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by ourbrooks
Sat May 23, 2015 9:36 pm
Forum: Investing - Theory, News & General
Topic: Land Values, Tax Deferral, Wealth Retention and Income
Replies: 7
Views: 658

Re: Land Values, Tax Deferral, Wealth Retention and Income

I'm still confused about the situation being described. I can think of several common cases: 1. The parents die and the children don't want to farm. The children get a stepped up basis and don't pay taxes. 2. The parents want to stay on the land. They may rent it out instead of farming it, but they'...
by ourbrooks
Sat May 23, 2015 8:21 pm
Forum: Personal Consumer Issues
Topic: Most effective wifi upgrade for range/speed?
Replies: 17
Views: 969

Re: Most effective wifi upgrade for range/speed?

Moving from 200 MBps power line to 500 MBps power line improved the reliability as well as the speed. When I was running a lot of power line, the thing that seemed to cause complete dropout was a central air conditioner coming on. It was a very high efficiency unit and, like many inverters, they can...
by ourbrooks
Sat May 23, 2015 6:26 pm
Forum: Personal Consumer Issues
Topic: Most effective wifi upgrade for range/speed?
Replies: 17
Views: 969

Re: Most effective wifi upgrade for range/speed?

What technology level is your powerline equipment? The first generation was 200 mbit; the latest is 1200. It's highly unlikely, of course, that you'll get 1200MBps, but, even if you only get 10% of that, it'll be enough for video streaming; 10% of 200 MBps isn't.
by ourbrooks
Sat May 23, 2015 5:01 pm
Forum: Investing - Theory, News & General
Topic: Land Values, Tax Deferral, Wealth Retention and Income
Replies: 7
Views: 658

Re: Land Values, Tax Deferral, Wealth Retention and Income

Deferring taxes isn't even an issue unless you've actually made a profit on the land. Farmland is valuable only to the extent that farmers are able to profitably grow crops on it. Food prices have been falling over a long period of time so farmers need to be more productive to make a profit. How muc...
by ourbrooks
Tue May 19, 2015 6:21 pm
Forum: Investing - Help with Personal Investments
Topic: My Portfolio - Am I a too risk averse?
Replies: 14
Views: 1496

Re: My Portfolio - Am I a too risk averse?

Everyone says "determine your risk tolerance." I have trouble with that; my risk tolerance for not having enough to eat at age 90 is zero. If being in low volatility investments, like bonds, means that I won't have enough to eat, then my risk tolerance for low risk is zero. Even at a histo...
by ourbrooks
Wed May 13, 2015 8:35 pm
Forum: Personal Consumer Issues
Topic: Home Internet - Cat 5e or Cat 6
Replies: 49
Views: 3098

Re: Home Internet - Cat 5e or Cat 6

Smurf tubing, a.k.a. as flexible conduit is the answer but you may have to negotiate a bit for it. You can run Cat 5 through it now and, later, replace it with something else.
by ourbrooks
Wed May 13, 2015 8:30 pm
Forum: Personal Finance (Not Investing)
Topic: Texas Tuition Promise Fund
Replies: 4
Views: 477

Re: Texas Tuition Promise Fund

The Texas Tuition Promise Fund covers only tuition and fees. Tuition and fees are about 35% of costs at a Texas state institution so you'll have to save some other way to cover the full cost. Legally speaking, TTPF is a 529 plan but there's also the Texas College Savings Plan which can be used for n...
by ourbrooks
Tue May 12, 2015 4:54 pm
Forum: Personal Finance (Not Investing)
Topic: Should we purchase home without permits?
Replies: 70
Views: 4174

Re: Should we purchase home without permits?

Leave in all of the inspections. Add additional ones if you can think of any which might be worthwhile. You're in a perfect positions to get a price reduction, depending on the laws in your local area. Where I live, sellers are required to disclose any known defects in a property. Sellers can be ver...
by ourbrooks
Sun May 03, 2015 7:59 pm
Forum: Investing - Theory, News & General
Topic: Pfau, Kitces, & Target-Date Fund glide paths
Replies: 29
Views: 2641

Re: Pfau, Kitces, & Target-Date Fund glide paths

On Wade's paper: I suggest these results do not say what most seem to think they say. First, given their "market expectations data" their 4% and 5% withdrawal rates are so high that the failure rates are such that all allocations are crazy bad. The best is a success rate (for 4%, worse of...
by ourbrooks
Sun May 03, 2015 12:12 pm
Forum: Personal Consumer Issues
Topic: Buying ML350 - how old a car to get?
Replies: 6
Views: 634

Re: Buying ML350 - how old a car to get?

The ML350 is made in plants in the U.S., India and Indonesia. The situation may have changed, but when production started in 2002, they had horrible quality problems. The source of the problems was not the workers in the plant, but the suppliers. Most of them didn't have plants in the U.S. but shipp...
by ourbrooks
Sun May 03, 2015 11:46 am
Forum: Investing - Help with Personal Investments
Topic: Is there any stable value funds that returns ~3% outside of a 401k?
Replies: 12
Views: 1748

Re: Is there any stable value funds that returns ~3% outside of a 401k?

You are not likely to find many. A common mechanism for stable value funds is to buy long term bonds and hold them to maturity. They also buy insurance against drop in the value of the principle. The rate they pass on to investors is what's left after paying for the insurance and, of course, taking ...
by ourbrooks
Mon Apr 27, 2015 5:24 pm
Forum: Investing - Theory, News & General
Topic: Pfau, Kitces, & Target-Date Fund glide paths
Replies: 29
Views: 2641

Re: Pfau, Kitces, & Target-Date Fund glide paths

An alternate view of the Pfau/Kitches approach is that it is a "bonds first" spending strategy. The real risk to portfolio longevity is large negative returns early in retirement; negative returns mean that you will be spending money which would otherwise provide future income. That's what...
by ourbrooks
Fri Apr 24, 2015 3:13 pm
Forum: Investing - Help with Personal Investments
Topic: Recommended stock to bond ratio??
Replies: 15
Views: 1718

Re: Recommended stock to bond ratio??

First, those Morningstar charts are nonsense. If go to the Morningstar site and read the actual article, you discover that there's really nothing behind the curves. They're just things that "retirees might want to consider." Get the latest issue of the Journal of the American Association o...
by ourbrooks
Fri Apr 24, 2015 2:56 pm
Forum: Investing - Theory, News & General
Topic: Who follows Age in Bonds
Replies: 62
Views: 4730

Re: Who follows Age in Bonds

Get yourself a copy of the latest American Association of Individual Investors Journal. It has two articles that look at retirement withdrawals with two different analyses. Both articles included "age in bonds." In both articles, "age in bonds" was better than all cash or all bon...
by ourbrooks
Tue Apr 21, 2015 5:16 pm
Forum: Investing - Theory, News & General
Topic: Retirees: What is your SWR in retirement?
Replies: 45
Views: 4084

Re: Retirees: What is your SWR in retirement?

We'll start out at under 2% but every five years there'll be blip which may send the real rate for that year soaring to 5-6%. Why this curious pattern? Well, I've got several fixed pensions whose purchasing power will drop over time. To compensate for this, every five years or so, I plan to purchase...
by ourbrooks
Sat Apr 18, 2015 8:07 pm
Forum: Personal Consumer Issues
Topic: New HVAC
Replies: 21
Views: 1556

Re: New HVAC

The big issue for me would be the reliability of the existing air conditioning unit. If you need to replace an air conditioning unit in the middle of a southern summer, you'll probably have to stay in a motel for a couple of weeks, while you're getting quotes, and you'll have to wait for them to put...
by ourbrooks
Sat Apr 18, 2015 7:58 pm
Forum: Personal Finance (Not Investing)
Topic: Retirement Budgeting
Replies: 9
Views: 1526

Re: Retirement Budgeting

You could, of course, do things the other way around and start out with how much you can afford to spend each year. That's probably the closest you'll come to a hard number. Your largest expenses, travel and rent, are both things you can be very flexible about. Suppose that travel turns out to be mo...
by ourbrooks
Fri Apr 17, 2015 4:09 pm
Forum: Personal Consumer Issues
Topic: Home stereo system conversion to digital
Replies: 27
Views: 1971

Re: Home stereo system conversion to digital

If you only want to listen to your music at one location, consider the following: Android tablet of your choice which supports an external thumb drive, on which you have your digitized music. Alternately, a couple of flash memory cards. There are players which support FLAC as well as MP3. They also ...
by ourbrooks
Thu Apr 16, 2015 6:37 pm
Forum: Personal Consumer Issues
Topic: Proof vinyl has higher music ceiling than mp3?
Replies: 36
Views: 2595

Re: Proof vinyl has higher music ceiling than mp3?

There are actually three different alternatives to consider: 1. Analog vinyl. 2. CDs, normally encoded in a format (.wav) sampled at 44 Khz per channel (22,000 Hz maximum frequency) 3. MP3 encoding MP3 encoding starts with some higher frequency format and then compresses it. The compression is lossy...
by ourbrooks
Wed Apr 15, 2015 8:03 pm
Forum: Investing - Help with Personal Investments
Topic: Count Pension + SS as part of the Bond portion of AA?
Replies: 31
Views: 2210

Re: Count Pension + SS as part of the Bond portion of AA?

If your mom is single, then $20,000 in Social Security has a present value of around $350,000... No it doesn't. If she passes away in the next year, how much does this SS entitlement add to her estate? That's right, ZERO... Here's the definition of present value: In economics, present value, also k...
by ourbrooks
Wed Apr 15, 2015 6:07 pm
Forum: Investing - Help with Personal Investments
Topic: Count Pension + SS as part of the Bond portion of AA?
Replies: 31
Views: 2210

Re: Count Pension + SS as part of the Bond portion of AA?

If your mom is single, then $20,000 in Social Security has a present value of around $350,000. With $300,000 in her IRA, this means to be "age in bonds" overall, she will have to hold $227,500 in stocks in her IRA. In other words, her IRA will have to be 76% stocks. Would she be comfortabl...
by ourbrooks
Wed Apr 15, 2015 5:27 pm
Forum: Personal Finance (Not Investing)
Topic: Inexpensive Smartphone
Replies: 46
Views: 4153

Re: Inexpensive Smartphone

Uh, how about $19.84 for the phone itself? Walmart periodically has the ZTE Zinger phone for that price, including a T Mobile SIM card. It runs Android 4.4 and does Google Maps, etc. but otherwise is a very low end phone. I bought one, made sure it works, and then put it on the shelf as backup in ca...
by ourbrooks
Wed Apr 15, 2015 5:19 pm
Forum: Investing - Theory, News & General
Topic: [retired guy said] terrible crash is coming
Replies: 71
Views: 8616

Re: [retired guy said] terrible crash is coming

The EMH says that the market uses all available information in determining the price of an asset. Nowhere does it say that the "information" be correct, merely that it be believed to be correct by those participating in the market. Suppose you and everyone else who trades stocks hears from...
by ourbrooks
Tue Apr 14, 2015 8:08 pm
Forum: Personal Finance (Not Investing)
Topic: How do you value a pension?
Replies: 18
Views: 1655

Re: How do you valuate a pension?

Actually, there are well known actuarial techniques for computing the present value of a life annuity, which is what a pension is. You don't have to make any assumption about how long the pension will be paid for; instead, the calculation uses mortality tables. Here's a link to a calculator which do...
by ourbrooks
Sun Apr 12, 2015 7:43 pm
Forum: Investing - Help with Personal Investments
Topic: Asset allocation for son who might buy a house in 5 years
Replies: 3
Views: 388

Re: Asset allocation for son who might buy a house in 5 year

Historically, over rolling five years periods, stocks have had a net loss 14% of the time. Unless you are willing to take that risk, I agree with dbr: assets which you expect to spend within five years should not be in stocks, at all.
by ourbrooks
Fri Apr 10, 2015 6:39 pm
Forum: Personal Finance (Not Investing)
Topic: What is Sammy Savers net worth?
Replies: 41
Views: 3740

Re: What is Sammy Savers net worth?

I presume that Sammy is a renter. If he had a home, then you could ask whether the value of the house was part of his net worth. In addition to trading options and buying hedge funds, the other use of net worth numbers would be in divorce proceedings. I do know that future pensions and Social Securi...
by ourbrooks
Fri Apr 10, 2015 4:45 pm
Forum: Personal Finance (Not Investing)
Topic: What is Sammy Savers net worth?
Replies: 41
Views: 3740

Re: What is Sammy Savers net worth?

If Sammy wants to trade options at a brokerage, it's only $500,000. The requirements for trading options at brokerages are defined as follows ( http://www.regulatorycompliance.com/newsletter/2012/jan-2012/WhatIsNetWorth.html ) Liquid Net Worth – In reviewing whether or not a person is suitable to ma...
by ourbrooks
Fri Apr 10, 2015 4:29 pm
Forum: Personal Consumer Issues
Topic: Kitchen upgrade - granite selection help
Replies: 52
Views: 4497

Re: Kitchen upgrade - granite selection help

Let me put in another good word in favor of tile. It costs about 1/4 of what granite costs installed. If you have a negative reaction to tile, based on 4 inch tiles and lots of dirt catching grout joints, you might want to go out and look at some modern tile. You can now get tile up to two feet by t...
by ourbrooks
Sun Apr 05, 2015 8:34 pm
Forum: Investing - Theory, News & General
Topic: Do CPI-Indexed Single-Premium Deferred Annuities exist?
Replies: 27
Views: 2212

Re: Do CPI-Indexed Single-Premium Deferred Annuities exist?

Why not buy an inflation indexed SPIA at retirement to cover your core expenses and invest/spend the rest any way you like? A fundamental issue with withdrawal strategies like Siegel's (or any PMT based method, such as VPW) is that there's large year to year variation in the amount of your withdrawa...
by ourbrooks
Sun Apr 05, 2015 1:14 pm
Forum: Personal Consumer Issues
Topic: smartphones
Replies: 24
Views: 1914

Re: smartphones

Well, there are smartphones and there are smartphones. For $19, you can get a smartphone which runs on the T Mobile network and runs Android 4.4. It's slow and the screen resolution is lousy but it will make and receive phone calls, text using an on screen keyboard and show you where you are using G...
by ourbrooks
Sat Apr 04, 2015 3:00 pm
Forum: Personal Finance (Not Investing)
Topic: Pay Off Mortgage to Save for Bigger House
Replies: 10
Views: 1607

Re: Pay Off Mortgage to Save for Bigger House

It depends on the housing market near you. If the market is very active and you're a buyer and there are other offers, the contingency counts against you. Why should the seller take a risk on the contingency falling through when they could take an offer without contingencies? Also, the interest you ...
by ourbrooks
Sat Apr 04, 2015 2:56 pm
Forum: Personal Consumer Issues
Topic: [how to handle a $100] purchase from Guatemala?
Replies: 24
Views: 1667

Re: [how to handle a $100] purchase from Guatemala?

The US Postal Service offers international money orders for $4.50 for up to $700.
by ourbrooks
Sat Apr 04, 2015 1:06 pm
Forum: Personal Finance (Not Investing)
Topic: Paying for childrens' college
Replies: 121
Views: 8189

Re: Paying for childrens' college

I think the bottom line I would take away is that the student clearly is the most important factor in the outcome, but to state that the school doesn't matter is going too far. The school does matter. If a student is good, generally, he'll do better in a selective school because: - he'll have bette...
by ourbrooks
Sat Apr 04, 2015 12:29 pm
Forum: Investing - Theory, News & General
Topic: Do CPI-Indexed Single-Premium Deferred Annuities exist?
Replies: 27
Views: 2212

Re: Do CPI-Indexed Single-Premium Deferred Annuities exist?

I don't think they exist and they are unlikely to exist in the future. The problem is that they appear to be an unattractive financial proposition. Deferred annuities look really good; for my $120K investment, I get a 34% annual payment. I'm paying relatively little for the insurance. Inflation adju...
by ourbrooks
Sat Apr 04, 2015 11:28 am
Forum: Personal Finance (Not Investing)
Topic: Paying for childrens' college
Replies: 121
Views: 8189

Re: Paying for childrens' college

ktd You need to face up to the very real possibility that the college "experience" you pay for is four years of "relaxation." If you child ends up in, say, the top 25% of his/her high school, then the odds are very, very good that they will receive some form of merit scholarship ...
by ourbrooks
Fri Apr 03, 2015 9:43 pm
Forum: Investing - Help with Personal Investments
Topic: Glide path design
Replies: 27
Views: 1958

Re: Glide path design

Jaysams, Please take to heart the advice often seem on this forum to consider a 50% drop in stock prices. I believe Warren Buffet once wrote "Do not invest in stocks unless you are willing to lose half the money that you have invested in stocks". Larry Swedroe has said that such a loss co...
by ourbrooks
Fri Apr 03, 2015 7:59 pm
Forum: Investing - Theory, News & General
Topic: How to find the true value of a stock
Replies: 17
Views: 1541

Re: How to find the true value of a stock

Why do you want to know? There is no principle, rule or, even, empirical observation that the market price of a stock has to converge on or be anywhere near the asset value.
by ourbrooks
Fri Apr 03, 2015 7:35 pm
Forum: Investing - Help with Personal Investments
Topic: Glide path design
Replies: 27
Views: 1958

Re: Glide path design

Yup, 70/30 in perpetuity. You need to be worried about multiple risks. There's the risk of volatility in the stock market, like the 39% drop in 2008, and there's the risk of running out of money before you die. Suppose that twenty years from now there was a big burst of inflation. Bonds have a lower...
by ourbrooks
Fri Apr 03, 2015 6:59 pm
Forum: Investing - Help with Personal Investments
Topic: Glide path design
Replies: 27
Views: 1958

Re: Glide path design

Some people don't use a glidepath at all; they keep their asset allocation the same throughout retirement. In particular, all of the safe withdrawal rates studies were done with fixed asset allocations. The famous 4% rate is based on a fixed allocation. No one has done any studies on what would be a...
by ourbrooks
Fri Apr 03, 2015 6:51 pm
Forum: Personal Finance (Not Investing)
Topic: Paying for childrens' college
Replies: 121
Views: 8189

Re: Paying for children college

As other posters have pointed out, if your kids are top students, paying for college won't be a problem. if you kids can get into Stanford or Yale, you'll be able to afford to send them there. Stanford has recently announced that tuition is free for students from families making less than $125,000 a...
by ourbrooks
Fri Apr 03, 2015 5:10 pm
Forum: Personal Finance (Not Investing)
Topic: Occasional big expenses after retirement
Replies: 32
Views: 2746

Re: Occasional big expenses after retirement

I'm also interested in this topic and I've done a bit of spreadsheet work. I think the following concept is important: "Saving" out of retirement withdrawals from investment accounts isn't saving at all; you've ALREADY saved the money. What it is is (a) a shift in asset allocation from sto...
by ourbrooks
Wed Apr 01, 2015 6:47 pm
Forum: Investing - Theory, News & General
Topic: Investing in the industry you work in
Replies: 21
Views: 1800

Re: Investing in the industry you work in

If your work involves contact with other companies, be careful about trading based on what you hear from them. It may not be obvious that what they tell you is, in fact, insider information. Also, in addition to government regulation, companies may have their own policies about investing in supplier...
by ourbrooks
Tue Mar 31, 2015 8:32 pm
Forum: Investing - Theory, News & General
Topic: Article on "New Patterns" of Boomer Retirement Spending
Replies: 9
Views: 1687

Re: Article on "New Patterns" of Boomer Retirement Spending

Sounds to me that most of the people in the survey are not at all like Taylor. Taylor's approach would lead to relatively level spending, although perhaps not at exactly 4%. The people mentioned in the study, in contrast, go between extremes. It's hard to imagine that people do this based on a ratio...
by ourbrooks
Mon Mar 30, 2015 8:34 pm
Forum: Investing - Theory, News & General
Topic: Risk Questionnaires: How they work?
Replies: 27
Views: 1881

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 7:30 pm
Forum: Investing - Theory, News & General
Topic: Bonds with Sinking fund = rising interest rate protection?
Replies: 3
Views: 440

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
Tue Mar 24, 2015 5:03 pm
Forum: Personal Finance (Not Investing)
Topic: Variable spending strategies paper by Pfau
Replies: 37
Views: 4218

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
Mon Mar 23, 2015 6:27 pm
Forum: Personal Finance (Not Investing)
Topic: Variable spending strategies paper by Pfau
Replies: 37
Views: 4218

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
Sun Mar 22, 2015 8:04 pm
Forum: Personal Finance (Not Investing)
Topic: Variable spending strategies paper by Pfau
Replies: 37
Views: 4218

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
Fri Mar 20, 2015 5:27 pm
Forum: Personal Finance (Not Investing)
Topic: Cryptocurrency
Replies: 8
Views: 1022

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 1:27 pm
Forum: Investing - Theory, News & General
Topic: The Most Likely Portfolio Peril — Inflation or Deflation?
Replies: 40
Views: 4062

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...

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