Search found 8311 matches

by Kevin M
Wed Apr 26, 2017 6:24 pm
Forum: Personal Finance (Not Investing)
Topic: Question on realized cap gain / estimated taxes
Replies: 9
Views: 264

Re: Question on realized cap gain / estimated taxes

What was your AGI for 2016? If 150K or less, then the safe harbor is only 100% of 2016 tax. If more than $150K then it's 110% of 2016 tax.

Kevin
by Kevin M
Wed Apr 26, 2017 4:36 pm
Forum: Investing - Theory, News & General
Topic: Vanguard has switched to brokerage only accounts
Replies: 53
Views: 4617

Re: Vanguard has switched to brokerage only accounts

If you don't like the new platform, don't "upgrade" to it unless you have to. I am not upgrading my accounts in general, but we've upgraded a few traditional IRA accounts because it's necessary if you want to do online Roth conversions into new Roth accounts. All new accounts are on the ne...
by Kevin M
Wed Apr 26, 2017 4:25 pm
Forum: Investing - Help with Personal Investments
Topic: Bonds
Replies: 30
Views: 1683

Re: Bonds

Waiting for some concrete data that allows us to check your results, and see how your conclusions might differ from what the Wiki says. I'd have to sell the spreadsheet to you for a few thousand dollars. Then your inputs are useless to this discussion and any others in which you use your spreadshee...
by Kevin M
Wed Apr 26, 2017 4:01 pm
Forum: Personal Finance (Not Investing)
Topic: Adding "Amended" Header on Federal Tax Forms Filed with 1040X?
Replies: 7
Views: 163

Re: Adding "Amended" Header on Federal Tax Forms Filed with 1040X?

Taxpayers filing amended federal and NYS returns generally wind up with a skinny envelope to the IRS and a massive envelope to NYS tax department. (Other states likely differ.) I end up with no envelope to the IRS for my standard return, since e-filing is free. I end up with a fat envelope to the s...
by Kevin M
Wed Apr 26, 2017 3:45 pm
Forum: Personal Finance (Not Investing)
Topic: Adding "Amended" Header on Federal Tax Forms Filed with 1040X?
Replies: 7
Views: 163

Re: Adding "Amended" Header on Federal Tax Forms Filed with 1040X?

If you aren't using tax software, and follow the IRS instructions for 1040X, does it tell you to write "amended" on the amended forms? Not that I can tell, but I am concerned that I may have overlooked something. Not from what you've shared so far. Plus, in previous years, when a very wel...
by Kevin M
Wed Apr 26, 2017 3:33 pm
Forum: Investing - Help with Personal Investments
Topic: Bonds
Replies: 30
Views: 1683

Re: Bonds

There are a few secondary reasons that could favor high risk assets in the Roth, but before discussing those factors, we should be clear on the primary factor that leads to the conclusion that it doesn't matter. Well the IRR is giving different results than the wiki in a few circumstances. Also the...
by Kevin M
Wed Apr 26, 2017 3:23 pm
Forum: Personal Finance (Not Investing)
Topic: Adding "Amended" Header on Federal Tax Forms Filed with 1040X?
Replies: 7
Views: 163

Re: Adding "Amended" Header on Federal Tax Forms Filed with 1040X?

You do not need to annotate the revised forms. I've filed several 1040X returns, most recently a few days ago. I use tax software, and just print the 1040X and amended forms, then mail them as is. Well, not exactly, since one of the forms I just amended required writing something "on the dotted...
by Kevin M
Wed Apr 26, 2017 3:12 pm
Forum: Investing - Help with Personal Investments
Topic: Bonds
Replies: 30
Views: 1683

Re: Bonds

I simply don't see any logical connection between your posts and mine. You referenced a wiki article "Tax Adjusted Allocation" and I referenced IRR. IRR would conclude to put bonds in a tIRA and would not start a Roth. Just what the numbers say. You are addressing a different decision, wh...
by Kevin M
Wed Apr 26, 2017 3:02 pm
Forum: Investing - Help with Personal Investments
Topic: Bonds
Replies: 30
Views: 1683

Re: Bonds

When one takes the big picture into consideration, including income tax, it makes little to no difference what assets one places in Roth versus tax-deferred accounts. +1. The other posters who are saying that it is better to place high expected return (also high risk) assets in a Roth in preference...
by Kevin M
Tue Apr 25, 2017 9:56 am
Forum: Investing - Help with Personal Investments
Topic: Backdoor roth tax mistake
Replies: 6
Views: 670

Re: Backdoor roth tax mistake

I was not covered by an employer plan during those years, but my income was too high to deduct the TIRA so it was funded with after tax dollars. What DSInvestor said. I'll also add that if you don't have an employer-sponsored retirement plan, you probably should be doing deductible traditional IRA ...
by Kevin M
Mon Apr 24, 2017 8:05 pm
Forum: Investing - Theory, News & General
Topic: I don't understand the case for EE bonds
Replies: 231
Views: 12205

Re: I don't understand the case for EE bonds

Let me put it another way: Can you propose a cheaper way to guarantee me exactly $40,000 in 20 years? Right now the least expensive way I've found to achieve that is by buying $20,000 of EE bonds. Yes, I think this is the primary benefit of EE bonds--a guaranteed nominal 20-year return that is high...
by Kevin M
Mon Apr 24, 2017 12:30 pm
Forum: Investing - Theory, News & General
Topic: I don't understand the case for EE bonds
Replies: 231
Views: 12205

Re: I don't understand the case for EE bonds

So let's put some numbers to it. I don't disagree with your analysis, but I would suggest they are putting the emphasis on "really spike" and "the first few years". For example, I think if you changed your time period to 10 years instead of 5 for the rate increase, the tradition...
by Kevin M
Mon Apr 24, 2017 11:37 am
Forum: Personal Finance (Not Investing)
Topic: "Pulling Money From Your Roth IRA? Read This First"
Replies: 1
Views: 687

Re: "Pulling Money From Your Roth IRA? Read This First"

Sure, but this is one of the most important sentences in the article: Note that we're talking about tax- and penalty-free withdrawals of investment earnings here; as noted above, you can always withdraw your contributions without any strings attached. This is why a Roth can be great for an emergency...
by Kevin M
Mon Apr 24, 2017 11:31 am
Forum: Personal Consumer Issues
Topic: Will cars be autonomous in three years?
Replies: 162
Views: 5889

Re: Will cars be autonomous in three years?

Have you driven a Tesla? If you have driven one, I would be kind of surprised that your only criterion for buying one over a truck would be self-driving capability (which isn't really there yet anyway). I had no intention of buying a Tesla, but was curious, so took a test drive. I ordered one as soo...
by Kevin M
Mon Apr 24, 2017 11:24 am
Forum: Investing - Theory, News & General
Topic: Is $20K I-Bonds considered cash or bond?
Replies: 55
Views: 3499

Re: Is $20K I-Bonds considered cash or bond?

My top level AA is stocks and fixed income. Each has sub-asset classes. Stocks are decomposed into international and US stocks, which are further decomposed into things like large-blend, small-value, developed markets, emerging markets, etc. Within the fixed-income asset class, I have bonds, CDs, st...
by Kevin M
Mon Apr 24, 2017 10:44 am
Forum: Investing - Theory, News & General
Topic: I don't understand the case for EE bonds
Replies: 231
Views: 12205

Re: I don't understand the case for EE bonds

So let's put some numbers to it. Say the 15-year Treasury yield is 5% in 5 years. The price of a 20-year Treasury bought at par (100) at today's yield of 2.61%, which would then be a 15-year Treasury with 2.61% coupon at 5% yield, would be 75.19. Without considering reinvestment, you would have col...
by Kevin M
Mon Apr 24, 2017 9:48 am
Forum: Investing - Theory, News & General
Topic: I don't understand the case for EE bonds
Replies: 231
Views: 12205

Re: I don't understand the case for EE bonds

Intriguingly, from my perspective, you make a more convincing argument for EE bonds that those who actually hold them. Just keep in mind you have to keep track of what has happened with yield and duration. X years in, the normal long bond has already generated a bunch of yield, and duration has dec...
by Kevin M
Sun Apr 23, 2017 8:27 pm
Forum: Investing - Theory, News & General
Topic: I don't understand the case for EE bonds
Replies: 231
Views: 12205

Re: I don't understand the case for EE bonds

Although they have unique characteristics compared to the long-term Treasuries held in something like a total bond market fund (TBM), some of those unique characteristics are positive (higher yield, limited downside in nominal terms), and I can see how someone would conclude that those positives ou...
by Kevin M
Sun Apr 23, 2017 6:46 pm
Forum: Investing - Theory, News & General
Topic: I don't understand the case for EE bonds
Replies: 231
Views: 12205

Re: I don't understand the case for EE bonds

I think a rational reason for letsgobobby and others with beliefs like him to own EE bonds in preference to stocks for a 20-year time period is that, unlike willthrill81 and others with beliefs like him, he might believe that the last 90 years or so of US stock history is not an adequate sample on w...
by Kevin M
Sun Apr 23, 2017 1:42 pm
Forum: Investing - Help with Personal Investments
Topic: Differential aggressiveness for ROTH vs 401K
Replies: 31
Views: 2324

Re: Differential aggressiveness for ROTH vs 401K

Ill be doing what I think you are alluding to. Put your growth-iest bets into your Roth. Why not? It all tax free. Because you are not adjusting your AA for after-tax return and risk. If you do so, it doesn't matter where you put your "growth-iest" bets. Kevin, I understand what you are s...
by Kevin M
Sun Apr 23, 2017 12:39 pm
Forum: Investing - Theory, News & General
Topic: I don't understand the case for EE bonds
Replies: 231
Views: 12205

Re: I don't understand the case for EE bonds

Kevin, you said rolling 5 year CDs could be a better choice for the above poster, <snip> Yes, "could be", given the concern about rising interest rates, which was one of the many points listed. Just wanted that poster to understand that EE bonds may not be the best choice if the concern i...
by Kevin M
Sun Apr 23, 2017 12:17 pm
Forum: Investing - Theory, News & General
Topic: How inefficient is it to hold Total Bond Index in a taxable account?
Replies: 34
Views: 4112

Re: How inefficient is it to hold Total Bond Index in a taxable account?

Say that young investor in the 28% Federal tax bracket with $100K in maturing CDs wants an AA of 60/40, but hypothetically has no retirement accounts. There is only room for $5500 to put that bond index into a new IRA account. The other $34,500 of VTBLX (Total Bond Index) would go into a taxable ac...
by Kevin M
Sun Apr 23, 2017 10:48 am
Forum: Investing - Theory, News & General
Topic: I don't understand the case for EE bonds
Replies: 231
Views: 12205

Re: I don't understand the case for EE bonds

3. I am expecting interest rate risk from bond funds (drop in price of bonds in fund when/if interest rates rise) in the future If interest rates increase enough, you will do better with rolling 5-year CDs for 20 years, as I discussed earlier. 5. I will likely be in a lower tax bracket then (and if...
by Kevin M
Sun Apr 23, 2017 10:17 am
Forum: Investing - Theory, News & General
Topic: I don't understand the case for EE bonds
Replies: 231
Views: 12205

Re: I don't understand the case for EE bonds

So, for example, a EE bond is essentially risk free. This is not true. What is true is that EE bonds have essentially no credit risk. But credit risk is only one dimension of fixed-income risk, the other primary dimension being term risk (term risk incorporates inflation risk if you think about it ...
by Kevin M
Sat Apr 22, 2017 8:05 pm
Forum: Investing - Theory, News & General
Topic: I don't understand the case for EE bonds
Replies: 231
Views: 12205

Re: I don't understand the case for EE bonds

and some of us plan to tax rate arbitrage the EEs, in my case from 35% marginal to perhaps 25% marginal in 20 years. kevin, what rates what a CD have to earn to compare to an EE for someone like me? Yes, that makes it more attractive. Assuming you start at 2.75% with marginal tax rate of 35% for th...
by Kevin M
Sat Apr 22, 2017 6:56 pm
Forum: Investing - Theory, News & General
Topic: I don't understand the case for EE bonds
Replies: 231
Views: 12205

Re: I don't understand the case for EE bonds

I recently bought a 7-year CD at 3%. I'd much rather take this bet than have to hold for 20 years to get 3.5%. If I can earn 4% for the remaining 13 years after the CD matures, I end up making 3.65%. Or maybe a CD will come along in less than 7 years with a rate high enough to justify paying the 1....
by Kevin M
Sat Apr 22, 2017 4:08 pm
Forum: Investing - Theory, News & General
Topic: I don't understand the case for EE bonds
Replies: 231
Views: 12205

Re: I don't understand the case for EE bonds

All of that may be true but that is not what liquid/illiquid means. Posters saying that EE bonds are illiquid either don't understand how they work or need to explain themselves more and not use incorrect term. To many of us, liquidity means that you can sell quickly and easily without losing money...
by Kevin M
Sat Apr 22, 2017 3:45 pm
Forum: Investing - Help with Personal Investments
Topic: Differential aggressiveness for ROTH vs 401K
Replies: 31
Views: 2324

Re: Differential aggressiveness for ROTH vs 401K

You increase your portfolio expected return by putting higher risk / higher expected return assets in Roth because you increase your after-tax risk. In other words, you are increasing your after-tax allocation to the riskier assets. You could accomplish the same thing by increasing your before-tax ...
by Kevin M
Sat Apr 22, 2017 10:25 am
Forum: Investing - Theory, News & General
Topic: Visualizing the devastating impact of fees
Replies: 54
Views: 4763

Re: Visualizing the devastating impact of fees

I believe the standard way to calculate after-cost return [R] is this formula (the same as adjusting [for] inflation): R = (1+r) / (1+c) -1 [where r is gross return before fee and c is the fee] This can't be right, Kevin. Consider the case where r, the gross return, is 0% and c, the fee, is 2%. You...
by Kevin M
Fri Apr 21, 2017 8:05 pm
Forum: Investing - Help with Personal Investments
Topic: Differential aggressiveness for ROTH vs 401K
Replies: 31
Views: 2324

Re: Differential aggressiveness for ROTH vs 401K

Kevin, I think I disagree with you for the following reason. When you talk about risk you need to include the concept of long term vs short term risk. I agree that short term risk is high for equities but long term risk is still fairly low. I am talking about long-term risk, or risk over whatever t...
by Kevin M
Fri Apr 21, 2017 4:47 pm
Forum: Investing - Help with Personal Investments
Topic: Differential aggressiveness for ROTH vs 401K
Replies: 31
Views: 2324

Re: Differential aggressiveness for ROTH vs 401K

Hi Kevin, thanks for that link, because I was reading https://www.bogleheads.org/wiki/Tax-efficient_fund_placement If all else is equal (and it often isn't, because you may have different options in your 401(k) and your Roth IRA), it is slightly better to have the fund with the highest expected ret...
by Kevin M
Fri Apr 21, 2017 2:34 pm
Forum: Investing - Theory, News & General
Topic: I don't understand the case for EE bonds
Replies: 231
Views: 12205

Re: I don't understand the case for EE bonds

I would definitely purchase TIPS long before EE bonds. I see no upside to holding TIPS in a taxable account. There is nothing worse than paying tax on phantom income for the inflation adjustment, the only way you realize the income is to completely liquidate the TIPS holding which sort of defeats t...
by Kevin M
Fri Apr 21, 2017 1:21 pm
Forum: Investing - Theory, News & General
Topic: I don't understand the case for EE bonds
Replies: 231
Views: 12205

Re: I don't understand the case for EE bonds

I always looked at EE bonds as a saving vehicle not as in investment. Young people could allocate a percentage of their pay to EE bonds and a few years later cash them in to buy a car, the down payment on a house, or to help pay for college. This makes no sense with EE bonds being issued currently....
by Kevin M
Fri Apr 21, 2017 1:10 pm
Forum: Investing - Help with Personal Investments
Topic: Differential aggressiveness for ROTH vs 401K
Replies: 31
Views: 2324

Re: Differential aggressiveness for ROTH vs 401K

Ill be doing what I think you are alluding to. Put your growth-iest bets into your Roth. Why not? It all tax free. Because you are not adjusting your AA for after-tax return and risk. If you do so, it doesn't matter where you put your "growth-iest" bets. You increase your portfolio expect...
by Kevin M
Fri Apr 21, 2017 1:02 pm
Forum: Investing - Theory, News & General
Topic: I don't understand the case for EE bonds
Replies: 231
Views: 12205

Re: I don't understand the case for EE bonds

There has yet to be a 15-year period where stocks have lost money, but it's not impossible for it to happen in the future. Based on data in our Simba backtest spreadsheet, US stocks had a cumulative real return of -5% over the 17-year period 1965-1981 (inclusive). Of course that high-inflation peri...
by Kevin M
Fri Apr 21, 2017 11:52 am
Forum: Investing - Theory, News & General
Topic: I don't understand the case for EE bonds
Replies: 231
Views: 12205

Re: I don't understand the case for EE bonds

I recently bought a 7-year CD at 3%. I'd much rather take this bet than have to hold for 20 years to get 3.5%. If I can earn 4% for the remaining 13 years after the CD matures, I end up making 3.65%. Or maybe a CD will come along in less than 7 years with a rate high enough to justify paying the 1....
by Kevin M
Fri Apr 21, 2017 11:43 am
Forum: Investing - Theory, News & General
Topic: How inefficient is it to hold Total Bond Index in a taxable account?
Replies: 34
Views: 4112

Re: How inefficient is it to hold Total Bond Index in a taxable account?

SEC yield includes changes in price which is more relevant to a short term investor who is banking on capital gains as part of his return. Distribution yield is just the return from interest payments. The latter dominates total return for long term investors. Most bogleheads are long-term investors...
by Kevin M
Fri Apr 21, 2017 11:18 am
Forum: Investing - Theory, News & General
Topic: Visualizing the devastating impact of fees
Replies: 54
Views: 4763

Re: Visualizing the devastating impact of fees

... In fact, what an investment provider gets as a fraction of what you would otherwise have had depends only on their fees, not returns. Looked at more precisely, the provider gets a fraction equal to 1–(1+c)^(–T) of what would otherwise be my wealth, given fee c and time horizon T. Is the relatio...
by Kevin M
Thu Apr 20, 2017 8:27 pm
Forum: Investing - Theory, News & General
Topic: I don't understand the case for EE bonds
Replies: 231
Views: 12205

Re: I don't understand the case for EE bonds

There has yet to be a 15-year period where stocks have lost money, but it's not impossible for it to happen in the future. Based on data in our Simba backtest spreadsheet, US stocks had a cumulative real return of -5% over the 17-year period 1965-1981 (inclusive). Of course that high-inflation peri...
by Kevin M
Thu Apr 20, 2017 8:11 pm
Forum: Investing - Theory, News & General
Topic: Visualizing the devastating impact of fees
Replies: 54
Views: 4763

Re: Visualizing the devastating impact of fees

This result (FV) does not change if you change the rate of return; changing the rate of return changes the amount you start with (PV) to get to $250K. Kevin I put a concrete $ amount on the Y-axis simply to provide an anchor point to help someone understand the significance of returns lost. It has ...
by Kevin M
Thu Apr 20, 2017 8:02 pm
Forum: Investing - Theory, News & General
Topic: Portfolio Visualizer - How to add stable value fund?
Replies: 5
Views: 431

Re: Portfolio Visualizer - How to add stable value fund?

If you create an account you can upload any data series you want, even a fake one. So the OP should download the SVF historical data and then upload it to PV. Nice to know. I typically work in the opposite direction, and download the data from PV to a spreadsheet, then I can do my own analysis. It ...
by Kevin M
Thu Apr 20, 2017 7:58 pm
Forum: Investing - Theory, News & General
Topic: I don't understand the case for EE bonds
Replies: 231
Views: 12205

Re: I don't understand the case for EE bonds

There has yet to be a 15-year period where stocks have lost money, but it's not impossible for it to happen in the future. Based on data in our Simba backtest spreadsheet, US stocks had a cumulative real return of -5% over the 17-year period 1965-1981 (inclusive). Of course that high-inflation peri...
by Kevin M
Thu Apr 20, 2017 7:38 pm
Forum: Investing - Theory, News & General
Topic: I don't understand the case for EE bonds
Replies: 231
Views: 12205

Re: I don't understand the case for EE bonds

I recently bought a 7-year CD at 3%. I'd much rather take this bet than have to hold for 20 years to get 3.5%. If I can earn 4% for the remaining 13 years after the CD matures, I end up making 3.65%. Or maybe a CD will come along in less than 7 years with a rate high enough to justify paying the 1.5...
by Kevin M
Thu Apr 20, 2017 7:21 pm
Forum: Investing - Theory, News & General
Topic: Portfolio Visualizer - How to add stable value fund?
Replies: 5
Views: 431

Re: Portfolio Visualizer - How to add stable value fund?

No.

The only phony ticker I know you can add is CASHX for cash.

Kevin
by Kevin M
Thu Apr 20, 2017 6:30 pm
Forum: Investing - Theory, News & General
Topic: How inefficient is it to hold Total Bond Index in a taxable account?
Replies: 34
Views: 4112

Re: How inefficient is it to hold Total Bond Index in a taxable account?

I go by the assumption I learned from forum member grabiner, which is that muni bonds have about the same taxable-equivalent return as taxable bonds at a federal marginal tax rate of 25%. Going by this assumption, you are better off with muni bonds on a risk-adjusted basis in the 28% tax bracket. If...
by Kevin M
Thu Apr 20, 2017 6:19 pm
Forum: Investing - Help with Personal Investments
Topic: Differential aggressiveness for ROTH vs 401K
Replies: 31
Views: 2324

Re: Differential aggressiveness for ROTH vs 401K

With Roth as a small sliver of your portfolio, it does not matter. That is my situation. If your Roth is a large portion of your portfolio, then you should think about after-tax risk and return, since that's what you eat. If you think in after-tax terms, then the risk and expected return are differe...
by Kevin M
Thu Apr 20, 2017 6:11 pm
Forum: Investing - Theory, News & General
Topic: Visualizing the devastating impact of fees
Replies: 54
Views: 4763

Re: Visualizing the devastating impact of fees

Here's the way I worked the problem. I use spreadsheet PV and FV functions, but for the simple case of a lump sum investment at the beginning of the period, we can use the simple TVM equation: FV = PV * (1+r)^N In the chart, we're given FV=250,000 (at 0% cost) and N = 40. So first we need a PV value...
by Kevin M
Thu Apr 20, 2017 3:52 pm
Forum: Investing - Theory, News & General
Topic: Visualizing the devastating impact of fees
Replies: 54
Views: 4763

Re: Visualizing the devastating impact of fees

So, yeah, if the growth rate is 0, of course you are giving away part of your principal to the advisor. But most of us in that situation, after 2 or 3 years, would wake up and do something--change to a different advisor, different investment, put the money in CDs.... The likelihood of this example ...
by Kevin M
Thu Apr 20, 2017 3:44 pm
Forum: Investing - Theory, News & General
Topic: Visualizing the devastating impact of fees
Replies: 54
Views: 4763

Re: Visualizing the devastating impact of fees

It is a nice chart. The intuitive way to understand this is that the impact of fees compounds, so with annual investments more of your money is subject to fees for less time, and the fees have less impact on final value. You're are absolutely right, thanks! I edited my original post to state that t...
by Kevin M
Thu Apr 20, 2017 3:30 pm
Forum: Investing - Theory, News & General
Topic: Visualizing the devastating impact of fees
Replies: 54
Views: 4763

Re: Visualizing the devastating impact of fees

It's tough to come up with concise labels to describe this, please make any suggestions you think might make it clearer! First, you should say something to the effect that it is based on a $250,000 lump sum invested at the beginning. I didn't get the impression that it was anything like $250K inves...

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