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Re: Risk Questionnaires: How they work?

One way to do it might be to take a large group of investors and survey them. The investors would have to already have asset allocations that they were comfortable with along with known goals (retirement, college, legacy, …) and known time frames (next year, 5 years, 10 years, …). Then the survey c...
by ourbrooks
Mon Mar 30, 2015 8:34 pm
 
Forum: Investing - Theory, News & General
Topic: Risk Questionnaires: How they work?
Replies: 23
Views: 1314

Re: Bonds with Sinking fund = rising interest rate protectio

Most sinking fund provisions specify purchasing the bonds at either market price or at par, whichever is lower. Now, when bond prices are above par, most of the purchases are likely to be at par. It is my vague understanding that when redemptions take place at par that the bond issuers choose the bo...
by ourbrooks
Mon Mar 30, 2015 7:30 pm
 
Forum: Investing - Theory, News & General
Topic: Bonds with Sinking fund = rising interest rate protection?
Replies: 3
Views: 353

Re: Variable spending strategies paper by Pfau

So let me re-assert my previous claim: the most spendable money for my hypothetical couple would be from constant dollar withdrawals. Yes, in theory, variable withdrawal schemes would permit higher total dollar withdrawals. In practice, though, that won't happen. To reduce volatility, the couple mus...
by ourbrooks
Tue Mar 24, 2015 5:03 pm
 
Forum: Personal Finance (Not Investing)
Topic: Variable spending strategies paper by Pfau
Replies: 32
Views: 3124

Re: Variable spending strategies paper by Pfau

Sigh. I had hoped for a lot better. What this article and others neglect is to provide any measure of the year to year volatility in spending. In a bad year, they need all of their investment returns to cover their medical care expenses, taxes, insurance, basic food expenses and utilities. What cou...
by ourbrooks
Mon Mar 23, 2015 6:27 pm
 
Forum: Personal Finance (Not Investing)
Topic: Variable spending strategies paper by Pfau
Replies: 32
Views: 3124

Re: Variable spending strategies paper by Pfau

Sigh. I had hoped for a lot better. What this article and others neglect is to provide any measure of the year to year volatility in spending. It's all well and good to assume that if they have extra money people will find something to spend it on, but that's only true to a very limited extent for p...
by ourbrooks
Sun Mar 22, 2015 8:04 pm
 
Forum: Personal Finance (Not Investing)
Topic: Variable spending strategies paper by Pfau
Replies: 32
Views: 3124

Re: Cryptocurrency

You don't really need to use crypto currencies to achieve nearly all of the benefits of crypto currencies for transferring money. The Automated Clearing House (ACH) system is a digital currency which is quickly converted from/to dollars at each end. Using ACH, no physical currency is ever moved arou...
by ourbrooks
Fri Mar 20, 2015 5:27 pm
 
Forum: Personal Finance (Not Investing)
Topic: Cryptocurrency
Replies: 8
Views: 960

Re: The Most Likely Portfolio Peril — Inflation or Deflation

You might want to choose a different country for comparison than Germany; it's the second most frequent destination for immigrants after the U.S. Relative to the native population, it has a higher rate. The large number of immigrants has been a cause of social friction recently. The amount of immigr...
by ourbrooks
Fri Mar 20, 2015 1:27 pm
 
Forum: Investing - Theory, News & General
Topic: The Most Likely Portfolio Peril — Inflation or Deflation?
Replies: 40
Views: 3787

Re: Who's buying Oil stocks?

Tillerson (Exxon CEO) thinks prices will stay low for two years. I'd be more inclined to call that a "short period" rather than an "extended period" and Warren Buffett often touts the advantages of holding investments for the long term. I'd be reluctant to conclude that Warren Bu...
by ourbrooks
Wed Mar 18, 2015 8:59 pm
 
Forum: Investing - Help with Personal Investments
Topic: Who's buying Oil stocks?
Replies: 106
Views: 11439

Re: Market-timing an SPIA purchase

SPIA payouts are heavily dependent on age. An approximate formula for the payout percentage is 1/remaining-life-expectancy + 10-year-TBill rate. For someone age 65, that works out to 1/19.4 + 1.91% = 6.99%, fairly close to what immediateannuities.com is paying. As you get older and remaining life ex...
by ourbrooks
Wed Mar 18, 2015 8:41 pm
 
Forum: Personal Finance (Not Investing)
Topic: Market-timing an SPIA purchase
Replies: 18
Views: 1655

Re: Retirement Withdrawals

What I'd like to spend has nothing to do with it. I can't tell my Medicare Advantage plan that I'm cutting my spending by 23% without losing important benefits. I can't tell the city I'm cutting my taxes by 23% either. So the real prerequisites for VPW are: 1. Non-investment income sources that cove...
by ourbrooks
Sun Mar 08, 2015 9:28 pm
 
Forum: Investing - Theory, News & General
Topic: Retirement Withdrawals
Replies: 16
Views: 2022

Re: 3 D Printing

Thanks, I'm going to use it to make a plug from which I'll pull a mold. The mold will be used to make carbon fiber parts for a business I'm in. Right now we make the molds from plugs we build up by hand. That takes awhile, and I thought the 3D printer might cut down on the time required to make a p...
by ourbrooks
Sun Mar 08, 2015 8:32 pm
 
Forum: Personal Consumer Issues
Topic: 3 D Printing
Replies: 25
Views: 1437

Re: Retirement Withdrawals

I've looked at VPW and decided it doesn't fit my needs at all, but, perhaps, I'm not interpreting it correctly. Suppose that I started retirement in 2007 with a 60/40 portfolio. That year, I'd withdraw 4.8%. The next year, the stock market dropped 39% so my overall portfolio dropped by 23%. In 2008,...
by ourbrooks
Sun Mar 08, 2015 7:55 pm
 
Forum: Investing - Theory, News & General
Topic: Retirement Withdrawals
Replies: 16
Views: 2022

Re: 3 D Printing

If you want to design your own parts, learning 3D CAD software will be the hard part. Designing a part for actual manufacturing is much harder than producing a picture of a 3D part. Surfaces have to line up exactly and not just look like they line up, etc. Even simple things can be really hard to do...
by ourbrooks
Sun Mar 08, 2015 6:44 pm
 
Forum: Personal Consumer Issues
Topic: 3 D Printing
Replies: 25
Views: 1437

Re: How is Your Pension Counted when Calculating Net Worth.

Suppose you were a member of a religious order and had taken a vow of poverty in exchange for the church providing your support for life, including after you retire. After looking at your records, you discover that the church will be providing you with about $30,000 a year in retirement, if you coun...
by ourbrooks
Sun Mar 08, 2015 12:22 pm
 
Forum: Personal Finance (Not Investing)
Topic: How is Your Pension Counted when Calculating Net Worth.
Replies: 40
Views: 2860

Re: Backpedaling: Rising Equity Allocation During Retiremen

What there seems to be darn little of is studies like Hannes Schwandt, 2014, Wealth Shocks and Health Outcomes: Evidence from Stock Market Fluctuations . Despite the scorn sometimes expressed for "volatility as risk," this paper suggests that volatility might literally be hazardous to hea...
by ourbrooks
Fri Mar 06, 2015 4:37 pm
 
Forum: Investing - Theory, News & General
Topic: Backpedaling: Rising Equity Allocation During Retirement
Replies: 38
Views: 3688

Re: Backpedaling: Rising Equity Allocation During Retiremen

Well, if Pfau and Kitches have backpedaled, it's not by much. Here's what they say in their March, 2015 JFP article: •When retirements begin in overvalued market environments (which reflected the situation for new retirees in 2015), an accelerated rising equity glide path shows potential to provide...
by ourbrooks
Thu Mar 05, 2015 9:06 pm
 
Forum: Investing - Theory, News & General
Topic: Backpedaling: Rising Equity Allocation During Retirement
Replies: 38
Views: 3688

Re: Backpedaling: Rising Equity Allocation During Retiremen

Well, if Pfau and Kitches have backpedaled, it's not by much. Here's what they say in their March, 2015 JFP article: •When retirements begin in overvalued market environments (which reflected the situation for new retirees in 2015), an accelerated rising equity glide path shows potential to provide ...
by ourbrooks
Thu Mar 05, 2015 5:07 pm
 
Forum: Investing - Theory, News & General
Topic: Backpedaling: Rising Equity Allocation During Retirement
Replies: 38
Views: 3688

Re: Help for a relative

If she doesn't care about a bequest, then the best option might be to use the IRA money to purchase an inflation adjusted Single Premium Immediate Annuity. The payments will last as long as she does, no matter how long she lives. If the purchase is done from within the IRA, the taxes will be due on ...
by ourbrooks
Sun Mar 01, 2015 7:07 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help for a relative
Replies: 4
Views: 497

Re: Oil ETF?

Well, if you want to take on more risk, why just do it with wimpy things like sector ETFs? If you're really serious about investing in oil, why not buy into a joint venture drilling an oil well? If the well is successful, for your one time investment, you own a share in all of the oil that comes out...
by ourbrooks
Fri Feb 27, 2015 9:16 pm
 
Forum: Investing - Theory, News & General
Topic: Oil ETF?
Replies: 9
Views: 792

Re: Oil ETF?

Search for the other threads which have discussed OIL; in the past, it has not tracked the price of oil very well. Why do you think OIL or any other energy related ETF is a good investment now? Everyone can read the same web sites you read. If a lot of people thought energy stocks were a good long t...
by ourbrooks
Fri Feb 27, 2015 4:24 pm
 
Forum: Investing - Theory, News & General
Topic: Oil ETF?
Replies: 9
Views: 792

Re: Immediate Pension Benefit Offering

I'm surprised that none of the actuaries who read this forum have piped up yet, but assuming a single age for an annuity can substantially undervalue an annuity; death rates are not evenly distributed around the median. The correct approach is to weight each payment by the probability of receiving i...
by ourbrooks
Fri Feb 27, 2015 4:15 pm
 
Forum: Investing - Help with Personal Investments
Topic: Immediate Pension Benefit Offering
Replies: 8
Views: 1151

Re: Safe Withdrawal Rate as it relates to Size of Portfolio

Just to preempt any confusion: The 4% rule comes from a study that showed if one withdrew 4% of his portfolio in his first year of retirement, then continued to withdraw this dollar amount adjusted for inflation in subsequent years, he would not outlive his money in 95% of 30-year historical scenar...
by ourbrooks
Thu Feb 26, 2015 4:37 pm
 
Forum: Investing - Theory, News & General
Topic: Safe Withdrawal Rate as it relates to Size of Portfolio
Replies: 25
Views: 2833

Re: Ideas of where to relocate

Larado, Uvalde or San Angelo, Texas. They're all "near" Big Bend National Park, using the Texas definition of "near."
by ourbrooks
Thu Feb 26, 2015 4:33 pm
 
Forum: Personal Consumer Issues
Topic: Ideas of where to relocate
Replies: 32
Views: 2596

Re: Is there a way to provide for inflation ?

You can certainly withdraw from an investment account each year to compensate for the effects of inflation, keeping in mind that every year you will be withdrawing more money. A better scheme is periodically, say, every five years, buy another SPIA whose payments would make up for the loss in purcha...
by ourbrooks
Wed Feb 25, 2015 7:43 pm
 
Forum: Investing - Help with Personal Investments
Topic: Is there a way to provide for inflation ?
Replies: 22
Views: 1774

Re: Questions about portfolio and TIAA-CREF, old and new

One thing to be aware of: When you deposit any money into TIAA traditional, you can only get out it as some type of annuity. You cannot roll it over to an IRA or to a Vanguard 401(k), or even to other CREF funds. Ralph Hi Ralph, Thanks for your reply. I am aware of this, and my thoughts were: If I'...
by ourbrooks
Wed Feb 25, 2015 6:07 pm
 
Forum: Investing - Help with Personal Investments
Topic: Questions about portfolio and TIAA-CREF, old and new
Replies: 13
Views: 1008

Re: Arguments for and against FSBO for house?

In most states, the seller pays the commissions of both the seller's agent and the buyer's. That's why they claim a buyer's agent is "free" for the buyer. Nowadays, commissions are negotiable. That being said, most people end up paying the full 3% commission to the buyer's agent. You want ...
by ourbrooks
Tue Feb 24, 2015 7:51 pm
 
Forum: Personal Finance (Not Investing)
Topic: Arguments for and against FSBO for house?
Replies: 14
Views: 1251

Re: What to do with Aunt's house

Depression can have other causes than senile dementia. If her depression can be treated, she may be perfectly capable of living in her home with minimum and affordable support. Do check that she's being treated by a psychiatrist or geriatrician who is knowledgeable about psychiatric medications in t...
by ourbrooks
Sat Feb 21, 2015 5:13 pm
 
Forum: Personal Finance (Not Investing)
Topic: What to do with Aunt's house
Replies: 26
Views: 1563

Re: Going to Austin, TX in March. What should we be doing?

Torchy's Tacos. Gingerbread pancakes at Magnolia's. Tour the Capitol. Eat at Chuy's. Visit Mt. Bonnell. If you're there during SXSW however ... abandon all hope and instead explore the hill country. If you have time take a daytrip to Shiner (brewery tour) then Lockhart (Black's). I'm honestly not o...
by ourbrooks
Sat Feb 21, 2015 4:42 pm
 
Forum: Personal Consumer Issues
Topic: Going to Austin, TX in March. What should we be doing?
Replies: 24
Views: 1421

Re: Factoring lump-sum pension into AA

You should only figure into your asset allocation assets that you actually have on hand.
Wait until August, 2045 until you receive the cash; then use it to buy stocks/bonds in proportion to your desired asset allocation.
by ourbrooks
Fri Feb 20, 2015 5:39 pm
 
Forum: Investing - Help with Personal Investments
Topic: Factoring lump-sum pension into AA
Replies: 3
Views: 255

Re: What to do with Aunt's house

I don't understand your aunt's physical situation. Could she get out of bed, walk, do some chores if she had physical therapy? Is she afraid that if she gets out of bed she'll fall? I don't understand her physical situation either. I think if she had some therapy she could do more things but she is...
by ourbrooks
Fri Feb 20, 2015 5:33 pm
 
Forum: Personal Finance (Not Investing)
Topic: What to do with Aunt's house
Replies: 26
Views: 1563

Re: Projecting “Increasing Withdrawal Rates” and not SWR

1. Consider some scenarios which replace bonds with SPIAs. Wade Pfau argues that in low interest rate environments, this will yield better results. 2. What about irregular large expenses, such as new cars or new roofs? A common way to model these is as annual "savings." The problem is that...
by ourbrooks
Mon Feb 16, 2015 7:43 pm
 
Forum: Investing - Theory, News & General
Topic: Projecting “Increasing Withdrawal Rates” and not SWR
Replies: 35
Views: 2666

Re: Pfau: Four Risks of Retirement Income

In an earlier paper, Wade Pfau did consider inflation adjusted SPIAs. Interestingly, they weren't superior to fixed payment SPIAs. How could that be? Well, the role of SPIAs in a stock/SPIA approach is to use the SPIA income for expenses early on, while the equity portion grows. It doesn't really ma...
by ourbrooks
Mon Feb 16, 2015 6:13 pm
 
Forum: Investing - Theory, News & General
Topic: Pfau: Four Risks of Retirement Income
Replies: 31
Views: 4450

Re: finding a buyer for private equity - avoiding commission

I'm sure someone is out there, but I don't really know how to go about finding them (perhaps make a website where people can contact me, or post an ad?) guess my question is, how can I do this? It seems tricky to find people who are interested in this company. I also don't want to attract too much ...
by ourbrooks
Sat Feb 14, 2015 1:35 pm
 
Forum: Investing - Help with Personal Investments
Topic: finding a buyer for private equity - avoiding commissions
Replies: 21
Views: 1393

Re: Projecting “Increasing Withdrawal Rates” and not SWR

I think it's perfectly okay to do a detailed plan, down to the monthly level in retirement. Then, do a couple more detailed plans, with different assumptions. This will let you spot at least the major factors regarding your financial situation. In the OP's case, the detailed planning has worked perf...
by ourbrooks
Sat Feb 14, 2015 1:21 pm
 
Forum: Investing - Theory, News & General
Topic: Projecting “Increasing Withdrawal Rates” and not SWR
Replies: 35
Views: 2666

Re: talk me out of it - investing in oil

I absolutely agree that net crude imports, even excluding Canada, are more than the maximum draw rate of the SPR. My point is, that the SPR was never intended to cope with a complete or, even a substantial, block of imports. It was intended to cope with drops of the size produced during the Arab oil...
by ourbrooks
Fri Feb 13, 2015 8:01 pm
 
Forum: Investing - Theory, News & General
Topic: talk me out of it - investing in oil
Replies: 50
Views: 4929

Re: Hypothetical chance of bond or stock index going to zero

Well, suppose the current trend for companies to go private continues, to the point where only new companies issue publically traded stock and S&P quits issuing the index. Private companies might still want to issue bonds, though. This is not such a far fetched scenario; in 1998 the Wilshire 500...
by ourbrooks
Fri Feb 13, 2015 7:09 pm
 
Forum: Investing - Theory, News & General
Topic: Hypothetical chance of bond or stock index going to zero
Replies: 8
Views: 807

Re: talk me out of it - investing in oil

The policy makers are still correct and we still need a strategic petroleum reserve. The U.S. now produces about 9 million barrels per day, the largest of any country. The U.S. now consumes about 19 million barrels per day, also the largest of any country. Energy self sufficiency? No where close. It...
by ourbrooks
Fri Feb 13, 2015 6:08 pm
 
Forum: Investing - Theory, News & General
Topic: talk me out of it - investing in oil
Replies: 50
Views: 4929

Re: Before building your house, what should you haven known/

Make friends with a builder and follow her/him around a day a week for long enough to see at least one job from start to finish. They're more likely to agree if (a) you promise to always buy lunch (b) say that you need more exercise and offer to lift and carry things and (c) tell them (truthfully in...
by ourbrooks
Fri Feb 13, 2015 5:26 pm
 
Forum: Personal Consumer Issues
Topic: Before building your house, what should you haven known/read
Replies: 14
Views: 1258

Re: Social Security as a bond?

Well, the Social Security retirement benefit is really two inflation adjusted annuities. One annuity is the spousal benefit; it pays as long as the primary beneficiary is alive, so, even though it's paid to the spouse, to determine its value, you need to use the life expectancy of the primary benefi...
by ourbrooks
Thu Feb 12, 2015 6:28 pm
 
Forum: Investing - Theory, News & General
Topic: Social Security as a bond?
Replies: 47
Views: 3294

Re: When 60/40 just isn't appropriate

I, of course, am using a 0/0 portfolio for my core expenses. No stocks, no bonds. I can't tell my health insurer that I'm not making my full payment this year because interest rates rose and my bonds dropped. It's LMP for me! For my discretionary expenses, I'm using "age in stocks" and exp...
by ourbrooks
Mon Feb 09, 2015 8:49 pm
 
Forum: Investing - Theory, News & General
Topic: When 60/40 just isn't appropriate
Replies: 127
Views: 13524

Re: Worth Upgrading to LED Lighting?

Here's a variant on texasdiver's approach: The incandescent BR30 bulbs we replaced had a 2,000 hour average lifetime and they were relatively new. The incandescent uses 65 watts; over its life time it'll use 130 kwh@12.56/kwh = $16.33 The LEDs we replaced them with use 8.5 watts; over the same 2,000...
by ourbrooks
Sun Feb 08, 2015 5:48 pm
 
Forum: Personal Consumer Issues
Topic: Worth Upgrading to LED Lighting?
Replies: 45
Views: 3592

Re: In retirement: S&P500 versus Total Stock Market

Trying to live off of the dividends is not as good a strategy as it used to be, because many companies now do share buybacks instead of dividends. If you want to continue to focus on dividends, the Vanguard High Dividend Yield Index Fund might be worth looking at. It has almost 400 stocks, so it's n...
by ourbrooks
Sat Feb 07, 2015 1:17 pm
 
Forum: Investing - Help with Personal Investments
Topic: In retirement: S&P500 versus Total Stock Market
Replies: 2
Views: 899

Re: Asymmetric Rebalancing in Withdrawal Phase

Actually, there's a study by Wade Pfau in which he looks at market timing based on whether or not the CAPE is above it's long term average. His result was that it works and delivers about 1% more per year than buy and hold. Only one problem, it's unlikely that any retiree would actually use it, beca...
by ourbrooks
Sat Feb 07, 2015 12:37 pm
 
Forum: Investing - Theory, News & General
Topic: Asymmetric Rebalancing in Withdrawal Phase
Replies: 27
Views: 1894

Re: Best laptop under $1000

What probably matters more than screen size is screen resolution; you can get a 15" with 1368X768 resolution or 1920x1080. You'll be able to fit much more text on the screen with the later than the former; alternately, text which is the same size will appear sharper and easier to read on the hi...
by ourbrooks
Sat Feb 07, 2015 11:49 am
 
Forum: Personal Consumer Issues
Topic: Best laptop under $1000
Replies: 41
Views: 4125

Re: Attic Insulation: benefit of only adding to part?

You might want to consider foam insulation for the sloping part. Per inch, the R value is double that of fiber insulation, but, as important, it seals off air movement. It's also two or three times as expensive as fiber insulation but it might be worth it for the draft reduction if not for the actua...
by ourbrooks
Fri Feb 06, 2015 8:55 pm
 
Forum: Personal Consumer Issues
Topic: Attic Insulation: benefit of only adding to part?
Replies: 10
Views: 1117

Re: Foreign to energy

Oh, one more thing: You can't "sell Foreign and buy energy." The largest Foreign stocks ARE energy stocks, companies like BP and Shell and Gazprom and PetroChina. Of the 10 largest publicly traded energy companies, only two, Exxon and Chevron are U.S. based. In fact, it's the drop in the s...
by ourbrooks
Fri Feb 06, 2015 8:43 pm
 
Forum: Investing - Help with Personal Investments
Topic: Foreign to energy
Replies: 10
Views: 739

Re: Foreign to energy

No, you should have energy anyways, and you shouldn't be worrying about it, especially if it is 1.25% of your portfolio. Besides there is energy in VXUS and VTI and so forth... http://finance.yahoo.com/q/hl?s=VXUS+Holdings Yep, energy in the top 10 holdings, you're covered! :sharebeer In fact, if e...
by ourbrooks
Fri Feb 06, 2015 8:37 pm
 
Forum: Investing - Help with Personal Investments
Topic: Foreign to energy
Replies: 10
Views: 739

Re: How much is a safe car worth?

To go back to the original topic of the thread, here are the used cars recommended by the IIHS: http://www.iihs.org/iihs/news/desktopnews/iihs-issues-recommendations-on-used-vehicles-for-teens-after-research-finds-many-arent-driving-the-safest-ones Certainly, it would be better to buy one of the car...
by ourbrooks
Sun Feb 01, 2015 7:56 pm
 
Forum: Personal Consumer Issues
Topic: How much is a safe car worth?
Replies: 170
Views: 9201

Re: How much is a safe car worth?

What you could do to increase your safety by a bigger amount than any car decision is to let your wife drive, or, better still, let her mother or your mother drive. Men 21-25 have three times the fatality rate as women the same age and women 21-25 have twice the fatality rate of women 61-65! Here's ...
by ourbrooks
Sat Jan 31, 2015 10:15 pm
 
Forum: Personal Consumer Issues
Topic: How much is a safe car worth?
Replies: 170
Views: 9201

Re: question about investing in oil, USO

Rather than USO, a better bet would be investing in a Master Limited Partnership (MLP) or royalty trust that's engaged in producing oil or gas. When the price of oil goes up, the amount of money these companies receive more money for the oil and gas they pump out of the ground. Be careful which one ...
by ourbrooks
Sat Jan 31, 2015 8:13 pm
 
Forum: Investing - Help with Personal Investments
Topic: question about investing in oil, USO
Replies: 15
Views: 1153
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