Search found 4786 matches

by ogd
Wed May 17, 2017 7:58 pm
Forum: Investing - Theory, News & General
Topic: The Case for Dividend Stocks in Retirement (article)
Replies: 92
Views: 10256

Re: The Case for Dividend Stocks in Retirement (article)

I back tested three portfolios without reinvesting dividends. The portfolio with only total stock market and bond market, certainly appreciates the most in value, but adding dividend fund component to your equity position certainly generates more income and also seems to reduce risk. (See 2002 and ...
by ogd
Tue Apr 11, 2017 2:10 pm
Forum: Investing - Theory, News & General
Topic: "Did Declining rates actually matter"
Replies: 26
Views: 2169

Re: "Did Declining rates actually matter"

Of course this all relies on rates moving in a completely linear fashion over time. And we're totally ignoring convexity. But it isn't a horrible approximation. Other functions (i.e. rate vs time) can be reasoned about similarly, even with calculus if you're feeling fancy. The question you're askin...
by ogd
Tue Apr 11, 2017 1:11 pm
Forum: Investing - Theory, News & General
Topic: SEC yield vs. distribution yield - Vanguard muni funds / ETFs
Replies: 3
Views: 452

Re: SEC yield vs. distribution yield - Vanguard muni funds / ETFs

I guess I'm just surprised that two funds with similar duration from the same company would have such different portfolios, but I guess I shouldn't be surprised since VTEB is tied to a muni fund index while VWIUX has no such constraints. One big reason is that VTEB is much newer, so it doesn't have...
by ogd
Wed Mar 22, 2017 11:46 am
Forum: Investing - Theory, News & General
Topic: VWIUX SEC vs Distribution yield [Vanguard Int-Term Tax-Exempt]
Replies: 29
Views: 2529

Re: VWIUX SEC vs Distribution yield [Vanguard Int-Term Tax-Exempt]

My advisor's response; they see a flattening yield curve and a ladder will be more nimble and provide more flexibility to adjust duration and target strategic maturities along the yield curve. In a scenario like this, having a bond fund like VWIUX that targets a duration of ~5 years, can’t engage i...
by ogd
Mon Mar 20, 2017 7:35 pm
Forum: Investing - Help with Personal Investments
Topic: Bonds Exchange in Taxable Account
Replies: 12
Views: 711

Re: Bonds Exchange in Taxable Account

Please share your feedback and suggest alternatives too if I'm way off. You should probably stay put. Switching from munis to taxable bonds and back should be a decision based solely on tax situation. If you want to shorten duration, you can do it in the muni space, with a Short or Limited fund or ...
by ogd
Sun Mar 19, 2017 4:23 pm
Forum: Investing - Help with Personal Investments
Topic: Schwab vs Vanguard
Replies: 68
Views: 15179

Re: Schwab vs Vanguard

Schwab is nice and cheap, but only on Vanguard will you find the Admiral index funds free, which are nicer to use than ETFs. Was just browsing and reading these threads - What do you mean -- Admiral index funds free - ? I meant without trading fees, not counting the ERs which are the same as the ET...
by ogd
Thu Mar 16, 2017 5:10 pm
Forum: Investing - Help with Personal Investments
Topic: Help with picking bond MFs
Replies: 5
Views: 511

Re: Help with picking bond MFs

Here is my quick version: 1) If you have room in a tax-advantaged account (possibly by selling stocks), use VBTLX there. 2) If taxable account and your tax rate is 25% or below, use VBTLX in a taxable account (rationale: in lower tax brackets, munis are not generally worth it since other buyers payi...
by ogd
Wed Mar 15, 2017 9:40 pm
Forum: Investing - Theory, News & General
Topic: VWIUX SEC vs Distribution yield [Vanguard Int-Term Tax-Exempt]
Replies: 29
Views: 2529

Re: VWIUX SEC vs Distribution yield [Vanguard Int-Term Tax-Exempt]

Now I am moving some funds out of equities into bonds and the question has come up again. Do I buy more VWIUX or build a ladder of individual bonds. Which got me once again debating with my advisor which is more relevant, distribution yield or SEC yield. He claims that the distribution yield is hig...
by ogd
Fri Jan 27, 2017 6:42 pm
Forum: Investing - Theory, News & General
Topic: The market knows, except for mutual funds
Replies: 39
Views: 3666

Re: The market knows, except for mutual funds

My theory is that when something adversely effects the price of a stock that's especially popular in low-turnover mutual funds, you can beat the market. The mutual funds will slowly rid themselves of it after you've sold short. It's a hypothesis not a theory. I would guess selecting against such st...
by ogd
Fri Jan 27, 2017 6:35 pm
Forum: Investing - Help with Personal Investments
Topic: Growth Versus Income Investing - Master Limited Partnerships for Young, High Earners
Replies: 4
Views: 440

Re: Growth Versus Income Investing - Master Limited Partnerships for Young, High Earners

It's a terrible idea. You don't need this income, so by taking it from your portfolio before you put it back you're only paying taxes unnecessarily. Even if you did need it (that is, you'd invest and reinvest nothing back to your portfolio), it would still be better off to take it as sales -- if you...
by ogd
Sun Jan 08, 2017 7:58 pm
Forum: Investing - Theory, News & General
Topic: "Yield surge: Remember the real role of bonds"
Replies: 50
Views: 6686

Re: "Yield surge: Remember the real role of bonds"

So to earn 2% over 10 years you would buy a bond now when you can instead get at least 1% in an online savings account with immediate access to your money with no loss in principal? Its foolishness. The 10 year might be a little rich still, but consider the intermediate bonds that we typically reco...
by ogd
Sun Jan 08, 2017 6:53 pm
Forum: Investing - Theory, News & General
Topic: "Yield surge: Remember the real role of bonds"
Replies: 50
Views: 6686

Re: "Yield surge: Remember the real role of bonds"

RAchip wrote:Again, just lay out the math if anyone knows how? 10yr $1000 tbond with 2% coupon. Rates double to 4%, what would the value of the tbond be at year 2?

$863.8, see my message above.

You can use the PRICE function in Excel or an online bond calculator.
by ogd
Sun Jan 08, 2017 2:59 pm
Forum: Investing - Theory, News & General
Topic: "Yield surge: Remember the real role of bonds"
Replies: 50
Views: 6686

Re: "Yield surge: Remember the real role of bonds"

Can anyone actually do the math? Let me simplify it. If i buy a 10 yr $1000 tbond with a 2% coupon and rates rise such that 10yr tbond buyers want a 4% yield in 2 years (not a ridiculous scenario right now) what will the market value of my tbond be at year 2? (hint -- it will be a lot more than a 1...
by ogd
Sat Jan 07, 2017 3:28 pm
Forum: Investing - Theory, News & General
Topic: A few very basic investing theory questions that have bugged me lately
Replies: 49
Views: 5170

Re: A few very basic investing theory questions that have bugged me lately

You're missing my point. If Google has billions of dollars but my share doesn't actually entitle me to any of that, then what does it matter? Saying Google share is worth more than another company because they have lots of cash even though I can't have any of it is not different than saying Aaron R...
by ogd
Sat Jan 07, 2017 2:38 pm
Forum: Investing - Theory, News & General
Topic: A few very basic investing theory questions that have bugged me lately
Replies: 49
Views: 5170

Re: A few very basic investing theory questions that have bugged me lately

2. What is it about a stock that gives it an intrinsic value? I understand the benefit if a stock is dividend paying, say like Johnson and Johnson or P&G. But why does a stock like Berkshire Hathaway have value? A few things: I get that it's fractional ownership in a company but why is owning p...
by ogd
Wed Jan 04, 2017 5:56 pm
Forum: Investing - Theory, News & General
Topic: Bernstein on Bonds...wow
Replies: 31
Views: 4771

Re: Bernstein on Bonds...wow

In practice, how does this problem present itself to the ETF investor? Is it as a substantial bid-ask spread? Or does the ETF show a premium as to the NAV? Wouldn't either of those show up in the reported statistics for the ETF's historical bid/ask spread or discount/premium? The ETF would show a d...
by ogd
Wed Jan 04, 2017 5:01 pm
Forum: Investing - Theory, News & General
Topic: Bernstein on Bonds...wow
Replies: 31
Views: 4771

Re: Bernstein on Bonds...wow

It seems to me that with ETFs, the liquidity problem follows the people who cash out. With mutual funds, the liquidity problem sticks to the people who don't panic and cash out. I'm not sure why we shouldn't prefer the vehicle that punishes the panicked traders. Well, that would be reasonable excep...
by ogd
Wed Jan 04, 2017 4:38 pm
Forum: Investing - Help with Personal Investments
Topic: Using a money market fund to reduce duration
Replies: 9
Views: 1103

Re: Using a money market fund to reduce duration

Can I view my money market in this way, helping to reduce the duration for the bonds as a whole, or am I fooling myself? Yes, I would say that's very reasonable. Please forget single state risk for this discussion. But we shouldn't, particularly when it's NJ. One of the favorite gambits of the same...
by ogd
Tue Jan 03, 2017 8:12 pm
Forum: Investing - Theory, News & General
Topic: Why Mix Asset Classes in a Single Fund?
Replies: 20
Views: 1682

Re: Why Mix Asset Classes in a Single Fund?

D'oh! Yes, you're right. Let's try this again. Using the same time period, PortfolioVisualizer is showing me that $10,000 grew to $167,123 and $192,920 in VFINX and VEXMX, respectively. So, if we wanted to end up with, say, $800,000 in VFINX and $200,000 in VEXMX today, then in 1988 we've had had t...
by ogd
Tue Jan 03, 2017 7:18 pm
Forum: Investing - Theory, News & General
Topic: Why Mix Asset Classes in a Single Fund?
Replies: 20
Views: 1682

Re: Why Mix Asset Classes in a Single Fund?

Why not keep assets classes separate within a single diversified portfolio? Why hold long and short term bonds or large and small cap stocks in the same fund? Isn't that like being forced to eat stew every day for the rest of your life instead of being able to have steak on Sunday and mashed potato...
by ogd
Tue Jan 03, 2017 7:09 pm
Forum: Investing - Theory, News & General
Topic: Why Mix Asset Classes in a Single Fund?
Replies: 20
Views: 1682

Re: Why Mix Asset Classes in a Single Fund?

Despite presumed trading costs, a portfolio of 80% Vanguard 500 Index Fund* and 20% Vanguard Extended Market Index Fund (which tracks the S&P 500 completion index), rebalanced monthly, actually had a slightly higher return than the Vanguard Total Stock Market Index Fund. This is generally not s...
by ogd
Fri Dec 30, 2016 6:42 pm
Forum: Investing - Theory, News & General
Topic: 100% TIPS and 0% in Nominal Bonds?
Replies: 168
Views: 10074

Re: 100% TIPS and 0% in Nominal Bonds?

If instrument B is a TIPS, than instrument A simply does not exist. This is a cold, hard, fact (excluding I bonds for sake of discussion). "A" might not exist, but I can still use it in an argument ("thought experiment" as I was saying). If TIPS used for a 5 year horizon have mo...
by ogd
Fri Dec 30, 2016 6:16 pm
Forum: Investing - Help with Personal Investments
Topic: Transferring everything from Betterment to Vanguard, considering 100% VTSAX
Replies: 13
Views: 1979

Re: Transferring everything from Betterment to Vanguard, considering 100% VTSAX

We have $250k total to invest, and if our income stays the same then we'll have about $75k a year to contribute across accounts. I'm not interested with bonds for the moment; I feel like $75k of new additions per year would have a nice smoothing effect in a down market, as opposed to rebalancing fr...
by ogd
Fri Dec 30, 2016 5:45 pm
Forum: Investing - Theory, News & General
Topic: 100% TIPS and 0% in Nominal Bonds?
Replies: 168
Views: 10074

Re: 100% TIPS and 0% in Nominal Bonds?

Common folk?! You do understand that I am not a salesman and have been talking about my personal situation and my family, right?? Yes, of course. It was not meant to be insulting. We are here on an investment website in a Theory thread debating on the interest rate risk of TIPS. We are not ordinary...
by ogd
Fri Dec 30, 2016 5:15 pm
Forum: Investing - Theory, News & General
Topic: 100% TIPS and 0% in Nominal Bonds?
Replies: 168
Views: 10074

Re: 100% TIPS and 0% in Nominal Bonds?

I think this is very common language for my family or others who need to understand this. Investor language is anything but common.... (see above ) Well, your common folk might be baffled to see that their zero risk money that they might have asked you to help invest are unavailable to them in an e...
by ogd
Fri Dec 30, 2016 4:49 pm
Forum: Investing - Theory, News & General
Topic: What's up with VBMFX? [Vanguard Total Bond Market]
Replies: 33
Views: 5622

Re: What's up with VBMFX? [Vanguard Total Bond Market]

The posts so far refers to monies already in Total Bond. How does new money (dollar cost averaged) alter the equation? Does DCA into total bond somewhat mitigate interest rate risk, and help stabilize NAV? Yes and no. Yes because the position in part TBM, part cash for a while reduces the duration ...
by ogd
Fri Dec 30, 2016 4:41 pm
Forum: Investing - Theory, News & General
Topic: 100% TIPS and 0% in Nominal Bonds?
Replies: 168
Views: 10074

Re: 100% TIPS and 0% in Nominal Bonds?

There was a time when I would have agreed with all you have said, but as you get closer to retirement or already are in retirement, your most important goal is reliable income. You are no longer in the business of optimizing your total return, but looking for ways to make the money you have saved l...
by ogd
Fri Dec 30, 2016 3:50 pm
Forum: Investing - Theory, News & General
Topic: 100% TIPS and 0% in Nominal Bonds?
Replies: 168
Views: 10074

Re: 100% TIPS and 0% in Nominal Bonds?

ogd - while all of your points appear quite accurate and useful in the broader discussion, they are irrelevant to the scenario that I described (i.e. held to maturity without concern for lost opportunity). Firechief: I am disputing the very framing you described, specifically the "without conc...
by ogd
Fri Dec 30, 2016 2:29 pm
Forum: Investing - Theory, News & General
Topic: 100% TIPS and 0% in Nominal Bonds?
Replies: 168
Views: 10074

Re: 100% TIPS and 0% in Nominal Bonds?

Just to clarify, I am totally disregarding potential default by the US government. Other than that, I will challenge you (or any other readers) to point out how a TIPS ladder (held to maturity) creates any risk. I do not consider "lost opportunity" to be a risk. You may not, but "int...
by ogd
Fri Dec 30, 2016 2:19 pm
Forum: Investing - Help with Personal Investments
Topic: Saw the light-Dumping Advisor & American funds....
Replies: 11
Views: 1631

Re: Saw the light-Dumping Advisor & American funds....

OGD-For the "tax situation" are you referring to if there was a loss? I was under the impression that none of these accounts would have income tax implications for 2016/17, other than the RMD on the Bene. IRA. The 529s, Roths, & IRA were going to be opened as similar accounts. With tr...
by ogd
Fri Dec 30, 2016 1:59 pm
Forum: Investing - Theory, News & General
Topic: What's up with VBMFX? [Vanguard Total Bond Market]
Replies: 33
Views: 5622

Re: What's up with VBMFX? [Vanguard Total Bond Market]

ogd: Thank you for the response and your patience. Since I am 79 years old with a life expectancy of 10 years at best, does that mean it will take 12 years to get back to the original NAV? If so, it means I'm investing for my heirs :happy. It will take that long to get the original NAV plus the 2% ...
by ogd
Fri Dec 30, 2016 1:03 pm
Forum: Investing - Theory, News & General
Topic: What's up with VBMFX? [Vanguard Total Bond Market]
Replies: 33
Views: 5622

Re: What's up with VBMFX? [Vanguard Total Bond Market]

ogd: Thank you. I am not good at math. Let us try a specific example with a bond fund that has a constant duration of 5.6 years. If the Fed raises the interest rate 0.25% about every six months in 2017 and 2018 (i.e. 4x), when will I expect the NAV to return to its original current value (meaning t...
by ogd
Fri Dec 30, 2016 12:16 am
Forum: Investing - Theory, News & General
Topic: What's up with VBMFX? [Vanguard Total Bond Market]
Replies: 33
Views: 5622

Re: What's up with VBMFX?

If rates keep rising every six months (for example), isn't the duration re-set every six months for the time it takes to return to your original NAV since the NAV will drop every time the rates rise? Doesn't this mean that one will recoup the original NAV only when rates stop rising- or what am I m...
by ogd
Thu Dec 29, 2016 6:54 pm
Forum: Investing - Theory, News & General
Topic: What's up with VBMFX? [Vanguard Total Bond Market]
Replies: 33
Views: 5622

Re: What's up with VBMFX?

If you own a bond fund, the components of the bond fund are replaced over time as the current bonds mature. The yields of the new bonds will be higher than the old bonds in an increasing rate environment. This is true when talking about coupon yield, however a bond's yield to maturity -- which is t...
by ogd
Thu Dec 29, 2016 6:37 pm
Forum: Investing - Help with Personal Investments
Topic: Saw the light-Dumping Advisor & American funds....
Replies: 11
Views: 1631

Re: Saw the light-Dumping Advisor & American funds....

However, if you were to try to switch your asset allocation you would lose the front-load that you already paid on those A-shares That front-load has already been lost, primarily to the advisor's pockets, so no point throwing more good money (ongoing ERs still higher than Vanguard funds) after bad....
by ogd
Thu Dec 29, 2016 6:30 pm
Forum: Investing - Theory, News & General
Topic: What's up with VBMFX? [Vanguard Total Bond Market]
Replies: 33
Views: 5622

Re: What's up with VBMFX?

Can you explain why this investment is becoming more rewarding? Bond funds are decreasing in NAV shouldn't it be less rewarding? I hold VBTLX and I'm no advocating for selling but I was just confused by your comment. Back in July, its yield was 1.75%. Now it's 2.33%. The SEC yield is the best indic...
by ogd
Thu Dec 29, 2016 5:25 pm
Forum: Investing - Help with Personal Investments
Topic: Long-term investment vehicles
Replies: 5
Views: 567

Re: Long-term investment vehicles

With Option 2, what's the highest yield instrument available that could match 6% but still be lower risk than equity? Am I trying to time the market in and being very unrealistic? I'm aiming to be disciplined over moving funds over to an equity ETF if we hit a recession or see a certain % fall (may...
by ogd
Thu Dec 29, 2016 5:11 pm
Forum: Investing - Theory, News & General
Topic: Bonds return more than stocks in the LT?
Replies: 5
Views: 667

Re: Bonds return more than stocks in the LT?

Don't forget you have just ended a 35 year long cyclical bull market in bonds!!!! Larry Hi Larry, I object to the term "35 year bull market" when it comes to bonds. Fact is, the intermediate bond holder would have been far better off if the yields had stayed put, about 3-4 times as much r...
by ogd
Thu Dec 29, 2016 4:59 pm
Forum: Investing - Theory, News & General
Topic: What's up with VBMFX? [Vanguard Total Bond Market]
Replies: 33
Views: 5622

Re: What's up with VBMFX?

I am relatively new to "the bond market," and have owned some VBMFX this year, 2016. It went up steadily until about July 1st, and then went down fairly steadily, until now, end of year. Why? Unlike a common stock or even an index fund, both of which can be loosely rationalized by looking...
by ogd
Wed Dec 28, 2016 10:09 pm
Forum: Investing - Theory, News & General
Topic: High Dividend Yield Index Fund
Replies: 33
Views: 5292

Re: High Dividend Yield Index Fund

Have you guys really looked at the dividend differences and tax numbers? We are talking about a maximum of .15% difference in extra owed taxes. And that is only if we assume a person loses 100% of the extra dividend which is not likely. Many low tax bracket payers lose nothing for these dividends. ...
by ogd
Wed Dec 28, 2016 6:36 pm
Forum: Investing - Theory, News & General
Topic: High Dividend Yield Index Fund
Replies: 33
Views: 5292

Re: High Dividend Yield Index Fund

Wait a minute guys!!!!! Income taxes on Cap gains are the same as income taxes on qualified dividends. Both are 15% taxable. One pays tax as you receive the dividend and one pays tax when you sell some of the fund to take the money. So the tax is the same. Capital gains can be deferred, and that's ...
by ogd
Tue Dec 27, 2016 7:07 pm
Forum: Investing - Help with Personal Investments
Topic: Anybody buying EE bonds these days
Replies: 64
Views: 5818

Re: Anybody buying EE bonds these days

You have to wait out 10 years earning at todays taxed 2.8% to get those juicy CDs later on. The whole time your EE Bond has been earning you a 3.5% tax deferred. So in the situation you mention where 10 years from now, treasuries are down 17% but have yielded 32% (for a net pretax gain of 15% after...
by ogd
Tue Dec 27, 2016 6:20 pm
Forum: Investing - Help with Personal Investments
Topic: Anybody buying EE bonds these days
Replies: 64
Views: 5818

Re: Anybody buying EE bonds these days

If I have 10K to invest right now that I am certain I won't need for another 20 years, I do not see a better option that provides an equivalent after tax return for an equivalent risk level. If there is one, please help me understand it, because I will happily use that other instrument instead. Sor...
by ogd
Tue Dec 27, 2016 6:04 pm
Forum: Investing - Help with Personal Investments
Topic: Anybody buying EE bonds these days
Replies: 64
Views: 5818

Re: Anybody buying EE bonds these days

Not really because the intention is to hold to maturity, but it's nice to know there is an "out" if one wanted to exit. Lose interest yes, lose nominal principal - no. One could theoretically make the argument there are other instruments out there where you see no return either until payo...
by ogd
Tue Dec 27, 2016 5:07 pm
Forum: Investing - Help with Personal Investments
Topic: Anybody buying EE bonds these days
Replies: 64
Views: 5818

Re: Anybody buying EE bonds these days

I'm still buying them....you aren't missing anything just yet. If you have to liquidate before 20 years is up, you can do so without a hit to principal or interest, try that with a nominal 20 year Treasury, the results will not be that pretty especially in a rising rate environment. Rates will have...
by ogd
Tue Dec 27, 2016 5:01 pm
Forum: Investing - Theory, News & General
Topic: High Yield Corporate Bonds Have Less Interest Rate Risk?
Replies: 17
Views: 1760

Re: High Yield Corporate Bonds Have Less Interest Rate Risk?

If duration, minus yield equals the approximate drop in NAV of a bond fund with each 1% increase in interest rates, what happens if the yield is higher than the duration? For example, Vanguard's High Yield Corporate Bond fund has a listed duration of 4.5 years and yield of 5.41. Would the reverse o...
by ogd
Tue Dec 27, 2016 12:23 pm
Forum: Investing - Theory, News & General
Topic: Should individual bonds be held close to retirement?
Replies: 33
Views: 2135

Re: Should individual bonds be held close to retirement?

First, unless inside of 401k there is almost no reason to own a bond fund for taxable investments. Simply better off buying individual FDIC insured CDs avoiding the expense of a fund and taking no credit risk. And can build a ladder of them to diversify term risk. DontTimeIt -- to expand on what ou...
by ogd
Tue Dec 27, 2016 12:10 pm
Forum: Investing - Theory, News & General
Topic: Should individual bonds be held close to retirement?
Replies: 33
Views: 2135

Re: Should individual bonds be held close to retirement?

The rest of the portfolio is distributed in the classic sense and I'll spend that money for the nicer things in life. Depending on how stocks do, I might buy a nicer car; or, if stocks swoon, I may delay the kitchen remodel. I will admit that the LMP portion isn't cheap to set up, but there is a ce...
by ogd
Tue Dec 27, 2016 2:35 am
Forum: Investing - Theory, News & General
Topic: Should individual bonds be held close to retirement?
Replies: 33
Views: 2135

Re: Should individual bonds be held close to retirement?

No, it is definitely not an equity. ogd & dbr, As I'm hoping to learn from what you both wrote, do I have this right: a bond fund often holds the bonds to maturity just the same as an individual bond holder may do. The bond fund fluctuates with the market pricing of the bonds but just as it's n...
by ogd
Mon Dec 26, 2016 6:07 pm
Forum: Investing - Theory, News & General
Topic: Should individual bonds be held close to retirement?
Replies: 33
Views: 2135

Re: Should individual bonds be held close to retirement?

Am I correct that a bond fund is technically an equity that can fluctuate in value? No, it is definitely not an equity. The value of safe bonds fluctuates not because their future payments change, but because the present value of those future payments changes; they become less valuable when market ...

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