Search found 170 matches

by kmok
Tue Sep 20, 2016 11:24 am
Forum: Investing - Help with Personal Investments
Topic: Asset Spread When Only Utilizing Tax-Advantaged Space
Replies: 2
Views: 192

Re: Asset Spread When Only Utilizing Tax-Advantaged Space

The question depends on whether you tax adjust, if yes how do you tax adjust. If you don't, then Lou354 is correct. Low return investments in traditional. The caveat is that although you will get higher overall expected return if you put low return investment in traditional, you are actually fooling...
by kmok
Thu Aug 18, 2016 6:24 pm
Forum: Investing - Theory, News & General
Topic: Inflating Income Statement through Surplus Account
Replies: 7
Views: 679

Re: Inflating Income Statement through Surplus Account

The terminology of accounting has evolved as well. Capital surplus is equivalent to additional paid in capital. Surplus at times can mean net income or retained earnings. When surplus is excluded from the income statement, it would be equivalent to other comprehensive income.
by kmok
Thu Aug 18, 2016 4:10 pm
Forum: Investing - Theory, News & General
Topic: Inflating Income Statement through Surplus Account
Replies: 7
Views: 679

Re: Inflating Income Statement through Surplus Account

The contra account would be inventory reserve, which is part of inventory in the balance sheet. The point is each financial transaction has equal and opposite effects in at least two different accounts. So the question is what is the other account that it hits. In this case, it would be an income st...
by kmok
Thu Aug 18, 2016 12:59 pm
Forum: Investing - Theory, News & General
Topic: Inflating Income Statement through Surplus Account
Replies: 7
Views: 679

Re: Inflating Income Statement through Surplus Account

Accounting has evolved. Not sure the accounting rule back then. Currently under US GAAP, you cannot write down inventory and charge directly to other comprehensive income without hitting the income statement. In IFRS, there are certain type of revaluation that you can hit other comprehensive income ...
by kmok
Thu Aug 18, 2016 1:20 am
Forum: Investing - Theory, News & General
Topic: Inflating Income Statement through Surplus Account
Replies: 7
Views: 679

Re: Inflating Income Statement through Surplus Account

Writing down inventory does hit the income statement. However it hit the current period income statement, or the period that the inventory are being written down. It can potentially inflate future period income statement (if the inventory write down is not justified). In accounting, every financial ...
by kmok
Tue Aug 09, 2016 5:38 pm
Forum: Investing - Theory, News & General
Topic: Return On Investment using XIRR formula in Excel
Replies: 5
Views: 512

Re: Return On Investment using XIRR formula in Excel

Let's put it this way, if you can get 24.97% return annually and you put in $10,000 and don't withdraw until 32 years later, you should be able to pull out $12.5M by the time you withdraw. How much additional return % would be added if you get an add $200K and can withdraw $12.7M instead of $12.5M? ...
by kmok
Wed Aug 03, 2016 2:36 pm
Forum: Investing - Help with Personal Investments
Topic: Help: Calculating overall % gains
Replies: 10
Views: 511

Re: Help: Calculating overall % gains

% gain is not meaningful unless it consist of a time period, such as an annualized return %. For example, 5% monthly return is totally different from 5% annual return. You can used an excel function XIRR to calculate the annualized return %, but you will need to include the time and amount for each ...
by kmok
Wed Jun 29, 2016 6:11 pm
Forum: Personal Finance (Not Investing)
Topic: Rent Vs. Buy Example
Replies: 37
Views: 3120

Re: Rent Vs. Buy Example

Look at the dilemma from another viewpoint. Those here who are Landlords are not in the charity business! What you are implying here. Yes, landlords are not in the charity business. The stocks that people invested in are also not non-profit business. There is a basic concept in economics call oppor...
by kmok
Mon Jun 20, 2016 6:53 pm
Forum: Investing - Help with Personal Investments
Topic: Contributing After-Tax Income to Rollover IRA
Replies: 2
Views: 375

Re: Contributing After-Tax Income to Rollover IRA

I won't say I am an expert, but unless you know what you are doing, otherwise it is usually or even almost always a bad idea to make after-tax contribution to a traditional IRA account. Now my question is are you covered by a retirment plan at work (most commonly 401K)? Also, how do you know you mad...
by kmok
Thu Jun 02, 2016 1:23 pm
Forum: Investing - Theory, News & General
Topic: Dividends Useless?
Replies: 154
Views: 8165

Re: Dividends Useless?

What you said is basically true. Your true potential gains will be based on the company's true earnings (not dividends, though the amount distributed through dividends will definitely be influenced by the earnings) which would lead to higher stock price. Obviously, there is a lot more that can influ...
by kmok
Thu May 26, 2016 2:00 pm
Forum: Investing - Theory, News & General
Topic: S&P 500 Growth Rate?
Replies: 5
Views: 759

Re: S&P 500 Growth Rate?

You should look at it net of inflation. Long term real earning growth should be somewhere between 1.5% to 2.5%, depends on the the time period you looked at.
by kmok
Tue Nov 17, 2015 4:01 pm
Forum: Investing - Theory, News & General
Topic: [How much does "Book Value" count in company valuation?]
Replies: 31
Views: 2847

Re: BOOK VALUE

In general (there are exceptions), most of the asset and liability line items are somewhat accurate except fixed assets and intangible assets, and goodwill. What about companies whose reserves in the ground (commodities) were valued using point in time market prices, following publication of balanc...
by kmok
Tue Nov 17, 2015 1:29 pm
Forum: Investing - Theory, News & General
Topic: [How much does "Book Value" count in company valuation?]
Replies: 31
Views: 2847

Re: BOOK VALUE

In general (there are exceptions), most of the asset and liability line items are somewhat accurate except fixed assets and intangible assets, and goodwill.
by kmok
Tue Jun 02, 2015 11:31 am
Forum: Investing - Theory, News & General
Topic: Global Market is the optimal portfolio. Do you follow that rule?
Replies: 43
Views: 3958

Re: Global Market is the optimal portfolio. Do you follow that rule?

It is reasonable to be a bit biased toward your own market. For example, if you live in US, you would want more US market relatively to the global market. Here are a few reasons: 1. You live in the US. You spend USD. The S&P 500 might be your benchmark, thus domestic equity might offer lower tra...
by kmok
Thu Feb 19, 2015 12:06 am
Forum: Investing - Theory, News & General
Topic: Easy Money
Replies: 18
Views: 2270

Re: Easy Money

Devil's Advocate wrote:So since inflation is essentially non existent why do we all complain about the low interest rate environment?


Correct me if I am wrong, when looking at the long term history, we are currently in a very low real interest rate environment.
by kmok
Sun Feb 15, 2015 3:37 pm
Forum: Personal Finance (Not Investing)
Topic: Savings Rate Methodology
Replies: 22
Views: 2450

Re: Savings Rate Methodology

Gross is much more common. So if you are comparing others or recommendation from books or blogs, then use gross. However, for your personal purposes, you can choose to use net. If you have already done your best to minimize taxes, then you can use net to see how you are doing over time, especially i...
by kmok
Sat Jan 31, 2015 3:16 pm
Forum: Personal Finance (Not Investing)
Topic: Effects of early retirement on Social Security benefits?
Replies: 8
Views: 1180

Re: Effects of early retirement on Social Security benefits?

Social Security benefit is calculating based on the 35 years of earnings. For example, if you only work for 20 years, Social Security will put $0 income on the remaining 15 years, which would significantly lower the Average Indexed Monthly Earnings (AIME). AIME is used to calculate your benefit. How...
by kmok
Thu Jan 29, 2015 9:36 pm
Forum: Personal Finance (Not Investing)
Topic: Stop 401K To Save More Cash
Replies: 5
Views: 861

Re: Stop 401K To Save More Cash

Without providing more details it is hard to provide recommendation. For example, your annual spending, amount of emergency fund, portfolio, income, tax rate, and etc.
by kmok
Thu Jan 29, 2015 9:29 pm
Forum: Investing - Theory, News & General
Topic: Wiki comments requested: The importance of asset allocation
Replies: 208
Views: 13999

Re: Wiki comments requested: The importance of asset allocat

Maybe these quotes should be considered: "in the late nineteen eighties, Gary Brinson, a noted money manager and financial analyst and his colleagues published two sophisticated statistical studies of eighty two large pension funds, but concluded that asset allocation accounted for over ninety ...
by kmok
Tue Jan 27, 2015 2:46 pm
Forum: Investing - Help with Personal Investments
Topic: Help with increasing employee stock option tax burden
Replies: 9
Views: 1042

Re: Help with increasing employee stock option tax burden

You said you don't want to miss the upside. If there is an upside, there is a downside. Every individual stock does.

If you are going to exercise, you should sell immediately. The risk is too high to have too much of one company's equity tie to your networth.
by kmok
Tue Jan 20, 2015 4:53 pm
Forum: Personal Finance (Not Investing)
Topic: What counts as "saving"?
Replies: 128
Views: 8642

Re: What counts as "saving"?

Okay, in the same situation you just posted, if that person had instead spent that $3,000 on a Roth IRA, what would you say their savings rate was? Using your logic and example, I have convincingly (at least in my opinion) prove that your logic and analysis is flawed. If you disagreed, please provi...
by kmok
Tue Jan 20, 2015 4:30 pm
Forum: Personal Finance (Not Investing)
Topic: What counts as "saving"?
Replies: 128
Views: 8642

Re: What counts as "saving"?

[...] At the beginning of 2014, Tom has $5,000 in Cash and owns a house valued at $120,000 with a $100,000 mortgage (no other assets or debts). His net worth is $25,000 For 2014, Tom had $50,000 in take home pay after taxes (no retirement contributions). He spent $54,000 , which includes his mortga...
by kmok
Tue Jan 20, 2015 4:29 pm
Forum: Personal Finance (Not Investing)
Topic: What counts as "saving"?
Replies: 128
Views: 8642

Re: What counts as "saving"?

[...] At the beginning of 2014, Tom has $5,000 in Cash and owns a house valued at $120,000 with a $100,000 mortgage (no other assets or debts). His net worth is $25,000 For 2014, Tom had $50,000 in take home pay after taxes (no retirement contributions). He spent $54,000 , which includes his mortga...
by kmok
Tue Jan 20, 2015 4:14 pm
Forum: Personal Finance (Not Investing)
Topic: What counts as "saving"?
Replies: 128
Views: 8642

Re: What counts as "saving"?

It looks like you agree with me that savings in my scenario is $23,000. We would come to the same "savings rate" (assuming a $60,000 gross income, this person would save 38.33% of their gross income). So why argue the semantics of when and how the principal payment was made? I understand ...
by kmok
Tue Jan 20, 2015 3:27 pm
Forum: Personal Finance (Not Investing)
Topic: What counts as "saving"?
Replies: 128
Views: 8642

Re: What counts as "saving"?

Let's use this very simplistic look at an increase in Net Worth (saving?): At the beginning of 2014, Tom has $5,000 in Cash and owns a house valued at $120,000 with a $100,000 mortgage (no other assets or debts). His net worth is $25,000 (if you count the house as an asset or not is another discuss...
by kmok
Tue Jan 20, 2015 12:56 pm
Forum: Personal Finance (Not Investing)
Topic: What counts as "saving"?
Replies: 128
Views: 8642

Re: What counts as "saving"?

Paying off debt reduced both your assets and liabilities , thus have no impact on your net worth, thus it is not saving nor spending. I am not going to get into the debate whether paying off debt is savings or not (It is starting to resemble a political or religious debate of zealots) However, your...
by kmok
Tue Jan 20, 2015 12:18 am
Forum: Personal Finance (Not Investing)
Topic: What counts as "saving"?
Replies: 128
Views: 8642

Re: What counts as "saving"?

Paying off debt reduced both your assets and liabilities , thus have no impact on your net worth, thus it is not saving nor spending. I am not going to get into the debate whether paying off debt is savings or not (It is starting to resemble a political or religious debate of zealots) However, your...
by kmok
Mon Jan 19, 2015 7:35 pm
Forum: Personal Finance (Not Investing)
Topic: What counts as "saving"?
Replies: 128
Views: 8642

Re: What counts as "saving"?

Fair enough, kmok. If I implied discussing accepted methods is not useful I misspoke. That said, I don't see the unity between discussing them and reading "'We saved 50% every year and now we're multimillionaires' (paraphrasing)." I certainly do not, in any serious sense, suggest buying a...
by kmok
Mon Jan 19, 2015 7:06 pm
Forum: Personal Finance (Not Investing)
Topic: What counts as "saving"?
Replies: 128
Views: 8642

Re: What counts as "saving"?

... I doubt the distinction will affect my own actions at all. But when reading the advice to "save XX% of your income," or when reading of people saying "We saved 50% every year and now we're multimillionaires" (paraphrasing), I get to wondering what exactly people consider to ...
by kmok
Mon Jan 19, 2015 6:48 pm
Forum: Personal Finance (Not Investing)
Topic: What counts as "saving"?
Replies: 128
Views: 8642

Re: What counts as "saving"?

My view is savings is acquiring "new" money and not spending it. So, you get a $2,000 paycheck and put $200 in a 529 plan, you've "saved" $200. It doesn't matter what you saved the money for. You could save it for education, retirement, a trip, a car, or a rainy day. It's still ...
by kmok
Mon Jan 19, 2015 5:56 pm
Forum: Personal Finance (Not Investing)
Topic: What counts as "saving"?
Replies: 128
Views: 8642

Re: What counts as "saving"?

What types of things count as "saving"? Examples: - Extra mortgage principal payments? In the long term the payments will shorten the mortgage term. You're paying down debt, but I tend to view this as saving, although I can't really give a rationale for it. Paying off debt is spending not...
by kmok
Sun Jan 18, 2015 2:46 pm
Forum: Investing - Theory, News & General
Topic: Size + Value Premium Explained
Replies: 5
Views: 663

Re: Size + Value Premium Explained

Can someone explain to me more in depth how the size/value premiums work? I don't understand why Growth stocks and Large Caps underperform small and value long term. 1. Is the value premium only existent because a few undervalued companies really outperform while most fail (so you need a fund to ca...
by kmok
Fri Jan 02, 2015 5:37 am
Forum: Personal Finance (Not Investing)
Topic: Question on creating a budget which accounts for taxes.
Replies: 5
Views: 703

Re: Question on creating a budget which accounts for taxes.

You can tried to applied the salary with the effective tax rate if you only have salary income. The rest of the income items applied at the marginal tax rate.
by kmok
Fri Jan 02, 2015 5:30 am
Forum: Investing - Theory, News & General
Topic: What does large cap add
Replies: 11
Views: 1362

Re: What does large cap add

Not sure if I understand your questions. But large caps makes up most of the market. For example, S&P 500 comprises 75% of the US market capitalization of US stocks, so in order not to have a huge tracking error and you need to have large caps in your portfolio. When most experts talking about t...
by kmok
Wed Dec 31, 2014 2:27 pm
Forum: Investing - Help with Personal Investments
Topic: Roth vs. Traditional w/tax savings invested.
Replies: 11
Views: 1289

Re: Roth vs. Traditional w/tax savings invested.

First of all, let’s assumed the marginal tax rate for contribution and withdraw are the same. Contribution to a tax deferred and tax free account would be the same, unless you reach the maximum contribution limit. In this case, $5.5k contribution limit for tax deferred and tax free account would not...
by kmok
Sun Dec 28, 2014 6:09 pm
Forum: Personal Finance (Not Investing)
Topic: Square pegs won't go in round holes! Net Worth and Cash flow
Replies: 83
Views: 8113

Re: Square pegs won't go in round holes! Net Worth and Cash

That approach fails to differentiate a 200K home from a 2 million home. and is useless if you have non tinkertoy assets. a house does not reduce your need for income. It produces income in the form of imputed rent which you then spend on housing. You cant analyze your "need" for income wi...
by kmok
Sun Dec 28, 2014 3:49 pm
Forum: Personal Finance (Not Investing)
Topic: Square pegs won't go in round holes! Net Worth and Cash flow
Replies: 83
Views: 8113

Re: Square pegs won't go in round holes! Net Worth and Cash

Why don't you explain how, in your view, one can make better portfolio allocation decisions after converting everything to its present value? Your portfolio is one part of your overall assets. it can range from 0% to 100% Your overall assets have to match your overall risk tolerance. If your portfo...
by kmok
Sat Dec 27, 2014 10:08 pm
Forum: Investing - Help with Personal Investments
Topic: Where to hold bond allocation
Replies: 3
Views: 641

Re: Where to hold bond allocation

Just switched employers and having some trouble figuring out how to allocate my bond holdings. I used to keep all my bonds in 401k and filled the remaining space with equities and my Roth IRA was entirely equities. On my new employers plan, the expense ratio for the bond funds is much higher than I...
by kmok
Sat Dec 27, 2014 6:08 pm
Forum: Personal Finance (Not Investing)
Topic: Square pegs won't go in round holes! Net Worth and Cash flow
Replies: 83
Views: 8113

Re: Square pegs won't go in round holes! Net Worth and Cash

It is interesting you used legal property definition to talk about finance, especially when the finance definition is much more common. I suggest when you do that, you should define the key terms first, unless you are talking to legal professions only. Otherwise, you create a lot of confusion. the ...
by kmok
Sat Dec 27, 2014 5:33 pm
Forum: Personal Finance (Not Investing)
Topic: Square pegs won't go in round holes! Net Worth and Cash flow
Replies: 83
Views: 8113

Re: Square pegs won't go in round holes! Net Worth and Cash

Asset allocation is an irrational process. Yes, for a desired risk level, you can do a pretty rational determination of asset mix based on historical volatility, but the decision about risk level is entirely up to the individual investor. Although some asset allocation decisions have measurable fin...
by kmok
Sat Dec 27, 2014 5:21 pm
Forum: Personal Finance (Not Investing)
Topic: Square pegs won't go in round holes! Net Worth and Cash flow
Replies: 83
Views: 8113

Re: Square pegs won't go in round holes! Net Worth and Cash

It is interesting you used legal property definition to talk about finance, especially when the finance definition is much more common. I suggest when you do that, you should define the key terms first, unless you are talking to legal professions only. Otherwise, you create a lot of confusion. the ...
by kmok
Sat Dec 27, 2014 4:16 pm
Forum: Personal Finance (Not Investing)
Topic: Square pegs won't go in round holes! Net Worth and Cash flow
Replies: 83
Views: 8113

Re: Square pegs won't go in round holes! Net Worth and Cash

I am using the legal property definition of "liquid". an asset is "liquid" when you have the legal right to turn it into cash Shares of stock (or any other property) that you own but cannot legally sell are not liquid. Social security and pension benefits are not liquid. My shar...
by kmok
Fri Dec 26, 2014 11:48 pm
Forum: Personal Finance (Not Investing)
Topic: Square pegs won't go in round holes! Net Worth and Cash flow
Replies: 83
Views: 8113

Re: Square pegs won't go in round holes! Net Worth and Cash

I don’t know how illiquid asset generally cannot be held in portfolios. The definition of portfolio is “a collection of investments held by an investment company, hedge fund, financial institution or individual.” ..... Illiquid is “The state of a security or other asset that cannot easily be sold o...
by kmok
Fri Dec 26, 2014 4:22 pm
Forum: Personal Finance (Not Investing)
Topic: Square pegs won't go in round holes! Net Worth and Cash flow
Replies: 83
Views: 8113

Re: Square pegs won't go in round holes! Net Worth and Cash

No, it's not consistent. You do not convert stock to flow when you buy the annuity. As you say, the annuity is an asset. So purchasing the annuity converts an asset to an asset. An annuity, just like any other financial assets, is valued based on the projected cash flows. Do you convert stock to a ...
by kmok
Thu Dec 25, 2014 7:55 pm
Forum: Personal Finance (Not Investing)
Topic: Square pegs won't go in round holes! Net Worth and Cash flow
Replies: 83
Views: 8113

Re: Square pegs won't go in round holes! Net Worth and Cash

Of course they are assets. They are not portfolio assets. But they are assets. And what is the value of these assets? Why not include the presumed value of human capital in net worth? Docs accepted at medical school are "worth" a minimum for 10 million, even though they may start actual w...
by kmok
Thu Dec 25, 2014 6:23 pm
Forum: Personal Finance (Not Investing)
Topic: Square pegs won't go in round holes! Net Worth and Cash flow
Replies: 83
Views: 8113

Re: Square pegs won't go in round holes! Net Worth and Cash

Liquidity is an attribute of both stocks and flows but it is not particularly important. Social security benefits are not liquid but that does not prevent the right to a benefit from being an asset in a net worth analysis. If social security is not an asset an identical debt payable in monthly inst...
by kmok
Thu Dec 25, 2014 4:12 pm
Forum: Personal Finance (Not Investing)
Topic: Square pegs won't go in round holes! Net Worth and Cash flow
Replies: 83
Views: 8113

Re: Square pegs won't go in round holes! Net Worth and Cash

The Wizard wrote:Cashflows for pre-retirees don't yet exist.
Whereas an accumulation of $X00k does exist.


Cashflow is not for retirees only. Anyone with cash inflows and outflows can prepare cashflows for various purposes such as budgeting and forecasting.
by kmok
Thu Dec 25, 2014 4:05 pm
Forum: Personal Finance (Not Investing)
Topic: Square pegs won't go in round holes! Net Worth and Cash flow
Replies: 83
Views: 8113

Re: Square pegs won't go in round holes! Net Worth and Cash

Liquidity is an attribute of both stocks and flows but it is not particularly important. Social security benefits are not liquid but that does not prevent the right to a benefit from being an asset in a net worth analysis. If social security is not an asset an identical debt payable in monthly inst...
by kmok
Mon Dec 22, 2014 2:12 am
Forum: Investing - Theory, News & General
Topic: Do Companies Index Their Profits?
Replies: 15
Views: 1477

Re: Do Companies Index Their Profits?

I think most companies don't do this, except certain industries such as investment banks of course. Public companies can't take the risk as they don't want to explain to their investors why they have a huge capital lost. Their risk tolerance is too high for this. If a company have a big pile of mone...
by kmok
Sun Dec 21, 2014 2:01 am
Forum: Investing - Theory, News & General
Topic: Using balanced funds to avoid rebalancing
Replies: 30
Views: 3130

Re: Using balanced funds to avoid rebalancing

If you have different type of account such as taxable and tax advantage accounts, you may not want to use balance fund because different investments have different tax efficiencies, thus you want to place certain investments in certain types of accounts. Rebalancing generally don't give you a higher...

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