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Re: Portfolio Volatility is a Big Drag on Returns

This is an improper example. we know gains and losses from stocks are proportional to the money invested. while in your example, the gain or lose is fixed at $50, doesn't matter how much you originally have. the whole following analysis is then flawed. I was just reading a shortened version of Ilman...
by ghost9804
Wed Apr 16, 2014 8:55 am
 
Forum: Investing - Theory, News & General
Topic: Portfolio Volatility is a Big Drag on Returns
Replies: 25
Views: 2026

Re: Roth Conversion "Horse Race"

If one is both eligible for contributing deductible traditional Ira and Roth IRA,and planned to contribute to Roth. The best stratege is contribute to t-Ira instead, and apply the "house race" stratege for conversion?
by ghost9804
Tue Feb 04, 2014 12:11 am
 
Forum: Investing - Theory, News & General
Topic: Roth Conversion "Horse Race"
Replies: 41
Views: 4223

Re: moving pre-tax money to after-tax for free?

of course there is a difference between after tax return. Not using tax adjusted asset allocation, assume now your money grow $1000 across your both pre-tax and after tax accounts, which scenario do you prefer? 1. ROTH grow $0, pre-tax grow $1000 2. ROTH grow $1000, pre-tax grow $0 3. ROTH grow $100...
by ghost9804
Wed Feb 13, 2013 1:57 pm
 
Forum: Investing - Theory, News & General
Topic: moving pre-tax money to after-tax for free?
Replies: 40
Views: 2143

Re: moving pre-tax money to after-tax for free?

I agree it depends on the future performance, but analog to rebalancing, under the basic assumption of "reverse to mean", we should gain by this kind of transaction, right? for rebalancing, we sell winners to buy losers, under the assumption that the winners will become losers and losers w...
by ghost9804
Wed Feb 13, 2013 12:51 pm
 
Forum: Investing - Theory, News & General
Topic: moving pre-tax money to after-tax for free?
Replies: 40
Views: 2143

Re: moving pre-tax money to after-tax for free?

That example only shows the tax benefit without considering rebalancing. With rebalancing, it can do even better.

kaneohe wrote:wouldn't you have done better by just rebalancing to the original 50-50 allocation in the example given after each of the extreme moves?
by ghost9804
Tue Feb 12, 2013 6:21 pm
 
Forum: Investing - Theory, News & General
Topic: moving pre-tax money to after-tax for free?
Replies: 40
Views: 2143

Re: moving pre-tax money to after-tax for free?

Wash sale is not the point. even it is a wash sale, it does not matter. IRS don't care what is the cost basis in your tax sheltered account, you are taxed by how much you withdraw, not how much you gain. ... say we have 2 funds A and B both in pre-tax and ROTH account. A is winning, B is losing. we ...
by ghost9804
Tue Feb 12, 2013 6:04 pm
 
Forum: Investing - Theory, News & General
Topic: moving pre-tax money to after-tax for free?
Replies: 40
Views: 2143

Re: moving pre-tax money to after-tax for free?

You are right. When AA is tax-adjusted, everything is the same

Ketawa wrote:Use tax-adjusted asset allocation, and you'll see that you're not beating the system by doing this. You are just fooling yourself about how much risk you have in each account.

Tax-Adjusted Asset Allocation
by ghost9804
Tue Feb 12, 2013 3:42 pm
 
Forum: Investing - Theory, News & General
Topic: moving pre-tax money to after-tax for free?
Replies: 40
Views: 2143

Re: moving pre-tax money to after-tax for free?

Thanks. That's exactly what I means Here's what I think ghost is saying: In a pre-tax IRA, you have $100 in fund A and $100 in fund B. In a Roth IRA, you also have $100 in fund A and $100 in fund B. Lets say fund A's value drops by 50% and fund B's value doubles. Within the pre-tax, you sell your $5...
by ghost9804
Tue Feb 12, 2013 12:26 pm
 
Forum: Investing - Theory, News & General
Topic: moving pre-tax money to after-tax for free?
Replies: 40
Views: 2143

Re: moving pre-tax money to after-tax for free?

no money moving between pre-tax and ROTH account say we have 2 funds A and B both in pre-tax and ROTH account. A is winning, B is losing. we sell B, buy A in pre-tax sell A, buy B in Roth AA for funds A and B still kept the same after the transaction. later on we can reverse the transaction if B is ...
by ghost9804
Tue Feb 12, 2013 12:24 pm
 
Forum: Investing - Theory, News & General
Topic: moving pre-tax money to after-tax for free?
Replies: 40
Views: 2143

Re: moving pre-tax money to after-tax for free?

the purpose is to NOT paying any conversion tax.

cheese_breath wrote:Sell? Buy? Aren't we just talking a Roth conversion here? There is no selling or buying. Just converting and paying the tax.
by ghost9804
Tue Feb 12, 2013 12:11 pm
 
Forum: Investing - Theory, News & General
Topic: moving pre-tax money to after-tax for free?
Replies: 40
Views: 2143

Re: moving pre-tax money to after-tax for free?

The key here is not to claim any capital loss and tax benefit to IRS, so it is not a tax loss harvesting. The key is to realize some capital loss in pretax account, and get the same amount capital gain in after tax account. So it looks like rolling over money from pretax account to after tax account...
by ghost9804
Tue Feb 12, 2013 12:09 pm
 
Forum: Investing - Theory, News & General
Topic: moving pre-tax money to after-tax for free?
Replies: 40
Views: 2143

Re: moving pre-tax money to after-tax for free?

Wash sale applies when sell for a loss in a taxable account to claim tax benefit if I sell in traditional IRA and buy back in ROTH/taxable, there is no capital loss to claim, nothing reported to IRS, still considered a wash sale? I just got an interesting thought, to move pre-tax money from traditio...
by ghost9804
Tue Feb 12, 2013 11:56 am
 
Forum: Investing - Theory, News & General
Topic: moving pre-tax money to after-tax for free?
Replies: 40
Views: 2143

Re: moving pre-tax money to after-tax for free?

I assume wash sale not applicable to tax sheltered account

Kosmo wrote:Wash sale?
by ghost9804
Tue Feb 12, 2013 11:50 am
 
Forum: Investing - Theory, News & General
Topic: moving pre-tax money to after-tax for free?
Replies: 40
Views: 2143

moving pre-tax money to after-tax for free?

I just got an interesting thought, to move pre-tax money from traditional IRA/401K to after-tax money in Roth. say we have some funds both in pretax and after tax account. when the market is right, we can sell the under performing fund in pretax account and buy back in after tax account. Also, we ca...
by ghost9804
Tue Feb 12, 2013 11:44 am
 
Forum: Investing - Theory, News & General
Topic: moving pre-tax money to after-tax for free?
Replies: 40
Views: 2143

Re: POLL: How much re-balancing bonus do you expect?

In theory, re-balancing could results in a total higher return than any return from the sub asset class. I still remember an interesting question:"how do you make money from a random walking stock market, which has zero expected return" So if you have 2 asset class: 1. cash, stable value, ...
by ghost9804
Wed Dec 26, 2012 6:45 pm
 
Forum: Investing - Theory, News & General
Topic: POLL: How much re-balancing bonus do you expect?
Replies: 47
Views: 3508

Re: Loan Paydown effect on AA

Here is how I treat the loan. We usually take a loan to buy something expensive, like car, house ,etc. Which if sold, can recover the money minus some "redemption fee". So when people take a loan to buy things, their asset doesn't change immediately, so does his asset allocation. Here is a...
by ghost9804
Thu Jul 05, 2012 8:38 pm
 
Forum: Investing - Theory, News & General
Topic: Loan Paydown effect on AA
Replies: 39
Views: 2954

Re: Modified Value averaging strategy

This $1000 is just a hypothetical number that people can save for investment each period. Of course if your have $100K-$1m upfrond, you can argue about lump sum or DCA, but that's out of the scope of this thread. What is "value averaging?" Sounds way to involved for $1000... if it were $10...
by ghost9804
Tue May 01, 2012 1:12 pm
 
Forum: Investing - Theory, News & General
Topic: Modified Value averaging strategy
Replies: 4
Views: 236

Modified Value averaging strategy

Did some research recently about DCA versus VA, and played a bit with the spread sheet "Dollar Cost vs Value Averaging", I found it interesting that in most cases, VA performs much better than DCA in terms of absolute dollar amount return, even though VA invest less than required by DCA. O...
by ghost9804
Tue May 01, 2012 1:00 pm
 
Forum: Investing - Theory, News & General
Topic: Modified Value averaging strategy
Replies: 4
Views: 236

Expense ratio and return

After some research on this forum, I see that the expense was charged daily proportional to ones asset value, but indirectly. For example, assuming no transaction fees, one can spend $1000 to buy 100 shares of XXX fund at market price $10 per share, and sells later some time at the market price $11 ...
by ghost9804
Sun Apr 15, 2012 2:02 pm
 
Forum: Investing - Theory, News & General
Topic: Expense ratio and return
Replies: 5
Views: 458

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