Search found 1476 matches

by FinancialDave
Sat Feb 18, 2017 3:58 pm
Forum: Investing - Theory, News & General
Topic: Why is American funds returns too good to be true?
Replies: 45
Views: 5042

Re: Why is American funds returns too good to be true?

I am looking at the below annual report from American Funds. Look at page 12 and on. This is as of 12.31.2015 https://www.americanfunds.com/advisor/pdf/shareholder/mfcpwp-043_actriwp.pdf All not almost but all funds beat their indexes. How is this possible? Are these returns net of expenses? I must...
by FinancialDave
Fri Feb 17, 2017 2:01 pm
Forum: Investing - Theory, News & General
Topic: Theory on whether to go Roth 401k
Replies: 89
Views: 6653

Re: Theory on whether to go Roth 401k

Is it not obvious that tax rate is a function of account balance for tax deferred accounts? Not to me. Since the first day I was filing paper returns I think the tax rate was always about the size of your "taxable income." Not the size of any account I had, nor even the size of the withdr...
by FinancialDave
Fri Feb 17, 2017 12:37 pm
Forum: Investing - Theory, News & General
Topic: Theory on whether to go Roth 401k
Replies: 89
Views: 6653

Re: Theory on whether to go Roth 401k

Is it not obvious that tax rate is a function of account balance for tax deferred accounts? Not to me. Since the first day I was filing paper returns I think the tax rate was always about the size of your "taxable income." Not the size of any account I had, nor even the size of the withdr...
by FinancialDave
Thu Feb 16, 2017 11:53 am
Forum: Investing - Theory, News & General
Topic: Roth IRA vs 401k
Replies: 27
Views: 1242

Re: Roth IRA vs 401k

Klangfool, In any case, this is a pointless discussion for many people like me. I max up my HSA, Trad. 401Ks, Roth IRAs and for most years, no mega backdoor Roth IRA option. I do not like 529. So,I have to invest in the taxable account and do the best that I can. I do not mean to discount what you a...
by FinancialDave
Thu Feb 16, 2017 1:07 am
Forum: Investing - Theory, News & General
Topic: Roth IRA vs 401k
Replies: 27
Views: 1242

Re: Roth IRA vs 401k

There is also a very good reason why most would suggest you spend down your taxable account before digging into your Roth account, as I don't see any way where the taxable account wins over the Roth. Also the only reason to put money into the taxable account is because you can't put it in the Roth....
by FinancialDave
Thu Feb 16, 2017 12:48 am
Forum: Investing - Theory, News & General
Topic: Roth IRA vs 401k
Replies: 27
Views: 1242

Re: Roth IRA vs 401k

BrandonBogle wrote:Don't forget taxable getting a step up in basis on the date of your death when passing to your heirs


If you pay a penney of tax after the step-up, Roth still wins.
by FinancialDave
Wed Feb 15, 2017 7:58 pm
Forum: Investing - Theory, News & General
Topic: Roth IRA vs 401k
Replies: 27
Views: 1242

Re: Roth IRA vs 401k

There is also a very good reason why most would suggest you spend down your taxable account before digging into your Roth account, as I don't see any way where the taxable account wins over the Roth. Also the only reason to put money into the taxable account is because you can't put it in the Roth. ...
by FinancialDave
Wed Feb 15, 2017 3:31 pm
Forum: Investing - Theory, News & General
Topic: Theory on whether to go Roth 401k
Replies: 89
Views: 6653

Re: Theory on whether to go Roth 401k

Also, to be totally clear about taxable accounts, they can NEVER win over a tax-advantaged account, at best they can be equal at a zero tax rate. This is predicated that you compare the money you had to earn in the first place to put it in any account, as I always do! Dave I must be missing somethi...
by FinancialDave
Mon Feb 13, 2017 6:16 pm
Forum: Investing - Theory, News & General
Topic: Theory on whether to go Roth 401k
Replies: 89
Views: 6653

Re: Theory on whether to go Roth 401k

FinancialDave, I am interested in reading and understanding how you arrive at 1 million to 2 million tax-deferred portfolios. Is it strictly by Trad. 401K? I could not get there even though I max up single Trad. 401K account whenever I can over 20+ years. KlangFool The size of portfolio you have is...
by FinancialDave
Mon Feb 13, 2017 5:56 pm
Forum: Investing - Theory, News & General
Topic: Theory on whether to go Roth 401k
Replies: 89
Views: 6653

Re: Theory on whether to go Roth 401k

Also, to be totally clear about taxable accounts, they can NEVER win over a tax-advantaged account, at best they can be equal at a zero tax rate. This is predicated that you compare the money you had to earn in the first place to put it in any account, as I always do! Dave I must be missing somethi...
by FinancialDave
Mon Feb 13, 2017 3:36 pm
Forum: Investing - Theory, News & General
Topic: Roth IRA vs 401k
Replies: 27
Views: 1242

Re: Roth IRA vs 401k

I understand a lot of factors contribute to this debate. The general consensus is that if you are in a higher tax bracket and get a company match, go with 401k.If your in a low tax bracket with no match, do the Roth first. This makes sense to me, however I feel that there is one very important fact...
by FinancialDave
Mon Feb 13, 2017 12:37 pm
Forum: Investing - Theory, News & General
Topic: Theory on whether to go Roth 401k
Replies: 89
Views: 6653

Re: Theory on whether to go Roth 401k

I didn't read all of the previous posts, so I'm not sure if this was mentioned. The whole point is to contribute to a Traditional 401k and then retire early. In the period from when you retire to before you begin taking SS (at 70), do Roth conversions to fill up the lower brackets. This is the tax ...
by FinancialDave
Mon Feb 13, 2017 12:20 pm
Forum: Investing - Theory, News & General
Topic: Theory on whether to go Roth 401k
Replies: 89
Views: 6653

Re: Theory on whether to go Roth 401k

You don't need a calculator to know that it doesn't matter what return is in which account. You can do this math on a napkin. Earn $5,000 and put it in apple stock earning 20% a year for 30 years and then withdraw it at a 25% tax rate - what do you have left. Dave Now run the math if instead of hav...
by FinancialDave
Mon Feb 13, 2017 11:29 am
Forum: Investing - Theory, News & General
Topic: Theory on whether to go Roth 401k
Replies: 89
Views: 6653

Re: Theory on whether to go Roth 401k

To clarify: I'm making the assumption that one is *not* invested entirely in tax-advantaged accounts, or at least that such an option is on the table. So for instance if you're looking to invest $24K/year and are hitting the 18K/year 401(k) maximum and are in the 25% tax bracket, you're looking at ...
by FinancialDave
Sat Feb 11, 2017 12:51 pm
Forum: Investing - Theory, News & General
Topic: Theory on whether to go Roth 401k
Replies: 89
Views: 6653

Re: Theory on whether to go Roth 401k

It doesn't matter what return is in which account? I guess they should delete this wiki page in that case ;) https://www.bogleheads.org/wiki/Tax-efficient_fund_placement I'm open to missing something obvious here, but it clearly matters a great deal what you put where if you have multiple types of ...
by FinancialDave
Sat Feb 11, 2017 12:20 pm
Forum: Investing - Theory, News & General
Topic: Theory on whether to go Roth 401k
Replies: 89
Views: 6653

Re: Theory on whether to go Roth 401k

it absolutely doesn't matter how long the funds are in any account. This is definitely not true. One of the benefits of tax advantaged accounts is an effectively higher rate of return through either the deferral or non-taxation of dividends. If invested long enough, this effect will dominate tax an...
by FinancialDave
Fri Feb 10, 2017 6:43 pm
Forum: Investing - Theory, News & General
Topic: Theory on whether to go Roth 401k
Replies: 89
Views: 6653

Re: Theory on whether to go Roth 401k

Ok, that is certainly possible and I even agree with the fact that retirees will most often have a lower overall tax rate, however during my first two years of retirement I paid off a $180k mortgage -- how do you do that if you only have tax-deferred money without affecting your tax rate? I'd argue...
by FinancialDave
Fri Feb 10, 2017 6:00 pm
Forum: Investing - Theory, News & General
Topic: Theory on whether to go Roth 401k
Replies: 89
Views: 6653

Re: Theory on whether to go Roth 401k

Second, for typical retirees, the benefit of tax deferment beats the Roth option by a significant margin. This indicates you don't understand the principals as it absolutely doesn't matter how long the funds are in any account. Go back to rule number one as only the tax rates matter. You misunderst...
by FinancialDave
Fri Feb 10, 2017 5:57 pm
Forum: Investing - Theory, News & General
Topic: Theory on whether to go Roth 401k
Replies: 89
Views: 6653

Re: Theory on whether to go Roth 401k

My general conclusion is this: it oversimplifies things too much to just assume similar rates of return for taxable and tax-advantaged. I'd love to see a calculator that allows for even more detailed examination of things, like: what if I have a Traditional 401(k) with low-yield bonds, and Roth 401...
by FinancialDave
Fri Feb 10, 2017 5:37 pm
Forum: Investing - Theory, News & General
Topic: Theory on whether to go Roth 401k
Replies: 89
Views: 6653

Re: Theory on whether to go Roth 401k

That's what I don't like about people just saying "marginal vs. marginal." It leads uninformed people down this path of thinking that if tax rates go up even a little bit that the Roth would have been a better choice. But that's simply false. For one, most of your retirement income will a...
by FinancialDave
Wed Feb 08, 2017 11:35 am
Forum: Investing - Theory, News & General
Topic: Theory on whether to go Roth 401k
Replies: 89
Views: 6653

Re: Theory on whether to go Roth 401k

Klangfool, Don't "what-if" yourself into sleepless nights trying to "know" things that are "unknowable." If you are still many years from retirement just do some of both Roth and non-Roth to diversify your options. As you get closer (within 5 yr) of retirement you shoul...
by FinancialDave
Tue Feb 07, 2017 2:31 pm
Forum: Investing - Theory, News & General
Topic: Buying before distribution
Replies: 4
Views: 388

Re: Buying before distribution

I don't give it a thought unless I'm buying a six figure amount in a taxable account in December. If that happens, I'd wait until after the distribution. If you're talking about a $10K purchase of VTSAX do it now or whenever. Doesn't matter. You're talking about a $50 dividend. Exactly, because the...
by FinancialDave
Tue Feb 07, 2017 2:21 pm
Forum: Investing - Theory, News & General
Topic: Theory on whether to go Roth 401k
Replies: 89
Views: 6653

Re: Theory on whether to go Roth 401k

Roth 401k lets you put away more money in tax-advantaged space. Say what? "No, that's crazy! Both options allow 18K/year" you say! But wait, there's a catch: the 18K that goes into a traditional 401k is pre-tax, so that's 18K that will be taxed later. The 18K that goes into a Roth is post...
by FinancialDave
Mon Feb 06, 2017 7:43 pm
Forum: Investing - Theory, News & General
Topic: Should retirees build a reserve for RMDs?
Replies: 16
Views: 2368

Re: Should retirees build a reserve for RMDs?

hoops777 wrote:You can buy 3,4,5 year cds to cover the first 3 RMDs


Are you talking about inside the IRA, or just from the taxable account. I have not looked into buying a CD inside an IRA?



fd
by FinancialDave
Mon Feb 06, 2017 2:10 pm
Forum: Investing - Theory, News & General
Topic: Should retirees build a reserve for RMDs?
Replies: 16
Views: 2368

Re: Should retirees build a reserve for RMDs?

We are both retired and hold most of our equities in taxable accounts, and hold bonds in IRAs. My traditional IRA is all bonds, split equally between VG Total Bond and VG Intermediate Corp Bond, with no cash. I will start RMDs in 2020, and we will use that money for living expenses. With so many fa...
by FinancialDave
Mon Feb 06, 2017 1:35 pm
Forum: Investing - Theory, News & General
Topic: Theory on whether to go Roth 401k
Replies: 89
Views: 6653

Re: Theory on whether to go Roth 401k

While I do tend to agree with the general recommendations of Trad 401k. I think we often overlook "tax rate risk" in choosing the allocation of retirement accounts. While I understand what you are saying about "tax rate risk" you can't underestimate the other side of the coin wh...
by FinancialDave
Sat Feb 04, 2017 2:26 pm
Forum: Investing - Theory, News & General
Topic: Theory on whether to go Roth 401k
Replies: 89
Views: 6653

Re: Theory on whether to go Roth 401k

DS,
I make no distinction between Roth 401k and Roth IRA. I was just making a couple of cases that are common reasons to have some money in your Roth even if it doesn't seem to make "tax sense" at the time, as we can't predict the future.

Dave
by FinancialDave
Fri Feb 03, 2017 6:40 pm
Forum: Investing - Theory, News & General
Topic: Theory on whether to go Roth 401k
Replies: 89
Views: 6653

Re: Theory on whether to go Roth 401k

Since we can't predict what our tax rates will be for 30+ years of retirement it's always good to diversify your tax options, even if you think you may end up paying more tax. A Roth account in retirement is always handy for those unforeseen large lump sum withdrawals, just can't do that from an IRA...
by FinancialDave
Sat Jan 28, 2017 2:05 pm
Forum: Investing - Theory, News & General
Topic: 2017 hedge fund contest
Replies: 147
Views: 9330

Re: 2017 hedge fund contest

I thought it was interesting that in principle it should be just as easy to pick winning stocks as losing ones, and hence it should be as much an accomplishment statistically speaking to have a large negative return as a large positive one. After all, you could have been short your longs and long y...
by FinancialDave
Wed Jan 25, 2017 2:33 pm
Forum: Investing - Theory, News & General
Topic: ROTH IRA Early Withdrawal and taxes
Replies: 35
Views: 1555

Re: ROTH IRA Early Withdrawal and taxes

Was ROTH IRA 5 years or longer? If not 10% withdrawal penalty applies on everything so 10% of 282.00, ergo $28.00 The OP's age was stated as 27 so 5 year rule doesn't matter. Also, I think a number of us agree given the fact there are not other Roths, then $9 will be the taxable income and $1 will ...
by FinancialDave
Tue Jan 24, 2017 8:01 pm
Forum: Investing - Theory, News & General
Topic: ROTH IRA Early Withdrawal and taxes
Replies: 35
Views: 1555

Re: ROTH IRA Early Withdrawal and taxes

If you think about it there is actually NO WAY the custodian could legally know what your basis was in all your tIRAs or all your Roth accounts. You could have accounts all over the place and they would have no way of knowing that. So box 2b is always going to be checked if the IRA box on the 1099-R...
by FinancialDave
Tue Jan 24, 2017 2:46 pm
Forum: Investing - Theory, News & General
Topic: ROTH IRA Early Withdrawal and taxes
Replies: 35
Views: 1555

Re: ROTH IRA Early Withdrawal and taxes

Box 2a should be blank, and "taxable amount not determined" checked in 2b. These two boxes must be coordinated properly. Alan, Are you saying the default case for box 2a for a Roth is blank? I believe the default case for an IRA (if 2b is checked) is the gross amount in box 1 is put into ...
by FinancialDave
Mon Jan 23, 2017 7:03 pm
Forum: Investing - Theory, News & General
Topic: ROTH IRA Early Withdrawal and taxes
Replies: 35
Views: 1555

Re: ROTH IRA Early Withdrawal and taxes

This is interesting then. My tax form from Vanguard shows the full amount (contributions and gains) for taxable amount. I am being taxed on the FULL amount. Does your tax form also have an "X" in the "Taxable Amount not determined" Box 2b. Shouldn't all IRA 1099Rs have that box ...
by FinancialDave
Mon Jan 23, 2017 1:47 pm
Forum: Investing - Theory, News & General
Topic: Upgrade button on Vanguard IRA
Replies: 72
Views: 6165

Re: Upgrade button on Vanguard IRA

Even though I have both a Fund account and a Brokerage account, my December statement still shows the full year transaction history for the fund account, but only the December transaction history for the brokerage account. They are two separate account numbers but one account statement. Actually the...
by FinancialDave
Mon Jan 23, 2017 1:14 pm
Forum: Investing - Theory, News & General
Topic: ROTH IRA Early Withdrawal and taxes
Replies: 35
Views: 1555

Re: ROTH IRA Early Withdrawal and taxes

I will try putting in the $273 when it asks what the basis is. If I didn't get your help on this, how would someone know what the basis is if it doesn't show on their tax form? The basis just basically means how much was contributed? Is it okay that I am putting the $273 amount in if was for the 20...
by FinancialDave
Mon Jan 23, 2017 1:07 pm
Forum: Investing - Theory, News & General
Topic: ROTH IRA Early Withdrawal and taxes
Replies: 35
Views: 1555

Re: ROTH IRA Early Withdrawal and taxes

FinancialDave wrote:One of the H&R questions is what is your basis in your Roth -- when you put in 273, the the H&R software uses the $9 as your taxable amount.

Dave


And the H&R software says your early distribution penalty is $1.
by FinancialDave
Mon Jan 23, 2017 1:05 pm
Forum: Investing - Theory, News & General
Topic: ROTH IRA Early Withdrawal and taxes
Replies: 35
Views: 1555

Re: ROTH IRA Early Withdrawal and taxes

schutzk21 wrote:Is there a reason the 1099-R would have the X marked off for taxable amount not determined? Wouldn't this box be the $9?


That is pretty much standard practice for a Roth, expecially code J according to the 1099-R instructions.
by FinancialDave
Mon Jan 23, 2017 1:04 pm
Forum: Investing - Theory, News & General
Topic: ROTH IRA Early Withdrawal and taxes
Replies: 35
Views: 1555

Re: ROTH IRA Early Withdrawal and taxes

One of the H&R questions is what is your basis in your Roth -- when you put in 273, the the H&R software uses the $9 as your taxable amount.

Dave
by FinancialDave
Mon Jan 23, 2017 12:41 pm
Forum: Investing - Theory, News & General
Topic: ROTH IRA Early Withdrawal and taxes
Replies: 35
Views: 1555

Re: ROTH IRA Early Withdrawal and taxes

schutzk21 wrote:The code for box 7 is a "J". I do not believe I checked off the money was returned in 2017. It was returned to me in the same year I deposited it, would that change anything?



How about box 5?
by FinancialDave
Mon Jan 23, 2017 12:37 pm
Forum: Investing - Theory, News & General
Topic: ROTH IRA Early Withdrawal and taxes
Replies: 35
Views: 1555

Re: ROTH IRA Early Withdrawal and taxes

What is the code in box 7 on the 1099-R? I am assuming this money was returned to you in 2016, which is the same year it was deposited. Also anything in box 5 on the 1099-R? IS is possible you checked the H&R software box indicating this money was returned to you in 2017 by mistake? This might l...
by FinancialDave
Wed Jan 11, 2017 12:34 pm
Forum: Investing - Theory, News & General
Topic: 2017 hedge fund contest
Replies: 147
Views: 9330

Re: 2017 hedge fund contest

By the way for people who use GoogleDocs you can just put this whole spreadsheet in your own "My Drive" location and then you can follow along whenever you want and build your own formulas to sort the file any way you want. From the existing googledoc just select the File tab, then "A...
by FinancialDave
Tue Jan 10, 2017 6:08 pm
Forum: Investing - Theory, News & General
Topic: 2017 hedge fund contest
Replies: 147
Views: 9330

Re: 2017 hedge fund contest

You may want to save the spreadsheet differently, as the default view goes to the "data" tab (not sorted). honduranhurricane is missing the fund name (username instead of the fund name) in all the tabs. Repeating here for convenience: 2017 Hedge Fund Contest Bogleheads Thanks for the upda...
by FinancialDave
Tue Jan 10, 2017 5:40 pm
Forum: Investing - Theory, News & General
Topic: 2017 hedge fund contest
Replies: 147
Views: 9330

Re: 2017 hedge fund contest

The spreadsheet owner can set a permanent filter, if desired. I believe I have fixed the spreadsheet to update the list to be sorted by returns automatically, with the current winner on top. Presently that's GoldenFinch with his auspicious pick of Sarepta Therapeutics (SRPT), up 25% today on good d...
by FinancialDave
Thu Jan 05, 2017 5:16 pm
Forum: Investing - Theory, News & General
Topic: 2017 hedge fund contest
Replies: 147
Views: 9330

Re: 2017 hedge fund contest

NANOPARTICLE HEDGE FUND

LONG: Novavax (NVAX)
by FinancialDave
Wed Jan 04, 2017 12:44 am
Forum: Investing - Theory, News & General
Topic: "How Pensions and Social Security Affect Asset Allocation"
Replies: 10
Views: 1884

Re: "How Pensions and Social Security Affect Asset Allocation"

Bogleheads: Boglehead Mike Piper, Editor of the Oblivious Investor, is featuring an article that will be of interest to many of us: How Pensions and Social Security Affect Asset Allocation Thank you, Mike! +1 Mike keeps it simple - income is income not a pseudo bond. I am a big fan of Mike's books ...
by FinancialDave
Thu Dec 22, 2016 4:21 pm
Forum: Personal Finance (Not Investing)
Topic: Getting Non-deductible Traditional IRA basis to zero.
Replies: 15
Views: 1645

Re: Getting Non-deductible Traditional IRA basis to zero.

I believe that once you have RMDs, any QCD charitable contributions (up to 100k/year) only use the deductible portion, and leave the part with basis alone. This could help you concentrate the basis part and reduce the tax on any Roth conversion after a few years of that. I don't see any mathmatical...
by FinancialDave
Tue Dec 20, 2016 9:59 pm
Forum: Personal Finance (Not Investing)
Topic: Getting Non-deductible Traditional IRA basis to zero.
Replies: 15
Views: 1645

Re: Getting Non-deductible Traditional IRA basis to zero.

What I am taking away from this conversation is that if you have say $2000 in a non-deductable IRA from more than a year or two ago (which means you can't undo it) and you are now retired and have rolled over hundreds of thousands of dollars in rollover IRAs there is nothing to really do except star...
by FinancialDave
Sat Sep 24, 2016 3:10 pm
Forum: Investing - Theory, News & General
Topic: Do Bogleheads Bucket?
Replies: 89
Views: 8429

Re: Do Bogleheads Bucket?

Two people could be doing exactly the same thing, and one could say they use buckets, and the other could say they don't use buckets. It's just mental accounting. It's semantics. That's a good point. I personally have one brokerage account dedicated to doing one thing and that is generating a retir...
by FinancialDave
Thu Sep 22, 2016 5:00 pm
Forum: Investing - Theory, News & General
Topic: Help understanding the attraction to W & W [Wellington/Wellesley]
Replies: 38
Views: 4403

Re: Help understanding the attraction to W & W [Wellington/Wellesley]

I think an underrated part is the fact it's a stable, disciplined, long-term strategy of Large Value plus high quality corporate bonds for a very cheap expense ratio, even for the investor shares. Especially relevant is that Wellington and Wellesley both seem to have done a consistently good job of...

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