Search found 968 matches

by dandan14
Tue Oct 31, 2023 8:24 am
Forum: Investing - Theory, News & General
Topic: Grouping years (rungs) in a bond ladder
Replies: 4
Views: 686

Grouping years (rungs) in a bond ladder

Hello everyone, I've posted a time or two recently about potentially using a TIPS ladder to reorganize my current bond holdings and create a more organized ladder. The tipsladder.com tool is spectacular at the task of building the ladder using tips with the desired inflation protected yearly income -- however, for me, it is quite a few rungs to cover 24 years (to age 70). Interestingly enough, not every year has TIPS that mature that year -- so the tipsladder tool suggests the closest alternative. So right away, my 24 year ladder is down to 18 CUSIPs. It got me thinking, could I cut this in half again -- essentially combining every other year to create a much more manageable list of bonds? It seems to me that I could. For example, if I comb...
by dandan14
Mon Oct 30, 2023 8:21 am
Forum: Personal Investments
Topic: TIPS for short term or long term cash flow
Replies: 20
Views: 1691

Re: TIPS for short term or long term cash flow

So in that regard, your concern about " not torpedoing my potential future growth in investments " doesn't seem to be an issue. You're just shuffling around the types of bonds you're holding, and the expected return on those bonds is likely all within a very limited range. The choice of using TIPS over nominal bonds does open up some unknown possibility of difference, depending on actual future inflation, but the expectation is roughly the same. Exactly. On the most recent Bogleheads on Investing podcast, Bill Bernstein mentioned the potential to hold a TIPS bond fund with a duration of about half of your actual income needs (i.e. 30 years of income means find a tips fund with a 15 yr. duration because that's essentially what you...
by dandan14
Mon Oct 30, 2023 5:49 am
Forum: Personal Investments
Topic: TIPS for short term or long term cash flow
Replies: 20
Views: 1691

Re: TIPS for short term or long term cash flow

What is the money you would put into TIPS currently in? With the recent down-turn in stocks, it would seem now is a less-good time than a month or so ago to be making such a move if it means selling stocks. No idea what's in store for the future of stocks (or TIPS rates.) 20+ years is a very long time to be all-in on bonds (of any flavor), it could work out better than alternatives, but I still have hopes of stocks doing better than bonds, and for someone at your age to have a large allocation to bonds does seem like "torpedoing [your] potential future growth in investments"... that said, if your plan is to start drawing down your portfolio that will impact your "growth" and probably your risk tolerance dealing with wha...
by dandan14
Sun Oct 29, 2023 2:08 pm
Forum: Personal Investments
Topic: TIPS for short term or long term cash flow
Replies: 20
Views: 1691

TIPS for short term or long term cash flow

Can you all help me think through something? I'm relatively young (46), but pretty solidly FI. I'm still working, but would like to shift to something else (i.e. not for the paycheck) by Jan 2025 (14 months from now). I'm currently salivating over TIPS rates -- and trying to figure out how to best utilize those, while not torpedoing my potential future growth in investments. So I have several options: Buy TIPS for 24 years to provide 60-70% of income. I could do that by shifting around my current bond allocation (35%), and still leaving 65% exposed to stocks. (Annuity at age 70 to combine with SS.) I may or may not need to pull from investments each year -- depending on actual earnings. I can't imagine that I'd earn zero. Buy TIPS for a sho...
by dandan14
Fri Oct 20, 2023 1:48 pm
Forum: Personal Investments
Topic: Annuity for longevity insurance -- buy immediate or deferred
Replies: 2
Views: 508

Annuity for longevity insurance -- buy immediate or deferred

With rates where they are, I'm considering whether it would be beneficial to go ahead and purchase a single premium fixed annuity now (for longevity insurance) -- or to wait until a much later age. Currently late 40s. Let's say I want to start the annuity payments at age 70 to correspond to claiming SS. This would create a safety net of lifetime income. For the sake of example, let's say I want an annual payout 50k/yr in today's dollars to supplement SS. Scenario 1: Buy now. The ins. company gets the benefit of 23 years of growth. I get a ~15% payout rate starting at age 70, which rises 3% per year COLA. Assuming 3% inflation between now and then (1.03^23) the cost of living will be 1.97x vs. today. So I'd need to plan for 100k yearly payme...
by dandan14
Mon Jul 12, 2021 11:18 am
Forum: Investing - Theory, News & General
Topic: Bond Tent and Glide path -- mitigated with option to return to work?
Replies: 15
Views: 1970

Re: Bond Tent and Glide path -- mitigated with option to return to work?

revhappy wrote: Mon Jul 12, 2021 11:06 am
You can watch this great video by Emily and Clark, a couple who live in a boat and go sailing all over the world. The guy retired at his peak at the age of 36 from a tech job during the dotcom bubble peak and equities crashed and he didnt sell a thing and it came back.

https://youtu.be/J4uRfc73iJQ?t=592
Thanks for the video. He makes a good point about going back to work, not just to reduce withdrawals, but to increase purchasing on the dip.
by dandan14
Mon Jul 12, 2021 8:34 am
Forum: Investing - Theory, News & General
Topic: Bond Tent and Glide path -- mitigated with option to return to work?
Replies: 15
Views: 1970

Re: Bond Tent and Glide path -- mitigated with option to return to work?

Thank you everyone. You both bring up excellent points. At the end of the day, reducing allocation of your portfolio to investments with higher expected return (e.g. equities) is very likely to reduce your portfolio size over time. Having a bond tent is akin to paying for a SORR insurance policy. I hadn't thought about it like this, but you're absolutely right. It is a sacrifice in potential long term upside for a more dependable sequence of returns. Putting a price tag on that is a very interesting way to look at it. Is it worth $x for me to have to potentially take steps of lifestyle adjustment, geo arbitrage, or returning to work over the first 10 years? Great question -- and one that can be answered every year as we assess all of the in...
by dandan14
Mon Jul 12, 2021 1:08 am
Forum: Investing - Theory, News & General
Topic: Bond Tent and Glide path -- mitigated with option to return to work?
Replies: 15
Views: 1970

Re: Bond Tent and Glide path -- mitigated with option to return to work?

dogagility wrote: Sun Jul 11, 2021 6:41 am No research needed. If you are flexible and can return to work, the SORR will be mitigated somewhat.

However, the timeframe for SORR is fairly long... 10 years perhaps. SORR might be concentrated around the retirement date.

Here's a useful paper from Estrada to read on the topic: https://papers.ssrn.com/sol3/papers.cfm ... id=3685653
Thanks for the link to the excellent paper. I just finished about half of it.
Clearly it is both the sequence risk and the inflexibility of withdrawals that create the risk. So by having the "return to work" option in the first 5-10 years, the risk is mitigated to some degree.
by dandan14
Sun Jul 11, 2021 5:35 am
Forum: Investing - Theory, News & General
Topic: Bond Tent and Glide path -- mitigated with option to return to work?
Replies: 15
Views: 1970

Bond Tent and Glide path -- mitigated with option to return to work?

I'm hoping you folks can help me find some research - or maybe just help me think through something. I'm getting very close to pulling the trigger on a reduction in work hours -- or possibly a hiatus. This is likely the start of the next chapter in my life -- and might even lead to "early retirement." Sequence of return risk, of course, is a pretty scary thing. Michael Kitces and Karsten Jeske (Big ERN) both advocate (and mathematically support) the concept of a bond tent (moving to something like 50/50 or even 40/60) immediately after retirement -- and then slowly moving back to something like 70/30 over the coming 5+ years. In that scenario, you are trading upside for the peace of mind that you won't get torpedoed in year 1 -- s...
by dandan14
Tue Jan 21, 2020 6:48 am
Forum: Investing - Theory, News & General
Topic: ESPP - company giving a do-over option
Replies: 17
Views: 1671

Re: ESPP - company giving a do-over option

I'd probably be more concerned with working for a company who's stock dropped 20% in a year when the market was up 30% You keep talking about "guarantees"..... how much have you lost in opportunity costs funneling money into this over the last year? What if the company goes bankrupt? This answer. Fair questions. It is a $5b company -- so I don't think bankruptcy is anywhere in the cards. Layoff would be much more likely -- at which point, according to the ESPP, I get my invested dollars back (with no ROI). You are right about the lost opportunity -- but that is a sunk cost. If I go forward without resetting, I'm promised (since guaranteed is too strong of a word) an 18% return for 2020 (which will average 8.5% annualized for 2019...
by dandan14
Mon Jan 20, 2020 2:45 pm
Forum: Investing - Theory, News & General
Topic: ESPP - company giving a do-over option
Replies: 17
Views: 1671

Re: ESPP - company giving a do-over option

Adding to my own post. This is a math problem -- not a stock timing problem. Worst case scenario in this plan is that you make 18% on your money over 2 years. Roughly 8.5% annualized. That's the likely outcome in this case, because it would be unlikely that the stock will go above where it was a year ago by this time next year. (To illustrate this, consider if it was a $100 ending price. I get it for $85. Let's say i have 10k in accrued. I'd get 117.64 shares. I'd then sell for $100 each. So I'd get 117,640. A gain of 17.64% over 2 years.) If I take the do-over over, the floor is still 18% over 2 years, but the potential is much higher since the starting price will now be relatively low. Now here is where it gets interesting. If I accept th...
by dandan14
Mon Jan 20, 2020 2:27 pm
Forum: Investing - Theory, News & General
Topic: ESPP - company giving a do-over option
Replies: 17
Views: 1671

ESPP - company giving a do-over option

So this is interesting. Our company only allows you to participate in 2 years of the ESPP. I don't know why. Like most ESPPs, it is setup to pretty much be a "can't lose" scenario for participants. For 2 years, you accrue money. A the end of 2 years, you get to purchase at the lower of either the beginning price minus 15% or the ending price minus 15%. Last year, the stock was at 18.xx. Our stock went down by about 20% in 2019, so now it is at 14.xx. So the company is doing something I didn't expect -- a do-over. For anyone that started their 2 year period in early 2019, you can literally get all your money back and start over. I'm trying to think through this, pros and cons. Pros: Have a definite lower base price Cons: Only get b...
by dandan14
Mon Oct 07, 2019 2:36 pm
Forum: Personal Investments
Topic: Borrowing at one rate (mortgage) and lending at another (bonds)
Replies: 7
Views: 1079

Re: Borrowing at one rate (mortgage) and lending at another (bonds)

Ignore the bond returns vs mortgage rate argument: the rates are so close it may be a wash. Here's the pertinent question: Why would you want to lock up all or most of your available cash in a single, non-diversified asset? Someone is willing to give you a fixed loan at 2.75%, when inflation is 1.5-2%. Take it without a second thought and invest your cash however you want, as long as you're properly diversified. I didn't say I was wanting to lock up all of my available cash. I suggested that I might want to use some of the fixed income portion of my portfolio to buy the house. However, here are some things I've thought about thanks to this thread. It's so close as to almost not matter. Liquidity in a house is difficult. Requires a month of...
by dandan14
Mon Oct 07, 2019 9:55 am
Forum: Personal Investments
Topic: Borrowing at one rate (mortgage) and lending at another (bonds)
Replies: 7
Views: 1079

Re: Borrowing at one rate (mortgage) and lending at another (bonds)

whodidntante wrote: Mon Oct 07, 2019 9:11 am
A direct CD or Treasury note held to maturity is easier to compare because the outcome is certain, just like the mortgage.
That's my thinking as well. That's why I used 3% at NavyFed as my benchmark.
by dandan14
Mon Oct 07, 2019 8:27 am
Forum: Personal Investments
Topic: Borrowing at one rate (mortgage) and lending at another (bonds)
Replies: 7
Views: 1079

Borrowing at one rate (mortgage) and lending at another (bonds)

Hey folks -- I love the way Allan Roth puts it -- that it makes no sense to borrow at 4% on a mortgage and lend at 2% on a bond. So before we take out this next mortgage, I want to think through this -- because it gets slightly more complicated. Mortgage: The builder incentivizes using their lender by giving $12k toward closing costs. That isn't "real" money, because their loans are overpriced. But I figure it is still worth about $7k. That isn't money that I can get as a discount on the house. So if I use that -- and no more -- to buy down the rate, I'll probably be at 2.75% -- maybe 2.6, depending on where rates go over the next few weeks. With other closing costs related to the lender (not counting the ones that I would have if...
by dandan14
Mon Oct 07, 2019 8:13 am
Forum: Personal Investments
Topic: Corp AAA bond vs. secondary market annuity
Replies: 7
Views: 859

Re: Corp AAA bond vs. secondary market annuity

bsteiner wrote: Sun Oct 06, 2019 9:33 pm The bond is more liquid.
That's a great point. Getting out of a 30 year payment arrangement (because that's what it is, more than an life annuity) would be costly. You'd have to try to sell it again on the secondary market -- which is likely costly and time consuming.
by dandan14
Sun Oct 06, 2019 8:39 pm
Forum: Personal Investments
Topic: Corp AAA bond vs. secondary market annuity
Replies: 7
Views: 859

Re: Corp AAA bond vs. secondary market annuity

venkman wrote: Sun Oct 06, 2019 8:19 pm The bond returns your principal at the end of the term. The annuity just ends.

It looks like the specific SMA you're looking at costs ~$95k and pays out $142.5k over 23.75 years. A $95k bond yielding 2.75% would pay out ~$62k over 23.75 years, at the end of which you'd get your $95k back, for a total of $157k (and that assumes no reinvestment of interest).
Not the case in this instance. I checked with XIRR.
This feels very much like a bond with a set payment schedule -- not a lifetime annuity.
by dandan14
Sun Oct 06, 2019 8:35 pm
Forum: Personal Investments
Topic: Corp AAA bond vs. secondary market annuity
Replies: 7
Views: 859

Re: Corp AAA bond vs. secondary market annuity

Gill wrote: Sun Oct 06, 2019 7:56 pm The annuity cash flow is not just income but is also a partial return of principal.
Gill
I double checked it with a spreadsheet. That is the YTM rate.
by dandan14
Sun Oct 06, 2019 7:37 pm
Forum: Personal Investments
Topic: Corp AAA bond vs. secondary market annuity
Replies: 7
Views: 859

Corp AAA bond vs. secondary market annuity

Can you folks help me understand something?
A 30 year AAA corporate bond from Berkshire Hathaway is paying about 2.75-3%.
However, I could theoretically buy an annuity on the secondary market also from BH that essentially acts like a 24 year bond paying 3.79%.
https://www.immediateannuities.com/seco ... annuities/

Why would it pay so much more? Wouldn't it be even safer than the corp bond -- because of the state guaranty system?
by dandan14
Thu Aug 02, 2018 4:24 pm
Forum: Personal Investments
Topic: Social Security + term life
Replies: 41
Views: 3063

Re: Social Security + term life

Not a wise plan with level term, because while the premium per dollars insured remains the same over the years, your likelihood of collecting rises every year. I'm sure it would make the insurance company very happy though. sorry edited -- i meant DECREASE. My plan is to consider "if" i keep my level term past FIRE I would decrease the DB greatly and perhaps keep it for a few more years as a way to leave something for the kids so they don't have to wait until we both pass to receive monies. Whatever the initial amount, you are giving up the "best" years of the policy if you cancel all or part of it in the later years of the term, for reasons that should be obvious. If you think you will need less at some point, it would...
by dandan14
Thu Aug 02, 2018 11:38 am
Forum: Personal Investments
Topic: Social Security + term life
Replies: 41
Views: 3063

Re: Social Security + term life

One consideration if you move forward with this plan is to increase DECREASE the DB initially and then over the term reduce the DB (as the need for funds lessens) which will also reduce the yearly cost.[/color] Not a wise plan with level term, because while the premium per dollars insured remains the same over the years, your likelihood of collecting rises every year. I'm sure it would make the insurance company very happy though. sorry edited -- i meant DECREASE. My plan is to consider "if" i keep my level term past FIRE I would decrease the DB greatly and perhaps keep it for a few more years as a way to leave something for the kids so they don't have to wait until we both pass to receive monies. Whatever the initial amount, you...
by dandan14
Thu Aug 02, 2018 11:36 am
Forum: Personal Investments
Topic: Social Security + term life
Replies: 41
Views: 3063

Re: Social Security + term life

]Note that $200K won't be $200K in today's dollars due to inflation 15-20 years from now. Would an inflation adjusted deferred annuity be an option? I think I would be at least as concerned about longevity risk with them.They don't have a big cushion. The cheapest inflation adjusted annuity you can purchase is delaying SS. If both wait until 70, survivor would get 65 percent of joint SS income $37,371/$57,471. Surely the spending requirements will go down upon first death (Medicare B and D and supplemental premiums for one) and they can be supplemented by remaining nest egg which now only needs to support one person. If the first dies early there’s more nest egg remaining to use for one person. If first dies later then they’ve benefitted f...
by dandan14
Thu Aug 02, 2018 11:34 am
Forum: Personal Investments
Topic: Social Security + term life
Replies: 41
Views: 3063

Re: Social Security + term life

curmudgeon wrote: Wed Aug 01, 2018 11:20 pm Take a look at the scenario where the higher earner (or maybe oldest) defers taking SS until age 70. The other takes SS at 62. The deferred benefit will be nearly 1/3 larger than the FRA benefit, and that larger benefit will ALSO be the survivor benefit for the other spouse, replacing their smaller benefit, if the older were to die first.

By deferring one of the SS claims, this helps to limit the cash flow shortfall if one were to die substantially earlier than the other.
I agree with that. Having the lower take at 62 and the higher claim at 70 is my current plan of attack.
by dandan14
Thu Aug 02, 2018 11:33 am
Forum: Personal Investments
Topic: Social Security + term life
Replies: 41
Views: 3063

Re: Social Security + term life

gmaynardkrebs wrote: Wed Aug 01, 2018 10:01 pm
dandan14 wrote: Wed Aug 01, 2018 9:44 pm For those asking for details, here is my google spreadsheet. Keep in mind that both J and K are same age.
https://docs.google.com/spreadsheets/d/ ... sp=sharing
Note that $200K won't be $200K in today's dollars due to inflation 15-20 years from now. Would an inflation adjusted deferred annuity be an option? I think I would be at least as concerned about longevity risk with them.They don't have a big cushion.
Since the SS payouts stay in "real" dollars, I've use the inflation variable to decrease the real value of the insurance payout as time goes forward.
by dandan14
Wed Aug 01, 2018 9:44 pm
Forum: Personal Investments
Topic: Social Security + term life
Replies: 41
Views: 3063

Re: Social Security + term life

For those asking for details, here is my google spreadsheet. Keep in mind that both J and K are same age.
https://docs.google.com/spreadsheets/d/ ... sp=sharing
by dandan14
Wed Aug 01, 2018 9:39 pm
Forum: Personal Investments
Topic: Social Security + term life
Replies: 41
Views: 3063

Re: Social Security + term life

[/quote]
In particular, what's the thinking behind just 10 years term?
[/quote]

I think you guys are right...surprisingly, a 20 year term for a 62 year old, is still not crazy expensive. It simplifies things, and actually allows me to push up the allowed expenditures another few thousand.
by dandan14
Wed Aug 01, 2018 5:02 pm
Forum: Personal Investments
Topic: Social Security + term life
Replies: 41
Views: 3063

Re: Social Security + term life

so you are suggesting $20K in premiums (over 10 years) on the risk that one of them dies prior to 72. What happens after 72 ? --then they really are kind of in the same situation. Lowish Nest egg and needing 2 SS incomes. When one of them passes the survivor will be in trouble, right ? What is their AA on the nest egg ? Do you have them at 50/50 or something more bond-fixed focused? They may need to stay 60/40 from 62-70 I will say when I ran the numbers thru firesim my success of a 35 year retirement starting at 60 increased by 7 to 8% if i took SS at 62 and didn't wait until 70. I found that interesting since the general thought by many BHr's is to wait on SS until 70 for the larger benefits (especially for surviving spouse). I have 120+...
by dandan14
Wed Aug 01, 2018 3:34 pm
Forum: Personal Investments
Topic: Social Security + term life
Replies: 41
Views: 3063

Re: Social Security + term life

gmaynardkrebs wrote: Wed Aug 01, 2018 12:42 pm
Darth Xanadu wrote: Wed Aug 01, 2018 12:18 pm I believe OP intends to suggest they buy the life insurance when they retire at 62, so there will be potentially a 2-year span of dual SS income before the term is up on the insurance.
Not sure that solves the problem. There would still be a lot one one-check years left.
Right....so I'm trying to find the balance of a policy that is cheap enough to be covered from cash flow while still providing enough death benefit. If spouse 1 dies, spouse 2 will have about a $6-$7k yearly deficit will will sip from remaining savings. I'm using TIPS to guarantee returns and remove all volatility. I could up the ante a bit on that to squeeze out more return, but I don't think it is necessary here.
by dandan14
Wed Aug 01, 2018 8:15 am
Forum: Personal Investments
Topic: Social Security + term life
Replies: 41
Views: 3063

Re: Social Security + term life

Thanks guys -- you caught a couple of errors in my original thinking.

First, the biggest error was that yes, I should have planned 2 life insurance policies. Second, I wasn't I didn't age them up + 2 years from now when I priced it out. So fixing that, assuming average health, seems like almost a perfect 100:1 ratio at various levels of payout (200k = $2000/year for a same age couple).

Given that, I played around with the "right" number. I want to ensure that they are still ok, even in the worst case scenario -- which now would mean dying the day after the policy expires.
At the moment, 10 years for 200k seems seems to work.
by dandan14
Tue Jul 31, 2018 9:13 pm
Forum: Personal Investments
Topic: Social Security + term life
Replies: 41
Views: 3063

Social Security + term life

I'm curious to get thoughts on this. I'm helping some friends with social security / retirement planning. Both are age 60 hoping to retire in June 2020. Wife's PIA is slightly more than husband's PIA. I'm setting up their plan to start retirement at 62, but wait until much later to file SS -- living off of savings in the interim. If they wait until age 70, the SS payout would fully cover their cost of living. It seems to me that the biggest risk to their plan is if one spouse dies very early. In that case, there will only be the one (bigger) check, instead of both SS checks. It occurred to me that this might be a great use of a 10 year level term life insurance policy. That way, they can spend more in their pre-SS years, without worry of th...
by dandan14
Sat Mar 31, 2018 11:08 am
Forum: Personal Finance (Not Investing)
Topic: Term life + ss survivors benefits
Replies: 7
Views: 971

Re: Term life + ss survivors benefits

Hillview wrote: Sat Mar 31, 2018 10:14 am Could be -- what about college savings? mortgage?
I figure the mortgage is just part of the yearly living expenses. I've never really understood the logic of planning to pay off a house when someone dies.

College savings are reasonably well funded already.
by dandan14
Sat Mar 31, 2018 11:06 am
Forum: Personal Finance (Not Investing)
Topic: Term life + ss survivors benefits
Replies: 7
Views: 971

Re: Term life + ss survivors benefits

FiveK wrote: Sat Mar 31, 2018 10:10 am One thought: how much is the cost difference between term life that would cover
- 1/4 of current living expenses, vs.
- 100% or even 150% of current living expenses (kids' college, etc.)?

And what fraction of current income is that difference?
I'm only talking about cutting the policy on my life -- so I would probably save $250-$400/year depending on how much I cut. So that's fairly negligible in the grand scheme, but still it's money.
by dandan14
Sat Mar 31, 2018 9:27 am
Forum: Personal Finance (Not Investing)
Topic: Term life + ss survivors benefits
Replies: 7
Views: 971

Term life + ss survivors benefits

Can you folks help me think through something?

It seems at this point in my career, Social Security Survivor's benefits are fairly generous -- and would cover about 3/4 of our current living expenses should I die. (If my wife were to die, her survivors' benefits are much lower.)

So my thinking is that I could adjust my life insurance (covering my life) so that:

Savings + insurance payout would spin off enough money to supplement the SS benefits. Right?

After the kids are grown, the survivors benefit would no longer pay out, so I need to make sure that at that point, my wife could either fully live off the nest egg or have a job and supplement it with nestegg earnings.

Thoughts?
by dandan14
Sun Jan 21, 2018 2:58 pm
Forum: Investing - Theory, News & General
Topic: Research on bond portfolio with index call options?
Replies: 5
Views: 635

Re: Research on bond portfolio with index call options?

following up on my own post -- I believe I read this in a Zvi Bodie book.
by dandan14
Sun Jan 21, 2018 2:53 pm
Forum: Investing - Theory, News & General
Topic: Research on bond portfolio with index call options?
Replies: 5
Views: 635

Research on bond portfolio with index call options?

As I get close and closer to my FIRE number, I'm thinking a lot about ways to avoid any big down years. As Wade Pfau points out, it is the few years leading up to and out of "retirement" that can have the biggest impact on success.

I'm currently at a 50/50 allocation with some call options on the index to model the upside of a 75/25 portfolio. The cost of that this year was 1% of my portfolio -- and it has worked out well.

I've been searching for some research / models that use a nearly 100% bond portfolio paired with some call options on the broad equity index.
Does anyone know of something that shows some historical returns and research using that model? I've not been successful and finding this sort of thing on google.
by dandan14
Sun Jan 07, 2018 2:16 pm
Forum: Investing - Theory, News & General
Topic: Lowering my risk profile (AA or options)
Replies: 2
Views: 509

Re: Lowering my risk profile (AA or options)

I've been running scenarios all weekend.
I'm leaning toward calls. I can shift my overall AA to 50/50 which will help me sleep better at night. Then I'll buy some 1 year calls every January for a cost of about 1% of my portfolio. (I've run some calcs, and I can make most of the shifts inside of IRAs to avoid capital gains.)
For that 1%, I get the downside performance of 50/50 and the upside performance of 75/25.
I feel pretty ok with that.
by dandan14
Sun Jan 07, 2018 8:07 am
Forum: Investing - Theory, News & General
Topic: Lowering my risk profile (AA or options)
Replies: 2
Views: 509

Lowering my risk profile (AA or options)

Typically, I have been slowing shifting my AA more toward bonds as I've gotten older and closer to "winning the game." As I've grown increasingly uncomfortable with the idea of loss, I'm thinking of making a more significant shift to my strategy. I'm currently 75/25. I believe I have 3 options with similar risk/reward profiles. 2 of them would use long term options (i.e. LEAPs), likely of a 1 year duration to keep it simple. 1. Shift AA to something like 60/40 or 50/50. This is a straight line payout. Softens, but does not cap, downside. Lessens upside. 2. Keep my AA at 75/25. Buy some protective puts on the index to limit my downside. This is the shape of a hockey stick -- with the downside significantly softened by having the pa...
by dandan14
Sat Dec 30, 2017 11:29 am
Forum: Personal Investments
Topic: Backdoor Roth vs. Recharacterization
Replies: 24
Views: 3362

Re: Backdoor Roth vs. Recharacterization

TravelforFun wrote: Sat Dec 30, 2017 11:11 am 1) Recharacterization is no longer allowed per new tax laws. You just have one shot.

TravelforFun
Hmm...my understanding is that recharacterizations are still allowed. For instance, you contribute to a Roth and, whoops, you made to much money.
What you can no longer do is convert 3 buckets to a Roth, and undo the 2 that appreciated least. (i.e. the horse race method)
by dandan14
Sat Dec 30, 2017 9:34 am
Forum: Personal Investments
Topic: Backdoor Roth vs. Recharacterization
Replies: 24
Views: 3362

Re: Backdoor Roth vs. Recharacterization

Thanks -- that's pretty much what I was thinking as well. I temporarily forgot about the 5 year rule -- because that is so unlikely to come into play here. But you're right -- that does add a little bit of a con to the conversion.
by dandan14
Sat Dec 30, 2017 6:56 am
Forum: Personal Investments
Topic: Backdoor Roth vs. Recharacterization
Replies: 24
Views: 3362

Backdoor Roth vs. Recharacterization

Looking into 2018, we'll likely be very close to the Roth income limits.
Is there any reason to prefer one of these options over the other?
1. Contribute to a Roth. Recharacterize if needed.
2. Contribute to a non-deductible and backdoor convert soon after.
by dandan14
Sun Dec 17, 2017 4:08 pm
Forum: Personal Finance (Not Investing)
Topic: Trust for my kids (in the event of my death)
Replies: 14
Views: 2303

Re: Trust for my kids (in the event of my death)

If worried about kids having too much control then allow them to be co-trustee with independent trustee and then they can be able trustee at designated age if they wish. ... Not sure if this is what you are thinking, but I'd shy away from any sort of mandatory distributions. For creditor protection purposes. Your attorney should know how to do this. Co-trustee is an interesting idea. I'll ask the attorney about that. Thanks. The creditor protection point is also a really good one. I'd hate for a mandatory distribution to get immediately eaten up by some sort of lawsuit or creditor. OP, While IANAL, I would suggest you google and read about beneficiary controlled asset protection trusts. Then ask your attorney about them. In a nut shell, th...
by dandan14
Sun Dec 17, 2017 8:24 am
Forum: Personal Finance (Not Investing)
Topic: Trust for my kids (in the event of my death)
Replies: 14
Views: 2303

Re: Trust for my kids (in the event of my death)

WannabeAgAlum wrote: Sat Dec 16, 2017 7:17 pm If worried about kids having too much control then allow them to be co-trustee with independent trustee and then they can be able trustee at designated age if they wish.
...
Not sure if this is what you are thinking, but I'd shy away from any sort of mandatory distributions. For creditor protection purposes. Your attorney should know how to do this.
Co-trustee is an interesting idea. I'll ask the attorney about that. Thanks.
The creditor protection point is also a really good one. I'd hate for a mandatory distribution to get immediately eaten up by some sort of lawsuit or creditor.
by dandan14
Sun Dec 17, 2017 8:22 am
Forum: Personal Finance (Not Investing)
Topic: Trust for my kids (in the event of my death)
Replies: 14
Views: 2303

Re: Trust for my kids (in the event of my death)

StevieG72 wrote: Sun Dec 17, 2017 6:35 am Beyond the Grave is a pretty good read. It has some interesting examples where the best laid plans when horribly wrong. It will give you things to think about and consider for your own estate plan.

I do not want to be too controlling, however I also do not want my kiddos entire inheritance to be squandered away by bad decisions or lost in the coin toss of marriage / divorce.
Nice -- I just checked it out via my library/hoopla account. I'll take a look!
by dandan14
Sat Dec 16, 2017 7:02 pm
Forum: Personal Finance (Not Investing)
Topic: Trust for my kids (in the event of my death)
Replies: 14
Views: 2303

Trust for my kids (in the event of my death)

It has been about 10 years since we revised our wills. We just started working with an attorney to update them. I've been thinking about setting up a trust that would last in perpetuity, funded by our assets and the payouts from life insurance (in the event my wife and I both die). This would give them a yearly payment each year for the rest of their lives. Here is my current thinking: Up to 3% of the account value at the beginning of the year can be used at the executor's discretion each year for the cost of raising the kids. At age 21 of the oldest kid, the full account would be split by the number of kids, and 10% of the 3% would be under the control of my son/daughter, while 90% resided under the control of the executor. Their portion o...
by dandan14
Sun Dec 03, 2017 1:32 pm
Forum: US Chapters
Topic: RTP, NC Chapter Meeting 11:00 AM Sat December 2, 2017
Replies: 6
Views: 2929

Re: RTP, NC Chapter Meeting 11:00 AM Sat December 2, 2017

While the 1200 mile round trip commute makes it tough for me to make the meetings, I still enjoy reading these summaries!
I'm really impressed that you guys have kept this going!
by dandan14
Sat Sep 09, 2017 12:09 pm
Forum: Personal Finance (Not Investing)
Topic: Anyone else freeze their credit score?
Replies: 126
Views: 16086

Re: Anyone else freeze their credit score?

Sure. I've had mine frozen for about 10 years. I thaw it a few times a year for a specific reason. Takes about 10 minutes to thaw all 3.
by dandan14
Tue Aug 15, 2017 12:25 pm
Forum: US Chapters
Topic: Detroit Area Bogleheads - Master Thread
Replies: 83
Views: 52661

Re: Detroit Area Bogleheads - Master Thread

Oh shoot, I should have googled that address. I didn't realize you were so far north. That makes it about 90 minutes for me -- which probably doesn't make sense.
Do you know of any groups around Ann Arbor?
by dandan14
Tue Aug 15, 2017 12:23 pm
Forum: US Chapters
Topic: Detroit Area Bogleheads - Master Thread
Replies: 83
Views: 52661

Re: Detroit Area Bogleheads - Master Thread

daytona084 wrote: Sat Jun 24, 2017 8:45 am The next meeting of the Detroit Chapter is planned for September 9th, 2017. It will be at the usual location (Multi-Lakes Conservation Association - scroll up for information). Hope to see everyone there!
Is it 10:30-noon?
by dandan14
Wed Jul 26, 2017 8:28 pm
Forum: Investing - Theory, News & General
Topic: CD Rates so much higher than bonds?
Replies: 14
Views: 2936

Re: CD Rates so much higher than bonds?

I guess the 250k fdic limit would keep out institutional money.
by dandan14
Wed Jul 26, 2017 8:01 pm
Forum: Investing - Theory, News & General
Topic: CD Rates so much higher than bonds?
Replies: 14
Views: 2936

CD Rates so much higher than bonds?

I know that Allan Roth often promotes the strategy of buying CDs over bonds -- and there are some good reasons for that. (You can typically cash out for a low penalty if rates go way up.) On the secondary market, you lose that benefit, and they behave much more like bonds. For that reason, I typically hold CDs for about half of my fixed portfolio. Here's my question. For mid-term bonds (let's say 10 years from now), US Treasuries are paying about 2.26 as of today. There is a new issue from JP Morgan chase (8/16/17) for 10 years paying 2.8%. It is reasonably in line with others with that maturity. I'm trying to justify to myself why the market adds so much of a premium to the price of bonds (thus lowering their rates). Thoughts? Ideas?