Search found 1283 matches

by 9-5 Suited
Wed Mar 27, 2024 4:31 pm
Forum: Personal Finance (Not Investing)
Topic: Why does a discussion of Financial Planning almost always turns into buying Whole life insurance?
Replies: 54
Views: 2847

Re: Why does a discussion of Financial Planning almost always turns into buying Whole life insurance?

In the event you ever want financial advice, www.adviceonlynetwork.com is a really good resource. You can find advisors who specialize in every niche, including estate planning (some are attorneys I think). The advisors all charge simple fee for advice models with no insurance sales garbage or AUM fees.
by 9-5 Suited
Sun Feb 18, 2024 12:39 pm
Forum: Investing - Theory, News & General
Topic: TIAA-CREF funds to be re-named "Nuveen"; some TC funds will have SALES LOADS?
Replies: 50
Views: 6214

Re: TIAA-CREF funds to be re-named "Nuveen"; some TC funds will have SALES LOADS?

It’s in moments like this that my admiration of John C. Bogle is dialed up from 10 to 11.
by 9-5 Suited
Thu Jan 25, 2024 2:03 pm
Forum: Personal Finance (Not Investing)
Topic: Most popular boglehead withdrawal strategy
Replies: 117
Views: 13140

Re: Most popular boglehead withdrawal strategy

Rick Ferri has a great quote about index investing that I feel applies more and more to retirement withdrawal strategies as well after having gone through the ringer on them. Original A successful index fund investor goes through four phases: 1) Darkness - takes advice from everyone; 2) Enlightenment - realizes a market return is superior to their return; 3) Complexity - overdoing everything to find optimal; 4) Simplicity - invests in a few total market funds Addendum A successful pre-retiree goes through four phases: 1) Darkness - has no idea how to do this decumulation thing; 2) Enlightenment - sees the 4% rule and has a rough idea of realistic spending; 3) Complexity - reads every article on ERN and subscribes to every FIRE blogger, accu...
by 9-5 Suited
Tue Jan 02, 2024 9:02 pm
Forum: Investing - Theory, News & General
Topic: If you retired using the 4% rule and the market crashed 50% a week later?
Replies: 100
Views: 16595

Re: If you retired using the 4% rule and the market crashed 50% a week later?

This hypothetical exposes a challenge with the idea of fixing a withdrawal amount from Day 1 portfolio balance. In theory, an investor who sets their 4% rate on the day before the crash and an investor who is the same in every respect except they set their 4% rate the day after the crash would take out dramatically different “safe” withdrawal amounts.

Clearly that’s bogus, so it should tell you something about the reality of flexibility being a part of retirement planning and also about valuations being an important component of reasonable withdrawal rate planning.
by 9-5 Suited
Thu Dec 28, 2023 7:18 pm
Forum: Investing - Theory, News & General
Topic: Replace Bonds With International Stocks?
Replies: 210
Views: 26042

Re: Replace Bonds With International Stocks?

Taking into account the totality of the learnings from Prof. Cederburg over his many papers and podcast appearances, I have distilled it down to these. And then I stop worrying too much about the details.

1. Don't go too heavy on bonds.
2. If using bonds, prefer inflation-protected ones.
3. Strongly prefer a global stock orientation vs. a US only one.
4. Lean a little conservative on withdrawal rates if you think the US is just 'one country of many' in the historical sample.
by 9-5 Suited
Mon Dec 18, 2023 5:46 pm
Forum: Personal Finance (Not Investing)
Topic: Fee based retirement/tax planner/consultants
Replies: 22
Views: 2336

Re: Fee based retirement/tax planner/consultants

You're looking for an "advice-only" financial advisor, of which there are many. And many are Bogleheads themselves or Boglehead-centric in their approach to planning because the conflict of interest is no longer present (and they can freely recommend index funds, low-cost insurance, etc.).

https://adviceonlynetwork.com/
by 9-5 Suited
Sun Dec 10, 2023 8:39 am
Forum: Investing - Theory, News & General
Topic: My Case Against Factor Investing
Replies: 93
Views: 19564

Re: My Case Against Factor Investing

When it comes to factors, what seems to matter is: 1. Are professional investors aware of them 2. Are they very simple to invest in If you can answer yes to both of these, such as value or growth, it’s very hard to make a case for over performance. Why? Professional investors are definitely aware of stocks, yet they still use bonds in some of their portfolios even though it’s likely that stocks will perform better on long timescales. Not everyone has the same objectives when they are investing. I am a factor investor, so consider this something of a devil’s advocacy point. This stock vs. bond comparison seems to betray something peculiar about factor advocacy. With stocks and bonds, yes we recognize a risk vs return difference, and therefo...
by 9-5 Suited
Mon Oct 16, 2023 4:53 pm
Forum: Investing - Theory, News & General
Topic: submit ?s on small-cap value [Bogleheads® Live]
Replies: 19
Views: 3558

Re: submit ?s for Wes Crill [Bogleheads® Live]

Excited for this guest! I'm curious when long-term investors are making financial planning assumptions, how (if at all) should they be adjusting their expected returns if they are "factorheads" who invest in small/value/momentum etc. And should they plan for more volatility in their outcomes?
by 9-5 Suited
Fri Oct 06, 2023 3:54 pm
Forum: Personal Investments
Topic: Dr. William Bernstein on Bonds
Replies: 106
Views: 23073

Re: Dr. William Bernstein on Bonds

Thinking about this, unlike a TIPS ladder LTPZ may not neutralize the risk of the Fed continually raising rates in a high inflation environment over a lifetime. And it is expensive at 0.20%. Not to mention a young investor may bail on it if it keeps going down (way down this year). Maybe if the Fed was not able or willing to raise rates, LTPZ would make sense but it seems to me that it doesn't offer the inflation protection that it sells. I wish all of the investing books that I have read talked about what to do about the Fed, and how to time the bond market based on what the Fed does and what it says it will do. Not sure how the Swedroe 20 basis points rule applies with TIPS and yield curve inversion, either. It's true if you only held LT...
by 9-5 Suited
Fri Oct 06, 2023 3:46 pm
Forum: Investing - Theory, News & General
Topic: My Dream Annuity by Nathan Dutzmann
Replies: 93
Views: 9143

Re: My Dream Annuity by Nathan Dutzmann

"Fee-only" advisors could eliminate the conflict of interest by charging for their services like every other professional service charges. It's totally ridiculous to build features into products just so it fits the net worth destroying model of 1% advisors. Just saying out loud that there's a conflict of interest preventing these advisors from recommending the products that are right for their clients because it harms their pocketbooks should tell you everything you need to know that "fee-only" and "fiduciary" simply aren't enough. But anyway, with the rant over, I do really wish there were an inflation-adjusted annuity and I would be among those who would take a haircut on the income stream sufficient enough t...
by 9-5 Suited
Fri Aug 25, 2023 3:10 pm
Forum: Personal Finance (Not Investing)
Topic: Medicare Advantage Plan / Dr. Ordered Test "Denied"
Replies: 102
Views: 9493

Re: Medicare Advantage Plan / Dr. Ordered Test "Denied"

I’m going through this with my mom right now. She’s had multiple things denied. Prescription medication, tests, and outpatient treatments. All things she used to get without issue on traditional Medicare, but after recently switching to an MA plan now are suddenly problems.

It’s deeply disturbing honestly. But, we’re about to start the appeals process. I hope that is successful, but I’m not holding my breath.
by 9-5 Suited
Tue Aug 15, 2023 6:48 pm
Forum: Investing - Theory, News & General
Topic: What do you guys think about DFA lately?
Replies: 79
Views: 9919

Re: What do you guys think about DFA lately?

DFA ETFs are available now for individual investors who can purchase them directly, without having to go through an Advisor. Avantis, a subsidiary to American Century, has hired a bunch of former DFA employees and they use strategies very similar to DFA, their ETFs are also available to individuals for direct purchase. The DFA and Avantis mutual funds do need an Advisor to access. But given the choice between buying the same fund in ETF or in mutual fund form, I would most likely choose the ETF anyways, even if the mutual funds were available for direct purchase. So not sure what your complaint is. Thank you for correcting that. I didn’t realize the ETF list was now this extensive. I suppose I am no closer to resolving the mystery though. ...
by 9-5 Suited
Tue Aug 15, 2023 4:03 pm
Forum: Investing - Theory, News & General
Topic: Why invest in corporate bond funds?
Replies: 66
Views: 8707

Re: Why invest in corporate bond funds?

secondopinion wrote: Tue Aug 15, 2023 4:00 pm But seriously, volatility of portfolio value is not the only risk.
100% agreed - it's only relationship to risk in my personal framework is that higher volatility can lead to higher dispersion of outcomes, which could cause a cash shortage at the time the investment is needed. Hence I take a safety-first and duration matching / liability matching approach to setting my AA, and I don't pay too much attention if any at all to volatility metrics other than just to inform my estimates of possible future outcomes at specific time horizons.
by 9-5 Suited
Tue Aug 15, 2023 4:00 pm
Forum: Personal Finance (Not Investing)
Topic: Rent Payment with a Credit Card Quesiton
Replies: 9
Views: 666

Re: Rent Payment with a Credit Card Quesiton

I have taken advantage of this before in two ways.

The first was when I could pay (large) condo HOA payments on a credit card with a $5 processing fee, so the arbitrage was obvious and immediate.

The second was more of a splurge, but I was able to buy my way into a high-value premium status with my primary airline by paying a few months rent on the card at a 2% fee. Got a lot of valuable travel perks that offset only about 50% of the cost in raw dollar terms, but let me travel in more premium seats, get faster boarding, check-in, etc.
by 9-5 Suited
Tue Aug 15, 2023 3:53 pm
Forum: Investing - Theory, News & General
Topic: Why invest in corporate bond funds?
Replies: 66
Views: 8707

Re: Why invest in corporate bond funds?

secondopinion wrote: Tue Aug 15, 2023 3:45 pm
9-5 Suited wrote: Tue Aug 15, 2023 3:41 pm
secondopinion wrote: Tue Aug 15, 2023 3:28 pm That is why I look at my objectives and not just the Sharpe Ratio.
I, for one, would prefer that my friends and family remember me as the person with the highest Sharpe ratio they ever knew!
But what good is "risk-adjusted returns" if not all volatility will impact me similarly? Risk is more than just what happens to my portfolio balance.
Did I really have to denote that the prior post was a joke? :beer I think 1% of all the people I know even know who Bill Sharpe is ...

I am a firm believer that volatility isn't risk, but rather the probability of not achieving a goal is risk. So no quibbles here.
by 9-5 Suited
Tue Aug 15, 2023 3:41 pm
Forum: Investing - Theory, News & General
Topic: Why invest in corporate bond funds?
Replies: 66
Views: 8707

Re: Why invest in corporate bond funds?

secondopinion wrote: Tue Aug 15, 2023 3:28 pm That is why I look at my objectives and not just the Sharpe Ratio.
I, for one, would prefer that my friends and family remember me as the person with the highest Sharpe ratio they ever knew!
by 9-5 Suited
Tue Aug 15, 2023 3:38 pm
Forum: Investing - Theory, News & General
Topic: Zero Coupon Treasuries
Replies: 7
Views: 1000

Re: Zero Coupon Treasuries

Meanwhile, the yield to maturity on Treasuries assumes you can reinvest the coupons at the prevailing interest rate. I used to think that as well but then someone pointed out the paper at https://www.economics-finance.org/jefe/econ/ForbesHatemPaulpaper.pdf which says at the top This note addresses a common misconception, found in investment texts and popular investment education literature, that in order to earn the yield to maturity on a coupon bond an investor must reinvest the coupon payments. We identify a sample of text and professional sources making this claim, demonstrate that yield to maturity entails no assumption of coupon reinvestment, discuss a cause for this confusion and offer a possible remedy. Very interesting read, thank ...
by 9-5 Suited
Tue Aug 15, 2023 3:31 pm
Forum: Investing - Theory, News & General
Topic: What do you guys think about DFA lately?
Replies: 79
Views: 9919

Re: What do you guys think about DFA lately?

Not sure if this will be a controversial take ... I should preface by saying that not only am I unopposed to factor investing, I do it myself. But the closer I've gotten to the financial advisory industry, the more I've kept hearing every single darn advisor (even ones whose investing acumen I find extremely suspect) pitching DFA and becoming a DFA advisor. This has gotten my Bogleheads antennae buzzing, as I am starting to think it's really become a way for advisors to market access to some kind of "exclusive secret sauce" that "you can only access through me". I just simply don't believe DFA offers an ex-ante premium above and beyond what an investor can now buy on his own for cheaper prices (and of course, without mai...
by 9-5 Suited
Tue Aug 15, 2023 3:21 pm
Forum: Investing - Theory, News & General
Topic: Why invest in corporate bond funds?
Replies: 66
Views: 8707

Re: Why invest in corporate bond funds?

[I sometimes fool around with historical numbers myself but take my own results with a grain of salt ...] (truncated) All great thoughts, and yes absolutely this optimization stuff is incredibly time-period sensitive and seemingly changes frequently. It qualifies as "majoring in minors" since this is the stuff people who have already figured out all the big stuff debate mostly to amuse themselves and tickle intellectual curiosity. It's largely meaningless with a zoomed out lens. Interestingly, over the last 20 years that proposed portfolio of 48% corporates, 35% treasuries, and 17% S&P500 was completely trounced on Sharpe Ratio and total return by a standard 60/40 of S&P and Treasuries. Someone taking the advice of the zo...
by 9-5 Suited
Tue Aug 15, 2023 3:06 pm
Forum: Investing - Theory, News & General
Topic: Zero Coupon Treasuries
Replies: 7
Views: 1000

Re: Zero Coupon Treasuries

Yes, zero coupon bonds will give you a fixed nominal value at maturity. Also yes, you have to gross up the nominal amount needed for any tax paid along the way if held outside a tax-advantaged returement account.

Because they have no coupons, zeros have no reinvestment risk. Meanwhile, the yield to maturity on Treasuries assumes you can reinvest the coupons at the prevailing interest rate. I'm guessing the market thinks that's unlikely, as rates should come down at some point, so that may account for the difference in perceived yield you're seeing.

Other bond experts will weigh in I'm sure!
by 9-5 Suited
Thu Aug 10, 2023 1:29 pm
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905681

Re: International (Non-US) versus US Equities (The "Arguments")

There is a continuum of choices , not zero, 20%, or market cap and higher. It is a diversification decision, not a choice of US exceptionalism or valuation-based market timing or global market cap or a compromise between those. Diversification is a risk management technique, as described in the investopedia article referenced above. That's a nice framework, but I genuinely don't believe that's how the majority of people arrive at their choice. I don't think it's some detailed review of risk exposures yielding a specific outcome on the continuum. If you popped the hood on international allocations in Boglehead IPS's, I think you'd find super high percentages of people with 0%, 20%, 30%, and 40% exactly. So it's not unfair to roughly categor...
by 9-5 Suited
Thu Aug 10, 2023 12:58 pm
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905681

Re: International (Non-US) versus US Equities (The "Arguments")

LadyGeek wrote: Thu Aug 10, 2023 12:54 pm Before this discussion gets contentious, do you (or anyone else) have suggested wording to put things in an appropriate perspective?
I'm personally a 40% international person, but I think a "steelman" for the ~20% position is that it delivers a lot of the diversification benefit to protect against the possibility of US underperformance while still retaining the advantages of a US-dominant portfolio (lower cost, more tax efficient, less currency risk, etc.).
by 9-5 Suited
Thu Aug 10, 2023 12:47 pm
Forum: Investing - Theory, News & General
Topic: Why invest in corporate bond funds?
Replies: 66
Views: 8707

Re: Why invest in corporate bond funds?

It's tough to find great empirical evidence that corporate bonds are better than a combination of stocks and treasuries. Usually most backtests will show the stocks/treasuries having similar or better performance with lower portfolio volatility. I think the common ratio is something like 3% stocks / 7% treasuries to replace a 10% corporate bond position and achieve these superior risk-adjusted results. This is further supported by expert opinion on the matter, which tends to fall into the camp of preferring safe bonds (Bernstein, Swedroe, etc.). I think there are (at least) three reasonable arguments for holding them: 1. Appeal to simplicity, since it doesn't matter that much. If you have 30% in intermediate treasuries vs. 30% in total bond...
by 9-5 Suited
Thu Aug 10, 2023 12:28 pm
Forum: Investing - Theory, News & General
Topic: International (Non-US) versus US Equities (The "Arguments")
Replies: 5351
Views: 905681

Re: International (Non-US) versus US Equities (The "Arguments")

22 pages in, was the argument resolved to the satisfaction of all parties?
by 9-5 Suited
Tue Aug 08, 2023 2:32 pm
Forum: Personal Finance (Not Investing)
Topic: What real return you use when calculating time to retirement
Replies: 43
Views: 3944

Re: What real return you use when calculating time to retirement

No matter what return you select for the expected outcome, I think the really critical thing to do is to then see the range of outcomes that could arise from that mean expectation. Otherwise you won't be able to ask yourself all the right questions on risk tolerance and how your plan would react to different possible futures. For example, if your mean expecteed real return on a global stock portfolio is 4.5% (which would be roughly a 1/CAPE valuation-based approach), you could have a 10th percentile outcome after X years of say 0.5% and a 90th percentile outcome of say 8.5%. I made up those numbers, but something along those lines is what you'll see. So the relevant questions become (1) is your plan robust to all of those future possible re...
by 9-5 Suited
Fri Aug 04, 2023 1:48 pm
Forum: Personal Investments
Topic: Tax strategies for taxable accounts -bogle newbie
Replies: 11
Views: 1557

Re: Tax strategies for taxable accounts -bogle newbie

So to make a long story short I received a windfall of ~ $900,000 in a trust. Currently this money is all in a taxable account. I'm very concerned about taxes and am still trying to learn as much as I can. I really don't want to have a financial adviser and I have invested in the Bogle method with Index Funds and ETFs to be more tax efficient. Last year I tried tax loss harvesting and have -$25,000 carrying over from last year to this year. I'm not sure how long this will last or what a good amount of TLH is in order to get the benefits from $900,000. I've read the Bogle TLH wiki, tax wiki, and plenty of posts about this topic, but would just like further insight. I'm not planning on selling anything and getting capital gains, just holding...
by 9-5 Suited
Wed Aug 02, 2023 3:28 pm
Forum: Investing - Theory, News & General
Topic: Valuations are Completely Useless and Meaningless
Replies: 260
Views: 14849

Re: Valuations are Completely Useless and Meaningless

Professor Robert Merton mentioned on a podcast interview that if one investor holds $1,000,000 in a 0.00% real yield environment and the other holds $1,000,000 in a 3.00% real yield environment, they are not equivalently wealthy. And valuations are the reason. I see no compelling reason why that logic should apply exclusively to bonds and not stocks. The logic would apply if stocks were more like bonds, but they are not. Bond interest payments are contractually guaranteed. Bonds automatically adjust to interest rate changes, which lowers risk. We don't know future earnings or dividends on stocks. We can guess, estimate, model, but that's not the same. Stocks do not automatically adjust as bonds do. Multiples can change. Of course, the lack...
by 9-5 Suited
Wed Aug 02, 2023 2:22 pm
Forum: Investing - Theory, News & General
Topic: Interrogating the size and value factors
Replies: 647
Views: 54385

Re: Interrogating the size and value factors

Forum contributor Ben Mathew has made these series of points a few times, but they resonate very much with me in the context of this discussion. It's interesting to note that if small/value were indeed viewed as pure risk factors, then it would be similarly common to see people tilt toward them and away from them based on risk tolerance. This occurs with stocks and bonds, where two investors may be 90/10 vs. 30/70. But you never really see a factor as risk factors believer tiliting to large growth. It's just a curiosity, is all. The common retort is often an appeal to 'factor diversification', but this is a difficult argument to really see through to the end because diversification is something every investor should want. Therefore if a fac...
by 9-5 Suited
Wed Aug 02, 2023 2:08 pm
Forum: Investing - Theory, News & General
Topic: Valuations are Completely Useless and Meaningless
Replies: 260
Views: 14849

Re: Valuations are Completely Useless and Meaningless

The closer your plan is to the edge, the more I believe valuations impact you personally. If your plan could survive a long period of 0-2% real returns on a balanced portfolio, then you could have the entire framework of valuations zapped from your mind like with that Men in Black memory tool, and it wouldn't make much difference. But if you live in a world where the CAPE10 is above 35, and your plan requires 5% real returns in order to succeed, then you should really think twice about the conditional probability of success. If on the other hand the CAPE10 is below 20 and your plan requires 5% real returns in order to succeed, there's a pretty solid chance you're going to be fine. In other words, I do use valuations to make a mean forecast ...
by 9-5 Suited
Sun Jul 30, 2023 8:12 pm
Forum: Personal Finance (Not Investing)
Topic: Personal spending and inflation
Replies: 30
Views: 2469

Re: Personal spending and inflation

I understand the points others are making about the proper way to do the comparison between CPI or PPI and your spending. But I think they are missing the point you're making, which I completely agree with. Since I know that my spending over long periods of time increases far more slowly than CPI, it would be reasonable to include that fact in my spending model when making predictions about the future. The comparison is not between our personal rates of inflation and CPI/PPI but between our predicted and actual personal rates of inflation. I personally keep my spreadsheet assuming 3% as yet another conservative assumption. But over longer periods of time, I know that 2.5% difference compounds quite a bit and probably makes my models overly...
by 9-5 Suited
Sun Jul 30, 2023 8:04 pm
Forum: Personal Finance (Not Investing)
Topic: Personal spending and inflation
Replies: 30
Views: 2469

Re: Personal spending and inflation

dbr wrote: Sun Jul 30, 2023 7:47 pm
So, relax and be flexible. Things come and go.
All good points. I am probably as relaxed and flexible a person as you’ll find, but even the most flexible person and plan requires a starting point best-estimate assumption :) This finding caused me to challenge whether or not “current spending plus CPI” is actually the right starting point for us. I think with a high discretionary spending budget like we have, it’s easy to keep spending growth below general inflation levels without feeling any real suffering. This 5 year data snapshot is one piece of evidence that might be true.
by 9-5 Suited
Sun Jul 30, 2023 7:24 pm
Forum: Personal Finance (Not Investing)
Topic: Personal spending and inflation
Replies: 30
Views: 2469

Re: Personal spending and inflation

Everyone at work knows my pet phrase: all models are wrong, some are useful. I instantly became suspicious when a model gives me a answer that I like. I know what confirmation bias is. You have a rather light model, it is giving you answers that you like. This leaves me deeply suspicious. Obviously no one knows each other here, but I can assure you this is very far from the case. The plan is an ABW-like approach that is robust to the 5%tile of Monte Carlo simulations, uses a mean real global equity return of ~4%, assumes no raises, $0 bonuses, takes an 80% projected haircut to Social Security, and assumes no inheritances. So, hopefully that gives you the sense that this isn't a doe-eyed plan seeking to squeak by with cheat codes. This is t...
by 9-5 Suited
Sun Jul 30, 2023 6:09 pm
Forum: Personal Finance (Not Investing)
Topic: Personal spending and inflation
Replies: 30
Views: 2469

Re: Personal spending and inflation

So, to be specific, you recalculated 2019 to 2022 CPI for your region excluding housing? This isn’t impossible, but it is a complex enough task that I doubt it. The numbers are all there. On the second point - do you think your standard of living has decreased? This is the critical point of PPI. It runs much lower then CPI due to the substitution effect. No idea here how one would calculate this without including housing. CPI assumes a constant bundle of items consumed over a period of time. Over COVID people’s actual purchases changed drastically. Did yours? Definitely not - this was a 5 minute exercise using high level CPI figures. But I live in NYC, so I very much doubt we had lower than national non-housing inflation. The reason I care...
by 9-5 Suited
Sun Jul 30, 2023 6:00 pm
Forum: Personal Finance (Not Investing)
Topic: Personal spending and inflation
Replies: 30
Views: 2469

Re: Personal spending and inflation

OP, Isn't it obvious to you that you have nothing in common with the average folks? For example, you do not live paycheck to paycheck. So, why should it surprise you that the official "inflation" rate that deal with average folks has little relevance to you? You just do not spend like the average folks. This has been obvious to me long ago. My personal inflation rate has very little relationship to the official inflation rate. KlangFool I didn't realize the extent to which we normalized our dollar spending within a very narrow band. I figured inflation still applied to us since it is just the rising price level of a basket of goods. We made no active intention to keep our spending within this narrow range. It was just the result ...
by 9-5 Suited
Sun Jul 30, 2023 5:33 pm
Forum: Personal Finance (Not Investing)
Topic: Personal spending and inflation
Replies: 30
Views: 2469

Re: Personal spending and inflation

I assume you are using cash accounting rather than accrual accounting. For example, how are you treating housing costs? For example, you need to keep track of depreciation and imputed rent. While you don’t have to pay for a new roof this year you will be paying for one eventually. Which CPI index are you using? The generic country wide one or the one specific to your region? And why CPI instead of the more accurate PPI? I excluded housing from this (as noted in the OP) because I was specifically curious about our non-housing expenditures for this exercise. I have no trouble believing non-mortgage housing costs generally keep up with stated inflation. I'm happy to look at it with PPI lens - this was just national annual inflation figures. B...
by 9-5 Suited
Sun Jul 30, 2023 5:19 pm
Forum: Personal Finance (Not Investing)
Topic: Personal spending and inflation
Replies: 30
Views: 2469

Re: Personal spending and inflation

stevewolfe wrote: Sun Jul 30, 2023 5:06 pm You''re experience seems roughly consistent with the "Retirement Spending Smile" I've been reading about in relation to my non-rolling TIPS ladder from early retirement to Social Security. Details here: https://retirementresearcher.com/retire ... ing-smile/. Presently, my TIPS ladder has a constant, real amount per year with no annual adjustment up... I can across this concept while researching and I'm curious to see how your experience compares to others here...
Funny, you're absolutely right that our real-dollar spending pattern resembles very closely the early years of the retirement spending "smile" starting at at 65 ... except I'm 37 :) Not sure what to make of that!
by 9-5 Suited
Sun Jul 30, 2023 4:32 pm
Forum: Personal Finance (Not Investing)
Topic: Personal spending and inflation
Replies: 30
Views: 2469

Personal spending and inflation

We keep pretty detailed spending records, so out of curiosity I went back and checked our spending for the past 5 years to see whether or not is loosely tracks with inflation (a common default assumption for financial planning). I was a little surprised to see just how much it did not. Since this is one 5 year sample for one person, it's hardly representative or predictive (even perhaps for us), but it did make me wonder if perhaps we anchor to certain monthly spending amounts regardless of inflation and kind of adapt as needed by buying some cheaper things, doing expensive things less frequently, or substituting cheaper options. Spending figures below exclude housing but include everything else. 2023 is annualized based on Jan-July figures...
by 9-5 Suited
Sat Jul 22, 2023 9:14 am
Forum: Investing - Theory, News & General
Topic: Boglehead Retirement Age Distribution
Replies: 50
Views: 8450

Re: Boglehead Retirement Age Distribution

I am under 40 and left my prior career with enough money to be financially independent, but I chose to jump into a lower paying but more rewarding 'encore career'. So I don't really consider myself "retired" and therefore didn't sign up on the thread.

I really don't intend to start up all the heated arguments about what is "retired" ... but for the purpose of this graph, does it have a definition? Or is it up to the user to self-define?
by 9-5 Suited
Sat Jul 22, 2023 9:06 am
Forum: Personal Consumer Issues
Topic: Keeping discreet about net worth after house purchase
Replies: 50
Views: 4409

Re: Keeping discreet about net worth after house purchase

alwaysonit wrote: Sat Jul 22, 2023 8:52 am
I would rather be discreet about my net worth after the purchase?
Ideally people would think I have a mortgage to pay and thus respect my frugality.
How much is this house? I do understand part of the issue, which is that snoopy people will head to Zillow and can see that you bought a $2.5M house or whatever, and that can be awkward. But if it's more of a slightly upper end of normal house, it's nothing to worry about at all. People with slightly above mid-range incomes buy homes approaching $1M in some areas since it only suggests you and your partner can cobble together about $200K for a downpayment.

And in all likelihood, you're thinking about this a lot more than other people are. But that doesn't mean the feeling isn't real.
by 9-5 Suited
Fri Jul 14, 2023 3:09 pm
Forum: Investing - Theory, News & General
Topic: Total Portfolio Allocation and Withdrawal (TPAW)
Replies: 690
Views: 172337

Re: Total portfolio allocation and withdrawal (TPAW)

The ceiling option in TPAW Planner is something along these lines, but a key aspect of the situation you've outlined is that legacy is not valued. The ceiling in TPAW Planner will push un-needed withdrawals above the ceiling back into the portfolio where it will protect future withdrawals from dropping too low and also increase legacy. Because legacy is not valued, that's unlikely to be optimal. Here's what I'm guessing might be a better approach in the case where neither legacy nor spending beyond a ceiling is valued: Let's focus first on a single period (i.e. funding for a single retirement year) and see what might be optimal there. A. If you have enough wealth to fund the max spending ceiling—say $100K—with 100% duration matched bonds, ...
by 9-5 Suited
Thu Jul 13, 2023 3:11 pm
Forum: Investing - Theory, News & General
Topic: Total Portfolio Allocation and Withdrawal (TPAW)
Replies: 690
Views: 172337

Re: Total portfolio allocation and withdrawal (TPAW)

Ben - I'm a TPAW convert and don't think I can ever go back to anything else for planning. As it happened, I was already doing several of the items independently in my planning - most relevant for this question, I was creating a synthetic tranche of spending for each year funded with enough money that a 25%tile outcome would yield the desired spending amount (even though the portfolio was managed as a single whole). My question is about the strategy for excess funds in this scenario. A few assumptions to simplify the question: (1) no legacy goal (2) no desire to spend more than the target amount (i.e. a person content with their life and not needing any more even if markets do well) and (3) the primary stock portfolio is a classic global w...
by 9-5 Suited
Thu Jul 13, 2023 9:02 am
Forum: Personal Investments
Topic: Dr. William Bernstein on Bonds
Replies: 106
Views: 23073

Re: Dr. William Bernstein on Bonds

Thank You for your thoughts. The difference that I should have pointed out is that I'm retired in the deaccumulation phase. I'll qualify in my initial post. A substantial difference indeed! And honestly there's not as much conflict between Dr. Bernstein's thoughts expressed in the podcast and Vineviz's beliefs when the individual is, say, over 65. For whatever reason, I think people mentally downplay reinvestment risk as being less bad than interest rate risk, which makes short-term bonds more appealing. Perhaps it's because reinvestment risk manifests as "I didn't make as much money as I could have" while interest rate risk manifests as "the money in my account is going down!". But as with everything, we all place our ...
by 9-5 Suited
Thu Jul 13, 2023 8:49 am
Forum: Investing - Theory, News & General
Topic: How safe is a 3% SWR?
Replies: 112
Views: 13726

Re: How safe is a 3% SWR?

TPAW Planner uses the current 20 year TIPS yield as the default estimate of the expected real return of bonds. Duration matching hasn't been incorporated into the planner yet. After that's in, a 100% duration matched bond portfolio would effectively be a TIPS ladder. What is the assumption about standard deviation and correlation with equities for the bond portion using 20 year TIPS as the bond proxy (without a duration matching feature)? And would a strict duration matching approach on TIPS where no rebalancing occurs render the typical SD and correlation considerations meaningless because you can know with reasonable certainty your return on that bond in the year when you need the money? So the volatility of the spendable amount would be...
by 9-5 Suited
Sat Jul 08, 2023 4:08 pm
Forum: Investing - Theory, News & General
Topic: The risk of stock and investment horizon
Replies: 113
Views: 10678

Re: The risk of stock and investment horizon

Ben Mathew wrote: Fri Jul 07, 2023 2:01 pm [Removed content for tagging purposes only]
Thanks for the additional explanations! All clear now. For what it's worth, your contributions to this forum are absolutely A+. Whenever I want to learn about a topic, my first course of action has been to Google [topic + Bogleheads + benmathew].
by 9-5 Suited
Fri Jul 07, 2023 9:38 am
Forum: Investing - Theory, News & General
Topic: The risk of stock and investment horizon
Replies: 113
Views: 10678

Re: The risk of stock and investment horizon

This would be true if the bottom of the historical range is the worst stocks can do going forward. That's a problematic assumption because it would imply that there is an arbitrage opportunity with unlimited risk free profits from issuing long term bonds and investing the proceeds in stocks. That's why I think it's important to model the future using returns that acknowledge the possibility of stocks underperforming bonds. Monte Carlo simulations can do this, so I think that's a better guide to financial planning than raw historical US returns. Monte Carlo and mathematical distributions will typically have that over long horizons, the probability of stocks underperforming bonds become small, but the magnitude of the underperformance gets l...
by 9-5 Suited
Thu Jul 06, 2023 6:39 pm
Forum: Investing - Theory, News & General
Topic: The risk of stock and investment horizon
Replies: 113
Views: 10678

Re: The risk of stock and investment horizon

https://imgur.com/PUSnRNv.png Great illustration. Going through an old thread, and wanted to confirm something with you based on this discussion around this chart. First, completely on board with the two primary points: the mean returns cluster closer together more tightly over the long run while the dispersion of dollar returns becomes (much) wider. But lets stipulate for a moment that an investor's goal is to turn $100,000 of capital into at least $419,000 of capital 25 years from now (chosen because the bottom of the 25 year outcome dispersion is $419). The investor intends to make a lump sum investment today and never open the lockbox until the 25 year mark. Could it be said for that investor that the stock investment is actually the c...
by 9-5 Suited
Sat Jul 01, 2023 12:17 pm
Forum: Investing - Theory, News & General
Topic: Paper: "Smart beta" is a mirage due to data mining in backtested indexes
Replies: 115
Views: 10134

Re: Paper: "Smart beta" is a mirage due to data mining in backtested indexes

I don't want to dig carefully into the paper right now so this is "I thought I heard somewhere," but Rational Reminder podcast 176, Is the Value Premium Smaller Than We Thought? interviews Mathias Hasler and links to a paper with the same title, scheduled to be published, here. The abstract is: The construction of the original HML portfolio (Fama and French, 1993) includes six seemingly innocuous decisions that could easily have been replaced with alternatives that are just as reasonable. I propose such alternatives and construct HML portfolios. In sample, the average estimate of the value premium is dramatically smaller than the original estimate of the value premium. The difference is 0.09% per month and statistically significa...
by 9-5 Suited
Fri Jun 30, 2023 8:01 pm
Forum: Personal Consumer Issues
Topic: Home search across multiple states?
Replies: 22
Views: 1518

Re: Home search across multiple states?

It looks like OP is trying to buy a unique house or else they would zoom in on the location first and search the house they want to buy. Do you mind sharing some of the features of the house that necessitates a search across several states? I enjoy searching for houses on Zillow and redfin. I would be happy to post some link for the audience here on your behalf if you tell me some of the parameters of the unique house I'm looking. Always appreciate another set of eyes, although in practice this is just scouting for early info because we won't be buying for a few years. The most unique feature of the house we're looking for is a water view. Not broad ocean necessarily - an bay, inlet, or even large lake is fine. The large geography is reall...
by 9-5 Suited
Fri Jun 30, 2023 4:58 pm
Forum: Personal Consumer Issues
Topic: Home search across multiple states?
Replies: 22
Views: 1518

Re: Home search across multiple states?

That price range is about right for Portsmouth, at least now, though you can easily double that depending on exactly where it's located. MA really depends on exactly what town you're looking at. I don't know much about RI. I'd suggest searching though Remax or the like to get a feel for the offerings. This time of year, you could drive all over Portsmouth, to Kittery, York and up to Portland in a day to get a good look at the areas. Note, though, these areas are always in high demand. You can expect crushes of traffic in the summer, though. Thanks for the confirmation and suggestion. I'll check out Remax as well - we've done a realtor.com search that sends new homes on the market to our email, but I just have such a hard time using picture...
by 9-5 Suited
Fri Jun 30, 2023 3:55 pm
Forum: Personal Consumer Issues
Topic: Home search across multiple states?
Replies: 22
Views: 1518

Re: Home search across multiple states?

It'll be hard to find someone who will handle more than two states, except maybe a RI realtor, who might handle the adjoining CT and MA regions. But even then, you'll be hard pressed to find one that will handle an entire state. It's just too much area to cover. Maine is a lot larger than you expect. And "upstate" NY means different things to people from NY than people out of NY. Albany is upstate. Buffalo is western NY. What are your criteria? Let’s exclude the NY portion because that’s lower probability. We are looking for something on the coast, ideally or or near a body of water. Maine would range from York/Kittery to Portland but no further north. Massachusetts would be north of Boston on the coast or the south coast adjacen...