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Jebediah

AIVSX returns after-tax are 8.91% since inception (per morningstar), and it trails the market by over 2% over the last 15 years.

VFINX (Vanguard 500) has a 9.58% after-tax return since inception.

Jebediah

You're set and should retire.

Jebediah

Carl53 wrote: ↑
Tue May 01, 2018 5:33 pm
According to Bloomberg, 5 year TIPS have a yield of 0.72%. Why would I sign up for Ibonds at 0.3%.

iBonds are tax-deferred.

https://www.bogleheads.org/wiki/I_Bonds_vs_TIPS

Jebediah

FI is absolutely based on one's liquid net worth. And houses/real estate are included in that because they are (typically) liquid, ie they can always be converted to spendable cash (just like a stock). This is patently false. I think joke about a farmer cooking his favorite pig one limb per month c...

Jebediah

Unless I am misunderstanding an awful lot, I find your examples and your way of thinking about this both bizarre and almost horrifying. It is not your net worth that defines financial independence, but your financial assets. Your example would suggest that someone with a paid-off million-dollar hom...

Jebediah

You can account for your home as a consumable (not part of net worth) or an investment asset (part of net worth). What's important is that you stick with one of the two designations when determining your A) net worth and B) spending, in order to determine C) your FI number (based on the SWR of your ...

Jebediah

Unlike renting, you have the opportunity to build equity but home ownership does not generate cash flow. Home ownership does indeed generate cash flow in the form of imputed rent. Cash is what pays bills. Imputed anything does not. Of course it does. Money is fungible. Savings is imputed earnings. ...

Jebediah

nedsaid wrote: ↑
Thu Mar 08, 2018 9:55 am
Unlike renting, you have the opportunity to build equity but home ownership does not generate cash flow.

Home ownership does indeed generate cash flow in the form of imputed rent.

Jebediah

Trailing earnings yield is 3.79%.

2 year treasury yield is 2.11%

Your choice if that's worth the risk.

Jebediah

If he has any artistic inclination-- graphic design, motion design, CGI, illustration etc are an option. It would require some months (say 6) of sitting down, learning the software (not that hard), making some stuff, and then creating a portfolio. Employers only look at the portfolio, could care les...

Jebediah

Investors are cutting their exposure to equities, and they have been for years.

How is this possible? Every share sold is a share bought. Is it a buyback phenomenon? Is it that there are less equity investors but larger holdings per individual? How does this concept of "flows" really work?

Jebediah

I have a solo 401k that I have used in conjunction with solo contractor work. In 2017, I did no solo contractor work. I contributed the 18K maximum to my employer's 401k, zero to the solo 401k. My employer is an LLC, of which I am a member/shareholder. The company is profitable, and allocates my sha...

Jebediah

That chart is not right. It does not include dividends. Look closer, the chart is right even accounting for the Q3 dividend distributions. Of course it's right. It is a price (NAV) chart. It is not supposed to include dividends. :D The problem with the chart is that it is only for three months. Tha...

Jebediah

It's the end of the mutifactor era. Thank you Larry for all the books, Robert T for all the posts. It was good times.

I'll let my DFA and AQR funds stick around as keepsakes, but it's all about VTI and VXUS from here on out.

Jebediah

Reframing might add perspective. If you had the $650K in hand, and were given the one-time opportunity to invest it in the company, would you do so? If yes, how do you rationalize holding 50% of your AA in this private stock? I'm not saying you cannot rationalize it, but what does that rationale loo...

Jebediah

Can anyone speak to outflow/liquidity risk of this kind of fund? We can assume the day will come when all these inflows become outflows. AFAIK PDI is the closed-end cousin (same strategy, more leverage). Is a smaller amount of a CEF a better choice for this kind of thing (assuming one doesn't drasti...

Jebediah

I want to buy 40K of QMNIX (AQR market neutral) in a Roth IRA before the fund closes on friday. It's available at Fidelity in an IRA with a $2500 min. I have put in motion a transfer request to move 40K in cash from my other Roth to a newly opened Roth account at Fidelity. Problem is that the transf...

Jebediah

Great comments, thank you. I hadn't thought of the bond spreads, and I think individual bonds ("special offers just for you") are part of this broker's schtick. I like tfb's suggestion, a CPA audit from the statements.

Jebediah

I am trying to convince a family member (FM) to leave her Morgan Stanley "advisor". FM has stuck around for the usual reasons: the advisor is a nice person, always available, etc. Of course, FM has no idea what they've been paying in fees. I've convinced them to ask for an accounting of the fees the...

Jebediah

I haven't read the whole thread, but QLERX has a .7 correlation to VT (world stock), so it is not the alternative fund you want.

Jebediah

I wonder if I can set my TDI on fire and still sell it back to them at the summer '15 KBB value.

Jebediah

My TDI drives like a dream (for now) but the damn sunroof wont stop rattling so they can have it back.

Jebediah

Do half the bogleheads not know the difference between real and nominal? Someone should do a poll...

Jebediah

P2P lending is the answer. You'll get very few defaults at a 5% return target.

Jebediah

I think it is extremely difficult to evaluate p2p lending as an investment until it is seen how it performs during an economic downturn. My intuition is that the currently available returns don't justify the downside risk. Haven't run any numbers to back this up, but I'd imagine default rates would...

Jebediah

It's not really a good question, because it totally depends on how much money you have. If you're 40 and have 100K, then sure why not go 100% stocks. If you're 40 and have $5 million, then you could reasonably consider 0% stocks.

Jebediah

Jan 2000 - Jan 2016

SPY returned 86%
Large Value returned 225%
Small Value returned 379%

Jebediah

Don't add your SS, and don't subtract your future taxes. Call it a wash.

Jebediah

REITs have a minor diversification benefit, as any sector fund would. I have a more conspiratorial take on why REITs became a "thing". I think the false narratives of "REITs approximate actual real estate investment" and "your home is a consumption item, not an investment" are ideas pushed by wealth...

Jebediah

. It also illustrates for investors, the general case against holding high-yielding bonds in a small-cap value tilted portfolio, so as to avoid holding the same companies on the stock side as the bond side of a portfolio. When risks show up - the negative outcomes can be very large, particularly fo...

Jebediah

Cheap is better than expensive, but either way EM is not a very compelling equity diversifier. It has a low Sharpe ratio and relatively high correlation to developed market equities. The better equity diversifier is a well-managed, low-duration, mildly-leveraged credit CEF. Better Sharpe, low correl...

Jebediah

People whom are tempted to play backtesting timing games on PortfolioVisualizer need to realize that these results, while fun for the euphoric wealth hallucinations they induce, are meaningless and totally data mined. Why? Because if you just tweak any of the input parameters slightly, the output va...

Jebediah

If it's down, you're supposed to buy more (rebalance), not sell it. Nobody can offer "timing" advice for interest rates. If you're tempted to even think about timing interest rates, then you probably have no business owning bonds, instead try CDs. Except for this particular bond fund, which you ough...

Jebediah

I have sent my brother a big box of Omaha steaks every year for his birthday. They had excellent service and my brother raved about them but I never tried them for myself. This year when I sent him his box, I ordered a few for myself. I thought they were horrible compared to the ones I get at the l...

Jebediah

That's helpful, thank you. I do not have any other earned income. So then, you're saying that I can make a Roth i401k contribution comprising my entire business profit (8K - 1/2 SE) and additionally contribute another $5500 to my Roth IRA? This makes me wonder…could I declare interest from CDs in my...

Jebediah

As a sole proprietor/independent contractor, I'll have an earned income of about 8K in 2015. I have a large % of investments in taxable, thus I want to contribute as much as possible to my i401k and/or Roth. What is the maximum I can contribute to my solo 401k? Is it 8K (employee) plus $1600 (employ...

Jebediah

tibbitts wrote:
Moving some of the funds to a Roth, particularly if you can stay in the 0% bracket, wouldn't hurt.

What 0% bracket? Isn't the lowest bracket 10% ?

Jebediah

Thanks for the replies. Consider this idea officially crushed. A 2% spread is pushing a year's worth of interest-- outrageous.

Jebediah

It is a bit cumbersome to re-balance with CDs (whether brokered or retail). I'd keep a modicum in a liquid bond fund or ETF for this reason. Although I prefer retail CDs, nothing wrong with brokered if held to maturity and rolled at that time. If you have the patience, a longish ladder will perform...

Jebediah

Just go for it. Nothing wrong with your idea except if there is a strong chance that you will need to cash in all those CDs before they mature. You can tell me yourself what might happen if interest rates go up. Suppose in 2 years, I can buy a 5-year CD that pays me 4% interest. How much would I be...

Jebediah

If you're planning to sell those CDs, you'll give up most of your yield bonus through spreads. Brokered CDs are best thought of as a buy-and-hold-until-maturity instrument. So, if one was doing a 10 year ladder that would be one thing; if one really just want bonds in the 7 to 10 year range, I'd pe...

Jebediah

In my fixed income allocation I'm aiming for zero credit risk and 7-10 years term risk. I could buy IEF, the 7-10 year treasury fund. That would be convenient. But the yield spread between 7 and 10 year treasuries is currently 1.93 to 2.20 %. Brokered CDs have a 7 to 10 year yield spread of 2.54 to ...

Jebediah

Gundlach is wrong most of the time. He has no idea what the long bond "wants".

Jebediah

Bulky $500 smartphones and their $100 a month "contracts" are good for teenagers who snapchat their kissy faces to each other during class. Compact $30 flip-phones, contract-free, $20 a month, are good for adults who need a simple way to talk and text. Use your computer for calendar and address. If ...

Jebediah

3% sounds high. GMO/Grantham are forecasting -2% real for US stocks over the next 7 years...and they have an excellent track record with these forecasts. Do you have evidence of their "excellent track record"? Let's say, 2010 to present? L. GMO makes 7-10 year forecasts, not short term. Some discus...

Jebediah

3% sounds high. GMO/Grantham are forecasting -2% real for US stocks over the next 7 years...and they have an excellent track record with these forecasts.

Jebediah

I'm always surprised to see people holding a portfolio with an expected real return of -1 to 1%. That basically means you have to save everything you hope to spend later in retirement. I'd rather see my portfolio do some of the heavy lifting, so I've decided to take some risk with it. So far, that ...

Jebediah

HomerJ wrote:
Maverick3320 wrote:From personal experience, my returns have been around 11% over the last few years.
But the economy has been growing.

What happens when the next crash happens, and millions of people lose their jobs?

11%
11%
11%
11%
-80%

You're talking about the stock market, right?

Jebediah

Isn't this the noise we should be tuning out? How is the ramblings of a random blogger actionable or relevant?

Jebediah

Contrary to what is asserted often on this board, DFA access does not have to be expensive at all .... Sorry, maybe I missed something. What's the inexpensive way to access DFA? 1. Hire advisor 2. Only let them manage funds for the equity side of your portfolio 3. get set up with BOSVX/DWUSX 4. use...

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