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Re: Savings rate, when you start, withdrawal rate > AA

Use the Future Value Of An Annuity formula. saving rate impacts the C. When to start impacts n. asset allocation impacts i See how sensitive each variables are. Note that there is no free lunch in investing. Once you get the basic things right (such as diversification, investing expense, and etc), t...
by kmok
Fri Sep 19, 2014 4:33 pm
 
Forum: Investing - Theory, News & General
Topic: Savings rate, when you start, withdrawal rate > AA
Replies: 3
Views: 459

Re: Low Tax Bracket & Almost Retired - Tax Exempt or Not??

At her marginal tax rate it may not make sense to invest in tax free bonds in her portfolio.
by kmok
Wed Aug 20, 2014 1:44 pm
 
Forum: Investing - Help with Personal Investments
Topic: Low Tax Bracket & Almost Retired - Tax Exempt or Not??
Replies: 11
Views: 1156

Re: Question about Tax Advantaged/Taxable Best Strategy

But the reason I bring this up is because the vast majority of the people who posted in this thread believed that even if you are currently and in the future at 25% to 30% marginal tax bracket, no tax-adjustment is needed for taxable account, which is in conflict with the boglehead wiki page Tax-ad...
by kmok
Mon Aug 18, 2014 5:40 pm
 
Forum: Investing - Theory, News & General
Topic: Question about Tax Advantaged/Taxable Best Strategy
Replies: 44
Views: 2761

Re: Question about Tax Advantaged/Taxable Best Strategy

I think some of it should be changed. Under current tax laws, a large number of people will be in the 0% capital gains/dividend rate in retirement. That's currently around $90k annual income for a married couple filing jointly with standard deductions. And in the mean time, the effective tax rate o...
by kmok
Mon Aug 18, 2014 4:42 pm
 
Forum: Investing - Theory, News & General
Topic: Question about Tax Advantaged/Taxable Best Strategy
Replies: 44
Views: 2761

Re: Question about Tax Advantaged/Taxable Best Strategy

You'll see in my calculation, that I discounted the returns from the taxable account exactly as you did. I'm thought that what we should do is FIRST set the STOCK/BOND mix. We do that by calculating exactly how much money is ours. Since the money in period 0 in the taxable account is completely min...
by kmok
Mon Aug 18, 2014 3:47 pm
 
Forum: Investing - Theory, News & General
Topic: Question about Tax Advantaged/Taxable Best Strategy
Replies: 44
Views: 2761

Re: Question about Tax Advantaged/Taxable Best Strategy

We set our asset allocation at a particular point (say every year). We decide we want 60% stocks 40% bonds. We of course want to set this percentage on the money that we actually own. This is the correct way to look at it if you want to know how much money you have right now, or how much money you ...
by kmok
Mon Aug 18, 2014 12:06 am
 
Forum: Investing - Theory, News & General
Topic: Question about Tax Advantaged/Taxable Best Strategy
Replies: 44
Views: 2761

Re: Question about Tax Advantaged/Taxable Best Strategy

Doc is correct. You have to be careful to tax adjust your AA before these comparisons can be done meaningfully. If I ever have time, I will build a free comprehensive model of this just so people can play with a spreadsheet and see that it really is better these days to put their stocks in IRAs und...
by kmok
Sun Aug 17, 2014 7:36 pm
 
Forum: Investing - Theory, News & General
Topic: Question about Tax Advantaged/Taxable Best Strategy
Replies: 44
Views: 2761

Re: Question about Tax Advantaged/Taxable Best Strategy

I have shown you in details my calculations and assumptions, and citing in details from the bogleheads wiki page. Option 1: AA at end 82.5/(102.25+82.5)=0.4465 Option 2: AA at end 108.5/(108.5+77.5)=0.5833 Option 2 has a higher result because it is more risky . You are mixing the allocation at the ...
by kmok
Sun Aug 17, 2014 7:33 pm
 
Forum: Investing - Theory, News & General
Topic: Question about Tax Advantaged/Taxable Best Strategy
Replies: 44
Views: 2761

Re: Question about Tax Advantaged/Taxable Best Strategy

A Goggle search on "bogleheads roth vs traditional" produces over 20,000 results. I am not going to repeat all the discussion. I have shown you in details my calculations and assumptions, and citing in details from the bogleheads wiki page. If you disagree, you should point out why my int...
by kmok
Sun Aug 17, 2014 5:04 pm
 
Forum: Investing - Theory, News & General
Topic: Question about Tax Advantaged/Taxable Best Strategy
Replies: 44
Views: 2761

Re: Question about Tax Advantaged/Taxable Best Strategy

The OP stipulated that he wanted to maintain his AA. Therefore the pretax return is not dependent on location. And minimize taxes should maximize after tax returns. Perhaps the problem here is that some are equating $1 in a tIRA to $1 in taxable. This is generally not true because the accrued taxes...
by kmok
Sun Aug 17, 2014 12:29 pm
 
Forum: Investing - Theory, News & General
Topic: Question about Tax Advantaged/Taxable Best Strategy
Replies: 44
Views: 2761

Re: Can I combine a Traditional and Rollover IRA?

Each state is different, but generally speaking in terms of asset protection, 401k is much strongerly protected than IRA. It is possible that the court would treat a rollover IRA as 401k (since it is directly originated from a 401k). but if you combine the rollover with an IRA, you may have loss tha...
by kmok
Sun Aug 17, 2014 10:03 am
 
Forum: Investing - Help with Personal Investments
Topic: Can I combine a Traditional and Rollover IRA?
Replies: 4
Views: 1886

Re: Selling VSS in taxable to move to IRA?

Your considerations are all valid. However, unless you provide the information about your whole portfolio, it is impossible to address your question. My gut feeling based on the current limited information is that selling your equity fund in taxable account does not sound right.
by kmok
Sun Aug 17, 2014 2:10 am
 
Forum: Investing - Help with Personal Investments
Topic: Selling VSS in taxable to move to IRA?
Replies: 5
Views: 491

Re: Question about Tax Advantaged/Taxable Best Strategy

I think this the the confusion you have. If you are not willing to try to educate yourself but just try to re-argue points that have been made over the course of many years I can't help you. Happy investing. If you still want to continue, you can look at this link: http://www.bogleheads.org/wiki/Ta...
by kmok
Sat Aug 16, 2014 11:31 pm
 
Forum: Investing - Theory, News & General
Topic: Question about Tax Advantaged/Taxable Best Strategy
Replies: 44
Views: 2761

Re: Do Private Company's have an advantage ?

Agreed with Tanelorn on compliance fee. Also, public companies tend to be in a bigger pressure to generate good financial results quickly as they have to do quarterly sec filing and stock prices are very sensitive the quarterly results.
by kmok
Sat Aug 16, 2014 6:20 pm
 
Forum: Investing - Theory, News & General
Topic: Do Private Company's have an advantage ?
Replies: 11
Views: 685

Re: Question about Tax Advantaged/Taxable Best Strategy

It is the tax on returns that matters , not the tax in the existing tIRA balance. You have to pay the 25% tax (whatever the assumption is here) on the existing balance no matter what you are investing, stocks or bonds. This is applicable to Roth, but we are not talking about that right now. You are...
by kmok
Sat Aug 16, 2014 5:09 pm
 
Forum: Investing - Theory, News & General
Topic: Question about Tax Advantaged/Taxable Best Strategy
Replies: 44
Views: 2761

Re: Question about Tax Advantaged/Taxable Best Strategy

The OP stipulated that he wanted to maintain his AA. Therefore the pretax return is not dependent on location. And minimize taxes should maximize after tax returns. This is not true. Perhaps the problem here is that some are equating $1 in a tIRA to $1 in taxable. This is generally not true because...
by kmok
Sat Aug 16, 2014 4:37 pm
 
Forum: Investing - Theory, News & General
Topic: Question about Tax Advantaged/Taxable Best Strategy
Replies: 44
Views: 2761

Re: Question about Tax Advantaged/Taxable Best Strategy

The OP stipulated that he wanted to maintain his AA. Therefore the pretax return is not dependent on location. And minimize taxes should maximize after tax returns. This is not true. Perhaps the problem here is that some are equating $1 in a tIRA to $1 in taxable. This is generally not true because...
by kmok
Sat Aug 16, 2014 3:22 pm
 
Forum: Investing - Theory, News & General
Topic: Question about Tax Advantaged/Taxable Best Strategy
Replies: 44
Views: 2761

Re: Question about Tax Advantaged/Taxable Best Strategy

Assuming the bonds are not tax free, you would most likely be better off in option B, because in taxable account long term capital gain tax is 15% and bonds tax would be at the marginal rate . The rate in IRA would be the same with stocks or bonds. So it is preferable to put stocks in taxable accou...
by kmok
Sat Aug 16, 2014 2:42 pm
 
Forum: Investing - Theory, News & General
Topic: Question about Tax Advantaged/Taxable Best Strategy
Replies: 44
Views: 2761

Re: Should I Invest in both T-IRA & R-IRA?

I preferred the Roth route in the 25% tax bracket. Why?... I understand the RMD part, and it is a valid reason, but I think you are plain wrong on the first part in which you said you preferred Roth "Because the tIRA will save you one year of taxes, but will cost you taxes on multiples years o...
by kmok
Fri Aug 15, 2014 10:26 pm
 
Forum: Investing - Help with Personal Investments
Topic: Should I Invest in both T-IRA & R-IRA?
Replies: 34
Views: 1477

Re: Help a 19 year old with long term investing porfolio

Why do you feel the large growth fund is potentially not needed, and what would you put in its place? Agree with toto238 that your total stock market fund already includes large growth. Base on multiple research, the most famous by Eugene Fama and Ken French, value does better than growth in the lo...
by kmok
Fri Aug 15, 2014 9:44 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help a 19 year old with long term investing porfolio
Replies: 21
Views: 970

Re: Help a 19 year old with long term investing porfolio

First of all, you may be more risk averse than you thought you are. You don't want to panic during a market crash and sell your stocks at the market bottom. So I wouldn't recommend a 100% equity portfolio. 90%-80% equity would be reasonable. You can choose to take risk instead on value and small. Yo...
by kmok
Fri Aug 15, 2014 8:40 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help a 19 year old with long term investing porfolio
Replies: 21
Views: 970

Re: Please critique my portfolio

I think you should consider allocating more than 10% of your equity allocation to international stocks, especially consider the current valuations. I think 20-35% would be reasonable.
by kmok
Fri Aug 15, 2014 8:08 pm
 
Forum: Investing - Help with Personal Investments
Topic: Please critique my portfolio
Replies: 42
Views: 4118

Re: Question about Tax Advantaged/Taxable Best Strategy

The best strategy cannot be known today. It will only be known in hindsight. I like equities only in taxable, so I set my asset allocation to that effect. I keep all my fixed income in tax-advantaged. Would your opinion change if you were were going to implement a high tilt (e.g. a Larry Portfolio)...
by kmok
Fri Aug 15, 2014 6:24 pm
 
Forum: Investing - Theory, News & General
Topic: Question about Tax Advantaged/Taxable Best Strategy
Replies: 44
Views: 2761

Re: Question about Tax Advantaged/Taxable Best Strategy

The best strategy cannot be known today. It will only be known in hindsight. I like equities only in taxable, so I set my asset allocation to that effect. I keep all my fixed income in tax-advantaged. Would your opinion change if you were were going to implement a high tilt (e.g. a Larry Portfolio)...
by kmok
Fri Aug 15, 2014 5:28 pm
 
Forum: Investing - Theory, News & General
Topic: Question about Tax Advantaged/Taxable Best Strategy
Replies: 44
Views: 2761

Re: Question about Tax Advantaged/Taxable Best Strategy

Assuming the bonds are not tax free, you would most likely be better off in option B, because in taxable account long term capital gain tax is 15% and bonds tax would be at the marginal rate. The rate in IRA would be the same with stocks or bonds. So it is preferable to put stocks in taxable account...
by kmok
Fri Aug 15, 2014 4:30 pm
 
Forum: Investing - Theory, News & General
Topic: Question about Tax Advantaged/Taxable Best Strategy
Replies: 44
Views: 2761

Re: Should I Invest in both T-IRA & R-IRA?

I preferred the Roth route in the 25% tax bracket. Why? Because the tIRA will save you one year of taxes, but will cost you taxes on multiples years of growth at ordinary income tax rates. Plus you will be subject to RMDs. (A tIRA converts QDI/LTCG to ordinary income upon withdrawal.) Because the r...
by kmok
Fri Aug 15, 2014 4:04 pm
 
Forum: Investing - Help with Personal Investments
Topic: Should I Invest in both T-IRA & R-IRA?
Replies: 34
Views: 1477

Re: Portfolio Allocation for 31 y/o

I am not sure why you do not qualify to contribute to Roth IRA. Have you pass the income limit? If you can't deduct your traditional IRA contribution, you may need to seriously consider whether you still want to contribute to it unless you are going to do a back door Roth. You might be able to roll...
by kmok
Fri Aug 15, 2014 1:05 pm
 
Forum: Investing - Help with Personal Investments
Topic: Portfolio Allocation for 31 y/o
Replies: 28
Views: 2819

Re: Should I Invest in both T-IRA & R-IRA?

I overlooked that. If you are planning for an early retirement you will have a period between your retirement age and the age you receive social security benefit that you can use to convert traditional IRA to Roth IRA, possibly at zero or very low marginal tax rate. Obviously this assumes that the c...
by kmok
Fri Aug 15, 2014 10:25 am
 
Forum: Investing - Help with Personal Investments
Topic: Should I Invest in both T-IRA & R-IRA?
Replies: 34
Views: 1477

Re: Should I Invest in both T-IRA & R-IRA?

Do you have any 401K or similar type of retirement account as well? If you do, you need to include that in the consideration. Traditional or Roth is a million dollar question for anyone. No one, especially the younger one, know exactly what the marginal tax rate will be. As such, it is reasonable to...
by kmok
Fri Aug 15, 2014 10:15 am
 
Forum: Investing - Help with Personal Investments
Topic: Should I Invest in both T-IRA & R-IRA?
Replies: 34
Views: 1477

Re: Question about investment and portfolio from a new inves

Not sure how much investing experience you have, I am not sure you have seriously tested your risk tolerance. You don't want to be in 100% stocks and then find you you are not as brave as you thought and panic and sell you equity during a market crash. 10% to 30% bonds would be reasonable. Line of c...
by kmok
Fri Aug 15, 2014 12:43 am
 
Forum: Investing - Help with Personal Investments
Topic: Question about investment and portfolio from a new investor
Replies: 7
Views: 675

Re: Why would a passive investor use ETFs?

ETFs can have a slight tax advantage by distributing less capital gains. I think these are applicable to many companies but not Vanguard. Vanguard have almost all of their mutual funds and ETFs structured the same thus there is no tax advantage. Actually I think the opposite is the case. The follow...
by kmok
Thu Aug 14, 2014 7:56 pm
 
Forum: Investing - Theory, News & General
Topic: Why would a passive investor use ETFs?
Replies: 60
Views: 3870

Re: Why would a passive investor use ETFs?

toto238 wrote:ETFs can have a slight tax advantage by distributing less capital gains.


I think these are applicable to many companies but not Vanguard. Vanguard have almost all of their mutual funds and ETFs structured the same thus there is no tax advantage.
by kmok
Thu Aug 14, 2014 7:25 pm
 
Forum: Investing - Theory, News & General
Topic: Why would a passive investor use ETFs?
Replies: 60
Views: 3870

Re: Focus more on Tax-Exempt in Taxable Account?

In most situation, it would be wise to use your after tax contribution to invest in "Tax Managed" and/or "Tax Exempt" funds, although total stock market fund is very tax efficient too.
by kmok
Thu Aug 14, 2014 6:40 pm
 
Forum: Investing - Theory, News & General
Topic: Focus more on Tax-Exempt in Taxable Account?
Replies: 16
Views: 1437

Re: US Equity Benchmark Options

For a 3 fund portfolio I would choose s&p 500, since it includes value and growth. On a side note, Russell index is not that good for index fund because it is so objective and transparent that investors can jump early to invest in companies that they speculate will be added into the index right ...
by kmok
Thu Aug 14, 2014 6:04 pm
 
Forum: Investing - Theory, News & General
Topic: US Equity Benchmark Options
Replies: 4
Views: 232

Re: Portfolio Allocation for 31 y/o

I am not sure why you do not qualify to contribute to Roth IRA. Have you pass the income limit? If you can't deduct your traditional IRA contribution, you may need to seriously consider whether you still want to contribute to it unless you are going to do a back door Roth. You might be able to rollo...
by kmok
Thu Aug 14, 2014 4:05 pm
 
Forum: Investing - Help with Personal Investments
Topic: Portfolio Allocation for 31 y/o
Replies: 28
Views: 2819

Re: Beginning Investor Advice

I hope you use a Vanguard account to buy Vanguard ETF, otherwise, you are spending unnecessary commission cost. I don't know how much you have in IT and healthcare, but it is not necessary, and if you have a significant portion of your portfolio is two particular sectors it might be a bit risky. I d...
by kmok
Thu Aug 14, 2014 3:55 pm
 
Forum: Investing - Help with Personal Investments
Topic: Beginning Investor Advice
Replies: 6
Views: 592

Re: Renting forever: financial suicide?

If you buy, you are betting that rents will go up more. If you rent, you are betting that prices will go up more. I disagree. It is much more complicated than this. I think you are missing an important variable that is essential in your conclusion (there are a lot more other variables). You talked ...
by kmok
Wed Aug 13, 2014 7:07 pm
 
Forum: Personal Finance (Not Investing)
Topic: Renting forever: financial suicide?
Replies: 92
Views: 11322

Re: Should I make my entire tax-deferred portfolio bonds?

First of all tax deferred would be traditional IRA or traditional 401K. Tax free accounts would be Roth accounts. Tax advantage are both tax deferred and tax free accounts. It makes no sense for you to buy only bonds right now. You should keep your current portfolio and adjust next year when you hav...
by kmok
Wed Aug 13, 2014 2:43 pm
 
Forum: Investing - Help with Personal Investments
Topic: Should I make my entire tax-deferred portfolio bonds?
Replies: 8
Views: 1156

Re: Taxable account strategy for young investors

You cannot do back door roth while maxing out your roth ira contribution. I don't know what are the size of your tax advantage and taxable accounts, but you might be investing too much into particular sectors such as health care and global tech. If you want to take the most advantage out of tax effi...
by kmok
Wed Aug 13, 2014 12:47 pm
 
Forum: Investing - Help with Personal Investments
Topic: Taxable account strategy for young investors
Replies: 7
Views: 926

Re: Is the 401k 10% early withdrawal penalty worth it?

I don't know what your budget looks like, but I suspect if you want to retire at age 45-50, you will need to safe more than three tax advantage accounts contribution limit, thus to taxable accounts. As a result, you will be able to live off of your taxable account until you reach typical retirement ...
by kmok
Wed Aug 13, 2014 10:08 am
 
Forum: Personal Finance (Not Investing)
Topic: Is the 401k 10% early withdrawal penalty worth it?
Replies: 32
Views: 1499

Re: Renting forever: financial suicide?

If you buy, you are betting that rents will go up more. If you rent, you are betting that prices will go up more. I disagree. It is much more complicated than this. I think you are missing an important variable that is essential in your conclusion (there are a lot more other variables). You talked ...
by kmok
Wed Aug 13, 2014 12:07 am
 
Forum: Personal Finance (Not Investing)
Topic: Renting forever: financial suicide?
Replies: 92
Views: 11322

Re: Backdoor Roth and a IRA?

To summarized, IRS takes your traditional IRA as a whole. You cannot pick which part of the traditional IRA is converted to Roth IRA. So if 60% of your traditional IRA are deductible and 40% are nondeductible and you convert half of your traditional IRA to Roth IRA, then 60% of the conversion would ...
by kmok
Tue Aug 12, 2014 11:07 pm
 
Forum: Investing - Help with Personal Investments
Topic: Backdoor Roth and a IRA?
Replies: 2
Views: 314

Re: Renting forever: financial suicide?

If one is in the 17%, then one more likely has the discipline to save and invest the Boglehead way. For this group, renting often comes out ahead (although there are many, many variables I have not mentioned). But 83% of people are not naturally predisposed to save that way, and they are generally ...
by kmok
Tue Aug 12, 2014 9:34 pm
 
Forum: Personal Finance (Not Investing)
Topic: Renting forever: financial suicide?
Replies: 92
Views: 11322

Re: Renting forever: financial suicide?

Buying or rent, it is a huge gamble. At the Bay Area with such a high price/rent ratio and historical long term growth in price over inflation, you are gambling either way. If you buy at such high price/rent ratio means unless the price continue to rise significantly faster than inflation, you might...
by kmok
Mon Aug 11, 2014 7:16 pm
 
Forum: Personal Finance (Not Investing)
Topic: Renting forever: financial suicide?
Replies: 92
Views: 11322

Re: International and Emerging Markets Small Cap Value

It may not be worthwhile. Foreign stocks, developed or emerging markets, would preferably placed in taxable account you can get foreign tax credit for foreign tax paid. You lose the tax advantage in a tax advantage account. However, Small and value tilts should ideally be placed in tax advantage acc...
by kmok
Mon Aug 11, 2014 3:03 pm
 
Forum: Investing - Help with Personal Investments
Topic: International and Emerging Markets Small Cap Value
Replies: 8
Views: 1099

Re: Beginner, needing some pointers on finding info

You can go to sec.gov, click filing and search the company with company name or ticker. If it is a domestic company you can fine the 10-k or 10-q filing. Inside the financial statement there is would he a footnote for eps. Cash dividend on common stocks do not impact eps for common stock. Cash divid...
by kmok
Sat Aug 09, 2014 1:36 pm
 
Forum: Investing - Theory, News & General
Topic: Beginner, needing some pointers on finding info
Replies: 11
Views: 714

Re: The Worst Investment You Can Make: Buying a Home

I forget where I heard this (probably here), but someone once said a house is a hedge on the price of housing in a particular area. By purchasing a house, I'm not nearly as exposed to the fluctuations of the real estate market in that particular area. I think that's a useful way to look at it. Not ...
by kmok
Fri Aug 08, 2014 5:58 pm
 
Forum: Investing - Theory, News & General
Topic: The Worst Investment You Can Make: Buying a Home
Replies: 135
Views: 16457

Re: The Worst Investment You Can Make: Buying a Home

Agre with the previous posters, let me add that buying a house is so undiversified for most typical households that some homebuyers would do very well, some will do very poorly.
by kmok
Fri Aug 08, 2014 4:13 pm
 
Forum: Investing - Theory, News & General
Topic: The Worst Investment You Can Make: Buying a Home
Replies: 135
Views: 16457

Re: Historical question about recessions

For example, one can argue president Bush's free market approach caused the financial crisis, and Obama's regulation safe the day. Another person can argue Bush's regulation cause the financial crisis, and Obama's policy will cause a bigger crisis in the future.
by kmok
Fri Aug 08, 2014 1:02 am
 
Forum: Investing - Theory, News & General
Topic: Historical question about recessions
Replies: 19
Views: 1166

Re: Historical question about recessions

You will get conflicting answers from different economist, for example Keynesian and Austrian economist...
by kmok
Fri Aug 08, 2014 12:49 am
 
Forum: Investing - Theory, News & General
Topic: Historical question about recessions
Replies: 19
Views: 1166
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