my comments on 100% equities, I just assumed that you were advocating 100% equities. It was certainly a good opportunity to highlight some of the issues with such a strategy. I'm pretty comfortable with my understanding of the article, related mathematical c...
by UALflyer
Mon May 13, 2013 11:43 am
 
Forum: Investing - Theory, News & General
Topic: 100% equities, anyone?
Replies: 149
Views: 9635

Re: 100% equities, anyone?

Cults are certainly dangerous, but so are extreme financial positions. You may want to re-read the Vanguard study, my posts as well as those of many other people here. You are arguing against imaginary points that noone has made, all because you are failing to understand objective data that's been ...
by UALflyer
Sat May 11, 2013 12:17 pm
 
Forum: Investing - Theory, News & General
Topic: 100% equities, anyone?
Replies: 149
Views: 9635

Re: 100% equities, anyone?

Market has a funny way of proving prople wrong when they are so sure something is going to happen. Like some of our friends here who are so sure that bonds are such a poor investment right now. It will be interesting to bookmark this page and revisit in a few months or years to see what Mr. Market ...
by UALflyer
Sat May 11, 2013 12:12 pm
 
Forum: Investing - Theory, News & General
Topic: 100% equities, anyone?
Replies: 149
Views: 9635

Re: 100% equities, anyone?

UALflier, based on such an extreme view (100% equities), I thought it only appropriate to provide to you the previous link to the Bond Section of the Bogleheads Wiki, to demonstrate to you in simple terms that Boglehead inspired investing involves Bonds. Yes, and I just demonstrated in simple terms...
by UALflyer
Sat May 11, 2013 7:58 am
 
Forum: Investing - Theory, News & General
Topic: 100% equities, anyone?
Replies: 149
Views: 9635

Re: 100% equities, anyone?

I do not agree. This depends on how much better stocks perform than bonds, and for how long...which I think we all agree not one of us can know going forward. You start adding in annual rebalancing, looking at long term returns, use 3 or 4 different asset classes, the 100% stock AA looks less and l...
by UALflyer
Sat May 11, 2013 7:54 am
 
Forum: Investing - Theory, News & General
Topic: 100% equities, anyone?
Replies: 149
Views: 9635

Re: 100% equities, anyone?

Really! Vanguard disagrees, as do I. The following recent Vanguard article demonstrates that the ability of lower yielding bonds to cushion a 20% shock to the stock market remains substantial. The title of the article is "Reducing your bond allocation? Proceed with caution" https://person...
by UALflyer
Fri May 10, 2013 7:12 pm
 
Forum: Investing - Theory, News & General
Topic: 100% equities, anyone?
Replies: 149
Views: 9635

Re: 100% equities, anyone?

Really! Vanguard disagrees, as do I. The following recent Vanguard article demonstrates that the ability of lower yielding bonds to cushion a 20% shock to the stock market remains substantial. The title of the article is "Reducing your bond allocation? Proceed with caution" https://person...
by UALflyer
Fri May 10, 2013 3:20 pm
 
Forum: Investing - Theory, News & General
Topic: 100% equities, anyone?
Replies: 149
Views: 9635

Re: 100% equities, anyone?

5% fixed income or zero: the difference has to do with acknowledging the role of fixed income in a portfolio, even if you are young and starting out with mostly equities (e.g. starting a glide path on 5% income and ratcheting up as you get older). Going with 100% is just bad form to follow and bad ...
by UALflyer
Fri May 10, 2013 1:38 pm
 
Forum: Investing - Theory, News & General
Topic: 100% equities, anyone?
Replies: 149
Views: 9635

Re: 100% equities, anyone?

Bonds don't look like a great investment at this time, but that will only hold true if there is no stock crash in the future. Actually, no. What will happen to the value of your bond holdings when interest rates go up? If there is a stock market decline of even -5%, then the 1% yield on bonds will ...
by UALflyer
Fri May 10, 2013 1:17 pm
 
Forum: Investing - Theory, News & General
Topic: 100% equities, anyone?
Replies: 149
Views: 9635

Re: Nongovernmental 457(b) and employer's creditors (legal)

Our state's 529 does not have very good investment options and, in general, 529 plans offer very limited tax advantages but expose you to higher tuition risks. Now, given the fact that we are in the highest tax bracket, the latter is not a big concern, as we're unlikely to qualify for any breaks an...
by UALflyer
Fri May 10, 2013 12:16 pm
 
Forum: Investing - Theory, News & General
Topic: Nongovernmental 457(b) and employer's creditors (legal)
Replies: 45
Views: 1295

Re: 100% equities, anyone?

I have been around these forums for a long time, and these type of posts always comes up during a market run up, typically close towards a peak or in the middle of a very strong bull market. Not saying we are near a top or anything, I have no idea, and I stopped trying to guess. No one is ever aski...
by UALflyer
Fri May 10, 2013 11:46 am
 
Forum: Investing - Theory, News & General
Topic: 100% equities, anyone?
Replies: 149
Views: 9635

Re: Nongovernmental 457(b) and employer's creditors (legal)

This went unchallenged above, but you might reconsider your 529 options. They have protection from bankruptcy under federal law, and creditor protection varies state by state. They are excluded from your estate for estate tax purposes. They are increasingly low cost. Our state's 529 does not have v...
by UALflyer
Fri May 10, 2013 9:21 am
 
Forum: Investing - Theory, News & General
Topic: Nongovernmental 457(b) and employer's creditors (legal)
Replies: 45
Views: 1295

Re: Nongovernmental 457(b) and employer's creditors

These are all fair points, letsgobobby (except that our umbrella is more expensive than that, but the difference is not material and doesn't affect the outcome of this discussion).
by UALflyer
Thu May 09, 2013 3:28 pm
 
Forum: Investing - Theory, News & General
Topic: Nongovernmental 457(b) and employer's creditors (legal)
Replies: 45
Views: 1295

Re: Nongovernmental 457(b) and employer's creditors

In either case, annuitization only becomes an option post retirement, so there's no protection while still working. And at retirement you can mark this account as the first to draw down (it probably can't be rolled to an IRA). That's a very good point. Technically, that way that it works with TIAA ...
by UALflyer
Thu May 09, 2013 3:18 pm
 
Forum: Investing - Theory, News & General
Topic: Nongovernmental 457(b) and employer's creditors (legal)
Replies: 45
Views: 1295

Re: Nongovernmental 457(b) and employer's creditors

I believe you're truly overstating things when you say that "most liability risks" still exist given the above protections. If you envision such severe liability exposure that several million dollars of umbrella and multimillion dollars of professional liability insurance are not adequate...
by UALflyer
Thu May 09, 2013 2:53 pm
 
Forum: Investing - Theory, News & General
Topic: Nongovernmental 457(b) and employer's creditors (legal)
Replies: 45
Views: 1295

Re: Nongovernmental 457(b) and employer's creditors

retiredjg, thanks. I am familiar with making nondeductible contributions to retirement accounts and then making in-service withdrawals to get them into Roth IRA's. Unfortunately, our respective plans do not allow it.
by UALflyer
Thu May 09, 2013 1:46 pm
 
Forum: Investing - Theory, News & General
Topic: Nongovernmental 457(b) and employer's creditors (legal)
Replies: 45
Views: 1295

Re: Nongovernmental 457(b) and employer's creditors (legal)

mah001 wrote:Try not calling it a 457(b), when you do research. You seem to be talking about a 457(f).
I don't understand. It is unquestionably a 457(b).
by UALflyer
Thu May 09, 2013 1:33 pm
 
Forum: Investing - Theory, News & General
Topic: Nongovernmental 457(b) and employer's creditors (legal)
Replies: 45
Views: 1295

Re: Nongovernmental 457(b) and employer's creditors

What if you could get that money into Roth status? Would that be more attractive to you? Yes, there might be a way, but it takes too long to explain right now. We are in the highest tax bracket, so a Roth is only attractive to us if our only other option is a taxable account. Having said that, is t...
by UALflyer
Thu May 09, 2013 1:20 pm
 
Forum: Investing - Theory, News & General
Topic: Nongovernmental 457(b) and employer's creditors (legal)
Replies: 45
Views: 1295

Re: Nongovernmental 457(b) and employer's creditors

large umbrella policies and outstanding professional insurance are relatively low in cost. Umbrella policies and professional liability policies are not even close to insulating you from every or even most liability risks. They are enormously helpful but there are quite a few liability risks that t...
by UALflyer
Thu May 09, 2013 1:16 pm
 
Forum: Investing - Theory, News & General
Topic: Nongovernmental 457(b) and employer's creditors (legal)
Replies: 45
Views: 1295

Re: Nongovernmental 457(b) and employer's creditors

1) I don't see how adding an annuity wrapper inside a non-governmental 457(b) plan would change the fact that the money in the plan is subject to the employer's creditors. But that is completely speculation on my part. Thanks for your thoughts. Conceptually, a suggestion that annuitizing the balanc...
by UALflyer
Thu May 09, 2013 1:09 pm
 
Forum: Investing - Theory, News & General
Topic: Nongovernmental 457(b) and employer's creditors (legal)
Replies: 45
Views: 1295

Re: Nongovernmental 457(b) and employer's creditors

the additional costs of those products (whatever they are) are likely to outweigh the benefits. There's a lot of study on standard 401ks that indicate that above a certain costs, despite the tax benefits, investors are better avoiding them and investing in a taxable account. I presume that would en...
by UALflyer
Thu May 09, 2013 12:52 pm
 
Forum: Investing - Theory, News & General
Topic: Nongovernmental 457(b) and employer's creditors (legal)
Replies: 45
Views: 1295

Re: Nongovernmental 457(b) and employer's creditors

not to mention I bonds, EE bonds, muni bonds. That risk to creditors' is one of those risks you don't have to take. Good rule of thumb: take no risk you don't have to take. Especially uncompensated risk. I bonds, EE bonds and muni bonds are all far too conservative for our appetite and all expose y...
by UALflyer
Thu May 09, 2013 12:41 pm
 
Forum: Investing - Theory, News & General
Topic: Nongovernmental 457(b) and employer's creditors (legal)
Replies: 45
Views: 1295

Re: Nongovernmental 457(b) and employer's creditors

2) I don't see the creditor thing as the only problem to a non-governmental 457(b). To me, another significant issue is the fact that it can never be rolled over into anything other than another non-governmental 457(b). That means that it cannot be an attractive plan to participate in unless the ex...
by UALflyer
Thu May 09, 2013 12:38 pm
 
Forum: Investing - Theory, News & General
Topic: Nongovernmental 457(b) and employer's creditors (legal)
Replies: 45
Views: 1295

Re: Nongovernmental 457(b) and employer's creditors

For people who don't use their respective 457(b)'s, do you max out all your other retirement options and, if it wasn't for this employer insolvency concern associated with 457(b)'s, would you invest in them as well? What I am getting at is that if you don't have the money to fully max out all your r...
by UALflyer
Thu May 09, 2013 10:05 am
 
Forum: Investing - Theory, News & General
Topic: Nongovernmental 457(b) and employer's creditors (legal)
Replies: 45
Views: 1295

Re: "Less volatility = more wealth, all else being equal"

YDNAL wrote:When more volatility = MORE expected return, lower volatility = LESS expected wealth. It's just common sense.
Precisely.
by UALflyer
Wed May 08, 2013 1:32 pm
 
Forum: Investing - Theory, News & General
Topic: "Less volatility = more wealth, all else being equal"
Replies: 49
Views: 3215

Re: "Less volatility = more wealth, all else being equal"

Why can't this be taken to mean that a 80/20 stock/bond portfolio will have greater CAGR than an all stock portfolio? Certainly it will have lower volatility, but why doesn't this translate into increased return if the OP is true? Because "all else" is not true if you are comparing an 80/...
by UALflyer
Wed May 08, 2013 1:25 pm
 
Forum: Investing - Theory, News & General
Topic: "Less volatility = more wealth, all else being equal"
Replies: 49
Views: 3215

Re: "Less volatility = more wealth, all else being equal"

UAL, Yes, one must accept volatility for increased returns. But one wants to increase the efficiency of a portfolio by maximizing its return per unit of volatility. By adding volatile weakly or non correlated asset classes to a portfolio, the overall portfolio volatility can be dampened, its effici...
by UALflyer
Wed May 08, 2013 1:06 pm
 
Forum: Investing - Theory, News & General
Topic: "Less volatility = more wealth, all else being equal"
Replies: 49
Views: 3215

Re: "Less volatility = more wealth, all else being equal"

An important issue is what I call "the risk budget." Generally speaking, higher returns come only with higher risk. And it is usually possible to get higher return if you are willing to take more risk, by using leverage if necessary. So you should have decided in advance how much risk you...
by UALflyer
Wed May 08, 2013 11:54 am
 
Forum: Investing - Theory, News & General
Topic: "Less volatility = more wealth, all else being equal"
Replies: 49
Views: 3215

Re: "Less volatility = more wealth, all else being equal"

Yes, figuring this out was quite the revelatory moment for me when I was first learning about investing. I think I saw it illustrated in one of Rick Ferri's books. This is why it can make more sense to go with 80/20 stocks/bonds instead of just 100% stocks. The CAG in the end can be higher by combi...
by UALflyer
Wed May 08, 2013 11:28 am
 
Forum: Investing - Theory, News & General
Topic: "Less volatility = more wealth, all else being equal"
Replies: 49
Views: 3215

Re: Does Roth make sense in my situation?

Thank you very much for the suggestions! I will definitely open a nondeductible IRA and then convert it to a Roth. Just be sure to familiarize yourself with the exact procedure before you do it. For instance, you cannot have any other non-Roth IRA's, as the taxable portion of any conversion that yo...
by UALflyer
Mon May 06, 2013 12:29 pm
 
Forum: Investing - Theory, News & General
Topic: Does Roth make sense in my situation?
Replies: 20
Views: 1423

Re: Nongovernmental 457(b) and employer's creditors

Having "at risk assets" with the same company as your employer is the opposite of diversification, since the same factors that may cause you to lose your job also make any assts controlled by that company at risk as well. Right, hence my question as to whether holding 457(b) assets in ann...
by UALflyer
Mon May 06, 2013 10:56 am
 
Forum: Investing - Theory, News & General
Topic: Nongovernmental 457(b) and employer's creditors (legal)
Replies: 45
Views: 1295

Re: Does Roth make sense in my situation?

In that tax bracket I would max out the pretax employer savings and then do a backdoor Roth IRA (note: chances are this would probably take no more money than what you are doing now-- it's just using the pre-tax savings to fund the Roth) +1 Second this. Plus a Vanguard account Roth IRA is almost ce...
by UALflyer
Fri May 03, 2013 1:26 pm
 
Forum: Investing - Theory, News & General
Topic: Does Roth make sense in my situation?
Replies: 20
Views: 1423

Re: Does Roth make sense in my situation?

Far cheaper than 0.06% ER? I haven't heard of any. Vanguard's own Institutional Index Fund with Instituional Plus Shares (VIIIX) has a 0.02% ER. You also have to remember that as you get into some of the more expensive categories, such as international, emerging markets, etc..., the differences wil...
by UALflyer
Fri May 03, 2013 1:22 pm
 
Forum: Investing - Theory, News & General
Topic: Does Roth make sense in my situation?
Replies: 20
Views: 1423

Nongovernmental 457(b) and employer's creditors (legal)

I've ran a number of searches on this topic and, while I came across plenty of prior 457(b) threads, none of them addressed the question of the steps, if any, that can be taken to shield assets held in nongovernmental 457(b) plans from the employer's general creditors. As we are all aware, the asset...
by UALflyer
Fri May 03, 2013 12:46 pm
 
Forum: Investing - Theory, News & General
Topic: Nongovernmental 457(b) and employer's creditors (legal)
Replies: 45
Views: 1295

Re: Does Roth make sense in my situation?

In that tax bracket I would max out the pretax employer savings and then do a backdoor Roth IRA (note: chances are this would probably take no more money than what you are doing now-- it's just using the pre-tax savings to fund the Roth) +1 Second this. Plus a Vanguard account Roth IRA is almost ce...
by UALflyer
Fri May 03, 2013 12:10 pm
 
Forum: Investing - Theory, News & General
Topic: Does Roth make sense in my situation?
Replies: 20
Views: 1423
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