Search found 578 matches

by Dirghatamas
Tue Mar 19, 2024 1:54 am
Forum: Personal Finance (Not Investing)
Topic: 2023 Fidelity 1099 IXUS "Addition to Basis" handling for taxes
Replies: 0
Views: 74

2023 Fidelity 1099 IXUS "Addition to Basis" handling for taxes

Hidden in the weeds in the supplement section of 2023 1099 from Fidelity, is a new entry for me. The supplement section is not sent to the IRS, so I normally look at it mostly for Foreign Tax Credit calculations. There is a small entry of ~45 dollars that is distributions called "addition to basis" for IXUS (Total International ETF by ishares) which I hold as the normal TLH pair for VXUS. This is a pretty common Boglehead ETF, so I would imaging many people on the forum will have this situation. I have seen the opposite "return of capital" before and that one is handled correctly by brokerage (at least Schwab in my experience by creating a new tax lot with the return of capital). I don't see any prorated adjustment of co...
by Dirghatamas
Thu Mar 14, 2024 9:39 pm
Forum: Investing - Theory, News & General
Topic: Robinhood 3% IRA Match
Replies: 1459
Views: 110217

Re: Robinhood 3% IRA Match

Execution on ETF purchases/sales has been fine for me so far, and I only transact during market hours. I don't expect much of an issue execution here, and it seems similar to Fidelity. Schwab actually reinvests three days later than Fidelity. Fidelity reinvests on T-2, Schwab reinvests on T+1, though Fidelity should change to T-1 in May. I assume Robinhood is T+1. I calculated that the delay at Schwab costs me less than a basis point per year with short term rates at 5%, so I ignore it. I expect Robinhood to earn less than 10bp on my total assets over five years, considering the cost of Gold, net interest (including delayed reinvestments), PFOF, and a single ACATS transfer out, which I expect to be reimbursed. Thank you Lyrrad for sharing ...
by Dirghatamas
Thu Mar 14, 2024 9:24 pm
Forum: Investing - Theory, News & General
Topic: Robinhood 3% IRA Match
Replies: 1459
Views: 110217

Re: Robinhood 3% IRA Match

3) PFOF cost modeling: Assuming one just has a standard buy and hold bogleheads portfolio with no trading, in my case 100% equities, always globally weighted, how does one bound the loss over 5 years? The weighted average of VTI/VXUS is likely ~2-2.5% dividend yield per year in the next few years. I don't know how bad their trade execution for automated dividend reinvestment is. If it is ~1% worse cost than other brokerages, that could be material at 2.5%*1%*5 = 0.13% loss over the time in RH but I would hope the execution loss is MUCH less than 1%. Fidelity reinvests a day sooner than Schwab (so Schwab gets your free cash for a day in interest) but that is minor, not sure what RH does in the mechanics/ date of auto dividends reinvesting. ...
by Dirghatamas
Thu Mar 14, 2024 8:44 pm
Forum: Investing - Theory, News & General
Topic: Robinhood 3% IRA Match
Replies: 1459
Views: 110217

Re: Robinhood 3% IRA Match

A few questions as I just saw this thread. Ordinarily, I wouldn't want to deal with a newish brokerage with a shady reputation but quick math shows one could get a 6 figures bonus (ignoring SIPC). That's tempting. 1) Charge for ACATS back from RH : I have only dealt with firms like Fidelity/VG etc. that don't charge you anything for moving accts partially or fully either to them or out of them. It looks like RH charged $75 (apparently changed to $100 recently per Google search) recently. Is this per person, partially/ wholly or per acct? For example if one transferred 2 IRA + 2 401K rollovers + 1 Roth, is it $500 on the way out..Perhaps it means one should transfer to just one larger acct at RH? Perhaps other brokerages will pay this to you...
by Dirghatamas
Wed Feb 28, 2024 9:23 pm
Forum: Personal Investments
Topic: Deep Dive: Poor Tax Efficiency of Vanguard International Funds 2023
Replies: 41
Views: 6035

Deep Dive: Poor Tax Efficiency of Vanguard International Funds 2023

I just finished my taxes and had an unwelcome surprise of several K $ extra compared to my very detailed modeling of estimated taxes. The culprit is VG dropping the ball on tax efficiency for 2023 across the board in its International Funds. I was annoyed enough to do a multi-year numerical analysis to see if this is a one-off or actionable. Below is the detailed analysis including various components of this inefficiency showing that some commonly discussed views (index selection) are NOT the main issue. Summary QDI -> non-QDI dividend increases taxes by ~2X. For 2023 VG delivered ~15% worse QDI in its main International funds compared to both a) iShares equivalents for 2023 b) VG own funds for 2022. The TER (Tax ER) compared to a straight ...
by Dirghatamas
Thu Feb 15, 2024 2:08 pm
Forum: Personal Investments
Topic: How big (if at all) of a mistake would it be for me to go VT instead of VTI/VXUS in taxable?
Replies: 67
Views: 5533

Re: How big (if at all) of a mistake would it be for me to go VT instead of VTI/VXUS in taxable?

This seems to be several times higher than that reported by others in that thread above and other ones. Thanks Vulcan for checking my math. I looked into the thread above from 2021 to understand why they are coming with such a small tax drag (5 basis points) while my mid range is 30 basis points (6X difference). My math is correct and I am listing my publicly available sources below. The main differences are 1) Unusually low dividends during COVID lock down while I take multi year averages to low pass filter the data 2) 60/40 amortization of the tax drag vs. stating it directly for international in isolation (clearer in my view). Source for dividend history https://www.dividend.com/etfs/vxus-vanguard-total-international-stock-etf/#distribu...
by Dirghatamas
Wed Feb 14, 2024 7:38 pm
Forum: Investing - Theory, News & General
Topic: Jason Zweig’s latest WSJ article on ETF/MF taxation
Replies: 25
Views: 4394

Re: Jason Zweig’s latest WSJ article on ETF/MF taxation

There are two issues here. Why can’t a fund remove all capital gains via in-kind redemptions? Well, if there is a mass exodus from the mutual fund side then the fund would have to use a traditional trading desk to sell securities in a traditional fashion that would trigger capital gains. Or there could be a liquidity event. Chances are small but they do happen. See the target date fund. Alex I know you worked inside funds so may have a more detailed view of how the numbers could work. As a naive outsider, when I dug through the numbers (size of VTI vs. overall Total Index, size of embedded gains) it does make me nervous. I was surprised how small is VTI compared to its mutual fund parent (just 23% of total) and also by the sheer size and %...
by Dirghatamas
Wed Feb 14, 2024 6:28 pm
Forum: Personal Investments
Topic: How big (if at all) of a mistake would it be for me to go VT instead of VTI/VXUS in taxable?
Replies: 67
Views: 5533

Re: How big (if at all) of a mistake would it be for me to go VT instead of VTI/VXUS in taxable?

I have thought about this. When a fund like VT holds international but doesn't qualify to pass through the foreign tax credit, are the foreign taxes instead removed from box 1a and 1b of 1099-DIV? So it's like being forced to take them as a deduction instead of a credit, but even better since you don't have to itemize and it doesn't count toward AGI. This could be an advantage for a low-AGI taxpayer with a substantial taxable position in VT, since it would avoid AGI-based phaseouts as well as the Form 1116 comparison of US and foreign tax (which could cause a portion of the credit to be denied)? I agree with you on net/gross dividend taxation but not on your conclusion (it maybe overall beneficial). First, several people have reported on t...
by Dirghatamas
Wed Feb 14, 2024 2:57 pm
Forum: Investing - Theory, News & General
Topic: Jason Zweig’s latest WSJ article on ETF/MF taxation
Replies: 25
Views: 4394

Re: Jason Zweig’s latest WSJ article on ETF/MF taxation

The ETF structure isn’t a cure-all, though. While it’s an unlikely scenario, Sauter notes that massive redemptions from an underperforming actively managed mutual fund in an up market could saddle investors in its ETF share class with capital-gains tax liabilities. Gus Sauter is quoted in this article by Jason, briefly mentioning that embedded/unrealized capital gains in an ETF could still be a problem. Leaving aside active funds, I have on and off worried about VTI as a "black swan event" of redemptions. Some time back I converted my taxable Total stock market fund (institutional class) to the ETF class. At the time, the ER was the same between the two so no gain. The main reason was portability but a secondary reason (vaguely i...
by Dirghatamas
Wed Feb 14, 2024 2:48 pm
Forum: Personal Investments
Topic: How big (if at all) of a mistake would it be for me to go VT instead of VTI/VXUS in taxable?
Replies: 67
Views: 5533

Re: How big (if at all) of a mistake would it be for me to go VT instead of VTI/VXUS in taxable?

Here’s a post that looked at it: https://www.bogleheads.org/forum/viewtopic.php?t=346428 Looks like you would be missing out on about $500 in FTC per million in VT. So, another 0.05%, on top of a - what? - a 0.02% ER difference? Simplicity wins in my book. As Einstein said: "Everything should be made as simple as possible, but no simpler." OP I strongly disagree with posts arguing for simplification. You will lose a LOT of money over the years following this advice. VT is a poor choice in a LARGE TAXABLE account. I have done exactly what you propose (invested in a 100% equity passive indexed, global market weighted) in taxable for >32 years now. As the portfolio has grown over the years, I have looked at simplifying many times fr...
by Dirghatamas
Sun Feb 11, 2024 10:38 pm
Forum: Investing - Theory, News & General
Topic: Jason Zweig’s latest WSJ article on ETF/MF taxation
Replies: 25
Views: 4394

Re: Jason Zweig’s latest WSJ article on ETF/MF taxation

I don't understand this: "If you own a faltering old mutual fund that’s stinking up your portfolio, you can sell it—but you might incur a stiff capital-gains tax bill. If that mutual fund had an ETF share class, you could exchange into it without triggering any tax." But then you still own the undesirable fund, unless you can then sell the ETF shares without incurring a tax? That can't be true, can it? I read the article and while well-intentioned, it does seem to have several technical errors. As you point out, simply buying the ETF version of an undesirable fund doesn't solve anything. Your cost basis is transferred, along with your date of purchase. Your capital gains remain the same. Your taxes can't magically disappear by co...
by Dirghatamas
Sun Feb 11, 2024 9:09 pm
Forum: Investing - Theory, News & General
Topic: New article casting doubt on index investing
Replies: 51
Views: 6532

Re: New article casting doubt on index investing

(Charles) Gave points out that the US stock market is now about 70% of world market capitalization, even though its economy is only 17.8% of global gross domestic product. There is so much wrong with the article, where to begin. I have been a globally market weighted passive indexer in my portfolio for > 32 years. The international part has been a huge cumulative drag over my entire investing career of three decades. Still, it seemed logical when starting investing, seems logical now and I will continue with it in retirement. Your position is fairly rare among Bogleheads. Usually, discussions here are about overweighing US (including 100%). Rarely do we have posters who have been UNDERWEIGHING it by as much as you have. Why did you decided...
by Dirghatamas
Fri Feb 09, 2024 10:45 pm
Forum: Personal Finance (Not Investing)
Topic: No way to stop estimated tax penalties from accruing if you pay after January?
Replies: 31
Views: 3488

Re: No way to stop estimated tax penalties from accruing if you pay after January?

Bewisefinacially I am an engineer not a tax lawyer, so my input to you is just based on my experience. YMMV. Here's what I would do in your case 1) Safe Harbor: You say you already paid most of your taxes in Dec but found out that you owe ~$8000 based on rough calc but don't have final forms yet. Very common. Given the smallish amount owed, the first thing is to figure out if you need to do anything at all right now. It could be that you have already met 90% of your taxes or other safe harbor rules (100% of last year taxes or 110% if high income). If you are in safe harbor, then you will not be charged any interest by IRS till April 15. 2) Balance: If you are not sure that you are in safe harbor, have the money AND are reasonably sure you o...
by Dirghatamas
Fri Feb 09, 2024 9:37 pm
Forum: Personal Finance (Not Investing)
Topic: No way to stop estimated tax penalties from accruing if you pay after January?
Replies: 31
Views: 3488

Re: No way to stop estimated tax penalties from accruing if you pay after January?

It's not just one system. In addition to none of the credit card processors accepting it, IRS Direct Pay states the following (if you press the "?" next to "Reason for Payment" and expand "Estimated Tax"): John I had some time to kill this afternoon and your topic piqued my nerd brain, given I had nothing to do. I have already answered your original question in my earlier post, that it IS possible to do estimated tax payments after Jan 31 all the way to April 14th using EFTPS (I did today and also last year). Can you please help how the EFTPS account is different from Direct Pay? I have done the first-time estimated payments in Dec'2023 but still owe ~$8000 to IRS after initial calculation while preparing a ro...
by Dirghatamas
Fri Feb 09, 2024 12:29 am
Forum: Personal Finance (Not Investing)
Topic: Tax topic: NIIT tax handling of foreign income/ credit
Replies: 9
Views: 1443

Re: Tax topic: NIIT tax handling of foreign income/ credit

This is both fair and consistent with the handling of foreign income for foreign tax credit purposes. This is very basic. If you take the credit, the US treasury has already absorbed the entire cost of all foreign tax Thank you grabiner, soxfan10 and MarkNYC. I thought some more and agree with you all. My previous position was plain muddled thinking and a mental block comparing SALT to foreign taxes. 1) Deduction vs. Credit : Soxfan10, yup I was mixing deduction and credit. My false equivalence was " tax law allows you to deduct SALT twice. Once for normal federal income tax and again separately for NIIT. So, to be consistent, it should allow us to credit Foreign taxes for federal income tax and then also deduct them from NIIT". ...
by Dirghatamas
Wed Feb 07, 2024 12:53 am
Forum: Personal Finance (Not Investing)
Topic: Tax topic: NIIT tax handling of foreign income/ credit
Replies: 9
Views: 1443

Re: Tax topic: NIIT tax handling of foreign income/ credit

taxes are not allowed as deductions under section 164(a)(3) in determining net investment income if the taxpayer claims the benefit of the foreign tax credit under section 901 with respect to the same taxable year ..."[/i] You can dislike it, or consider it inconsistent, but it's the law. Thank you Mark. That's quite unambiguous. I do believe this is inconsistent from how SALT is handled for ordinary income vs. NIIT..but as you say, the law is the law. My opinion doesn't matter, the text of the law does. More constructively, I went ahead and modeled in excel (given this clear guidance from you) on how to optimize foreign taxes given NIIT restrictions. That may be useful to others in my situation (high tax brackets with NIIT + high for...
by Dirghatamas
Tue Feb 06, 2024 2:27 pm
Forum: Personal Finance (Not Investing)
Topic: Tax topic: NIIT tax handling of foreign income/ credit
Replies: 9
Views: 1443

Re: Tax topic: NIIT tax handling of foreign income/ credit

Tuesday bump to see if someone has experience with the (admittedly) arcane topic of correct handling of NIIT + foreign taxes :confused
by Dirghatamas
Tue Feb 06, 2024 12:10 am
Forum: Personal Finance (Not Investing)
Topic: Tax topic: NIIT tax handling of foreign income/ credit
Replies: 9
Views: 1443

Re: Tax topic: NIIT tax handling of foreign income/ credit

You're already crediting the tax against your tax bill. Why would you get a further deduction? There is no foreign tax cost at all after the credit. As I replied in my previous reply (just after your post), playing with Turbo tax was instructive (and not very logical). Ordinary income tax and NIIT are two separate taxes. One can imagine all sorts of ways IRS could combine them as far as codes go (logic need not apply). Consider that prior to SALT cap laws passes in 2017/2018, when you filed you federal taxes, you got to deduct your state income tax from ordinary federal income. On top of that you got to deduct the prorated part of your state income tax (related to investment income) from NIIT. When the SALT cap was introduced, there were s...
by Dirghatamas
Mon Feb 05, 2024 11:55 pm
Forum: Personal Finance (Not Investing)
Topic: Tax topic: NIIT tax handling of foreign income/ credit
Replies: 9
Views: 1443

Re: Tax topic: NIIT tax handling of foreign income/ credit

FYI for people in similar situation, I played around with Turbotax (2022 version as my 2023 forms are not yet ready). I am not implying that the handling of Turbo tax is correct or incorrect, just what it does in various cases of State, local and foreign taxes for NIIT with foreign taxes taken as a deduction vs. a credit. Case 1: Take Foreign tax credit + Standard deduction: It takes the foreign income tax as straight credit from federal income taxes. It puts 0 for the deduction for NIIT. So once you take a standard deduction, it seems to 0 out any state or local or foreign taxes in its calculation. Case 2: Take foreign tax credit + Itemized deduction. Total tax bill is higher because now it uses an itemized deduction (smaller) than standar...
by Dirghatamas
Mon Feb 05, 2024 9:10 pm
Forum: Personal Finance (Not Investing)
Topic: Tax topic: NIIT tax handling of foreign income/ credit
Replies: 9
Views: 1443

Tax topic: NIIT tax handling of foreign income/ credit

TLDR : If a person has substantial passive foreign investment income e.g international index funds AND files for foreign tax credit, is this tax deductible from investment income for NIIT taxes? Details : Passive boglehead/ index only investor. Due to higher % dividends in international funds (VXUS), the foreign tax on my dividend income was ~20K for 2022. Data for 2023 not yet available but likely slightly higher due to increasing dividends/ inflation. I DO take the foreign tax credit using form 1116 every year in my main income tax 1040 form. I pay the 3.8% NIIT on the entirety of my investment income every year due to high ordinary income unrelated to investments. NIIT and foreign income deduction : The biggest deduction for NIIT used t...
by Dirghatamas
Thu Feb 01, 2024 6:41 pm
Forum: Personal Finance (Not Investing)
Topic: No way to stop estimated tax penalties from accruing if you pay after January?
Replies: 31
Views: 3488

Re: No way to stop estimated tax penalties from accruing if you pay after January?

It's not just one system. In addition to none of the credit card processors accepting it, IRS Direct Pay states the following (if you press the "?" next to "Reason for Payment" and expand "Estimated Tax"): John I had some time to kill this afternoon and your topic piqued my nerd brain, given I had nothing to do. I have already answered your original question in my earlier post, that it IS possible to do estimated tax payments after Jan 31 all the way to April 14th using EFTPS (I did today and also last year). I was curious as to why you are finding a different behavior using other systems. I logged into my IRS account (not EFTPS account) to see how it categorizes my past payments made through EFTPS. It also ha...
by Dirghatamas
Thu Feb 01, 2024 3:02 pm
Forum: Personal Finance (Not Investing)
Topic: No way to stop estimated tax penalties from accruing if you pay after January?
Replies: 31
Views: 3488

Re: No way to stop estimated tax penalties from accruing if you pay after January?

There seems to be a peculiar difference with Q4 that is driving me a bit mad. Namely, it seems that the IRS stops accepting any "Estimated Tax" payments for the prior year on January 31st, whether you're paying by ACH or CC. So if I make a payment on January 31st, I only owe two weeks of interest, as usual. But if I'm ten minutes past that, it seems I'll have to pay interest on the amount as if I didn't pay it until April 15th - even if I'm prepared to make a payment immediately! OP, your understanding is emphatically incorrect, based on my personal records. 2023 Estimated taxes : I used IRS EFTPS system today early morning to pay my estimated taxes for 2023 (plain forgot in Jan). It accepted my request with a payment date of Feb...
by Dirghatamas
Sat May 13, 2023 1:04 am
Forum: Investing - Theory, News & General
Topic: Equity Risk Premium: Why measure vs. Nominal Treasury?
Replies: 180
Views: 7525

Re: Equity Risk Premium: Why measure vs. Nominal Treasury?

Ben Mathew wrote: Sat May 13, 2023 12:54 am
Like you said, the earnings yield (1/PE ratio) of stocks makes sense as an estimate of the expected real return of stocks, not the expected nominal return of stocks. This is because the earnings of a company are typically derived from real assets owned by the company, which would keep up with inflation.

So you would subtract the real interest rate from the earnings yield to get an estimate of the the equity premium.
Thanks. You explained it more succinctly than me as I was trying to wrap my head around this idea.

That (1/PE ratio of stocks should be considered real yield) is what I concluded on my bike ride for the same reasons. Thanks for confirming my intuition.
by Dirghatamas
Sat May 13, 2023 12:52 am
Forum: Investing - Theory, News & General
Topic: Equity Risk Premium: Why measure vs. Nominal Treasury?
Replies: 180
Views: 7525

Re: Equity Risk Premium: Why measure vs. Nominal Treasury?

Global Equities Nominal Returns: 6.40% 10 YR Breakeven Inflation: 2.18% Global Equities Real Return: 4.22% 10 YR TIPS Real Return: 1.28% Real Equity Premium vs TIPS: 2.94% The way you did the calculations is exactly how people traditionally do it. My thought during my bike ride was that we are calculating it wrong..hence the question. Consider the S&P 500 just to keep it simple instead of using the world index. Because the world index such as VT is over so many countries, figuring weighted inflation over so many countries is difficult. For the US, it is simpler so lets do it that way (even though I always invest in proportion to world market cap with no home bias). Lets say the S&P P/E today is 20 so the earning yield is 5%. Is tha...
by Dirghatamas
Fri May 12, 2023 11:41 pm
Forum: Investing - Theory, News & General
Topic: Equity Risk Premium: Why measure vs. Nominal Treasury?
Replies: 180
Views: 7525

Equity Risk Premium: Why measure vs. Nominal Treasury?

On my bike ride today evening, I had a thought that I couldn't find an answer to, after consulting the relevant book and then even asking AI assistants (Google Bard and ChatGPT) so asking Bogleheads. I HAVE read the book literally on the equity risk premium (based on suggestion from forum member alex a year or so ago) and looked at it again. I am an engineer, not an economist so I may well have a large hole in my understanding. I asked the AI bots Bard and ChatGPT to see if they know better. Q: Why is the equity risk premium compared to nominal Gov Bonds (usually 10 year US treasury) instead of TIPS of equivalent duration? Answer Google Bard: Shortened The ERP is typically measured using nominal U.S. Treasury bonds because it is a more liqu...
by Dirghatamas
Mon Aug 22, 2022 4:38 pm
Forum: Personal Finance (Not Investing)
Topic: Nomadic lifestyle to avoid (not evade) state income taxes
Replies: 52
Views: 5329

Re: Nomadic lifestyle to avoid (not evade) state income taxes

I suspect the friend is evading (not avoiding) taxes in multiple jurisdictions, and just hasn’t been caught yet because they’re hyper nomadic. Agree. I looked into this thread because I am starting to idly daydream (not too distant future, perhaps later this year) about either Air B&B or RVing with remote work for a couple of years (having already sold my house earlier this year) either moving to different states within US or perhaps Air B&Bing in multiple countries. I have been studying this topic for the last few weeks and the OP's consultant has some serious misunderstanding of US tax laws. First, ignoring the state tax, much bigger issue is country of domicile (federal income taxes are usually much bigger than state taxes). > 9...
by Dirghatamas
Thu Aug 04, 2022 1:01 am
Forum: Investing - Theory, News & General
Topic: Testing Fidelity's Lockdown Mode for theft prevention: Does it work?
Replies: 81
Views: 17843

Re: Testing Fidelity's Lockdown Mode for theft prevention: Does it work?

What am I doing personally after testing: Fraudulent ACH pulls are a weakness so it makes sense to remove any link from brokerage account to the external world. I do something similar but with one additional wrinkle -- a second (small) brokerage account with margin. My main brokerage account does not have margin (both be design and because Fidelity won't give margin on more than one account apparently). The margin account is my "overdraft protection account" (ODP) tied to the CMA via Cash Manager Tool. 1) Transfers to the outside world are ONLY to/from CMA. Nobody else has knows of any of my other account numbers. 2) II can limit the amount of automatic overdraft I'm willing to risk by choosing what holding to keep in ODP. 3) The...
by Dirghatamas
Thu Aug 04, 2022 12:58 am
Forum: Investing - Theory, News & General
Topic: Testing Fidelity's Lockdown Mode for theft prevention: Does it work?
Replies: 81
Views: 17843

Re: Testing Fidelity's Lockdown Mode for theft prevention: Does it work?

I just wanted to update with a pleasant surprise around this ACATS testing in the OP from Vanguard. I had done 2 partial account transfer requests from VG and 2 identical ones from Schwab to test how all 3 (Fidelity, VG, Schwab) would work. Schwab had been more communicative during the transfer process sending me an email when they received my request and then another email after it was rejected by Fidelity with a cogent explanation and error code. So I was satisfied on Schwab's end. Vanguard had been less communicative (just a tab on my home screen) with no email or text and just a cryptic looking error code within the tab (transaction closed -> request cancelled) with no further explanation. Today morning, a couple of days after the onlin...
by Dirghatamas
Tue Aug 02, 2022 3:46 pm
Forum: Investing - Theory, News & General
Topic: Testing Fidelity's Lockdown Mode for theft prevention: Does it work?
Replies: 81
Views: 17843

Re: Testing Fidelity's Lockdown Mode for theft prevention: Does it work?

Testing is now complete so I have edited the OP with ACATS findings, pruned it for clarity and changed my conclusions. I will eat crow for predicting the ACATS outcome based on ACH results & Schwab rep's arguments. I deserve the flaming I received on my OP for incomplete testing. Hopefully, the completed testing is useful to those who want to evaluate this feature for their needs.
by Dirghatamas
Tue Jul 26, 2022 2:14 pm
Forum: Investing - Theory, News & General
Topic: Testing Fidelity's Lockdown Mode for theft prevention: Does it work?
Replies: 81
Views: 17843

Re: Testing Fidelity's Lockdown Mode for theft prevention: Does it work?

Seems to me that not testing ACAT renders the comparison of the scary thread irrelevant. Any way to buy a share of some $10 ETF and give it a try OP? Thanks. I agree that ACH pull doesn't guarantee ACATS pull. Your idea is a good one. It was cumbersome to deal with my actual large holdings and funds and track cost basis back and forth just to test. Your idea is better as then I don't need to move anything back. I couldn't find a $10 ETF I would actually want to buy so right now I just bought a couple of shares of NTSX (60/40 US stock bonds leveraged) for $35 per share. I will transfer 1 to Schwab and 1 to Vanguard. Lets see if the lockdown stops the transactions. It will take several days as the buy has to first settle (T+2) and then ACATS...
by Dirghatamas
Tue Jul 26, 2022 1:41 pm
Forum: Investing - Theory, News & General
Topic: Testing Fidelity's Lockdown Mode for theft prevention: Does it work?
Replies: 81
Views: 17843

Re: Testing Fidelity's Lockdown Mode for theft prevention: Does it work?

Schwab rep was more proactive and reached out to his fraud protection people. He called back and had a longish, detailed conversation with me, emphasizing that his folks have told him not only that Schwab doesn't offer and equivalent but more importantly, the Fidelity mode CAN'T do what the fidelity rep claims :confused While I cannot vouch for whether the Fidelity ACATS lock-down feature would actually prevent an ACATS transfer, the explanation provided by Schwab is a correct statement of applicable FINRA regulations. OP...you would do many Bogleheads a service if you would setup a partial ACATS transfer to move perhaps a trivial number of shares of a common ETF or mutual fund from Fidelity to either Schwab or Vanguard. Since you have acc...
by Dirghatamas
Tue Jul 26, 2022 1:39 am
Forum: Investing - Theory, News & General
Topic: Testing Fidelity's Lockdown Mode for theft prevention: Does it work?
Replies: 81
Views: 17843

Testing Fidelity's Lockdown Mode for theft prevention: Does it work?

Edit 8/2/2022 Testing is now complete so I have edited the OP with ACATS findings, pruned it for clarity and changed my conclusions. I will eat crow for predicting the ACATS outcome based on ACH results & Schwab rep's arguments. I deserve the flaming I received on my OP for incomplete testing. Hopefully, the completed testing is useful to those who want to evaluate this feature for their needs. Edit 7/26/2022 While I thought testing ACH would be sufficient, based on feedback, it is clearly not. So I will go ahead and test the ACATS pull feature by pulling a small number of shares from Fidelity using my Schwab and Vanguard accounts and then later get them back to Fidelity. Cumbersome (which is why I first just did ACH) but I will go ahe...
by Dirghatamas
Wed Jul 13, 2022 9:06 pm
Forum: Investing - Theory, News & General
Topic: 4 % of stocks created all the gains
Replies: 108
Views: 13910

Re: 4 % of stocks created all the gains

The obvious problem would be that if you've got stock markets growing at a compounded 10%, indefinitely, while global GDP's growing at 3-4%, you'll get to a point where the market's growing more in a month than the total value of the world economy – then more in a week. It cannot be sustainable. I think it's a uniquely 20th century phenomenon, and what we've been doing since then is really just bringing future growth forward, which also gets you to a point where you run out of space to expand into. I strongly disagree with this view from Logan Roy (which is a very commonly held and perhaps even majority view) for both empirical and mathematical reasons. There are many equivalent/similar sounding statements made: "Global markets can't ...
by Dirghatamas
Mon Jul 11, 2022 9:27 pm
Forum: Investing - Theory, News & General
Topic: Is International underperformance mainly due to strengthening dollar?
Replies: 42
Views: 5156

Re: Is International underperformance mainly due to strengthening dollar?

Ex-US underperformance is mostly explained by valuation of the stock. Between 2010-2020 valuation change accounted for 5.4 percentage points of the nearly 8 percentage point difference between US annual returns of 13% for that decade vs 5.1% for Ex-US. Currency exchange accounted for 2.1 percentage points of the 8 point difference. Source: https://corporate.vanguard.com/content/dam/corp/research/pdf/A-tale-of-two-decades-for-U.S.-and-non-U.S.-equity-Past-is-rarely-projogue-ISGUSIE_122020_online-003.pdf So, I’d say currency exchange is significant but in theory should balance out over time. So less than .5% is the actual reason people typically proclaim US investing to be fundamentally better? (Better businesses, better rules of law, blah, ...
by Dirghatamas
Sun Jul 10, 2022 9:52 pm
Forum: Investing - Theory, News & General
Topic: ACATS Transfer thefts from Fidelity
Replies: 546
Views: 60482

Re: ACATS Transfer thefts from Fidelity

typical.investor wrote: Sun Jul 10, 2022 9:15 pm But yeah why use the word crypto and infer that it is safer if it's not what you meant? I'm not having it.
Thanks. Anyone can read my posts and understand what I meant (that I have no interest in crypto and don't think that is a solution). Looks like you can't (or don't want to). Lets not derail this thread any further which is discussing an actual serious potential issue. You win. I will not respond to any further posts from you in this thread so as to not derail this thread.

If all you want to do is win an internet argument, then great, be my guest!
by Dirghatamas
Sun Jul 10, 2022 9:02 pm
Forum: Investing - Theory, News & General
Topic: ACATS Transfer thefts from Fidelity
Replies: 546
Views: 60482

Re: ACATS Transfer thefts from Fidelity

Basically, there are MANY legitimate reasons why your brokerage acct number could be out there, even if you are a careful person. Its just not the same as your private password or a private crypto key. It's estimated that 10% of crypto keys get lost. Whatever the exact figure that money is gone forever. It's easy to find examples. Private unrecoverable keys to secure a brokerage account is not the solution. Or do the rest of us have to pay insurance to cover those who lost their keys? Now you are creating a strawman. My reply to you was there are MANY legitimate reasons your brokerage acct number is out there. I gave my recent house sale/wire transfer example. Lots of people do wire transfers into their brokerage accts for a variety of pur...
by Dirghatamas
Sun Jul 10, 2022 5:29 pm
Forum: Investing - Theory, News & General
Topic: ACATS Transfer thefts from Fidelity
Replies: 546
Views: 60482

Re: ACATS Transfer thefts from Fidelity

All brokerages and banks that do ACH already have the trial deposit scheme set up. That makes the pull security problem equivalent to push security. All they need to do (or FINRA needs to insist) is copy that step (which they already have implemented for all accts to enable ACH) for ACATS transfer. This shouldn't take a lot of new software or cost because the system and software already exists at all brokerage and banks. The argument about being "cumbersome" is nonsense. You solution won't work in many cases. Many people use an advisor. They get statements but don't control the account online. I did in the past. I transferred out via ACATs. Ensuring timely transfer is what the current system tries to do. Your 'solution' would end...
by Dirghatamas
Sun Jul 10, 2022 4:51 pm
Forum: Investing - Theory, News & General
Topic: ACATS Transfer thefts from Fidelity
Replies: 546
Views: 60482

Re: ACATS Transfer thefts from Fidelity

Well the brokerage account number is created and stored by someone other than me so it's hardly private. Printed on the statement even. If one is concerned about accidentally leaking the account number, it's very easy to open a new brokerage account, transfer assets internally, and endeavor to keep the new one secret. FWIW, I think it's great that people are thinking about the security of their accounts. This particular attack isn't a big concern in my threat model, though. There are MANY legitimate reasons for which your acct number can't stay private. Its not just a question of being diligent or "accidentally leaking". Case in point: I sold my house last month. The title company offered either a paper check or a wire (no ACH). ...
by Dirghatamas
Sun Jul 10, 2022 4:08 pm
Forum: Investing - Theory, News & General
Topic: ACATS Transfer thefts from Fidelity
Replies: 546
Views: 60482

Re: ACATS Transfer thefts from Fidelity

OK this ruined my evening run! ACH vs. ACATS security : Let's say you (good guy) have an acct with Institution A (brokerage or bank doesn't matter). Let's say the bad guy opens an acct at Institution B under your name. They just need your SSN, DOB and maybe your address which are all easily available nowadays after Equifax and other breaches. Now the security case of transferring money (ACH or wire) is very different from transferring stocks/bonds/ETF/mutual funds. To actually transfer money, the institution B, when it receives a request, will first deposit a couple of tiny amounts to the Institution A acct using ACH. Then it will ask the bad guy to enter those amounts. As long as the bad guy doesn't have the Userid + password + 2FA of you...
by Dirghatamas
Sun Jul 03, 2022 12:14 am
Forum: Investing - Theory, News & General
Topic: ACATS Transfer thefts from Fidelity
Replies: 546
Views: 60482

Re: ACATS Transfer thefts from Fidelity

OK this ruined my evening run! I thought I had all the standard security stuff nailed: 2FA, Symantec and YubiKey, Credit Freeze at the 3 reporting agencies + Bank account freeze using Chexx...but this seems to be a simple and very dangerous loophole that affects all brokerages (not just fidelity) and seems impervious to basic security steps one can take. There seem to be trivial security additions brokerages could do ( same as ACH noted below) but apparently none have. This is concerning. During my run, being an engineer, I payed a mental war game of how many ways a bad guys could attempt this and how could I proactively stop it. It seems to be damn difficult without making the brokerage acct very inconvenient. ACH vs. ACATS security : Let'...
by Dirghatamas
Wed Jun 22, 2022 10:12 pm
Forum: Personal Finance (Not Investing)
Topic: House sale capital gains tax handling of upgrades/renovations
Replies: 18
Views: 1963

Re: House sale capital gains tax handling of upgrades/renovations

I wanted to update this thread, now that my house sale closed earlier in June and I have a much better understanding of both the renovation and taxes. Hopefully it can help others in the future. My original question was about the handling of capital gains taxes vis a vis large home renovations prior to sale. Most replies argued that instead of worrying about taxes, focus should be on renovation: does it make sense and have sufficient ROI? The consensus advice was to do the minimum and basically sell "as is" especially in a hot market. My realtor insisted that ROI of an upgrades house is typically much better than 1:1. Being completely naive about real estate, I went with the realtor's recommendation and ~ 3months later, the proces...
by Dirghatamas
Sun Mar 20, 2022 3:50 pm
Forum: Personal Finance (Not Investing)
Topic: House sale capital gains tax handling of upgrades/renovations
Replies: 18
Views: 1963

Re: House sale capital gains tax handling of upgrades/renovations

Thanks everybody so far. I have read through all responses but replying collectively because in effect ALL responses so far have been the same: it is difficult to make home renovations/upgrades beat 1:1 in final asking price so why bother figuring out tax consequences when the before tax ROI itself isn't justified. I would still like to get my capital tax question answered by any knowlegeable folks who went though a similar situation of house renovation/upgrades/repairs I am a bit surprised that there is such heavy consensus. I am completely naive about real estate having only bought and lived in one house for 25 years..so learning. I reached out to the realtor and she sent me back several actual examples of houses+ renovation work she reco...
by Dirghatamas
Sat Mar 19, 2022 6:31 pm
Forum: Personal Finance (Not Investing)
Topic: House sale capital gains tax handling of upgrades/renovations
Replies: 18
Views: 1963

House sale capital gains tax handling of upgrades/renovations

Short Version : Are all repairs/renovations/upgrades done within 90 days of house sale closing, deductible for capital gains taxes, or is there a specified list that is covered and those that are not? Long Version : Moving from a house I have lived in/owned for 25 years to a downtown apartment (renting), so I can work remotely and walk to coffeeshops/restaurants/library/walking trails/farmers market instead of having to drive. First and only house I have owned so naive about house sales and taxes. House was built ~30 years ago. I am moving/emptying the house this week and already hired a realtor and got inspection report done. Realtor gave me 3 options a) sell as is with no repairs b) sell with all external repairs/upgrades done c) sell wi...
by Dirghatamas
Mon Oct 18, 2021 11:52 pm
Forum: Investing - Theory, News & General
Topic: Creating Margin Loan at ~0.5% using Tax Arbitrage
Replies: 7
Views: 1385

Re: Creating Margin Loan at ~0.5% using Tax Arbitrage

I like it, but I can't help but add that box spread financing will typically come at a lower financing cost and doesn't depend on offsetting dividends to realize tax savings. Thanks whodidntante, jarjarM and drk for educating me about a different concept I had never heard about. I googled "Box Spreads" after casually going over the Bogleheads thread linked. The first article that shows up on Google when I searched "Box Spreads vs. Margin" to understand this concept (new to me) was this. "The Box Spread Trick: Get rich slightly faster" https://www.lesswrong.com/posts/8NSKMMDXS8gjFHfQa/the-box-spread-trick-get-rich-slightly-faster#:~:text=As%20a%20retail%20investor%2C%20you,3%2D10%25%20margin%20rates. Going thro...
by Dirghatamas
Mon Oct 18, 2021 9:06 pm
Forum: Investing - Theory, News & General
Topic: Creating Margin Loan at ~0.5% using Tax Arbitrage
Replies: 7
Views: 1385

Creating Margin Loan at ~0.5% using Tax Arbitrage

This isn't about WHETHER or not using prudent margin is a good idea or bad idea for Bogleheads. Assuming someone wants to consider margin, is it possible to create margin at ~half the rate of interest we normally hear about, using tax law. The purpose of the discussion is whether this is a good way to create margin or are there missing gotchas I haven't considered. TLDR : If one is in a high tax bracket AND has a large brokerage (post tax) account, one can decrease the cost of a margin loan interest by ~half by subtracting the investment expenditure (margin loan interest) against non-qualified dividends. Background : I am starting to consider retirement in the next few years (by early to mid fifties). My investment philosophy has been const...
by Dirghatamas
Tue Oct 05, 2021 5:49 pm
Forum: Personal Consumer Issues
Topic: Inexpensive and simple foods
Replies: 141
Views: 15242

Re: Inexpensive and simple foods

For food, I like the ideas of simple and healthy but not of cheap. I think saving money on food is being penny wise and pound foolish if it involves unhealthy food choices. US commercial agriculture + large scale animal production allow several questionable practices just to increase efficiency/ reduce costs. Fast food/ processed food is loaded with cheap calories: soybean oil, corn syrup, cheap carbs, questionable preservatives, pesticide residue.. The total cost of healthcare + loss of "health span" if one suffers poor health in later years from a lifetime of this type of food consumption is ORDERS more than the minor saving in food cost. Majority of US adults now suffer from chronic, lifestyle diseases like diabetes/pre diabete...
by Dirghatamas
Mon May 31, 2021 7:39 pm
Forum: Personal Investments
Topic: Comparing VTI and VTSAX expense ratio over long periods
Replies: 86
Views: 14425

Re: Comparing VTI and VTSAX expense ratio over long periods

I twisted my ankle a bit on a morning trail run, so immobile for the rest of the day (what luck on this holiday). So I went and actually looked at the data. Instead of guessing the impact of several miniscule factors (ER cost diff, reinvestment date diff, bid/ask spread impact, NAV premium/discount) which sometimes help and sometimes hurt the two share classes (MF vs. ETF) in subtly different ways, why not go to the horse's mouth and see what Vanguard shows ? Vanguard website has fund performance -> growth of 10,000 dollars. The longest dataset it shows is over the last 10 years. As of 5/31/2021 it shows Total Stock Market Index Fund Admiral Shares: $37,743.69. For ETF class $37,744.89. ETF ahead by 0.003% S&P 500 Index Admiral: $38,213...
by Dirghatamas
Sat May 22, 2021 3:45 pm
Forum: Investing - Theory, News & General
Topic: Theory: Creating Small Leverage using Estimated Taxes Arbitrage
Replies: 26
Views: 3179

Re: Theory: Creating Small Leverage using Estimated Taxes Arbitrage

I wanted to close by recording what actually happened this year. Again, the basic idea was to do withholdings correctly but beyond that, not get too stressed if you owed IRS some money because the "penalty" for underestimating your taxes till the payment deadline, is just interest. To see how this idea worked out for 2020 Taxes, I looked at the total returns in US stocks and International Stocks for the past year. Latest (in terms of total returns) I could find was as of 4/30/2021 from TD Ameritrade Research Website. So, 1 year total returns 4/30/2020-> 4/30/2021 are US Total Stocks: VTI 51.24%. 6 month total return 30.97% International Total Stocks: VXUS 46.18% 6 months total return 28.01% This compares to the 3% annual interest ...
by Dirghatamas
Thu May 13, 2021 4:37 pm
Forum: Personal Finance (Not Investing)
Topic: Fidelity Brokerage -> Credit card payment BKM/ issue
Replies: 17
Views: 2403

Re: Fidelity Brokerage -> Credit card payment BKM/ issue

I'm not aware of any brokerage that has a credit card integrated as a product even close to Fidelity. That may very well be true, but is not a high bar. I backpack a lot and tried a spork (spoon+ fork) when they came out so one could reduce the backpacking weight and cooking utensils a bit. It was terrible at being a spoon and terrible at being a fork. I chucked the stupid thing and went back to my trusty backpacking set up. The bar should NOT be whether the Fidelity integration is better than say Schwab or other brokerages (it may very well be), the objective question is how is it better than a non-integrated (Brokerage + external bank+ bank's credit card) solution. Time to pay CC: I thought integration may lead to a faster time Fidelity-...
by Dirghatamas
Thu May 13, 2021 4:04 pm
Forum: Personal Finance (Not Investing)
Topic: Fidelity Brokerage -> Credit card payment BKM/ issue
Replies: 17
Views: 2403

Re: Fidelity Brokerage -> Credit card payment BKM/ issue

Broken Man 1999 wrote: Wed May 12, 2021 5:45 pm Until CMA accounts are serviced from beginning to end by a brokerage, with no intermediate players, they just don't seem attractive to me.
Broken Man 1999
Ding, ding, ding. Could not agree more. An integrated Brokerage + Bank + Credit Card + CMA sounds awesome but is probably a Unicorn (atleast at present).