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Re: Renaissance tech vs EMH

Ten-sigma events happen a lot more often than would be predicted from the normal distribution. The standard deviation of daily stock market moves is about 1%. The Dow Jones Industrial average has been up more than 10% seven times and down more than 10% four times . If your model tells you that a 10...
by grabiner
Thu Jan 29, 2015 12:32 am
 
Forum: Investing - Theory, News & General
Topic: Renaissance tech vs EMH
Replies: 37
Views: 1718

Re: Relationship between PMI, Mortgage Rate, and Down Paymen

I had initially assumed that the best rate a bank would offer would be based upon having the highest credit score and putting 20% down. It turns out I was mistaken. I've been surprised at the number of banks that offer lower interest rates for exceeding the 20% LTV ratio. With that being said, why ...
by grabiner
Thu Jan 29, 2015 12:10 am
 
Forum: Personal Finance (Not Investing)
Topic: Relationship between PMI, Mortgage Rate, and Down Payment
Replies: 26
Views: 1836

Re: What do you drive, and why?

2007 Honda Civic bought new, 90,000 miles. Given used-car and new-car prices at the time, I figured that I would get more miles per dollar buying a new car and driving it 120,000 miles, rather than buying a used car and driving it 80,000 miles; also, for the first three years, I would have a new car...
by grabiner
Wed Jan 28, 2015 9:51 pm
 
Forum: Personal Consumer Issues
Topic: What do you drive, and why?
Replies: 199
Views: 16687

Re: Refund from the IRS? Why?

ID theft isn't the only problem. I have three times had a state refund held up because of an error. Twice, it was the state's error; once, it was mine, as I paid the right amount of tax but copied an intermediate number wrong and the state computed the tax from the miscopied number. The longest dela...
by grabiner
Wed Jan 28, 2015 9:36 pm
 
Forum: Personal Finance (Not Investing)
Topic: Refund from the IRS? Why?
Replies: 45
Views: 4148

Re: turbotax: foreign bank interest ?

There is no hack around it. How do you report other interest that doesn't have a 1099-INT? TubboTax doesn't tell me. :annoyed And TaxAct says that you have to make out a fake 1099-INT to report interest that wasn't reported on a real one. It requires an override to make an entry directly on Schedul...
by grabiner
Wed Jan 28, 2015 9:25 pm
 
Forum: Personal Finance (Not Investing)
Topic: turbotax: foreign bank interest ?
Replies: 13
Views: 573

Re: Renaissance tech vs EMH

Why not? The failure of LTCM was calculated to be a "10-sigma event," yet it happened. I'll defer to what another smart poster said about LTCM a while back: "LTCM consisted of smart professionals. Clearly, they underestimated the risk of what they were doing. Well, maybe it's not cle...
by grabiner
Wed Jan 28, 2015 9:15 pm
 
Forum: Investing - Theory, News & General
Topic: Renaissance tech vs EMH
Replies: 37
Views: 1718

Re: VNQ & VNQI

I have 5% of my portfolio in each of them in my Roth IRA. (I hold Admiral shares, not the mutual fund class.)
by grabiner
Wed Jan 28, 2015 9:00 pm
 
Forum: Investing - Help with Personal Investments
Topic: VNQ & VNQI
Replies: 9
Views: 913

Re: VXUS and VTI names

I would love to read some inside account of just how the process does work. The PIMCO Total Return Bond ETF started out life as TRXT, and then a month later it was changed to... BOND. How the heck did Gross snag that little bit of primo real estate? And if BOND was available, why did Vanguard settl...
by grabiner
Wed Jan 28, 2015 8:59 pm
 
Forum: Investing - Help with Personal Investments
Topic: VXUS and VTI names
Replies: 14
Views: 915

Re: How to set up an HSA account? (for a first time user)

Your plan sounds fine to me. Some think that HSA investing should come before 401(k) because it is payroll tax free. If it were me, I'd probably contribute to my match in the 401(k), then max out the HSA, then fill up my Roth, then finish my 401(k). The key isn't that the HSA is payroll tax free, b...
by grabiner
Wed Jan 28, 2015 8:47 pm
 
Forum: Investing - Help with Personal Investments
Topic: How to set up an HSA account? (for a first time user)
Replies: 7
Views: 634

Re: Payoff Mortgage with investments in taxable accounts

Would you have a large tax bill for selling the taxable investments? If you would, you have to subtract the capital-gains tax from the risk-free return on your mortgage payoff. (From your other post, I believe the answer is no.) Do you itemize deductions, and if so, at what tax rate? If you are in t...
by grabiner
Tue Jan 27, 2015 8:59 pm
 
Forum: Personal Finance (Not Investing)
Topic: Payoff Mortgage with investments in taxable accounts
Replies: 22
Views: 1565

Re: Short Term Bonds in Taxable

I'm in the 33% tax bracket (9.3% CA), and based on this I believe that the short term is actually better in terms of yield when factoring the tax rate, but I'm not sure if I'm overlooking something important. I'd like to consolidate into just one of these funds, but am not sure which one I should c...
by grabiner
Tue Jan 27, 2015 8:48 pm
 
Forum: Investing - Help with Personal Investments
Topic: Short Term Bonds in Taxable
Replies: 6
Views: 1017

Re: Portfolio review / paying debt vs investing with a windf

Debt: Mortgage of $400k at 3% interest. 10 years remaining. Tax Rate: 39.6% Federal, 0% State Therefore, you get a 1.79% return after tax from paying down that mortgage. If you pay part of that mortgage, so that you clear it in six years rather than ten, that is equivalent to investing in a bond fu...
by grabiner
Mon Jan 26, 2015 11:31 pm
 
Forum: Investing - Help with Personal Investments
Topic: Portfolio review / paying debt vs investing with a windfall
Replies: 9
Views: 741

Re: Is VIGIX diversified enough?

What are the options in the 401(k)? Growth Index is not as well diversified as other indexes; it holds only large-cap growth stocks, not small-cap or value. Therefore, if you have Growth Index, you might want to offset it with a value fund, such as Small-Cap Value Index in your IRA if the 401(k) doe...
by grabiner
Mon Jan 26, 2015 11:26 pm
 
Forum: Investing - Help with Personal Investments
Topic: Is VIGIX diversified enough?
Replies: 8
Views: 1278

Re: Able to 'roll over' an OH teacher tax-deferred retiremen

I used to teach at a university in Ohio. Since my position was temporary, I chose not to use the pension system, and instead made a contribution to the Optional Retirement Plan, which was a 403(b) plan with TIAA-CREF. After leaving the Ohio position, I was allowed to roll the plan over to an IRA, wh...
by grabiner
Mon Jan 26, 2015 11:23 pm
 
Forum: Investing - Help with Personal Investments
Topic: Able to 'roll over' an OH teacher tax-deferred retirement?
Replies: 7
Views: 561

Re: Cap-weighted international

You will not quite stay at the cap weighting with this strategy, because of companies being added and removed. If you own one billionth of every company in the world, you have the world cap weighting. You can do this with the appropriate amount of Total World Stock Index, or the combination of Total...
by grabiner
Mon Jan 26, 2015 11:21 pm
 
Forum: Investing - Help with Personal Investments
Topic: Cap-weighted international
Replies: 1
Views: 230

Re: Slice and Dice with Etf and Admiral?

I slice and dice with ETF and Admiral shares. My US holdings are all Admiral shares, except for RZV (Guggenheim S&P 600 Pure Value), which is an ETF without Admiral shares; I hold it in my HSA. For international, I hold Emerging Markets Index as a mutual fund, but Developed Markets (because the ...
by grabiner
Mon Jan 26, 2015 11:13 pm
 
Forum: Investing - Help with Personal Investments
Topic: Slice and Dice with Etf and Admiral?
Replies: 8
Views: 635

Re: How much umbrella insurance do I need?

I'm trying to sort out how much umbrella insurance I need. They usually say that you should have enough to cover all your assets and in my case $1 million is way more than my assets. I don't understand why people recommend that your amount of umbrella insurance be related to the assets you have. Ge...
by grabiner
Mon Jan 26, 2015 12:18 am
 
Forum: Personal Finance (Not Investing)
Topic: How much umbrella insurance do I need?
Replies: 19
Views: 2114

Re: Android or iPhone? Which do you like, and why?

When I first bought a smartphone, I tested out the features in the store. One of my tests was the web site I am most likely to use the smartphone to browse: the bogleheads.org forum. It didn't zoom well on the iPhones I tried, and that was a good reason for me to go with an Android instead. This is ...
by grabiner
Sun Jan 25, 2015 8:16 pm
 
Forum: Personal Consumer Issues
Topic: Android or iPhone? Which do you like, and why?
Replies: 40
Views: 1823

Re: $1 and $2 foreign tax paid - file? refundable credit?

I agree with this, and I want to add the point that you potentially might not be able to actually use the carryover foreign tax credits in future years. Let's assume you had $2,000 in qualified foreign dividends and paid $300 in foreign taxes (not sure if this is realistic....foreign dividends may ...
by grabiner
Sun Jan 25, 2015 7:30 pm
 
Forum: Personal Finance (Not Investing)
Topic: $1 and $2 foreign tax paid - file? refundable credit?
Replies: 6
Views: 577

Re: WHAT EXPERTS SAY ABOUT

Taylor , I know you have a " house that Jack built " I have a nice " portfolio that Taylor built " In addition to the peace of mind that comes from following the wisdom of the bogle heads Happy Birthday and God Bless ! Happy Birthday! I also live in a House that Jack Built, insp...
by grabiner
Sun Jan 25, 2015 7:12 pm
 
Forum: Investing - Theory, News & General
Topic: What Experts Say [about various investing topics]
Replies: 49
Views: 2896

Re: rebalancing after an inheritance

Since you live in Montgomery County, MD and are in the 25% federal bracket, you have a 7.95% state and county tax on your investments. Vanguard doesn't have a Maryland tax-free fund, and the extra cost of T. Rowe Price's fund isn't worth the tax savings compared to a Vanguard national muni fund. I-B...
by grabiner
Sun Jan 25, 2015 7:08 pm
 
Forum: Investing - Help with Personal Investments
Topic: rebalancing after an inheritance
Replies: 7
Views: 716

Re: Long term cap gains tax rate for 15% bracket

There are also other rates that can apply, if the capital gains affect an income-based phase-in or phase-out for some other tax provision. For example, if you are receiving Social Security and are in the phase-in range for Social Security taxation, $1 of capital gains might be taxed at 0%, but it mi...
by grabiner
Sun Jan 25, 2015 6:59 pm
 
Forum: Investing - Help with Personal Investments
Topic: Long term cap gains tax rate for 15% bracket
Replies: 17
Views: 1719

Re: Should I sell tax inefficient mutual funds?

Toons wrote:Do not let the tax tail wag the dog :happy


Yes, but it's fine to turn the dog around. If you already have an asset allocation but have the tax-inefficient funds (such as Wellesley) in the wrong place, it's worth fixing; you can save on taxes without significantly changing your allocation.
by grabiner
Sun Jan 25, 2015 4:33 pm
 
Forum: Investing - Help with Personal Investments
Topic: Should I sell tax inefficient mutual funds?
Replies: 22
Views: 1464

Re: Tax efficiency ignoring capital gains

Tax efficiency depends both on avoiding taxable gains and on paying the lowest taxes you can on the gains which are taxed. Funds which pay non-qualified dividends or short-term capital gains are less tax-efficient than funds which pay only qualified divdends and long-term capital gains. Dividends on...
by grabiner
Sun Jan 25, 2015 12:14 pm
 
Forum: Investing - Theory, News & General
Topic: Tax efficiency ignoring capital gains
Replies: 6
Views: 829

Re: Varying returns with different sites

Check the end dates. Some sites will give returns as of yesterday, while others will give returns as of the last day of the month or quarter. Morningstar gives all three. Total Return is the return of a dollar invested in the fund over the whole time period; it indicates how well the fund did. Inves...
by grabiner
Sun Jan 25, 2015 12:10 pm
 
Forum: Investing - Theory, News & General
Topic: Varying returns with different sites
Replies: 4
Views: 358

Re: Total Bond: 23 years of SEC yield and distribution yield

Besides recent rates, there can be the issue of when bonds were purchased, which will be different for Total Bond Market Index and other bond funds. If Total Bond Market bought a 30-year bond at original issue 21 years ago, the distributions today on the 9-year bond will still be based on the coupon...
by grabiner
Sun Jan 25, 2015 11:59 am
 
Forum: Investing - Theory, News & General
Topic: Total Bond: 23 years of SEC yield and distribution yield
Replies: 22
Views: 2331

Re: Do you have an EF & Taxable Account?

I don't have a separate emergency fund, because I have a large taxable account and hold a virtual emergency fund in my retirement account. If I need to spend $10K and don't want to sell any stock, I can sell $10K in stock, and move $10K from bonds to stock in my retirement account. I believe that ha...
by grabiner
Sun Jan 25, 2015 11:50 am
 
Forum: Investing - Theory, News & General
Topic: Do you have an EF & Taxable Account?
Replies: 20
Views: 1439

Re: Bad 401K or Taxable or Mortgage or Car Loan?

Both aged 39 15% tax bracket Spouse’s 401K is bad with no match. I won’t list all of the funds and expense ratios because they are all bad and I know it. Instead I’ll just say that the “least bad” choices are: 1) Mutual of America Equity Index Fund ER 1.39% 2) Mutual of America Mid-Cap Equity Index...
by grabiner
Sun Jan 25, 2015 11:35 am
 
Forum: Investing - Help with Personal Investments
Topic: Bad 401K or Taxable or Mortgage or Car Loan?
Replies: 19
Views: 788

Re: Anyone regret paying off mortgage early?

Every person who paid of their mortgage early should make the following calculation: - take 80% of the equity in their home as of the date that mortgage was paid off, - invest in 30/70, 50/50, or 70/30 US_Stocks / Int_Bonds fund. Mortgage carrying cost can be assumed at 1% above the prevailing HELO...
by grabiner
Sun Jan 25, 2015 11:18 am
 
Forum: Personal Finance (Not Investing)
Topic: Anyone regret paying off mortgage early?
Replies: 306
Views: 37215

Re: Surviving the Tax Bite of RMD Withdrawals in Retirement

Ironically, my handle tells a story! All my tax deferred investments are in indexed funds and taxable investments have non-indexed funds. So every year I have been getting hit by the paper gains on mutual fund. I specifically registered here to ask for the advice on correcting the split of the fund...
by grabiner
Sun Jan 25, 2015 10:59 am
 
Forum: Investing - Theory, News & General
Topic: Surviving the Tax Bite of RMD Withdrawals in Retirement
Replies: 75
Views: 6125

Re: More tax efficient: Total US or Total International?

The answer depends on the fund family and years selected. Tax cost ratios at morningstar suggest that, at least superficially, and for US investors, vti is more tax-efficient than vt, and vt is more tax-efficient than vxus. M* tax data is often unreliable; check with the fund company. I don't think...
by grabiner
Sat Jan 24, 2015 5:36 pm
 
Forum: Investing - Help with Personal Investments
Topic: More tax efficient: Total US or Total International?
Replies: 19
Views: 1769

Re: More tax efficient: Total US or Total International?

Is there a reason TISM has been yielding so much more than TSM since 2008? Total International currently has about a 3% yield, which is only 2/3 qualified, but a foreign tax credit of 7% of the yield, so you pay 22.2% tax on 2% and 41.8% tax on 1%, a net tax cost of 0.84%. If the yields are equal (...
by grabiner
Sat Jan 24, 2015 5:28 pm
 
Forum: Investing - Help with Personal Investments
Topic: More tax efficient: Total US or Total International?
Replies: 19
Views: 1769

Re: Credit card FICO, is it a gimmick? EMV+sign, useful?

I suppose that if you see a significant drop in score month over month that it would be a clue to check your credit report to see what is causing it. That's a really excellent point. Has anybody reading this noticed a big unexpected drop? I know that my CreditKarma score dropped when I paid off my ...
by grabiner
Fri Jan 23, 2015 11:13 pm
 
Forum: Personal Finance (Not Investing)
Topic: Credit card FICO, is it a gimmick? EMV+sign, useful?
Replies: 20
Views: 1678

Re: Vanguard's Process for Closing Funds

If a fund is closing to new investments, the fund company won't announce that in advance, as that would defeat the purpose. A fund closes to new investments when the managers can't find good investment opportunities for the the money it has. If the fund announced a close in advance, it would attract...
by grabiner
Fri Jan 23, 2015 10:54 pm
 
Forum: Investing - Theory, News & General
Topic: Vanguard's Process for Closing Funds
Replies: 6
Views: 1003

Re: Why not invest in bond fund in taxable account?

Say someone has some money that he may need to use in 3-5 years that he wishes to take a bit of risk on in order to potentially gain a higher return. Why worry about whether the bond is taxable or not? A savings account has taxable interest and nobody thinks twice about it most of the time. It matt...
by grabiner
Fri Jan 23, 2015 10:48 pm
 
Forum: Investing - Theory, News & General
Topic: Why not invest in bond fund in taxable account?
Replies: 23
Views: 2643

Re: How do you recommend investing 1.5 million?

3. VTMFX is just a 50/50 stock bond fund based on the indexes. Wouldn’t VWELX be better? Not in a taxable account, given that you are in a high tax bracket. Tax-Managed Balanced will have a very low tax cost. Wellington holds corporate bonds, which lead to a large tax bill, and actively manages its...
by grabiner
Fri Jan 23, 2015 10:38 pm
 
Forum: Investing - Help with Personal Investments
Topic: How do you recommend investing 1.5 million?
Replies: 9
Views: 1596

Re: More tax efficient: Total US or Total International?

2014: TSM: 1.8% div,100% QDI TISM: 3.4% div, 72% QDI TISM gets the FTC, but as stated it's a bit of a mirage. Your total dividends, as reported to the IRS, are cash distributions plus the FTC. You get a credit for the FTC, but it's just an offset for an expense that reduces the cash you would have ...
by grabiner
Fri Jan 23, 2015 10:33 pm
 
Forum: Investing - Help with Personal Investments
Topic: More tax efficient: Total US or Total International?
Replies: 19
Views: 1769

Re: Can I exchange VG taxable account funds to IRA

Fortunately I am in the 15% tax bracket so if I read the rules correctly my long term gains are not taxed at all. This is the main reason for my wanting to put money in the IRAs. We cannot afford to fully fund both IRAs with just our normal income, but can use the taxable account to take us up to t...
by grabiner
Fri Jan 23, 2015 10:30 pm
 
Forum: Investing - Help with Personal Investments
Topic: Can I exchange VG taxable account funds to IRA
Replies: 10
Views: 702

Re: Should I sell tax inefficient mutual funds?

Wiki article link: Paying a tax cost to switch funds Since you have a long way to go to retirement, the tax cost from selling your funds will probably be less than the taxes and expenses you save by investing in alternative funds. Wellesley, in particular, is not the right fund for your taxable acco...
by grabiner
Fri Jan 23, 2015 10:26 pm
 
Forum: Investing - Help with Personal Investments
Topic: Should I sell tax inefficient mutual funds?
Replies: 22
Views: 1464

Re: Would maxing a Roth and 401k each year be enough?

Keep in mind that if your income rises over the years beyond a certain point, you won't be able to max out a Roth. The income at which the Roth limit starts to phase out in 2015 is $116,000 for individuals. With an income of $131,000 you are no longer eligible to contribute to a Roth IRA. That coul...
by grabiner
Thu Jan 22, 2015 11:56 pm
 
Forum: Investing - Theory, News & General
Topic: Would maxing a Roth and 401k each year be enough?
Replies: 17
Views: 2791

Re: Risk Efficiency of Thrift Savings Plan Portfolio

^ Thanks so much! So other than moving the portion I currently have in the F fund to G - does my plan look reasonable or am I being too conservative? 40% stock is reasonable if you are about to retire. The TSP itself uses this allocation three years before the target date; it will be the 2017 alloc...
by grabiner
Thu Jan 22, 2015 11:52 pm
 
Forum: Investing - Help with Personal Investments
Topic: Risk Efficiency of Thrift Savings Plan Portfolio
Replies: 14
Views: 1131

Re: AA for an 18 year old ?

toto238 wrote:Well it helps that rent is pretty decent in my city, even the expensive parts aren't too bad. And it "helps" that my spouse and I have about $100k in debt between the two of us.


What is the interest rate on that debt? Paying down the debt may be a better investment than an IRA.
by grabiner
Thu Jan 22, 2015 11:51 pm
 
Forum: Investing - Help with Personal Investments
Topic: AA for an 18 year old ?
Replies: 29
Views: 1497

Re: Pay off my building or put it in a vanguard fund???

4.65% is an after-tax return; for an investment to return more, then, e.g., depending on your taxes, you'd need, say 8% pre-tax to get a 4.65% after-tax return. While I agree with the general principle, this is a loan against the building he uses for his business, so it is presumably deductible fro...
by grabiner
Thu Jan 22, 2015 10:54 pm
 
Forum: Personal Finance (Not Investing)
Topic: Pay off my building or put it in a vanguard fund???
Replies: 7
Views: 665

Re: Explain me some tax law!

Of course who knows, high tax states like NY and CA may double tax high earners on income earned elsewhere. It wouldn't surprise me. I am not aware of any state where this happens at the state level, although you may not get the full credit because it is limited to a prorated share of your state ta...
by grabiner
Thu Jan 22, 2015 10:51 pm
 
Forum: Personal Finance (Not Investing)
Topic: Explain me some tax law!
Replies: 16
Views: 2159

Re: Would maxing a Roth and 401k each year be enough?

For most people, it would be. Maxing your IRA and 401(k) is an investment of $23,500 per year, growing with inflation. If your investments earn 3% above inflation (typical returns for a balanced portfolio), they would grow by a factor of 2.43 in 30 years, becoming $57,000 per year. Thus, by contribu...
by grabiner
Thu Jan 22, 2015 10:35 pm
 
Forum: Investing - Theory, News & General
Topic: Would maxing a Roth and 401k each year be enough?
Replies: 17
Views: 2791

Re: Surviving the Tax Bite of RMD Withdrawals in Retirement

I don't see the RMDs themselves as a major tax problem. If you are in a 25% tax bracket, the IRS owns 25% of your IRA, and will take that 25% somehow. If you have a $1.2M traditional IRA, you own $900K of it tax-free. If the RMDs are more than you need, you can move the money to your taxable account...
by grabiner
Thu Jan 22, 2015 10:28 pm
 
Forum: Investing - Theory, News & General
Topic: Surviving the Tax Bite of RMD Withdrawals in Retirement
Replies: 75
Views: 6125

Re: Which is the most tax efficient fund?

At current yields, Total Stock Market is more tax efficient than Total International. If yields were equal, Total International would be slightly more tax efficient, but international yields have been higher than US yields since 2009. The bond funds have a higher immediate tax cost, but with current...
by grabiner
Thu Jan 22, 2015 10:22 pm
 
Forum: Investing - Theory, News & General
Topic: Which is the most tax efficient fund?
Replies: 3
Views: 574

Re: vwitx, vbtix, vt tax placement

Since you are in the highest tax bracket, there is a good reason for you to hold munis in your taxable account at current yields. Your tax rate on qualified dividends is 23.8% (including the ACA surtax), and when you sell your taxable stocks, you will presumably also pay 23.8% on the capital gains. ...
by grabiner
Thu Jan 22, 2015 10:04 pm
 
Forum: Investing - Help with Personal Investments
Topic: vwitx, vbtix, vt tax placement
Replies: 3
Views: 513

Re: Risk Efficiency of Thrift Savings Plan Portfolio

[quote="Unadan"]I may begin drawing monthly life expectancy payments from my federal Thrift Savings Plan sometime next year. I hope to draw from this fund for approximately 30 years. I am allocated as follows: (corrections from other posts incorporated) 54% in G Fund (Government Secure). 6...
by grabiner
Thu Jan 22, 2015 9:46 pm
 
Forum: Investing - Help with Personal Investments
Topic: Risk Efficiency of Thrift Savings Plan Portfolio
Replies: 14
Views: 1131
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