Search found 1495 matches

by FinancialDave
Tue May 16, 2017 4:52 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe on the price paid for Socially Responsible Investing
Replies: 10
Views: 1215

Re: Larry Swedroe on the price paid for Socially Responsible Investing

All I can say on this topic is "Not all Socially Responsible Funds are created equal." I can back this up with my own real life experience which now has about 10 years under it's belt in my granddaughter's 529 plan. When I originally set it up about 10 years ago I put one lump sum into it ...
by FinancialDave
Tue May 09, 2017 8:28 pm
Forum: Investing - Theory, News & General
Topic: Dividend Fund Slice or Stick To Total Stock Market
Replies: 10
Views: 1179

Re: Dividend Fund Slice or Stick To Total Stock Market

My only reason for even thinking about all of this is to generate a decent enough revenue stream from a taxable account to fund an early retirement. If you want to build a taxable account you need a tax efficient fund, in your case the VTSAX. Once you get to retirement you can sell down some of the...
by FinancialDave
Tue May 09, 2017 11:33 am
Forum: Investing - Theory, News & General
Topic: Dividend Fund Slice or Stick To Total Stock Market
Replies: 10
Views: 1179

Re: Dividend Fund Slice or Stick To Total Stock Market

I don't see a purpose in putting a dividend fund in your taxable account, as this is just going to create a bigger taxable event for you along the way and a smaller retirement. If you want to build a taxable account you need a tax efficient fund, in your case the VTSAX. Once you get to retirement yo...
by FinancialDave
Thu Apr 27, 2017 10:56 am
Forum: Investing - Theory, News & General
Topic: Article on Vanguard Total Stock Market
Replies: 10
Views: 2359

Re: Article on Vanguard Total Stock Market

I admit to being rather naive when it comes to investing. If I wanted to get some small cap/value in my portfolio, what Vanguard funds would I want to look at? Instead of tilting TSM in what I call my retirement paycheck portfolio I use the following that I tweaked from Paul Merriman: 10% bonds spl...
by FinancialDave
Wed Apr 26, 2017 12:41 am
Forum: Investing - Theory, News & General
Topic: Unwinding all positions and buy back after French Elections
Replies: 55
Views: 5792

Re: Unwinding all positions and buy back after French Elections

unclescrooge wrote:
Vanguard Fan 1367 wrote:I love Jack Bogle, "don't do something, just stand there." :happy


Indeed the hardest part about investing is not doing anything!


:sharebeer
by FinancialDave
Tue Apr 25, 2017 4:01 pm
Forum: Personal Finance (Not Investing)
Topic: Why are pensions revered, but annuities reviled?
Replies: 113
Views: 10261

Re: Why are pensions revered, but annuities reviled?

$200 difference in monthly pension. But if you take the $100,000 of your contributions and purchase a private annuity, let's say it yields $5000 a year income or $416.66 a month income. It makes sense then to take the $100,000 withdrawal and get $416.66 a month income even though you're giving up $...
by FinancialDave
Sat Apr 22, 2017 5:02 pm
Forum: Personal Finance (Not Investing)
Topic: Why are pensions revered, but annuities reviled?
Replies: 113
Views: 10261

Re: Why are pensions revered, but annuities reviled?

Ditto that. I know of at least one financial podcaster who says that given the choice between a pension and a 401k with a good match, he'd recommend the 401k every time. I don't dispute the math of this if you know what to use for "future returns earned by the 401k participant." :?: Compa...
by FinancialDave
Sat Apr 22, 2017 3:05 pm
Forum: Personal Finance (Not Investing)
Topic: Why are pensions revered, but annuities reviled?
Replies: 113
Views: 10261

Re: Why are pensions revered, but annuities reviled?

I read lots of stuff about the good old days when everyone had a pension, but at the same time whenever anyone brings up annuities people's blood starts to boil. I don't get it. It seems to me that upon retirement, converting some portion of your retirement account into an single-premium immediate ...
by FinancialDave
Mon Apr 10, 2017 2:54 pm
Forum: Investing - Theory, News & General
Topic: What % of People Invest in the Stock Market?
Replies: 29
Views: 5106

Re: What % of People Invest in the Stock Market?

As a totally unscientific assumption consider that the working class is saving maybe 4% of their salary on average and the retired group is spending around 4% on the back end. Considering that household income is similar for those working as those retired. If that was true then we should see the inv...
by FinancialDave
Fri Apr 07, 2017 11:33 pm
Forum: Investing - Theory, News & General
Topic: Do Index Funds Drive Apple Up?
Replies: 27
Views: 2555

Re: Do Index Funds Drive Apple Up?

Imagine a company that has four shares in circulation, and whose only values comes from $100 in the bank. Market Cap: $100 Share Price: $25 Alternative A: Dividends Let's say the company pays a $6.25 dividend per share, for a total of $25 in dividends. There are still 4 shares outstanding. Market C...
by FinancialDave
Thu Apr 06, 2017 9:19 pm
Forum: Investing - Theory, News & General
Topic: Retirement Equity Glide path with 2-3 years of expenses in cash
Replies: 13
Views: 1399

Re: Retirement Equity Glide path with 2-3 years of expenses in cash

I agree that 30/70 is way too conservative for most, but each person needs to sleep at night. To some extent I believe in not making huge changes to your asset allocation all at once, but certainly I can see no reason to go beyond 50/50 as this is plenty conservative especially with some cash in the...
by FinancialDave
Thu Mar 23, 2017 11:27 am
Forum: Investing - Theory, News & General
Topic: Why nobody talk about cash allocation ?
Replies: 17
Views: 2179

Re: Why nobody talk about cash allocation ?

I don't really see how the amount of cash you hold has anything to do with the amount of funds you have saved. That is because the very reason for holding cash (in most cases) is to satisfy a need such as to tide you over if you lose your job or in retirement to last a certain number of years in a r...
by FinancialDave
Thu Mar 23, 2017 11:19 am
Forum: Investing - Theory, News & General
Topic: "Rising Equity Glide Path" ?
Replies: 40
Views: 6114

Re: "Rising Equity Glide Path" ?

A couple of clarifications or assumptions on my initial post. (Dave thanks for the very well thought out and articulate reply). 3) I am at the point where 4 years of cash is only 10%, so a lot of this is probably easier than it could be if numbers were more challenging. However I am planning on a 4...
by FinancialDave
Wed Mar 22, 2017 11:40 am
Forum: Investing - Theory, News & General
Topic: "Rising Equity Glide Path" ?
Replies: 40
Views: 6114

Re: "Rising Equity Glide Path" ?

Bogles: Reposting this here in the right thread. My main question is if anyone has punched the numbers on historical returns with a monthly dollar cost-averaging back into the stock market starting in retirement. (See below) I've been reading a bit in AAII about starting conservative with allocatio...
by FinancialDave
Wed Mar 01, 2017 6:44 pm
Forum: Investing - Theory, News & General
Topic: IRA Conversion
Replies: 5
Views: 431

Re: IRA Conversion

We are in our early 30's and are also in the 15% bracket. The amount involved is about $63k. Would doing a Roth conversion be beneficial for us? There is really no way to know the answer to your question, unless you can predict your tax rates in retirement some 30-40 years from now. However, let's ...
by FinancialDave
Wed Mar 01, 2017 6:07 pm
Forum: Investing - Theory, News & General
Topic: Market up but VTSAX down???
Replies: 21
Views: 2249

Re: Market up but VTSAX down???

How about a little longer term thinking:

12 months VTSAX 26+ %, Vanguard 500 ETF 23+%

Dave
by FinancialDave
Wed Mar 01, 2017 6:00 pm
Forum: Investing - Theory, News & General
Topic: ROTH IRA and April Deadline
Replies: 15
Views: 760

Re: ROTH IRA and April Deadline

Whether or not her future income is low, if her income is currently low, a Roth IRA is the best bet for her earned income right behind the 401(k) up to the match. In other words, I don't see the relevance of future income in the discussion of whether to open a Roth IRA now or not. On the other hand...
by FinancialDave
Wed Mar 01, 2017 5:45 pm
Forum: Investing - Theory, News & General
Topic: ROTH IRA Early Withdrawal and taxes
Replies: 40
Views: 2044

Re: ROTH IRA Early Withdrawal and taxes

Thanks so much for the response. So just to make sure I understand, if I were to contribute to the 2016 year right now (in 2017), would this mean my contributions are for tax year 2016, or 2017? I just think I am confusing myself. It is up to you to specify to your institution holding the Roth that...
by FinancialDave
Wed Mar 01, 2017 1:23 pm
Forum: Investing - Theory, News & General
Topic: ROTH IRA and April Deadline
Replies: 15
Views: 760

Re: ROTH IRA and April Deadline

You may want to read this for the specifics: https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-savings-contributions-savers-credit What you need to be sure of is that the Roth contribution is made for year 2016, if that is done then she can claim the credit provided she meets...
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: 5417

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: 7405

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: 7405

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: 1504

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: 1504

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: 1504

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: 1504

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: 7405

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: 7405

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: 7405

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: 1504

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: 7405

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: 7405

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: 7405

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: 7405

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: 7405

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: 7405

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: 7405

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: 7405

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: 7405

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: 7405

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: 458

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: 7405

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: 2553

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: 2553

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: 7405

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: 7405

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: 7405

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: 191
Views: 17433

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: 40
Views: 2044

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: 40
Views: 2044

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...

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