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Re: Does investing in a 401k actually save any money?

I think the OPs scenario is constructed in such a way that 401K will definitely come out ahead, especially with the 28% bracket in retirement being below the 33% bracket while working. But what about the following: - 33% while working, but 40% in retirement (either due to over-saving, or due to tax...
by dbr
Fri Nov 21, 2014 11:04 am
 
Forum: Investing - Theory, News & General
Topic: Does investing in a 401k actually save any money?
Replies: 21
Views: 583

Re: Social Security 62 vs 66

One thing is that you did not index the SS payments for inflation. Alternatively one could do the analysis in real dollars. In that case assuming that Jack can get a risk free real return of 4% is unrealistic. The right number to use would be the rate on five year TIPS which is 0.08% today. A differ...
by dbr
Fri Nov 21, 2014 10:56 am
 
Forum: Investing - Help with Personal Investments
Topic: Social Security 62 vs 66
Replies: 3
Views: 146

Re: New Investor (23), Switch from Vanguard Target Retiremen

I think the plan is fine.

Personally I think TR funds create a lot of confusion and complexity in preference to a three fund approach. My recommendation is to use a TR fund when there is a specific good reason to do it and otherwise not.
by dbr
Fri Nov 21, 2014 10:49 am
 
Forum: Investing - Help with Personal Investments
Topic: New Investor (23), Switch from Vanguard Target Retirement?
Replies: 6
Views: 557

Re: Does investing in a 401k actually save any money?

If my understanding is correct, he'll make withdrawls from the 401k during retirement and pay ordinary income tax (28% bracket) on all the withdrawls. But had he invested this money in a taxable account the whole time, he'd have paid mostly 15% capital gains and dividends taxes along the way, possi...
by dbr
Fri Nov 21, 2014 10:47 am
 
Forum: Investing - Theory, News & General
Topic: Does investing in a 401k actually save any money?
Replies: 21
Views: 583

Re: Rick Ferri 60/40 portfolio

Rick, it is truly refreshing to hear from a well regarded adviser and author in the field that people do not need to agonize over all the over-engineering of portfolios that is presented in too many places.
by dbr
Fri Nov 21, 2014 10:26 am
 
Forum: Investing - Help with Personal Investments
Topic: Rick Ferri 60/40 portfolio
Replies: 14
Views: 2579

Re: Can Non-Tax Filers Contribute to IRA?

As a matter of principle isn't it a good idea to have a complete record on file of anything having to do with income going into tax preferred accounts from day one? I would do it.
by dbr
Fri Nov 21, 2014 9:29 am
 
Forum: Investing - Help with Personal Investments
Topic: Can Non-Tax Filers Contribute to IRA?
Replies: 9
Views: 780

Re: Problem with posting

I have lost posts from time to time by not paying attention to the notice that someone else has replied while I was typing, and you can see I should know that by now.

I personally might prefer not to have that feature.
by dbr
Thu Nov 20, 2014 2:44 pm
 
Forum: Forum Issues and Administration
Topic: Problem with posting
Replies: 9
Views: 440

Re: Suggested retirement reading for 60 year olds

There is also Jim Otar's book on this site:

http://www.retirementoptimizer.com/

It is a long text, very engineering oriented, but one can read the content in the chapter intros and conclusions to glean the important content.
by dbr
Thu Nov 20, 2014 2:35 pm
 
Forum: Investing - Theory, News & General
Topic: Suggested retirement reading for 60 year olds
Replies: 19
Views: 1615

Re: What is the $$ value of delaying retirement a month?

You could probably enter a retirement calculator such as Firecalc with modified values of accumulated assets, new estimate of SS benefits, etc. and reduce the duration of the calculation by one year and see what amount of monthly spending could be supported at the same failure rate. That would be a ...
by dbr
Thu Nov 20, 2014 8:50 am
 
Forum: Investing - Help with Personal Investments
Topic: What is the $$ value of delaying retirement a month?
Replies: 24
Views: 1429

Re: Dividends in my taxable account

I'm reading the Boglehead Wiki page about taxable accounts and I need clarification about this section: Directing the dividends to a money-market fund gives you tax-free money for rebalancing Does this mean if you have the dividends go into the money market account you do not owe taxes on them? Or ...
by dbr
Thu Nov 20, 2014 8:45 am
 
Forum: Investing - Help with Personal Investments
Topic: Dividends in my taxable account
Replies: 8
Views: 1100

Re: Does Fidelity allow Real Estate investments?

Investment companies are not traders in real property any more than a coin dealer sells stocks and bonds or an art dealer vintage wines. As mentioned the vehicle for stock investors would be REIT stocks, but that is a different thing from owning rental real estate as such. People can do very well ow...
by dbr
Wed Nov 19, 2014 8:18 pm
 
Forum: Personal Finance (Not Investing)
Topic: Does Fidelity allow Real Estate investments?
Replies: 9
Views: 1047

Re: Need Income - Wellesley Income or Wellington Fund

Initially bond yields go up and bond NAVs go down, but the dividend payment remains constant.
by dbr
Wed Nov 19, 2014 5:56 pm
 
Forum: Investing - Help with Personal Investments
Topic: Need Income - Wellesley Income or Wellington Fund
Replies: 22
Views: 2662

Re: Assets for Liability Matching Portfolio?

A "risk" portfolio in this context can contain any balance of risky and less risky assets that the investor chooses. There are major semantic issues going on when starting a discussion around the liability matching portfolio concept.
by dbr
Wed Nov 19, 2014 3:43 pm
 
Forum: Investing - Theory, News & General
Topic: Assets for Liability Matching Portfolio?
Replies: 24
Views: 1716

Re: Another bond fund question do I need short term in my 40

There is no general principal according to which one would "need" some short term bonds or some TIPS in a portfolio. Of course TBM does hold some short term bonds and does not hold any TIPS.
by dbr
Wed Nov 19, 2014 3:39 pm
 
Forum: Investing - Help with Personal Investments
Topic: Another bond fund question do I need short term in my 401k?
Replies: 7
Views: 458

Re: Diversification among Bonds?

Would this mindset change on the verge of retirement and starting the distribution phase? How about including a tips ladder and funding the continued rolling of a tips ladder 15 years out? That is not diversification in the intended sense of the word. It is matching a tool to a need. The need in th...
by dbr
Wed Nov 19, 2014 2:36 pm
 
Forum: Investing - Theory, News & General
Topic: Diversification among Bonds?
Replies: 17
Views: 1474

Re: VWINX (Wellesley Inc.)

If OP wants to add another fund to his Wellesley, how would he calculate his total asset allocation since Wellesley consists of different asset classes? How does one separate it out and put Wellesley's holdings into the different AA classes? Or does one just keep it in a separate AA "folder&qu...
by dbr
Wed Nov 19, 2014 2:09 pm
 
Forum: Investing - Theory, News & General
Topic: VWINX (Wellesley Inc.)
Replies: 44
Views: 4757

Re: I may not make my retirement goals! What to do?

IMHO the Fidelity calculator is the most detailed and best by far. Again, without knowing the other 73% I would have to float the concept you are too light on equities at this point in retirement. Why don't you retry the Fidelity calculator at 35%, 40%, 45% and 50% and print the results so you can ...
by dbr
Wed Nov 19, 2014 9:54 am
 
Forum: Investing - Help with Personal Investments
Topic: I may not make my retirement goals! What to do?
Replies: 49
Views: 3306

Re: I may not make my retirement goals! What to do?

Consider buying an SPIA. Victoria Agreed. The general financial answer to this dilemma is to annuitize. I don't recall your situation regarding current income streams such as pension and SS. What fraction of income is in those sources makes a great deal of difference. The conventional models do ind...
by dbr
Wed Nov 19, 2014 9:43 am
 
Forum: Investing - Help with Personal Investments
Topic: I may not make my retirement goals! What to do?
Replies: 49
Views: 3306

Re: Should you use a 401k if you'll def. be in a higher brac

But isn't it really a no brainer to put away as much as you can into tax sheltered investments, whether or not you plan to be in a higher bracket. Taxes are the biggest drag on on investments. My wife will be in a higher tax bracket when she retires and I have run some numbers, obviously having to ...
by dbr
Wed Nov 19, 2014 9:15 am
 
Forum: Investing - Theory, News & General
Topic: Should you use a 401k if you'll def. be in a higher bracket?
Replies: 18
Views: 2144

Re: What to calculate withdrawals on?

There are a couple of questions here about how to define the question. Firstly the OP speaks of withdrawing from his account. It would probably be better, as suggested in one reply above, to think of withdrawing from the totality of the assets. Secondly the OP is withdrawing but his wife is still co...
by dbr
Tue Nov 18, 2014 2:39 pm
 
Forum: Personal Finance (Not Investing)
Topic: What to calculate withdrawals on?
Replies: 11
Views: 914

Re: Regression Analysis and Asset Allocation

I should probably go further and suggest that the whole objective of factor asset allocation within a stock portfolio is not to get a distribution across a selection of funds but rather to establish the factor loading of the entire portfolio. How to build that from a selection of funds will take som...
by dbr
Tue Nov 18, 2014 9:07 am
 
Forum: Investing - Theory, News & General
Topic: Regression Analysis and Asset Allocation
Replies: 6
Views: 588

Re: Active or Not, I Love Wellington

Ok.I looked at the page.Wellington owns about 100 stocks that were each handpicked by the managers as well as 500 bonds.So how is that any different from any other fund where someone chooses all of the stocks.My idea of an index is all inclusive with no stock picking.I really do not get it.Sorry. W...
by dbr
Tue Nov 18, 2014 8:58 am
 
Forum: Investing - Theory, News & General
Topic: Active or Not, I Love Wellington
Replies: 53
Views: 5010

Re: Basic Help on Fund Distributions

In reality the daily volatility of stock investments is similar to the size of dividends and even of gains distributions if they are not large. It is often difficult to actually see the effect. I did read a study of this once that showed the NAV loss the next day in the market to be best correlated ...
by dbr
Tue Nov 18, 2014 8:55 am
 
Forum: Investing - Help with Personal Investments
Topic: Basic Help on Fund Distributions
Replies: 8
Views: 286

Re: Regression Analysis and Asset Allocation

I would suggest not trying to classify the fund. Is there a specific reason you need to do this? If you are trying to construct a portfolio using a factor investing approach the factor loadings ARE the description of the fund. This is really a step into investing by the numbers and away from investi...
by dbr
Tue Nov 18, 2014 8:52 am
 
Forum: Investing - Theory, News & General
Topic: Regression Analysis and Asset Allocation
Replies: 6
Views: 588

Re: 403(b) Difficulties - please advise!

Trying to convince people (the committee and the company management) that what they think is a great plan and a benefit for the employees is actually a rip-off that will hand over buckets of wealth to what amounts to thievery is a hard sell. It isn't surprising that there would be resentment and ang...
by dbr
Tue Nov 18, 2014 8:49 am
 
Forum: Investing - Help with Personal Investments
Topic: 403(b) Difficulties - please advise!
Replies: 9
Views: 779

Re: 75w LED bulb in a 60w socket?

Here is a listing of bulbs sorted specifically for use in enclosed fixtures, as an example:

http://www.earthled.com/collections/led ... ight-bulbs
by dbr
Mon Nov 17, 2014 5:47 pm
 
Forum: Personal Consumer Issues
Topic: 75w LED bulb in a 60w socket?
Replies: 14
Views: 1960

Re: Should you use a 401k if you'll def. be in a higher brac

A theoretical question: if an investor knows they will 100% definitely have much greater taxable income in retirement due to large assets from inheritance, sale of business, lottery winnings, etc, should they ever contribute to a tax deferred 401k in the present? Let's say the taxable account balan...
by dbr
Mon Nov 17, 2014 5:16 pm
 
Forum: Investing - Theory, News & General
Topic: Should you use a 401k if you'll def. be in a higher bracket?
Replies: 18
Views: 2144

Re: Advice for Another Mother

Life expectancy changes with age. At age 60 the expectancy may be 85, but at age 85, it might be 93. However, the expected years remaining goes down every year, but not by a full year.
by dbr
Mon Nov 17, 2014 5:12 pm
 
Forum: Investing - Help with Personal Investments
Topic: Advice for Another Mother
Replies: 14
Views: 2165

Re: Get a financial advisor? Retired now

Just back of the envelope, the long term prospect is a $42K pension and $18K in SS for $60K and you want to spend $5K/year more from about $600K in assets. So that looks like a lock. There just isn't a problem. Oh wait, is the pension fully COLA'd? My guess is yes because you have no SS and retireme...
by dbr
Mon Nov 17, 2014 5:09 pm
 
Forum: Investing - Help with Personal Investments
Topic: Get a financial advisor? Retired now
Replies: 20
Views: 2804

Re: Fund expense

Off hand they are charging you 0.69% for the service. I am not familiar with Fidelity PAS, so I don't know how the costs of the service show up.
by dbr
Mon Nov 17, 2014 3:55 pm
 
Forum: Investing - Help with Personal Investments
Topic: Fund expense
Replies: 4
Views: 235

Re: Tax Implications of Opening UGMA/UTMA for Niece/Nephew

It is important to be aware that a UGMA/UTMA is a completed gift to the minor, otherwise known as it is their money absolutely. Along with that goes that the accounts and the tax filing are under the SSN of the minor. That means the minor files the tax return, or at least it is the minor's name and ...
by dbr
Mon Nov 17, 2014 3:50 pm
 
Forum: Investing - Help with Personal Investments
Topic: Tax Implications of Opening UGMA/UTMA for Niece/Nephew
Replies: 4
Views: 271

Re: Best way to get money on the sideline into action

I am 53 with a total portfolio of just over $2M. Zero debt. I have around $400,000 sitting in a Vanguard money market fund basically making next to nothing. I want to move it into a combination of Vanguard Index funds but am not sure of the best way to go about doing this. Should I just move it all...
by dbr
Mon Nov 17, 2014 3:02 pm
 
Forum: Investing - Help with Personal Investments
Topic: Best way to get money on the sideline into action
Replies: 8
Views: 790

Re: 75w LED bulb in a 60w socket?

It is true that the LED bulb will be much cooler than an incandescent bulb and therefore limitations that are related to overheating the wiring in the fixture will not be an issue. However, LED bulbs are also much more sensitive to heat than other bulbs and should not be used in enclosed sockets unl...
by dbr
Mon Nov 17, 2014 2:56 pm
 
Forum: Personal Consumer Issues
Topic: 75w LED bulb in a 60w socket?
Replies: 14
Views: 1960

Re: what about adding $ to poorly performing asset classes?

It is emotionally hard to sell the winners and buy the losers, but that is called "rebalancing". I will add new contributions to the losers, if they are to be kept in my portfolio. Of course the problem comes from using the words "winner" and "loser," which are false a...
by dbr
Mon Nov 17, 2014 2:21 pm
 
Forum: Investing - Theory, News & General
Topic: what about adding $ to poorly performing asset classes?
Replies: 23
Views: 2411

Re: When do your account returns dwarf your contributions?

Don't think you have it made when account returns either equals or dwarfs contributions, for what the market giveth, the market can taketh away too. :twisted: Keep adding, you never know what lurks around the corner and that could include loss of employment. You'll be glad you kept adding all the w...
by dbr
Mon Nov 17, 2014 9:44 am
 
Forum: Investing - Theory, News & General
Topic: When do your account returns dwarf your contributions?
Replies: 51
Views: 5639

Re: Variable Percentage Withdrawal (VPW)

Thanks for the information, LadyGeek. This situation could lead people to worry about the safety of using the spreadsheet. Is there any solution other than trying to get hold of a Windows computer with an Excel license? [I do not like the idea of using commercial software; it can threaten the long-...
by dbr
Mon Nov 17, 2014 9:09 am
 
Forum: Investing - Theory, News & General
Topic: Variable Percentage Withdrawal (VPW)
Replies: 493
Views: 59933

Re: When do your account returns dwarf your contributions?

It's not about when one dwarfs the other. It is about when you have enough money that you can decide it is safe to stop saving or to save less. For a lot of people that is when they stop saving and start spending. A factor in this is that the last years before retirement are often the years when inc...
by dbr
Mon Nov 17, 2014 9:01 am
 
Forum: Investing - Theory, News & General
Topic: When do your account returns dwarf your contributions?
Replies: 51
Views: 5639

Re: Landlord wants us to sign an entirely new contract!

I have a question for those saying the OP should simply accept the landlord's desired changes to the signed contract. What advice would you have given if the facts were the same, but the landlord was asking what to do? I think the contract should be what the landlord, the tenants, and general pract...
by dbr
Mon Nov 17, 2014 8:58 am
 
Forum: Personal Finance (Not Investing)
Topic: Landlord wants us to sign an entirely new contract!
Replies: 51
Views: 5777

Re: Rental Real Estate vs. Stocks and Bonds

$55K for $800 a month? I'd buy it unless it needed a ton of money poured into it. $800K*12*55%=a net operating income of $5280. $5280/$55K= a cap rate of 9.6%, an awfully attractive proposition where the stuff in the MLS around here is a cap rate of 4 or so. I haven't looked at it but they claim it...
by dbr
Mon Nov 17, 2014 8:45 am
 
Forum: Personal Finance (Not Investing)
Topic: Rental Real Estate vs. Stocks and Bonds
Replies: 14
Views: 1389

Re: Advice Needed: Unique Situation At workplace

My own personal experience is that good employees outlast bad managers. Managers are a dime a dozen and move on at a great rate. The other advice I have gleaned is that if you can't stand a bad manager the only real choice is to find a way to move. You might even be surprised how often the places yo...
by dbr
Mon Nov 17, 2014 8:44 am
 
Forum: Personal Finance (Not Investing)
Topic: Advice Needed: Unique Situation At workplace
Replies: 28
Views: 3780

Re: VWINX (Wellesley Inc.)

thank you dbr, true there are plenty of discussions of each, none that were as specific as I brought up. Maybe you could point me to one. Respectfully Jeff There is an almost parallel discussion of the sister fund Wellington here: http://www.bogleheads.org/forum/viewtopic.php?f=10&t=150958 The ...
by dbr
Sun Nov 16, 2014 10:02 pm
 
Forum: Investing - Theory, News & General
Topic: VWINX (Wellesley Inc.)
Replies: 44
Views: 4757

Re: VWINX (Wellesley Inc.)

There are many, many discussions of Wellesley and Wellington on this forum.

You could probably browse through or search for some of them for much discussion and comment.
by dbr
Sun Nov 16, 2014 9:45 pm
 
Forum: Investing - Theory, News & General
Topic: VWINX (Wellesley Inc.)
Replies: 44
Views: 4757

Re: Target Date Fund all I need?

livesoft wrote:^Maybe rebalancing caused that?


Balanced funds including Target and LS funds may not be the best holding in taxable accounts for some people.
by dbr
Sun Nov 16, 2014 7:38 pm
 
Forum: Investing - Help with Personal Investments
Topic: Target Date Fund all I need?
Replies: 19
Views: 2547

Re: Active or Not, I Love Wellington

I still do not get the index issue.Wellington is composed of about 100 stocks plus the 35 pct or so in bonds.The managers pick the stocks....what am I missing?There is nothing index about this fund other than trying to maintain the 65/35 allocation. Go here: https://personal.vanguard.com/us/funds/s...
by dbr
Sun Nov 16, 2014 7:37 pm
 
Forum: Investing - Theory, News & General
Topic: Active or Not, I Love Wellington
Replies: 53
Views: 5010

Re: How to buy "junk" bonds as an individual investor?

I think what should be added to your thinking is to consider your portfolio as a whole and not the isolated behavior of a single component. There is nothing unsound about high yield bonds given an understanding of how they behave. What is questionable is what there is to gain from them as a componen...
by dbr
Sun Nov 16, 2014 7:33 pm
 
Forum: Investing - Help with Personal Investments
Topic: How to buy "junk" bonds as an individual investor?
Replies: 24
Views: 1212

Re: Tips Ladder Now or Not So Fast........

I don't like positioning an income stream that will certainly terminate at age 84. What happens then? Is the presumption that the other 35% of today's portfolio will somehow constitute a sufficient resource to fund you retirement together with SS from age 84 till you and anyone dependent on you pass...
by dbr
Sun Nov 16, 2014 7:27 pm
 
Forum: Investing - Help with Personal Investments
Topic: Tips Ladder Now or Not So Fast........
Replies: 9
Views: 1140

Re: is 3.20% Vanguard brokered CD best deal around?

Now if we could get back to someone posting CD rate better than 3.2% for Vanguard Brokered, that would be great, if anything like that exists in these though times.... So the answer after all the sound and fury is that the Vanguard CD is the best deal around or close enough to it that one might as ...
by dbr
Sun Nov 16, 2014 7:21 pm
 
Forum: Investing - Help with Personal Investments
Topic: is 3.20% Vanguard brokered CD best deal around?
Replies: 48
Views: 4099

Re: Target Date Fund all I need?

Buying a fund that keeps changing its asset allocation to which you respond by exchanging to a different fund makes no sense. As suggested, the LifeStrategy funds don't do that and might be a good idea.
by dbr
Sun Nov 16, 2014 7:17 pm
 
Forum: Investing - Help with Personal Investments
Topic: Target Date Fund all I need?
Replies: 19
Views: 2547

Re: How to buy "junk" bonds as an individual investor?

Thanks for the thoughtful responses all. It sounds like the nearly unanimous advice is to invest in Vanguard's High Yield Bond Fund, which I am leaning towards. I think more people actually suggested that you should not use junk bonds at all. But if you must use them, it should be in a fund rather ...
by dbr
Sun Nov 16, 2014 7:07 pm
 
Forum: Investing - Help with Personal Investments
Topic: How to buy "junk" bonds as an individual investor?
Replies: 24
Views: 1212

Re: Rental Real Estate vs. Stocks and Bonds

Okay so it is more like a part time job than it is an investment you'd say? There is that and in addition the fact that small business ventures are risky. To the extent you might expect a better return than stocks and bonds, you might expect more risk than stocks and bonds. How good a real estate i...
by dbr
Sun Nov 16, 2014 1:39 pm
 
Forum: Personal Finance (Not Investing)
Topic: Rental Real Estate vs. Stocks and Bonds
Replies: 14
Views: 1389
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