Search found 109 matches

by MrDogg
Sun Apr 12, 2020 9:22 am
Forum: Personal Finance (Not Investing)
Topic: Why not buy mobile homes instead of overpriced traditional homes?
Replies: 106
Views: 29567

Re: Why not buy mobile homes instead of overpriced traditional homes?

I agree with Jimmy Buffet (excerpt from Migration):

"And mobile homes are smotherin' my keys;
Well I hate those bastards so much.
I wish a summer squall would blow them
all the way up to fantasy land.
They're ugly and square, they don't belong here.
They look a lot better as beer cans."
by MrDogg
Mon May 28, 2018 7:01 am
Forum: Personal Finance (Not Investing)
Topic: Why pay cash for a car?
Replies: 250
Views: 41315

Re: Why pay cash for a car?

Better to get a low interest loan than go cash. It's a time value of money issue.

For example, my last car purchase was financed for 6 years at 0% interest. In addition to obtaining a good out the door price on the car (that's another subject) I got to pay the money back in lower value dollars than on the day of purchase plus I had use of the future payment dollars to invest. That equates to a nice discount.

It's a no brainer really.
by MrDogg
Sun May 27, 2018 8:01 am
Forum: US Chapters
Topic: South Florida Local Chapter
Replies: 628
Views: 213468

Re: South Florida Local Chapter

Hi Miriam,

Please accept this as my RSVP for the July 21st meeting.

Thanks,
Jack
by MrDogg
Thu Jan 25, 2018 3:41 pm
Forum: US Chapters
Topic: Happy Birthday, Taylor!
Replies: 84
Views: 9000

Re: Happy Birthday, Taylor!

Fair winds and following seas.
by MrDogg
Thu Jan 25, 2018 12:28 pm
Forum: US Chapters
Topic: South Florida Local Chapter
Replies: 628
Views: 213468

Re: South Florida Local Chapter

Thank you to all the organizers and presenters at the 2018 South Florida Boglehead Conference. As always, I met many interesting people and learned something new relating to investing. A special thanks to Taylor who through his posts has greatly enhanced my personal portfolio and a Happy Birthday wish as well. The sandwiches and snacks capped off a great event. Looking forward to next years meeting.
by MrDogg
Mon Jan 01, 2018 3:39 pm
Forum: Investing - Theory, News & General
Topic: The Three-Fund Portfolio
Replies: 3895
Views: 2424477

Re: "My Favorite Mutual Fund"

Taylor Larimore wrote: Thu Dec 28, 2017 3:13 pm
Amazon has released the publishing date of my new book, "The Bogleheads' Guide to the Three-Fund Portfolio." It is available for pre-order now. All Royalties go directly to "The John C. Bogle Center for Financial Literacy" (a 501 (c)(3) public charity) so I feel free to make the announcement.
I just ordered my copy.
by MrDogg
Thu Dec 28, 2017 1:54 pm
Forum: Personal Finance (Not Investing)
Topic: Applying for new credit card when credit is frozen?
Replies: 17
Views: 2083

Re: Applying for new credit card when credit is frozen?

Contact the new credit card company and ask which credit reporting agencies they use. Then temporarily unfreeze just those. Sometimes it's just one so you can save a little time and effort.
by MrDogg
Wed Dec 27, 2017 3:03 pm
Forum: Personal Investments
Topic: Is Roth IRA conversion easy with Vanguard?
Replies: 26
Views: 4537

Re: Is Roth IRA conversion easy with Vanguard?

If you are over 70.5 and taking RMDs you must take the RMD first then do the ROTH Conversion.
by MrDogg
Wed Dec 27, 2017 2:45 pm
Forum: Personal Investments
Topic: Automatic RMDs to be effected by Vanguard
Replies: 23
Views: 3508

Re: Automatic RMDs to be effected by Vanguard

So the RMD service properly recognizes that the first distribution (conversion is a distribution) is applied to the RMD. However, completion of the rest of your RMD will take care of your RMD, but you also have an excess contribution to your Roth IRA that must be corrected. In the past there were two ways to fix this: 1) Recharacterize the conversion, then take the full RMD. But starting in 2018, this option is no longer possible, leaving just the following options. 2) The Roth IRA excess is treated as an excess regular Roth IRA contribution that must be removed with allocated earnings and the earnings will be taxable in the year of the conversion. Other alternatives if you have gains to protect on the conversion are to either pay the 6% e...
by MrDogg
Wed Dec 27, 2017 12:21 pm
Forum: Personal Investments
Topic: Automatic RMDs to be effected by Vanguard
Replies: 23
Views: 3508

Re: Automatic RMDs to be effected by Vanguard

As the OP I want all to know that my issue will be resolved by Vanguard today 12-27. The purpose of this post is to make others aware of how I got into trouble so you can prevent it from happening to you. Here's what happened: earlier this year I converted some funds from my tIRA to my ROTH. This was counted toward my annual 2017 RMD. My automatic RMD scheduled for 12-22 amounted to the difference between my total RMD and what had already been distributed. Unbeknown to me, you have to schedule your annual RMD to take place BEFORE you can do a conversion. In other words, you have to satisfy the RMD requirement BEFORE you do a Roth conversion. This transaction somehow hung up the Vanguard system until I was able to work it out with a Vanguard...
by MrDogg
Mon Dec 25, 2017 10:33 am
Forum: Personal Consumer Issues
Topic: Expedia Booking Problems ...
Replies: 11
Views: 1437

Re: Expedia Booking Problems ...

I too learned the hard way. Now I only book directly with the hotel. There is never a problem with reservations, pricing, or if you need to cancel and/or get a refund.

I used to be lured by the gooblykooo points, special memberships, so called discounts, etc. It just isn't worth the hassle. Besides you can negotiate rates when talking directly with a hotel. They will usually give you a senior discount if you ask for it.
by MrDogg
Mon Dec 25, 2017 9:29 am
Forum: US Chapters
Topic: My Christmas Present to You
Replies: 106
Views: 17220

Re: My Christmas Present to You

Taylor.

It's an honor to know you and to have benefited from your continued sage advise. Thank you. Merry Christmas and Happy New Year to you and yours.

Jack
by MrDogg
Mon Dec 25, 2017 7:21 am
Forum: Personal Finance (Not Investing)
Topic: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]
Replies: 889
Views: 85909

Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Does the new tax bill change the capital gains calculation on the sale of your personal residence? Under the old rules the first $250K ($500K if married filing jointly) of capital gains was excluded from tax and you could spend the money on anything (did not have to spend it on a new personal residence). The new tax law does not change the rules you described. However, indirectly, it could increase your marginal long term capital gains rate (on home sale profits above the exclusion amount) compared to the old rules if you (1) live in a state that taxes long-term capital gains, and 2) the newly-imposed federal $10k cap on SALT deductions now prevents you from deducting some or all of this capital gain tax assessed by your state. I reside in...
by MrDogg
Mon Dec 25, 2017 7:17 am
Forum: Personal Investments
Topic: Automatic RMDs to be effected by Vanguard
Replies: 23
Views: 3508

Re: Automatic RMDs to be effected by Vanguard

Mel Lindauer wrote: Sun Dec 24, 2017 3:58 pm Check your transaction tab to see if it shows it being sold. With this new brokerage setup, some things like take a couple of days to show up in your account since it has to go thru the settlement account first and that doesn't show up until the next business day. It's as if the funds are in limbo.
Thanks Mel. Everything I needed was there. It shows being sold.
by MrDogg
Sun Dec 24, 2017 1:22 pm
Forum: Personal Investments
Topic: Automatic RMDs to be effected by Vanguard
Replies: 23
Views: 3508

Re: Automatic RMDs to be effected by Vanguard

Big Dog wrote: Sat Dec 23, 2017 10:54 pm you should be able to go online and see the transaction pending.

I used the auto RMD service and it ran fine on yesterday, and should post on Tuesday.
I just checked the Vanguard website and it does show pending. Probably will get settled on the 26th.
by MrDogg
Sun Dec 24, 2017 1:12 pm
Forum: Personal Finance (Not Investing)
Topic: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]
Replies: 889
Views: 85909

Re: Please Post Tax Bill Questions Here [was Tax Bill Omnibus Thread]

Does the new tax bill change the capital gains calculation on the sale of your personal residence? Under the old rules the first $250K ($500K if married filing jointly) of capital gains was excluded from tax and you could spend the money on anything (did not have to spend it on a new personal residence).
by MrDogg
Sat Dec 23, 2017 3:23 pm
Forum: Personal Investments
Topic: Automatic RMDs to be effected by Vanguard
Replies: 23
Views: 3508

Re: Automatic RMDs to be effected by Vanguard

You could always cancel the instructions and go online and make the withdrawal yourself. Gill If it was scheduled for the 22nd it's a tad late to cancel. One other thing to consider is if OP has made a indirect rollover in the last twelve months. If he hasn't then if he accidentally makes two withdrawals he can re-deposit the extra one back to the IRA to complete an indirect rollover. If he has already used the indirect rollover then he will have no way to correct that error. Having said that my experience with Vanguard is that they do what I tell them to, but they don't update the web-site as fast as might be desired. I would wait until I could check the website on Tuesday afternoon. These are tIRSs that were rolled over to Vanguard sever...
by MrDogg
Sat Dec 23, 2017 3:16 pm
Forum: Personal Investments
Topic: Automatic RMDs to be effected by Vanguard
Replies: 23
Views: 3508

Re: Automatic RMDs to be effected by Vanguard

NotWhoYouThink wrote: Sat Dec 23, 2017 3:11 pm DH has an inherited IRA at Vanguard, and has the RMD automatically set for a date in August. The date he set is the date they sell the designated securities, the actual payment happens a couple (maybe 3) days later.
So maybe in my scenario there is a delay of a few days. I can live with that.
by MrDogg
Sat Dec 23, 2017 3:14 pm
Forum: Personal Investments
Topic: Automatic RMDs to be effected by Vanguard
Replies: 23
Views: 3508

Re: Automatic RMDs to be effected by Vanguard

Gill wrote: Sat Dec 23, 2017 3:06 pm You could always cancel the instructions and go online and make the withdrawal yourself.
Gill
Good idea. This may be my default next week.
by MrDogg
Sat Dec 23, 2017 3:12 pm
Forum: Personal Investments
Topic: Automatic RMDs to be effected by Vanguard
Replies: 23
Views: 3508

Re: Automatic RMDs to be effected by Vanguard

GerryL wrote: Sat Dec 23, 2017 3:02 pm Is it possible that they execute the transaction at close of market, in which case the transaction confirmation is not complete until the next business day? Hope you don't experience any timing issues, but I think you would be wise to give yourself an extra week next year.
You may be right about executing at close of business and confirming on next business day. I'll know this Tuesday.

Agree it would be wise to allow more time. Next year I'll add two more weeks.
by MrDogg
Sat Dec 23, 2017 2:41 pm
Forum: Personal Investments
Topic: Automatic RMDs to be effected by Vanguard
Replies: 23
Views: 3508

Automatic RMDs to be effected by Vanguard

Earlier this year I set up Automatic RMDs on the Vanguard website to occur on 12-22-2017 for both my tIRA and DW tIRA. As of today 12-23 this has not happened according to the site. I just sent Vanguard a message via their site and plan to call them on Tuesday 12-26 to find out why.

Has anyone else experienced this? Because of the timing (weekend and Christmas) am I being too anxious since the 22nd was Friday? In any case I plan on selecting an earlier distribution date next year to insure I have time to correct any problems should they arise. Getting nervous because not meeting the 12-31 deadline is probably going to be a hassle to straighten out.
by MrDogg
Sat Dec 16, 2017 3:38 pm
Forum: Investing - Theory, News & General
Topic: Is anyone putting money aside into Gold?
Replies: 148
Views: 21515

Re: Is anyone putting money aside into Gold?

Mohamed Aly El-Erian, chief economic adviser at Allianz, the corporate parent of PIMCO where he served as CEO and co-chief investment officer (2007-2014). He served as chair of President Obama's Global Development Council (2012-17), and is a columnist for Bloomberg View, and a contributing editor to the Financial Times says your investment portfolio should have at least 5% Gold.

Warren Buffet says 0% Gold.

3FP says 0% Gold

I agree with Buffett and 3FP so I don't have any gold.
by MrDogg
Sat Dec 16, 2017 3:34 pm
Forum: Investing - Theory, News & General
Topic: Buying Real Silver and Gold (Not Bitcoin)
Replies: 201
Views: 28145

Re: Buying Real Silver and Gold (Not Bitcoin)

Mohamed Aly El-Erian, chief economic adviser at Allianz, the corporate parent of PIMCO where he served as CEO and co-chief investment officer (2007-2014). He served as chair of President Obama's Global Development Council (2012-17), and is a columnist for Bloomberg View, and a contributing editor to the Financial Times says your investment portfolio should have at least 5% Gold.

Warren Buffet says 0% Gold.

3FP says 0% Gold

I agree with Buffett and 3FP so I don't have any gold.
by MrDogg
Sat Dec 09, 2017 6:54 pm
Forum: US Chapters
Topic: South Florida Local Chapter
Replies: 628
Views: 213468

Re: South Florida Local Chapter

Hi Miriam,

This is my RSVP for one for the January meeting.

Thanks
by MrDogg
Fri Nov 17, 2017 11:40 am
Forum: Personal Consumer Issues
Topic: Confused!!!! CRCCs or home care..? Help!!
Replies: 12
Views: 1988

Re: Confused!!!! CRCCs or home care..? Help!!

Wife and I have considered a CCRC. There are several nice ones in our area but they are really expensive. The buy-in expense includes long term and final care in the price (they have mini hospitals onsite and some outside doctors come in also). So, when you break it down what you are really paying for is, statistically, the last year or so of your life. Some residents die before needing any care and some get the care past the average stay by a few years. I don't think anyone ever stays in long term or final care more than 3 - 4 years. When you compare the cost of living in a comparable condominium versus a CCRC you realize that you're buying a LTC insurance policy. Probably right for some people. I'm not sold.
by MrDogg
Fri Nov 17, 2017 11:21 am
Forum: Personal Investments
Topic: Finance Simplicity
Replies: 36
Views: 3078

Re: Finance Simplicity

I'll go with Einstein: "Everything should be made as simple as possible, but not simpler." (my underline added).

3FP in tIRA, ROTH, and Taxable accounts
2 credit cards - one may have a problem from time to time
online savings account
checking account
I-Bonds and Short Term bonds for cash reserve or EF, if you will
by MrDogg
Thu Nov 09, 2017 9:48 am
Forum: Personal Finance (Not Investing)
Topic: Annuity Alternative
Replies: 54
Views: 4194

Re: Annuity Alternative

..... and ask what any of this would actually do to make your life more pleasant? A possible alternative, not the same as do nothing, would be just spend a little more money from what you have. We are retired and living a modest middle class lifestyle with monthly Soc. Sec. and business sale proceeds. As yet we have not started withdrawing from our stock/bond/cash portfolio. I was looking for a creative way to increase monthly income by a small amount to blow on some extravagancies (making life a little more pleasant) plus help out a relative in the process. You are right, I could start portfolio withdrawals now to get some extra monthly income without impacting our lifespan balance but I guess I'm having trouble making the transition from...
by MrDogg
Thu Nov 09, 2017 9:02 am
Forum: Personal Finance (Not Investing)
Topic: Annuity Alternative
Replies: 54
Views: 4194

Re: Annuity Alternative

MrDogg wrote: Wed Nov 08, 2017 10:19 am I am going to do one of the following (in no particular order):

Nothing
or
Loan
or
Managed Payout Fund
or
SPIA
I am adding to the list:

DIA
or
QLAC
by MrDogg
Thu Nov 09, 2017 8:53 am
Forum: Personal Finance (Not Investing)
Topic: Annuity Alternative
Replies: 54
Views: 4194

Re: Annuity Alternative

Wade Pfau wrote a column entitled Why Retirees Should Choose DIAs over SPIAs[5]. The short answer is that deferred annuities are the most economically-efficient way to finance the latter years of retirement should a retiree or spouse live a long time. The more technical answer is that DIAs "expand" the retirement income efficient frontier and create opportunities with higher expected returns for a given level of risk. Regarding OP's dilemma, using the concept of Inversion, in any given situation in which a goal or end point is involved, "don't ask what could go right, ask what could go wrong ?" Inverting any dilemma is much more powerful than simply focusing on what is to be gained. In using Inversion, we find that some...
by MrDogg
Thu Nov 09, 2017 8:49 am
Forum: Personal Finance (Not Investing)
Topic: Annuity Alternative
Replies: 54
Views: 4194

Re: Annuity Alternative

I would suggest two things if you move ahead & they really depend on the situation of others involved in the "estate disposition". One, if others find out & only get part of the story, there might be resentment regarding perceived partiality. Two, ensure both the loan & your (& wife's) will handle your wishes. Picking on your words about the estate getting any remaining money -- sounds as if you intend for the loan to be due in full upon your death...or if you die 1st, will your wife get the loan...you see where I'm going I hope. This could unintentionally affect the handling of the estate if not thoroughly thought thru & executed This would be totally transparent, in advance, to all the participants in the es...
by MrDogg
Thu Nov 09, 2017 8:36 am
Forum: Personal Finance (Not Investing)
Topic: Annuity Alternative
Replies: 54
Views: 4194

Re: Annuity Alternative

[/quote]

... it does not resemble anything like an annuity.
[/quote]

Agreed, it does not resemble an annuity.
by MrDogg
Wed Nov 08, 2017 10:19 am
Forum: Personal Finance (Not Investing)
Topic: Annuity Alternative
Replies: 54
Views: 4194

Re: Annuity Alternative

OK guys I think it's time to wrap this up. I want to thank everyone for their responses, they have made some good points and made me think hard about this idea. I am going to do one of the following (in no particular order):

Nothing
or
Loan
or
Managed Payout Fund
or
SPIA

Thanks again for weighing in.

Cheers!
by MrDogg
Wed Nov 08, 2017 10:14 am
Forum: Personal Finance (Not Investing)
Topic: Annuity Alternative
Replies: 54
Views: 4194

Re: Annuity Alternative

Gill wrote: Wed Nov 08, 2017 10:08 am
MrDogg wrote: Wed Nov 08, 2017 9:56 am The reason to lend in this scenario is a mutually beneficial financial transaction.
You are obviously set on doing this, but I still fail to see how it is beneficial to you. You could do the same thing with a 30 year Treasury with far more security. All you're doing is generating some income from cash you hold. There are many ways that can be done, and if you want to think of it as an alternative to an annuity that's fine. I suppose it meets the definition of an annuity as a series of payments, but that's about all it has in common with a SPIA.
Gill
A low interest loan with sweet terms is a benefit to the borrower. In retrospect I probably should not have alluded to the transaction as "an annuity alternative".
by MrDogg
Wed Nov 08, 2017 10:01 am
Forum: Personal Finance (Not Investing)
Topic: Annuity Alternative
Replies: 54
Views: 4194

Re: Annuity Alternative

itstoomuch wrote: Tue Nov 07, 2017 8:44 pm OP,
JMO, your proposal sounds plausible.
YMMV :sharebeer
I thought so too, thanks.
by MrDogg
Wed Nov 08, 2017 10:00 am
Forum: Personal Finance (Not Investing)
Topic: Annuity Alternative
Replies: 54
Views: 4194

Re: Annuity Alternative

HIinvestor wrote: Tue Nov 07, 2017 9:24 pm We gave our relative a significant business "loan," but it ended up being a gift and we didn't get any interest payments. We don't plan to repeat that again. The relative has LOTS of income and assets and we are OK with how it worked out, but it never generated cash flow for us.
Doesn't address OPs question.
by MrDogg
Wed Nov 08, 2017 9:56 am
Forum: Personal Finance (Not Investing)
Topic: Annuity Alternative
Replies: 54
Views: 4194

Re: Annuity Alternative

goingup wrote: Wed Nov 08, 2017 9:11 am One big risk is that the relative will want to pay off early. Not many people want to be tethered to a personal loan for 25 years.

The only reason to lend to a relative is because of familial duty or magnanimity, not to generate a tidy long-term income stream.
The loan agreement has been stated, there is no prepayment consideration. Who says the only reason to lend to a relative is because of familial duty or magnanimity, not to generate a tidy long-term income stream? The reason to lend in this scenario is a mutually beneficial financial transaction.
by MrDogg
Wed Nov 08, 2017 9:51 am
Forum: Personal Finance (Not Investing)
Topic: Annuity Alternative
Replies: 54
Views: 4194

Re: Annuity Alternative

One difference pointed out is that the loan apparently terminates at some fixed number of years with amortization or a balloon payment while an annuity payout terminates with your death. What you are planning might be an alternative source of an income stream but it isn't equivalent to an annuity. One question is what would motivate a relative to undertake an obligation like this? Also I am not impressed by the circular argument of setting the conditions in such a way that all sorts of reasons not to do this are defined away. It's not supposed to be equivalent, it's an alternative or instead of consideration. The motivation is a mutually beneficial transaction. The borrower as part of his normal business obtains bank loans from time to tim...
by MrDogg
Wed Nov 08, 2017 8:37 am
Forum: Personal Finance (Not Investing)
Topic: Annuity Alternative
Replies: 54
Views: 4194

Re: Annuity Alternative

AlohaJoe wrote: Tue Nov 07, 2017 9:14 pm
Now, many people (myself included) feel that the price for that guarantee is too high. That's a perfectly fine opinion. Just as people have different feelings about the risk of equities, people have different feelings about the risk of longevity. But that doesn't mean you've found an "alternative" to annuities. It means that you don't assign a high value to the single most important defining part of an annuity.
[/quote]
Very astute - that's it in a nutshell. I am trying to accomplish a lifetime payout with an investment rather than insurance (and as a bonus helping someone dear to me).
by MrDogg
Wed Nov 08, 2017 8:29 am
Forum: Personal Finance (Not Investing)
Topic: Annuity Alternative
Replies: 54
Views: 4194

Re: Annuity Alternative

itstoomuch wrote: Tue Nov 07, 2017 8:40 pm Once you are in retirement and begin to take Income from your retirement funds; the Retirement Fund becomes a self-initiated annuity. For some it becomes a Multi-year-guaranteed-annuity; For some a fixed annuity; For others a VA; and for us, we split the funds into specific and non-specific types of "annuities" and "pseudo-annuities".
YMMV
Yes it pays out like an annuity but you and your estate still own it.
by MrDogg
Wed Nov 08, 2017 8:25 am
Forum: Personal Finance (Not Investing)
Topic: Annuity Alternative
Replies: 54
Views: 4194

Re: Annuity Alternative

Does this make sense as an income stream alternative to an annuity? No this is not an alternative to an annuity. No matter what you do there is always a ~5% chance the annuity will pay out more money. Your example is not an alternative to an annuity. Annuities are for people with longevity risk aversion -- the people who are worried about that 5% chance of only having Social Security left -- and who don't have enough money (or don't want to wait the extra decade required to save enough money) to self-insure against it. Hard money loans, CD ladders, TIPS ladders, emerging market bonds, and 15-year STRIPS held in paper in a shoe box all are not reasonable alternatives to annuities. Rather than 'alternative' how about 'instead of'' an annuity...
by MrDogg
Tue Nov 07, 2017 8:00 pm
Forum: Personal Finance (Not Investing)
Topic: Annuity Alternative
Replies: 54
Views: 4194

Re: Annuity Alternative

Gill wrote: Tue Nov 07, 2017 7:42 pm Is it also impossible for him to die, get divorced or go bankrupt?
Gill
Yes those are risks, all acceptable to me.
by MrDogg
Tue Nov 07, 2017 7:57 pm
Forum: Personal Finance (Not Investing)
Topic: Annuity Alternative
Replies: 54
Views: 4194

Re: Annuity Alternative

Gill wrote: Tue Nov 07, 2017 7:12 pm The problem most of us see is that you’re basing this on the credit worthiness of one individual. You asked us not to consider this, but that is the flaw in the entire scheme. For any number of reasons, this person may be unable or unwilling to pay you back. If you just want 5% interest for 30 years just buy a long term bond.
Gill
Yes, I am basing this on the credit worthiness of one individual. Buying the bond would work (a good idea) but then I would not be helping out my relative which I really would like to do.
by MrDogg
Tue Nov 07, 2017 7:52 pm
Forum: Personal Finance (Not Investing)
Topic: Annuity Alternative
Replies: 54
Views: 4194

Re: Annuity Alternative

Gill wrote: Tue Nov 07, 2017 7:42 pm Is it also impossible for him to die, get divorced or go bankrupt?
Gill
I have those bases covered. Some are addressed in previous posts on this thread.
by MrDogg
Tue Nov 07, 2017 7:49 pm
Forum: Personal Finance (Not Investing)
Topic: Annuity Alternative
Replies: 54
Views: 4194

Re: Annuity Alternative

Tyler Aspect wrote: Tue Nov 07, 2017 7:20 pm Just for some background information, are you currently withdrawing at 4% of your portfolio asset per year, or is the withdrawal lower than 4%? If your proposed increase withdrawal rate is still below 4% of your total asset then that should not be a problem.
I have not started drawing from my portfolio and plan on starting in about five years at a rate a little below 4%. I won't run out of money unless an unforeseen major catastrophe occurs. I am just exploring ways to increase my monthly "income" while preserving/increasing my estate. I don't have to have the added funds. It would just be icing on the cake.
by MrDogg
Tue Nov 07, 2017 7:40 pm
Forum: Personal Finance (Not Investing)
Topic: Annuity Alternative
Replies: 54
Views: 4194

Re: Annuity Alternative

Mlm wrote: Tue Nov 07, 2017 7:11 pm Would this be a loan to the relative or a loan to his business? Where would you stand in line in case of a bankruptcy?
Personal loan not business. Because of our personal relationship I would be first in line; this is academic as his personal finances are solid and he has a strong track record in a growing business sector.
by MrDogg
Tue Nov 07, 2017 7:32 pm
Forum: Personal Finance (Not Investing)
Topic: Annuity Alternative
Replies: 54
Views: 4194

Re: Annuity Alternative

You're kidding, right? I'm quite serious. What do you see as the pitfall? Said young person may come to a time where they cannot or won't pay you back. Family members become alienated over loans. Money can make people irrational. Don't do it. Don't burden the young person with a loan like this. Go with a nice tidy SPIA. In my original post I stated " I can make a personal loan to a young family member who I know will pay me back guaranteed - with a back up if something should happen to him (in your responses you must take this as a given)" This loan will be used for business purposes which will help him as much as it helps me. In the course of his business he gets bank loans all the time with the attendant pile of paperwork and h...
by MrDogg
Tue Nov 07, 2017 6:52 pm
Forum: Personal Finance (Not Investing)
Topic: Annuity Alternative
Replies: 54
Views: 4194

Re: Annuity Alternative

The SPIA would pay out better if you wait until age 70 or even later, and more so if interest rates go up. You could automate a monthly payment from your IRA at Vanguard. No guarantees, but if 2%, for example, you shouldn't likely run out of money. A balanced fund such as Wellesley, LS conservative, or others with more or less equities might be a simple choice that ought to work. Agreed that the pay out would better the longer I wait and more so if interest rates go up. I understand how the SPIA works. My issues are the low interest rate and if I lose the bet and die early the principal is gone. I would prefer that my heirs get it instead of the insurance company. In your illustration I know I would not run out of money but an even safer, ...
by MrDogg
Tue Nov 07, 2017 6:35 pm
Forum: Personal Finance (Not Investing)
Topic: Annuity Alternative
Replies: 54
Views: 4194

Re: Annuity Alternative

muddlehead wrote: Tue Nov 07, 2017 3:25 pm You're kidding, right?
I'm quite serious. What do you see as the pitfall?
by MrDogg
Tue Nov 07, 2017 6:32 pm
Forum: Personal Finance (Not Investing)
Topic: Annuity Alternative
Replies: 54
Views: 4194

Re: Annuity Alternative

I can imagine ways that the IRS could interpret this as something other than the way you want to characterize it, especially because the proposed borrower is in your will. And you can buy an SPIA with a return-of-premium feature, The IRS calls this an intra-family loan which is allowed. In order to avoid having the IRS contest the loan a promissory note needs to be created along with a fixed repayment schedule with an interest rate that's either at or above the imputed rate in effect which right now is only .40%. My loan would be around 5%. Adding a return-of-premium feature to an SPIA makes the effective interest rate even worse. I can't justify the low return compared to what I am considering, landmines and pitfalls notwithstanding.
by MrDogg
Tue Nov 07, 2017 6:19 pm
Forum: Personal Finance (Not Investing)
Topic: Annuity Alternative
Replies: 54
Views: 4194

Re: Annuity Alternative

Gill wrote: Tue Nov 07, 2017 2:50 pm Could you elaborate on the terms of the loan. Is he amortizing principal? You take it as a given that he can and all pay it back but I see too many landmines as possibilities.
Gill
This would be a simple interest loan amortized over something like 25 years, like a mortgage. If there are possible landmines I'd like to know what they are.