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Re: Advice with my allocation and bonds in a taxable account

Using muni bonds in taxable is a great call in my view. However, I would use caution with that Ohio fund. If you take a look at this page (https://personal.vanguard.com/us/funds/snapshot?FundId=0097&FundIntExt=INT), you'll see that it has: Duration: 5.9 Average stated maturity: 15.5 What that te...
by stlutz
Wed Jan 28, 2015 10:11 pm
 
Forum: Investing - Help with Personal Investments
Topic: Advice with my allocation and bonds in a taxable account
Replies: 3
Views: 172

Re: Any reason NOT to buy treasuries individually?

plus auctions don't happen every day right?


You can buy/sell them in the secondary market anytime you want.
by stlutz
Wed Jan 28, 2015 9:54 pm
 
Forum: Investing - Theory, News & General
Topic: Any reason NOT to buy treasuries individually?
Replies: 12
Views: 772

Re: Why do brokerages give commission free-etfs

The real reason is because Schwab did it. When they came out with their own line of Schwab ETFs, free trades were a great way to build assets. Because Vanguard is relentlessly competitive, they matched the offer with their own ETFs. TD Ameritrade didn't want to lose customer assets so they came up w...
by stlutz
Wed Jan 28, 2015 9:11 pm
 
Forum: Investing - Theory, News & General
Topic: Why do brokerages give commission free-etfs
Replies: 16
Views: 1329

Re: Any reason NOT to buy treasuries individually?

am I missing something? You're not missing anything provided you are using a broker that allows you buy and sell Treasuries free of commission--namely Fidelity, Vanguard, or E*Trade. This is definitely an over-analyzed topic. Treasuries are easy and cheap to trade and it is the most liquid trading ...
by stlutz
Wed Jan 28, 2015 8:55 pm
 
Forum: Investing - Theory, News & General
Topic: Any reason NOT to buy treasuries individually?
Replies: 12
Views: 772

Re: Vanguard High-Yield Tax-Exempt Fund Admiral Shares (VWAL

Don't quite get this. I think you should "market"-time the hell out of it, although indeed not "in this way". By no means should you refuse to move money between bonds and CDs because of a strategic allocation made many yield bps ago. Bonds and CDs are simply different types of ...
by stlutz
Tue Jan 27, 2015 10:17 pm
 
Forum: Investing - Help with Personal Investments
Topic: Vanguard High-Yield Tax-Exempt Fund Admiral Shares (VWALX)
Replies: 22
Views: 1185

Re: Mixed treasury mutual fund

GOVT is an ETF that owns all treasury securities over 1 year in maturity, excluding TIPS. You'd have go add in VIPSX/SCHP/TIP for that.
by stlutz
Tue Jan 27, 2015 9:57 pm
 
Forum: Investing - Theory, News & General
Topic: Mixed treasury mutual fund
Replies: 10
Views: 707

Re: data mining vs. historical performance

Amazingly often, people will post historical data to make a point, and not give any explanation for the choice of the time period used. I don't mean posting in this forum necessarily, I mean anywhere. Nicely stated. There are a number of battles over "investment speak" here and elsewhere:...
by stlutz
Tue Jan 27, 2015 9:54 pm
 
Forum: Investing - Theory, News & General
Topic: data mining vs. historical performance
Replies: 37
Views: 1294

Re: Vanguard High-Yield Tax-Exempt Fund Admiral Shares (VWAL

maybe VWIUX could be a good option to wait out these bad CD yields, and withdraw when some yield jumps to 3% or higher... The approach you suggested above has a flaw. In order for yields to go back above 3%, rates overall will have to go up. If rates go up, the value of the fund shares will go down...
by stlutz
Tue Jan 27, 2015 9:44 pm
 
Forum: Investing - Help with Personal Investments
Topic: Vanguard High-Yield Tax-Exempt Fund Admiral Shares (VWALX)
Replies: 22
Views: 1185

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

Kevin--we often say around here that SEC Yield is better because fund managers can manipulate distribution yield. Do you disagree with this view? Interestingly, this paper actually found that the gap between distribution and SEC Yields was actually predictive of future performance for muni bond fund...
by stlutz
Tue Jan 27, 2015 2:31 am
 
Forum: Investing - Theory, News & General
Topic: Total Bond: 23 years of SEC yield and distribution yield
Replies: 21
Views: 2137

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

The amortization amounts increase each year. Perhaps someone else can explain why an amortized premium bond can distribute more taxable income than a bond trading at par. It doesn't. If we take calls out of the equation for the moment. If you buy $100K worth of bonds and par yielding 8% and $100K o...
by stlutz
Tue Jan 27, 2015 2:00 am
 
Forum: Investing - Theory, News & General
Topic: Total Bond: 23 years of SEC yield and distribution yield
Replies: 21
Views: 2137

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

This discussion is making it too complex. One primarily needs to remember two things: 1) SEC Yield is based on the current yield-to-maturity (or call) of the bonds in the portfolio. 2) Distribution yield is based on what the YTM/YTC of the bonds were at the time the fund purchased them. When the yie...
by stlutz
Tue Jan 27, 2015 1:49 am
 
Forum: Investing - Theory, News & General
Topic: Total Bond: 23 years of SEC yield and distribution yield
Replies: 21
Views: 2137

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

Since YTM on the premium bond was 8.07439%, I think we can assume that a par bond selling for $100,000 might have a roughly similar yield and pay interest of perhaps $8074. Note that the amortized premium bond still distributes quite a bit more taxable income ($8881.83) than the par bond ($8074). I...
by stlutz
Tue Jan 27, 2015 1:38 am
 
Forum: Investing - Theory, News & General
Topic: Total Bond: 23 years of SEC yield and distribution yield
Replies: 21
Views: 2137

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: 15
Views: 1316

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: 480

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: 580

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: 526

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: 840

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: 840

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: 619

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: 8
Views: 1234

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: 118
Views: 5693

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: 1664

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: 2210

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: 478

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: 4032

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: 2858

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: 118
Views: 5693

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: 483

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: 1504

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: 50
Views: 3354

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: 118
Views: 5693

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: 1585

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: 3821

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: 1042

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: 50
Views: 3354

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: 50
Views: 3354

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: 681

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: 681

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: 591

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: 865

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: 2042

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: 1981

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: 1497

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: 1957

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: 3385

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: 1412

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: 624

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
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