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Re: Bond Fund vs CDs - which to use?

Make sure you understand how bond funds can return much more than their stated SEC yield through riding the yield curve. CDs don't get this potential benefit. https://www.bogleheads.org/forum/viewtopic.php?t=132601&f=10 I use CDs with low break penalties when I need liquidity (eg: emergency fun...
by ogd
Thu Dec 18, 2014 6:20 pm
 
Forum: Investing - Theory, News & General
Topic: Bond Fund vs CDs - which to use?
Replies: 16
Views: 1267

Re: Riding the yield curve, in action

Just wanted to post a small update in response to this thread being quoted elsewhere. What has happened since is that the yield curve has flattened quite a bit. Compare vs the beginning of the thread: 3Yr 5Yr 10Yr 02/07/2014 0.66 1.47 2.71 12/18/2014 1.10 1.68 2.22 This is also why I haven't posted ...
by ogd
Thu Dec 18, 2014 6:18 pm
 
Forum: Investing - Theory, News & General
Topic: Riding the yield curve, in action
Replies: 45
Views: 5206

Re: Credit Risk vs. Term Risk

When short term rates rise, existing short term bonds lose principal value. That's the bad news. The good news is that you can replace your short term bonds quicker than intermediate or long term, taking advantage of those rising rates. Actually, if you do mark to market accounting you don't need t...
by ogd
Thu Dec 18, 2014 2:36 pm
 
Forum: Investing - Theory, News & General
Topic: Credit Risk vs. Term Risk
Replies: 11
Views: 886

Re: Credit Risk vs. Term Risk

Well in the last three months the total return difference between the two is 2.14% in favor of the Treasury fund. The SEC yield is based on what a fund has in its portfolio today and if the fund didn't change that is the yield you would receive over the "duration". Of course funds do chan...
by ogd
Wed Dec 17, 2014 11:14 pm
 
Forum: Investing - Theory, News & General
Topic: Credit Risk vs. Term Risk
Replies: 11
Views: 886

Re: Why would you invest in a bond fund?

Not sure I can answer that, but back when I was trying to model what to expect in my portfolio from different choices, I can tell you I never looked at total return since I was not going to reinvest and total return is meaningless to my portfolio. I absolutely looked at historical distributions sin...
by ogd
Wed Dec 17, 2014 4:37 pm
 
Forum: Investing - Theory, News & General
Topic: Why would you invest in a bond fund?
Replies: 25
Views: 1935

Re: Help me choose a bond fund

PIMCO! Based on ER, the only criterion shown to reliably make a difference. It's also a fairly stable core bond fund as a TBM alternative, despite the recent weirdness caused by the departure of Bill Gross. You haven't told us what Age-10 is, but if you're close to retirement you could consider an a...
by ogd
Wed Dec 17, 2014 4:13 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help me choose a bond fund
Replies: 9
Views: 1173

Re: Why would you invest in a bond fund?

Just to be clear here, I am not saying dividend reinvestment is bad or good. And I am beyond choosing the "right" fund. I have made my investments and am sticking with them ("stay the course"). All I am saying is that for me (and perhaps other retirees) it is more useful to trac...
by ogd
Wed Dec 17, 2014 3:59 pm
 
Forum: Investing - Theory, News & General
Topic: Why would you invest in a bond fund?
Replies: 25
Views: 1935

Re: Why would you invest in a bond fund?

No, the total return graph is the right one to use. It's not about reinvesting dividends, it's about not spending increased dividends. If TBM gives you increased dividends and you spend them all, then TBM deserves some credit and you deserve some blame for increasing your spending. Wait, I'm confus...
by ogd
Wed Dec 17, 2014 3:17 pm
 
Forum: Investing - Theory, News & General
Topic: Why would you invest in a bond fund?
Replies: 25
Views: 1935

Re: Credit Risk vs. Term Risk

In this low interest rate environment one would expect interest rates more likely to go up than down and for defaults to be arguably less then "normal". Well in the last three months the total return difference between the two is 2.14% in favor of the Treasury fund. Which is almost enough...
by ogd
Wed Dec 17, 2014 1:42 pm
 
Forum: Investing - Theory, News & General
Topic: Credit Risk vs. Term Risk
Replies: 11
Views: 886

Re: Buying "timing" question

While I could put TISM into the Roths, I like the simplification of only have Total International in taxable and a single inherited IRA that I will eventually move 100% into taxable. So what would the Borg do? I would not pay taxes on TISM for a year on account of that simplification. Particularly ...
by ogd
Wed Dec 17, 2014 1:15 pm
 
Forum: Investing - Help with Personal Investments
Topic: Buying "timing" question
Replies: 13
Views: 1265

Re: Vanguard's International Small Cap Fund -ETF vs Mutual F

If you hold a Vanguard mutual fund at Vanguard and there is a corresponding ETF, Vanguard can/will convert shares of the mutual fund to the ETF without a taxable event: http://www.bogleheads.org/wiki/ETFs_vs_mutual_funds#Vanguard_funds From Vanguard itself: Can I convert my conventional Vanguard mu...
by ogd
Wed Dec 17, 2014 12:56 pm
 
Forum: Investing - Theory, News & General
Topic: Vanguard's International Small Cap Fund -ETF vs Mutual Fund
Replies: 17
Views: 1871

Re: Why would you invest in a bond fund?

Here is what dumb old Vanguard Total Bond Market Index Fund has been doing. I can live with it. http://s24.postimg.org/jsue38r79/Captura_de_pantalla_2014_12_16_a_las_9_17_19_PM.png You charted total return which makes me thing you reinvest dividends. A lot of retired folks (like me) do not reinvest...
by ogd
Wed Dec 17, 2014 12:31 pm
 
Forum: Investing - Theory, News & General
Topic: Why would you invest in a bond fund?
Replies: 25
Views: 1935

Re: Better Costs: ETFs or Admiral Shares?

Thanks for the clarification. Folks have reported that Fidelity essentially re-invests the dividend the same day the ETF goes ex-dividend, so essentially no time out of the market. What do you think of that? I don't particularly care since I don't use Fidelity and don't reinvest dividends. Frankly ...
by ogd
Tue Dec 16, 2014 7:57 pm
 
Forum: Investing - Theory, News & General
Topic: Better Costs: ETFs or Admiral Shares?
Replies: 53
Views: 3712

Re: Better Costs: ETFs or Admiral Shares?

livesoft wrote:I've never had my bond ETF dividends 36 days out of the market unintentionally.

I meant 36 days over a year, which is about 14% of the time the market is open, only applicable to the already small dividend amount. I suppose that qualifies as a typo by omission.
by ogd
Tue Dec 16, 2014 7:32 pm
 
Forum: Investing - Theory, News & General
Topic: Better Costs: ETFs or Admiral Shares?
Replies: 53
Views: 3712

Re: MUNIs currently a better buy in any tax bracket?

What's the evidence that the credit ratings are meaningless? Basic reasoning. The best case for any municipal bonds is that they are backed by Treasuries. They cannot possibly be safer. I should relax this a little bit and say that the comparison is meaningless because these two are not the same ty...
by ogd
Tue Dec 16, 2014 4:49 pm
 
Forum: Investing - Theory, News & General
Topic: MUNIs currently a better buy in any tax bracket?
Replies: 4
Views: 695

Re: Better Costs: ETFs or Admiral Shares?

I don't think SpringMan is saying anything other than timing. Which overall is a small issue (36 days out of the market, for the dividends). There must be a typo in this. No typo. He says: Assuming you reinvest dividends, keep in mind that for bond mutual funds that pay monthly dividends, these div...
by ogd
Tue Dec 16, 2014 4:34 pm
 
Forum: Investing - Theory, News & General
Topic: Better Costs: ETFs or Admiral Shares?
Replies: 53
Views: 3712

Re: Better Costs: ETFs or Admiral Shares?

So do we all agree that SpringMan's thing about dividends and T+1 and T+3 does not hold water? I thought you agreed with that point, for example in the context of the Wiki article discussion: Automatic dividend reinvestment seems to have gotten removed. There are technical differences in the timing...
by ogd
Tue Dec 16, 2014 3:27 pm
 
Forum: Investing - Theory, News & General
Topic: Better Costs: ETFs or Admiral Shares?
Replies: 53
Views: 3712

Re: MUNIs currently a better buy in any tax bracket?

Because the credit ratings are bogus. In reality the munis in BMBIX are much riskier than Treasuries and the market knows this. There is also negative convexity to consider, but that's the smaller issue. This is actually the entire rationale of the "better deal above 25%" mantra, that the ...
by ogd
Tue Dec 16, 2014 3:19 pm
 
Forum: Investing - Theory, News & General
Topic: MUNIs currently a better buy in any tax bracket?
Replies: 4
Views: 695

Re: Better Costs: ETFs or Admiral Shares?

Theoretically, you could buy $1,000,000 of shares the day before the record date, pick up the dividends, and then sell a couple of days later. Taking it further, you could buy Total Bond Market on January 1, sell on January 20 and collect 20 days of interest, purchase BND, collect the full month of...
by ogd
Tue Dec 16, 2014 11:42 am
 
Forum: Investing - Theory, News & General
Topic: Better Costs: ETFs or Admiral Shares?
Replies: 53
Views: 3712

Re: A perfect profession

The current marketing is falling behind. Questionnaires, focus groups, etc., are far inferior to the ability to capture and analyze consumers' eye movements as they are walking along aisles in a store. Product packaging will reflect the subconscious processes that make people to look at one package...
by ogd
Tue Dec 16, 2014 12:53 am
 
Forum: Personal Finance (Not Investing)
Topic: A perfect profession
Replies: 58
Views: 5315

Re: Better Costs: ETFs or Admiral Shares?

Would you like me to dig in my recent mutual fund trades and find how much the equivalent ETF transaction could have lost? (Careful, the way I formulated that challenge is completely unfair. The point about zero sums remains, though) Yes, please. Thank you. Well, I'll be darned. Turns out I can't g...
by ogd
Mon Dec 15, 2014 9:18 pm
 
Forum: Investing - Theory, News & General
Topic: Better Costs: ETFs or Admiral Shares?
Replies: 53
Views: 3712

Re: RBD in Emerging Markets Brewing

I think VWO should be renamed VWOE to properly reflect its role in investor portfolios as of late.

I am finally done with this clunker ... for the next 30 days. I was secretly hoping that its replacement was more auspicious, but so far not good.
by ogd
Mon Dec 15, 2014 2:23 pm
 
Forum: Investing - Theory, News & General
Topic: RBD in Emerging Markets Brewing
Replies: 37
Views: 3302

Re: Bond Rules (Not 007)

Great answers from asif. I'll only add a few things. 1. Many advocate for % age in bonds or a more aggressive age-10%. Some also swear that you should always hold at least ~20% (lowers volatility) and some say never more than ~60% (not enough growth). Do you have any rules for yourself? Do you have ...
by ogd
Mon Dec 15, 2014 2:20 pm
 
Forum: Investing - Theory, News & General
Topic: Bond Rules (Not 007)
Replies: 3
Views: 461

Re: No wash sale when you sell all shares?

It is not a wash sale of the "recent purchase" kind if you sell all shares you bought with the recent purchase. Even if there are other shares remaining, as long as you designate the recent lot as sold (with SpecID accounting), you are golden. It doesn't avoid the "future purchase&quo...
by ogd
Mon Dec 15, 2014 2:02 pm
 
Forum: Investing - Help with Personal Investments
Topic: No wash sale when you sell all shares?
Replies: 8
Views: 541

Re: Where to put cash now? Prefer CD's.

Swampy wrote:Bump.

Anybody know of any good CD rates out there?

Yes. Ken from http://depositaccounts.com knows about all good CD rates out there, along with their gotchas.
by ogd
Mon Dec 15, 2014 1:49 pm
 
Forum: Investing - Help with Personal Investments
Topic: Where to put cash now? Prefer CD's.
Replies: 22
Views: 3992

Re: Better Costs: ETFs or Admiral Shares?

I bought VWO on 9/29 and sold on 10/07 for a profit of about 1%. If one had used VEMAX (Admiral share class) at the end of the day over the same dates, Morningstar shows that the total return of VEMAX would be -1.27%. That's a 2+% difference in total return. Of course, folks will invoke, "You ...
by ogd
Mon Dec 15, 2014 1:32 pm
 
Forum: Investing - Theory, News & General
Topic: Better Costs: ETFs or Admiral Shares?
Replies: 53
Views: 3712

Re: 3 Fund vs. Stategic Life Style

Would you suggest the tried and true conservative lifestyle index fund or the Wellsley fund which has historically done a little better? dans: it is impossible to invest in Wellesley's history. It has done well, but going forward nobody knows and the LifeStrategy funds win IMHO on diversification a...
by ogd
Mon Dec 15, 2014 12:34 am
 
Forum: Investing - Help with Personal Investments
Topic: 3 Fund vs. Stategic Life Style
Replies: 13
Views: 1068

Re: Better Costs: ETFs or Admiral Shares?

The difference is small, but the wiki gives the admiral shares a slight edge: http://www.bogleheads.org/wiki/ETFs_vs_mutual_funds#Trading_costs Without trading though, it's the same. without trading? So if someone needed to rebalance at the end of the year and additional money would not cover all t...
by ogd
Mon Dec 15, 2014 12:27 am
 
Forum: Investing - Theory, News & General
Topic: Better Costs: ETFs or Admiral Shares?
Replies: 53
Views: 3712

Re: 100% equities - my reasoning

Had you actually experienced the resulting 55% loss and said: "what the hell - it's only a paper loss, I'll make it back" then you're one of the lucky few who have the temperament to invest exclusively in equities. Thanks. But would a 90/10 portfolio change that? More along these lines: T...
by ogd
Mon Dec 15, 2014 12:17 am
 
Forum: Investing - Theory, News & General
Topic: 100% equities - my reasoning
Replies: 91
Views: 5863

Re: Am I crazy to move my emergency fund to bonds?

It's not crazy if what you mean is folding the emergency fund into the overall allocation. It's basically what I do. I simply disallow safe investments to drop below $XYZ. It would be a little ... strange ... if you invested part of your emergency fund in stocks, which is another reading of your sec...
by ogd
Mon Dec 15, 2014 12:05 am
 
Forum: Investing - Help with Personal Investments
Topic: Am I crazy to move my emergency fund to bonds?
Replies: 8
Views: 1188

Re: I'm an Irrational Bond Chicken Little

We have a recent example of interest rates (in the 5 year range) climbing from 2% to 5% in a relatively short time span. It looks like this: http://i.imgur.com/C9EWX0T.jpg The green line is cash, at the time competitive with CDs. So yes, Chicken Little. To put it in perspective, let's add stocks to ...
by ogd
Sun Dec 14, 2014 11:58 pm
 
Forum: Investing - Help with Personal Investments
Topic: I'm an Irrational Bond Chicken Little
Replies: 32
Views: 2919

Re: Treat Bonds Like Stocks?

joer1212 wrote: it can be several days after the buying/selling opportunity.

That is indeed the point. Use ETFs.
by ogd
Fri Dec 12, 2014 4:52 pm
 
Forum: Investing - Help with Personal Investments
Topic: Treat Bonds Like Stocks?
Replies: 8
Views: 693

Re: Vanguard Wish List

A read-only account password that I can hand out to Mint and the Vanguard app, for example. It would not allow any trading or movement of money, and the two-factor would not be required. An option to wait on hold for Flagship representative. Easier charitable donations in-kind, without long forms th...
by ogd
Fri Dec 12, 2014 4:46 pm
 
Forum: Investing - Theory, News & General
Topic: Vanguard Wish List
Replies: 44
Views: 2982

Re: VXUS [Vanguard Total International Stock Index]

tzakiel: there's a similar, current thread with much of the same concern. Here's my reply therein: https://www.bogleheads.org/forum/viewtopic.php?f=10&t=129264&newpost=2291383#p2287755. VTIAX is the same fund as VXUS.
by ogd
Fri Dec 12, 2014 4:35 pm
 
Forum: Investing - Help with Personal Investments
Topic: VXUS [Vanguard Total International Stock Index]
Replies: 15
Views: 1139

Re: Treat Bonds Like Stocks?

Just got a surprise at Vanguard. It turns out that if I rebalance, I won't be able to do it again for the next 60 days (except by mail). I understand why they impose this rule, but it can be detrimental to an investor with volatile funds such as precious metals. You can certainly do it again, just ...
by ogd
Fri Dec 12, 2014 3:26 pm
 
Forum: Investing - Help with Personal Investments
Topic: Treat Bonds Like Stocks?
Replies: 8
Views: 693

Re: Alternative to VCADX

Considering you have a significant amount of other bonds, the urgency to diversify CA risk is not great. I too recommend the national fund VWIUX. You should not demand the same after-tax yield from non-CA bonds, because you won't get it except with more risk. Instead, you need to accept 10% or so le...
by ogd
Thu Dec 11, 2014 11:43 pm
 
Forum: Investing - Help with Personal Investments
Topic: Alternative to VCADX
Replies: 2
Views: 368

Re: VTI Fee Savings Until Admiral-Ready (VTSAX)?

The fee comparison is made in http://www.bogleheads.org/wiki/ETFs_vs_mutual_funds#Vanguard_funds . It's ultimately very little. In an tax-advantaged account it's not such a big deal because you can switch back to VTSAX without paying taxes. However, why even bother. In the long term I like VTSAX muc...
by ogd
Thu Dec 11, 2014 5:18 pm
 
Forum: Investing - Help with Personal Investments
Topic: VTI Fee Savings Until Admiral-Ready (VTSAX)?
Replies: 15
Views: 1006

Re: 'Might Vanguard Founder Jack Bogle Be Wrong for a Change

Might Vanguard Founder Jack Bogle Be Wrong for a Change? Is the father of index investing a market xenophobe? And is Ray Dalio’s “all-weather portfolio” all wet? (Barron's) ... It appears Barron's is complying with Betteridge's Law of Headlines . PJW I like! Here's another one, for Mr Dalio himself...
by ogd
Wed Dec 10, 2014 8:48 pm
 
Forum: Investing - Theory, News & General
Topic: 'Might Jack Bogle Be Wrong for a Change?' [Int'l holdings]
Replies: 49
Views: 4157

Re: VBMFX vs PIMIX

Also, how does one best get the capital gains distribution data for a bond fund… to understand tax implications? You can go to the fund page (e.g. on vanguard.com) which should list fund distributions of all kinds (e.g. the Distributions tab). However, this is a red herring when it comes to tax imp...
by ogd
Wed Dec 10, 2014 5:07 pm
 
Forum: Investing - Help with Personal Investments
Topic: VBMFX vs PIMIX
Replies: 5
Views: 523

Re: Adjust Post-Crash Bond Allocation?

A good strategy might be to drop 10% of your bonds every time the market goes down 10%. You wouldn't be doing it to time the market, you'd be doing it because you realized a higher stock allocation is better for your circumstances, so you might as well make the switch when prices are favorable. Eve...
by ogd
Wed Dec 10, 2014 5:02 pm
 
Forum: Investing - Theory, News & General
Topic: Adjust Post-Crash Bond Allocation?
Replies: 23
Views: 1586

Re: Adjust Post-Crash Bond Allocation?

Honestly, I don't have a magic number for what would be a major market downturn. 10% would be insufficient, but I have no way of knowing whether a market move is a blip like October or a more serious one like 2011, 2008, or the multi-year bear market of 2000+. Prices would be 'at an ebb' following ...
by ogd
Wed Dec 10, 2014 1:00 pm
 
Forum: Investing - Theory, News & General
Topic: Adjust Post-Crash Bond Allocation?
Replies: 23
Views: 1586

Re: Tax Exempt Bond Fund - Question

It's important to note that even though the dividends of tax free munis are not taxable federally they are added as income into Alternative Minimal Tax calculations. So if you're on the borderline for AMT and have considerable muni distribution income, be aware of this. Likewise, I believe, with th...
by ogd
Wed Dec 10, 2014 12:48 pm
 
Forum: Investing - Theory, News & General
Topic: Tax Exempt Bond Fund - Question
Replies: 8
Views: 1068

Re: Bond fund that pays no taxable interest?

Some corrections here: 1) EE bonds indeed pay only 0.1%, but they also DOUBLE after 20 years, which works out to 3.5% or so interest. The downside is you have to hold for 20 years or you get nada. Elsewhere I am complaining about the resulting weirdness: https://www.bogleheads.org/forum/viewtopic.ph...
by ogd
Wed Dec 10, 2014 12:42 pm
 
Forum: Investing - Theory, News & General
Topic: Bond fund that pays no taxable interest?
Replies: 12
Views: 1456

Re: Are ETFs a good addition to Roth IRA

Make sure to read our wiki http://www.bogleheads.org/wiki/ETFs_vs_mutual_funds , which contains among other things an estimate of the maximum fees saved by using an ETF before Admiral shares becomes available. I would say it's not worth mixing them up based on the cost argument, as the savings are m...
by ogd
Wed Dec 10, 2014 12:18 am
 
Forum: Investing - Theory, News & General
Topic: Are ETFs a good addition to Roth IRA
Replies: 16
Views: 1193

Re: Tax Exempt Bond Fund - Question

Yes.

However, rest assured that in the long term the bond funds deliver almost all of their return as income, and price appreciation is minimal.
by ogd
Tue Dec 09, 2014 3:17 pm
 
Forum: Investing - Theory, News & General
Topic: Tax Exempt Bond Fund - Question
Replies: 8
Views: 1068

Re: Fundamental Theory of Index Investing

The "what would happen if everyone indexed", with its easy answer, has already been addressed so I won't go there. Instead, I'd like to focus on the "parasitism" and the moral quandary / worry about eventual justice that you seem to be deriving from this notion. Let's think for a...
by ogd
Tue Dec 09, 2014 3:14 pm
 
Forum: Investing - Theory, News & General
Topic: Fundamental Theory of Index Investing
Replies: 16
Views: 1374

Re: What's wrong with VTIAX?

I know this thread is old from 2013, but I searched and found my exact topic I was looking for. I only began index investing this year 2014, and have a core index portfolio thanks to several members here (Retired JG, Nedsaid, Toons) I am sick of my VTIAX , it is the only index fund that has unrecog...
by ogd
Tue Dec 09, 2014 2:47 pm
 
Forum: Investing - Theory, News & General
Topic: What's wrong with VTIAX?
Replies: 63
Views: 7420

Re: Why have more US than Intl Market Index?

My thinking is that a good global stock allocation is 30% US, 30% other developed, 30% emerging markets, 10% home country. I am following my thinking (40% US, 30% Dvp'd. Int'l, 30% EM) because. Why are you splitting "other developed" and "emerging"? Why not X% US Index Fund, X% ...
by ogd
Mon Dec 08, 2014 10:52 pm
 
Forum: Investing - Theory, News & General
Topic: Why have more US than Intl Market Index?
Replies: 65
Views: 4053

Re: Why have more US than Intl Market Index?

Well, imported goods have the pressure of staying competitive with the locals. For example German cars are MUCH more expensive in Germany, at the factory door, than in the US. They weren't when the euro was $0.7, but the Germans are unable to raise the prices accordingly -- they wouldn't sell anyth...
by ogd
Mon Dec 08, 2014 10:46 pm
 
Forum: Investing - Theory, News & General
Topic: Why have more US than Intl Market Index?
Replies: 65
Views: 4053

Re: Why have more US than Intl Market Index?

If you plug numbers in various form fields like gold and long bonds, you can come up with even better allocations going backward , but I think some of them will look so weird that you too will agree it's probably accident. You will notice that diversifying into a small equal allocation to gold and ...
by ogd
Mon Dec 08, 2014 8:12 pm
 
Forum: Investing - Theory, News & General
Topic: Why have more US than Intl Market Index?
Replies: 65
Views: 4053
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