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by grabiner
Tue May 26, 2015 10:41 pm
Forum: Investing - Theory, News & General
Topic: suitability of Vanguard Target retirement funds
Replies: 15
Views: 1731

Re: suitability of Vanguard Target retirement funds

My confusion stems from the various ways it's described: TBM in taxable is bad for high income. TBM is bad for for higher earners in the 25% bracket TBM is acceptable for the 25% bracket TBM is tax inefficient etc. Well, what's the real answer? There are three issues: In the 25% tax bracket, taxabl...
by grabiner
Tue May 26, 2015 8:56 pm
Forum: Investing - Help with Personal Investments
Topic: Adjustments to a taxable account
Replies: 7
Views: 567

Re: Adjustments to a taxable account

What is the best way to get better funds in my parent's taxable account without getting hit with taxes too much? They currently have $50k in three funds. I estimate they have about $15,000 in unrealized capital gains and they are in the 25% tax bracket. Paying 15% tax on the 30% gain would be a los...
by grabiner
Tue May 26, 2015 8:44 pm
Forum: Investing - Help with Personal Investments
Topic: Exchanging Vanguard Funds In Personal Account Relating to Tax
Replies: 3
Views: 225

Re: Exchanging Vanguard Funds In Personal Account Relating to Tax

I have money investing in a taxable account split across VFIAX and VSMAX (80/20 split for a total of 250K). I would like to setup a 4 fund strategy using the following funds below, but not sure if that is recommended due to the tax issues when selling and buying my current investments. I would just...
by grabiner
Tue May 26, 2015 8:39 pm
Forum: Investing - Help with Personal Investments
Topic: Do I need to sell my REIT in taxable account?
Replies: 17
Views: 812

Re: Do I need to sell my REIT in taxable account?

I made a typical beginner's mistake, followed someone's advice to pick this hot fund back in January. To make it worse, I put it in the taxable account. I bought $30K @$122.83 per share, which is about 7% of the total portfolio. Now it is less than $28K. Today's price is $113.48. I am afraid it wil...
by grabiner
Tue May 26, 2015 8:34 pm
Forum: Investing - Help with Personal Investments
Topic: an appropriate bond fund for taxable account
Replies: 27
Views: 2402

Re: an appropriate bond fund for taxable account

This is a tough question. It may be slightly financially better over 9 years to invest in a good fund (bond or stock index). But the truth is that is no more riskier than real estate. If you think you live in a strong neighborhood were property values will maintain then you may have less risk there...
by grabiner
Tue May 26, 2015 8:26 pm
Forum: Investing - Help with Personal Investments
Topic: Will Vanguard automatically convert to Admiral class shares?
Replies: 34
Views: 3139

Re: Will Vanguard automatically convert to Admiral class shares?

Do all shares, no matter when purchased, have the same ratio as a split stock would? Don't they track differently because of different expense ratios? I only had to convert about six purchases so I kept it simple. The difference in expenses is taken out of dividends. The ratio between investor and ...
by grabiner
Mon May 25, 2015 10:20 pm
Forum: Personal Finance (Not Investing)
Topic: Extra mortgage payments or nonIRA investment?
Replies: 9
Views: 954

Re: Extra mortgage payments or nonIRA investment?

I'm about to pay off a business loan and was trying to decide what to do with the extra cash flow. I have 2 mortgages at 3.25% with a $200k balance 1 mortgage at 2.65% with 150k balance What are the terms of these mortgages, and are they deductible? It is more attractive to pay down a variable-rate...
by grabiner
Mon May 25, 2015 10:17 pm
Forum: Personal Finance (Not Investing)
Topic: Question about Taxes on Social Security
Replies: 28
Views: 2218

Re: Question about Taxes on Social Security

Here is a brief description: http://www.ssa.gov/planners/taxes.html You have the right idea on adding tax-exempt interest to other income, then add 1/2 of SS to that to get "combined income". Do not use SD or exemptions. file a joint return, and you and your spouse have a combined income*...
by grabiner
Mon May 25, 2015 10:01 pm
Forum: Investing - Help with Personal Investments
Topic: Help with asset location and options - bond funds
Replies: 2
Views: 344

Re: Help with asset location and options - bond funds

See portfolio details below - my question is which fund should I use first for my bond allocation (20%; Age - 20): FTHRX which is available in His/Her 403b/401a FSITX which is available in His/Her Roth IRAs Per what I've learned from the Wiki, the tax-deferred space would be preferred over tax-free...
by grabiner
Mon May 25, 2015 9:55 pm
Forum: Investing - Help with Personal Investments
Topic: an appropriate bond fund for taxable account
Replies: 27
Views: 2402

Re: an appropriate bond fund for taxable account

Wouldn't some of this math depend upon if you're over or under the $500k capital gains credit for primary residences? The taxable capital gain when you sell your house is independent of the mortgage; it is the difference between sale price and basis (purchase price plus any improvements). The only ...
by grabiner
Sun May 24, 2015 9:28 pm
Forum: Investing - Theory, News & General
Topic: Taking out a HELOC to invest
Replies: 19
Views: 1659

Re: Taking out a HELOC to invest

Still scratching my head over Grabiner's mortgage. I thought we hit the jackpot with 3.4% fixed, re-fi, 30 years, several years back. I paid 2.75 points and a 1% loan origination fee to get 2.625% for 15 years. The APR on the Truth-In-Lending statement is 3.213%, but I would only earn 2.625% if I m...
by grabiner
Sun May 24, 2015 9:24 pm
Forum: Personal Finance (Not Investing)
Topic: Does a recent student loan affect mortgage rates?
Replies: 7
Views: 614

Re: Does a recent student loan affect mortgage rates?

I think that credit karma now uses actual credit score. It's a VantageScore 3.0, which is used by some lenders, although not by as many as FICO. But the real reason to get a paid score is so that you can get actual reason codes, which say that your score is lowered because "amount owed on revo...
by grabiner
Sun May 24, 2015 7:58 pm
Forum: Personal Finance (Not Investing)
Topic: Does a recent student loan affect mortgage rates?
Replies: 7
Views: 614

Re: Does a recent student loan affect mortgage rates?

I have a somewhat better credit history than my wife (782 vs 759 of 850 on CreditKarma). I have 13 year borrowing history and around 4 credit cards, 2 bank accounts while she has a 3 year borrowing history and one credit card, one bank account. Pay for an actual FICO score. Credit Karma's score, wh...
by grabiner
Sun May 24, 2015 7:53 pm
Forum: Investing - Theory, News & General
Topic: Stock Splits and Options
Replies: 3
Views: 344

Re: Stock Splits and Options

http://www.investopedia.com/ask/answers/03/092103.asp The value of the option is adjusted accordingly, not the number of contracts. While the reported number of contracts is not adjusted, the effect is the same as if they did. You have one contract which is a call option to buy 100 shares at $60. W...
by grabiner
Sun May 24, 2015 7:46 pm
Forum: Investing - Help with Personal Investments
Topic: Will Vanguard automatically convert to Admiral class shares?
Replies: 34
Views: 3139

Re: Will Vanguard automatically convert to Admiral class shares?

Hmmm, I was wondering how exactly you declare what you bought (how many shares of what you bought at what price), but looking at the forms it seems that detail is not needed. When Vanguard converts they convert each share purchase individually. They change their records and show the Admiral cost fr...
by grabiner
Sun May 24, 2015 7:45 pm
Forum: Investing - Help with Personal Investments
Topic: Portfolio for maxed long-term return
Replies: 5
Views: 831

Re: Portfolio for maxed long-term return

You are in the military; are you maxing out the TSP (probably Roth)? This is likely the best fund for the bond portion of your portfolio, as the G fund has intermediate-term-fund returns with no risk. And you can rebalance out of the G fund if that gives you too much in bonds; the C fund is a large-...
by grabiner
Sun May 24, 2015 7:39 pm
Forum: Investing - Help with Personal Investments
Topic: an appropriate bond fund for taxable account
Replies: 27
Views: 2402

Re: an appropriate bond fund for taxable account

I'm thinking that if the $1,500/month were going into, say, the Vanguard intermediate term tax-exempt fund, that over the next 9 years or so I'd likely come out ahead because the average duration isn't too long (4.7 years) and even though the yield is lower than the mortgage interest at the moment,...
by grabiner
Sun May 24, 2015 7:37 pm
Forum: Investing - Help with Personal Investments
Topic: an appropriate bond fund for taxable account
Replies: 27
Views: 2402

Re: an appropriate bond fund for taxable account

I have an average disposible income of $1,500/month that I've been using to make extra principal payments on my 3.25% fixed rate mortgage. The mortgage has 9 years of regular payments left on it (4 years if I continue devoting the $1,500/month towards the principal). I'm beginning to think that I c...
by grabiner
Sun May 24, 2015 7:32 pm
Forum: Investing - Help with Personal Investments
Topic: Tax efficient way to unwind a dividend growth portfolio?
Replies: 5
Views: 684

Re: Tax efficient way to unwind a dividend growth portfolio?

I would not pay taxes to do this. 38 different companies could be pretty good diversification as long as they are not all airlines. If you are in the 0 % cap gains then I would do it. With 38 stocks and not too much in any one stock, you could treat these stocks as an index fund and build the rest ...
by grabiner
Sun May 24, 2015 7:28 pm
Forum: Investing - Help with Personal Investments
Topic: NASDAQ Index Fund
Replies: 3
Views: 442

Re: NASDAQ Index Fund

Also, which is better among S&P 500, total stock market or NASDAQ composite index funds? No index is inherently "better"; an index fund may be a good investment in the context of your portfolio. The reason to buy an index fund is to capture the returns of the relevant asset class. Thu...
by grabiner
Sat May 23, 2015 11:02 pm
Forum: Personal Finance (Not Investing)
Topic: Major issues with new HSABank.com website
Replies: 40
Views: 3806

Re: Major issues with new HSABank.com website

I was thinking of switching from GEHA HDHP this year. Then I would be able to transfer my HSA elsewhere, correct? You can transfer your HSA whether you stay with GEHA or not. However, if you stay with GEHA, any GEHA contributions go to HSA Bank because that is the bank that GEHA uses. If you switch...
by grabiner
Sat May 23, 2015 3:49 pm
Forum: Investing - Help with Personal Investments
Topic: Confused [about bonds]
Replies: 15
Views: 1716

Re: Confused [about bonds]

Yes, I should have done that 'Lafder', thanks. Ages 75 & 76(her), both retired, Income: my non-COLA'd pension + his & her Social Security. If that non-COLA'd pension is a substantial part of your retirement income, then you have a significant exposure to inflation risk. This would make I-Bo...
by grabiner
Sat May 23, 2015 12:43 pm
Forum: Investing - Help with Personal Investments
Topic: Rebalancing bands in taxable accounts
Replies: 8
Views: 453

Re: Rebalancing bands in taxable accounts

Here is what I have in my Investment Policy Statement: I will pay capital gains tax to rebalance in a taxable account only if a major asset class or subclass would otherwise be off by more than 5% of my total allocation, or a major asset class would be off by more than 25% of its own target allocati...
by grabiner
Sat May 23, 2015 12:36 pm
Forum: Investing - Theory, News & General
Topic: Taking out a HELOC to invest
Replies: 19
Views: 1659

Re: Taking out a HELOC to invest

The tax advantage of mortgages is shared by margin loans, the case of stock index futures is more complicated (because they have less favorable tax treatment on the stock side, so to speak, if held in a taxable account, work best in tax deferred). For a tax-efficient taxable account, the tax advant...
by grabiner
Sat May 23, 2015 12:24 pm
Forum: Personal Finance (Not Investing)
Topic: Major issues with new HSABank.com website
Replies: 40
Views: 3806

Re: Major issues with new HSABank.com website

Thank you for the correction....that HSABank in the institution chosen by GEHA...as I recall and will need to verify, GEHA may have been my only choice for an HDHP during the last enrollment season. I wonder if there a backdoor way around using HSABank if I stay with the GEHA HDHP...like setting up...
by grabiner
Fri May 22, 2015 10:56 pm
Forum: Investing - Theory, News & General
Topic: Taking out a HELOC to invest
Replies: 19
Views: 1659

Re: Taking out a HELOC to invest

and the portion used to carry municipal bonds is not deductible. Thank you for this information! So what happens if you buy municipal bonds after you have a HELOC established, but not from HELOC funds. Is the write off still allowed? Just curious if you know how the IRS would look at that. Here is ...
by grabiner
Fri May 22, 2015 10:17 pm
Forum: Personal Finance (Not Investing)
Topic: high income, low interest CA mortgage
Replies: 2
Views: 504

Re: high income, low interest CA mortgage

Mortgage rate *(1-federal tax)*(1-state tax) = 2.875%*.604*.897=1.558% If you pay AMT, it would be mortgage rate*(1-federal AMT rate-state rate) since the increased state tax doesn't become a federal deduction. The ACA tax doesn't enter into the calculation because it is based on gross income, not t...
by grabiner
Fri May 22, 2015 10:11 pm
Forum: Personal Finance (Not Investing)
Topic: How to go about paying down loans?
Replies: 8
Views: 746

Re: How to go about paying down loans?

Should I just skip paying the interest off on the GREAT Lakes loans for several months and pay the entire Navient loan off ($5554.45) and be done with it? Just making sure, both sets of loans are at 6.8%? If so, paying down any of the loans should be equivalent, i.e., you're saving 6.8% interest on...
by grabiner
Fri May 22, 2015 10:09 pm
Forum: Personal Finance (Not Investing)
Topic: Major issues with new HSABank.com website
Replies: 40
Views: 3806

Re: Major issues with new HSABank.com website

HSABank is the institution the federal government uses for HSA accounts for federal employees. The federal government doesn't have any contract with HSA Bank. There are several different high-deductible health plans for government employees, and each plan chooses its own HSA provider; plans can cha...
by grabiner
Fri May 22, 2015 10:02 pm
Forum: Investing - Theory, News & General
Topic: Investment Priority turned upside down?
Replies: 8
Views: 935

Re: Investment Priority turned upside down?

But this prioritized order assumes full consumption of the assets during the lifetime of the retiree or spouse. Full consumption probably rarely occurs for Bogleheads. It rarely occurs if one follows a safe withdrawal rule. Because of the stepped up basis, prioritizing for inheritance may favor tax...
by grabiner
Fri May 22, 2015 9:50 pm
Forum: Investing - Theory, News & General
Topic: Land Values, Tax Deferral, Wealth Retention and Income
Replies: 8
Views: 964

Re: Land Values, Tax Deferral, Wealth Retention and Income

Farmland and real estate are not proper alternatives to investing at "interest rates" (CDs and bonds). They do have tax advantages, but they are also risky investments. Retirees who need income should not be putting more money into risky investments (including stocks). If so, why are so ma...
by grabiner
Fri May 22, 2015 9:42 pm
Forum: Investing - Theory, News & General
Topic: Quick question about tax harvesting
Replies: 9
Views: 500

Re: Quick question about tax harvesting

Question to those who TLH: when you sell doesn't it throw off your AA? Isn't it the case that you can't buy back in for 30 days, or else you'd have a wash sale? Do you just leave the AA out of balance for a month? You can't buy back the same asset, or a substantially identical asset, within 30 days...
by grabiner
Fri May 22, 2015 9:32 pm
Forum: Investing - Theory, News & General
Topic: Taking out a HELOC to invest
Replies: 19
Views: 1659

Re: Taking out a HELOC to invest

I don't own a home (but intend to in the near future), so I can't answer the question posed in this post from personal experience. I would like to hear homeowners' answer to this question based on their personal experience. I often see the advice on here (and elsewhere) to not make any additional l...
by grabiner
Fri May 22, 2015 9:22 pm
Forum: Investing - Help with Personal Investments
Topic: Help me help my retired father -- preferred stocks
Replies: 24
Views: 1683

Re: Help me help my retired father -- preferred stocks

Don't know what tax bracket your father is in, but you will want to be sure of the tax implications before selling a bunch of long-held stocks to buy mutual funds. That could generate substantial long term capital gains and the tax bite could easily be much greater than any potential increase in fu...
by grabiner
Fri May 22, 2015 9:18 pm
Forum: Investing - Help with Personal Investments
Topic: city selling 'mini-bonds' at attractive rates
Replies: 24
Views: 1690

Re: city selling 'mini-bonds' at attractive rates

For bonds that only pay interest at maturity, the IRS usually requires you to report the accrued interest every year as income even though interest is not yet paid. It is similar to inflation adjustment reporting on TIPS. However, muni income is federal tax exempt and thus no phantom income problem...
by grabiner
Fri May 22, 2015 9:16 pm
Forum: Investing - Help with Personal Investments
Topic: Are ETFs better for tax gain harvesting?
Replies: 6
Views: 560

Re: Are ETFs better for tax gain harvesting?

The mutual fund workaround is to sell the mutual fund online, then write Vanguard a letter buying it back. You'll be out of the fund for just a few days. (And you need not be out of the market if you are harvesting gains in two different funds. You can sell A to buy B online, then sell your old shar...
by grabiner
Fri May 22, 2015 9:14 pm
Forum: Investing - Help with Personal Investments
Topic: Dilemma on assert allocation: risk tolerance vs tax efficiency
Replies: 9
Views: 580

Re: Dilemma on assert allocation: risk tolerance vs tax efficiency

Wiki article link: Placing cash needs in a tax-advantaged account Your risk tolerance need not determine which account holds stocks, because you can move money between the accounts. If you decide to buy a house and need $50K for the down payment, and your taxable account is entirely in stock, you ca...
by grabiner
Fri May 22, 2015 9:06 pm
Forum: Investing - Help with Personal Investments
Topic: Move from Vanguard Equity Income to Growth Index fund?
Replies: 7
Views: 680

Re: Move from Vanguard Equity Income to Growth Income fund?

My 401k options are changing on June 1, though the fund I'm currently 100% in is staying. That said, would it be worth it to move the $40k of Vanguard Equity Income Investor Shares ( VEIPX ) to their Growth Index Admiral Shares ( VIGAX )? I would think the overall return on the Equity Income fund o...
by grabiner
Fri May 22, 2015 8:58 pm
Forum: Investing - Help with Personal Investments
Topic: Medical Student Loan Refinancing - Fixed vs Variable
Replies: 8
Views: 574

Re: Medical Student Loan Refinancing - Fixed vs Variable

-With my current provider, I pay about $1300/month towards my loans. This will probably be all I can afford with the refinancing. That leaves me with primarily the following two options that keep me in the ballpark of what I'm paying now. Fixed 20yr @ 6% ($1350/mo); Variable 15yr @3.26% (1325) -My ...
by grabiner
Fri May 22, 2015 4:08 pm
Forum: Investing - Help with Personal Investments
Topic: Fund Roth IRA or pay student loans?
Replies: 13
Views: 971

Re: Fund Roth IRA or pay student loans?

With federal student loans, one important but overlooked feature is that interest accrues without compounding. In other words, during the negative amortization phase of your loan (where your payment does not cover interest), you are effectively accruing a 0% interest loan (the accrued interest is l...
by grabiner
Fri May 22, 2015 4:05 pm
Forum: Investing - Help with Personal Investments
Topic: Pay off mortage with EJones and invest the rest?
Replies: 4
Views: 579

Re: Pay off mortage with EJones and invest the rest?

So my tax situation is more complicated that normal. I do itemize, but may not once the mortgage is paid off and student loan is now paid off. One tax person I talked to said that I should consider holding the funds in the credit union or other liquid instrument and then pay off Citimortgage in 201...
by grabiner
Thu May 21, 2015 9:44 pm
Forum: Investing - Theory, News & General
Topic: Not your father's Total Bond Market Fund anymore
Replies: 84
Views: 8359

Re: Why Total Bond Market Index Fund

Thanks for the history lesson, and sage opinion. Interesting that the duration of the Intermediate-Term Bond Index Admiral Shares (VBILX) seems to be longer (6.5 years) than the duration of the Total Bond Market Index Fund Admiral Shares (VBTLX) (5.6 years), for anyone concerned with the potential ...
by grabiner
Thu May 21, 2015 9:41 pm
Forum: Investing - Help with Personal Investments
Topic: Advice for younger friend
Replies: 11
Views: 759

Re: Advice for younger friend

Choosing an allocation can be difficult for a new investor. Did your friend give any indication of his feelings on risk tolerance? If not, it's something you should discuss. For new investors who don't really have an idea, I suggest an AA of no more than 75/25. I agree with Grabinar that your frien...
by grabiner
Thu May 21, 2015 7:50 pm
Forum: Personal Finance (Not Investing)
Topic: Invest in Mutual Funds or Pay off house?
Replies: 7
Views: 488

Re: Invest in Mutual Funds or Pay off house?

If you are going to pay off a mortgage, does it make sense to keep it in a separate account until you have the balance? No, because you lose much of the benefit. If you make an extra payment on your 4% mortgage today, you earn a guaranteed 4%, and this rate is the reason you might want to make such...
by grabiner
Thu May 21, 2015 7:40 pm
Forum: Personal Finance (Not Investing)
Topic: Selling House Affect MAGI?
Replies: 2
Views: 376

Re: Selling House Affect MAGI?

After you have gone through the worksheet, if you have a reportable capital gain on selling your home (and don't have a capital loss to offset it), the gain is counted in your income; you will owe tax on it, and it will count as income for tax phase-outs such as Roth eligibility.
by grabiner
Thu May 21, 2015 6:59 pm
Forum: Investing - Theory, News & General
Topic: Not your father's Total Bond Market Fund anymore
Replies: 84
Views: 8359

Re: Not your father's Total Bond Market Fund anymore

The impact of '08 still continues after some eight years. Three year rolling return chart for Vanguard Total Bond Market fund compared to the category average: http://i62.tinypic.com/1zbvtxx.jpg Is this really what you want for one of your three funds? The question to ask: Why does it have these lo...
by grabiner
Thu May 21, 2015 6:47 pm
Forum: Investing - Theory, News & General
Topic: suitability of Vanguard Target retirement funds
Replies: 15
Views: 1731

Re: suitability of Vanguard Target retirement funds

Thanks! Living in a small state like MN, it is easy to forget Muni bonds. There isn't a low-priced MN bond fund, and the extra cost of using a high-priced fund will cancel any tax savings. You might use TIPS for the bond holding in your taxable account; these bonds are exempt from state taxes, and ...
by grabiner
Thu May 21, 2015 6:42 pm
Forum: Investing - Help with Personal Investments
Topic: Would a nervous self investor be better off with Wellington Fund?
Replies: 17
Views: 1812

Re: Would a nervous self investor be better off with Wellington Fund?

Neither the stocks nor the bonds in Wellington are similar to your index portfolio. That is neither right nor wrong, but electing Wellington would be a shift in investment style. Therefore, if you want a portfolio that manages itself (so that you don't have to think about rebalancing back into stoc...
by grabiner
Thu May 21, 2015 6:34 pm
Forum: Investing - Help with Personal Investments
Topic: Advice for younger friend
Replies: 11
Views: 759

Re: Advice for younger friend

I would suggest waiting until he has $1000; while a Roth IRA is a great idea, managing a tiny brokerage account with ETFs is more work than is worthwhile. When he has $1000, he can put it all into Vanguard Target Retirement 2060. If he isn't a student, then he will get 10% back from the IRS on up to...
by grabiner
Thu May 21, 2015 6:25 pm
Forum: Investing - Help with Personal Investments
Topic: Fund Roth IRA or pay student loans?
Replies: 13
Views: 971

Re: Fund Roth IRA or pay student loans?

Welcome to the forum! Paying down student loans at 6.8% is a risk-free 6.8% return, which is much better than you can get on your investments, and it will last several years because of the time it will take to pay off the loans. You do lose the right to get tax-deferred growth in your Roth IRA/Roth ...

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