Search found 90 matches

by restingonmylaurels
Sat Aug 12, 2017 6:02 am
Forum: Investing - Help with Personal Investments
Topic: Has anyone converted their interest income to QDI?
Replies: 4
Views: 339

Has anyone converted their interest income to QDI?

Interest income earned from CDs and bond funds is taxed at progressive federal rates while dividend income from stocks is not taxed or is taxed at a (mostly) flat rate if qualified dividend income (QDI). All things being equal, it would be preferable to receive one’s income distributions from stocks...
by restingonmylaurels
Thu Aug 10, 2017 3:13 pm
Forum: Investing - Theory, News & General
Topic: Does VG Compound Interest?
Replies: 12
Views: 1157

Re: Does VG Compound Interest?

You will see if you look at fund reports that the bond funds have investments in institutional money market funds (for liquidity and other purposes), so whatever interest arrives and is part of the daily declaration of dividends is invested in at least a money market fund and thus is earning a form...
by restingonmylaurels
Thu Aug 10, 2017 8:44 am
Forum: Investing - Theory, News & General
Topic: Does VG Compound Interest?
Replies: 12
Views: 1157

Re: Does VG Compound Interest?

There is no cash to reinvest until the coupon is actually paid. The accrued interest on a bond is not compounded by the bond issuer either. Sure, but these coupons are not all paid the day before fund distribution date. They may be paid at various days all during the month. What happens to that cas...
by restingonmylaurels
Thu Aug 10, 2017 8:21 am
Forum: Investing - Theory, News & General
Topic: Does VG Compound Interest?
Replies: 12
Views: 1157

Re: Does VG Compound Interest?

There is no cash flow to invest with an accrual. An accrual is an accounting method to account for that part of the interest that you have already earned but that won't get paid until the coupon date or when/if the bond is sold before maturity. Agree that cash flow and accrual are different as this...
by restingonmylaurels
Thu Aug 10, 2017 7:48 am
Forum: Investing - Theory, News & General
Topic: Does VG Compound Interest?
Replies: 12
Views: 1157

Does VG Compound Interest?

From the Management fees and fund distributions wiki, I noted that most VG bond funds accrue/declare interest daily and pay it to fund holders monthly. I am wondering if these interest income accruals, which do not show up as part of the fund’s NAV, are they themselves subject to compounding and if ...
by restingonmylaurels
Thu Aug 10, 2017 3:01 am
Forum: Investing - Theory, News & General
Topic: Should TBM Be Your Only Bond Fund?
Replies: 33
Views: 4917

Re: Should TBM Be Your Only Bond Fund?

It seems that you could get more yield for less interest rate risk by allocating the fixed income part of your portfolio equally to Prime MMR and HYC. TBM has a yield of 2.37% and duration of 6.1 years. Prime MMR has a yield of 1.10% and duration of 0.3 years; HYC has a yield of 4.58% and a duratio...
by restingonmylaurels
Wed Aug 09, 2017 11:57 am
Forum: Investing - Help with Personal Investments
Topic: Bond Fund Piñata
Replies: 27
Views: 2989

Re: Bond Fund Piñata

No, because you can always realize capital gains whenever you want to, by selling shares for a capital gain and buying them back. This is most commonly done when you are temporarily in the 15% bracket and pay no tax on your capital gains. The difficulty is that I do not see that I can ever be in th...
by restingonmylaurels
Wed Aug 09, 2017 7:18 am
Forum: Investing - Help with Personal Investments
Topic: Bond Fund Piñata
Replies: 27
Views: 2989

Re: Bond Fund Piñata

No, because you can always realize capital gains whenever you want to, by selling shares for a capital gain and buying them back. This is most commonly done when you are temporarily in the 15% bracket and pay no tax on your capitl agins. The difficulty is that I do not see that I can ever be in the...
by restingonmylaurels
Wed Aug 09, 2017 1:43 am
Forum: Investing - Help with Personal Investments
Topic: Never Needing to Withdraw Capital?
Replies: 8
Views: 1298

Re: Never Needing to Withdraw Capital?

Scenario 1 would be a 1% withdrawal rate. Quite safe Scenario 2 would be a 2% withdrawal rate. Again quite safe. I am assuming ~2% interest and ~2% dividend for the bond and stock funds. Someone will correct me if I'm off target. :wink: bloom2708, thanks for that. Could you fill in a few of the det...
by restingonmylaurels
Tue Aug 08, 2017 2:36 pm
Forum: Investing - Help with Personal Investments
Topic: Never Needing to Withdraw Capital?
Replies: 8
Views: 1298

Never Needing to Withdraw Capital?

I have a simple scenario and I know BHs talk a lot about this topic, so if it has already been fully covered, I would appreciate a link. It has to do with living off of the income from one’s investments during retirement, under two scenarios, without ever drawing down the capital. Scenario 1: I have...
by restingonmylaurels
Tue Aug 08, 2017 10:16 am
Forum: Investing - Help with Personal Investments
Topic: Bond Fund Piñata
Replies: 27
Views: 2989

Re: Bond Fund Piñata

I am looking at these things as a percent of the fund value. If you sell a fund for $10,000 and pay 5% in capital-gains taxes, you will have $9500 to reinvest. But if the new fund grows by 0.5% per year more than the old fund, it will catch up. For example, if the old fund has doubled in value by t...
by restingonmylaurels
Mon Aug 07, 2017 8:19 am
Forum: Investing - Theory, News & General
Topic: Anyone following the latest in Bitcoin and cryptocurrency news?
Replies: 25
Views: 4596

Re: Anyone following the latest in Bitcoin and cryptocurrency news?

Governments have and will continue to regulate virtual currencies like BTC in areas like money transmitting and money laundering, likely both increasing and diminishing their appeal to different types of more mainstream users. That is, as soon as governments determine what to define it as (e.g. prop...
by restingonmylaurels
Sun Aug 06, 2017 1:44 pm
Forum: Investing - Help with Personal Investments
Topic: Bond Fund Piñata
Replies: 27
Views: 2989

Re: Bond Fund Piñata

I am looking at these things as a percent of the fund value. If you sell a fund for $10,000 and pay 5% in capital-gains taxes, you will have $9500 to reinvest. But if the new fund grows by 0.5% per year more than the old fund, it will catch up. For example, if the old fund has doubled in value by t...
by restingonmylaurels
Sun Aug 06, 2017 10:20 am
Forum: Investing - Help with Personal Investments
Topic: Bond Fund Piñata
Replies: 27
Views: 2989

Re: Bond Fund Piñata

Selling these funds in taxable, and replacing them with index funds, will probably cost you less in taxes now than it saves you in future years from capital gains distributions. If a fund is costing you half a percent per year, and you lose 5% to taxes when you sell, you'll actually be well ahead t...
by restingonmylaurels
Sun Aug 06, 2017 9:35 am
Forum: Investing - Theory, News & General
Topic: Should TBM Be Your Only Bond Fund?
Replies: 33
Views: 4917

Should TBM Be Your Only Bond Fund?

Across a few recent posts, I have listened to others and gathered my thoughts on what I have been doing on the fixed income side of my portfolio and have concluded that it is sub-optimal for TBM to be my only bond fund. It seems that you could get more yield for less interest rate risk by allocating...
by restingonmylaurels
Sun Aug 06, 2017 9:18 am
Forum: Investing - Help with Personal Investments
Topic: Bond Fund Piñata
Replies: 27
Views: 2989

Re: Bond Fund Piñata

If the reason you are stuck with STAR is that you hold STAR in a taxable account, it's probably worth switching, even if you would have to pay capital-gains tax. The problem with STAR is that its taxable stock funds distribute a lot of capital gains, and STAR itself has to distribute even more capi...
by restingonmylaurels
Sun Aug 06, 2017 3:36 am
Forum: Investing - Help with Personal Investments
Topic: Bond Fund Piñata
Replies: 27
Views: 2989

Re: Bond Fund Piñata

It seems you are aware of the risks. This is a very good bond portfolio for yield and long-term return. It is not a good bond portfolio for stability and positive return during bear markets. Is this an accurate understanding of your strategy? Your approach is defensible and your fund selection is g...
by restingonmylaurels
Sun Aug 06, 2017 3:18 am
Forum: Investing - Theory, News & General
Topic: What am I missing? [Ultra-short bond vs Prime MM]
Replies: 50
Views: 5620

Re: What am I missing? [Ultra-short bond vs Prime MM]

This isn't unknown. The Fed has said 6 quarter price increases over the next 18 mo, the bond market doesn't believe them and has priced in 4. I was relying on Jbolden1517's statement. I think the tool that Doc pointed you to is impressive. It nicely breaks down everything. alex_686 and jbolden1517,...
by restingonmylaurels
Sat Aug 05, 2017 1:58 pm
Forum: Investing - Help with Personal Investments
Topic: Bond Fund Piñata
Replies: 27
Views: 2989

Re: Bond Fund Piñata

If I had a choice, I would probably only have 4 bonds funds but I am stuck with the other three (STIG, GNMA, LTIG) through my investment in STAR. USB is a higher-paying alternative for money markets, TBM is, well, TBM, Wellesley provides exposure also to higher-paying stock dividends, and I have lon...
by restingonmylaurels
Sat Aug 05, 2017 7:49 am
Forum: Investing - Theory, News & General
Topic: What am I missing? [Ultra-short bond vs Prime MM]
Replies: 50
Views: 5620

Re: What am I missing? [Ultra-short bond vs Prime MM]

The market believes that the Fed will raise rates 4 times. With that belief we can apply the No Arbitrage Principle and use Forward Returns to ensure that the market efficiently represents those views. When it comes to short term rates, historically the market is very good with with. alex_686, I wa...
by restingonmylaurels
Fri Aug 04, 2017 4:22 pm
Forum: Investing - Help with Personal Investments
Topic: Bond Fund Piñata
Replies: 27
Views: 2989

Re: Bond Fund Piñata

Midareff, You reminded about about this M* tool, which I had not looked at in a long time. More to your point, which I believe is that bonds funds in the last year have lost value, beyond their yield. Is that not what one would expect in a rising interest rate environment? I have never been a big pr...
by restingonmylaurels
Fri Aug 04, 2017 12:38 am
Forum: Investing - Help with Personal Investments
Topic: Bond Fund Piñata
Replies: 27
Views: 2989

Bond Fund Piñata

Over time, the number of bond funds I hold directly and indirectly has risen to ten (10)! And every time I think I should cut down that number, I re-discover the reason I opened each separate fund, to cover a box in the 9-square bond style box for duration and credit quality, with a third axis of do...
by restingonmylaurels
Thu Aug 03, 2017 11:40 am
Forum: Investing - Theory, News & General
Topic: VGSTX: Is Vanguard STAR Still A Star?
Replies: 22
Views: 3137

Re: VGSTX: Is Vanguard STAR Still A Star?

I have been invested in this fund for decades. Every time I think about moving away from it (like during the period of poor performance by US Growth), I find a reason to stick around. Last time I looked at Wellington as a replacement, I decided I did not like Wellington's lack of international expos...
by restingonmylaurels
Thu Aug 03, 2017 3:17 am
Forum: Investing - Theory, News & General
Topic: What am I missing? [Ultra-short bond vs Prime MM]
Replies: 50
Views: 5620

Re: What am I missing? [Ultra-short bond vs Prime MM]

grabiner,

I appreciate the reference to STIG, I already own a bunch through my STAR fund. Is there any way to discover how often a fund's lower credit quality bonds have actually defaulted?
by restingonmylaurels
Wed Aug 02, 2017 3:11 pm
Forum: Investing - Help with Personal Investments
Topic: Do you hold your VG mutual funds with VG Group or VG Brokerage?
Replies: 19
Views: 1287

Re: Do you hold your VG mutual funds with VG Group or VG Brokerage?

I really don't trade much and the mutual fund dividend/CG re-investments are automatic. Much too early for RMDs. Without any true benefit from SIPC, I cannot find any benefit to combine these accounts, as I much prefer the way my mutual fund account operates as opposed to my brokerage account. I kno...
by restingonmylaurels
Wed Aug 02, 2017 3:02 pm
Forum: Investing - Theory, News & General
Topic: What am I missing? [Ultra-short bond vs Prime MM]
Replies: 50
Views: 5620

Re: What am I missing? [Ultra-short bond vs Prime MM]

I have read the prior posts but still do not see the issue I am discussing, that the last 12 months returns for USB and TBM may repeat themselves over the next 24 months due to the continuing rate hikes. I guess I can check back in at the end of 2019 and let you know how it went sticking with shorte...
by restingonmylaurels
Wed Aug 02, 2017 3:19 am
Forum: Investing - Theory, News & General
Topic: What am I missing? [Ultra-short bond vs Prime MM]
Replies: 50
Views: 5620

Re: What am I missing? [Ultra-short bond vs Prime MM]

*3!4!/5!, yes I had a look-see.

Can you please make your point either by writing it out here or by copying in the specific parts of the previous thread you are referring to that answers my specific question.
by restingonmylaurels
Wed Aug 02, 2017 3:13 am
Forum: Investing - Help with Personal Investments
Topic: Do you hold your VG mutual funds with VG Group or VG Brokerage?
Replies: 19
Views: 1287

Re: Do you hold your VG mutual funds with VG Group or VG Brokerage?

I took a quick look at the longer one but it was not really answering what I was thinking about. It listed the purported benefits as: * Hold your Vanguard mutual funds, ETFs, and other brokerage securities in the same account. * Use a simpler online process to buy and sell mutual funds and securitie...
by restingonmylaurels
Wed Aug 02, 2017 2:34 am
Forum: Investing - Help with Personal Investments
Topic: Do you hold your VG mutual funds with VG Group or VG Brokerage?
Replies: 19
Views: 1287

Do you hold your VG mutual funds with VG Group or VG Brokerage?

I was in conversation with my Flagship representative the other day in which he pointed out that there was an Upgrade button on the Balances and Holdings webpage that allows me to consolidate my VG mutual funds under VG Brokerage. It says “You have Vanguard mutual fund and brokerage accounts registe...
by restingonmylaurels
Wed Aug 02, 2017 1:38 am
Forum: Investing - Theory, News & General
Topic: What am I missing? [Ultra-short bond vs Prime MM]
Replies: 50
Views: 5620

Re: What am I missing? [Ultra-short bond vs Prime MM]

alex_686, Any thoughts on why TBM has under-performed USB over the last year during a period of Fed rate hikes that I described in my last post (reprinted below)? It is this real world return that leads me to prefer short term bonds over the total bond market until the Fed's gets to the end of publi...
by restingonmylaurels
Tue Aug 01, 2017 4:41 pm
Forum: Investing - Theory, News & General
Topic: What am I missing? [Ultra-short bond vs Prime MM]
Replies: 50
Views: 5620

Re: What am I missing? [Ultra-short bond vs TBM)

Rkhusky, Your explanation is very helpful and concise. I am trying to expand that to see how it applies during times of rising rates. Understand I am already invested in Admiral funds in both USB and TBM but am trying to decide to what to do right now with new funds, none of which I need in the fore...
by restingonmylaurels
Tue Aug 01, 2017 2:17 am
Forum: Investing - Theory, News & General
Topic: What am I missing? [Ultra-short bond vs Prime MM]
Replies: 50
Views: 5620

Re: What am I missing?

alex_686, I appreciate the good explanation but I am not sure where your explanation finally leads one when determining which way to invest in bonds. Are you saying that an investment in TBM, with its higher yield, is always a better decision, as forward contracts and APT ensure that with what is kn...
by restingonmylaurels
Mon Jul 31, 2017 10:09 am
Forum: Investing - Theory, News & General
Topic: What am I missing? [Ultra-short bond vs Prime MM]
Replies: 50
Views: 5620

Re: What am I missing?

alex_686, I agree it is simplified. But every investor has to have a view of what they generally expect in the future, even if that view is only that markets will continue to act like markets have in the past. My view is the Fed will continue raising rates the Fed funds rate over the next few years ...
by restingonmylaurels
Mon Jul 31, 2017 8:53 am
Forum: Investing - Theory, News & General
Topic: "Why Don’t Vanguard’s Target Retirement and LifeStrategy Funds Own Admiral Shares?"
Replies: 37
Views: 4377

Re: "Why Don’t Vanguard’s Target Retirement and LifeStrategy Funds Own Admiral Shares?"

I have long had similar issues with the STAR fund, which holds 11 other VG stock and bond funds. I have asked VG several times about why there were no Admiral shares available for it but this is the first time I have seen such a well reasoned response, which now makes some sense to me. Then I rumina...
by restingonmylaurels
Mon Jul 31, 2017 3:52 am
Forum: Investing - Theory, News & General
Topic: What am I missing? [Ultra-short bond vs Prime MM]
Replies: 50
Views: 5620

Re: What am I missing?

Let me do some math on USB vs. TBM on the next few years to fill out my thoughts. I will use the Fed's dot plot from June as the most likely path for short-term interest rates and assume that the whole interest rate curve will move up by the same amount. The dot plot shows the most likely anticipate...
by restingonmylaurels
Sun Jul 30, 2017 6:00 am
Forum: Investing - Theory, News & General
Topic: What am I missing? [Ultra-short bond vs Prime MM]
Replies: 50
Views: 5620

What am I missing? [Ultra-short bond vs Prime MM]

Last year, knowing that rising interest rates were coming and wanting to take advantage of them income-wise but not wanting to be disadvantaged by lower valuations, I determined that the best path in the short to intermediate term was move funds out of money markets into the Ultra Short-Term Bond (U...
by restingonmylaurels
Mon Jul 24, 2017 11:23 am
Forum: Investing - Theory, News & General
Topic: Today's Treasury Yield Curve
Replies: 3
Views: 690

Today's Treasury Yield Curve

I just noted on receiving today's Treasury bill auction results that for the first time I ever remember, the six-month T-Bill rate (1.13%) is less than the three-month T-Bill rate (1.18%). I am having trouble interpreting what this could mean. Why would the market demand a lower rate for money payab...
by restingonmylaurels
Thu Apr 27, 2017 8:19 am
Forum: Investing - Help with Personal Investments
Topic: How to Capitalize Your Pension and SSA for AA Purposes?
Replies: 8
Views: 962

How to Capitalize Your Pension and SSA for AA Purposes?

Just read a three-year-old article from the WSJ quoting Morningstar research ( https://www.wsj.com/articles/new-take-on-asset-allocation-include-your-house-and-social-security-1403470472 ) on the multipliers to use to capitalize your SSA income stream as an asset for AA purposes. Not sure exactly wh...
by restingonmylaurels
Tue Apr 25, 2017 2:18 pm
Forum: Investing - Help with Personal Investments
Topic: Investors Capturing Returns of All U.S. Equities?
Replies: 19
Views: 1366

Investors Capturing Returns of All U.S. Equities?

I just came across a fascinating report published last month from Credit Suisse titled "The Incredible Shrinking Universe of Stocks: The Causes and Consequences of Fewer U.S. Equities." There are many points made in it but the significant one for people on this forum would be that it is di...
by restingonmylaurels
Tue Mar 14, 2017 7:41 am
Forum: Investing - Help with Personal Investments
Topic: Do unrealized gains impact a fund's price?
Replies: 7
Views: 555

Do unrealized gains impact a fund's price?

I am wondering about unrealized gains and their impact on the pricing of a fund. For example, VTSAX now has the following unrealized appreciation: Unrealized appreciation/depreciation $18.00 Unrealized appreciation/depreciation as a % of NAV 31.49% Are the potential tax implications of this unrealiz...
by restingonmylaurels
Fri Mar 03, 2017 2:39 am
Forum: Investing - Help with Personal Investments
Topic: How is Your Pension Plan Performing?
Replies: 6
Views: 761

How is Your Pension Plan Performing?

This year, upon receiving the annual notice from my pension plan, I decided to have an in-depth look. My previous company used to be very healthy financially but has begun to decline due to fierce competition and changes in technology and use. This makes me feel less comfortable about being paid the...
by restingonmylaurels
Sat Feb 18, 2017 7:28 am
Forum: Investing - Help with Personal Investments
Topic: Is Your Asset Allocation Reading Accurate?
Replies: 4
Views: 573

Is Your Asset Allocation Reading Accurate?

I thought I would share what just happened to me regarding asset allocation. I rely on the Asset Mix feature on VG’s account overview page to check where I am in allocation to stocks, bonds, short-term reserves and other. I just discovered that this reliance comes with a caveat. The asset allocation...
by restingonmylaurels
Fri Feb 17, 2017 10:00 am
Forum: Investing - Help with Personal Investments
Topic: Saver's Tax Credit
Replies: 6
Views: 820

Re: Saver's Tax Credit

BrandonBogle, That is right, a small amount of earned income (5500/6500), W-2 or self employment, is all that is required for the largest IRA/Roth contribution I believe. But as this credit is limited to the first $2000 of the retirement savings contribution, we are really talking about making only ...
by restingonmylaurels
Fri Feb 17, 2017 8:37 am
Forum: Investing - Help with Personal Investments
Topic: Saver's Tax Credit
Replies: 6
Views: 820

Saver's Tax Credit

Receiving my final tax docs this week, I set about to see where I stood. A bit to my surprise, despite ongoing favorable treatment for QDIs and CG/CLs, rising interest rates had pushed me into a (small) tax due situation for the first time in years. Casting around for what to do short of pulling out...
by restingonmylaurels
Thu Feb 16, 2017 9:17 am
Forum: Investing - Help with Personal Investments
Topic: How Much Cash Do You Actually Hold?
Replies: 110
Views: 12297

Re: How Much Cash Do You Actually Hold?

Just to close up this thread I started, I have been delighted to find that, like me, the human element in investing has caused many others to act against their own economic self interest in favor of their emotional security and hold more cash than they really need to. As interest rates continue to r...
by restingonmylaurels
Thu Feb 16, 2017 4:06 am
Forum: Investing - Help with Personal Investments
Topic: Never-Ending Foreign Tax Credit Problem
Replies: 42
Views: 4135

Re: Never-Ending Foreign Tax Credit Problem

House Blend and Wagnerjb/Andy, what you say seems correct, that it is an issue of my global effective tax rate being less than my foreign effective tax rate from the passive income on VG international funds. Kaneohe, that may happen to me as well, with rising ordinary income given the rising interes...
by restingonmylaurels
Wed Feb 15, 2017 11:14 am
Forum: Investing - Help with Personal Investments
Topic: Never-Ending Foreign Tax Credit Problem
Replies: 42
Views: 4135

Re: Never-Ending Foreign Tax Credit Problem

For those who believe I do not understand the form 1116 (I hate to do this on a general posting), I will explain the form below. I may have wrote too quickly on my way out the door earlier. But what I am really looking for is someone who has been able to get out of the situation of ever-increasing f...
by restingonmylaurels
Wed Feb 15, 2017 8:36 am
Forum: Investing - Help with Personal Investments
Topic: Never-Ending Foreign Tax Credit Problem
Replies: 42
Views: 4135

Never-Ending Foreign Tax Credit Problem

I imagine any VG investor with some foreign equity exposure may be experiencing the same problem I am. The issue is that VG foreign stock funds pay foreign tax. To avoid double taxation on that foreign income, the IRS allows for a foreign tax credit for US taxpayers. The allowable foreign tax credit...
by restingonmylaurels
Sun Feb 12, 2017 12:56 pm
Forum: Investing - Help with Personal Investments
Topic: How Much Cash Do You Actually Hold?
Replies: 110
Views: 12297

Re: How Much Cash Do You Actually Hold?

betablocker, A couple of quick points. Understand that cash/CEs I are a limited subset of my portfolio, say 15%, so I am not at all arguing against stocks and bonds, just searching for the right allocation of cash/CEs. Also, I think inflation by almost any measure is over-stated, as most people do n...
by restingonmylaurels
Sun Feb 12, 2017 11:30 am
Forum: Investing - Help with Personal Investments
Topic: How Much Cash Do You Actually Hold?
Replies: 110
Views: 12297

Re: How Much Cash Do You Actually Hold?

Thought I should jump back into the thread I started yesterday. Fascinating the diversity in people's feelings about amount of cash and cash equivalents that they actually hold. Glad to see I am not alone in feeling that not having to worry about one's investments is worth the lost opportunity cost ...