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Re: Should I use margin to buy a balanced fund?

Also, I think you might be double counting inflation. When you use a margin account, you put some of your portfolio up as collateral, but it's still yours. In the 2.5x leverage scenario that we are discussing, I am investing $1 and borrowing $1.50. If the un-leveraged portfolio yields a nominal 8%,...
by ogd
Thu Aug 21, 2014 2:49 am
 
Forum: Investing - Theory, News & General
Topic: Should I use margin to buy a balanced fund?
Replies: 268
Views: 17364

Re: Why only stocks in a taxable account at retirement?

Yup, YDNAL's message is precisely right. You can rebalance across account boundaries by making matching trades of the stuff you don't actually want to sell, like stocks in a crash. So availability of a specific asset in a specific account doesn't matter. As a complication, though, you should ideally...
by ogd
Wed Aug 20, 2014 1:46 pm
 
Forum: Investing - Theory, News & General
Topic: Why only stocks in a taxable account at retirement?
Replies: 26
Views: 1536

Re: Bond Allocation - 27 y/o

Agreed with the posters above. In addition, quite a few of us on this board feel that BNDX is not a rewarding proposition and VWOB is too risky for a bond allocation, particularly the 10% supporting a 90% stock allocation. Those dollar signs in your eyes should be because of equities not bonds.
by ogd
Tue Aug 19, 2014 11:17 pm
 
Forum: Investing - Help with Personal Investments
Topic: Bond Allocation - 27 y/o
Replies: 4
Views: 341

Re: VBMPX safe enough for saving for tuition

Yes and no. No because Total Bond (btw: consider spelling it out in the title) has interest rate risk and rates could rise just before you need to withdraw, costing you 5% or more and wiping out the yield. Generally, we recommend using this fund for money you need in 5 years or more, when the rate i...
by ogd
Tue Aug 19, 2014 4:55 pm
 
Forum: Investing - Help with Personal Investments
Topic: VBMPX safe enough for saving for tuition
Replies: 7
Views: 550

Re: which vanguard bond fund for 30-something?

My view is that I don't want more than half of fixed income in munis. The reason is 1) idiosyncratic risks such as losing tax advantaged status or legal rulings about bankruptcies and 2) more correlated with equities than other bonds -- certainly Treasuries and occasionally even high grade corporate...
by ogd
Tue Aug 19, 2014 3:43 pm
 
Forum: Investing - Help with Personal Investments
Topic: which vanguard bond fund for 30-something?
Replies: 11
Views: 1674

Re: Why would anyone own a treasury bond fund?

The point about fiddling is a good one. I do wonder how much holding bond funds actually helps with this? There seem to be no shortage of posts from investors wondering if the should own shorter bond funds or CDs while they wait for rates to rise... Well, the people wondering certainly don't think ...
by ogd
Tue Aug 19, 2014 3:34 pm
 
Forum: Investing - Help with Personal Investments
Topic: Why would anyone own a treasury bond fund?
Replies: 20
Views: 1677

Re: Why would anyone own a treasury bond fund?

Whether the fees are "tiny" depends on how much you have in bonds. 10 basis points a year is $500 for a half-million dollar bond portfolio. I would happily put in an extra few minutes of effort for $500. May I suggest that if you had $500K in Treasuries in a 90/10 portfolio, your views on...
by ogd
Tue Aug 19, 2014 2:32 pm
 
Forum: Investing - Help with Personal Investments
Topic: Why would anyone own a treasury bond fund?
Replies: 20
Views: 1677

Re: Why would anyone own a treasury bond fund?

This is a good point. For investors with stock mutual funds, the fund may be more convenient given the settlement issue. Since I own stock ETFs, the individual treasuries are in fact more convenient. Otherwise, when I sell stocks, I have to wait for settlement to move the money to a bond mutual fun...
by ogd
Tue Aug 19, 2014 2:27 pm
 
Forum: Investing - Help with Personal Investments
Topic: Why would anyone own a treasury bond fund?
Replies: 20
Views: 1677

Re: Long term bond tilting?

There is actually one free lunch in bonds, and it's the G Fund. So here is an interesting question: is adding duration by mixing the G Fund with long term Treasuries worth the potential correlation benefits? Ketawa: I wouldn't do it. The free lunch is too great. We're talking 2%+ above short term y...
by ogd
Tue Aug 19, 2014 2:25 pm
 
Forum: Investing - Theory, News & General
Topic: Long term bond tilting?
Replies: 14
Views: 1220

Re: Why would anyone own a treasury bond fund?

1) Because the fees are tiny even compared to the small amount of effort required.
2) Because it removes the temptation to make calls or micromanage.
3) Ask Doc.
by ogd
Tue Aug 19, 2014 1:49 pm
 
Forum: Investing - Help with Personal Investments
Topic: Why would anyone own a treasury bond fund?
Replies: 20
Views: 1677

Re: Europe travel: best card for ATM cash

Schwab is the only debit card I'm aware of that reimburses fees internationally. I use them every time I travel outside the U.S. and it works beautifully. Just make sure you let them know when/where you'll be traveling so they do not lock out your card. You use the card the same way you do at home ...
by ogd
Mon Aug 18, 2014 8:18 pm
 
Forum: Personal Finance (Not Investing)
Topic: Europe travel: best card for ATM cash
Replies: 33
Views: 1886

Re: Bad(?) advice given about Target Date Retirement funds

bertilak, englishgirl: while I too like the LS funds more than the TD funds, there are IMHO two reasons for the TD recommendation. One is that all of this is for investors who prefer simplicity. Whether they're sophisticated or just zen, they don't want to be choosing glide paths. Moreover, the glid...
by ogd
Mon Aug 18, 2014 8:15 pm
 
Forum: Investing - Theory, News & General
Topic: Bad(?) advice given about Target Date Retirement funds
Replies: 72
Views: 4379

Re: Closest index to VTSAX?

A word of caution: Yes, technically the S&P 500 is the most similar to the Total. In the same way that a bicycle is more similar to a Ferrari than is a loaf of bread. There are important significant differences between the 500 and the Total. Given that the S&P is 80% of Total Stock Market, ...
by ogd
Mon Aug 18, 2014 7:54 pm
 
Forum: Investing - Help with Personal Investments
Topic: Closest index to VTSAX?
Replies: 16
Views: 754

Re: Closest index to VTSAX?

The Nasdaq is tech-heavy, and is a good approximation for the tech sector in general. It is by no means a good approximation of the stock market as a whole. One topic Bogle has discussed regarding sector investments is that it may make sense to be heavier in sectors where you don't work and lighter...
by ogd
Mon Aug 18, 2014 7:23 pm
 
Forum: Investing - Help with Personal Investments
Topic: Closest index to VTSAX?
Replies: 16
Views: 754

Re: Closest index to VTSAX?

Which Major index would have the closest results to VTSAX? DJIA, Nasdaq, S and P 500? Since VTSAX essentially "buys the market," I would think that it would very somewhat closely to one of those 3 main indexes, if not all 3? Which would be the closest? Thanks! The S&P is close, missin...
by ogd
Mon Aug 18, 2014 6:58 pm
 
Forum: Investing - Help with Personal Investments
Topic: Closest index to VTSAX?
Replies: 16
Views: 754

Re: Dealing with taxes on Options

With that said, am I missing something here? Is the tax treatment on RSU's different than any other individual stock investment? Seems to me that having a L-T cap gain a few years from now wouldn't be the worst problem to have. No, it isn't different after they vest. In fact, it's so equivalent tha...
by ogd
Mon Aug 18, 2014 6:54 pm
 
Forum: Investing - Help with Personal Investments
Topic: Dealing with taxes on Options
Replies: 10
Views: 424

Re: Is buying two SUVs a sane/good financial move?

Civic spirit', to deliberately expose yourself to more risk of death in a smaller vehicle? Just think how civic minded it would be to ride a motorcycle. I hope you're joking, as to the issue in general. As to the OP specifically, lots of people are bad drivers, perhaps most. Just very few are willi...
by ogd
Mon Aug 18, 2014 12:25 am
 
Forum: Personal Consumer Issues
Topic: Is buying two SUVs a sane/good financial move?
Replies: 63
Views: 3631

Re: Is buying two SUVs a sane/good financial move?

SoCalGal: Please reconsider this. I will echo a few of the posters above and say that getting a big car because you're a bad driver is irresponsible if not downright murderous. The flipside of SUVs is that they can make some otherwise mundane collisions lethal because of the height difference vs a n...
by ogd
Sun Aug 17, 2014 8:43 pm
 
Forum: Personal Consumer Issues
Topic: Is buying two SUVs a sane/good financial move?
Replies: 63
Views: 3631

Re: Why would a passive investor use ETFs?

If you hold Vanguard mutual funds with ETF shares and want to leave Vanguard after large capital gains, you can make a quick phone call and next day you'll have the equivalent ETF shares in your brokerage account, which you can then move over, with no tax event. So you aren't stuck like with other ...
by ogd
Fri Aug 15, 2014 7:01 pm
 
Forum: Investing - Theory, News & General
Topic: Why would a passive investor use ETFs?
Replies: 60
Views: 3648

Re: Why would a passive investor use ETFs?

Well let me say at the outset, I am not here to convince you this is a good strategy. ... (ogd: some numbers follow)... wshang: what you've done here is elaborate on a strategy that bets a big stock rally won't happen within a month. You're saying that this is unlikely, and I could in response say ...
by ogd
Fri Aug 15, 2014 6:20 pm
 
Forum: Investing - Theory, News & General
Topic: Why would a passive investor use ETFs?
Replies: 60
Views: 3648

Re: Why would a passive investor use ETFs?

With Vanguard mutual funds, the strongest advantages of ETFs, tax efficiency and portability, are not present. What do you mean by portability not being present? If you hold Vanguard mutual funds with ETF shares and want to leave Vanguard after large capital gains, you can make a quick phone call a...
by ogd
Fri Aug 15, 2014 6:02 pm
 
Forum: Investing - Theory, News & General
Topic: Why would a passive investor use ETFs?
Replies: 60
Views: 3648

Re: Performance chasing vs. stay-the-course.

So if past performance of performance chasing has been poor, and past performance doesn't necessarily indicate future performance, then maybe the future performance of performance chasing will be good? :confused That's an overly simplistic argument which, after you remove some linguistic similariti...
by ogd
Fri Aug 15, 2014 5:09 pm
 
Forum: Investing - Theory, News & General
Topic: Performance chasing vs. stay-the-course.
Replies: 4
Views: 570

Re: Who sells fresh coffee that is not as strong as Starbuck

No national chains that I'm aware of sell light coffee that's decent. However, Starbucks itself has the blonde roasts in some locations and it's reasonable if I remember well (been a while). Another option is to use the opportunity and sample local chains. Fire up yelp and try something new :beer Ed...
by ogd
Fri Aug 15, 2014 4:26 pm
 
Forum: Personal Consumer Issues
Topic: Who sells fresh coffee that is not as strong as Starbucks?
Replies: 50
Views: 2224

Re: Why would a passive investor use ETFs?

I don't fully understand this. Are you sure it's not an illusion? You could end up paying a higher price days or weeks later than the person who was willing to buy at market price. There are two answers to this, but I'll just answer with the first and most straightforward one. When you are selling ...
by ogd
Fri Aug 15, 2014 2:24 pm
 
Forum: Investing - Theory, News & General
Topic: Why would a passive investor use ETFs?
Replies: 60
Views: 3648

Re: Berkshire Hathaway - Warren Buffett - Anyone own the sto

I am tempted to buy some Berkshire, actually, because it seems to be much like a value-tilted actively managed fund, with at-cost expenses (you get all the profits), which does not pay any dividends or distribute any capital gains . When the stocks owned by Berkshire pay dividends, doesn't Berkshir...
by ogd
Fri Aug 15, 2014 1:17 pm
 
Forum: Investing - Theory, News & General
Topic: Berkshire Hathaway - Warren Buffett - Anyone own the stock?
Replies: 110
Views: 9459

Re: Why would a passive investor use ETFs?

See also the Wiki article: http://www.bogleheads.org/wiki/ETFs_vs_mutual_funds , which covers this in some detail. I too prefer mutual funds because of their simplicity and lack of transaction spreads; ETFs offer no advantages to me to compensate. With Vanguard mutual funds, the strongest advantages...
by ogd
Fri Aug 15, 2014 1:11 pm
 
Forum: Investing - Theory, News & General
Topic: Why would a passive investor use ETFs?
Replies: 60
Views: 3648

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

You definitely mustn't invest in municipal bonds in your tax deferred aaccount, which defeats their purpose. It's such a bad ideatthat usually they're not offered at all. ..................... Agreed. And that was never my intent. Ah good. It just seemed that the discussion had drifted in that dire...
by ogd
Fri Aug 15, 2014 1:04 pm
 
Forum: Investing - Theory, News & General
Topic: Focus more on Tax-Exempt in Taxable Account?
Replies: 16
Views: 1389

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

You definitely mustn't invest in municipal bonds in your tax deferred aaccount, which defeats their purpose. It's such a bad ideatthat usually they're not offered at all. Use Total Bond and the remaining tax-advantaged space to rebalance.
by ogd
Fri Aug 15, 2014 12:11 am
 
Forum: Investing - Theory, News & General
Topic: Focus more on Tax-Exempt in Taxable Account?
Replies: 16
Views: 1389

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

Tax Managed doesn't do much anymore. Total Stock Market is extremely tax efficient already, and more diversified. As for Tax Exempt : these are bonds , not an alternative to stocks. If your asset allocation calls for stocks, you should keep doing Total Stocks. If you need more bonds (e.g. no more ro...
by ogd
Thu Aug 14, 2014 6:56 pm
 
Forum: Investing - Theory, News & General
Topic: Focus more on Tax-Exempt in Taxable Account?
Replies: 16
Views: 1389

Re: Comparing Risk of Bond Barbell and Bullet

I agree with #Cruncher that you probably want to simulate scenarios. One that's missing in his examples is a complete flattening of the yield curve, which is almost its normal state. The barbell should win that one handily. But thinking about it at the higher level (added: like your last post seemed...
by ogd
Thu Aug 14, 2014 1:47 pm
 
Forum: Investing - Help with Personal Investments
Topic: Comparing Risk of Bond Barbell and Bullet
Replies: 32
Views: 1808

Re: Expense ratios as tax rates

Gene: I'm not 100% sure, but I believe you're not deferring capital gains taxes. This is one of their biggest advantages and it can reduce the annualized tax rates by half over the long term. As for thinking of them as such, I'd say that fees are far worse. First off, they're avoidable, whereas taxe...
by ogd
Thu Aug 14, 2014 1:38 pm
 
Forum: Investing - Theory, News & General
Topic: Expense ratios as tax rates
Replies: 7
Views: 431

Re: A new stock index: companies with happy employees

OTOH, this would inevitably lead to buying high, selling low, as employee happiness would be affected by belt tightening at the company, at what might be precisely the best time to buy.
by ogd
Thu Aug 14, 2014 1:32 pm
 
Forum: Investing - Theory, News & General
Topic: A new stock index: companies with happy employees
Replies: 23
Views: 2069

Re: Bond funds: long term, mid or short?

Lee: the various durations have their advantages and disadvantages, and none is a better deal on its own. However, in a portfolio we have some research indicating that long-term treasuries may be the best fit in a high equity portfolio (such as yours) because they move quite often in opposite way fr...
by ogd
Thu Aug 14, 2014 1:31 pm
 
Forum: Investing - Help with Personal Investments
Topic: Bond funds: long term, mid or short?
Replies: 3
Views: 498

Re: Should I use margin to buy a balanced fund?

berntson: I completely agree! I don't understand how many posts above discuss this in the abstract without talking about the 1.5% obstacle that needs to be overcome somehow (those proposing alternate forms of leverage excluded).
by ogd
Thu Aug 14, 2014 1:24 pm
 
Forum: Investing - Theory, News & General
Topic: Should I use margin to buy a balanced fund?
Replies: 268
Views: 17364

Re: Why is Bank of America so hated?

In fairness to B of A, they provide a lot of services for free and they do have to cover their costs somewhere. Yes, and the disgusting thing is that it ends up being the people who can afford it the least that end up paying for all our free stuff, because they don't know any better. It's a rotten ...
by ogd
Wed Aug 13, 2014 5:30 pm
 
Forum: Personal Finance (Not Investing)
Topic: Why is Bank of America so hated?
Replies: 43
Views: 2349

Re: Why is Bank of America so hated?

In fairness to B of A, they provide a lot of services for free and they do have to cover their costs somewhere. Yes, and the disgusting thing is that it ends up being the people who can afford it the least that end up paying for all our free stuff, because they don't know any better. It's a rotten ...
by ogd
Wed Aug 13, 2014 5:20 pm
 
Forum: Personal Finance (Not Investing)
Topic: Why is Bank of America so hated?
Replies: 43
Views: 2349

Re: Total Market Bond Fund vs Intermediate Term Fund

So I've got a very basic question that this thread has got me thinking about. Often in reading about bonds and how to pick ones that seem similar, there's talk of "it depends on your level of risk" or something equally vague, but I'm still not clear on the type of risk that's being discus...
by ogd
Wed Aug 13, 2014 5:15 pm
 
Forum: Investing - Theory, News & General
Topic: Total Market Bond Fund vs Intermediate Term Fund
Replies: 47
Views: 5778

Re: Why is Bank of America so hated?

Because they're a bunch of nickel-and-diming thieves. For example: charging you for using non-BofA ATMs, in addition to what the ATM itself charges. Are you kidding me? How do you guys put up with that? The decent banks that I know of manage to do this for exactly $0 (the great ones reimburse the AT...
by ogd
Wed Aug 13, 2014 4:55 pm
 
Forum: Personal Finance (Not Investing)
Topic: Why is Bank of America so hated?
Replies: 43
Views: 2349

Re: Treasuries vs CDs/Cash

Thank you all for your answers. I’m learning a lot here. Ok, I understood most of this but could use a little help with this statement from “ogd” “Treasuries have the nice habit of increasing in value during crashes. This helps with the efficiency of a portfolio.” Can someone explain why this happe...
by ogd
Tue Aug 12, 2014 2:56 am
 
Forum: Investing - Help with Personal Investments
Topic: Treasuries vs CDs/Cash
Replies: 13
Views: 1803

Re: Convert an option to LT gain with an RSU vest?

No, it makes no sense. You've lost the things that made the options valuable (time value, tax timing) and hold plain old boring RSUs. If you believe Total Stock Market is a better investment than your employer's stock, and you should, it never makes any sense to hold either vested RSUs or stock resu...
by ogd
Mon Aug 11, 2014 6:10 pm
 
Forum: Personal Finance (Not Investing)
Topic: Convert an option to LT gain with an RSU vest?
Replies: 14
Views: 909

Re: Should I use margin to buy a balanced fund?

Rob: among the assets you're actually using, 0.1% is the risk-free rate. I'm not sure that I follow. I could be mistaken, but the efficient frontier is the mean and variance calculated from performance of assets over a long period. Sure, there was a risk-free rate for each time segment in the sampl...
by ogd
Mon Aug 11, 2014 3:42 pm
 
Forum: Investing - Theory, News & General
Topic: Should I use margin to buy a balanced fund?
Replies: 268
Views: 17364

Re: Does domestic over weighting qualify as active managemen

So Mike himself says (and he might well pop in here to clarify): I don’t have any strong opinion on whether the domestic tilt of the LifeStrategy portfolio (i.e., the fact that the LifeStrategy funds overweight domestic stocks and underweight international stocks relative to their market capitalizat...
by ogd
Mon Aug 11, 2014 2:13 pm
 
Forum: Investing - Theory, News & General
Topic: Does domestic over weighting qualify as active management?
Replies: 26
Views: 1205

Re: Does domestic over weighting qualify as active managemen

Your link doesn't work, but the answer would be no - words have meanings and the meaning of "active management" can't be stretched nearly enough to cover any unchanging domestic / international split, which has nothing to do with opinions and everything to do with you being domestic. It ca...
by ogd
Mon Aug 11, 2014 12:12 pm
 
Forum: Investing - Theory, News & General
Topic: Does domestic over weighting qualify as active management?
Replies: 26
Views: 1205

Re: Maxed Out & Stressed Out

Miba: your conservative self might be very surprised by this: a 25% stocks / 75% bonds allocation is actually less risky, în addition to more rewarding, than 100% bonds. How is that for a starting point?
by ogd
Sun Aug 10, 2014 6:21 pm
 
Forum: Investing - Help with Personal Investments
Topic: Maxed Out & Stressed Out
Replies: 14
Views: 3445

Re: 100% Total Stock Market in Roth Account?

I'm going to dissent and say that one should have at least 20% in bonds or cash, whether Roth or IRA or taxable. Particularly inexperienced investors starting in a bull market. You don't want to end up in the "sworn off stocks forever" refugee camp, I hear the conditions over there are ter...
by ogd
Sun Aug 10, 2014 6:13 pm
 
Forum: Investing - Help with Personal Investments
Topic: 100% Total Stock Market in Roth Account?
Replies: 7
Views: 797

Re: Should I use margin to buy a balanced fund?

Rob: among the assets you're actually using, 0.1% is the risk-free rate. Outside the bond market, there exists this 1% free lunch, but you're not sitting at that table. Your bonds are priced based on the 0.1% plus risks, make no mistake about it. There are proposals above to specifically target that...
by ogd
Sun Aug 10, 2014 6:06 pm
 
Forum: Investing - Theory, News & General
Topic: Should I use margin to buy a balanced fund?
Replies: 268
Views: 17364

Re: Treasuries vs CDs/Cash

Several reasons to consider Treasuries: * Most importantly, when you can't access CDs from the account in question. This is a case with a substantial amount of investments, those in 401k. However good CDs are, they're not worth extracting 401k money. * If you prefer the simplicity of a fund - one cl...
by ogd
Sun Aug 10, 2014 6:29 am
 
Forum: Investing - Help with Personal Investments
Topic: Treasuries vs CDs/Cash
Replies: 13
Views: 1803

Re: Seeking "growth of $10,000" charts considering load

Guys, multiplication is commutative. So: Sum x (1-Load) x GrowthOfADollar = Sum x GrowthOfADollar x (1-Load) The first two terms of the 2nd expression are seen readily in the load unadjusted graphs. It doesn't matter that GrowthOfADollar is a complex, compounding expression, the effects are containe...
by ogd
Sun Aug 10, 2014 4:03 am
 
Forum: Investing - Theory, News & General
Topic: Seeking "growth of $10,000" charts considering load
Replies: 11
Views: 939

Re: Bond interest rate & yield - dumb question

ValueThinker: the SEC yield is the equivalent of a fund YtM abroad. There might be slight differences in the required calculation, but that's the gist of it. siamond: yes, the yield of a Treasury fund should closely match the point corresponding to its duration on the Treasury yield curve. This isn'...
by ogd
Sat Aug 09, 2014 3:55 pm
 
Forum: Investing - Theory, News & General
Topic: Bond interest rate & yield - dumb question
Replies: 4
Views: 729

Re: Going 60+% international? (US resident)

Here is why I'm confused. The currency-risk argument usually proceeds on the assumption that the US dollar has none of the "currency risk" that US investors want to avoid. Maybe that would be true if the value of the US dollar was tied to gold or some other sort of commodity. But actual d...
by ogd
Sat Aug 09, 2014 3:31 pm
 
Forum: Investing - Theory, News & General
Topic: Going 60+% international? (US resident)
Replies: 83
Views: 5878
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