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Re: Is it a bad move to buy a home now?

Is this a bad time to buy? Nobody knows. Not your parents, not the good people of this forum, not the 'experts.' The National Association of Realtors continued to quip that "there's never been a better time to buy" all of the way up the bubble, then down, before finally (mostly) abandonin...
by kenyan
Thu Apr 24, 2014 11:33 am
 
Forum: Personal Finance (Not Investing)
Topic: Is it a bad move to buy a home now?
Replies: 24
Views: 1961

Re: Please explain a 3% SWR to me

Inflation adjustment, and uncertainty of duration. If inflation averages 2.5% over the period, by year 28, that 3% withdrawal rate is 6% of the original balance. If inflation averages 3%, then you're withdrawing 6% of the original balance annually by year 24. If you happen to live until year 40, you...
by kenyan
Wed Apr 23, 2014 10:48 am
 
Forum: Investing - Theory, News & General
Topic: Please explain a 3% SWR to me
Replies: 77
Views: 3782

Re: Does Asset Allocation beat the S&P 500?

I suppose it depends upon your definition of 'beating.' On a risk-adjusted basis, diversified passive investments will almost always beat a single index such as the S&P 500. On an absolute basis, ignoring risk, then a risky allocation such as 100% stocks may win out. Over the very long term (20+...
by kenyan
Tue Apr 22, 2014 10:39 am
 
Forum: Investing - Theory, News & General
Topic: Does Asset Allocation beat the S&P 500?
Replies: 75
Views: 3555

Re: Real Estate Investing

What does everyone think about real estate? I think it's one of the worst investments out there regardless of the interest rates when you factor in the taxes, maintenance, transaction costs, and illiquidity. It just doesn't make sense to me. I think your returns are going to be 3% at best. There ar...
by kenyan
Tue Apr 22, 2014 10:18 am
 
Forum: Investing - Theory, News & General
Topic: Real Estate Investing
Replies: 11
Views: 925

Re: Savings Rate what do you include?

I started budgeting (closely) for the first time when we purchased our house last year. I have several categories for various unexpected or irregular expenses, including car maintenance/repairs, house maintenance, medical bills. None of these are classified as savings; they are dollars already alloc...
by kenyan
Tue Apr 22, 2014 10:05 am
 
Forum: Investing - Theory, News & General
Topic: Savings Rate what do you include?
Replies: 52
Views: 2918

Re: Is 1800s stock market data even relevant?

I cast a critical eye on all past stock data. The world was very different in the 1800s, but also in the 1920s, 1950s, and 1980s. The same goes for international data. I'm not sure where to draw the line to discretize the continuum, so I think it is all suspect, at least in terms of being able to pr...
by kenyan
Tue Apr 22, 2014 9:56 am
 
Forum: Investing - Theory, News & General
Topic: Is 1800s stock market data even relevant?
Replies: 60
Views: 2842

Re: Just maxed 2013 Roth IRA. Should I max 2014 now too?

Buying on the dips works when cherry picking and backtesting. In real practice, it's much more difficult. Someone who entered 2013 waiting to buy on the dip is still waiting, 16 months later. In the meantime, he/she has missed out on a 36% gain. This is true (for lesser gains) for at least a hundred...
by kenyan
Mon Apr 21, 2014 7:08 pm
 
Forum: Investing - Help with Personal Investments
Topic: Just maxed 2013 Roth IRA. Should I max 2014 now too?
Replies: 21
Views: 2596

Re: Town home, good or bad idea?

Now that I looked over your specific situation, I would emphatically say that this is a bad idea. That's not to say that it couldn't work out, but this is obviously not a long-term purchase, and one fraught with complications. If you want to cut down on your commute, rent closer to work. You could s...
by kenyan
Mon Apr 21, 2014 12:40 pm
 
Forum: Personal Finance (Not Investing)
Topic: Town home, good or bad idea?
Replies: 21
Views: 1532

Re: Town home, good or bad idea?

It kills me to think I would be throwing away money towards rent for an apartment This is a terrible, pervasive myth, at least when swept with a broad stroke against renting in general. Rent is not money 'thrown away,' unless you also consider all of the non-recoverable costs of owning to be money ...
by kenyan
Mon Apr 21, 2014 12:12 pm
 
Forum: Personal Finance (Not Investing)
Topic: Town home, good or bad idea?
Replies: 21
Views: 1532

Re: Total bond vs intermediate tax exempt

They are not equivalent. Don't you think that the bond market would not demand more compensation from taxable bonds than equivalent tax-free bonds? Vanguard Total Bond Market Investor Shares: SEC yield 2.07%, Duration 5.6 years, 65% US Government Bonds. Vanguard Intermediate Term Tax-Exempt Investor...
by kenyan
Sun Apr 20, 2014 3:46 pm
 
Forum: Investing - Theory, News & General
Topic: Total bond vs intermediate tax exempt
Replies: 12
Views: 1491

Re: GMO Forecasts now include Value and Growth

Let me know if I've got this right... According to GMO, a US small value index fund such as VBR will lose 63.7% of its NAV between now and April 2021. I get there from -5.1 real, minus 2.2 for inflation, minus 1.8 for dividends = a 9.1 annual loss in NAV = a 63.7 loss in NAV in 7 years. So VBR, whi...
by kenyan
Wed Apr 16, 2014 10:59 pm
 
Forum: Investing - Theory, News & General
Topic: GMO Forecasts now include Value and Growth
Replies: 17
Views: 1127

Re: New Housing Bubble and upcoming cycle peak

wilked wrote:As a for instance, then, do you peg both at 2% or 3% or so?


Typically, yes. I might slide it one way or another just to see how the results differ, but my real analysis will occur in the range of inflation +/- 1%.
by kenyan
Mon Apr 14, 2014 3:39 pm
 
Forum: Investing - Theory, News & General
Topic: New Housing Bubble and upcoming cycle peak
Replies: 74
Views: 6385

Re: New Housing Bubble and upcoming cycle peak

NYT calculator...I feel like you can skew the rent % increase or housing % gain to tell whatever story you would like. I honestly have no way of doing it with removing bias. I guess the only thing I find it useful for is 'scenario modeling', but even then it feels a bit loose You can do that, or yo...
by kenyan
Mon Apr 14, 2014 12:01 pm
 
Forum: Investing - Theory, News & General
Topic: New Housing Bubble and upcoming cycle peak
Replies: 74
Views: 6385

Re: Fundamental Indexing

by kenyan
Mon Apr 14, 2014 11:37 am
 
Forum: Investing - Theory, News & General
Topic: Fundamental Indexing
Replies: 9
Views: 778

Re: New Housing Bubble and upcoming cycle peak

I am going to consider 14-16x a wash, and will have a hat time swallowing 17x or more The 15x is a fairly good rule of thumb, but I do think some allowances should be made for present day interest rates, as compared to historical rates. With very low rates, you can probably creep that number up a b...
by kenyan
Sun Apr 13, 2014 11:00 am
 
Forum: Investing - Theory, News & General
Topic: New Housing Bubble and upcoming cycle peak
Replies: 74
Views: 6385

Re: Anyone else very reluctant to buy right now?

Subscribe to my market-timing newsletter. I sold a bunch of Small Value and International Small Cap on April 1, buying Intermediate-Term Bonds in their place. From April 2-April 11, Small Value is down 5%, International Small is down 2%, and my bonds are up 1.5%. Boom. Or...maybe I just rebalanced w...
by kenyan
Sat Apr 12, 2014 2:47 pm
 
Forum: Investing - Theory, News & General
Topic: Anyone else very reluctant to buy right now?
Replies: 124
Views: 12217

Re: New Housing Bubble and upcoming cycle peak

I am going to consider 14-16x a wash, and will have a hat time swallowing 17x or more The 15x is a fairly good rule of thumb, but I do think some allowances should be made for present day interest rates, as compared to historical rates. With very low rates, you can probably creep that number up a b...
by kenyan
Sat Apr 12, 2014 2:36 pm
 
Forum: Investing - Theory, News & General
Topic: New Housing Bubble and upcoming cycle peak
Replies: 74
Views: 6385

Re: The market portfolio vs. value tilts

That brings about another question I have been pondering. If the small and value premium is a risk story and you are trying to increase returns by taking on more risk, why not just increase your equity percentage in a market portfolio? If the market portfolio is the most efficient and the equity ri...
by kenyan
Thu Apr 10, 2014 10:09 pm
 
Forum: Investing - Theory, News & General
Topic: The market portfolio vs. value tilts
Replies: 66
Views: 3191

Re: Vanguard REIT Index (VGSIX): a Good Investment, Now?

Some people believe that valuations of US-based REITs are too high, and the sector is bound for lower returns going forward. They also said that at the end of last year, and domestic REITs have been the top-performing asset class of the year thus far (after a terrible year last year). I suppose that...
by kenyan
Tue Apr 08, 2014 4:08 pm
 
Forum: Investing - Help with Personal Investments
Topic: Vanguard REIT Index (VGSIX): a Good Investment, Now?
Replies: 7
Views: 1156

Re: 180K and no clue

Sorry about the divorce. Your investments are actually not conservative overall. They're fine, but not conservative (~12-13% in bonds overall). Of course, you did state that you had 180K, and only listed 158K in investments. Your tax efficiency could definitely be improved, but your overall mix is f...
by kenyan
Tue Apr 08, 2014 12:08 pm
 
Forum: Investing - Help with Personal Investments
Topic: 180K and no clue
Replies: 8
Views: 1676

Re: California Taxes - Am I Missing Something?

Taxes here in Missouri are only 6%. Nevertheless, I still want to move to Southern California. For Bogleheads living in California, do you think it would be a mistake to consider Riverside County for the sake of lower housing prices. Also the desert towns like Palm Desert have more affordable housi...
by kenyan
Mon Apr 07, 2014 10:09 pm
 
Forum: Personal Finance (Not Investing)
Topic: California Taxes - Am I Missing Something?
Replies: 142
Views: 8554

Re: Anyone else very reluctant to buy right now?

I think people get a bit carried away with the conviction about the futility of short term timing, and neglect to observe that reversion to the mean from starting valuations has been a tremendously accurate way to predict longer term returns. Tremendously accurate? I think you are vastly overstatin...
by kenyan
Mon Apr 07, 2014 9:53 pm
 
Forum: Investing - Theory, News & General
Topic: Anyone else very reluctant to buy right now?
Replies: 124
Views: 12217

Re: California Taxes - Am I Missing Something?

celia wrote:
The gas prices are higher because the gas has stricter refinery regulations than the rest of the country, ie. we now have cleaner exhaust.


Gas taxes are higher too. Only Pennsylvania and New York have higher state gasoline taxes.
by kenyan
Mon Apr 07, 2014 3:30 pm
 
Forum: Personal Finance (Not Investing)
Topic: California Taxes - Am I Missing Something?
Replies: 142
Views: 8554

Re: California Taxes - Am I Missing Something?

Sales taxes are just under 10% in most counties, though that is not the highest in the nation. Income taxes are very high, as noted the 9.3% bracket starts at relatively low income, and the top bracket is over 13% for millionaire incomes. State Disability taxes take a chunk of income, though I don't...
by kenyan
Mon Apr 07, 2014 3:25 pm
 
Forum: Personal Finance (Not Investing)
Topic: California Taxes - Am I Missing Something?
Replies: 142
Views: 8554

Re: Calculate effect of mortgage-interest deduction

If the taxpayer would itemize deductions with or without mortgage interest, then he/she is getting the benefit that everyone assumes. This is a relatively small fraction of people. The fraction of people who would itemize without either mortgage interest or property taxes (the relevant number when d...
by kenyan
Mon Apr 07, 2014 1:25 pm
 
Forum: Personal Finance (Not Investing)
Topic: Calculate effect of mortgage-interest deduction
Replies: 11
Views: 707

Re: Anyone else very reluctant to buy right now?

I did just sell a chunk of equities due to hitting rebalancing bands. Aside from that, buying every week/month as usual. If I come in to some extra money to invest in our Roth IRAs, it will go into the market as usual. Annual re-evaluation of my IPS is in July, but I don't think there will be any ch...
by kenyan
Mon Apr 07, 2014 11:15 am
 
Forum: Investing - Theory, News & General
Topic: Anyone else very reluctant to buy right now?
Replies: 124
Views: 12217

Re: 1 Nice car vs 2 Decent cars (daily driver/weekend car)?

Where is the annual registration fee in your math? We have to pay a few hundred $ per year to the state, per car, for the privilege of having it registered here.
by kenyan
Mon Apr 07, 2014 9:59 am
 
Forum: Personal Finance (Not Investing)
Topic: 1 Nice car vs 2 Decent cars (daily driver/weekend car)?
Replies: 34
Views: 2513

Re: Why pay off your house?

Non-interest costs of a house aren't going to change whether or not you have a mortgage. The question is whether or not you want a large collateralized loan against your property, when said loan is not necessary. The loss of a tax deduction? I would rather keep 100% of my money, than pay a bunch of ...
by kenyan
Sat Apr 05, 2014 1:43 pm
 
Forum: Investing - Help with Personal Investments
Topic: Why pay off your house?
Replies: 119
Views: 8620

Re: And suddenly, I'm done...

"Don't just do something, stand there!" -Jack Bogle I got through this a couple of years ago, getting through all of the transactions to Boglefy my portfolio and plan. Things did calm down for a while, but it was a good feeling to have that plan executed. The plan has evolved over time, th...
by kenyan
Fri Apr 04, 2014 10:57 am
 
Forum: Personal Finance (Not Investing)
Topic: And suddenly, I'm done...
Replies: 24
Views: 4972

Re: Urge to buy a house every rent increase

You sound like someone who is better suited as a renter for now. You're thinking about settling down, but you'll probably need a bigger place when you have those kids. If you buy now, you'll need to buy a place that is bigger than you need, to accommodate future family changes. Either that, or you'l...
by kenyan
Fri Apr 04, 2014 10:39 am
 
Forum: Personal Finance (Not Investing)
Topic: Urge to buy a house every rent increase
Replies: 29
Views: 1517

Re: Using municipal bonds for short term saving

Really depends upon your flexibility - if your goal is flexible (time of purchase, price of house, etc), then I think you can get away with more risk than people on this forum usually recommend for near-term goals. We used 10-15/25-30/60 or so (stocks/muni bonds/cash+CDs) for our down payment saving...
by kenyan
Tue Apr 01, 2014 10:29 pm
 
Forum: Investing - Help with Personal Investments
Topic: Using municipal bonds for short term saving
Replies: 6
Views: 823

Re: best vacuum cleaner

If you are on a budget, and don't have a cavernous house to vacuum, I would also highly recommend the Shark Navigator series. We have the Lift-Away Pro.

If you don't mind spending 2-3 times as much, a Dyson might treat you better.
by kenyan
Tue Apr 01, 2014 10:23 pm
 
Forum: Personal Consumer Issues
Topic: best vacuum cleaner
Replies: 23
Views: 1655

Re: Lending money to family

Reading between the lines (ignore this post if my assumption is incorrect): It sounds like you are not giving a gift; you are tendering an interest-free loan to a relative who does not have sufficient reserve requirements to qualify for a particular mortgage. Repayment of this loan is going to be fr...
by kenyan
Tue Apr 01, 2014 11:12 am
 
Forum: Personal Finance (Not Investing)
Topic: Lending money to family
Replies: 25
Views: 1913

Re: Being older/younger in class -- benefits, issues?

I was a year early - my parents took me to be assessed for early entry into 1st grade, which I entered at 5 (and a few months). I did suffer a bit (until high school) from being smaller than most of my peers; it certainly didn't help that I come from short stock. For a year or two in elementary scho...
by kenyan
Tue Apr 01, 2014 10:18 am
 
Forum: Personal Finance (Not Investing)
Topic: Being older/younger in class -- benefits, issues?
Replies: 98
Views: 4864

Re: 401k vs Roth?

Contributions to pretax retirement plans do not exempt that income from Social Security and Medicare taxes. You also will likely be in the 25% bracket, not the 28%. The 28% bracket starts just under $149k in 2014. Your taxable income will be below that threshold, particularly if you contribute to th...
by kenyan
Mon Mar 31, 2014 4:10 pm
 
Forum: Investing - Help with Personal Investments
Topic: 401k vs Roth?
Replies: 12
Views: 929

Re: Amazon Prime Increase

For us, if Prime was purely about the shipping (it's not - we make ample use of both the streaming video and the free kindle books), it would be a tough sell at $99/year. We do appreciate the fast shipping, and order dozens of times per year. Many of those orders would require us to take extra trips...
by kenyan
Wed Mar 26, 2014 5:01 pm
 
Forum: Personal Consumer Issues
Topic: Amazon Prime Increase
Replies: 185
Views: 7667

Re: Road trip advice?

One other note - plan around Chicago traffic. The last thing you want to do at the beginning of your trip is sit in traffic for an extra hour+.
by kenyan
Wed Mar 26, 2014 3:39 pm
 
Forum: Personal Consumer Issues
Topic: Road trip advice?
Replies: 35
Views: 2230

Re: Road trip advice?

My wife and I are moving to Sacramento, CA from Lansing, MI in 2 weeks or so. We'll be driving our 2012 Civic with luggage to the west coast. We plan to take I-80 all the way (we should hit it after about 200 miles from Lansing) to Sacramento. How many days do you think we need to reach there? We a...
by kenyan
Wed Mar 26, 2014 3:36 pm
 
Forum: Personal Consumer Issues
Topic: Road trip advice?
Replies: 35
Views: 2230

Re: IRS: bitcoins are property for tax purposes in U.S.

Phineas J. Whoopee wrote:
chaz wrote:Does binary code have value?

Ask Microsoft.
PJW


Reminds me of the Onion article where Microsoft patented ones, zeroes - forcing all competitors to work in analog.
by kenyan
Tue Mar 25, 2014 3:59 pm
 
Forum: Investing - Theory, News & General
Topic: IRS: bitcoins are property for tax purposes in U.S.
Replies: 26
Views: 1970

Re: New Housing Bubble and upcoming cycle peak

Seems to me that house resales are more indicative of the state of the housing market than new house sales, given that resales represent the vast majority of the market. The story is a little different using resales. That's not to say that there isn't a new bubble starting - who knows - but Case-Shi...
by kenyan
Tue Mar 25, 2014 3:58 pm
 
Forum: Investing - Theory, News & General
Topic: New Housing Bubble and upcoming cycle peak
Replies: 74
Views: 6385

Re: PenFed 5/5 ARM advice

Thanks for the responses. It looks like the no closing cost deal is over at least for now. That being said there is a one-click rate lock available for an extra .25% which lets one lock the rate in for an additional 5 years after being in the current rate for 1 year. This can be done 5 times during...
by kenyan
Wed Mar 12, 2014 3:34 pm
 
Forum: Personal Finance (Not Investing)
Topic: PenFed 5/5 ARM advice
Replies: 14
Views: 1039

Re: New callable CD offering

So, again comparing them to treasuries, you are getting a slight premium in order to expose yourself only to the downside risk of duration, without benefit on the upside (since the bank will call them if interest rates drop). If you can guarantee a holding period of ~13 years, and don't mind having ...
by kenyan
Wed Mar 12, 2014 11:08 am
 
Forum: Investing - Theory, News & General
Topic: New callable CD offering
Replies: 18
Views: 1277

Re: New callable CD offering

I suppose that from my limited understanding, those sound almost too good to be true. A 9% 15-year CD? Bond-like risk or not, that's nuts. If they call it, you avoid the downside of duration risk anyhow. Hopefully, someone with more understanding will chime in and explain why this product exists, g...
by kenyan
Wed Mar 12, 2014 11:03 am
 
Forum: Investing - Theory, News & General
Topic: New callable CD offering
Replies: 18
Views: 1277

Re: New callable CD offering

I suppose that from my limited understanding, those sound almost too good to be true. A 9% 15-year CD? Bond-like risk or not, that's nuts. If they call it, you avoid the downside of duration risk anyhow. Hopefully, someone with more understanding will chime in and explain why this product exist...
by kenyan
Wed Mar 12, 2014 10:58 am
 
Forum: Investing - Theory, News & General
Topic: New callable CD offering
Replies: 18
Views: 1277

Re: New callable CD offering

Are those brokered CDs?
by kenyan
Wed Mar 12, 2014 10:42 am
 
Forum: Investing - Theory, News & General
Topic: New callable CD offering
Replies: 18
Views: 1277

Re: After Tax Investing vs. Pre Tax Investing

By investing pretax over taxable, you are avoiding capital gains taxes, as well as the millstone of recurring taxes (can be minimized but usually not avoided altogether). There are other benefits - easy investment changes/rebalancing, protection from lawsuits, FAFSA, etc. You do miss out on potentia...
by kenyan
Wed Mar 12, 2014 10:32 am
 
Forum: Investing - Theory, News & General
Topic: After Tax Investing vs. Pre Tax Investing
Replies: 26
Views: 1141

Re: PenFed 5/5 ARM advice

Thanks for the responses. It looks like the no closing cost deal is over at least for now. That being said there is a one-click rate lock available for an extra .25% which lets one lock the rate in for an additional 5 years after being in the current rate for 1 year. This can be done 5 times during...
by kenyan
Wed Mar 12, 2014 9:58 am
 
Forum: Personal Finance (Not Investing)
Topic: PenFed 5/5 ARM advice
Replies: 14
Views: 1039

Re: PenFed 5/5 ARM advice

Recently refinanced into this product after having our 30-year fixed for only four months. Our refinance was from a 4.75% fixed into the 5/5 at 2.625%. No closing costs were paid, as advertised. Like you, we plan to prepay, at least while the interest rate is exceedingly low. The prepayment we are p...
by kenyan
Tue Mar 11, 2014 9:58 pm
 
Forum: Personal Finance (Not Investing)
Topic: PenFed 5/5 ARM advice
Replies: 14
Views: 1039

Re: What video games are you currently playing?

I had my MMORPG phase, including several stints with WoW. During the last iteration, I got wrapped up in endgame raiding (for perhaps 6 months), and it did eventually feel akin to a second job in terms of responsibility, albeit one that was usually more enjoyable than a paying job. I finally quit fo...
by kenyan
Tue Mar 11, 2014 4:30 pm
 
Forum: Personal Consumer Issues
Topic: What video games are you currently playing?
Replies: 99
Views: 4238

Re: House too small; what to do?

1000 sf per person is nuts, unless you're living alone. My brother has that (4000 sf, two adults + two children), and his house is cavernous. However, he does plan on filling it with many more children. 1.5 bathrooms would be rough for 7 people; we didn't want 1.5 for four of us. Our house is about ...
by kenyan
Tue Mar 11, 2014 10:14 am
 
Forum: Personal Consumer Issues
Topic: House too small; what to do?
Replies: 38
Views: 3063
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