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Re: Illiquid Assets

texasdiver wrote:Is there really a illiquidity premium?




If not, then what thread of benefit might have existed in the idea doesn't even exist.
by dbr
Sun Mar 01, 2015 9:12 pm
 
Forum: Investing - Theory, News & General
Topic: Illiquid Assets
Replies: 35
Views: 2309

Re: Do you consider mortgage payments as savings?

I think the issue about what is counted as an asset is arbitrary as long as all the accounting is self consistent. Naturally it is possible to create situations that seem distorted or that may not seem distorted from a different point of view.
by dbr
Sun Mar 01, 2015 8:05 pm
 
Forum: Personal Finance (Not Investing)
Topic: Do you consider mortgage payments as savings?
Replies: 131
Views: 4991

Re: where to put excess cash

any other thoughts on asset allocation issue? I set up my retirement accounts asset allocation and only counted all the retirement accounts in the asset allocation. Did not include things like: emergency funds, savings for a house, owned properties, cars, any other asset etc.. But should it? I didn...
by dbr
Sun Mar 01, 2015 7:58 pm
 
Forum: Investing - Help with Personal Investments
Topic: where to put excess cash
Replies: 16
Views: 2400

Re: Do you consider mortgage payments as savings?

Yours one was of the posts that I had in mind. As Rodc points out there was not a deafening response acknowledging that your definition somehow offered helpful clarification. I think it does offer helpful clarification. One thing that would be included in your definition if the OP wants the scope t...
by dbr
Sun Mar 01, 2015 6:13 pm
 
Forum: Personal Finance (Not Investing)
Topic: Do you consider mortgage payments as savings?
Replies: 131
Views: 4991

Re: rebalancing & purchasing when fear is present

Well, there has a been a recent trend of stocks being up quite a bit compared to bonds, so to take some withdrawals I have liquidated stocks and not bonds to do it. I am not sure what fear is involved in that. I guess there is an underlying rationale there of not ending up invested too heavily in st...
by dbr
Sun Mar 01, 2015 6:10 pm
 
Forum: Investing - Theory, News & General
Topic: rebalancing & purchasing when fear is present
Replies: 8
Views: 316

Re: Do you consider mortgage payments as savings?

I did state earlier that cash flow is a very very very flawed way to measure saving of any kind. It can easily be manipulated by taking on more debt or reducing debt. Someone taking on loads and loads of debt could have very healthy cash flow and many people here, by their definition, would conside...
by dbr
Sun Mar 01, 2015 6:04 pm
 
Forum: Personal Finance (Not Investing)
Topic: Do you consider mortgage payments as savings?
Replies: 131
Views: 4991

Re: Do you consider mortgage payments as savings?

I may have missed it. Is there a post that defines savings and some set of posts where folks agreed to that definition? (note it would be best of the OP provides the definition and asks folks to use that for the purposes of the thread. Many will wander off to other definitions because few can hold ...
by dbr
Sun Mar 01, 2015 5:52 pm
 
Forum: Personal Finance (Not Investing)
Topic: Do you consider mortgage payments as savings?
Replies: 131
Views: 4991

Re: Do you consider mortgage payments as savings?

Has anyone wanted to explicitly discard the definition that savings is the difference between income and outgo in any particular period of time? Is it that there has been some implicit discarding of this definition, perhaps by altering what is defined as income and what is defined as outgo? Does an...
by dbr
Sun Mar 01, 2015 5:37 pm
 
Forum: Personal Finance (Not Investing)
Topic: Do you consider mortgage payments as savings?
Replies: 131
Views: 4991

Re: Do you consider mortgage payments as savings?

I think you all are not debating whether or not mortgage (principle) counts as savings. You are sort of dancing around the question of what the definition of "savings" should be. If you actually came up with a definition the answer to the question would be clear. Has anyone wanted to expl...
by dbr
Sun Mar 01, 2015 5:08 pm
 
Forum: Personal Finance (Not Investing)
Topic: Do you consider mortgage payments as savings?
Replies: 131
Views: 4991

Re: Dividends and Market Slides

I don't have a problem debating possible subtle differences in risk and return, especially at the extreme downside of the returns distribution, in a sub-selection of the total stock market based on dividend paying. I have a big problem if lying behind that is an investor who is misunderstanding the ...
by dbr
Sun Mar 01, 2015 5:03 pm
 
Forum: Investing - Theory, News & General
Topic: Dividends and Market Slides
Replies: 47
Views: 2078

Re: Illiquid Assets

The problem for a young investor is the good illiquid investments end up being undiversified because they're too large a fraction of their portfolio. Like raw land in a good location. Or a field of timber. So if you want exposure in small diversified chunks1 yiu have to rely on intermediaries. The ...
by dbr
Sun Mar 01, 2015 3:42 pm
 
Forum: Investing - Theory, News & General
Topic: Illiquid Assets
Replies: 35
Views: 2309

Re: Costs of loyalty to employer

You can most likely maximize compensation by moving around. You can also learn some positive and some negative lessons about what companies are worth sticking with and what companies are not. Those lessons will come too late to be of use. I would say that the biggest factors in this equation are int...
by dbr
Sun Mar 01, 2015 3:15 pm
 
Forum: Personal Finance (Not Investing)
Topic: Costs of loyalty to employer
Replies: 14
Views: 1397

Re: Help for a relative

If you follow a rough estimate that one can affort to take about 4% of a portfolio annually in withdrawal and recognize that somewhere around 2%-3% has already been siphoned off by the expenses of holding those funds (the ER plus trading costs in the funds plus other costs at ML) then you could incr...
by dbr
Sun Mar 01, 2015 3:07 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help for a relative
Replies: 4
Views: 324

Re: Tips on answering the question - What Should I Do?

I am a great believer in getting an overview of the life income situation using one of the retirement planners like FireCalc, Otar's Retirement Optimizer, the Fidelity Planner, etc. It is the best way to combine planned income streams, investment situation, hoped for income in retirement, and evalua...
by dbr
Sun Mar 01, 2015 2:55 pm
 
Forum: Investing - Theory, News & General
Topic: Tips on answering the question - What Should I Do?
Replies: 154
Views: 180343

Re: Investing 1 Mill for 75 year old parent

I agree with two points. One is that more than 1/3 of needed income should be annuitized, possibly spaced out, and the other is that for investments the target retirement income fund is a pretty good concept for investing. A target withdrawal of 4.5% for 15 years is not crazy, but it would be better...
by dbr
Sun Mar 01, 2015 2:43 pm
 
Forum: Investing - Help with Personal Investments
Topic: Investing 1 Mill for 75 year old parent
Replies: 15
Views: 941

Re: Do you consider mortgage payments as savings?

stan1 wrote:
dbr wrote:What causes this ongoing confusion about what it means to save?


Because saving 30% or 50% is obviously better than saving 20%, especially if you want to tell your spouse/friends about it or gloat on the internet. :moneybag


Maybe that is exactly it.
by dbr
Sun Mar 01, 2015 1:46 pm
 
Forum: Personal Finance (Not Investing)
Topic: Do you consider mortgage payments as savings?
Replies: 131
Views: 4991

Re: Fund for 50+ years???

Holding something 50 year is a big stretch. I would opt for balanced fund. Vg doesn't seem to mess with that fund as it does with Target Date and Life Strategy Funds - so maybe what you are buying at low cost will stay the same. No international, no TIPS etc so if that is needed/wanted you need to ...
by dbr
Sun Mar 01, 2015 1:43 pm
 
Forum: Investing - Help with Personal Investments
Topic: Fund for 50+ years???
Replies: 6
Views: 458

Re: Do you consider mortgage payments as savings?

It's not saving. It's paying for something you already bought. Correct. If I get a big inheritance, for instance, and buy a house for cash, would THAT count as "savings"? No it would not, and neither does paying down a loan or debt for any reason... But getting the big inheritance and kee...
by dbr
Sun Mar 01, 2015 1:30 pm
 
Forum: Personal Finance (Not Investing)
Topic: Do you consider mortgage payments as savings?
Replies: 131
Views: 4991

Re: Do you consider mortgage payments as savings?

As a previous poster pointed out, moving money from one asset, cash in the bank for example, to another, reduction of loan liability for example, is not saving. If the question is whether or not it is saving to make use one's new paycheck to make a payment against mortgage principal versus not makin...
by dbr
Sun Mar 01, 2015 1:14 pm
 
Forum: Personal Finance (Not Investing)
Topic: Do you consider mortgage payments as savings?
Replies: 131
Views: 4991

Re: Fund for 50+ years???

There is no "best" fund for such a general purpose. There are lots of investment choices that would be very suitable, possibly including those you list and others besides. I think it is better to lay out one's entire investment portfolio and solve the investment selection problem last rath...
by dbr
Sun Mar 01, 2015 12:42 pm
 
Forum: Investing - Help with Personal Investments
Topic: Fund for 50+ years???
Replies: 6
Views: 458

Re: Risk--Again. The common stepping stone

The benchmark study would be this one: http://en.wikipedia.org/wiki/Trinity_study but the research has continued over the years. You could Google for Wade Pfau and Michael Kitces for recent work. This is a source of frequent and lengthy discussions on this forum. Milevsky is another academic who has...
by dbr
Sun Mar 01, 2015 11:12 am
 
Forum: Investing - Theory, News & General
Topic: Risk--Again. The common stepping stone
Replies: 57
Views: 3119

Re: Help me calculate changing asset percentages.

Apparently I suck at math. Can anyone show me how calculate the correct amount or percentage of asset class when adjusting asset allocation? For instance, assume my current allocation is 30% Total Stock Market and 70% Total Bond Market. If I want to add 10% Total International Stock Fund to my 30% ...
by dbr
Sun Mar 01, 2015 10:53 am
 
Forum: Investing - Help with Personal Investments
Topic: Help me calculate changing asset percentages.
Replies: 6
Views: 251

Re: Recovering Your Investment after a Loss

There is a calculator in the New York Times "Your Money" section that allows you to calculate how long it takes to recover where you were after a portfolio loss. You enter in what you had, where you are after the loss, any estimated on-going contributions, an expected return rate, and an ...
by dbr
Sun Mar 01, 2015 10:52 am
 
Forum: Investing - Theory, News & General
Topic: Recovering Your Investment after a Loss
Replies: 7
Views: 577

Re: Help me calculate changing asset percentages.

You haven't define what you mean by "add." If you mean you want to increase your stock allocation by 3% with the addition to be in international stocks, then you sell 3% of total assets in bonds and buy those stocks, ending up with a 33/67 allocation. If you mean you want to sell some bond...
by dbr
Sun Mar 01, 2015 10:42 am
 
Forum: Investing - Help with Personal Investments
Topic: Help me calculate changing asset percentages.
Replies: 6
Views: 251

Re: Inheritance to be held in expensive trust for ~10 years

We are the grantors of an irrevocable trust, making annual gifts to the trust. Each year the trust files a Form 1041 return based upon its net income from investments. In our case the trust pays no tax. It issues a K-1 form to us, as grantors, that we include in our personal Form 1040 tax filing, p...
by dbr
Sun Mar 01, 2015 10:27 am
 
Forum: Personal Finance (Not Investing)
Topic: Inheritance to be held in expensive trust for ~10 years
Replies: 55
Views: 6345

Re: Risk--Again. The common stepping stone

It appears that the essence of this discussion is the event: "running out of money" (or the event: available funds being less than XXX dollars). This "event" (e.g. dying, cancer diagnosis, some other adverse event), can be modeled (i.e. proportional hazards regression), given va...
by dbr
Sun Mar 01, 2015 10:21 am
 
Forum: Investing - Theory, News & General
Topic: Risk--Again. The common stepping stone
Replies: 57
Views: 3119

Re: Retirement planning - Too soon for TIPS?

The one caveat about I bonds is that interest payment will stop and tax come due after thirty years. This may not be a big deal but for some investors could be awkward if the timing falls in years of highest earnings before retirement. I bond tax can be paid as you go, but one of the appeals of I bo...
by dbr
Sun Mar 01, 2015 10:14 am
 
Forum: Investing - Help with Personal Investments
Topic: Retirement planning - Too soon for TIPS?
Replies: 25
Views: 2192

Re: slice and dice question (fixed income)

I was recommended these by a financial adviser. Are these more/less risky than just investing the money in BND? Yes, they are risky. High yield corporate bond, for example, is risky enough that a lot of people here would classify that as effectively half stocks and half bonds. Emerging market forei...
by dbr
Sun Mar 01, 2015 10:10 am
 
Forum: Investing - Help with Personal Investments
Topic: slice and dice question (fixed income)
Replies: 10
Views: 603

Re: Inheritance to be held in expensive trust for ~10 years

The trust tax return is Form 1041 and Instructions. Aside from articles, as offered in the reply above, the tax rate schedule is part of the instructions for 1041 Schedule G, which is found on Page 30 of the instructions. As with any other part of the Tax Code there is nothing on this form that is s...
by dbr
Sat Feb 28, 2015 4:42 pm
 
Forum: Personal Finance (Not Investing)
Topic: Inheritance to be held in expensive trust for ~10 years
Replies: 55
Views: 6345

Re: PIN + Signature card in Europe

I traveled a lot across all continents and never had a problem using ATM cards. There were only a few places where I used cash anyway. In a few places it sometimes pays to have a wad of USD -- sometimes the unofficial exchange rates are quite good. I was in Buenos Aires the week after they unpegged...
by dbr
Sat Feb 28, 2015 2:13 pm
 
Forum: Personal Consumer Issues
Topic: PIN + Signature card in Europe
Replies: 16
Views: 586

Re: PIN + Signature card in Europe

That usually means finding an attended gas station. At least in Italy I've found that many stations take cash vending-machine style. But yes, attended is better. That's exactly what was happening. Cash was working in the machines and the credit cards were turned off. We had been in Switzerland and ...
by dbr
Sat Feb 28, 2015 2:12 pm
 
Forum: Personal Consumer Issues
Topic: PIN + Signature card in Europe
Replies: 16
Views: 586

Re: Inheritance to be held in expensive trust for ~10 years

Can someone please explain, if multiple heirs what's the difference if distributions were taken "in kind" or first sold and divided? Assuming all wanted to choose their own funds anyway. Is there a step up basis either way or one method incur more taxes or some other issue? Thanks. If the...
by dbr
Sat Feb 28, 2015 2:10 pm
 
Forum: Personal Finance (Not Investing)
Topic: Inheritance to be held in expensive trust for ~10 years
Replies: 55
Views: 6345

Re: Analysis Paralysis - Stock Options

A very standard situation is that options are granted annually with ten year expiration and that a common plan is to exercise each tranch shortly before expiration. That gives you an annual process of exercising options indefinitely. So the question is will you be gaining grants every year or are t...
by dbr
Sat Feb 28, 2015 2:02 pm
 
Forum: Personal Finance (Not Investing)
Topic: Analysis Paralysis - Stock Options
Replies: 13
Views: 558

Re: Do you consider mortgage payments as savings?

I don't consider the principle portion of my mortgage payment savings, although I do include the equity in my home as part of my Net Worth. So when the equity in your home increases, due to you paying down principal, you recognize that your net worth has increased. But you don't consider that savin...
by dbr
Sat Feb 28, 2015 1:50 pm
 
Forum: Personal Finance (Not Investing)
Topic: Do you consider mortgage payments as savings?
Replies: 131
Views: 4991

Re: Analysis Paralysis - Stock Options

A very standard situation is that options are granted annually with ten year expiration and that a common plan is to exercise each tranch shortly before expiration. That gives you an annual process of exercising options indefinitely. So the question is will you be gaining grants every year or are th...
by dbr
Sat Feb 28, 2015 1:48 pm
 
Forum: Personal Finance (Not Investing)
Topic: Analysis Paralysis - Stock Options
Replies: 13
Views: 558

Re: PIN + Signature card in Europe

That usually means finding an attended gas station. At least in Italy I've found that many stations take cash vending-machine style. But yes, attended is better. That's exactly what was happening. Cash was working in the machines and the credit cards were turned off. We had been in Switzerland and ...
by dbr
Sat Feb 28, 2015 1:42 pm
 
Forum: Personal Consumer Issues
Topic: PIN + Signature card in Europe
Replies: 16
Views: 586

Re: Do you consider mortgage payments as savings?

Well with all due respect when someone says savings I take that as money put into an account that is safe,not something that can lose value like a stock or a house.Maybe I misunderstood his meaning. When somebody asks, "What percent of your income are you saving?" you are going to include...
by dbr
Sat Feb 28, 2015 1:37 pm
 
Forum: Personal Finance (Not Investing)
Topic: Do you consider mortgage payments as savings?
Replies: 131
Views: 4991

Re: Retirement planning - Too soon for TIPS?

Perhaps I am misinformed, but I thought at present I bonds were paying zero over inflation. Because the inflation return is taxed, won't they certainly lose purchasing power? Perhaps less quickly than a money market fund, but lose just the same. How do people address this issue? Taxes are part of e...
by dbr
Sat Feb 28, 2015 12:21 pm
 
Forum: Investing - Help with Personal Investments
Topic: Retirement planning - Too soon for TIPS?
Replies: 25
Views: 2192

Re: International increase in Target Retirement & LifeStrate

ftobin wrote:
dbr wrote:However, this does show that there is no such thing as "invest and forget." You still should pay attention to what is going on TR fund or not.

Or not pay attention and let Vanguard manage the risk :-)


No one should ever not know what they are invested in.
by dbr
Sat Feb 28, 2015 12:12 pm
 
Forum: Investing - Theory, News & General
Topic: International increase in Target Retirement & LifeStrategy
Replies: 119
Views: 7776

Re: International increase in Target Retirement & LifeStrate

However, this does show that there is no such thing as "invest and forget." You still should pay attention to what is going on TR fund or not.
by dbr
Sat Feb 28, 2015 11:59 am
 
Forum: Investing - Theory, News & General
Topic: International increase in Target Retirement & LifeStrategy
Replies: 119
Views: 7776

Re: Do you consider mortgage payments as savings?

if you consider it savings because it increases net worth you are wrong. You did not increase net worth by making the payment. You used cash from your net worth to decrease a liability. It's neutral to net worth. It's merely an exchange of asset type. edit: post above me beat to it Yes, I was after...
by dbr
Sat Feb 28, 2015 11:57 am
 
Forum: Personal Finance (Not Investing)
Topic: Do you consider mortgage payments as savings?
Replies: 131
Views: 4991

Re: Retirement planning - Too soon for TIPS?

Perhaps I am misinformed, but I thought at present I bonds were paying zero over inflation. Because the inflation return is taxed, won't they certainly lose purchasing power? Perhaps less quickly than a money market fund, but lose just the same. How do people address this issue? Taxes are part of e...
by dbr
Sat Feb 28, 2015 11:31 am
 
Forum: Investing - Help with Personal Investments
Topic: Retirement planning - Too soon for TIPS?
Replies: 25
Views: 2192

Re: Self-directed 401(k) Option

I've only seen a self-directed 401K option a couple of times. Both were expensive options to trade stocks and other instruments. Lots of fees, not my style. If you can trade stocks, you can buy Vanguard ETFs. High commissions don't matter much compared to a much lower ER if you're holding for the l...
by dbr
Sat Feb 28, 2015 11:21 am
 
Forum: Investing - Help with Personal Investments
Topic: Self-directed 401(k) Option
Replies: 9
Views: 566

Re: Do you consider mortgage payments as savings?

I think people are confusing net worth with all kinds of rationalizations about what assets comprise that net worth.

Diverting income from consumption to increasing net worth is saving by definition.

As always the ultimate answer depends on what purpose one has in mind in tracking the data.
by dbr
Sat Feb 28, 2015 10:45 am
 
Forum: Personal Finance (Not Investing)
Topic: Do you consider mortgage payments as savings?
Replies: 131
Views: 4991

Re: Is this a good AA plan?

1. Does this look like an appropriate AA or should I be tax adjusting the AA based on which funds are in the Roth vs Taxable vs Tax Deferred? If you tax adjust the AA you also have to think through how asset allocation should be computed for a tax adjusted asset allocation as distinct from a non-ad...
by dbr
Sat Feb 28, 2015 10:05 am
 
Forum: Investing - Help with Personal Investments
Topic: Is this a good AA plan?
Replies: 7
Views: 678

Re: Self-directed 401(k) Option

Many large companies such as my Megacorp have a brokerage window with a selected broker. Most of my 401K is placed there. There is an annual fee and transaction costs to trade at the brokerage. For an older employee with substantial assets fees are a completely negligible fraction of assets. For a y...
by dbr
Sat Feb 28, 2015 9:57 am
 
Forum: Investing - Help with Personal Investments
Topic: Self-directed 401(k) Option
Replies: 9
Views: 566

Re: slice and dice question (fixed income)

. . . as I don't fully understand what they are, & the risks associated with them. That is the risk right there. I would reinforce the suggestion to start with the suggested books and also articles in the Wiki. Realistically there is not a game to be played going beyond basic investments in bon...
by dbr
Sat Feb 28, 2015 9:49 am
 
Forum: Investing - Help with Personal Investments
Topic: slice and dice question (fixed income)
Replies: 10
Views: 603

Re: Holding bond funds to average duration

How does the fed raise rates anyways, as far as timing? Is it possible that they raise rates 1% in one day/announcement, causing a 1% multiplied by avg duration loss in every bond fund? Or do people expect them to raise it slowly, such as 1% over the course of a few weeks or months? Perhaps a strat...
by dbr
Sat Feb 28, 2015 9:11 am
 
Forum: Investing - Theory, News & General
Topic: Holding bond funds to average duration
Replies: 20
Views: 1421

Re: Tax efficiency of bonds in a taxable account

So you're basically saying to just flip a coin? I'm torn between VBMFX and VWITX. Where can I find CA munis? The search and filter options on Vanguard does not bring up any state-specific results. Any links for the dummy tax return site for me to plug in the numbers? By indifference I mean that the...
by dbr
Fri Feb 27, 2015 1:46 pm
 
Forum: Investing - Help with Personal Investments
Topic: Tax efficiency of bonds in a taxable account
Replies: 9
Views: 701
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