Search found 706 matches

by learning_head
Mon Jun 19, 2017 3:57 pm
Forum: Investing - Theory, News & General
Topic: Amazon Buys Whole Foods
Replies: 103
Views: 10895

Re: Amazon Buys Whole Foods

I don't mind paying more for organic fruit/produce/meats, but what's annoying about WF is that they charge more for the exact same product at Trader Joes. It's just gouging plain and simple. Try pricing a 28 oz can of San Marzano whole tomatoes at both places. WF is like a dollar more. So annoying....
by learning_head
Tue Apr 25, 2017 11:39 am
Forum: Personal Finance (Not Investing)
Topic: Why are pensions revered, but annuities reviled?
Replies: 113
Views: 10734

Re: Why are pensions revered, but annuities reviled?

Note, at that point I only had 7 day freelook period, before I would have to cancel the whole contract and request the money back; and annuity prices became worse in the mean time as well. With interest rates rising, I would why the annuity prices became worse. Higher interest rates generally impro...
by learning_head
Tue Apr 25, 2017 11:04 am
Forum: Investing - Theory, News & General
Topic: LMP-1: P&I article on corporate & public pension plans
Replies: 60
Views: 4938

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

... as you say though "its never clear how long you are going to live." somewhere in your 80s i guess is probably the time to start buying a deferred annuity that kicks in at age 95. (As you also noted in the past) today at least, deferred annuities provide no meaningful inflation protect...
by learning_head
Mon Apr 24, 2017 7:56 pm
Forum: Personal Finance (Not Investing)
Topic: Why are pensions revered, but annuities reviled?
Replies: 113
Views: 10734

Re: Why are pensions revered, but annuities reviled?

... but the single-premium immediate annuity (SPIA) is a fine product, but only from either Vanguard or TIAA. There may be other companies, but I would check around and be very careful about the costs. I would not recommend Vanguard. They just resell SPIAs from other companies (and go through anoth...
by learning_head
Mon Apr 24, 2017 7:18 pm
Forum: Investing - Theory, News & General
Topic: LMP-1: P&I article on corporate & public pension plans
Replies: 60
Views: 4938

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

I'm not sure i understand why a tips ladder has reinvestment riSk? I imagine it means this for someone who needs to assure real income for over 30 years: (a) it's not clear what TIPS products will exist in 30 years when you may need to reinvest proceeds for years beyond; i.e. --- at what maturities...
by learning_head
Mon Apr 24, 2017 12:58 pm
Forum: Investing - Theory, News & General
Topic: LMP-1: P&I article on corporate & public pension plans
Replies: 60
Views: 4938

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. A portfolio starting at 60% bonds and 40...
by learning_head
Sat Apr 22, 2017 2:19 pm
Forum: Personal Finance (Not Investing)
Topic: Should some professions tell people how much they make?
Replies: 39
Views: 5269

Re: Should some professions tell people how much they make?

Or come up with an offer to align your interests with parents? E.g. offer to return 50% of all fees if grades do not improve at least by 1 letter after 1 semester?
by learning_head
Sat Apr 22, 2017 2:16 pm
Forum: Personal Finance (Not Investing)
Topic: Delayed Mega Backdoor Roth
Replies: 11
Views: 1471

Re: Delayed Mega Backdoor Roth

I have same question for Alan: would not contributing earnings to TIRA significantly complicate the "normal" backdoor Roth IRA conversions for those that don't want to mess with proportional allocations when going from tIRA to rIRA? If alternative is just investing in taxable, I would thin...
by learning_head
Thu Apr 20, 2017 10:00 pm
Forum: Investing - Theory, News & General
Topic: Visualizing the devastating impact of fees
Replies: 54
Views: 5359

Re: Visualizing the devastating impact of fees

To summarize: what investor loses - as percentage of their overall wealth does not depend on market returns - as percentage of growth *does* depend on market returns With any reasonable market returns assumptions, the latter is a much larger number over years (e.g. over 50-60% as opposed to "ju...
by learning_head
Thu Apr 20, 2017 1:17 pm
Forum: Investing - Theory, News & General
Topic: Visualizing the devastating impact of fees
Replies: 54
Views: 5359

Re: Visualizing the devastating impact of fees

... I notice that changing the rate return on the Vanguard slider impacts the percentage lost to fees, which I don't understand. ... In case of Vanguard, their chart shows growth on 10k principal. Consider 2% fee charged and 2 scenarios after year 1: - 5% return implies $500 growth out of which ~$2...
by learning_head
Wed Apr 19, 2017 10:06 pm
Forum: Investing - Theory, News & General
Topic: Article-Argument against Buffet and Bogle's International Advice
Replies: 36
Views: 4425

Re: Article-Argument against Buffet and Bogle's International Advice

The usual response is that owning US stocks is not a bet that the dollar will go up for US investors, and this because our expenses are in dollars. If the dollar goes down in value, my US stocks go down in value, but my expense go down by the same amount, so I haven't lost anything in real terms. I...
by learning_head
Wed Apr 19, 2017 6:40 pm
Forum: Personal Finance (Not Investing)
Topic: Capital One 360 $200 bonus (and now $300 checking bonus)
Replies: 217
Views: 23938

Re: Capital One 360 $200 bonus

I almost felt guilty for taking $250 from WFB after having the account open for less than 3 weeks and doing only 10 debits for 10 days by buying my daily $2 coffee. Same goes for CapOne, whose account I only had opened for 8 days! I thought when taking advantage of credit card bonuses, it's recomme...
by learning_head
Wed Apr 19, 2017 5:56 pm
Forum: Personal Finance (Not Investing)
Topic: Did anything surprise you in your 2016 taxes?
Replies: 83
Views: 7608

Re: Did anything surprise you in your 2016 taxes?

Head of Household status apparently has no advantage over Single status once both reach AMT level
by learning_head
Wed Apr 19, 2017 2:47 pm
Forum: Investing - Theory, News & General
Topic: Article-Argument against Buffet and Bogle's International Advice
Replies: 36
Views: 4425

Re: Article-Argument against Buffet and Bogle's International Advice

I have a small allocation to international equities because I value the diversification. I also understand and hate that it exposes me to the risk of currency fluctuations on top of the normal market risk that comes from investing in U.S. based companies. That said, I intend to stay the course and ...
by learning_head
Wed Apr 19, 2017 8:58 am
Forum: Investing - Theory, News & General
Topic: Article-Argument against Buffet and Bogle's International Advice
Replies: 36
Views: 4425

Re: Article-Argument against Buffet and Bogle's International Advice

I keep a significant 40% in International simply to ensure I don't have all my eggs in one basket. I would tell someone in real estate not to tilt their retirement towards REITs in the off chance that sector has a long-term implosion. People at Enron, for example, learned the hard way why it is a a...
by learning_head
Fri Apr 14, 2017 2:54 pm
Forum: Investing - Theory, News & General
Topic: Illusion of poverty/wealth
Replies: 159
Views: 21768

Re: Illusion of poverty/wealth

You keep saying how I consider only 1 extremely unlikely scenario. I would say there are only 2 general scenarios: inflation will be high during my lifetime or it won't be. There are very many high-inflation scenarios that would come out the same way as my example. There are some high inflation scen...
by learning_head
Fri Apr 14, 2017 12:50 pm
Forum: Investing - Theory, News & General
Topic: Illusion of poverty/wealth
Replies: 159
Views: 21768

Re: Illusion of poverty/wealth

4.7% average inflation does not necessarily assume it's constant throughout period as I had mentioned before. You could have a large spike and then (when you need to buy annuity) 0% inflation or deflation even (and yes, including expectations). That parenthetical ("and yes, including expectati...
by learning_head
Thu Apr 13, 2017 1:10 pm
Forum: Investing - Theory, News & General
Topic: Vanguard Forms Nightmare
Replies: 7
Views: 1749

Re: Vanguard Forms Nightmare

I encountered Vanguard rep incompetence as well; in my case, with annuity purchase. First they sent me wrong info as to how a rider would work. After I purchased the annuity based on that info, neither my assigned rep, nor the manager in that group tried to help when I asked them to. Both claimed th...
by learning_head
Thu Apr 13, 2017 12:28 pm
Forum: Investing - Theory, News & General
Topic: Illusion of poverty/wealth
Replies: 159
Views: 21768

Re: Illusion of poverty/wealth

@NiceUnparticularMan: 4.7% average inflation does not necessarily assume it's constant throughout period as I had mentioned before. You could have a large spike and then (when you need to buy annuity) 0% inflation or deflation even (and yes, including expectations). And further, 2 or more spikes in ...
by learning_head
Wed Apr 12, 2017 6:07 pm
Forum: Investing - Theory, News & General
Topic: Illusion of poverty/wealth
Replies: 159
Views: 21768

Re: Illusion of poverty/wealth

That's not typically what a monopolist does. Yes, but as of lately they have not adjusted to being a monopolist yet. Their prices are worse than AIG had but they did not start increasing them much yet (last time i checked) Well, I showed you the chart--very rarely is the rolling 10-year average ove...
by learning_head
Tue Apr 11, 2017 2:16 pm
Forum: Investing - Theory, News & General
Topic: Illusion of poverty/wealth
Replies: 159
Views: 21768

Re: Illusion of poverty/wealth

E.g. today COLA annuities are down to 1 provider that can jack up prices if they want. Who knows how laws or markets will affect annuity prices independent of inflation. True, but isn't that reason to be concerned that: (a) current COLA annuities are more likely to be poorly priced; and (b) in the ...
by learning_head
Tue Apr 11, 2017 10:59 am
Forum: Investing - Theory, News & General
Topic: Illusion of poverty/wealth
Replies: 159
Views: 21768

Re: Illusion of poverty/wealth

I was never discussing a plan which essentially either borrows from my heirs for my own spending or defaults on my debts when I die! I was! As I see it, replacing self-insurance against longevity with life annuities is always going to amount to a plan to increase your own consumption rate while ali...
by learning_head
Tue Apr 11, 2017 8:02 am
Forum: Investing - Theory, News & General
Topic: Illusion of poverty/wealth
Replies: 159
Views: 21768

Re: Illusion of poverty/wealth

However, question is whether you'd be paying too much (in interest) for that leverage when trying not just to pay back the mortgage from the alternative investments but also beat the inflation along the way? Your specific numbers are not a valid comparison IMO because you have an old person take ou...
by learning_head
Mon Apr 10, 2017 8:51 am
Forum: Investing - Theory, News & General
Topic: Illusion of poverty/wealth
Replies: 159
Views: 21768

Re: Illusion of poverty/wealth

@NiceUnparticularMan: I think we'll just have to disagree. It makes no sense to me that adding $300k for 1675/month extra income in both scenarios would make any difference in their comparison. Comparing A + X vs B + X is same as comparing A and B. I do get the point that mortgage payments are worth...
by learning_head
Mon Apr 10, 2017 7:20 am
Forum: Investing - Theory, News & General
Topic: PurePoint 1.25% online savings $10K min
Replies: 54
Views: 9540

Re: PurePoint 1.25% online savings $10K min

One downside: yet another institution having your confidential info. So, potential hacks into this bank puts your identity at more risk. Also, depending on how this bank shares your info with "affiliates" (even if you limit sharing, it takes some time before such settings take effect, dep...
by learning_head
Sat Apr 08, 2017 8:41 am
Forum: Investing - Theory, News & General
Topic: Illusion of poverty/wealth
Replies: 159
Views: 21768

Re: Illusion of poverty/wealth

So here is how I would model it: Scenario 1: pay $A for house, and pay $B to buy annuity to generate $X/month for life Scenario 2: take out mortgage for $C which requires payments of $Y/month for 30 years. Pay $A-$C for house. Buy annuity for $D which generates $X + $Y/month for life. I could try g...
by learning_head
Fri Apr 07, 2017 9:41 am
Forum: Investing - Theory, News & General
Topic: Illusion of poverty/wealth
Replies: 159
Views: 21768

Re: Illusion of poverty/wealth

So here is how I would model it: Scenario 1: pay $A for house, and pay $B to buy annuity to generate $X/month for life Scenario 2: take out mortgage for $C which requires payments of $Y/month for 30 years. Pay $A-$C for house. Buy annuity for $D which generates $X + $Y/month for life. I could try g...
by learning_head
Thu Apr 06, 2017 9:42 pm
Forum: Investing - Theory, News & General
Topic: Illusion of poverty/wealth
Replies: 159
Views: 21768

Re: Illusion of poverty/wealth

Well, I can't easily separate "inflation risk over my lifetime" into "inflation risk" and "my lifetime" That's certainly a little complex, but I think that is the idea behind splitting the investment between a nominal SPIA and an inflation-fighting portfolio, planning ...
by learning_head
Thu Apr 06, 2017 4:37 pm
Forum: Investing - Theory, News & General
Topic: Illusion of poverty/wealth
Replies: 159
Views: 21768

Re: Illusion of poverty/wealth

I do not want to take on risks that insurance company is not willing to take. In fact I want to take LESS risks if at all possible. I want to offload my risks onto the company. The point is to have real known income for life, or as close to it as possible. That's what retirement income is all about...
by learning_head
Thu Apr 06, 2017 3:49 pm
Forum: Investing - Theory, News & General
Topic: Value of having TIPS funds?
Replies: 35
Views: 4141

Re: Value of having TIPS funds?

One aspect of relying on bond funds is the decreased sensitivity to rising interest rates. IMO, your premise is wrong: bond fund of duration X years and individual bond that matures in X years should have either - same sensitivity to interest rates, or - some would argue individual bond would have ...
by learning_head
Thu Apr 06, 2017 3:18 pm
Forum: Investing - Theory, News & General
Topic: Illusion of poverty/wealth
Replies: 159
Views: 21768

Re: Illusion of poverty/wealth

I think main point is that any market based investment you make to try to keep up with inflation will carry a very real risk that they will NOT keep up with inflation. So, you may not have as much funds as you thought you would later on to buy additional SPIA. Only exceptions include TIPS consuming...
by learning_head
Thu Apr 06, 2017 10:17 am
Forum: Investing - Theory, News & General
Topic: Illusion of poverty/wealth
Replies: 159
Views: 21768

Re: Illusion of poverty/wealth

You can debate if real SPIAs are overpriced or not. Getting 6.5% versus 4% now makes the real ones seem overpriced. But if you look at it as getting 4% in 30 years versus 2%, they look like a better deal. You can calculate out where the transition point is for a bunch of different cases (inflation ...
by learning_head
Wed Apr 05, 2017 9:03 am
Forum: Investing - Theory, News & General
Topic: Illusion of poverty/wealth
Replies: 159
Views: 21768

Re: Illusion of poverty/wealth

Unless inflation became rampant again, it might not necessarily be a problem for a SPIA to not have a COLA. I would not want to bet my financial future on low inflation assumption. There are absolutely no guarantees of that. Keeping up with inflation is the primary reason I even invest in stock mar...
by learning_head
Sat Apr 01, 2017 2:02 pm
Forum: Investing - Theory, News & General
Topic: Illusion of poverty/wealth
Replies: 159
Views: 21768

Re: Illusion of poverty/wealth

Since 1970, a portfolio with 20% LCV/20% MCV/20% SCV/30% TBM/10% commodities had a SWR just above 6% for a 30 year period. Ok, so you are saying portfolio with heavy value tilt, some small tilt and some commodities tilt and 0 bonds happened to provide 6% SWR in last 45 years. So what? I am sure it'...
by learning_head
Tue Mar 28, 2017 3:20 pm
Forum: Investing - Theory, News & General
Topic: Illusion of poverty/wealth
Replies: 159
Views: 21768

Re: Illusion of poverty/wealth

I think it's worth noting that the authors seem to assume a "6% rule" whereas most Bogleheads seem to adhere to a 4% rule. So, according to them, yes, many people here have an illusion of poverty. 4% rule is perhaps dangerous given current reasonable expectations of market returns? 6% ann...
by learning_head
Tue Mar 28, 2017 3:13 pm
Forum: Investing - Theory, News & General
Topic: Illusion of poverty/wealth
Replies: 159
Views: 21768

Re: Illusion of poverty/wealth

wolf359 wrote:... In the US, the states guarantee the annuities. The amount varies by state, but are typically limited to $100,000.


It's typically 250k.
by learning_head
Tue Mar 28, 2017 2:59 pm
Forum: Personal Finance (Not Investing)
Topic: More support for backdoor Roth? [Roth IRA Decision reversing Tax Court]
Replies: 27
Views: 3227

Re: More support for backdoor Roth? [Roth IRA Decision reversing Tax Court]

To minimize number of transactions, I do it once every 2 years - between Jan and Apr, contributing for both prior and current year and then converting both right away. You delay contributing by over a year just to avoid filing a form? I file a tax form every year. I just prefer not to deal with con...
by learning_head
Tue Mar 28, 2017 2:55 pm
Forum: Investing - Theory, News & General
Topic: PurePoint 1.25% online savings $10K min
Replies: 54
Views: 9540

Re: PurePoint 1.25% online savings $10K min

One downside: yet another institution having your confidential info. So, potential hacks into this bank puts your identity at more risk. Also, depending on how this bank shares your info with "affiliates" (even if you limit sharing, it takes some time before such settings take effect, dep...
by learning_head
Mon Mar 27, 2017 7:52 am
Forum: Personal Finance (Not Investing)
Topic: More support for backdoor Roth? [Roth IRA Decision reversing Tax Court]
Replies: 27
Views: 3227

Re: More support for backdoor Roth? [Roth IRA Decision reversing Tax Court]

I have successfully started to freak myself out over backdoor Roths. Finding this thread has given me more insight as to how the law treats them, but I'm curious. How are most people handling their conversions if they're over Roth income limits? Do many use it systematically every year? Or do they ...
by learning_head
Fri Mar 24, 2017 11:18 am
Forum: Investing - Theory, News & General
Topic: tips on buying TIPS: new issue vs secondary market?
Replies: 24
Views: 2503

Re: tips on buying TIPS: new issue vs secondary market?

Thanks again, #Cruncher ⋅  If I am looking to buy [an] LMP ladder with each rung every few years and last rung near 2045, should not I still go with 2045 year rather than 2040 in this case? An LMP (Liability Matching Portfolio) ladder is a non-rolling ladder where one plans to spend the re...
by learning_head
Wed Mar 22, 2017 12:30 am
Forum: Investing - Theory, News & General
Topic: tips on buying TIPS: new issue vs secondary market?
Replies: 24
Views: 2503

Re: tips on buying TIPS: new issue vs secondary market?

In Swedroe's "Bond Book" I think in the appendix he opines on the % TIPS vs nominals in the 2% - 3%. real range. Since then real rates have gone through the bottom and the fed has replaced the 20 with a 30. I would suggest that you get a copy of Larry's book and consider if in today's mar...
by learning_head
Tue Mar 21, 2017 11:53 pm
Forum: Investing - Theory, News & General
Topic: tips on buying TIPS: new issue vs secondary market?
Replies: 24
Views: 2503

Re: tips on buying TIPS: new issue vs secondary market?

Sorry, by "this number" I meant "Adjusted Price". From your response, it sounds like "Adjusted Price" is a better indication of what I would actually pay than "Price", but still not complete as it does not take into account accrued interest. So with Adjusted P...
by learning_head
Tue Mar 21, 2017 9:58 am
Forum: Investing - Theory, News & General
Topic: How to think about CDs
Replies: 4
Views: 1070

Re: How to think about CDs

I would also research the insurance position of Credit Unions-- DM200 here has taught me that this is not a given (separate fund). That means you have to pay some attention to the creditworthiness of these institutions OR take a view that the deposit fund would be bailed out if necessary. Do you ha...
by learning_head
Tue Mar 21, 2017 9:33 am
Forum: Investing - Theory, News & General
Topic: tips on buying TIPS: new issue vs secondary market?
Replies: 24
Views: 2503

Re: tips on buying TIPS: new issue vs secondary market?

... 0.459% yield for the 0.375% coupon TIPS and 0.507% for the 2.375% coupon TIPS. Given that it has a lower duration [1], one would expect the 2.375% TIPS to have a lower yield in our rising yield curve environment. But in fact it has a higher yield. ... we'd both favor the old 2.375% TIPS with it...
by learning_head
Fri Mar 17, 2017 3:43 pm
Forum: Investing - Theory, News & General
Topic: tips on buying TIPS: new issue vs secondary market?
Replies: 24
Views: 2503

Re: tips on buying TIPS: new issue vs secondary market?

question : does new issue auction pricing tend to be a little better than secondary market ... ? Yes, according to a comparison I did three years ago of 10-year TIPS. (See my post, 10-Year TIPS Auction Yields Compared to Secondary Market .) Thanks!! So, sounds like auction is a better route on aver...
by learning_head
Fri Mar 17, 2017 3:33 pm
Forum: Investing - Theory, News & General
Topic: tips on buying TIPS: new issue vs secondary market?
Replies: 24
Views: 2503

Re: tips on buying TIPS: new issue vs secondary market?

Judging from the almost flat yield curve 2040 to 2047 it appears the market fears reinvestment risk almost as much as interest rate risk. If you're like me and fear the latter more, a 2040 TIPS looks better than a 2047. It yields only 0.06% points less but has a 7.5 year shorter duration. Hmm.. try...
by learning_head
Fri Mar 17, 2017 3:22 pm
Forum: Investing - Theory, News & General
Topic: tips on buying TIPS: new issue vs secondary market?
Replies: 24
Views: 2503

Re: tips on buying TIPS: new issue vs secondary market?

Thanks for a lot of info #Cruncher! Very interesting. Thank you for including the links too! Need to look at cumulative inflation, the reason is that it creates risk if get deflation--TIPS cannot go below par at maturity, but the inflation adjustment after you buy it can be negative. So the bigger t...
by learning_head
Thu Mar 16, 2017 11:44 am
Forum: Investing - Theory, News & General
Topic: PurePoint 1.25% online savings $10K min
Replies: 54
Views: 9540

Re: PurePoint 1.25% online savings $10K min

One downside: yet another institution having your confidential info. So, potential hacks into this bank puts your identity at more risk. Also, depending on how this bank shares your info with "affiliates" (even if you limit sharing, it takes some time before such settings take effect, depe...
by learning_head
Thu Mar 16, 2017 10:32 am
Forum: Investing - Theory, News & General
Topic: tips on buying TIPS: new issue vs secondary market?
Replies: 24
Views: 2503

Re: tips on buying TIPS: new issue vs secondary market?

Please note: I am planning to buy inside 401k, not in taxable acct given that TIPS appear to be less tax-efficient than other stocks / bonds. I was not going to buy a TIPs fund but instead am trying to more closely match with few rungs for LMP. (Good point about e/r of a fund too) I was curious abou...
by learning_head
Thu Mar 16, 2017 9:03 am
Forum: Investing - Theory, News & General
Topic: tips on buying TIPS: new issue vs secondary market?
Replies: 24
Views: 2503

Re: tips on buying TIPS: new issue vs secondary market?

Hi Doc, are you looking at Fidelity site? As of 9:54am ET today, I see these TIPS yields Jan 2023: bid: 0.211, ask: 0.168 => diff: 4.3 bps (or 20%) Apr 2032: bid: 0.649, ask: 0.612 => diff: 3.7 bps (or 6%) Feb 2042: bid: 1.012, ask: 0.986 => diff: 2.6 bps (or 5%) Feb 2047: bid: 1.023, ask: 1.002 => ...

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