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Re: Make Income the Outcome

Here's a football analogy. With 6 minutes to go, possession of the ball, and a 9 point lead a team can maximize its expected pointed total by throwing lots of medium and long passes, but the goal of winning the game is not maximized by employing this strategy. BobK But doesn't a glide path to conse...
by dbr
Fri Jul 25, 2014 1:16 pm
 
Forum: Investing - Theory, News & General
Topic: Make Income the Outcome
Replies: 18
Views: 733

Re: If FF3 model is a true risk model, does it follow to buy

2: Three factors are not perfectly correlated and react to different stimuli - increasing diversification Diversification, when risk taken is compensated, is the only free lunch in investing. I tilt because the 3 factors have historically been compensated, and so my free lunch is multi-course... wi...
by dbr
Fri Jul 25, 2014 1:12 pm
 
Forum: Investing - Theory, News & General
Topic: If FF3 model is a true risk model, does it follow to buy SV?
Replies: 9
Views: 283

Re: Make Income the Outcome

In the game of life there is ultimately no winning, as there's only one outcome. And maximizing spending is *a* goal but is not necessarily *the* only or even most important goal. It would be interesting to learn what percentage of folks have significant bequest motives. I suspect there's millions ...
by dbr
Fri Jul 25, 2014 12:57 pm
 
Forum: Investing - Theory, News & General
Topic: Make Income the Outcome
Replies: 18
Views: 733

Re: Rules of thumb that shouldn't be

In your opinion, what rules of thumb are too often incorrect to be a good rule of thumb? Judging by the recent thread about tax adjustment and the wiki article on tax efficient asset location, some would probably include the following on the list: "stocks should go in taxable, bonds should go ...
by dbr
Fri Jul 25, 2014 12:52 pm
 
Forum: Investing - Theory, News & General
Topic: Rules of thumb that shouldn't be
Replies: 21
Views: 826

Re: If FF3 model is a true risk model, does it follow to buy

2: Three factors are not perfectly correlated and react to different stimuli - increasing diversification Diversification, when risk taken is compensated, is the only free lunch in investing. I tilt because the 3 factors have historically been compensated, and so my free lunch is multi-course... wi...
by dbr
Fri Jul 25, 2014 12:46 pm
 
Forum: Investing - Theory, News & General
Topic: If FF3 model is a true risk model, does it follow to buy SV?
Replies: 9
Views: 283

Re: Rules of thumb that shouldn't be

YES - The details vary by state, and I think the regs/laws may have changed in the last few years, but I was badly burned (and given incorrect information from an attorney) when I lost a civil judgment (business related contract/obligation) case and a very large amount (about $300,000) was seized f...
by dbr
Fri Jul 25, 2014 12:37 pm
 
Forum: Investing - Theory, News & General
Topic: Rules of thumb that shouldn't be
Replies: 21
Views: 826

Re: Make Income the Outcome

I think the message of this article and the previous discussion is that most financial professionals and all individual investors do not understand how to properly configure and explain an investment strategy that meats the actual needs of people saving for retirement. I think that observation in ge...
by dbr
Fri Jul 25, 2014 12:24 pm
 
Forum: Investing - Theory, News & General
Topic: Make Income the Outcome
Replies: 18
Views: 733

Re: Make Income the Outcome

Could one even imagine? 14% tax free (on that balance). Well, if it was 1980 that was a real return of about 1% We have no idea if that man's investment choices enabled him to have the purchasing power he desired or not. If he wanted to spend, say, $500,000/year, inflation adjusted, the rest of his...
by dbr
Fri Jul 25, 2014 12:19 pm
 
Forum: Investing - Theory, News & General
Topic: Make Income the Outcome
Replies: 18
Views: 733

Re: Simplify usingVASIX

It would be best to go here and learn fundamentals of investing rather than to ask an opinion about a specific fund: http://www.bogleheads.org/wiki/Getting_started For example, that fund is 80% bonds and 20% stocks. On what basis would it be a good idea for you to invest at that asset allocation? Yo...
by dbr
Fri Jul 25, 2014 12:13 pm
 
Forum: Investing - Help with Personal Investments
Topic: Simplify usingVASIX
Replies: 2
Views: 142

Re: Rules of thumb that shouldn't be

So yes if you have one of these super plans that are about as common as left handed screwdrivers, take advantage. But I'm happy with the rule of thumb. +1. You shouldn't follow it if you have unusual circumstances, but institutional funds or a backdoor Roth that maybe 5% of people have to worry abo...
by dbr
Fri Jul 25, 2014 11:47 am
 
Forum: Investing - Theory, News & General
Topic: Rules of thumb that shouldn't be
Replies: 21
Views: 826

Re: The article on tax efficient placement needs to be rewri

It might be better for the Wiki to explain systematically how taxation of assets in different locations works rather than try to formulate a blanket statement about what anyone and everyone "should" do under all conditions.
by dbr
Fri Jul 25, 2014 11:41 am
 
Forum: Investing - Theory, News & General
Topic: The article on tax efficient placement needs to be rewri
Replies: 70
Views: 3272

Re: Rules of thumb that shouldn't be

Rules of thumb are really just "titles" for longer discussions that discuss in detail some subject in investing. As such, there are probably no rules of thumb that should not be. If someone is actually following a rule of thumb without more investigation of why's and wherefore's, then that...
by dbr
Fri Jul 25, 2014 10:23 am
 
Forum: Investing - Theory, News & General
Topic: Rules of thumb that shouldn't be
Replies: 21
Views: 826

Re: Make Income the Outcome

Aptenodytes wrote:Another version of this was circulated here earlier.


Bob, in view of this, can you introduce some discussion to explain what is needed here that has not already been discussed.

I can see that the previous thread may not have been as satisfactory as one might have hoped.
by dbr
Fri Jul 25, 2014 10:04 am
 
Forum: Investing - Theory, News & General
Topic: Make Income the Outcome
Replies: 18
Views: 733

Re: If FF3 model is a true risk model, does it follow to buy

Sorry creating another SV related topic. I have read posts saying something like "I believe FF3 factor model is correct hence I am buying SV." If SMB and HML are true risk factors, why does it follow that one should buy SV? Note1: I'll appreciate if you explain why FF3 leads to SV investi...
by dbr
Fri Jul 25, 2014 9:29 am
 
Forum: Investing - Theory, News & General
Topic: If FF3 model is a true risk model, does it follow to buy SV?
Replies: 9
Views: 283

Re: Mutual fund account with Vanguard or MerrillEdge?

No, one needs to deposit cash apparently. I don't think so. Their site says, "Funding must come from an external, non-Fidelity source via any standard monetary transfer method ( a standard Transfer of Assets form , check, electronic funds transfer, ADM deposit, etc.). But, you can always call ...
by dbr
Thu Jul 24, 2014 7:33 pm
 
Forum: Investing - Help with Personal Investments
Topic: Mutual fund account with Vanguard or MerrillEdge?
Replies: 28
Views: 732

Re: How to complement VWENX to get full diversification?

Hello, I a looking to build a portfolio of which VWENX is a component. 1. What other funds would be needed to have a full and well diversified portfolio (moderate risk appetite)? 2. Given the answer to 1., what would be a smart allocation of total funds across these portfolio components? Thank you!...
by dbr
Wed Jul 23, 2014 6:33 pm
 
Forum: Investing - Help with Personal Investments
Topic: How to complement VWENX to get full diversification?
Replies: 4
Views: 367

Re: Evaluating Vanguard CFP Recommendations

tibbitts wrote:
It's always been my feeling that VG can't win here.


Right. People should not be going to investment companies for financial advice.
by dbr
Wed Jul 23, 2014 9:09 am
 
Forum: Investing - Help with Personal Investments
Topic: Evaluating Vanguard CFP Recommendations
Replies: 23
Views: 1730

Re: Defining what an expense ratio means for individuals

Thank you for your reply. Sounds like your first sentence is in agreement with dbr. It still sounds a bit complicated. Do companies like Vanguard make it clear how much money you actually paid in fees in a year through the ER? It sounds like in my simplified example, the person could have paid a wi...
by dbr
Wed Jul 23, 2014 9:06 am
 
Forum: Investing - Theory, News & General
Topic: Defining what an expense ratio means for individuals
Replies: 26
Views: 1363

Re: Evaluating Vanguard CFP Recommendations

We see Vanguard recommendations from time to time. But this one makes me wonder if we've ever seen one solely for a taxable account. It is not tax-efficient and certainly not what would be recommended here. That does not mean it is a bad suggestion, but it makes me wonder if Vanguard pays attention...
by dbr
Tue Jul 22, 2014 9:41 pm
 
Forum: Investing - Help with Personal Investments
Topic: Evaluating Vanguard CFP Recommendations
Replies: 23
Views: 1730

Re: Defining what an expense ratio means for individuals

The value of your investment is the number of shares you have in the fund multiplied by the net asset value (NAV) of a share. The NAV is computed daily by adding up the value of all the holdings of investments and cash of the fund divided by how many shares are outstanding. The company will sell hol...
by dbr
Tue Jul 22, 2014 9:39 pm
 
Forum: Investing - Theory, News & General
Topic: Defining what an expense ratio means for individuals
Replies: 26
Views: 1363

Re: Can it be wrong to be too risk averse?

A real issue here would be how to live with the idea that from time to time the total value of assets may actually go down, otherwise known as the dreaded "loss of principal." There has to be a step at which one understands how financial affairs work that takes a person past this difficult...
by dbr
Tue Jul 22, 2014 1:27 pm
 
Forum: Investing - Theory, News & General
Topic: Can it be wrong to be too risk averse?
Replies: 49
Views: 2281

Re: Buying in ok neighborhood vs good neighborhood

What does it mean to be "x blocks away from the 'crime part of town'"? Doesn't sound like either one is a good choice.
by dbr
Tue Jul 22, 2014 11:41 am
 
Forum: Personal Finance (Not Investing)
Topic: Buying in ok neighborhood vs good neighborhood
Replies: 27
Views: 1659

Re: Can it be wrong to be too risk averse?

It is possible to be to averse to the risk of stock fluctuations and not sufficiently averse to the specter of ending up with too little savings for retirement. That could be viewed as not having sufficient risk aversion. But some people are in a position to save enough without taking risk in the s...
by dbr
Tue Jul 22, 2014 10:43 am
 
Forum: Investing - Theory, News & General
Topic: Can it be wrong to be too risk averse?
Replies: 49
Views: 2281

Re: Need financial advice

He can just give the money back. The thing to understand about the annual limit is that this is a point where a gift tax return needs to be filed but for most people that will not require paying any tax because there is a huge lifetime exclusion. Also the obligation is only on the giver and not on t...
by dbr
Tue Jul 22, 2014 8:39 am
 
Forum: Personal Finance (Not Investing)
Topic: Need financial advice
Replies: 1
Views: 383

Re: Can it be wrong to be too risk averse?

You can ask him how he knows he will have enough income when he retires.
by dbr
Mon Jul 21, 2014 11:29 pm
 
Forum: Investing - Theory, News & General
Topic: Can it be wrong to be too risk averse?
Replies: 49
Views: 2281

Re: What is reasonable for 403b fees?

I would say 0.5% is reasonable. That's total ER inclusive of everything: Fund ER + 12b-1 + account maintenance fees + etc. I would say that a retirement savings plan that loses more than 0.5% all in is unreasonable. The only truly reasonable fee is 0.00%. Between the two is a question if understand...
by dbr
Mon Jul 21, 2014 4:32 pm
 
Forum: Personal Finance (Not Investing)
Topic: What is reasonable for 403b fees?
Replies: 21
Views: 1077

Re: Stable Value Fund vs Total Bond Market

I prefer total bond market but see a diversification benefit to having some % in a stable value fund at this time. I understand that it is riskier from a credit standpoint than the total bond fund because it is mostly invested in corporate bonds with longer durations that the total bond market fund...
by dbr
Mon Jul 21, 2014 2:06 pm
 
Forum: Investing - Theory, News & General
Topic: Stable Value Fund vs Total Bond Market
Replies: 27
Views: 2119

Re: Helping my sister consolidate to Vanguard after 30 yrs

Hi, I'm helping my sister with her finances. She was approached by a financial advisor who wants to charge her 1.5% to manage her finances. I think he is well meaning and trustworthy, but I have told her that a simple portfolio composed of index funds will likely do just as well without the fee. I'...
by dbr
Mon Jul 21, 2014 12:59 pm
 
Forum: Investing - Help with Personal Investments
Topic: Helping my sister consolidate to Vanguard after 30 yrs
Replies: 6
Views: 835

Re: Which kind of bike for recent retiree?

At the same time, I've ridden with hundreds of middle-aged bikers, mostly retired, who spend a ton of money on gear and saddles and pedals and shoes and expensive bikes, because it's their hobby and they enjoy spending money on stuff and showing off all the stuff they buy and going on tours and cha...
by dbr
Mon Jul 21, 2014 10:36 am
 
Forum: Personal Consumer Issues
Topic: Which kind of bike for recent retiree?
Replies: 48
Views: 2562

Re: Stable Value Fund vs Total Bond Market

The stable value fund in my 401(k) has 4x the expense ratio of the total bond fund, and information on it is more opaque. The first of those is generally not relevant as one should evaluate the return which is usually net of expenses and fees. While that is true, I still choke on the idea of financ...
by dbr
Mon Jul 21, 2014 9:58 am
 
Forum: Investing - Theory, News & General
Topic: Stable Value Fund vs Total Bond Market
Replies: 27
Views: 2119

Re: Stable Value Fund vs Total Bond Market

I would not be comfortable with a single dedicated SV fund in a 401K holding over 20% of my assets due to idiosyncratic risk. I don't have data on such things, but . . .
by dbr
Mon Jul 21, 2014 9:40 am
 
Forum: Investing - Theory, News & General
Topic: Stable Value Fund vs Total Bond Market
Replies: 27
Views: 2119

Re: Bond Fund or Money Market Fund?

I appreciate the answers so far. However, my intention for rolling over from TSP to Vanguard is to increase my flexibility for withdrawals. So using the G fund doesn't cut it for me. For clarification: all of my rollover will be into a traditional. IRA For simplicity of portfolio management I want ...
by dbr
Mon Jul 21, 2014 9:38 am
 
Forum: Investing - Help with Personal Investments
Topic: Bond Fund or Money Market Fund?
Replies: 7
Views: 569

Re: Income for my 81 Year Old Father

I too am in my 80's with a good bit of cash and i bonds and never thought of dividing the total by 20 in order to see what i could draw down on an annual basis with no risk involved since i own no equities.I would be very comfortable .Thank you Lady Geek! Bob Yes, It is amazing how many people agon...
by dbr
Sun Jul 20, 2014 6:14 pm
 
Forum: Investing - Help with Personal Investments
Topic: Income for my 81 Year Old Father
Replies: 11
Views: 1444

Re: Income for my 81 Year Old Father

As an FYI an 81 year old man could get that $600/month for about $70K invested in an SPIA. That does not mean this is advice off the bat to do so, but it would supply the income (not inflation indexed) and leave $100K for reserve and contingencies. He wouldn't have to go for all the income by such m...
by dbr
Sun Jul 20, 2014 3:35 pm
 
Forum: Investing - Help with Personal Investments
Topic: Income for my 81 Year Old Father
Replies: 11
Views: 1444

Re: Can I retire early?

You have four million dollars in investable assets. Yes, you can retire now. I agree, but why not move to 50/50 now? Actually, there is not a game to be played with asset allocation nor does a couple of years in a bond ladder have anything to do one way or the other. Why is there no mention of SS? ...
by dbr
Sun Jul 20, 2014 2:04 pm
 
Forum: Investing - Help with Personal Investments
Topic: Can I retire early?
Replies: 28
Views: 3852

Re: Which kind of bike for recent retiree?

I think riding more upright simply compresses your spine more and is more dangerous for your vertebrae especially when going over bumps. A bent-over position is better for your spine, helps distribute your weight between the two wheels, and also helps to take your weight off your saddle. Of course,...
by dbr
Sun Jul 20, 2014 12:57 pm
 
Forum: Personal Consumer Issues
Topic: Which kind of bike for recent retiree?
Replies: 48
Views: 2562

Re: Which kind of bike for recent retiree?

goblue100 wrote:
Based on what you are describing, a commuter style bike might be a good fit.
http://www.trekbikes.com/us/en/bikes/to ... n_utility/

http://www.specialized.com/us/en/bikes/ ... rus/sirrus


Those look like great suggestions based on the OP.
by dbr
Sun Jul 20, 2014 10:42 am
 
Forum: Personal Consumer Issues
Topic: Which kind of bike for recent retiree?
Replies: 48
Views: 2562

Re: Stable Value Fund vs Total Bond Market

The stable value fund in my 401(k) has 4x the expense ratio of the total bond fund, and information on it is more opaque. Those factors and my time horizon led me to choose the total bond fund. Megacorp recently abandoned their SV fund due to (according to them) high costs and have substituted an i...
by dbr
Sun Jul 20, 2014 10:40 am
 
Forum: Investing - Theory, News & General
Topic: Stable Value Fund vs Total Bond Market
Replies: 27
Views: 2119

Re: Which kind of bike for recent retiree?

I started riding 4 years ago at the age of 49. I road cycle long distances. Some of those road bikes are what they call relaxed geometry, meaning they are not setup as aggressively as a "race" bike, but they have the drop handlebars. That is what I got, and I've been quite happy with it. ...
by dbr
Sun Jul 20, 2014 9:44 am
 
Forum: Personal Consumer Issues
Topic: Which kind of bike for recent retiree?
Replies: 48
Views: 2562

Re: Which kind of bike for recent retiree?

I ride a road bike, clipless pedals, shorts, and all. I find it the most comfortable and enjoyable way to enjoy biking as a sport. I don't think my digestion could tolerate an actual lunch in the middle of riding. That sort of bike is actually optimized for biking rather than for biking and doing ot...
by dbr
Sun Jul 20, 2014 9:19 am
 
Forum: Personal Consumer Issues
Topic: Which kind of bike for recent retiree?
Replies: 48
Views: 2562

Re: Retiring soon setting aside 3 years living expenses

This article may lend some perspective regarding what are and what aren't bad times to retire: http://www.kitces.com/blog/Why-Merely-Mediocre-Returns-Can-Be-Worse-Than-A-Market-Crash/ The gist is that protracted period of poor returns is more damaging than large drops in the market which recover soo...
by dbr
Sat Jul 12, 2014 8:58 pm
 
Forum: Personal Finance (Not Investing)
Topic: Retiring soon setting aside 3 years living expenses
Replies: 49
Views: 5217

Re: Safe 401k withdrawal rate?

Probably the most comprehensive book on this subject is Jim Otar's Unveiling the Retirement Myth. See his website and book here: http://www.retirementoptimizer.com/ You can look for articles on the forum and in the literature by people like Kitces and Pfau for more recent updates to this sort of wor...
by dbr
Sat Jul 12, 2014 8:37 pm
 
Forum: Investing - Help with Personal Investments
Topic: Safe 401k withdrawal rate?
Replies: 5
Views: 869

Re: Who else hates choosing a car?

I drive a fifteen year old car that perhaps might need to be replaced in sooner more than later. As of now I can't identify any car, used or new, on the market that I would want to pay money to own. I guess I can identify wanting to continue to own the car I have. The more expensive the car the more...
by dbr
Sat Jul 12, 2014 4:44 pm
 
Forum: Personal Consumer Issues
Topic: Who else hates choosing a car?
Replies: 75
Views: 6320

Re: Please help differentiate rate of returns

If the idea was supposed to be that you have charged the client $50 each year that would have stayed invested then I think the loss is like investing $50 each year for 40 years at 25% return each and every year. The future value of that is $1,504,433. Of course the money is not invested at 25% every...
by dbr
Sat Jul 12, 2014 1:00 pm
 
Forum: Investing - Help with Personal Investments
Topic: Please help differentiate rate of returns
Replies: 5
Views: 840

Re: Merton: 401(k) retirement plans face crisis

I am not conflating anything. I was simply trying to indicate reaching a level of savings that could assure a future level of income, long before that income is needed. 4% is as good a rule of thumb as any. Why do you persist in this binary view that those who do not hunker down with a TIPS ladder ...
by dbr
Sat Jul 12, 2014 12:43 pm
 
Forum: Investing - Theory, News & General
Topic: Merton: 401(k) retirement plans face crisis
Replies: 188
Views: 16956

Re: Retiring soon setting aside 3 years living expenses

Thanks for the information. Still not sure where the impression about being worried came from but no matter. My strategy has to do with building a platform for maximizing the experiences in my late 50s and 60s as well as creating and taking advantage of zero income years. I think the point is that ...
by dbr
Sat Jul 12, 2014 12:39 pm
 
Forum: Personal Finance (Not Investing)
Topic: Retiring soon setting aside 3 years living expenses
Replies: 49
Views: 5217

Re: Retiring soon setting aside 3 years living expenses

In retirement, I need distributions from my investments to go along with my Social Security to meet expenses. Because I don't want to have to sell investments when markets are down, I have kept up to 5 years of normal investment distributions in money market and short term bond funds (presently in ...
by dbr
Sat Jul 12, 2014 12:33 pm
 
Forum: Personal Finance (Not Investing)
Topic: Retiring soon setting aside 3 years living expenses
Replies: 49
Views: 5217

Re: Retiring soon setting aside 3 years living expenses

I think as long as you use short-term bonds and include it in your fixed-income asset allocation and don't count it separately, then you are good to go. There are published studies that show that cash is a drag and doesn't save you. If you are on such dicey ground that you are worrying about where ...
by dbr
Sat Jul 12, 2014 10:14 am
 
Forum: Personal Finance (Not Investing)
Topic: Retiring soon setting aside 3 years living expenses
Replies: 49
Views: 5217

Re: True or False? Your risk tolerance only increases with t

midareff wrote: it matters not once liability matching has occurred.


It matters if you screwed up your estimate of liabilities or life throws some curveballs.
by dbr
Sat Jul 12, 2014 9:59 am
 
Forum: Investing - Theory, News & General
Topic: True or False? Your risk tolerance only increases with time
Replies: 30
Views: 2336
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