Search found 118 matches

by Phil DeMuth
Sun Oct 01, 2017 11:29 am
Forum: Personal Finance (Not Investing)
Topic: Tax Strategy for Timing of Early Retirement with Significant Long-Term Capital Gains
Replies: 41
Views: 2857

Re: Tax Strategy for Timing of Early Retirement with Significant Long-Term Capital Gains

You should do a long-term tax projection of your post-retirement life, taking into account the effect of rising RMDs from your qualified accounts. Only then can you estimate whether you are better off using your early retirement low income years for tax gain harvesting or Roth conversions. If possib...
by Phil DeMuth
Thu Sep 28, 2017 11:46 am
Forum: Personal Finance (Not Investing)
Topic: Tax saving strategies for DINKs
Replies: 47
Views: 3784

Re: Tax saving strategies for DINKs

This is a tough situation. Make sure you only buy super tax-efficient funds in your taxable investment account.

Consider also: buying a couple of goldfish and claim them as your children? This can be very profitable unless/until you are audited....
by Phil DeMuth
Tue Sep 26, 2017 9:51 am
Forum: Investing - Theory, News & General
Topic: Financial History Books
Replies: 15
Views: 1507

Re: Financial History Books

No one writes with more flair about Wall Street history than John Brooks. He was a New Yorker columnist back in the day, and there are several books of his collected columns. Highly recommended (Buffett and Gates are two fans).
by Phil DeMuth
Mon Sep 25, 2017 10:47 am
Forum: Investing - Theory, News & General
Topic: Warren Buffett Books
Replies: 11
Views: 1291

Re: Warren Buffett Books

The Lowenstein bio is the best. Then I would read "The Essays of Warren Buffett" by that professor who edits his letters by topic.

You can be an A+ Boglehead investor without reading a word of Buffett. That said, he is an investing god.
by Phil DeMuth
Mon Sep 25, 2017 10:41 am
Forum: Investing - Theory, News & General
Topic: Selling Taxable to Top of Bracket: What does it mean?
Replies: 33
Views: 3702

Re: Selling Taxable to Top of Bracket: What does it mean?

I would recommend that you do a 15-year tax projection instead of trying to plan this year-by-year. The RMDs start small but ramp up over time and investors typically and expensively and needlessly jump brackets during retirement. If you see that rising RMDs are going to push you into the 25% bracke...
by Phil DeMuth
Sat Sep 23, 2017 12:44 pm
Forum: Investing - Theory, News & General
Topic: Roth Conversion and Strategy
Replies: 25
Views: 2809

Re: Roth Conversion and Strategy

The following article by Sumutka and Coopersmith might be of interest:
http://www.iarfc.org/documents/issues/Vol16Issue1.pdf
by Phil DeMuth
Sat Sep 23, 2017 12:39 pm
Forum: Investing - Help with Personal Investments
Topic: Help?! My 70 year old father is 100% invested in equities
Replies: 79
Views: 7295

Re: Help?! My 70 year old father is 100% invested in equities

There are millions of stories of gullible seniors getting fleeced by their high-priced advisors in the naked city. This doesn't strike me as one of them. If it is any consolation, one day you will probably inherit far more money from your father than you otherwise would have thanks to his aggressive...
by Phil DeMuth
Mon Sep 11, 2017 10:08 am
Forum: Investing - Theory, News & General
Topic: What is the "safe, safe" withdrawal rate?
Replies: 38
Views: 4180

Re: What is the "safe, safe" withdrawal rate?

There is no such thing as a safe withdrawal rate. There is no such thing as a risk-free asset. For any scenario I propose that will give you a certain cash flow over X years, you will be able to point out a scenario or perhaps twenty scenarios where it fails. I don't mean to say that some aren't mor...
by Phil DeMuth
Sun Sep 03, 2017 1:40 pm
Forum: Personal Finance (Not Investing)
Topic: Reverse Mortgage Line of Credit
Replies: 44
Views: 4671

Re: Reverse Mortgage Line of Credit

It looks like as of Oct 1 2017 FHA/HUD is pulling the plug on the features that made the HECM LOC too good to be true

http://www.investmentnews.com/article/2 ... gage-rules

https://portal.hud.gov/hudportal/docume ... 7-12ml.pdf
by Phil DeMuth
Wed Aug 30, 2017 9:56 am
Forum: Personal Finance (Not Investing)
Topic: tax / estate planning for parents
Replies: 16
Views: 1183

Re: tax / estate planning for parents

1) Estate attorney 2) Asset location: park bonds in qualified accounts and stocks in taxable accounts to prevent RMD bracket creep later in retirement, if it looks like that will be a problem. 3) Not sure if Roth conversions make sense if there is already a big pension plan payout operating. On the ...
by Phil DeMuth
Sat Aug 26, 2017 10:18 am
Forum: Personal Finance (Not Investing)
Topic: Should I abandon airline credit cards for cash back?
Replies: 34
Views: 3024

Re: Should I abandon airline credit cards for cash back?

Thank you all for this terrific range of replies and opinions. This is exactly why the Bogleheads forum is a national treasure. I will go cash back for now and then see how it goes trying to use my existing Money Bin of miles, probably using a service to find flights for me. If it goes well I can al...
by Phil DeMuth
Fri Aug 25, 2017 11:38 am
Forum: Personal Finance (Not Investing)
Topic: Should I abandon airline credit cards for cash back?
Replies: 34
Views: 3024

Should I abandon airline credit cards for cash back?

I am thinking of abandoning my airline miles rewards credit cards (Chase, Amex) for simple 2% cash back cards. My only interest is using airline miles for international business class travel, and these seats now seem impossible to get. Even if I log in at midnight 331 days out (or whenever the seats...
by Phil DeMuth
Thu Aug 24, 2017 9:57 am
Forum: Personal Finance (Not Investing)
Topic: Is a Major House Remodel Worth It?
Replies: 21
Views: 2296

Re: Is a Major House Remodel Worth It?

You have no idea what the remodel will cost until you finish the demo. It could be 2X your current estimate in the blink of an eye. Would you still be glad then? Vs. moving to a better 'hood? Of course, moving is also expensive -- at least 10% of the house's sale price. This sounds like a job for Ex...
by Phil DeMuth
Mon Aug 21, 2017 10:08 am
Forum: Personal Finance (Not Investing)
Topic: CFP vs MBA with focus in finance/management during career transition
Replies: 21
Views: 1880

Re: CFP vs MBA with focus in finance/management during career transition

One question I would ask is, how much could I expect to earn as a CFP (my guess: 5 figures) vs. if I applied the same energy pursuing an advanced degree in a field related to what I already know, e.g., petroleum engineering. Human capital compounds: if you can build off your current base you should ...
by Phil DeMuth
Tue Aug 08, 2017 9:46 am
Forum: Investing - Theory, News & General
Topic: Factor crowding
Replies: 19
Views: 1558

Re: Factor crowding

I thought that the "smart beta" funds amounted to < $1T of a ~$40T global stock market. Is this wrong? Remember that all the long overdue big flows into index funds are factor-neutral (except for the 'market' factor). And a lot of the flows from active managers to "smart beta" funds are simply excha...
by Phil DeMuth
Sat Aug 05, 2017 5:07 pm
Forum: Personal Finance (Not Investing)
Topic: Roth conversion in a high tax bracket?
Replies: 21
Views: 1881

Re: Roth conversion in a high tax bracket?

I think you should start at the end and work backwards. That is, with a probate attorney for your estate plan. We don't know how the law will change (if at all) this year, but your attorney should be able to give you a rough idea how your estate should be structured. Knowing that, you are in a posit...
by Phil DeMuth
Fri Aug 04, 2017 9:00 am
Forum: Investing - Theory, News & General
Topic: How to Account for Taxes - 25X Rule
Replies: 16
Views: 1928

Re: How to Account for Taxes - 25X Rule

RE: shifting stocks out of an IRA... I was assuming you had both a Traditional IRA and a taxable account of sufficient size that you could (1) sell the stocks inside the IRA, (2) buy bonds inside the IRA, (3) sell bonds inside the Taxable account, and (4) buy stocks inside the taxable account. This ...
by Phil DeMuth
Thu Aug 03, 2017 8:32 am
Forum: Investing - Theory, News & General
Topic: How to Account for Taxes - 25X Rule
Replies: 16
Views: 1928

Re: How to Account for Taxes - 25X Rule

Before retiring, you should do a pan-retirement tax analysis. Look at what happens to your brackets when you start SS, when you start your RMDs, and then overlay the same for your spouse. Also figure what happens if one of you die along the way and you have one standard deduction instead of two. Mos...
by Phil DeMuth
Fri Jul 21, 2017 10:38 am
Forum: Investing - Theory, News & General
Topic: Complex (profitable?) Roth Conversion Strategy
Replies: 23
Views: 1902

Re: Complex (profitable?) Roth Conversion Strategy

Very clever. Rather than aim for an arbitrary $100,000 annual conversion, it would be better to start with a projected pan-retirement tax analysis. If Joe is spending his entire retirement in the 15% bracket, there may be no point to converting any amount that will put him temporarily in the 25% bra...
by Phil DeMuth
Sat Jul 08, 2017 11:10 am
Forum: Personal Finance (Not Investing)
Topic: Does anyone use ANNUITIES for SOME of their retirement funds?
Replies: 61
Views: 4507

Re: Does anyone use ANNUITIES for SOME of their retirement funds?

What's curious about this is that while financial planning experts often recommend covering your core retirement expenses with annuities, the Boglehead community seems to cheerfully ignore this advice (apart from SS, which they were forced to buy). The experts speak of the "annuity puzzle," which is...
by Phil DeMuth
Fri Jun 23, 2017 2:18 pm
Forum: Investing - Theory, News & General
Topic: "Waiting for the Market to Crash is a Terrible Strategy"
Replies: 27
Views: 4956

Re: "Waiting for the Market to Crash is a Terrible Strategy"

Two corrections: Ben Stein's book did not recommend waiting for a 30% drop. Also, he did not panic during the crash.
by Phil DeMuth
Wed Jun 21, 2017 11:26 am
Forum: Investing - Theory, News & General
Topic: Thoughts about tilting away from the sector you work in?
Replies: 32
Views: 2728

Re: Thoughts about tilting away from the sector you work in?

The technology is not really there to make this convenient for most investors. While we wait, I think the pretty-good workaround is through beta. If you are in a high-beta industry (presumably with a high-beta career), you should invest low-beta in compensation. If you are in a low-beta sector with ...
by Phil DeMuth
Sun Jun 18, 2017 12:01 pm
Forum: Personal Finance (Not Investing)
Topic: Tax Strategy for 1099 Income
Replies: 18
Views: 1517

Re: Tax Strategy for 1099 Income

Open your own defined benefit plan. You have to hire an actuary but these plans are surprisingly flexible and you can shelter as much money from your side gig as you want. They can be used on top of your other retirement plans.
by Phil DeMuth
Thu Jun 01, 2017 10:51 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Explaining The Low Vol Anomaly
Replies: 16
Views: 2188

Re: Larry Swedroe: Explaining The Low Vol Anomaly

USMV 5/31 YTD: 9.63% SPY 5/31 YTD: 8.48% The low vol holdings are mostly US large cap stocks. Is there some capacity constraint here? I would think that other factors like size would find their trades more crowded. Low vol was the leading factor in 2008, 2011, and 2014, but size was leading in 2009,...
by Phil DeMuth
Wed May 31, 2017 11:40 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Explaining The Low Vol Anomaly
Replies: 16
Views: 2188

Re: Larry Swedroe: Explaining The Low Vol Anomaly

It's been so "overgrazed" that it's (USMV) is beating the S&P 500 year-to-date by a significant margin. Meanwhile, small/value (not "overgrazed"?) is down 4 - 5% so far in 2017.
by Phil DeMuth
Tue May 30, 2017 9:57 am
Forum: Investing - Theory, News & General
Topic: The Best Account for International Equities
Replies: 42
Views: 4404

Re: The Best Account for International Equities

Chip's issues illustrate the difficulties of adding a lifecycle perspective to the already complex problem of asset location for international. Modeling this is over my pay grade. Even ESPlanner won't drill down to this level of detail.
by Phil DeMuth
Sun May 28, 2017 7:47 pm
Forum: Investing - Theory, News & General
Topic: The Best Account for International Equities
Replies: 42
Views: 4404

Re: The Best Account for International Equities

For Vanguard specifically, for all their index funds I am familiar with: ETF and Mutual Fund shares are simply different share classes of the same fund. So, by definition, there can no difference in taxation..this is different from other brokerage/mutual fund families because of patents VG owns. Th...
by Phil DeMuth
Sun May 28, 2017 3:49 pm
Forum: Investing - Theory, News & General
Topic: The Best Account for International Equities
Replies: 42
Views: 4404

Re: The Best Account for International Equities

People love to obsess over the expense ratio Availability bias. Look how much work is involved in gathering the tax information, and how it has to be customized. I am still looking find some way to summarize this, and not coming up with much. 1) A three-fund portfolio can be conclusively allocated:...
by Phil DeMuth
Sat May 27, 2017 1:54 pm
Forum: Investing - Theory, News & General
Topic: The Best Account for International Equities
Replies: 42
Views: 4404

Re: The Best Account for International Equities

Triceratops -- Thank you for your reply and for your outstanding contribution here. Just to be clear: I would strongly disagree about "rules". If this spreadsheet analysis shows anything at all it is that one should not use broad rules to apply to a broad swath of tax situations. Given the broad-bas...
by Phil DeMuth
Sat May 27, 2017 11:51 am
Forum: Investing - Theory, News & General
Topic: The Best Account for International Equities
Replies: 42
Views: 4404

Re: The Best Account for International Equities

Rules Given infinite room in tax-deferred accounts, it seems always preferable to park foreign index funds there, given that these funds pay higher dividend yields than domestic index funds. This holds even after considering the tax deduction or credit for foreign taxes paid (without even considerin...
by Phil DeMuth
Thu May 25, 2017 5:01 pm
Forum: Investing - Theory, News & General
Topic: The Best Account for International Equities
Replies: 42
Views: 4404

Re: The Best Account for International Equities

Dirghatamas - Looking over the distributions from EFA (the EAFE index ETF) for the past five years, I see interest income and dividend income, but no short- or long-term capital gains. Are you saying that the 1099 lists foreign company buybacks as (non-qualified?) dividends? Or as Interest? Would th...
by Phil DeMuth
Sun Apr 30, 2017 11:30 am
Forum: Investing - Theory, News & General
Topic: Question for quants, math geeks - reducing volatility in my costs?
Replies: 18
Views: 1428

Re: Question for quants, math geeks - reducing volatility in my costs?

"With four parameters I can fit an elephant, and with five I can make him wiggle his trunk." - John von Neumann
by Phil DeMuth
Wed Apr 26, 2017 11:07 am
Forum: Personal Finance (Not Investing)
Topic: Los Angeles house buying
Replies: 38
Views: 4280

Re: Los Angeles house buying

FWIW, I was astonished how little housing prices went down in LA in 2008. I was ready to pounce and move up in the world and I did my calculations and waited and watched but never got the big dip I was planning on. The banks never foreclosed to the extent that I thought they would -- they just carri...
by Phil DeMuth
Tue Apr 25, 2017 10:29 am
Forum: Personal Finance (Not Investing)
Topic: Any regrets living a frugal life for high income/high networth individuals?
Replies: 170
Views: 22125

Re: Any regrets living a frugal life for high income/high networth individuals?

When value investor Ben Graham got wiped out during the Great Depression, he kicked himself because he felt his extravagant lifestyle had been a contributing factor. He realized that living significantly below his means was simply taking the "margin of safety" idea he employed investing in...
by Phil DeMuth
Thu Apr 20, 2017 9:59 am
Forum: Personal Finance (Not Investing)
Topic: Can I afford private school for my kids?
Replies: 67
Views: 5959

Re: Can I afford private school for my kids?

I have not read through all the posts but that won't stop me, so here goes: This question cannot be answered except in the context of a lifetime financial plan. You need to work out your retirement first and work backwards, not start with your salary and see if you can squeeze out the tuition this y...
by Phil DeMuth
Thu Apr 20, 2017 9:39 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe says "Goodbye."
Replies: 336
Views: 41910

Re: Larry Swedroe says "Goodby."

But wait -- if you stop posting where am I going to get my ideas from???

Thank you for your service. I read every one of your posts and learned everything I could.

Appreciatively,

Phil
by Phil DeMuth
Fri Apr 14, 2017 11:06 am
Forum: Investing - Theory, News & General
Topic: Delaying SS (or not) and the tax torpedo
Replies: 41
Views: 4864

Re: Delaying SS (or not) and the tax torpedo

House Blend wrote: This is the situation for my 84yo mother. Her RMDs have not grown much at all over the past several years, and in fact have occasionally dipped. When you adjust for inflation (which is what matters relative to tax bracket locations), her RMDs probably show negative real growth . I...
by Phil DeMuth
Wed Apr 12, 2017 1:59 pm
Forum: Personal Finance (Not Investing)
Topic: tax strategy for side income
Replies: 6
Views: 776

Re: tax strategy for side income

If you don't need the money for living expenses, after putting the max in your qualified plan of choice, you could put the rest in a defined benefit plan. These are far more flexible that usually thought. The key is to find a low-fee actuary.
by Phil DeMuth
Wed Apr 12, 2017 9:48 am
Forum: Investing - Theory, News & General
Topic: Delaying SS (or not) and the tax torpedo
Replies: 41
Views: 4864

Re: Delaying SS (or not) and the tax torpedo

One thing to keep in mind is not only the SS and RMDs that start at 70 1/2 but also the fact that the RMDs increase over time as a % of IRA assets. This means owners of large IRAs can experience tax bracket creep later in retirement. This should be modeled if possible. Even though future tax rates a...
by Phil DeMuth
Sat Apr 08, 2017 6:39 pm
Forum: Investing - Theory, News & General
Topic: Part 2 of the series on alternative sources, this one on alternative lending
Replies: 16
Views: 2356

Re: Part 2 of the series on alternative sources, this one on alternative lending

Larry --

Great article, thanks!

I've heard that some ETFs have applied to get into this space. If so, they would be creating a market in these loans and the illiquidity would go away. Do you think this is likely to happen? My guess is not anytime soon or BAM wouldn't be jumping in.

Thanks,

Phil
by Phil DeMuth
Sat Apr 08, 2017 10:09 am
Forum: Investing - Theory, News & General
Topic: Use Debt Instead Of Cash/Fixed Income In Asset Allocation?
Replies: 15
Views: 1921

Re: Use Debt Instead Of Cash/Fixed Income In Asset Allocation?

There was a good discussion of this on the Personal Investing board:

viewtopic.php?t=201734

Unfortunately it got locked down for administrative review last November. Still waiting for the review!
by Phil DeMuth
Thu Apr 06, 2017 11:12 am
Forum: Investing - Theory, News & General
Topic: Alts:new sources of risk/return improve portfolio efficiency
Replies: 119
Views: 10138

Re: Alts:new sources of risk/return improve portfolio efficiency

I was wondering if I already had exposure to this space via Berkshire Hathaway. Answer: no, unfortunately. Correlation the between BRK and SSRIX for the past three years is 0.07. Correlations to other reinsurers are also very low: Swiss RE -0.07 Hannover 0.06 Munich RE 0.18 The highest relevant corr...
by Phil DeMuth
Wed Apr 05, 2017 10:00 am
Forum: Personal Finance (Not Investing)
Topic: High Income earners, whats your Tax Strategy?
Replies: 113
Views: 12636

Re: High Income earners, whats your Tax Strategy?

I recommend a diversified portfolio of zero-dividend stocks for taxable accounts. Research shows that zero-dividend stocks underperform the indexes pre-tax but outperform post-tax. This is un-Bogleheadish in that it is a tilt towards stockpicking, but very Bogleheadish in that it is research-based a...
by Phil DeMuth
Sun Apr 02, 2017 11:50 am
Forum: Personal Finance (Not Investing)
Topic: Advice Needed: Enough to Retire, but the Tax Bill is a shock
Replies: 58
Views: 9083

Re: Advice Needed: Enough to Retire, but the Tax Bill is a shock

One other point is that it is desirable to use asset location to cut your taxes. Specifically, you want to move growth assets (stocks) into your taxable account and Roth and slow growth assets (bonds) into your qualified accounts. At your allocation, that would be something like 100% stocks in taxab...
by Phil DeMuth
Fri Mar 31, 2017 10:39 am
Forum: Personal Finance (Not Investing)
Topic: Using irrevocable trust to optimize home purchase in HCOL area
Replies: 23
Views: 1592

Re: Using irrevocable trust to optimize home purchase in HCOL area

1. Did you see the article in yesterday's NYT about the sweet spot for schools vs. price in suburban Boston? m 2. How many physicians in Boston with malpractice insurance lost their homes due to malpractice lawsuits last year? My guess is zero. Buy the house outside of the irrevocable trust using Ma...
by Phil DeMuth
Mon Mar 27, 2017 10:38 am
Forum: Personal Finance (Not Investing)
Topic: Custodial ROTH a good idea?
Replies: 7
Views: 753

Re: Custodial ROTH a good idea?

A custodial Roth is not a good idea, it's a GREAT idea. Imagine letting that money compound tax-free for 60 years and you see how it puts your kids way ahead of the curve. Add to it every year they work, all through high school, etc. Consider investing it very aggressively -- like 100% S&P 500 o...
by Phil DeMuth
Sat Mar 11, 2017 10:52 am
Forum: Investing - Theory, News & General
Topic: Refining the failure rate, when it fails matters, not just how often
Replies: 20
Views: 2732

Re: Refining the failure rate, when it fails matters, not just how often

My guess: the highest Sharpe ratio (in the sense of return/risk) portfolio wins, not the highest Geometric Mean portfolio. This could be an important lesson in target practice for anyone who might retire one day.
by Phil DeMuth
Fri Mar 10, 2017 4:26 pm
Forum: Investing - Theory, News & General
Topic: Reasons to Deviate from the Global Market Portfolio
Replies: 36
Views: 4352

Re: Reasons to Deviate from the Global Market Portfolio

One more thought: in many cases, what you are trying to do is not deviate from the global market portfolio but re-establish the global market portfolio from the deviations created by your inherent outsized investments in your house, your human capital, etc.
by Phil DeMuth
Fri Mar 10, 2017 10:37 am
Forum: Investing - Theory, News & General
Topic: Reasons to Deviate from the Global Market Portfolio
Replies: 36
Views: 4352

Re: Reasons to Deviate from the Global Market Portfolio

Risk tolerance and ability: The risk tolerance and ability could be lower or higher than that of the average invested money. Thus a tilt towards securities with lower (e.g. cash or bonds) or higher (e.g. stocks) risk and expected return is appropriate. In theory, rather than distort the market port...
by Phil DeMuth
Wed Mar 08, 2017 1:25 pm
Forum: Personal Finance (Not Investing)
Topic: How to make it easier for spouse upon death
Replies: 91
Views: 12461

Re: How to make it easier for spouse upon death

Hi Taylor -- Bogleheads tend to be fee-conscious do-it-yourselfers, so if the surviving spouse is not a committed Boglehead the financial services industry will find and exploit the weak spot and end up with an even bigger pie to carve up thanks to our efforts. The best answer is to get the spouse a...