Search found 4990 matches

by bobcat2
Wed Feb 21, 2018 4:41 pm
Forum: Investing - Theory, News & General
Topic: Which Inflation Rate Do You Use?
Replies: 19
Views: 1035

Re: Which Inflation Rate Do You Use?

At $175 for a year long subscription, you still get the same ShadowStats as you got twelve years ago. The cost of the subscription has remained the same even as inflation has moved higher. So, in real terms, there's actually been huge deflation in the cost of a ShadowStats subscription since 2006, i...
by bobcat2
Mon Feb 19, 2018 6:13 pm
Forum: Investing - Theory, News & General
Topic: What seems to matter
Replies: 21
Views: 2706

Re: What seems to matter

Other things that matter for achieving a financially successful retirement - Work until at least age 64, if possible. The advice many people don’t want to hear, but working a few extra years is more powerful than saving a slightly higher percentage of income every year. - Own, don’t rent, and pay of...
by bobcat2
Mon Feb 19, 2018 12:46 pm
Forum: Investing - Theory, News & General
Topic: Retirees: The common sense withdrawal method
Replies: 128
Views: 10422

Re: Retirees: The common sense withdrawal method

What would the average Social Security benefit be, if delayed to age 70? Wouldn't it be something like $25,000? If so, someone retiring at age 65 would need to put aside $125,000 into a savings account to fill the 5-year delay gap. A Boglehead should be able to build a portfolio significantly bigge...
by bobcat2
Mon Feb 19, 2018 11:52 am
Forum: Investing - Theory, News & General
Topic: Retirees: The common sense withdrawal method
Replies: 128
Views: 10422

Re: Retirees: The common sense withdrawal method

Example. If I was 60, I had a $1,500,000 50/50 stocks/bonds portfolio, and I expected to get $35,000 annually by delaying Social Security to age 70, I would do the following: Very few people who expect to get $35,000 from Social Security by delaying benefits to age 70 have portfolios of $1,500,000 ...
by bobcat2
Sat Feb 17, 2018 11:46 am
Forum: Investing - Theory, News & General
Topic: Retirees: The common sense withdrawal method
Replies: 128
Views: 10422

Re: Retirees: The common sense withdrawal method

I thought the purpose of a "sophisticated" withdrawal method was to achieve a consistent, reliable, long-term cash flow . Further, if something like a 4% WR is used in order to maintain income stability, then on average, the retiree would have withdrawn too little (apart from a desire for a bequest...
by bobcat2
Sat Feb 17, 2018 11:04 am
Forum: Investing - Theory, News & General
Topic: Retirees: The common sense withdrawal method
Replies: 128
Views: 10422

Re: Retirees: The common sense withdrawal method

My point in starting this thread was that before computers or sophisticated models, my suspicion is that some people financially navigated their way through retirement. Retirement, as we know it, is a post WWII concept. Before that most Americans didn't live that long and there wasn't Social Securi...
by bobcat2
Sat Feb 17, 2018 10:15 am
Forum: Investing - Theory, News & General
Topic: Retirees: The common sense withdrawal method
Replies: 128
Views: 10422

Re: Retirees: The common sense withdrawal method

From "simple Bogle Basics" to Bob's "Funded Ratio", there comes a point where, yes, to those that are aware and informed (most on the forum) things become intuitive and seem like "common sense". j :D I don't believe using the funded ratio for retirement planning is something that is intuitive for m...
by bobcat2
Thu Feb 15, 2018 6:13 pm
Forum: Investing - Theory, News & General
Topic: Present Value of an Annuity or Social Security Stream
Replies: 9
Views: 803

Re: Present Value of an Annuity or Social Security Stream

Can someone help me with calculating this? Assume that in 10 years John Doe will begin receiving a regular income stream (either SS or an annuity or a pension). He will receive $60,000 a year for 15 years. What is the net present value of that income stream, and how is it calculated? Thanks in adva...
by bobcat2
Tue Feb 13, 2018 6:20 pm
Forum: Personal Finance (Not Investing)
Topic: Number at which to stop worrying
Replies: 170
Views: 16710

Re: Number at which to stop worrying

Number at which to stop worrying

A funded ratio north of 1.05 :sharebeer

BobK
by bobcat2
Tue Feb 13, 2018 1:10 pm
Forum: Investing - Help with Personal Investments
Topic: Did you learn anything from the market correction?
Replies: 160
Views: 11079

Re: Did you learn anything from the market correction?

Did you learn anything from the market correction? Given that volatility measures are still fluctuating between the mid 20s and the mid 30s, after averaging about 13 over the previous twelve months, I suspect there is a significant probability (greater than 25%) the market drop will continue. BobK
by bobcat2
Sat Feb 10, 2018 3:47 pm
Forum: Investing - Theory, News & General
Topic: Matching a TIPS bond ladder with ST and LT TIPS bond funds
Replies: 98
Views: 4673

Re: Matching a TIPS bond ladder with ST and LT TIPS bond funds

Here is another problem with using income generated from duration matched bonds beyond age 85. Is it really a good idea to plan for you or your spouse to be managing a bond ladder or duration matched bond funds beyond age 88? I certainly don't think that's a good idea. :(

BobK
by bobcat2
Sat Feb 10, 2018 3:07 pm
Forum: Investing - Theory, News & General
Topic: DFA Has Introduced Target Date Funds - LifeCycle Based?
Replies: 64
Views: 9253

Re: DFA Has Introduced Target Date Funds - LifeCycle Based?

Theoretically, I think the funds may be a good tool for those seeking to employ a liability driven investing (LDI) strategy. That said,... the number of people who will use this fund appropriately over the long term is close to zero. In the early 1980s I was one of the relatively few people investe...
by bobcat2
Sat Feb 10, 2018 1:29 pm
Forum: Investing - Theory, News & General
Topic: Matching a TIPS bond ladder with ST and LT TIPS bond funds
Replies: 98
Views: 4673

Re: Matching a TIPS bond ladder with ST and LT TIPS bond funds

Bob - what about the problem of inflation if you have abandoned TIPS for annuities at age 85? I'd hate to get caught by an unexpected spike in inflation at that stage of life. Purchase real (inflation-adjusted) life annuities. Or purchase graded life annuities. Graded life annuities increase the pa...
by bobcat2
Sat Feb 10, 2018 1:24 pm
Forum: Investing - Theory, News & General
Topic: Matching a TIPS bond ladder with ST and LT TIPS bond funds
Replies: 98
Views: 4673

Re: Replicating a TIPS bond ladder with ST and LT TIPS bond funds

I would point out that the joint life expectancy of a couple age 65 is somewhere in the low 90's. For various reasons I'm disinclined to plan on purchasing life annuities so am liability matching out to age 90. Yes, but that's for the sole survivor. The probability of both partners surviving until ...
by bobcat2
Sat Feb 10, 2018 1:11 pm
Forum: Investing - Theory, News & General
Topic: Matching a TIPS bond ladder with ST and LT TIPS bond funds
Replies: 98
Views: 4673

Re: Matching a TIPS bond ladder with ST and LT TIPS bond funds

Thanks BobK again for the valuable information. In reading the article: "A Three Fund Portfolio tailored for stable retirement spending" which seems to be authored by you, I note that you advise using TIPS out to about age 85 and then using an SPIA from that point as less expensive longevity insura...
by bobcat2
Sat Feb 10, 2018 11:33 am
Forum: Investing - Theory, News & General
Topic: Matching a TIPS bond ladder with ST and LT TIPS bond funds
Replies: 98
Views: 4673

Re: Matching a TIPS bond ladder with ST and LT TIPS bond funds

...TIAA offers something like DFA's liability matching retirement income option. I sent an email message to TIAA and was told that I could move money into that, called Targeted Income. However, there seems to be precious little information about the details of Targeted Income that I can locate on t...
by bobcat2
Sat Feb 10, 2018 10:50 am
Forum: Investing - Theory, News & General
Topic: Matching a TIPS bond ladder with ST and LT TIPS bond funds
Replies: 98
Views: 4673

Re: Matching a TIPS bond ladder with ST and LT TIPS bond funds

You have to update the weights at least quarterly ... Be aware that adjusting the duration of the funds more frequently reduce s, but does not eliminate , interest rate risk. That's certainly true. DFA duration matches two TIPS funds in their target date funds on a monthly basis, which is what I wo...
by bobcat2
Fri Feb 09, 2018 7:36 pm
Forum: Investing - Theory, News & General
Topic: Matching a TIPS bond ladder with ST and LT TIPS bond funds
Replies: 98
Views: 4673

Re: Matching a TIPS bond ladder with ST and LT TIPS bond funds

I believe it’s important to keep our eyes on the goal and place bond liability matching within the broader framework of providing safe income in retirement. We begin by setting an aspirational level of retirement income (our retirement paycheck replacement) and add as a constraint a floor income lev...
by bobcat2
Thu Feb 08, 2018 9:22 pm
Forum: Investing - Theory, News & General
Topic: Matching a TIPS bond ladder with ST and LT TIPS bond funds
Replies: 98
Views: 4673

Re: Matching a TIPS bond ladder with ST and LT TIPS bond funds

Two points about duration matching with TIPS funds. This isn't going to be perfect matching. What I intend to do is redo the calculation every year as if I were starting that year. Let's say a particular year the current size of the funds is $1,000 short of what I need over the remaining 15 years of...
by bobcat2
Thu Feb 08, 2018 6:07 pm
Forum: Investing - Theory, News & General
Topic: Matching a TIPS bond ladder with ST and LT TIPS bond funds
Replies: 98
Views: 4673

Re: Matching a TIPS bond ladder with ST and LT TIPS bond funds

This seems complex. I readily admit that this is something most individual investors are not capable of doing. OTOH, it is not mind-numbingly complex if you understand basic finance. (You've mastered a beginning finance course at the undergrad level.) I want $10,000/yr for the next 15 years. How mu...
by bobcat2
Thu Feb 08, 2018 5:45 pm
Forum: Investing - Theory, News & General
Topic: Matching a TIPS bond ladder with ST and LT TIPS bond funds
Replies: 98
Views: 4673

Re: Matching a TIPS bond ladder with ST and LT TIPS bond funds

If I know I want to have $1,000 in 5 years, then I could purchase a zero-coupon bond with a face value of $1,000 that matures in 5 years - this is the cash flow matching method . It is also the duration matching method. The duration of a zero coupon bond is the same as its maturity. So a zero coupo...
by bobcat2
Thu Feb 08, 2018 3:10 pm
Forum: Investing - Theory, News & General
Topic: Bitcoin in Freefall
Replies: 162
Views: 16642

Re: Bitcoin in Freefall

I find this hard to believe, but apparently it's true. Some people, seeing in the last week that investing in stocks can be risky, have sold part or all of their equity positions and moved those funds to a safer asset, bitcoin.

BobK
by bobcat2
Thu Feb 08, 2018 2:48 pm
Forum: Investing - Theory, News & General
Topic: Matching a TIPS bond ladder with ST and LT TIPS bond funds
Replies: 98
Views: 4673

Re: Matching a TIPS bond ladder with ST and LT TIPS bond funds

Short-term: VTIP/VTAPX, STIP Medium-term: VIPSX/VAIPX, TIP Long-term: LTPZ also Ultra ST Vanguard fund - VUSFX - duration of about 1 year Because the duration of a ST TIPS fund is typically a little over two years and that is not short enough to cover immediate spending with very little interest ra...
by bobcat2
Thu Feb 08, 2018 12:24 am
Forum: Investing - Theory, News & General
Topic: Return of stock market is better overnight than during the day - NYTimes article
Replies: 19
Views: 2551

Re: Return of stock market is better overnight than during the day - NYTimes article

What's troubling about the market over the past week is how much volatility has picked up compared to any other time over the past 12 months. For most of the last 12 months volatility was between 10-15. Over the last few days it shot up to about 50 and is currently "down" to 27. It looks like the ma...
by bobcat2
Thu Feb 08, 2018 12:04 am
Forum: Personal Consumer Issues
Topic: Books/articles on life 100-120 years ago?
Replies: 19
Views: 1265

Re: Books/articles on life 100-120 years ago?

Hey folk! I’ve been doing some genealogy searches and wondering about how my grandparents lived. It’s just 2 generations, plus a few years, but from what I guess, it was a whole different world. They were born in the 1890s, 2 in rural England, one in rural Illinois, one in downtown Chicago. Any sug...
by bobcat2
Wed Feb 07, 2018 10:52 pm
Forum: Investing - Theory, News & General
Topic: Matching a TIPS bond ladder with ST and LT TIPS bond funds
Replies: 98
Views: 4673

Re: Matching a TIPS bond ladder with ST and LT TIPS bond funds

I still don't understand for DIY if I should be taking out the periodic withdrawals as the same nominal amounts each time. That really doesn't make sense to me, since the objective is to match spending liabilities that will change based on inflation. If I wanted to provide $1,000 per year starting ...
by bobcat2
Wed Feb 07, 2018 6:39 pm
Forum: Investing - Theory, News & General
Topic: Matching a TIPS bond ladder with ST and LT TIPS bond funds
Replies: 98
Views: 4673

Re: Matching a TIPS bond ladder with ST and LT TIPS bond funds

I still don't understand for DIY if I should be taking out the periodic withdrawals as the same nominal amounts each time. That really doesn't make sense to me, since the objective is to match spending liabilities that will change based on inflation. If I wanted to provide $1,000 per year starting ...
by bobcat2
Wed Feb 07, 2018 6:32 pm
Forum: Investing - Theory, News & General
Topic: Matching a TIPS bond ladder with ST and LT TIPS bond funds
Replies: 98
Views: 4673

Re: Matching a TIPS bond ladder with ST and LT TIPS bond funds

Here's a thread I started about a year ago about the TIAA implementation of DFA's retirement strategies.

New Retirement Income Solution for DC Retirement Plans
Link - viewtopic.php?f=10&t=209540&p=3214929&h ... a#p3214929

BobK
by bobcat2
Wed Feb 07, 2018 6:09 pm
Forum: Investing - Theory, News & General
Topic: Matching a TIPS bond ladder with ST and LT TIPS bond funds
Replies: 98
Views: 4673

Re: Matching a TIPS bond ladder with ST and LT TIPS bond funds

Bob - Do you think it is worth setting up retirement account with DFA to utilize their duration-matching TIPS funds... I could be wrong but I think DFA target date funds are only available to participants in tax advantaged retirement accounts such as 401ks and 403bs that use DFA as a product provid...
by bobcat2
Wed Feb 07, 2018 5:25 pm
Forum: Investing - Theory, News & General
Topic: Matching a TIPS bond ladder with ST and LT TIPS bond funds
Replies: 98
Views: 4673

Re: Matching a TIPS bond ladder with ST and LT TIPS bond funds

You can do cash flow matching with a bond ladder. You can do duration liability matching with a bond ladder or bond funds. Most bond laddering done by professionals is done through duration matching. I would guess that most individual investors don't use ladders for duration liability matching, but ...
by bobcat2
Wed Feb 07, 2018 3:54 pm
Forum: Investing - Theory, News & General
Topic: Matching a TIPS bond ladder with ST and LT TIPS bond funds
Replies: 98
Views: 4673

Re: Matching a TIPS bond ladder with ST and LT TIPS bond funds

I'm still pondering this method, which basically seems to be a strategy for "simulating" a bond ladder with a sliding "duration targeting" approach that utilizes a short-term and a long-term bond fund. You simply ratchet down the average duration of the two funds to match your year-by-year spending...
by bobcat2
Wed Feb 07, 2018 1:00 pm
Forum: Investing - Theory, News & General
Topic: Matching a TIPS bond ladder with ST and LT TIPS bond funds
Replies: 98
Views: 4673

Re: Matching a TIPS bond ladder with ST and LT TIPS bond funds

BobK--Since you're following this thread I just wanted to take the time to say "thanks" for your contributions to the forum over the years on the subject of liability matching. :sharebeer This idea of duration matching TIPS funds for retirement income comes comes from a short article Robert Merton ...
by bobcat2
Wed Feb 07, 2018 11:45 am
Forum: Investing - Theory, News & General
Topic: Matching a TIPS bond ladder with ST and LT TIPS bond funds
Replies: 98
Views: 4673

Re: Matching a TIPS bond ladder with ST and LT TIPS bond funds

BobK - would you be able to address this earlier query of mine regarding how to liquidate the funds when taking a distribution? So, would you simply liquidate ST and LT proportionally, regardless of rates and changes in NAV, whenever you take a distribution and then maintain a regular duration-matc...
by bobcat2
Wed Feb 07, 2018 10:35 am
Forum: Investing - Theory, News & General
Topic: Matching a TIPS bond ladder with ST and LT TIPS bond funds
Replies: 98
Views: 4673

Re: Matching a TIPS bond ladder with ST and LT TIPS bond funds

For N years, a good estimate for the duration would be: (1/N)×(1 + 2 + ... + N) = (1/N)×N×(N+1)/2 = (N + 1)/2 or 10.5 for 20 years. I believe that would be true if all the withdrawals took place at the end of the year. Much like if a bond matured in December. In reality the withdrawals are spread t...
by bobcat2
Mon Feb 05, 2018 10:59 pm
Forum: Investing - Theory, News & General
Topic: Bitcoin in Freefall
Replies: 162
Views: 16642

Re: Bitcoin in Freefall

Here's a good thing about bitcoin.

Measured in bitcoin units rather than artificial fiat money (US dollars) the US stock market continues to climb to ever new highs!

BobK
by bobcat2
Mon Feb 05, 2018 8:40 pm
Forum: Investing - Theory, News & General
Topic: Wisdom of Bitcoin
Replies: 90
Views: 6821

Re: Wisdom of Bitcoin

[As of today] the stock market is still rising if you measure its true value in bitcoin rather than artificial fiat currency.
-Justin Wolfers


BobK
by bobcat2
Mon Feb 05, 2018 12:53 am
Forum: Investing - Theory, News & General
Topic: Nassim Taleb on Bitcoin
Replies: 21
Views: 3162

Re: Nassim Taleb on Bitcoin

Nassim Talib investment advice given on February 4, 2010. Financial guru Nassim Taleb says everyone on earth should short Treasuries, thanks to the exploding U.S. budget deficit and potential inflation. He said at a conference that investors should keep a majority of their portfolio risk free and ap...
by bobcat2
Mon Feb 05, 2018 12:39 am
Forum: Investing - Theory, News & General
Topic: Nassim Taleb on Bitcoin
Replies: 21
Views: 3162

Re: Nassim Taleb on Bitcoin

Hi again Siamond, Here is Taleb making predictions in 2010 in the magazine the Economist on what the world will be like in 2025. Do these predictions seem reasonable to you? The top-down nation-state will be only cosmetically alive, weakened by deficits, politicians' misalignment of interests and th...
by bobcat2
Mon Feb 05, 2018 12:09 am
Forum: Investing - Theory, News & General
Topic: Nassim Taleb on Bitcoin
Replies: 21
Views: 3162

Re: Nassim Taleb on Bitcoin

Hi siamond,
You say snarky, I say accurate. We will have to agree to disagree.
Link - https://scottlocklin.wordpress.com/2009 ... e-finance/

It certainly seems to be that his political/economic beliefs are somewhere between anarchism and libertarianism.

BobK
by bobcat2
Sun Feb 04, 2018 11:33 pm
Forum: Investing - Theory, News & General
Topic: Nassim Taleb on Bitcoin
Replies: 21
Views: 3162

Re: Nassim Taleb on Bitcoin

So a pop philosopher whose political/economic pontifications are somewhere on a murky spectrum between anarchism and libertarianism has come out in favor of crypto currencies. Just who is it that is supposed to be surprised about this?

BobK
by bobcat2
Sun Feb 04, 2018 3:26 pm
Forum: Investing - Theory, News & General
Topic: Matching a TIPS bond ladder with ST and LT TIPS bond funds
Replies: 98
Views: 4673

Re: Matching a TIPS bond ladder with ST and LT TIPS bond funds

Holding a ladder of bonds is not so simple either. You have to deal with the reinvestment of all the dividends and the fact that a real $15,000 in 2015 is not the same as a real $15,000 in 2018 and a real $15,000 in 2021 is different than either of the other two. #Cruncher's TIPS spreadsheets deal ...
by bobcat2
Sun Feb 04, 2018 11:10 am
Forum: Investing - Theory, News & General
Topic: Matching a TIPS bond ladder with ST and LT TIPS bond funds
Replies: 98
Views: 4673

Re: Matching a TIPS bond ladder with ST and LT TIPS bond funds

I thought that when one established a Liability Matching ladder, that if when a person bought a TIPS direct for Treasury Direct in 2018, ( Just like the ones I bought several weeks ago at the 10 year tips auction). that I would have basically the same purchasing power in 2018 that I did on the day ...
by bobcat2
Sat Feb 03, 2018 6:00 pm
Forum: Investing - Theory, News & General
Topic: Matching a TIPS bond ladder with ST and LT TIPS bond funds
Replies: 98
Views: 4673

Re: Matching a TIPS bond ladder with ST and LT TIPS bond funds

Suppose I need $15K a year starting in 5 years for the next 20 years? The “real interest” duration of Vanguard’s intermediate TIPS fund is about 8 years. Since I don’t need the money for 5 years, is there any reason to convert some of the intermediate TIPS to the short term fund? If I understand th...
by bobcat2
Sat Feb 03, 2018 5:12 pm
Forum: Investing - Theory, News & General
Topic: Matching a TIPS bond ladder with ST and LT TIPS bond funds
Replies: 98
Views: 4673

Re: Matching a TIPS bond ladder with ST and LT TIPS bond funds

Interesting discussion in this thread that the duration of TIPS fund should be reported as "real duration" instead of nominal duration. That's because TIPS are sensitive to changes in real interest rates and not nominal rates. This stuff is getting beyond my pay grade. https://www.bogleheads.org/fo...
by bobcat2
Sat Feb 03, 2018 4:19 pm
Forum: Investing - Theory, News & General
Topic: Matching a TIPS bond ladder with ST and LT TIPS bond funds
Replies: 98
Views: 4673

Re: Matching a TIPS bond ladder with ST and LT TIPS bond funds

In the DFA target date funds I believe they rebalance the TIPS funds monthly. But then the guys running the DFA funds can rebalance their own funds quite cheaply. As stlutz has pointed out, how you trade off duration accuracy vs trading costs goes a long way to determining how frequently you rebalan...
by bobcat2
Sat Feb 03, 2018 4:00 pm
Forum: Investing - Theory, News & General
Topic: Ric Edelman: Vanguard, Other Bitcoin Deniers Will Eat Their Words
Replies: 47
Views: 6052

Re: Ric Edelman: Vanguard, Other Bitcoin Deniers Will Eat Their Words

I disgust myself as I gleefully wallow in cryptofreude. :D

BobK
by bobcat2
Sat Feb 03, 2018 3:01 pm
Forum: Investing - Theory, News & General
Topic: Matching a TIPS bond ladder with ST and LT TIPS bond funds
Replies: 98
Views: 4673

Re: Matching a TIPS bond ladder with ST and LT TIPS bond funds

The weights on the two funds keeps changing over time as the duration of the targeted spending stream declines and the duration of the funds or etfs change over time. I never considered the trading costs of the etfs to be anything other than trivial. Evidently, it's in the eye of the beholder as to ...
by bobcat2
Sat Feb 03, 2018 10:29 am
Forum: Investing - Theory, News & General
Topic: Matching a TIPS bond ladder with ST and LT TIPS bond funds
Replies: 98
Views: 4673

Re: Matching a TIPS bond ladder with ST and LT TIPS bond funds

Thanks BobK. So, when you are withdrawing money from the TIPS barbell, you take it out of ST and LT proportionally in order to maintain the targeted aggregate duration? I guess what I don't quite understand is what happens if real rates have shot up and the share price of the LT TIPS fund has been ...
by bobcat2
Sat Feb 03, 2018 9:37 am
Forum: Personal Consumer Issues
Topic: Best Movies of 2017
Replies: 35
Views: 2936

Re: Best Movies of 2017

None of the following movies would make my top ten but they were all worth seeing. Marshall (perhaps this would make my top ten list.) LBJ Mark Felt (timely) My Cousin Rachel 13 Minutes Viceroy's House A Quiet Passion Film Stars Don’t Die in Liverpool The following movie made few top ten lists but w...
by bobcat2
Fri Feb 02, 2018 6:56 pm
Forum: Investing - Theory, News & General
Topic: Matching a TIPS bond ladder with ST and LT TIPS bond funds
Replies: 98
Views: 4673

Re: Matching a TIPS bond ladder with ST and LT TIPS bond funds

What an investor is doing with a non-rolling TIPS ladder (whether he knows it or not) is duration matching income from the ladder to the duration of a spending goal over time. The same thing can be accomplished by matching the average weighted duration of two TIPS funds to the duration of the target...