Effective stock allocations over 100% are perfectly reasonable for young accumulators, if they have the risk tolerance for it.er999 wrote: ↑Mon Aug 08, 2022 12:40 am It’s risky year to year with the potential drawdowns compared to an all bond portfolio or portfolios with a large bond percentage but less risky over the standpoint of 20-30 years to get a larger total amount. Most people on bogleheads seem to be risk adverse and focus the potential drawdowns of 100% stock but for someone young the bigger risk is being too conservative and not getting enough assets when they get closer to retirement age. Of course this kind of logic could apply to leverage too, why not 120% or 150% stocks then?
Search found 32084 matches
- Mon Aug 08, 2022 9:39 am
- Forum: Investing - Theory, News & General
- Topic: Does anyone believe 100 percent equities is not risky?
- Replies: 258
- Views: 19136
Re: Does anyone believe 100 percent equities is not risky?
- Mon Aug 08, 2022 9:38 am
- Forum: Investing - Theory, News & General
- Topic: Vanguard - "you shouldn't abandon bonds"
- Replies: 35
- Views: 5822
Re: Vanguard - "you shouldn't abandon bonds"
The comparison of LTT to intermediate-term TIPS in that graph is not an apples to apples comparison since LTT have a longer duration than the intermediate-term TIPS. When we compare LTT to long-term TIPS, we see that the latter had higher returns going back to 2010 (all available data).
- Mon Aug 08, 2022 9:35 am
- Forum: Investing - Theory, News & General
- Topic: Past Performance
- Replies: 26
- Views: 2552
Re: Past Performance
True, but that's largely irrelevant as to whether EM is a good investment. Emerging markets have been 'emerging' for decades.
IMHO, a 5% allocation to any non-leveraged instrument is probably too low to make a meaningful difference. 10% or nothing.
- Mon Aug 08, 2022 9:31 am
- Forum: Investing - Theory, News & General
- Topic: 60/40 when faced with Lower future expected return
- Replies: 103
- Views: 9812
Re: 60/40 when faced with Lower future expected return
So I assume you are implicitly arguing for an LMP "to safely fund a steady retirement income stream"? Or are you suggesting that no such beast exists "to safely fund a steady retirement income stream"? I'm not "implicitly arguing" for anything. Just responding to your query "60-40 is a risky asset?" Fair enough. Honest question: What you would consider not to be a risky asset "to safely fund a steady retirement income stream"? The only assets that qualify are inflation-linked bonds issued by the Treasury. I would modify that to say it has to be an inflation indexed SPIA because an individual can't invest in a holding that avoids longevity risk. Naturally such an SPIA would presumably be bac...
- Sun Aug 07, 2022 10:38 pm
- Forum: Personal Investments
- Topic: What interest rate is needed to cover mortgage?
- Replies: 9
- Views: 1780
Re: What interest rate is needed to cover mortgage?
Yes I can keep the construction loan for 7 years. I could pay it off at closing but I'm considering keeping it. If interest rates go up enough to cover it then I don't see a reason to pay it off. I guess the tax on the interest I earn would offset the tax on the interest I pay. So I need to get 3.25 or in more. Yes, the 3.25% rate on the mortgage will very likely not be deductible, meaning that it's an after-tax expense. 5 year Treasuries are yielding 2.95% right now, and 10 year Treasuries are yielding 2.82%, but both are before taxes. At this point, it's speculation as to whether Treasury yields will rise enough to yield 3.25% after taxes. If you have the funds to pay off the loan at closing and would otherwise buy something like Treasur...
- Sun Aug 07, 2022 10:31 pm
- Forum: Personal Consumer Issues
- Topic: Umbrella coverage - how to determine amount?
- Replies: 69
- Views: 10843
Re: Umbrella coverage - how to determine amount?
The number that do is much larger than I thought. Perhaps the number of states protecting IRAs has grown significantly in recent years.tj wrote: ↑Sun Aug 07, 2022 10:21 pmSome? I would say most.
https://www.irafinancialgroup.com/learn ... rotection/
- Sun Aug 07, 2022 9:39 pm
- Forum: Personal Consumer Issues
- Topic: Umbrella coverage - how to determine amount?
- Replies: 69
- Views: 10843
- Sun Aug 07, 2022 9:19 pm
- Forum: Investing - Theory, News & General
- Topic: 60/40 when faced with Lower future expected return
- Replies: 103
- Views: 9812
Re: 60/40 when faced with Lower future expected return
60-40 is a risky asset? That the 60% equities portion of a prototypical 60/40 portfolio is risky should come as no surprise to any alert investor. It's called the "risk premium" for a reason. Those investors who viewed the 40% portion of a prototypical 60/40 portfolio as a sort of piggy bank have now come to realize bond risks https://www.finra.org/investors/learn-to-invest/types-investments/bonds/understanding-bond-risk So I assume you are implicitly arguing for an LMP "to safely fund a steady retirement income stream"? Or are you suggesting that no such beast exists "to safely fund a steady retirement income stream"? I'm not "implicitly arguing" for anything. Just responding to your query "60-...
- Sun Aug 07, 2022 9:18 pm
- Forum: Investing - Theory, News & General
- Topic: Asymmetric risk with nominal vs. inflation-linked bonds
- Replies: 539
- Views: 39805
Re: Asymmetric risk with nominal vs. inflation-linked bonds
You are thinking about this in one dimension only, preserving real real return, which is certainly a worthwhile consideration. For an investor who will consume goods and services in real terms, it’s the ONLY consideration. Inflation risk is a single dimension of risk. When that risk is hedged, there is no more “bet”. Anyone who tells you different either doesn’t understand risk, or is lying to you. That may be your only concern and, if so, congratulations on overcoming human nature, because most humans measure their well being relative to others and if they see nominals having a better run they are most assuredly going to feel like they made a suboptimal bet, even if they are in the same position in real terms. Investors whose goal is to n...
- Sun Aug 07, 2022 8:18 pm
- Forum: Personal Investments
- Topic: Is there a sensible approach to financial planners for HNW investors?
- Replies: 38
- Views: 4236
Re: Is there a sensible approach to financial planners for HNW investors?
I agree with all your post except on this point. An investor could very logically hold more than 3 funds.
- Sun Aug 07, 2022 8:12 pm
- Forum: Investing - Theory, News & General
- Topic: Asymmetric risk with nominal vs. inflation-linked bonds
- Replies: 539
- Views: 39805
Re: Asymmetric risk with nominal vs. inflation-linked bonds
An aspect of the nominal bond vs. TIPS issue that is often overlooked is the asymmetric risk investors are exposed to with nominal bonds like TBM. Note that this assumes both that an investor's future spending and other liabilities will be in at least roughly real (i.e., inflation-adjusted) dollars and that the CPI used to derive TIPS' yields is a reasonably good measure of inflation. In general, these seem to be fairly reasonable assumptions, and I ask that we do not derail this discussion on questioning them as this is apt to get the thread locked. My contention that there is asymmetric risk in the decision to allocate one's fixed income in nominal bonds, such as TBM, or inflation-linked bonds, such as TIPS. With individual TIPS held to ...
- Sun Aug 07, 2022 7:11 pm
- Forum: Personal Investments
- Topic: cautious/frugal early retiree seeking allocation feedback/suggestions
- Replies: 14
- Views: 1809
Re: cautious/frugal early retiree seeking allocation feedback/suggestions
In response to some of the earlier questions: I don't have a pension (just a 403b and whatever else I've saved over the years) and I'm not eligible for SS for a few years. As for "providing for income", I haven't thought about that yet; given that I'm staggering the maturities of my TIPS purchases, could I just use part of them to pay my expenses as they mature? To address another question, I anticipate that my expenses for 2023 will be less than 3% of my assets. (By the way, I'm single with no dependents, I rent, and I don't have any loans.) Thank you for responding, matt90077 I understand that you are late 50's, no dependents, no debts, renting, no pension and presumably eligible for SS at 62, which is in a "few years.&quo...
- Sun Aug 07, 2022 7:05 pm
- Forum: Investing - Theory, News & General
- Topic: Asymmetric risk with nominal vs. inflation-linked bonds
- Replies: 539
- Views: 39805
Re: Asymmetric risk with nominal vs. inflation-linked bonds
Many realize that the 'big opportunity' could turn into a 'much bigger cost'. Nobody knows what future inflation will be, so nobody knows in advance whether nominal bonds or TIPS will have higher real returns. TIPS are bought to eliminate the downside risk from inflation, which is much greater than the upside potential of nominal bonds.Joey Jo Jo Jr wrote: ↑Sun Aug 07, 2022 6:45 pmThe bet for someone that only wants a real return is that they aren’t missing a big opportunity for making that choice.
- Sun Aug 07, 2022 6:29 pm
- Forum: Personal Consumer Issues
- Topic: What's usually the going rate for painting the house
- Replies: 30
- Views: 4597
- Sun Aug 07, 2022 3:54 pm
- Forum: Investing - Theory, News & General
- Topic: Asymmetric risk with nominal vs. inflation-linked bonds
- Replies: 539
- Views: 39805
Re: Asymmetric risk with nominal vs. inflation-linked bonds
Thanks for posting that. So far, the BEI never exceeded actual inflation by more than about .8% annualized. Most of the periods where there was a significant gap between the two, actual inflation was higher.FactualFran wrote: ↑Sun Aug 07, 2022 3:51 pmThe following graph may be useful. It shows the actual inflation adjustment to 10-year TIPS that have matured and the breakeven rate when each was auctioned.
- Sun Aug 07, 2022 3:51 pm
- Forum: Personal Investments
- Topic: cautious/frugal early retiree seeking allocation feedback/suggestions
- Replies: 14
- Views: 1809
Re: cautious/frugal early retiree seeking allocation feedback/suggestions
I agree that it's a very conservative portfolio, but it's difficult to say that it's too conservative without more information.carminered2019 wrote: ↑Sun Aug 07, 2022 3:48 pm How many years of living expenses is your portfolio and if you are happy and sleep well at the current AA then why change ?
to me your AA is way too conservative to where I don't even think you will keep up with inflation.
The TIPS should keep pace with inflation over their duration at least. The rest of the portfolio is exposed to inflation risk, but stocks are usually expected to at least keep pace with inflation over a moderate period of time.
- Sun Aug 07, 2022 3:42 pm
- Forum: Personal Investments
- Topic: cautious/frugal early retiree seeking allocation feedback/suggestions
- Replies: 14
- Views: 1809
Re: cautious/frugal early retiree seeking allocation feedback/suggestions
That's a very conservative portfolio, but if that's in keeping with your investment goals, risk tolerance, etc., it sounds fine. The only thing I would question is the 10% allocation to CDs/money markets, which are paying very low nominal rates and are completely exposed to inflation risk. I'd suggest moving that to the TIPS allocation.
- Sun Aug 07, 2022 3:22 pm
- Forum: Investing - Theory, News & General
- Topic: 60/40 when faced with Lower future expected return
- Replies: 103
- Views: 9812
Re: 60/40 when faced with Lower future expected return
Bond yields are undeniably lower than they've been for much of the historic record. Right now, they are priced for close to 0% real returns going forward. Stocks are always the big unknown, though since the bursting of the dot-com bubble, U.S. stocks have only returned about 4% real. If they return 4% real and bonds return 0% real, then a 60/40 would return about 2.4% real.
- Sun Aug 07, 2022 3:05 pm
- Forum: Investing - Theory, News & General
- Topic: Asymmetric risk with nominal vs. inflation-linked bonds
- Replies: 539
- Views: 39805
Re: Asymmetric risk with nominal vs. inflation-linked bonds
However you prefer to frame it, taking action to guard against inflation in inherently a bet about inflation. You still miss the underlying concept of hedging a risk: once the risk is fully hedged you no longer CARE whether the risk shows up or not. If you are equally well off whether the risk shows up or not then that is the OPPOSITE of a bet. But fully hedging the inflation risk opens you to the risk of losing out relative to nominals if inflation doesn’t meet expectations. If you don’t care about that fine, but to say others don’t isn’t true because people do want to outpace their peers. Human nature. You're referring to every choice that anyone can make as a 'bet'. As I note above, that's not in keeping with the typical use of the word.
- Sun Aug 07, 2022 3:05 pm
- Forum: Investing - Theory, News & General
- Topic: Asymmetric risk with nominal vs. inflation-linked bonds
- Replies: 539
- Views: 39805
Re: Asymmetric risk with nominal vs. inflation-linked bonds
Taking inflation risk out of funds you put in inflation linked bonds is indeed a bet that your other assets are not going to overcome to potential risk of inflation. This isn't a clearheaded approach to the question. An investor should have no illusion that they can successfully predict whether inflation will turn out to be higher or lower than expected. They can, however, rationally evaluate the likely impact that it would have on their lifestyle IF it turns out higher. They can also rationally take steps to reduce that impact by choosing inflation-linked bonds instead of nominal bonds. However you prefer to frame it, taking action to guard against inflation in inherently a bet about inflation. Simply acknowledging that inflation could be...
- Sun Aug 07, 2022 2:52 pm
- Forum: Investing - Theory, News & General
- Topic: Asymmetric risk with nominal vs. inflation-linked bonds
- Replies: 539
- Views: 39805
Re: Asymmetric risk with nominal vs. inflation-linked bonds
Taking inflation risk out of funds you put in inflation linked bonds is indeed a bet that your other assets are not going to overcome to potential risk of inflation. This isn't a clearheaded approach to the question. An investor should have no illusion that they can successfully predict whether inflation will turn out to be higher or lower than expected. They can, however, rationally evaluate the likely impact that it would have on their lifestyle IF it turns out higher. They can also rationally take steps to reduce that impact by choosing inflation-linked bonds instead of nominal bonds. However you prefer to frame it, taking action to guard against inflation in inherently a bet about inflation. Simply acknowledging that inflation could be...
- Sun Aug 07, 2022 2:46 pm
- Forum: Investing - Theory, News & General
- Topic: Watch out for hidden risk tolerance assumptions in SWR claims
- Replies: 182
- Views: 12505
Re: Watch out for hidden risk tolerance assumptions in SWR claims
Failure rate is not a good metric because it treats running out of money in year 5 and year 25 the same way -- the former is much worse. The following paper proposes a different metric. Running out of money in year 5 would mean knowing there was a problem before year 5, and you still likely would be able to re-enter the workforce, absent disability. But as you indicated above, if retirees are spending less in real dollars over time, which I agree that the research indicates is the general trend, it's not entirely logical to expect them to be withdrawing the same real dollars 25 years in either. I'd rather become at serious risk of running out of money when I still could re-enter the workforce even if my expenses were somewhat higher in rea...
- Sun Aug 07, 2022 2:41 pm
- Forum: Investing - Theory, News & General
- Topic: Asymmetric risk with nominal vs. inflation-linked bonds
- Replies: 539
- Views: 39805
Re: Asymmetric risk with nominal vs. inflation-linked bonds
In the real world, have we actually seen the TIPS provide said inflation protection? If they didn't, it would only be because (1) the Treasury defaulted on its TIPS obligations and/or (2) unexpected inflation didn't manifest itself in a meaningful way. In theory, it sounds correct, but can you pull up some actual numbers? Since 2021, Vanguard's TIPS fund has outperformed their ITT fund by 5% annualized. For example, if a 1 year TIP 1 year ago yielded -1%, a nominal yielded 0%, and inflation was 6%, then the TIP should have a yield of 5% over that time period no? Yes, that would have indeed been the nominal return (not yield) of 1 year TIPS under those conditions. Anything otherwise would have been a default, by definition. We don't have to...
- Sun Aug 07, 2022 2:35 pm
- Forum: Investing - Theory, News & General
- Topic: Asymmetric risk with nominal vs. inflation-linked bonds
- Replies: 539
- Views: 39805
- Sun Aug 07, 2022 2:28 pm
- Forum: Investing - Theory, News & General
- Topic: Asymmetric risk with nominal vs. inflation-linked bonds
- Replies: 539
- Views: 39805
Re: Asymmetric risk with nominal vs. inflation-linked bonds
I don’t agree with that. If one doesn’t think inflation is an issue then you would just go with nominals. This is not correct. The question is one of risks, not expectations. To the extent that a significant amount of an investor's future consumption is subject to inflation, TIPS or Series I savings bonds are assets that reduce the risk that inflation turns out to be unexpectedly high. This calculation is based on the investor's risk exposure, not a prediction about what inflation will be. Sorry but you are not correct. Taking inflation risk out of funds you put in inflation linked bonds is indeed a bet that your other assets are not going to overcome to potential risk of inflation. Buying inflation-linked bonds involves an acknowledgement...
- Sun Aug 07, 2022 2:11 pm
- Forum: Investing - Theory, News & General
- Topic: Watch out for hidden risk tolerance assumptions in SWR claims
- Replies: 182
- Views: 12505
Re: Watch out for hidden risk tolerance assumptions in SWR claims
But as you indicated above, if retirees are spending less in real dollars over time, which I agree that the research indicates is the general trend, it's not entirely logical to expect them to be withdrawing the same real dollars 25 years in either.Northern Flicker wrote: ↑Sun Aug 07, 2022 2:06 pmRunning out of money in year 5 would mean knowing there was a problem before year 5, and you still likely would be able to re-enter the workforce, absent disability.Beliavsky wrote: Failure rate is not a good metric because it treats running out of money in year 5 and year 25 the same way -- the former is much worse. The following paper proposes a different metric.
- Sun Aug 07, 2022 2:07 pm
- Forum: Investing - Theory, News & General
- Topic: Asymmetric risk with nominal vs. inflation-linked bonds
- Replies: 539
- Views: 39805
Re: Asymmetric risk with nominal vs. inflation-linked bonds
If someone doesn't think that inflation could be an issue, then that person is gravely mistaken.Joey Jo Jo Jr wrote: ↑Sun Aug 07, 2022 2:02 pmI don’t agree with that. If one doesn’t think inflation is an issue then you would just go with nominals.
- Sun Aug 07, 2022 2:06 pm
- Forum: Investing - Theory, News & General
- Topic: Asymmetric risk with nominal vs. inflation-linked bonds
- Replies: 539
- Views: 39805
Re: Asymmetric risk with nominal vs. inflation-linked bonds
Doesn’t have anything to do with OP’s statement that TIPS owners aren’t making a bet on inflation, whether implicitly or explicitly, which is what I was responding to. Is the person who buys homeowner's insurance making a 'bet' that their house will be destroyed by some covered calamity? Or are they buying it to reduce downside risk? they are making a bet that it could happen as opposed to not happening, or else they would save their money. Yes, their house could be destroyed. And inflation could greatly erode the buying power of nominal bonds. Moreover, I’m not sure the analogy is valid anyway as you don’t have any expectation of getting back your insurance premium whereas an inflation linked bond is designed for preservation of the money...
- Sun Aug 07, 2022 1:58 pm
- Forum: Personal Finance (Not Investing)
- Topic: Self Insuring LTC or Buying LTCI?
- Replies: 248
- Views: 18397
Re: Self Insuring LTC or Buying LTCI?
I'm not sure what you mean about FICA? Only the employer half is tax deductible. Medical insurance provided by your employer and if applicable your share that is payroll deducted under IRS section 125 is not subject to FICA (employer and employee portion), federal, and state tax. The same exemption applies to self employed medical insurance. LTC (tax qualified) is treated the same way. It’s not that FICA is or isn’t deductible, it’s not even being paid. I don't think LTCi premiums can be paid on a pretax basis under section 125 of the Internal Revenue Code. Never been able to do that when I was employed, though other medical insurance and some other benefits were permitted, including HSA contributions. Here's what the Federal LTCi program ...
- Sun Aug 07, 2022 1:30 pm
- Forum: Investing - Theory, News & General
- Topic: Asymmetric risk with nominal vs. inflation-linked bonds
- Replies: 539
- Views: 39805
Re: Asymmetric risk with nominal vs. inflation-linked bonds
Is the person who buys homeowner's insurance making a 'bet' that their house will be destroyed by some covered calamity? Or are they buying it to reduce downside risk?Joey Jo Jo Jr wrote: ↑Sun Aug 07, 2022 1:00 pmDoesn’t have anything to do with OP’s statement that TIPS owners aren’t making a bet on inflation, whether implicitly or explicitly, which is what I was responding to.
- Sun Aug 07, 2022 1:28 pm
- Forum: Investing - Theory, News & General
- Topic: Asymmetric risk with nominal vs. inflation-linked bonds
- Replies: 539
- Views: 39805
Re: Asymmetric risk with nominal vs. inflation-linked bonds
So the downside of inflation significantly outweighs the possible upsides of deflation for nominals? It seems that virtually everyone in the thread who has spoken about this agrees that the answer is yes. ... I agree with this. And yet until recently, "most" bond recommendation and target date funds had minimal TIPs. I would actually say "nearly all." So, I am trying to get my head around why, how, etc. I mean, what was missed in the past? Will such an understand be helpful? Some thoughts. TIPs had a negative real yield (at least when I decided against them, perhaps with a touch of recency bias at the time as nominals had been doing well and inflation was off the radar. IDK. A status quo bias --- i.e. stay the course wi...
- Sun Aug 07, 2022 1:22 pm
- Forum: Investing - Theory, News & General
- Topic: Stocks for the Long Haul? Maybe Not.
- Replies: 146
- Views: 21495
Re: Stocks for the Long Haul? Maybe Not.
What I have learned from the past in terms of investing is that the future will be nothing like the past. … What's best? We have long had the answer - diversification and time in the market. If the future will be nothing like the past how do you know that diversification and time in market is the best? What we have are some folks saying we don’t have enough data because there has only been 3-4 independent periods since 1920 (or whenever) and other folks saying that data from the 19th century is of little value…taken together that pretty much eliminates using historical data for anything. So without using any historical data…show me that the BH three index fund passive investing strategy is better than picking individual stocks or using act...
- Sun Aug 07, 2022 10:24 am
- Forum: Investing - Theory, News & General
- Topic: Mortgage as a negative bond...Don't pay down mortgage early...House is not a bond
- Replies: 238
- Views: 23009
Re: Mortgage negative bond...Don't pay down mortgage early...House is not a bond
Someone aggressively using their income to pay extra towards their mortgage- but still having a sizeable balance on that mortgage likely would not have benefited from that action if they were so adversely impacted by the GFC (or other shock causing them to lose their job). Right? That's why many instead use a sinking fund for the purpose of eventually paying off the mortgage. This enables them to retain the liquidity of the funds until they can pay off the mortgage in one fell swoop, thereby reducing their need for liquidity. However, this has usually entailed paying a higher after-tax rate on one's mortgage than one earned from the sinking fund. However, a mortgage can also potentially be recast after significant principal payments, reduc...
- Sun Aug 07, 2022 10:11 am
- Forum: Investing - Theory, News & General
- Topic: Why Own Corporate Bonds?
- Replies: 132
- Views: 17699
Re: Why Own Corporate Bonds?
And by the same token, just because an asset is excluded from something like a 'total bond market' fund, such as TIPS, does not mean that investors should avoid it.vineviz wrote: ↑Sun Aug 07, 2022 10:04 amI agree with Sharpe that corporate bonds are board of the global market portfolio.
My point was merely that the fact that the are PART of that portfolio doesn't necessarily imply that every investor - or, indeed, any particular investor - needs to (or should) own them.
- Sun Aug 07, 2022 10:09 am
- Forum: Personal Finance (Not Investing)
- Topic: Locked Out of Mom's I Bond Account
- Replies: 48
- Views: 6143
Re: Locked Out of Mom's I Bond Account
anon_investor wrote: ↑Sun Aug 07, 2022 10:05 amGood luck waking up at 5am PT to call first thing.willthrill81 wrote: ↑Sun Aug 07, 2022 9:48 amNo. Calling is the only way to unlock the account.anon_investor wrote: ↑Sun Aug 07, 2022 8:18 amWas there no option to mail in a form?willthrill81 wrote: ↑Sat Aug 06, 2022 4:33 pm I've been locked out of my Treasury Direct account since April because I haven't had the ability to devote half a day to waiting on hold. I'm hoping to finally do so next week.
- Sun Aug 07, 2022 10:09 am
- Forum: Investing - Theory, News & General
- Topic: Emerging markets have failed to live up (says M* article)
- Replies: 156
- Views: 19352
Re: Emerging markets have failed to live up (says M* article)
One should be careful taking sharpe ratio seriously. The biggest weakness in the ratio is the numerator ie average excess return. It tends to fluctuate heavily depending on time period chosen. Rolling Sharpe Ratios is more ideal. But this is not the only problem with it. I noticed if you were to subtract RF in the numerator it would have effect on how much higher the assets sharpe ratio is % wise over the othrer assets sharpe ratio compared to not subtracting the RF in the numerator Sharpe ratio only makes sense for a portfolio as a whole, not for an individual asset. For a portfolio, it does make sense; if portfolio X has higher risk and return than portfolio Y, but the same Sharpe ratio, then a portfolio combining X with risk-free assets...
- Sun Aug 07, 2022 10:03 am
- Forum: Personal Finance (Not Investing)
- Topic: Self Insuring LTC or Buying LTCI?
- Replies: 248
- Views: 18397
Re: Self Insuring LTC or Buying LTCI?
That seems to nearly always be the case, but not quite always, or at least not always in the future. https://www.centerforasecureretirement.com/posts/are-long-term-care-benefits-taxable#:~:text=When%20you%20receive%20benefits%20from,don't%20consider%20taxable%20income. I think the vast majority of people have the tax qualified policies. I know mine is as well as any others I’ve looked at. Removing the tax deductibility of employer provided medical insurance comes up regularly. It was looked at seriously back some time ago in the nineties. I wouldn’t be surprised to see it eventually pass in some form. The Cadillac tax was an excise tax that would only come into play once premiums reached a certain level. I also wouldn’t be surprised to see...
- Sun Aug 07, 2022 10:00 am
- Forum: Investing - Theory, News & General
- Topic: Why Own Corporate Bonds?
- Replies: 132
- Views: 17699
Re: Why Own Corporate Bonds?
Sharpe's quoted views are certainly valid ones, are are broadly accepted. They don't, offer, offer an investor any help in deciding the question the OP posed in the title: "why own corporate bonds?". Sharpe is making a theoretical/academic point that corporate bonds are certainly part of the global market portfolio. Totally eliminating a class of assets (e.g., high-yield corporate bonds) from the market portfolio requires a good argument -- e.g., lack of access, prohibitive costs, being a negligible percentage, existing intrinsic risk exposure outside the investment portfolio. In the absence of strong justification, an investor should consider owning at least some position in each (positive net supply) asset class. Sure, you can ...
- Sun Aug 07, 2022 9:55 am
- Forum: Personal Finance (Not Investing)
- Topic: Anyone ever explicitly refused promotion for better work-life-balance?
- Replies: 90
- Views: 9427
Re: Anyone ever explicitly refused promotion for better work-life-balance?
I'm sorry to hear about those issues. Can you move to another position or another institution?quattro73 wrote: ↑Sat Aug 06, 2022 10:34 pmIt absolutely is.willthrill81 wrote: ↑Sat Aug 06, 2022 9:48 pmOften, it's like adult daycare. And sometimes, it's de minimis on the 'adult' part.
I work in banking for a large community bank spread across the bulk of a single state.
It is awful. Worst thing I ever did. My work-life balance has been destroyed several years ago, and commercial loan officers are generally some of the biggest ego maniacs with very little genuine competency. And you cannot tell them. It is awful.
- Sun Aug 07, 2022 9:53 am
- Forum: Investing - Theory, News & General
- Topic: Asymmetric risk with nominal vs. inflation-linked bonds
- Replies: 539
- Views: 39805
Re: Asymmetric risk with nominal vs. inflation-linked bonds
I'm not sure why you think that. We've discussed differences between individual bonds and funds, which are more similar than they are different. On this forum, we're nearly always talking about funds with regard to bonds.Fremdon Ferndock wrote: ↑Sun Aug 07, 2022 9:39 amThis whole thread conflates bond ladders with bond funds, and is
- Sun Aug 07, 2022 9:48 am
- Forum: Personal Finance (Not Investing)
- Topic: Locked Out of Mom's I Bond Account
- Replies: 48
- Views: 6143
Re: Locked Out of Mom's I Bond Account
No. Calling is the only way to unlock the account.anon_investor wrote: ↑Sun Aug 07, 2022 8:18 amWas there no option to mail in a form?willthrill81 wrote: ↑Sat Aug 06, 2022 4:33 pm I've been locked out of my Treasury Direct account since April because I haven't had the ability to devote half a day to waiting on hold. I'm hoping to finally do so next week.
- Sat Aug 06, 2022 11:49 pm
- Forum: Investing - Theory, News & General
- Topic: Asymmetric risk with nominal vs. inflation-linked bonds
- Replies: 539
- Views: 39805
Re: Asymmetric risk with nominal vs. inflation-linked bonds
Those who buy TIPS or I bonds don't care what subsequent inflation is because they are literally 'locking in' a fixed, real yield. It doesn't matter if subsequent inflation is 1% or 10%. Inflation-linked bonds remove all the uncertainty and risk about future inflation.
A risk like that of inflation can 'cut' both ways. It may hurt you or it may help you, but you don't know which it will be. Removing a risk means that you might have been better off by taking the risk, but you might have been worse off. That's just the nature of the beast.
- Sat Aug 06, 2022 9:48 pm
- Forum: Personal Finance (Not Investing)
- Topic: Anyone ever explicitly refused promotion for better work-life-balance?
- Replies: 90
- Views: 9427
- Sat Aug 06, 2022 9:44 pm
- Forum: Personal Investments
- Topic: Downside of using I bonds as our only inflation/duration protection versus tips
- Replies: 22
- Views: 3443
Re: Downside of using I bonds as our only inflation/duration protection versus tips
Right. I bonds and TIPS only protect the funds used to buy them from inflation. They offer no such protection whatsoever to the remainder of one's assets.dbr wrote: ↑Sat Aug 06, 2022 8:01 pm Neither I bonds nor TIPS are "inflation protection." I don't think any general asset of such a nature exists. There is no possibility to buy some sort of "inflation insurance." Those assets are "inflation protected" meaning they are without inflation risk because they are specifically compensated for it. As such it makes sense to hold fixed income in inflation protected assets, but that is all the sense it makes.
- Sat Aug 06, 2022 9:41 pm
- Forum: Investing - Theory, News & General
- Topic: Vanguard - "you shouldn't abandon bonds"
- Replies: 35
- Views: 5822
Re: Vanguard - "you shouldn't abandon bonds"
It's virtually impossible for bonds to repeat that performance. In 1981, the yields on 10 year Treasuries were nearly 16%. They are now at 2.7%.Valuethinker wrote: ↑Sat Aug 06, 2022 4:25 pm The 40 year period of broadly falling interest rates (1981-2021) obviously enhanced the capital returns of long bonds quite a bit. That may not be repeatable.
- Sat Aug 06, 2022 9:29 pm
- Forum: Investing - Theory, News & General
- Topic: Asymmetric risk with nominal vs. inflation-linked bonds
- Replies: 539
- Views: 39805
Re: Asymmetric risk with nominal vs. inflation-linked bonds
And what about the risk of actual inflation being lower than expected inflation, thereby lowering the real return vs nominals? As noted in the OP, with inflation-linked bonds like TIPS, you know with precision what the real yield will be at the time of purchase. With nominal bonds, the real yield is unknown. Therefore, nominals are riskier because the real yield could be lower than that of TIPS. The fact that the real yield of nominals could also be higher than that of TIPS is irrelevant from a risk perspective. The potential losses of nominal bonds exceeds their potential gain, hence, the risk is asymmetric. It just doesn't seem to be an actionable observation without knowing the probabilities as well. The main point of the OP is to point...
- Sat Aug 06, 2022 9:13 pm
- Forum: Personal Finance (Not Investing)
- Topic: HumbleDollar - "the two-minute checkup"
- Replies: 25
- Views: 3773
Re: HumbleDollar - "the two-minute checkup"
I agree. But it might be helpful for those who aren't well versed in personal finance.anon_investor wrote: ↑Sat Aug 06, 2022 7:55 amNot good info for a BH. Too simplistic.Fremdon Ferndock wrote: ↑Sat Aug 06, 2022 7:46 am I tried it. See what you think:
https://humbledollar.com/2022/08/check-on-yourself/How does it work? All you need to do is input up to nine pieces of information, the sort of stuff most of us know off the top of our head. There’s no need to create an account or link to your brokerage firm or bank, and none of your information is saved on HumbleDollar or anywhere else. Once you input your info, hit the “results” button and the calculator will offer insights across 10 areas of your financial life. It’s that easy.
- Sat Aug 06, 2022 9:08 pm
- Forum: Personal Finance (Not Investing)
- Topic: Anyone ever explicitly refused promotion for better work-life-balance?
- Replies: 90
- Views: 9427
Re: Anyone ever explicitly refused promotion for better work-life-balance?
I left my last employer shortly before I was essentially guaranteed to get promoted and have a significant pay increase. And I would do it again in a heartbeat.
It really is true that money isn't everything.
"Enough is as good as a feast."
-British proverb
It really is true that money isn't everything.
"Enough is as good as a feast."
-British proverb
- Sat Aug 06, 2022 9:06 pm
- Forum: Investing - Theory, News & General
- Topic: Asymmetric risk with nominal vs. inflation-linked bonds
- Replies: 539
- Views: 39805
Re: Asymmetric risk with nominal vs. inflation-linked bonds
As noted in the OP, with inflation-linked bonds like TIPS, you know with precision what the real yield will be at the time of purchase. With nominal bonds, the real yield is unknown. Therefore, nominals are riskier because the real yield could be lower than that of TIPS. The fact that the real yield of nominals could also be higher than that of TIPS is irrelevant from a risk perspective.
The potential losses of nominal bonds exceeds their potential gain, hence, the risk is asymmetric.
- Sat Aug 06, 2022 8:56 pm
- Forum: Personal Investments
- Topic: Prepay mortgage vs invest in stock mkt for our specific situation? (AA 100% stocks)
- Replies: 22
- Views: 2849
Re: Prepay mortgage vs invest in stock mkt for our specific situation? (AA 100% stocks)
Good malpractice insurance is far more important than minimizing home equity.sphinx2020 wrote: ↑Sat Aug 06, 2022 7:41 pm Since one of you is a doctor, what is the personal malpractice risk for the speciality and state? There may be nuanced risk management considerations here. Paying off the mortgage as soon as possible and concentrating wealth in the house may be a good asset protection mechanism in the event of a strategic bankruptcy, but only if your state has an unlimited homestead exemption in bankruptcy.