Search found 4776 matches

by bobcat2
Sun May 28, 2017 7:02 pm
Forum: Investing - Theory, News & General
Topic: DFA Retirement Income Strategies
Replies: 64
Views: 4208

Re: DFA Retirement Income Strategies

Not even close to a Larry Portfolio. :thumbsup :thumbsup The heart of the strategy driving this portfolio asset allocation is the dynamic duration matching of the two TIPS funds to the duration of the targeted 25 year retirement income stream. I haven't seen all of the Larry portfolios, but I suspe...
by bobcat2
Sun May 28, 2017 9:52 am
Forum: Investing - Theory, News & General
Topic: Using the Funded Ratio to drive your retirement investment plan
Replies: 35
Views: 1407

Using the Funded Ratio to drive your retirement investment plan

That TIAA-CREF example reinforces the need for goal- or liability-driven investing . …Regarding the example, it is important to decide whether the pot is a savings account or a retirement account. It is hard to have two different goals because they conflict. One calls for having principal stability...
by bobcat2
Sat May 27, 2017 11:49 pm
Forum: Investing - Help with Personal Investments
Topic: Intermediate vs Short Term TIPS Fund
Replies: 43
Views: 3351

Re: Intermediate vs Short Term TIPS Fund

bobcat, thanks again for all your help/advice but I think we have different definition of what "handle the risk" means. I did not mean to imply that my approach was immune to the risk but I'm confident that I can survive without undue hardship. With a normal SWR below 3% and the possibili...
by bobcat2
Sat May 27, 2017 11:29 pm
Forum: Investing - Theory, News & General
Topic: Mathematically-rigorous, yet comprehensive (assuming little prior investing knowledge), books?
Replies: 28
Views: 1230

Re: Mathematically-rigorous, yet comprehensive (assuming little prior investing knowledge), books?

You want rigorous, but comprehensive. I suggest you start where PhDs in financial economics start and that's with Merton. It is said that if you want to understand finance, first you must understand Merton. And here it is, all 551 pages of "Continuous Time Finance", by Robert Merton in fre...
by bobcat2
Sat May 27, 2017 10:17 pm
Forum: Investing - Help with Personal Investments
Topic: Intermediate vs Short Term TIPS Fund
Replies: 43
Views: 3351

Re: Intermediate vs Short Term TIPS Fund

I've put together a 3 fund portfolio that I'm comfortable with handling interest rate risks using an IT nominal bond fund. If you understand interest rate risk to your withdrawals, then you understand that an IT bond fund does not handle the risk. For your withdrawals from the portfolio to provide ...
by bobcat2
Sat May 27, 2017 6:03 pm
Forum: Investing - Help with Personal Investments
Topic: Intermediate vs Short Term TIPS Fund
Replies: 43
Views: 3351

Re: Intermediate vs Short Term TIPS Fund

When you want to turn assets in bond funds into safe income in retirement - there are two principal risks 1) inflation risk 2) interest rate risk Holding any bond fund with a duration of 8 does not protect you against interest rate risk, except for the point in time that the corresponding liability ...
by bobcat2
Sat May 27, 2017 3:05 pm
Forum: Investing - Help with Personal Investments
Topic: Intermediate vs Short Term TIPS Fund
Replies: 43
Views: 3351

Re: Intermediate vs Short Term TIPS Fund

Hi BigJohn, I was referring to the different duration matching strategies. Holding an intermediate term TIPS fund is far removed from any of the duration matching strategies. For safe income over retirement there is little difference between holding an intermediate nominal bond fund and an intermedi...
by bobcat2
Sat May 27, 2017 2:53 pm
Forum: Investing - Theory, News & General
Topic: DFA Retirement Income Strategies
Replies: 64
Views: 4208

Re: DFA Retirement Income Strategies

Consider current yields: July 2027 TIPS are currently yielding 0.439%. Feb 2040 TIPS are currently yielding 0.868%. http://online.wsj.com/mdc/public/page/2_3020-tips.html?mod=mdc_bnd_pglnk While equities will surely have more volatility, it's difficult to conceive that they would return less over t...
by bobcat2
Sat May 27, 2017 1:53 pm
Forum: Investing - Help with Personal Investments
Topic: Intermediate vs Short Term TIPS Fund
Replies: 43
Views: 3351

Re: Intermediate vs Short Term TIPS Fund

Hi #Cruncher, You are rebalancing the funds at higher frequency than annually. I suggest a frequency of at least a quarterly or trimester basis. The higher frequency the better, but you have to trade off the efficiency of near continual re-balancing with the trading costs, both in dollars and time a...
by bobcat2
Sat May 27, 2017 1:23 pm
Forum: Investing - Theory, News & General
Topic: DFA Retirement Income Strategies
Replies: 64
Views: 4208

Re: DFA Retirement Income Strategies

I think these matching strategies are more for people who have "won the game." As for me, I need portfolio growth before retirement and probably will need portfolio growth in retirement. The point of goal based investing based on the funded ratio and an LDI strategy is to have a plan for ...
by bobcat2
Sat May 27, 2017 11:30 am
Forum: Investing - Theory, News & General
Topic: DFA Retirement Income Strategies
Replies: 64
Views: 4208

Re: DFA Retirement Income Strategies

Excerpt from an article by Wade Pfau on duration matching with bond funds. - The Hunt For Duration-Matched Bond Fund s In practice, duration matching for a retired household will be highly complex and not necessarily practical, making immunization from interest rate risk an insurmountable obstacle f...
by bobcat2
Sat May 27, 2017 10:34 am
Forum: Investing - Help with Personal Investments
Topic: Intermediate vs Short Term TIPS Fund
Replies: 43
Views: 3351

Re: Intermediate vs Short Term TIPS Fund

Hi midnightrun, You pose an interesting question IMO and that's because I am not sure the duration of I-bonds is zero. When I googled the question, "what is the duration of I-bonds?", what came up was a heated discussion of that very topic here at Bogleheads four years ago. :D I was not aw...
by bobcat2
Sat May 27, 2017 12:51 am
Forum: Investing - Theory, News & General
Topic: DFA Retirement Income Strategies
Replies: 64
Views: 4208

Re: DFA Retirement Income Strategies

Of course, that just changes the question to why DFA is talking about 15 year retirements. It is hard to tell just from a presentation what they really intend or mean or why. The DFA TDFs asssume retirement at age 65 and a roughly 25 year retirement to age 90-91. This is depicted on pages 8 and 22 ...
by bobcat2
Fri May 26, 2017 3:41 pm
Forum: Investing - Help with Personal Investments
Topic: Intermediate vs Short Term TIPS Fund
Replies: 43
Views: 3351

Re: Intermediate vs Short Term TIPS Fund

... while I understand the theoretical benefit of trying to dynamically match remaining life expectancy, is there really that much benefit in practical terms? After all, the target itself (ie life span) is a huge unknown in the base case. For the sake of simplicity, what's the downside of just usin...
by bobcat2
Fri May 26, 2017 8:03 am
Forum: Investing - Help with Personal Investments
Topic: Intermediate vs Short Term TIPS Fund
Replies: 43
Views: 3351

Re: Intermediate vs Short Term TIPS Fund

yeah 25/75 stocks/long-term-tips is what the DFA target retirement fund apparently does http://www.investmentnews.com/article/20151103/FREE/151109985/dfa-breaks-into-target-date-fund-market-with-unique-investment cheers, grok No, 75% LT TIPS is not what DFA does. That doesn't make much sense financ...
by bobcat2
Thu May 25, 2017 8:34 pm
Forum: Investing - Theory, News & General
Topic: DFA Retirement Income Strategies
Replies: 64
Views: 4208

Re: DFA Retirement Income Strategies

.. I have been retired for 20 years already and still have 2/3 equity, 1/3 bonds which has worked quite well for 20 years of drawdowns and can easily withstand another 20 in my view. Had I loaded up on 80% TIPS/LMP when I started I suspect I'd be broke now. Garland Whizzer Garland,18-20 years TIPS ...
by bobcat2
Thu May 25, 2017 12:06 pm
Forum: Local Chapters and Bogleheads Community
Topic: Master thread for Washington DC Area Bogleheads
Replies: 106
Views: 24219

Re: Master thread for Washington DC Area Bogleheads

Hi Victoria, I think you’ve got it, but I’ll put it in my own words. There are two ways to get safe real (inflation-adjusted) income in retirement. One is real life annuities - SS, real pensions, and real commercial life annuities, and the other is real bonds – TIPS & I-bonds. IMO they are compl...
by bobcat2
Thu May 25, 2017 10:52 am
Forum: Investing - Theory, News & General
Topic: DFA Retirement Income Strategies
Replies: 64
Views: 4208

Re: DFA Retirement Income Strategies

A bit off topic, but does anyone share my concern that TIPS may not actually keep up with actual inflation from a retiree's viewpoint? Currently, actual health care cost inflation exceeds the govt. inflation rate. Health care costs, especially in later retirement, may make up a significant portion ...
by bobcat2
Thu May 25, 2017 9:20 am
Forum: Investing - Theory, News & General
Topic: DFA Retirement Income Strategies
Replies: 64
Views: 4208

Re: DFA Retirement Income Strategies

A couple of comments after reading through the thread. Target date funds are intended for 401k and 403b plans and other tax advantaged DC plans. It's where middle income people are keeping their retirement portfolios. Worrying about the heavy allocation to TIPS and other bonds and frequent re-balanc...
by bobcat2
Thu May 25, 2017 8:28 am
Forum: Investing - Theory, News & General
Topic: Interesting conversation with an alleged SS actuary
Replies: 63
Views: 4793

Re: Interesting conversation with an alleged SS actuary

I think the 2.9% is probably what the SS administration uses for the fund. Not what you & I get. Maybe bobcat can answer. Doc is right, but that 2.9% still makes it a great deal to delay taking SS these days. A real inflation-adjusted life annuity based on roughly a 2.9% rate is a great deal wh...
by bobcat2
Mon May 22, 2017 9:11 pm
Forum: Investing - Theory, News & General
Topic: 401k industry focused on wrong metrics
Replies: 2
Views: 522

Re: 401k industry focused on wrong metrics

My 401k thinks its important to tell me how much my portfolio changed in value since yesterday. If you are 63 years old and planning to retire in two years and your portfolio rose today because interest rates fell; then what your portfolio thinks is important is wrong. It's not important that your ...
by bobcat2
Mon May 22, 2017 12:35 pm
Forum: Investing - Theory, News & General
Topic: DFA Retirement Income Strategies
Replies: 64
Views: 4208

DFA Retirement Income Strategies

Slides from DFA presentation earlier this year that discusses their investment strategy for helping individuals to achieve their retirement income goals. Link - https://www.oregon.gov/treasury/ORSP/Documents/2017%20Dimensional%20TDIF%20Presentation%20Material.pdf Below is the link to the DFA retirem...
by bobcat2
Mon May 22, 2017 12:09 pm
Forum: Investing - Theory, News & General
Topic: 401k industry focused on wrong metrics
Replies: 2
Views: 522

401k industry focused on wrong metrics

The funded ratio should replace account balances as the priority. – Robert Merton in Canada earlier this year. Link to article - http://www.benefitscanada.com/news/dc-industry-focused-on-the-wrong-metric-for-retirement-income-96288 Merton warned that the industry’s emphasis on return on investment,...
by bobcat2
Mon May 22, 2017 9:35 am
Forum: Local Chapters and Bogleheads Community
Topic: Master thread for Washington DC Area Bogleheads
Replies: 106
Views: 24219

Re: Master thread for Washington DC Area Bogleheads

Back in March, there was post above stating that the four remaining meetings for 2017 would be held at Ballston Library, but clearly something changed those plans since yesterday's meeting was in Silver Spring. I am making plans to come to DC this summer and/or fall, are there any plans for a Balls...
by bobcat2
Mon May 22, 2017 8:59 am
Forum: Local Chapters and Bogleheads Community
Topic: Master thread for Washington DC Area Bogleheads
Replies: 106
Views: 24219

Calculating the Funded Ratio using real life annuity pricing

At yesterday's meeting it was brought up that one can calculate the funded ratio for your retirement portfolio while working by dividing the size of your portfolio by the price of a deferred real (inflation-adjusted) life annuity with payouts at your desired retirement income level. The question tha...
by bobcat2
Sat May 20, 2017 8:45 am
Forum: Investing - Theory, News & General
Topic: Interesting conversation with an alleged SS actuary
Replies: 63
Views: 4793

Re: Interesting conversation with an alleged SS actuary

OK, to be precise, no life annuities sold to individuals or couples is unisex. 8-)

BobK :wink:
by bobcat2
Sat May 20, 2017 8:31 am
Forum: Investing - Theory, News & General
Topic: Interesting conversation with an alleged SS actuary
Replies: 63
Views: 4793

Re: Interesting conversation with an alleged SS actuary

That SS is actuarially neutral has been debunked numerous times at Bogleheads. There are many reasons it is not actuarially neutral. Here are some of them. - It is unisex. If it were actuarially neutral for single people it would need to differentiate between men and women since on average women liv...
by bobcat2
Thu May 18, 2017 8:41 pm
Forum: Investing - Theory, News & General
Topic: LMP-1: P&I article on corporate & public pension plans
Replies: 60
Views: 4366

Re: LMP-1: P&I article on corporate & public pension plans

Do I do a strict LDI until I amass 70% of my nest egg and then invest in risky assets. This will be right opposite to what many want to do - bonds only, in early accumulation, shifting to stocks closer to retirement. Or, each year investements are made to maintain 70% in LDI and 30% into risky asse...
by bobcat2
Thu May 18, 2017 2:16 pm
Forum: Investing - Theory, News & General
Topic: LMP-1: P&I article on corporate & public pension plans
Replies: 60
Views: 4366

Re: LMP-1: P&I article on corporate & public pension plans

If LDI allows all other funds to be invested elsewhere, isn't it advocating a traditional benchmark driven strategy for all of these 'other funds'. It looks like LDI allows for this compartmentalization. I don't see it that way. An LDI strategy is focused on meeting your financial goal. If you have...
by bobcat2
Thu May 18, 2017 8:02 am
Forum: Investing - Theory, News & General
Topic: LMP-1: P&I article on corporate & public pension plans
Replies: 60
Views: 4366

Re: LMP-1: P&I article on corporate & public pension plans

A definition of Liability Driven Investing (LDI) LDI strategies are goal based investment strategies that seek to maximize the probability of reaching a financial goal. Often an LDI strategy is implemented by focusing on duration matching assets to future liabilities. Bob, in a LDI, once you start m...
by bobcat2
Thu May 18, 2017 12:25 am
Forum: Investing - Theory, News & General
Topic: LMP-1: P&I article on corporate & public pension plans
Replies: 60
Views: 4366

Re: LMP-1: P&I article on corporate & public pension plans

Hi Angst, Liability driven investing (LDI) is an investment strategy - not a portfolio. If you have an investment strategy that is matching at least some assets to some liabilities, then you have some form of an LDI. LDI strategies do not have to match all liabilities to assets. However, you have on...
by bobcat2
Wed May 17, 2017 11:05 am
Forum: Investing - Theory, News & General
Topic: LMP-1: P&I article on corporate & public pension plans
Replies: 60
Views: 4366

Re: LMP-1: P&I article on corporate & public pension plans

Hi gilgamesh, The thread on LDI and interest rate matching started by Bob is what drew me to this forum. This is the thread https://www.bogleheads.org/forum/viewtopic.php?f=10&t=174991&p=2645226&hilit=LDI+LMP+STRATEGY#p2645226 I have to say I don't fully understand it :D ... It is not bu...
by bobcat2
Thu Apr 27, 2017 12:56 pm
Forum: Local Chapters and Bogleheads Community
Topic: Master thread for Washington DC Area Bogleheads
Replies: 106
Views: 24219

Re: Master thread for Washington DC Area Bogleheads

I'm putting together a presentation on target date funds for the meeting. Also some follow-up material on using the funded ratio, which was discussed at the January meeting. Also up for discussion is Mr. Boffin's dilemma of selling a house & then buying a house during retirement and how a HECM f...
by bobcat2
Mon Apr 24, 2017 2:36 pm
Forum: Investing - Theory, News & General
Topic: LMP-1: P&I article on corporate & public pension plans
Replies: 60
Views: 4366

Re: LMP-1: P&I article on corporate & public pension plans

The key point is that all three choices—an inflation-adjusted annuity, TIPS ladder or short-bond portfolio—or any combination of them would match the retiree’s annual needs well, because they all provide a known stream of income and principal over the years. It certainly seems much easier to invest...
by bobcat2
Sun Apr 23, 2017 5:35 pm
Forum: Investing - Theory, News & General
Topic: LMP-1: P&I article on corporate & public pension plans
Replies: 60
Views: 4366

Re: LMP-1: P&I article on corporate & public pension plans

Another key difference between LDI and LMP is that LDI strategies, whether public pensions, corporate pensions, or an individual planning retirement by allocating assets in a DC plan, use the funded ratio as a key metric. OTOH when people advocate developing an LMP, the funded ratio is at best an af...
by bobcat2
Sun Apr 23, 2017 5:15 pm
Forum: Investing - Theory, News & General
Topic: LMP-1: P&I article on corporate & public pension plans
Replies: 60
Views: 4366

Re: LMP-1: P&I article on corporate & public pension plans

LMP-1: P&I article on corporate & public pension plans LMP = Liability Matching Portfolio Split on bonds: Corporate plans have increased their bond allocations as more have adopted LDI strategies, while public plans have lowered bond allocations, as the need for returns has led them to risk...
by bobcat2
Sat Apr 15, 2017 9:49 pm
Forum: Investing - Help with Personal Investments
Topic: The great commodities debate
Replies: 39
Views: 6638

Re: The great commodities debate

Murray Boyd wrote:I just looked up the long-term performance of PCRIX. Aha! That's hilarious.

Hi Murray,
A very warm welcome back. Please don't wait two years to make your next post. :D

Best,
BobK
by bobcat2
Wed Apr 12, 2017 3:39 pm
Forum: Investing - Help with Personal Investments
Topic: STRIPS ladder to buy my retirement home?
Replies: 13
Views: 1335

Re: STRIPS ladder to buy my retirement home?

Hi again Mr W. Boffin,

I think instead of a zero coupon Treasury ladder you should consider a HECM for purchase. This product was designed for seniors who want to buy more house in retirement. That sounds like you to me. :wink:

Maybe we can talk about this next month.

Best,
BC2
by bobcat2
Wed Apr 05, 2017 9:16 pm
Forum: Personal Finance (Not Investing)
Topic: What is your definition of 'Savings'?
Replies: 25
Views: 1545

Re: What is your definition of 'Savings'?

How saving and savings are defined in financial economics. Saving (without the terminal s) refers to a flow variable; the income that is not spent. Savings (with the terminal s) refers to a stock variable; the total value of the saving over time that has not been spent. Thus, savings are the totalit...
by bobcat2
Tue Apr 04, 2017 11:14 am
Forum: Personal Finance (Not Investing)
Topic: Value of your social security tax contributions "account"
Replies: 15
Views: 1670

Re: Value of your social security tax contributions "account"

At a minimum remember that if you are married the real life annuity that Social Security provides is joint last to die. Be sure when comparing to a private life annuity to compare it with joint last to die using both you and your spouse's ages. These policies are very expensive in the private market...
by bobcat2
Mon Apr 03, 2017 4:52 pm
Forum: Investing - Help with Personal Investments
Topic: Best investments for risk-averse retiree
Replies: 31
Views: 2044

Re: Best investments for risk-averse retiree

A reverse mortgage cannot be explained in a paragraph or two but here are some sources - Here are some articles on reverse mortgages - Jane Bryant Quinn - A great reverse mortgage idea: Take a credit line now Link- http://janebryantquinn.com/2013/08/a-great-reverse-mortgage-idea-take-a-credit-line-n...
by bobcat2
Mon Apr 03, 2017 3:40 pm
Forum: Investing - Help with Personal Investments
Topic: Best investments for risk-averse retiree
Replies: 31
Views: 2044

Re: Best investments for risk-averse retiree

This is what you told us. My Mom is selling her house, as she has no retirement savings and it's her only option to sock away some $$$. She's 71 and still has to work full-time. after paying off the existing mortgage, she'll have about 50k to invest. Where is this $50k coming from if it's not coming...
by bobcat2
Mon Apr 03, 2017 2:48 pm
Forum: Investing - Help with Personal Investments
Topic: Best investments for risk-averse retiree
Replies: 31
Views: 2044

Re: Best investments for risk-averse retiree

Why is she selling the house? Unless she is moving in with you rent free, how does that help? Wouldn't she be better off taking out a reverse mortgage and staying in the house mortgage and rent free? BobK The thinking is that she's 71 and owes 40k. She makes around 20k a yr at her job, has only 2k ...
by bobcat2
Mon Apr 03, 2017 9:52 am
Forum: Investing - Help with Personal Investments
Topic: Best investments for risk-averse retiree
Replies: 31
Views: 2044

Re: Best investments for risk-averse retiree

Why is she selling the house? Unless she is moving in with you rent free, how does that help? Wouldn't she be better off taking out a reverse mortgage and staying in the house mortgage and rent free?

BobK
by bobcat2
Thu Mar 16, 2017 9:30 am
Forum: Local Chapters and Bogleheads Community
Topic: Master thread for Washington DC Area Bogleheads
Replies: 106
Views: 24219

Re: Next Meeting Sunday March 19 at Silver Spring library

Our next meeting will be from 2:30-4:30 this coming Sunday, March 19, in meeting room #2 at the Silver Spring Library, 900 Wayne Ave, Silver Spring, MD 20910. This is the second of our two planned meetings this year at the Silver Spring library. At this point we are planning on holding our four rema...
by bobcat2
Tue Mar 14, 2017 9:37 am
Forum: Investing - Theory, News & General
Topic: SEC Rejects Winklevoss Bitcoin ETF
Replies: 67
Views: 6510

Re: SEC Rejects Winklevoss Bitcoin ETF

In the following linked interview Larry Summers recalls his meeting with the Winklevii and how the real meeting compares with the celluloid version.
Link - https://www.youtube.com/watch?v=4suMs5Skw88

BobK
by bobcat2
Tue Mar 14, 2017 8:58 am
Forum: Investing - Theory, News & General
Topic: SEC Rejects Winklevoss Bitcoin ETF
Replies: 67
Views: 6510

Re: SEC Rejects Winklevoss Bitcoin ETF

Btw, the ICA1940 ensures MFs/ETFs are safer, not insures . :wink: I'm heartbroken by this news. How will I be able to go from a mere millionaire to a multi multi millionaire if I can't short Bitcoin ETFs :?: :confused Whenever I read about the Winklevoss twins, I almost always think about the follo...
by bobcat2
Mon Mar 13, 2017 7:08 pm
Forum: Investing - Theory, News & General
Topic: SEC Rejects Winklevoss Bitcoin ETF
Replies: 67
Views: 6510

Re: SEC Rejects Winklevoss Bitcoin ETF

I'm heartbroken by this news. How will I be able to go from a mere millionaire to a multi multi millionaire if I can't short Bitcoin ETFs :?: :confused Whenever I read about the Winklevoss twins, I almost always think about the following. Link - https://www.youtube.com/watch?v=Y3JtmZugzl4 BobK :wink:
by bobcat2
Sun Mar 12, 2017 3:55 pm
Forum: Investing - Help with Personal Investments
Topic: ST TIPS Volatility
Replies: 8
Views: 517

Duration Matching of ST & LT TIPS bond funds

Duration Matching of ST & LT TIPS bond funds to replicate a TIPS ladder Here is an example of using the weighted duration of two TIPS funds in lieu of a TIPS ladder for a targeted stream of retirement payments (annual income). Example – A 63 year old wants $10,000/year in real income starting i...
by bobcat2
Sun Mar 12, 2017 3:37 pm
Forum: Investing - Help with Personal Investments
Topic: ST TIPS Volatility
Replies: 8
Views: 517

Re: ST TIPS Volatility

Much more volatility than other short term bond funds. I have no idea why. Would the short term volatility negate its value for use with RMD's? Thank you for your thoughts. Going to Morningstar I see the annual standard deviation of Vanguard's Short-Term Investment-Grade Fund (VFSTX) has a three ye...

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