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Re: Question about Bond Mutual Funds and High Interest CD's

This may sound flippant, but a bond mutual funds holds..... individual bonds! There is one case where holding an individual treasury bond holds a distinct advantage over a fund--if you are saving for a specific liability with a known amount and date. Most individuals don't really have these types of...
by stlutz
Sat Jan 24, 2015 11:57 pm
 
Forum: Investing - Help with Personal Investments
Topic: Question about Bond Mutual Funds and High Interest CD's
Replies: 13
Views: 729

Re: Bond ETFs at Schwab: SCHZ, SCHO, SCHR, SCHP - how to cho

In terms of the experts we tend to go to on this board, there are really three approaches: Rick Ferri: Total Bond (i.e. SCHZ) William Bernstin: Short Term Treasuries only (i.e. SCHO) Larry Swedroe: Treasuries only but some term risk is also okay (so, some combination of SCHO, SCHR, and SCHP). You ca...
by stlutz
Sat Jan 24, 2015 10:29 pm
 
Forum: Investing - Help with Personal Investments
Topic: Bond ETFs at Schwab: SCHZ, SCHO, SCHR, SCHP - how to choose?
Replies: 5
Views: 413

Re: Help with Merrill Edge Roth Account

Thanks for the post. Instead of meeting with the advisor, your GF should call Vanguard and tell them that she would like to transfer her account over to them and would like to pay as few fees as possible. They will walk her through what she needs to do. At Vanguard, invest in the Life Strategy Moder...
by stlutz
Sat Jan 24, 2015 11:47 am
 
Forum: Personal Finance (Not Investing)
Topic: Help with Merrill Edge Roth Account
Replies: 7
Views: 521

Re: Schwab equivalent to vanguard total world?

Is this one purchase or are you making monthly contributions? If it's the former, you should not fear paying $9 to make a single trade to buy VT at Schwab. On the other hand, if we're talking about $100/mo., then I would just open another account at VG.
by stlutz
Sat Jan 24, 2015 3:36 am
 
Forum: Investing - Help with Personal Investments
Topic: Schwab equivalent to vanguard total world?
Replies: 5
Views: 513

Re: Effect of European Central Bank QE on US bond rates?

So stlutz, if I understood you right you are saying the opposite of what's stated in that article is more likely? We know by now the amount that the ECB is planning on spending. Or is your main point that Fed rate setting trumps everything else? My point is simply that the market moves in response ...
by stlutz
Sat Jan 24, 2015 3:32 am
 
Forum: Investing - Theory, News & General
Topic: Effect of European Central Bank QE on US bond rates?
Replies: 6
Views: 831

Re: Effect of European Central Bank QE on US bond rates?

When the US Fed has done QE, rates have gone up. When they've ended QE, rates have gone down. Given how much rates have dropped in anticipation of European QE, I'm expecting a little bit of a runup in rates. Note that QE is targeting the longer bond maturities. It's actual impact on rates is uncerta...
by stlutz
Fri Jan 23, 2015 2:42 am
 
Forum: Investing - Theory, News & General
Topic: Effect of European Central Bank QE on US bond rates?
Replies: 6
Views: 831

Re: Today's "Low-vol" and yesterday's "high beta"

The Capital Asset Pricing model which claims that high beta stocks should outperform only came around in the 1960s, so that is logical. It wasn't until later that backtesting was done to show that it didn't work in actual practice. I don't know that I few this as being about fads as much as being ab...
by stlutz
Wed Jan 21, 2015 9:15 pm
 
Forum: Investing - Theory, News & General
Topic: Today's "Low-vol" and yesterday's "high beta"
Replies: 5
Views: 612

Re: Help me redo the bond side of my portfolio?

several years ago, to stop paralysis-by-analysis, I picked an asset allocation and simply went with it. This was a good approach. I think the best advice is to continue with this. There is nothing wrong with any of your bond holdings. Low yielding bonds (which included any treasury bond today) work...
by stlutz
Wed Jan 21, 2015 2:11 am
 
Forum: Investing - Help with Personal Investments
Topic: Help me redo the bond side of my portfolio?
Replies: 6
Views: 861

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

Finally, although you may be an accumulator who is dollar cost averaging into bond funds over decades, I am not, and many others on this forum are not either. As a retiree depending on my investment returns to support current and future expenses, there is a big difference between my fixed income co...
by stlutz
Wed Jan 21, 2015 1:57 am
 
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 105
Views: 4703

Re: Poll: What Percent of TIPS in Taxable Account

I currently only hold TIPS through the target retirement fund in my 401K. I have held TIPS funds in taxable in the past.

I would not hold individual TIPS in taxable until 2016 when brokers have to start tracking the cost basis for me.
by stlutz
Tue Jan 20, 2015 7:59 pm
 
Forum: Investing - Theory, News & General
Topic: Poll: What Percent of TIPS in Taxable Account
Replies: 27
Views: 1653

Re: Likelihood of Admiral shares for the Target Retirement F

I think what you may have seen is that one of the underlying funds (Total Bond) uses Admiral Shares while it uses investor shares for the others.

I would think this would change at some point, but I'm just guessing with that.
by stlutz
Tue Jan 20, 2015 6:18 pm
 
Forum: Investing - Help with Personal Investments
Topic: Likelihood of Admiral shares for the Target Retirement Funds
Replies: 20
Views: 2188

Re: Vanguard direct purchase of bond question

as anyone bought/sold Treasuries at Vanguard directly? Can you both buy AND sell with no commission, and without talking to the bond desk? Vanguard, Fidelity, and E*Trade are the brokers who will allow buys/sells w/o commission. I like Schwab, but this fee for selling Treasuries was pretty hidden a...
by stlutz
Tue Jan 20, 2015 5:55 pm
 
Forum: Investing - Help with Personal Investments
Topic: Vanguard direct purchase of bond question
Replies: 4
Views: 476

Re: Today was a Really Bad Day in Shanghai

Yep, risk and expected return do seem to be related.


Just to be argumentative, how is it that I should expect the risk of corruption or inadequate regulation to pay off?
by stlutz
Mon Jan 19, 2015 4:35 pm
 
Forum: Investing - Theory, News & General
Topic: Today was a Really Bad Day in Shanghai
Replies: 27
Views: 4018

Re: Engineered Hardwood

Obviously more expensive usually ends up being better, but suppose I have a flooring budget of $X, which allows me to either buy higher-end laminate such as the better stuff from Quick Step, high end vinyl (e.g. Karndean), or cheaper hardwood (either engineered or "normal")? Which should I...
by stlutz
Mon Jan 19, 2015 4:23 pm
 
Forum: Personal Consumer Issues
Topic: Engineered Hardwood
Replies: 29
Views: 2839

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

One of the observations I was waiting to hear someone make is that for the fund featured in the OP, the only "big" 5-year return surprise on the downside was for the 5-year period starting in 2004--a period when rates moved generally higher (up a little, up "a lot", flat, flat, ...
by stlutz
Mon Jan 19, 2015 4:10 pm
 
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 105
Views: 4703

Re: CAPM and Minimum Variance Portofolio

1.) How practical is CAPM? Not quite sure that I understand the question. Generally most people around here agree that the CAPM is not a good model of reality--it doesn't do that good of a job explaining how various parts of the market perform. There are different approaches for how to deal with th...
by stlutz
Sun Jan 18, 2015 9:21 pm
 
Forum: Investing - Theory, News & General
Topic: CAPM and Minimum Variance Portofolio
Replies: 4
Views: 482

Re: MediCare and ? What are your out of pocket costs please.

Nisiprius hints at this, but a good way to get a cost estimate is to price out the cost of Part B combined with a Plan "F" supplemental plan which basically pays for everything Medicare does not. You can add a drug plan onto that as well.

You can shop for these things online.
by stlutz
Sun Jan 18, 2015 7:38 pm
 
Forum: Personal Finance (Not Investing)
Topic: MediCare and ? What are your out of pocket costs please.
Replies: 16
Views: 1329

Re: Fidelity Donor Advised Fund

After having used one for a few years now (Schwab), I think I would continue to use it even of tax benefit of donating appreciated shares was eliminated. It's much easier come tax time to handle one big donation to one charity than assembling all of the various receipts from various organizations at...
by stlutz
Sun Jan 18, 2015 7:35 pm
 
Forum: Personal Finance (Not Investing)
Topic: Fidelity Donor Advised Fund
Replies: 48
Views: 3057

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

Instead of using real world returns I decided to try a few hypothetical scenarios. My simplifying assumption was to buy a 6 year bond, hold for one year, sell, rinse and repeat for 10 years. This gives my portfolio an average duration that approximates many IT Treasury funds (i.e. a little over 5). ...
by stlutz
Sun Jan 18, 2015 7:27 pm
 
Forum: Investing - Theory, News & General
Topic: Initial SEC yield and subsequent 5yr and 10yr returns
Replies: 105
Views: 4703

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

I used to use this fund for my short-term savings/emergency fund until its yield dropped below .5% about 3 years ago. I switched to using an Ally savings account. After tax, it looks like I would have been just slightly better of sticking with ST-TE.

FWIW.
by stlutz
Sun Jan 18, 2015 6:56 pm
 
Forum: Investing - Theory, News & General
Topic: How Can Short-Term Tax Exempt Make Sense?
Replies: 13
Views: 1575

Re: Malkiel's recommendations, 1990 to 2015

Two obvious notes and then an overall comment: --Most people don't buy every new edition of a book that comes out. --Somebody who was 65 in 1990 is 90 today. Has Malkiel said that the recommendations he made in 1990, 1995, 2000 etc. were bad ones and that people who adopted those allocations should ...
by stlutz
Sun Jan 18, 2015 12:40 pm
 
Forum: Investing - Theory, News & General
Topic: Malkiel's recommendations, 1990 to 2015
Replies: 40
Views: 3784

Re: Which are the best short/long term U.S. Treasuries?

First off, I would argue that Rick Ferri is the greatest asset allocator in the world, but I guess that's not the actual question. :happy The big problem with long-term bonds from the perspective of an individual investor is that this type of debt is very low risk for many people in the market, such...
by stlutz
Sat Jan 17, 2015 8:48 pm
 
Forum: Investing - Help with Personal Investments
Topic: Which are the best short/long term U.S. Treasuries?
Replies: 10
Views: 1038

Re: Fidelity Donor Advised Fund

1. I realize for example if I start the DAF this year with a 5K deposit, I can then deduct 5K on my 2015 taxes. Correct. 2. If that 5 K grows to $6500 and I designate it to a charity in 2016 a full year later but it has now gained 1500 from original 5K do i ever get to deduct that $1500 it has grow...
by stlutz
Sat Jan 17, 2015 8:27 pm
 
Forum: Personal Finance (Not Investing)
Topic: Fidelity Donor Advised Fund
Replies: 48
Views: 3057

Re: Fidelity Donor Advised Fund

Recently switched from Vgd Charitable to Fidelity DAF. Lower minimum donation amounts and faster approvals. No regrets.


Out of curiosity, did you move funds from VG Charitable to Fido Charitable? I'm interested in knowing what the mechanics would be for something like that.
by stlutz
Sat Jan 17, 2015 2:18 pm
 
Forum: Personal Finance (Not Investing)
Topic: Fidelity Donor Advised Fund
Replies: 48
Views: 3057

Re: ETF or Fund for Total Stock, Total Int'l (In Taxable)

The difference comes into play when you are comparing a standalone (i.e non-VG) ETF with a standalone mutual fund. In that case, the ETF is less likely to distribute gains. So, for example, the VG Global Minimum Volatility fund (no ETF share class) distributed capital gains this year; the iShares mi...
by stlutz
Sat Jan 17, 2015 2:06 pm
 
Forum: Investing - Help with Personal Investments
Topic: ETF or Fund for Total Stock, Total Int'l (In Taxable)
Replies: 8
Views: 679

Re: ETF or Fund for Total Stock, Total Int'l (In Taxable)

They are different shares classes of the same fund. So, it makes no real difference. Choose based on what makes the most logistical sense. Usually that means using the fund if you are dealing directly with VG or using the ETF if you hold your investments elsewhere.
by stlutz
Sat Jan 17, 2015 12:45 am
 
Forum: Investing - Help with Personal Investments
Topic: ETF or Fund for Total Stock, Total Int'l (In Taxable)
Replies: 8
Views: 679

Re: ["Limited time"] Pension Buyout Offer - What to do

So what is the lump sum they are offering instead of the $631? What somebody else got really makes no difference.
by stlutz
Sat Jan 17, 2015 12:35 am
 
Forum: Personal Finance (Not Investing)
Topic: ["Limited time"] Pension Buyout Offer - What to do
Replies: 3
Views: 590

Re: LMP TIPS ladder- Purchase at next week's auction?

I prefer to purchase at auction, and would only purchase in secondary market if there was a compelling reason to do so. I would not be afraid of purchasing in the secondary market as long as you are doing it with a broker who offers $0 trades on Treasuries (VG, Fido, E*Trade). Spreads on TIPS are l...
by stlutz
Sat Jan 17, 2015 12:32 am
 
Forum: Investing - Help with Personal Investments
Topic: LMP TIPS ladder- Purchase at next week's auction?
Replies: 6
Views: 861

Re: Eliminating the "Face Palm" Icon

I'd like to keep it. It's the only icon that works when someone points out a mistake I've made.


Perhaps we could reserve it for responding to retiredjg's posts? :twisted:
by stlutz
Fri Jan 16, 2015 5:38 pm
 
Forum: Forum Issues and Administration
Topic: Eliminating the "Face Palm" Icon
Replies: 33
Views: 2018

Re: Do you encrypt financial/investment documents on your PC

I started to, but then I realized that I keep hardcopy year-end records as a "fail-safe" backup, so that kind of defeats the purpose.
by stlutz
Wed Jan 14, 2015 11:57 pm
 
Forum: Personal Finance (Not Investing)
Topic: Do you encrypt financial/investment documents on your PC?
Replies: 37
Views: 1972

Re: Vanguard Short Term TIPS fund puzzle

But in my opinion this is a fool's errand. The reason is that there is no fixed ratio between changes in nominal yields and TIPS yields. In fact they sometimes move in opposite directions. I believe the only meaningful duration for a TIPS fund is real duration -- a measures of the price sensitivity...
by stlutz
Wed Jan 14, 2015 11:50 pm
 
Forum: Investing - Theory, News & General
Topic: Vanguard Short Term TIPS fund puzzle
Replies: 10
Views: 1495

Re: Fixed Income 2015

I see that CIT has a 5 year CD offering 2.4%, which I'm leaning towards putting the FDIC max into. This is the kind of statement that should set off alarm bells, but I'll say it anyway: You should move fast on this. One to lock in your gains on the muni fund with the recent big drop in interest rat...
by stlutz
Wed Jan 14, 2015 11:41 pm
 
Forum: Investing - Help with Personal Investments
Topic: Fixed Income 2015
Replies: 16
Views: 1954

Re: 3%, 10-year CD bought today

Good luck to you, a lot can happen in a decade.


A rolling 10 year CD ladder would still have lower duration than most "intermediate-term" bond funds.
by stlutz
Wed Jan 14, 2015 7:50 pm
 
Forum: Investing - Theory, News & General
Topic: 3%, 10-year CD bought today
Replies: 35
Views: 3370

Re: Is the Vanguard TIPs fund Active or Passive?

So, it appears VAIPX actually did 0.46% points worse than the index in 2014, not 0.33% points better. IPE tracks a different index than their other funds mentioned. (I stumbled across the same thing when doing a very similar performance comparison a few weeks back. :happy). The other funds are &quo...
by stlutz
Tue Jan 13, 2015 2:09 am
 
Forum: Investing - Theory, News & General
Topic: Is the Vanguard TIPs fund Active or Passive?
Replies: 15
Views: 1406

Re: CD ladder question

If one is doing a '5 year CD ladder' is it best to do it at one institution? I'm assuming that that is easiest? It may start out this way, but it won't stay this way. The banks with the best yields change over time. So, if you built a ladder at that bank with the best yields now, in another year wh...
by stlutz
Mon Jan 12, 2015 10:53 pm
 
Forum: Investing - Theory, News & General
Topic: CD ladder question
Replies: 4
Views: 623

Re: How can you tell if a bond is a Build America bond?

It looks to me like your broker is correct. This bond is: VILLAGE OF ROSEMONT, COOK COUNTY, IL TAXABLE GENERAL OBLIGATION REFUNDING BONDS (IL) . Notice the word "taxable" in there. Regardless, the prior poster pointed you to the right place to look up details on any bond (emma.msrb.org).
by stlutz
Mon Jan 12, 2015 10:46 pm
 
Forum: Investing - Help with Personal Investments
Topic: How can you tell if a bond is a Build America bond?
Replies: 3
Views: 419

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

One advantage of a fund over individual bonds is that it makes it much easier to regulate the amount of risk you are taking. As has been discussed, if you want to slowly reduce your portfolio duration over time, this can be done by gradually moving from a fund/ETF with a longer duration to one with ...
by stlutz
Mon Jan 12, 2015 10:30 pm
 
Forum: Investing - Theory, News & General
Topic: Asness: Why individual bonds are no safer than bond funds
Replies: 59
Views: 2924

Re: Doing my taxes by hand

Actually, I'm curious if tax software will handle any of these scenarios without me doing most of the work: --That I created a wash sale when I sold X investment in my taxable account and bought it back in my IRA a week later? (i.e. do I not have to tell it that I did such a thing?) --Will it figure...
by stlutz
Mon Jan 12, 2015 1:21 am
 
Forum: Personal Finance (Not Investing)
Topic: Doing my taxes by hand
Replies: 64
Views: 4710

Re: Should pension plans be relied upon for retirement?

No, companies can't just decide not to pay the pension benefits. The government has the Pension Benefit Guaranty Corporation that handles the benefits of companies that go bankrupt (although people with huge pension like pilots only get partial protection here). There is a law called ERISA that regu...
by stlutz
Mon Jan 12, 2015 1:09 am
 
Forum: Personal Finance (Not Investing)
Topic: Should pension plans be relied upon for retirement?
Replies: 35
Views: 3087

Re: Is the Vanguard TIPs fund Active or Passive?

It never deviates too much from the index in terms of the actual portfolio. Because the TIPS market is relatively less liquid, I think it's believed that you can pick up a few basis points of return by managing the timing of transactions.
by stlutz
Sun Jan 11, 2015 7:12 pm
 
Forum: Investing - Theory, News & General
Topic: Is the Vanguard TIPs fund Active or Passive?
Replies: 15
Views: 1406

Re: Spreadsheets in Apache Open Office

The dialogue box then gives me two options. The first option, which is the default option, reads "Keep Current Format." The second option reads "Save in ODF format." I always use the default option; however, I am not sure if this is the option I should use. If you save in ODF fo...
by stlutz
Sun Jan 11, 2015 1:27 pm
 
Forum: Personal Consumer Issues
Topic: Spreadsheets in Apache Open Office
Replies: 14
Views: 1424

Re: Fastest way to withdraw money from Ally Bank

A week before the closing date, I ACH the required fund from Ally to my Charles Schwab checking account. A day before the closing date, I wired the money from Charles Schwab to the escrow account. The transaction closed smoothly on closing day as expected. Why was this preferred over just doing a w...
by stlutz
Sun Jan 11, 2015 1:22 pm
 
Forum: Personal Finance (Not Investing)
Topic: Fastest way to withdraw money from Ally Bank
Replies: 8
Views: 1358

Re: Rick Ferri looking to internationalize his portfolio

Would you have rejected investing in the US after its poor market performance from the mid-1960s through the end of the 1970s? I agree with visualguy's points at least to the extent that I agree that most international markets *should* be selling a lower multiples than US markets. I don't agree wit...
by stlutz
Sun Jan 11, 2015 1:12 pm
 
Forum: Investing - Theory, News & General
Topic: Rick Ferri looking to internationalize his portfolio
Replies: 224
Views: 24701

Re: Losing Job (& insurance) Need Advice - ACA Subsidy or Ro

OP: I'd take a closer look at the health care coverage you are actually getting as opposed to just looking for whatever is cheapest. I know you haven't used many health care services in a long time, but quite honestly, that's how it works for most people--you go to the doctor very little or not at a...
by stlutz
Sat Jan 10, 2015 4:26 pm
 
Forum: Personal Finance (Not Investing)
Topic: Losing Job (& insurance) Need Advice - ACA Subsidy or Roth
Replies: 11
Views: 994

Re: Help clarify "expected future return"

the formal definition, which is essentially probability weighted returns


And, of course, nobody ever actually does this.
by stlutz
Fri Jan 09, 2015 9:01 pm
 
Forum: Investing - Theory, News & General
Topic: Help clarify "expected future return"
Replies: 12
Views: 726

Re: Help clarify "expected future return"

Let's suppose that stocks in aggregate are currently yielding 4% and that one assumes that profits will growth 5% per year. Then your return expectation would be 4+5 = 9%. Suppose the market doubles in price. Your yield would now be 2%. If you still assume that profits will grow 5% per year, then yo...
by stlutz
Fri Jan 09, 2015 8:59 pm
 
Forum: Investing - Theory, News & General
Topic: Help clarify "expected future return"
Replies: 12
Views: 726

Re: I see rental properties as bonds. Am I completely off b

You should view them as a small business. You invest capital (both financial and human) and sell a product/service with the hope of making a profit. And it sounds like you are making a profit, so it's a good business. If you want to take more risk with your financial investments, that's fine. But do...
by stlutz
Fri Jan 09, 2015 4:40 am
 
Forum: Investing - Theory, News & General
Topic: I see rental properties as bonds. Am I completely off base?
Replies: 28
Views: 2383

Re: I have to leave Ameriprise

It looks like these are all IRAs which means that you can sell all of your existing funds and re-invest in something new without worry about tax issues. The Life Strategy Conservative Growth fund may be a good place to start in terms of what to invest in at Vanguard. At your level of assets, you cou...
by stlutz
Fri Jan 09, 2015 2:46 am
 
Forum: Investing - Help with Personal Investments
Topic: I have to leave Ameriprise
Replies: 22
Views: 3064
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