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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 ogd
Mon Jan 26, 2015 10:22 pm
 
Forum: Investing - Help with Personal Investments
Topic: Short Term Bonds in Taxable
Replies: 3
Views: 474

Re: bonds [help with fund selection]

sherry: the best investment for your worries, right now, is probably bank CDs. Note that I am not advocating market timing or taking heed of warnings you hear to shift bond durations. Like timboktoo I think it's futile because the bond market is both sophisticated and efficient. However , direct CDs...
by ogd
Mon Jan 26, 2015 10:12 pm
 
Forum: Investing - Help with Personal Investments
Topic: bonds [help with fund selection]
Replies: 4
Views: 275

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

- As others have mentioned, the fact that SEC yield is greater/less than the distribution yield is probably explained by relative amount of discounted/premium bonds in the fund. That makes sense to me. Since bond mutual fund amortize premiums and accrete discounts why would the "relative amoun...
by ogd
Mon Jan 26, 2015 8:48 pm
 
Forum: Investing - Theory, News & General
Topic: Total Bond: 23 years of SEC yield and distribution yield
Replies: 9
Views: 1320

Re: Initial SEC yield and subsequent 5yr and 10yr returns

TwoByFour: at current rates, reinvestment / compounding is a very small effect over periods of 5 or even 10 years. It will stay so for the foreseeable future. What's far more important for these "recovery"/"predictability" questions and the source of some confusion when it comes ...
by ogd
Fri Jan 23, 2015 2:42 pm
 
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 107
Views: 4988

Re: Short term taxable investment- Disadvantage to Muni fund

For 2-3 year money, a 1% savings account is a very good deal. The bond market would love to get that kind of return for cash, but they have to make do with 0.1% and all the other short-term instruments are priced accordingly, i.e. not very well for small investors who have access to said savings acc...
by ogd
Fri Jan 23, 2015 2:27 pm
 
Forum: Investing - Help with Personal Investments
Topic: Short term taxable investment- Disadvantage to Muni fund?
Replies: 9
Views: 503

Re: Selling mutual fund to buy ETF - "out of market" risk

This direction is actually quite a bit easier than the opposite transfer. 1) If this is at Vanguard and the mutual fund the same as the ETF, call VG and ask them to convert the shares. Overnight, no time out of the market at all, perfect conversion. Done. 2) If this is at Vanguard and the funds diff...
by ogd
Thu Jan 22, 2015 3:04 am
 
Forum: Investing - Help with Personal Investments
Topic: Selling mutual fund to buy ETF - "out of market" risk
Replies: 17
Views: 821

Re: Google Chrome: is this a mega security problem?

Finally, I set up Google Drive on the laptop because I got an offer for 50 Gb or something when I bought a Moto-X smartphone. Then somehow I apparently signed into GMail (aka Chrome) on the laptop, before there was two-factor authentication. I don't even remember doing that or how I did that -- so ...
by ogd
Wed Jan 21, 2015 8:50 pm
 
Forum: Personal Consumer Issues
Topic: Google Chrome: is this a mega security problem?
Replies: 111
Views: 6478

Re: Google Chrome: is this a mega security problem?

It doesn't seem obvious how the tradeoff goes. Is it really easier to resist the urge to tell the phishers your gmail password than it is to resist the urge to install that extra special trojan horse video viewer on your regular PC? Yes, absolutely. For the regular PC you have to also keep the syst...
by ogd
Wed Jan 21, 2015 12:29 am
 
Forum: Personal Consumer Issues
Topic: Google Chrome: is this a mega security problem?
Replies: 111
Views: 6478

Re: Which broker to choose for IRA and which for taxable?

I would choose Vanguard, for both. Failing that, any of the others, for both. There aren't good reasons to separate, and the reasons to consolidate are both simplicity and maximizing AUM to get a better level of service. I've been very happy with Vanguard's level of service, myself. And it's good fo...
by ogd
Tue Jan 20, 2015 7:21 pm
 
Forum: Investing - Help with Personal Investments
Topic: Which broker to choose for IRA and which for taxable?
Replies: 5
Views: 672

Re: Google Chrome: is this a mega security problem?

Yes, but on the other hand "worming... into your machine" has gotten much harder. You've traded your security chops for Google's. For most people this is a very wise tradeoff. There are still plenty of ways to exploit a cloud user's mistakes. For instance, the badguys could just guess wha...
by ogd
Tue Jan 20, 2015 7:09 pm
 
Forum: Personal Consumer Issues
Topic: Google Chrome: is this a mega security problem?
Replies: 111
Views: 6478

Re: Google Chrome: is this a mega security problem?

...Like others have noted, this can be configured in Settings / Advanced Sync.... This is blaming the victim. More and more and more, everything new in computing is coming defaulted to no privacy, share everything, and it is excused by saying "but you can turn it off." Yes, if you know it...
by ogd
Tue Jan 20, 2015 7:00 pm
 
Forum: Personal Consumer Issues
Topic: Google Chrome: is this a mega security problem?
Replies: 111
Views: 6478

Re: Initial SEC yield and subsequent 5yr and 10yr returns

Apologies if I missed this, but I find it odd that SEC yield does a better job of predicting 10 year returns than 5 year returns for a fund with an average maturity of 7.5 years and an average duration of 5.5 years. Why would that be? An interval of time about 2x duration works like a point of indi...
by ogd
Tue Jan 20, 2015 1:37 pm
 
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 107
Views: 4988

Re: Google Chrome: is this a mega security problem?

Like others have noted, this can be configured in Settings / Advanced Sync. A big mitigating factor is that these are not random pieces of software, but they have to be approved extensions from the Chrome web store. Google is known to watch over those, remove malware and analyze them on an ongoing b...
by ogd
Tue Jan 20, 2015 1:05 pm
 
Forum: Personal Consumer Issues
Topic: Google Chrome: is this a mega security problem?
Replies: 111
Views: 6478

Re: Sell Long term bonds with large gain for short term bond

privateID: REITs are not bonds. They are incomparably more risky. In 2008 the REIT index declined as much as 60%. They should be considered equities, alternatives to the equity allocation. It's unfair to compare them to bonds and say they have this extra return that's more tax efficient (capital gai...
by ogd
Mon Jan 19, 2015 6:07 pm
 
Forum: Investing - Help with Personal Investments
Topic: Sell Long term bonds with large gain for short term bonds
Replies: 49
Views: 4826

Re: estimating atfter tax return

@ogd, take two bonds with the same risk-adjusted returns, but different tax treatments. If your tax rate is different than the tax rate implied by market yields, then it might be profitable for you to purchase the one with the better after-tax returns, computed using your tax rate. richard: I agree...
by ogd
Sun Jan 18, 2015 3:25 pm
 
Forum: Investing - Theory, News & General
Topic: estimating atfter tax return
Replies: 5
Views: 507

Re: estimating atfter tax return

* the goal is to help compare the yield of various investments I think the entire enterprise hinges on this goal, which is IMHO not a very good idea because it ignores risk. So you will end up with extremely precise numbers for the expected return but very broad buckets for risk, if any buckets at ...
by ogd
Sun Jan 18, 2015 2:38 pm
 
Forum: Investing - Theory, News & General
Topic: estimating atfter tax return
Replies: 5
Views: 507

Re: How Can Short-Term Tax Exempt Make Sense?

You are right that ST Tax-Exempt does not make sense presently at .35% yield (which at least is post-expenses, as others have noted). A far better option is a 1% savings account, which offers complete safety and instant liquidity. And, at Vanguard and presumably other brokers, an external savings ac...
by ogd
Sun Jan 18, 2015 2:21 pm
 
Forum: Investing - Theory, News & General
Topic: How Can Short-Term Tax Exempt Make Sense?
Replies: 13
Views: 1580

Re: Should I use zero interest CC checks for emergency cash?

That 2% fee is too high for me. The interest rate after those 12 months is also pretty scary, if more of the unexpected happens, e.g. the house doesn't sell for whatever reason. I would consider a 401k loan as the top option, if there's enough in there (probably, considering your attitude towards co...
by ogd
Sun Jan 18, 2015 2:13 pm
 
Forum: Personal Finance (Not Investing)
Topic: Should I use zero interest CC checks for emergency cash?
Replies: 11
Views: 1236

Re: Initial SEC yield and subsequent 5yr and 10yr returns

Kevin: there were also the graphs produced by user Ranger in this older thread you were on: http://www.bogleheads.org/forum/viewtopic.php?f=10&t=120317#p1758761 , from a combination of the Agg bond index and Ibbotson's data, very long term back to the 30s. Unfortunately, imageshack went south si...
by ogd
Sun Jan 18, 2015 2:02 pm
 
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 107
Views: 4988

Re: Sell Long term bonds with large gain for short term bond

REITs - If we were to shift tax-deferred money to REITs, then would need to shift the taxable REITs to bonds to keep the AA. So, we wouldn't be moving more tax-efficient stocks into taxable. That is why I thought that continuing to hold them in taxable is ok (combined with my other reasons). I full...
by ogd
Sat Jan 17, 2015 8:03 pm
 
Forum: Investing - Help with Personal Investments
Topic: Sell Long term bonds with large gain for short term bonds
Replies: 49
Views: 4826

Re: Sell Long term bonds with large gain for short term bond

2) Decided NOT to sell REIT fund. Although the income is not necessary, there does not seem to be a huge advantage to selling them. If REITs are desired anyhow, then paying ordinary dividends in the form of RMDs from an IRA is the same as in taxable. Also, although the income is currently not neede...
by ogd
Sat Jan 17, 2015 2:26 pm
 
Forum: Investing - Help with Personal Investments
Topic: Sell Long term bonds with large gain for short term bonds
Replies: 49
Views: 4826

Re: Asness: Why individual bonds are no safer than bond fund

^ I'm trying hard to imagine an 8-10% hole that will be difficult to get out of. Is this a rough estimate on how much one would be behind by buying short-term bonds as opposed to intermediate-term bonds? Yes. This is the cost of staying in short vs intermediate-term Treasuries since 2010. Other bon...
by ogd
Tue Jan 13, 2015 9:35 pm
 
Forum: Investing - Theory, News & General
Topic: Asness: Why individual bonds are no safer than bond funds
Replies: 59
Views: 2925

Re: Asness: Why individual bonds are no safer than bond fund

Cliff Asness' comments may not apply to TIPS. Bill Bernstein warns about a liquidity risk which shows up when a TIPS fund manager needs to sell shares on the secondary market during a financial crisis, perhaps incurring a loss of 25 or 30%. Therefore, Bernstein recommends purchasing only individual...
by ogd
Tue Jan 13, 2015 7:24 pm
 
Forum: Investing - Theory, News & General
Topic: Asness: Why individual bonds are no safer than bond funds
Replies: 59
Views: 2925

Re: Asness: Why individual bonds are no safer than bond fund

Are they selling bonds before maturity as a matter of policy? Yes. And this is a good thing. I don't want my Intermediate Treasury fund to hold Treasuries below 3 years with yields (not coupons) below 1% when I have 1% savings accounts available. In a rising rate environment such a policy gives me ...
by ogd
Tue Jan 13, 2015 5:29 pm
 
Forum: Investing - Theory, News & General
Topic: Asness: Why individual bonds are no safer than bond funds
Replies: 59
Views: 2925

Re: Can you make money betting on random coin flips?

And the better-ness somehow seems to involve some kind of more-ness, some kind of assertion that in the long run, eventually, 100% bettor is virtually certain to encounter some sequence of luck so bad that he will permanently fall behind the 50% bettor. I think an important distinction here is whet...
by ogd
Mon Jan 12, 2015 9:36 pm
 
Forum: Investing - Theory, News & General
Topic: Can you make money betting on random coin flips?
Replies: 295
Views: 16510

Re: Asness: Why individual bonds are no safer than bond fund

ogd : Well, individual bonds let you better match obligations *if* you have precise future obligations. But most people don't. Expense change in bad markets. And besides, if you have stocks, your total portfolio is not going to be matched to obligations. So the increased precision of individual bon...
by ogd
Mon Jan 12, 2015 9:20 pm
 
Forum: Investing - Theory, News & General
Topic: Asness: Why individual bonds are no safer than bond funds
Replies: 59
Views: 2925

Re: Dazed, Confused and Upset

Is there any reason why it would make any sense to stay with EJ? No. Edward Jones is pretty terrible, perhaps one of the worst places to invest this side of Madoff. Those investments were specifically chosen to maximize the profits of your advisor and EJ and in the long term they'd take away half o...
by ogd
Mon Jan 12, 2015 8:34 pm
 
Forum: Investing - Help with Personal Investments
Topic: Dazed, Confused and Upset
Replies: 63
Views: 6276

Re: Asness: Why individual bonds are no safer than bond fund

Are they selling bonds before maturity as a matter of policy? Yes. And this is a good thing. I don't want my Intermediate Treasury fund to hold Treasuries below 3 years with yields (not coupons) below 1% when I have 1% savings accounts available. Am I going to get unexpected cap gains distributions...
by ogd
Mon Jan 12, 2015 8:31 pm
 
Forum: Investing - Theory, News & General
Topic: Asness: Why individual bonds are no safer than bond funds
Replies: 59
Views: 2925

Re: Asness: Why individual bonds are no safer than bond fund

ogd : Well, individual bonds let you better match obligations *if* you have precise future obligations. But most people don't. Expense change in bad markets. And besides, if you have stocks, your total portfolio is not going to be matched to obligations. So the increased precision of individual bon...
by ogd
Mon Jan 12, 2015 8:26 pm
 
Forum: Investing - Theory, News & General
Topic: Asness: Why individual bonds are no safer than bond funds
Replies: 59
Views: 2925

Re: Asness: Why individual bonds are no safer than bond fund

But his arguments are not meant to apply to those you will not be rolling their bonds. If I know I need $X to spend in 2020, I'm going to buy a bond that matures in 2020. But what about your stocks Artsdoctor? Aren't your odds rather high that in 2020 you'll be fulfilling that liability from stocks...
by ogd
Mon Jan 12, 2015 6:30 pm
 
Forum: Investing - Theory, News & General
Topic: Asness: Why individual bonds are no safer than bond funds
Replies: 59
Views: 2925

Re: Asness: Why individual bonds are no safer than bond fund

1) The $10k were the only bonds you had. In this case, when the rates increased -- which must have been towards the end of the interval, otherwise the fund would have recovered already -- the fund position was much riskier. This is the source of the $1k difference. Nobody forced you to hold riskier...
by ogd
Mon Jan 12, 2015 6:17 pm
 
Forum: Investing - Theory, News & General
Topic: Asness: Why individual bonds are no safer than bond funds
Replies: 59
Views: 2925

Re: Why Is "Deflation" A Bad Thing??? How To Prepare/Profit

I think this is true of all major categories of the CPI. We all need shelter over our heads --- the fact that housing will be cheaper next year than this year does not mean we will go homeless for a year to get a cheaper house next year. We all need to eat a certain number of calories a day, and th...
by ogd
Mon Jan 12, 2015 6:07 pm
 
Forum: Investing - Theory, News & General
Topic: Why Is "Deflation" A Bad Thing??? How To Prepare/Profit?
Replies: 87
Views: 6147

Re: Asness: Why individual bonds are no safer than bond fund

2) The $10k were part of a, say, $100k portfolio of varying maturities(which is how I read it at first). This would be indeed an apples to apples comparison when it comes to risk. You are saying, the maturing $10k gives me the chance to not reinvest it. I say, you can sell $10k of the fund (not $9k...
by ogd
Mon Jan 12, 2015 5:37 pm
 
Forum: Investing - Theory, News & General
Topic: Asness: Why individual bonds are no safer than bond funds
Replies: 59
Views: 2925

Re: Asness: Why individual bonds are no safer than bond fund

Buy 10k of an intermediate bond fund and 10k of a 5 year treasury. After 5 years, you get your 10k of the 5 year treasury back. Over that time, rates have risen such that your bond fund is down 10% from where you purchased it. You can purchase more using some/all of the 10k you just got back from y...
by ogd
Mon Jan 12, 2015 5:23 pm
 
Forum: Investing - Theory, News & General
Topic: Asness: Why individual bonds are no safer than bond funds
Replies: 59
Views: 2925

Re: Sell Long term bonds with large gain for short term bond

You guys respond fast. So if a REIT fund exists in a taxable account, with a decent amount of gains, any suggestions about what to do about it? Ideally, the fund would be held in a tax-advantaged account unless the income was needed (which is not the case). Sell all of it as soon as gains are long ...
by ogd
Mon Jan 12, 2015 4:35 pm
 
Forum: Investing - Help with Personal Investments
Topic: Sell Long term bonds with large gain for short term bonds
Replies: 49
Views: 4826

Re: Asness: Why individual bonds are no safer than bond fund

backpacker: thanks for the article. I fully agree with Asness here, it's what I've been saying in bond threads ever since 2013. This makes sense if comparing the fund to a rolling bond ladder, and the fund happens to have the same term risk and credit/default risk as the ladder that you would otherw...
by ogd
Mon Jan 12, 2015 4:31 pm
 
Forum: Investing - Theory, News & General
Topic: Asness: Why individual bonds are no safer than bond funds
Replies: 59
Views: 2925

Re: Asness: Why individual bonds are no safer than bond fund

Not that I think it's prudent for people to recommend everyone go out and buy whatever individual bonds they're in the mood for that day, but geez, if you're matching a liability, individual bonds are the way to go. I think this degree of matching is almost always an exercise in overplanning. That ...
by ogd
Mon Jan 12, 2015 4:25 pm
 
Forum: Investing - Theory, News & General
Topic: Asness: Why individual bonds are no safer than bond funds
Replies: 59
Views: 2925

Re: Sell Long term bonds with large gain for short term bond

Thanks again for the help. I did sell some of those bond funds. I was curious if the same principal would be true for REIT funds (capital gains eventually get dispersed as income over time)? It would make sense to me that REITs, which we know have to distribute a certain percentage of gains every y...
by ogd
Mon Jan 12, 2015 4:15 pm
 
Forum: Investing - Help with Personal Investments
Topic: Sell Long term bonds with large gain for short term bonds
Replies: 49
Views: 4826

Re: Need help with bonds in taxable

mnvalue: you're welcome. Muni bonds are tricky beasts, which is why I don't advise anyone to go investing in them on their own (buying bonds directly) and even with funds you gotta keep your eyes open. The fund industry is not helping either, e.g. Sit could title their fund "High Yield" or...
by ogd
Mon Jan 12, 2015 1:39 pm
 
Forum: Investing - Help with Personal Investments
Topic: Need help with bonds in taxable
Replies: 8
Views: 886

Re: Why Is "Deflation" A Bad Thing??? How To Prepare/Profit

Deflation is bad because the economy slows down to a crawl. You can think of it in terms of credit (which becomes a great burden), something that the entire economy runs on whether you like it or not. That leaves open the simplistic moral argument that maybe debt is a bad thing, but you can also thi...
by ogd
Mon Jan 12, 2015 1:31 pm
 
Forum: Investing - Theory, News & General
Topic: Why Is "Deflation" A Bad Thing??? How To Prepare/Profit?
Replies: 87
Views: 6147

Re: Need help with bonds in taxable

Definitely go for the national fund. It's not even close. The tax on the national fund VWITX based on SEC yield would only cost you about 0.16%, much smaller than the ER difference between the funds. Even based on the larger distribution yields (i.e. in the immediate term), it's only 0.30%. In gener...
by ogd
Sun Jan 11, 2015 4:58 pm
 
Forum: Investing - Help with Personal Investments
Topic: Need help with bonds in taxable
Replies: 8
Views: 886

Re: Why is it wrong to think individual bonds are safer vs f

This is true, but the fund investor who wishes to accomplish this reduced duration has the means to do so fairly easily. For now, before the clock starts rolling, the risk is exactly the same. I think in the 1965-1980 scenario above, an investor who gradually sold shares in a long duration fund as ...
by ogd
Sat Jan 10, 2015 4:42 pm
 
Forum: Investing - Help with Personal Investments
Topic: Why is it wrong to think individual bonds are safer vs funds
Replies: 30
Views: 1979

Re: Sell Long term bonds with large gain for short term bond

privateID: I would order the choices like this: Best: taxable bonds or bank CDs in IRA. Good: munis in taxable. Not too bad: taxable bonds in taxable. I estimate that the tax bracket that makes munis "worth it" is about 25%, so you're not too far above that. Good alternative: bank CDs in t...
by ogd
Sat Jan 10, 2015 3:48 pm
 
Forum: Investing - Help with Personal Investments
Topic: Sell Long term bonds with large gain for short term bonds
Replies: 49
Views: 4826

Re: Why is it wrong to think individual bonds are safer vs f

Still, I would say that the risk for the bondholder who holds to maturity is best categorized as "opportunity cost risk". If interest rates go up, the person who already owns bonds can't take advantage because their money is already tied up in them. Yes, but when this "opportunity co...
by ogd
Sat Jan 10, 2015 3:42 pm
 
Forum: Investing - Help with Personal Investments
Topic: Why is it wrong to think individual bonds are safer vs funds
Replies: 30
Views: 1979

Re: Sell Long term bonds with large gain for short term bond

One exception to the range-bound thing, but in the other direction, is the VG high yield fund. Unadjusted price in 1980 was 9.54, and price now is 5.97, so almost 40% lower. I believe it's been pointed out that this is typical of high-yield bond funds, since essentially part of the high yield is at...
by ogd
Sat Jan 10, 2015 3:36 pm
 
Forum: Investing - Help with Personal Investments
Topic: Sell Long term bonds with large gain for short term bonds
Replies: 49
Views: 4826

Re: Sell Long term bonds with large gain for short term bond

Do you think this point is true across all bonds: Long/int/short, muni/treasury/corporate, nominal/inflation? Just looking at some of the prices, it seems not all bonds have as tight a nav as TBM. I probably would need to study it a bit, though, to really understand. I can't say I've looked at all ...
by ogd
Sat Jan 10, 2015 2:25 pm
 
Forum: Investing - Help with Personal Investments
Topic: Sell Long term bonds with large gain for short term bonds
Replies: 49
Views: 4826

Re: Why is it wrong to think individual bonds are safer vs f

Oh, you are very much affected by interest rate risk with individual bonds. Consider these three investors: A holds a 5 year duration bond fund. B holds a 5 year individual bond. C holds cash. Now imagine rates go up 2% in short order for all maturities, what some would call "bondmageddon"...
by ogd
Sat Jan 10, 2015 2:12 pm
 
Forum: Investing - Help with Personal Investments
Topic: Why is it wrong to think individual bonds are safer vs funds
Replies: 30
Views: 1979

Re: Why is it wrong to think individual bonds are safer vs f

How can we say Person B tangibly lost money? I think what she just lost was the opportunity to have made a better investment? Assuming person C keeps their money in cash, it seems like Person B will come out ahead of C regardless of interest rates. Person A has potential to come back negative, whic...
by ogd
Fri Jan 09, 2015 7:50 pm
 
Forum: Investing - Help with Personal Investments
Topic: Why is it wrong to think individual bonds are safer vs funds
Replies: 30
Views: 1979

Re: Why is it wrong to think individual bonds are safer vs f

I added something to my post while you were posting yours. I said "I think ogd is right that the interest rate changes do matter whether or not you are holding a fund or individual bonds. However, I think the individual-bond investor who plans and succeeds in holding to maturity has less risk ...
by ogd
Fri Jan 09, 2015 7:33 pm
 
Forum: Investing - Help with Personal Investments
Topic: Why is it wrong to think individual bonds are safer vs funds
Replies: 30
Views: 1979

Re: Why is it wrong to think individual bonds are safer vs f

It is controversial. I happen to agree with you. Unfortunately, the people who have studied economics most seem to disagree with me, so quite likely I'm wrong. Yes. One of the very few instances, perhaps, and the only one I can think of. Look at my example above. C is what zero interest rate risk l...
by ogd
Fri Jan 09, 2015 7:20 pm
 
Forum: Investing - Help with Personal Investments
Topic: Why is it wrong to think individual bonds are safer vs funds
Replies: 30
Views: 1979
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