Bogleheads.org

One possibility might be to rent in the better school district. If you have any uncertainty I would caution against buying. It's too big of a purchase. You don't want to be constantly stretched thin or end up with a house you hate. If you rent out the townhouse for now you could eventually move back.

ebeb wrote: ↑Fri Mar 24, 2023 9:37 am I am about to put $50k short term money into the below TIPS. Am I better off keeping in a moneymkt fund or is this better if inflation remains 6%

US Treasury TIP 912828VM9 coupon=0.375% maturity=07/15/2023 Ask=100.47235 YTM= -1.173%

CPI is a lagging indicator based on past 12 months. Based on the last six months inflation is around 3%. What matter is future inflation, which isn't knowable but you would think the gap between nominal Treasuries and TIPS would be the best approximation you have. Your purchase should be determined by the risk you are trying to protect against instead of what you expect inflation to be.

Could you sell one more more of the properties in the trust to build up some cash and also reduce the amount of maintenance cost?

In the case of bonds, diversification doesn't necessarily reduce risk. An extreme example would be adding junk bonds to your portfolio. If you view US Treasuries as the safest, adding international would arguably be a less extreme version where you are getting more countries but that doesn't necessarily mean lower risk.

I'm surprised every modern bank hasn't figured this out by now. I am also surprised the FDIC allows it. I am not sure how much this differs from say CDARS. The more surprising thing to me is the FDIC requires people too jump through hoops for this insurance. Seriously, banking needs to be safe and secure for the system to work, the idea that people with deposits over a certain amount need to constantly try to crawl through their regulated bank's balance sheet to determine if their deposits are safe is ridiculous. If it is this easy to spread your funds around and get 10x insurance, they should just require every bank to do it and then insure everyone up to $2M. That would reduce risk to any particular bank but would it create systemic risk...

I'm surprised every modern bank hasn't figured this out by now. I am also surprised the FDIC allows it. I am not sure how much this differs from say CDARS. The more surprising thing to me is the FDIC requires people too jump through hoops for this insurance. Seriously, banking needs to be safe and secure for the system to work, the idea that people with deposits over a certain amount need to constantly try to crawl through their regulated bank's balance sheet to determine if their deposits are safe is ridiculous. If it is this easy to spread your funds around and get 10x insurance, they should just require every bank to do it and then insure everyone up to $2M. That would reduce risk to any particular bank but would it create systemic risk?

I'm surprised every modern bank hasn't figured this out by now. I am also surprised the FDIC allows it.

Lemonaid56 wrote: ↑Thu Mar 23, 2023 2:03 pm Yes , we have been called many times over the years. Chose not to take the risk as I did reseearch and they seem to use this "investment" money to fund the losses from their "dry wells " and R&D.
Family member worked for them when they first got out of college and their job was cold calling people to get them to invest and then hand them off to the "sharks" to close the deal.
I didn't find it guaranteed enough for me and we don't have that kind of cash to risk.
I just tell them that when they call now.

I was going to say this sounds like being on the other end of a sales pitch in Glengarry Glen Ross.

Long term rate is not the way to go now. Rates keep rising and it would make no sense to lock in at 5% and find in 5 years that banks everywhere pay 10%. Redneck just raised their money market rate to 4.55%. I'm sure we'll see Ally raise their 3.6% rate soon and everyone will leap frog up. And if you're thinking I'm just out of my mind citing 10%, I can remember in the late 80's having 6 month CDs at 10% as I was in grad school at the time and they required $10k, which I had available. The Fed just said they are going to stop raising rates. If there is a recession they may pivot back to lower rates. I have no idea what the future will bring but the market appears to be betting on lower rates 5-10 years out. 5-10 year rates have been droppi...

Have you looked at the fixed income options on your brokerage platform?

It looks like there is a big discrepancy right now between 10 year CD's at 5% and Treasuries at 3.5%. CD's across the board have higher yields. Might not be a bad idea to grab one.

Last year I thought it might be a good idea to "lock in" 1.45% for 10 years. Turns out that was a terrible idea.

Make sure you get the basis stepped up for the taxable account. Fortunately the funds that are currently selected are safe and unlikely to have significant gains while you are planning your next move, so you should have minimal tax consequences to worry about.

I would recommend the Wiki on Managing a Windfall, especially the advice to take your time before taking action:
https://www.bogleheads.org/wiki/Managing_a_windfall

Keeping the funds mostly in VMRXX, they are earning about 4.5% which is more than enough income for your needs.

btq96r wrote: ↑Thu Mar 23, 2023 8:48 am I would think they'll raise the expense ratio to keep it profitable before they liquidate a fund with a fund total net assets of $1.2 Trillion. It would be a huge disruption all around if VTSAX fell off the map. I can't even begin to guess how many individual accounts and other Vanguard funds are tied to it at this point.

For sure, VTSAX would be the very last fund they would liquidate. It would take a Vanguard going out of business scenario. But these things do happen.

Given the recent collapse of SVB...which is not the same thing as this, but can someone educate me about this: Is it possible for a single index fund to collapse? Is it safe to put one's entire equity portfolio into VTI/VTSAX? Should one diversify to include index funds from different firms even though they may be tracking the same index? thank you Read this Vanguard is different from other asset management firms. Vanguard is owned by its member funds, which in turn are owned by fund shareholders. With no outside owners to satisfy, Vanguard's focus is squarely on meeting the investment needs of their clients. Vanguard funds are very safe. There is no need to buy the same type of index funds elsewhere. You can slice and dice your portfolio ...

I did call my HSA custodian and talked to two people. Both of them were fairly unhelpful (one of them telling me that since I was under the $7300 limit that there was no problem, and I had to explain that the limit was pro-rata by month). In any case, I have the form for removal of excess contributions filled out. The only part that I'm still confused about is the tax impact of this. I expected that by removing these excess contributions, I would realize more income for 2022 and thus my tax liability would go up. However, unless FreeTaxUSA did something to take this into account from the get-go, it seemed like my tax liability stayed the same even when I answered that I would remove the $696 from my HSA. Should my current tax liability not...

Yes, you do need to create the account at EJ. No worries, you can transfer it almost immediately as soon as it is set up. One good thing about EJ, if I remember correctly I don't think they charge a transfer fee.

mix wrote: ↑Wed Mar 22, 2023 9:29 pm Seems like everyone is recommending a solo 401K. I can google and see what the differences are. But is there one or two things that just make it better in most peoples opinion?

The pro rata rule applies only to IRA's, so rolling your IRA funds into the Solo 401k would allow you to convert your basis to Roth with minimal tax.

Going forward, Solo 401k allows employees contributions up to 22,500 *plus* the same employer contributions as SEP, so it is much better if you don't have a W2 401k.

RyeBourbon wrote: ↑Wed Mar 22, 2023 7:41 pm

aristotelian wrote: ↑Wed Mar 22, 2023 7:39 pm You can always roll the IRA funds together and just forget about the $5500 of basis. You would be getting double taxed on the $5500 but it would be spread out over your withdrawals and conversions on a pro rata basis. It is such a negligible amount it isn't worth worrying about IMO.

No need to forget about the basis. It will reduce the taxable amount of distribution (pro-rata) when the time comes.

Fair enough. Point being they have no obligation to track it as far as I know. Up to them if it is worth it to keep tracking it.

You can always roll the IRA funds together and just forget about the $5500 of basis. You would be getting double taxed on the $5500 but it would be spread out over your withdrawals and conversions on a pro rata basis. It is such a negligible amount it isn't worth worrying about IMO.

j.click wrote: ↑Wed Mar 22, 2023 10:29 am Two things an attorney offers: 1) expertise and 2) time. You get what you pay for with #1 and pay a base cost with #2 with additional charges for complexity and responding to client requests. I am all for comparison shopping and reasonable expenditures but legal advice, akin to medical advice, is not something I mind paying for excellence.

This is a small estate we're talking about. They don't need Johnnie Cochrane.

Occasionally professionals in a knowledge asymmetry situation will overcharge for their services. Paying more is not a guarantee of getting better service.

I'd be pretty mad. I'd ask why they have gone so far over the initial estimate. They should have a good idea of what it takes to close a small estate, so they need to explain what is different about this one that they have gone 3X over. I would express dissatisfaction, noting the original estimate, and ask that they give you a firm estimate to complete the job regardless of the hours it takes.

I would also shop around and get another bid just so you have some leverage.

I have payflex and Fidelity HSA. I do a pull from Fidelity (account transfer), leaving some money (I leave $500) in the payflex account so that it doesn't close. Doing it this way there are no fees. It can take about 3 weeks or so for the transfer. This is very helpful as I’m also interested in avoiding fees. Is there a limit to how many times I can do this in a year and still avoid fees? I’m expecting I’d do this about 3 to 4 times per year if it’s free. I don’t mind the three week delay, I’ll just time when the market is about to drop before I initiate the transfer :mrgreen: How do you pull from fidelity, must I call them or is there a way to do this online? I am seeing several Payflex plan documents indicating $25.00 fee for custodian-t...

By the way, one more option not many people know about, it is sometimes possible to direct deposit your HSA contribution straight to a third party HSA. HSA's are more like IRA's than 401k's, i.e. they are individual accounts rather than employer plans per se. It took me several phone calls, but my individual and employer contributions go straight from my paycheck to my Fidelity HSA even though our default HSA is with a local credit union. Often the HR people don't even know that there are more options, and then employees take their word for it.

You will need to call Payflex to make sure how to do it. I have seen stories where accounts have been closed automatically if you transfer down to zero balance. Also make sure you are aware.of any transfer fees they may charge on their end. The worst case scenario, you can withdraw cash yourself and deposit it at Fidelity within 60 days once per year.

I prefer the simplicity of ETF, especially in taxable account.

I think you are fine. Only concern is your are going to want to do a good amount of Roth conversions because you have a lot of your portfolio in traditional IRA's. That is going to add some taxes to your budget.

If your budget includes debt servicing, paying off some of the debt will help.

What about college funds for the kids?

I would assume when things settle down you will be able to earn some income, somehow, to give yourself a bit more flexibility.

Most here advise to put your bond allocation in tax deferred first, then fill out the rest of your portfolio with stocks. That would be my approach with the Inherited IRA. Thanks. But isn't one of the advantages of an IRA that the growth is not taxed? We expect equities to grow more than bonds. That's why I had it set to 100% equities in the past. Unlike my other accounts, where I only contribute, this is a portfolio where I'm forced to withdraw every year. Is that a consideration or am I barking up the wrong tree? I expect my annual tax liability to go down when I retire. The growth is taxed, just on withdrawal. It is actually taxed higher than capital gains since it is taxed at income tax rates, whereas capital gains can be taxed at 0%. ...

Hi, I have an inherited IRA from which I have to take RMDs every year (about 2% --- it's grandfathered under the old rules). My overall AA is 95/5 because I am still youngish. I am wondering if there are any special considerations for the AA within the inherited IRA given that I have to make withdrawals from it. Historically I've had it at 100% equities, but would some bonds help prevent SORR depleting the IRA during down years? Thanks. Most here advise to put your bond allocation in tax deferred first, then fill out the rest of your portfolio with stocks. That would be my approach with the Inherited IRA. The question is how much in bonds overall. Your overall allocation depends on your risk tolerance and need for returns. 95-100 equities ...

According to the information I can see on the Primecap website as well as third party sources like Fidelity and Morningstar, POAGX has had zero dividend distributions since 2018. When it has paid dividends, they have been tiny ($.02 in 2018, $.0026 in 2015, etc). However, they have paid relatively enormous capital gain distributions. Can anyone explain how they have paid such low dividends when at least some of the stocks in the fund are dividend payers? Are they doing something like selling stocks before their dividend dates and then rebuying them? Dividend History Dividend History Additional Information Date Per Share Amount Reinvestment Price 12/17/18 $0.02583 $38.81 12/16/15 $0.00257 $32.35 12/16/14 $0.05742 $31.09 Capital Gains History...

Use whatever is most tax efficient, then rebalance to your target allocation using your retirement accounts. You haven't provided enough info for us to advise.

tlveik wrote: ↑Mon Mar 20, 2023 7:44 pm I was adding beneficiaries to my Vanguard account and decided to add a couple charities as beneficiary. Should I notify them now that I did that? Or just have my executor notify them when I die?

Couldn't hurt to do both.

Yes, definitely do some Roth conversions. Back of napkin, I think I'd do up to the top of the 12% bracket at least.

What's wrong with the 350k house? Certainly you can afford the upgrade but seems like you might be stretching your cashflow and might not be able to max your tax advantages accounts comfortably. Wouldn't be worth it to me without a good reason. We do actually like our current house. Mostly wants not needs involved in this move. Big one is current home is 3 bedrooms. We live ~2 hours from our family who visit often and we want them specifically to stay with us for time with kids, etc. DW also works full time from home and the new house has a great office (currently working from kitchen table) . Also neighborhood. We love a lot of our current neighbors but there are increasing rentals and Airbnb in our small neighborhood. Street is congested...

What's wrong with the 350k house? Certainly you can afford the upgrade but seems like you might be stretching your cashflow and might not be able to max your tax advantages accounts comfortably. Wouldn't be worth it to me without a good reason.

What about older TIPS with zero or negative fixed rate?

How about some type of annuity?

Both of my teenagers have Fidelity Youth Accounts. This is their individually owned brokerage and banking account that comes with a no fee ATM card. As parent I can see their balances and activity but they do all the transactions themselves. They mostly use it for banking but they can also buy mutual funds and ETF's through it. As far as taxes go, the income is taxable to the child (same would be the case for UTMA under your custodial control). They need to file a return with over $1,100 investment income, but you can do it for them. The OP here apparently wants the tax reporting to go to the parent's SSN. With a bank account, this is (or was for me, pre-Patriot Act) possible--where the account is jointly owned and the secondary owner is a...

I certainly support you in ignoring the advice and pressure from family. That is generally a terrible dynamic. However, in this case, the problem is they have a point. You are looking at the mortgage as an expense, but a portion of every payment goes to build equity. So it is not exactly an apples to apples comparison between renting/no maintenance and mortgage/with maintenance. In exchange for the maintenance cost, you are building equity over time. Eventually the mortgage will be paid off whereas with renting you will always have that cost. Finally, the mortgage is locked in, while rent is subject to inflation. In real dollars, your mortgage cost is going to go down over time. Up to you how you value the equity, but I think it is simplist...

OldSport wrote: ↑Mon Mar 20, 2023 1:53 pm Isn't somewhere between 70/30 and 65/35 statistically the best AA for long term portfolio success?

Not exactly. The longer your retirement and higher the withdrawal rate, the higher percentage you generally need in stocks. 100% stocks generally has the highest success rates when you get over 30 years. There are only a few combinations where 75% has higher success rate. Once you get under 30 years I would guess that the higher bond allocation comes into play. https://earlyretirementnow.com/2016/12/ ... t-1-intro/

Is it possible to open a joint investment account with a minor (secondary name) who is 16+ ? i.e. I want the minor to have none of the tax responsibilities. I am in California. I don't want it to be a custodial account in name or treatment. What are the restrictions in the type of deposits, and withdrawals, if any, and what type of consent from the minor (!?) would be required to operate the account? Any restriction on any other type of activity, such as adding additional joint account holders, or deleting joint account holders (including the minor) at a later date? Does it just transition to a regular joint account when the Minor attains the age of majority? Thanks Both of my teenagers have Fidelity Youth Accounts. This is their individua...

Here is how I look at it. After buying house, portfolio is $1.8M.

Starting at age 67, you have $39,000 income from SS.
From now until 67, you have $14,000. If you set aside 9 X $25,000, that means you will have $39k taken care of for life.

That leaves you with $1.575M. A conservative 3% withdrawal rate would yield $47,250. $47,250 + $39,000 = total income of $86,250.

That almost exactly hits your goal of $86,000. I think you are good to retire, but there's not much room for error. You still probably want somewhere around 20-30% stocks to stay ahead of inflation.
https://earlyretirementnow.com/2016/12/ ... t-1-intro/

Look at your tax lots and see if you can start by selling any that are down.

I am also a bit confused on the points brought up by the previous two posters. I am also confused about <1% bond and the 90% fixed income. In any case, I think the standard rule of thumb is 4% of the portfolio (with inflation adjustment in subsequent years). However, this assumes retiring at 65 (30 years retirement) and a 50/50 portfolio. https://www.forbes.com/advisor/retirement/four-percent-rule-retirement/ Personally, I prefer a more conservative 3%. Assuming my understanding is correct, you have $2.3M investable assets and you would like $72k a year in today's dollars. Using my preferred 3%, it is close enough. However you portfolio is 10/90 and you are only 58. Personally I would not do it at this time with a 10/90 portfolio. They are...

Biggest concern for me is your asset allocation. With only 10% stocks, your biggest risk is inflation. This portfolio should have a very low expected return, perhaps earning just barely more than inflation over time. If you are OK with slowly spending down your funds that is fine. I do not think this portfolio is a safe bet to produce $72k on its own but since you will be claiming SS you should be OK. As it is you have 25 years expenses (4% withdrawal rate) which is typically regarded as safe but that is assuming at least 50% in equities.

With such a bond centric approach consider at least some allocation to TIPS for inflation protection.

How did the timing work out for you?

Assuming you are getting the market rate, that shouldn't in principle affect your decision. With interest rates in general, you should have higher expected nominal return, whereas you should have had lower expected nominal return with lower interest rates. Should be more about risk tolerance and need, willingness, and ability to see extra return. If that hasn't changed, let it ride.

Can you not consolidate them into one account?

The benefit is higher reward, the downside is higher risk. Does your increased ability to take risk outweigh your reduced need for returns?

Do not kid yourself about diversification. The addition of *more* investments does not make a portfolio diversified if they are high risk and concentrated positions.

Fidelity Cash Management Account and brokerage account. Yes, That's exactly what i'm talkin bout -and- Not what we want... Most are requiring(2 Accts) like a 1.CaskMgmtAcct -AND- 2.BrokerageAcct (*TwoAccts*) Thats TwoAccts!, with movements,Balances, reports,transfers, RequestsForWithDrawal,CHARGES! & etc... Actually Fidelity would work perfectly. Either CMA or brokerage would be fine. Both allow check writing and brokerage services without a separate account. You can also use them together if you want the brokerage account to be strictly segregated, but it sounds like you don't want that. The differences between the two: -CMA comes with ATM rebates but forces you to use FDIC insured sweep account yielding 2.2% for the core account (mea...

Fidelity Cash Management Account and brokerage account.

Yes, your list is correct. Instead of viewing capital gains as comparable to dividends, think of dividends as forced capital gains.

My safe withdrawal rate is determined by whatever dividends my portfolio pays. A dividend is a withdrawal from a company's NAV. I believe, even if imperfect, the dividend payers are better at determining what is safe than I am. If I had to spend more than the available dividends, I think it would be difficult to come up with a SWR, but I would subtract out the dividends from whatever I needed to cover expenses. That might make the calculation easier in that there was less at stake. The amount of your dividends has nothing to do with Safe Withdrawal Rate. SWR is the constant dollar number you can safely withdraw inflation adjusted based on historical data. If you are withdrawing dividends, you are using a variable method which may be safer ...

Is TDA the same as traditional IRA? Intuitively I would wait on SS as long as possible to allow you to do bigger Roth conversions now.