Search found 1334 matches

by venkman
Mon Feb 14, 2022 11:02 pm
Forum: Investing - Theory, News & General
Topic: Are Bonds more risky than Stocks?
Replies: 73
Views: 7170

Re: Are Bonds more risky than Stocks?

With the low natured return of Bonds, I am starting to wonder if they are actually more risky than Stocks? Risk, in investment terms, is the chance that your realized returns over a given period will differ from the expected return of the asset. Currently, bonds have about the same level of investment risk they've always had. While the expected return of bonds is historically low, that low level of return is predictable; and there's low risk that the realized return from bonds will differ greatly from the expected return. The fact that bonds are returning so little does lead to the increased chance that one might not achieve a hoped-for level of growth from one's portfolio. But that's not because of increased uncertainty about expected ret...
by venkman
Tue Feb 01, 2022 10:10 pm
Forum: Personal Investments
Topic: Early 30s - Invest in iBonds?
Replies: 49
Views: 5803

Re: Early 30s - Invest in iBonds?

NYCaviator wrote: Tue Feb 01, 2022 8:06 am Does it make any sense, with a 30 year horizon, to invest our bond allocation in iBonds, or just keep it in total bond market funds? We have a 90/10 AA.
If you can afford to keep this portion of your portfolio illiquid for the long term, EE bonds might be a better option than I bonds. Guaranteed to double in value after 20 years = 3.5% annualized return, significantly higher than what the market is predicting for inflation over the next 2-3 decades.
by venkman
Thu Jan 27, 2022 11:45 pm
Forum: Investing - Theory, News & General
Topic: REITs - Where is the benefit again?
Replies: 125
Views: 19629

Re: REITs - Where is the benefit again?

REIT's were never an uncorrelated asset class. At best, they were only moderately correlated. Over the past decade, their correlation with the overall market has been about 0.70, so you wouldn't expect REIT's to zig when the market zags. The diversification benefit is that the yearly performance of REIT's doesn't always correspond closely with the performance of the overall market. e.g. In 2013 and 2020, REIT's hugely underperformed the market; and in 2014 and 2021, they hugely outperformed. A portfolio with a set allocation to REIT's would've rebalanced when they were low and gotten rewarded when they outperformed the market the following year. That being said, research has determined that REIT's are not a unique asset class, and that thei...
by venkman
Fri Jan 14, 2022 11:03 pm
Forum: Investing - Theory, News & General
Topic: VTI vs BRK [Berkshire Hathaway]
Replies: 137
Views: 17631

Re: Berkshire Hathaway vs VTI

I recently read that Berkshire Hathaway’s phenomenal performance stemmed from its early years, and that in recent decades it has slightly lagged a total market index. That sounded odd to me, so I thought I’d check it out. Most of Warren Buffett's outperformance over his career can be explained by factor exposure (size, value, profitability, etc.) Which is not to say he doesn't deserve credit, because he was investing in those factors before they were widely known. The problem with BRK is the same problem faced by mutual funds that outperform and see loads of money rush in: they get too big. Buying a big stake in a bargain-priced small company barely moves the needle when your market cap is closing in on $1 trillion. And even if you find la...
by venkman
Wed Jan 12, 2022 10:30 pm
Forum: Investing - Theory, News & General
Topic: Balancing diversity risk and tax drag
Replies: 7
Views: 768

Re: Balancing diversity risk and tax drag

You might want to explore creating a Charitable Remainder Trust. You'll be able to sell the whole stock position immediately, but can spread out the tax on the gains over many years, as you take income from the trust.

You need to set it up so that, actuarially, the charity is likely to end up with a minimum percentage of the original donation when the trust ends; but I think that amount is 10%, which is much less of a haircut than you'd take by selling and paying taxes.
by venkman
Mon Jan 10, 2022 1:21 am
Forum: Investing - Theory, News & General
Topic: Why take a capital loss?
Replies: 31
Views: 3318

Re: Why take a capital loss?

archurisk wrote: Sun Jan 09, 2022 6:59 pm I'm mainly referring to the case where you take a capital loss in a taxable account in order to lower your taxable income. From what I understand, tax loss harvesting does just that. But aside from that strategy, it just sounds counterintuitive to me to take a loss on your investment just to lower you taxes.
With traditional TLH, you aren't taking a loss on your investment. You're realizing a capital loss, while remaining fully invested in essentially the same asset. Unless you anticipate that your tax bracket will be higher when you plan to ultimately cash in the asset, it makes sense to take the tax break now rather than later.
by venkman
Wed Jan 05, 2022 11:47 pm
Forum: Personal Investments
Topic: Inflation-Protected Bonds vs. Total Bond Market Index Fnd
Replies: 6
Views: 1636

Re: Inflation-Protected Bonds vs. Total Bond Market Index Fnd

I am 3-5 years from retirement, invested approx. 70/30 in Total Stock Mkt Index Fund and Total Bond Mkt Index Fund. Given anticipated interest rate increases and persistent inflation at least in 2022, would it be prudent to shift from Total Bond Mkt Index Fund to Inflation-Protected Securities Fund? I am looking for some positive returns for my bond fund. Thanks! Future expected inflation and future expected Fed actions are factored into the price of all bonds*, including TIPS (which is why TIPS have a negative real yield right now). Investing in TIPS over nominal Treasuries is a bet that inflation will come in higher than what the market is predicting. There's nothing inherently wrong with making that bet, but you shouldn't expect to get ...
by venkman
Wed Jan 05, 2022 11:19 pm
Forum: Personal Finance (Not Investing)
Topic: Minimizing Estate Tax (in FL) on a $20M Estate?
Replies: 13
Views: 1496

Re: Minimizing Estate Tax (in FL) on a $20M Estate?

If she donates the entire brokerage account and the Traditional IRA to charity, that should put her estate under the limit. Estate tax minimized. :sharebeer
by venkman
Sat Jan 01, 2022 11:42 pm
Forum: Personal Investments
Topic: Question about REITS….
Replies: 39
Views: 4512

Re: Question about REITS….

As for picking a REIT, its yet another thing I know little about, but based on what I have read, a residential REIT may be good now as they can increase rents due to potential inflation so this may be an inflation hedge. In hindsight, 2020 was a great time to buy residential REIT's, as prices had been severely beaten down due to the pandemic, and stayed down well after the S&P had started to recover. However, they have since made a comeback, and many are close to all-time highs. In short, you're about 13 months late to the party. On the bright side, you don't particularly need to own REIT's to be properly diversified. A study conducted some years back found that REIT's aren't a unique asset class, and that their returns can be explaine...
by venkman
Thu Dec 30, 2021 11:02 pm
Forum: Investing - Theory, News & General
Topic: David Swenson on asset allocation
Replies: 18
Views: 3074

Re: David Swenson on asset allocation

What if, in 1925, you had put 100% of your portfolio into a single US asset class and left it there? In a presentation from 2008, David Swenson, the former investment manager for Yale, answers this question. He points out, for example, that if you had invested solely in Treasury bills, your investment would have grown 21-fold (ignoring taxes). Here are the numbers for other common asset classes. Treasury bills: 21-fold Treasury bonds: 86-fold Equities: 2,592-fold Small Cap Equities: 12,226-fold What were the returns after you factor in trading costs? I can easily see the costs of holding and rebalancing a diversified portfolio of hundreds of small-cap stocks in an era of high commissions canceling out much of the added returns from small c...
by venkman
Tue Dec 21, 2021 10:54 pm
Forum: Personal Finance (Not Investing)
Topic: Another post about bonds
Replies: 6
Views: 935

Re: Another post about bonds

Even if stocks and bonds went down in a given year, I would sell off Total Bond if the SEC yield was less than the predicted 5-10 year forward inflation rate. I Bonds are one of the best deals in fixed income right now; and if you rebalance out of them, your ability to rebalance back into them later on is limited.
by venkman
Mon Dec 20, 2021 10:56 pm
Forum: Personal Consumer Issues
Topic: Any Free Lunches Out There?
Replies: 130
Views: 14425

Re: Any Free Lunches Out There?

The 0.50% risk-free yield on a competitive HYSA is a free lunch (or maybe just a free stop at the dessert tray) for retail investors, compared to the sub-0.10% yield on 1-month Treasuries.

I don't know how long it will last, though. I don't think banks will match the coming Fed rate increases on a 1:1 basis.
by venkman
Mon Dec 20, 2021 12:15 am
Forum: Investing - Theory, News & General
Topic: Are target funds too vanilla?
Replies: 115
Views: 11511

Re: Are target funds too vanilla?

nisiprius wrote: Sun Dec 19, 2021 6:26 pm The second failure occurred in 2020, when they abruptly cancelled the managed payout feature--the whole reason for the fund in the first place. Today, they are saying, well, here is a this wad of assets you can invest in, if you like. If you want to try to use it to live off of in retirement, how you do that is up to you, you're on your own.
If I recall correctly, they cancelled the managed payout feature because very few people were actually taking the payouts; most people were just reinvesting them. Not much point in managing the fund to achieve a certain payout level if no one needs it.
by venkman
Tue Dec 14, 2021 11:06 pm
Forum: Personal Investments
Topic: Large taxable investment - wait until after dividend?
Replies: 10
Views: 1124

Re: Large taxable investment - wait until after dividend?

Triple digit golfer wrote: Tue Dec 14, 2021 12:00 pm People always say "don't buy the dividend" but we're talking 0.20% here. Am I missing something or is it a lot about nothing?
Other people say, "Don't let the tax tail wag the investment dog." I side with those people in this particular instance. 0.20% is noise.
by venkman
Sun Dec 12, 2021 12:09 am
Forum: Personal Investments
Topic: Reducing concentration in big tech holdings?
Replies: 45
Views: 4559

Re: Reducing concentration in big tech holdings?

If your goal is to tilt away from tech, but not necessarily away from growth stocks in general, you might consider a Dividend Growth index fund like VDADX/VIG. It's a large blend fund with 15% exposure to the tech sector (S&P 500 is 25%). You'll still have MSFT as your top holding, but none of the others in the top 7.
by venkman
Fri Dec 10, 2021 10:14 pm
Forum: Personal Finance (Not Investing)
Topic: Florida Health Insurance Options for Self-Employed Person?
Replies: 14
Views: 1376

Re: Florida Health Insurance Options for Self-Employed Person?

You can still use the healthcare.gov site to shop for plans, even if you don't qualify for a subsidy.
by venkman
Mon Dec 06, 2021 11:25 pm
Forum: Personal Investments
Topic: need advice on avoiding capital gains tax
Replies: 3
Views: 666

Re: need advice on avoiding capital gains tax

Wash sale rules only apply to losses, not gains.
by venkman
Mon Dec 06, 2021 11:17 pm
Forum: Investing - Theory, News & General
Topic: Vanguard: U.S. equities more overvalued than any time since the dot-com bubble
Replies: 599
Views: 45134

Re: Vanguard: U.S. equities more overvalued than any time since the dot-com bubble

TheDDC wrote: Mon Dec 06, 2021 11:02 pm I was just told on the BH forum last night that we are "buy and hold" (which is really "buy and hide" the way this individual was presenting it, but anyway...) investors, so why would valuations even matter for those of us who just continue to buy in consistently at 100/0?
CAPE isn't useful for market timing, but it can be useful for long term planning. A high CAPE today is a reasonably good predictor of below-average returns over the next decade; if one wished to retire in 2031, they should plan for lower stock returns between now and then.

If one's time horizon is 20+ years, it likely won't matter too much.
by venkman
Fri Dec 03, 2021 11:18 pm
Forum: Personal Investments
Topic: Debating on Options trading - any suggestions
Replies: 24
Views: 2555

Re: Debating on Options trading - any suggestions

The BH case for options trading is that--if you do it right--you can capture the variance risk premium, which is somewhat uncorrelated to the equity risk premium, thereby reducing the overall volatility of your portfolio without reducing expected returns.

My guess is that increasing portfolio efficiency is not the reason your DH wants to get back into options trading.

This situation seems like it would fall under the unofficial BH "It's okay to actively trade as long as you keep it to 5% or less of your total portfolio" guideline. He can take that amount and play with it. If he beats the market, great. If not, oh well. Either way, no more ever gets taken out of the portfolio to add to the "play money" account.
by venkman
Fri Dec 03, 2021 10:52 pm
Forum: Investing - Theory, News & General
Topic: In which scenarios will cash outperform TIPS?
Replies: 24
Views: 2206

Re: In which scenarios will cash outperform TIPS?

As of market close today, a 5-year TIPS has a negative real yield of -1.59%.

Cash will outperform a 5-year TIPS over the next 5 years if inflation comes in at less than (1.59% + yield on cash).
by venkman
Sun Nov 28, 2021 10:34 pm
Forum: Investing - Theory, News & General
Topic: How to calculate cash dividends from holding stock index funds
Replies: 16
Views: 1690

Re: How to calculate cash dividends from holding stock index funds

[SEC yield of the fund on Jan. 1] times [total cash invested in the fund]

should give you a reasonable guesstimate of what to expect in terms of actual dividend distributions for the year. Swings in the price of the fund shouldn't significantly affect the actual per-share dividend amount, but an economic downturn could result in companies cutting dividends, as happened in 2020.
by venkman
Sun Nov 21, 2021 10:19 pm
Forum: Personal Investments
Topic: IRA, RMD & Bond Funds
Replies: 8
Views: 981

Re: IRA, RMD & Bond Funds

RMD's require you to take assets out of your IRA. They don't require you to liquidate anything. Some IRA custodians will let you take in-kind IRA distributions, so you can simply move the bonds to a taxable account. Or you can sell the bonds within your IRA, take the RMD in cash, then buy the same bonds in a taxable account. Being out of the bond market for a few days is not likely to make a significant difference in returns.
by venkman
Sun Nov 21, 2021 10:06 pm
Forum: Investing - Theory, News & General
Topic: theory: stock picking vs indexing in a small market
Replies: 7
Views: 1137

Re: theory: stock picking vs indexing in a small market

Within a given universe of stocks, the average active investor will earn exactly the same return as the average passive investor, before investing costs and fees. The ultimate winner will be whichever group has lower costs and fees.

The math applies to any universe of stocks.

Professional fund managers in the aggregate might be able to add value beyond their fees if they competed primarily against amateur retail investors; but for the most part, they're competing against each other.
by venkman
Fri Nov 19, 2021 11:11 pm
Forum: Investing - Theory, News & General
Topic: Why do companies still offer dividends?
Replies: 68
Views: 6532

Re: Why do companies still offer dividends?

7eight9 wrote: Fri Nov 19, 2021 5:29 pm Because a lot of investors know that non-dividend paying stock isn't really all that different from Pokemon Cards. It relies on the Greater Fool theory.

...when you buy a stock that doesn't pay a dividend, that is not an investment, that is a speculation ...(b)ecause the only way you can make money is it has to go up. --- Kevin O’Leary
Is that the same Kevin O'Leary who created the O'Shares Global Internet Giants ETF (OGIG), which holds so few dividend-paying stocks that it has never made a distribution in its 3+ years of existence?
by venkman
Tue Nov 16, 2021 11:01 pm
Forum: Investing - Theory, News & General
Topic: [GameStop GME trading mega-thread]
Replies: 5086
Views: 396909

Re: Theory on how GameStop is holding its price

"The market can remain irrational longer than you can remain solvent."
by venkman
Mon Nov 15, 2021 10:48 pm
Forum: Investing - Theory, News & General
Topic: Tax Efficiency and CEFs
Replies: 2
Views: 457

Re: Tax Efficiency and CEFs

There are some Buy-Write CEF's (ETV, ETB, et. al.) where the majority of the distribution is classified as return of capital. Could be useful in situations where you want current income, and plan to donate or pass on the shares via inheritance.
by venkman
Tue Nov 09, 2021 10:57 pm
Forum: Personal Investments
Topic: Helping an Elderly Relative with His Modest Nest Egg
Replies: 14
Views: 2436

Re: Helping an Elderly Relative with His Modest Nest Egg

MrSluggo581 wrote: Tue Nov 09, 2021 4:29 pm 1. Does he need the munis? Boglehead wisdom says munis don’t belong in an IRA
Those all appear to be taxable muni bonds, so it's not necessarily a problem to hold them in an IRA. My bigger worry would be how much of a haircut would you take trying to sell them.
by venkman
Mon Nov 08, 2021 10:32 pm
Forum: Personal Investments
Topic: Wade Pfau Retirement Planning Handbook - Annuity instead of bonds?
Replies: 121
Views: 12009

Re: Wade Pfau Retirement Planning Handbook - Annuity instead of bonds?

CrazyCatLady wrote: Mon Nov 08, 2021 8:43 am —take all or a portion of your bond allocation and use that money to buy an annuity to cover the absolutely must have amount not covered by other sources- SPIA/DIA if you can get your head around the fact you may not receive enough payments to get back what you invested. If you can’t accept that, go with a FIA with an income rider where your beneficiary gets the remainder.
SPIA's and DIA's can be structured so that your beneficiaries get 100% of the remaining unpaid premium if you die before it's all been paid out. The tradeoff is that your monthly payout will be lower, since the insurance company is assuming more risk.
by venkman
Sat Nov 06, 2021 11:48 pm
Forum: Investing - Theory, News & General
Topic: Easy way to compare asset classes with dividends re-invested
Replies: 11
Views: 1237

Re: Easy way to compare asset classes with dividends re-invested

https://www.portfoliovisualizer.com/

The free version only gives monthly results, but that's fine for backtesting.

The default option is to reinvest dividends, though you can change that if you like.
by venkman
Sat Nov 06, 2021 11:37 pm
Forum: Investing - Theory, News & General
Topic: Rick Ferri active v passive "debate of the century" podcast.
Replies: 4
Views: 1517

Re: Rick Ferri active v passive "debate of the century" podcast.

Tom Sosnoff is the founder and face of TastyTrade, which is aimed at educating retail investors about selling options. While they use a wide variety of option strategies, their bread and butter is selling options at 45 DTE and managing at 21 DTE. They're product-neutral, meaning they'll sell options on pretty much anything, if it has enough liquidity; and they do recommend trading on a wide variety of uncorrelated assets. For the most part, it's a mechanical strategy based on probability. The underpinning of the strategy is the Variance Risk Premium--the fact that realized volatility is usually lower than option implied volatility--so sellers of options have a positive expected return over the long term. And you can set up your options port...
by venkman
Fri Nov 05, 2021 10:35 pm
Forum: Investing - Theory, News & General
Topic: VIMAX Double performing VTSAX since 2000
Replies: 36
Views: 5702

Re: VIMAX Double performing VTSAX since 2000

Hi all, I was looking at my stock portfolio today (which is 100% VTI and VTSAX) and stumbled upon VIMAX Mid Cap index fund. I noticed the VIMAX returns over the last two decades on the VIMAX have been far more substantial than VTSAX (almost double). VIMAX has returned 526% while VTSAX has returned 248% since 2000. Starting the backtest in 2000 is going to skew the results against anything with a significant allocation to large-cap growth. You get all the effects of the bursting of the tech bubble, and none of the prior run-up that caused it. The S&P 500 got crushed in 2000-2002, while mid-caps were mostly flat over that stretch. If you start in 2003, the long term results are a lot closer. Mid-caps outperform slightly, but with higher ...
by venkman
Wed Nov 03, 2021 10:09 pm
Forum: Personal Investments
Topic: Zero Risk with 500k to invest
Replies: 48
Views: 6265

Re: Zero Risk with 500k to invest

Hello, I have a friend that has 500k in his 401(k) currently getting 2.4% in Empower's guarantee account. He wants option to invest it that could give him a better return though he wants zero risk. He is 57 and will be using the money for an income stream in retirement say around 63. Any thoughts on how to get him a better return? He is fine with annuity since zero market risk (of course the insurance company could crap out). I would tell him to run some quotes for a 57 year old buying a 500k deferred income annuity now, with income starting in 6 years, and a 63 year old buying a $575k (about what 500k would grow to in 6 years at 2.4%) immediate annuity. If the plan is definitely to buy an annuity in 6 years, it might be a better deal to g...
by venkman
Tue Nov 02, 2021 10:59 pm
Forum: Investing - Theory, News & General
Topic: Comparison of REITs, Small-Value, and Total US Equities Since 1994
Replies: 31
Views: 4103

Re: Comparison of REITs, Small-Value, and Total US Equities Since 1994

If you move forward the start date one year to 1995 there is no surprise, REITs and SCV win (27 year outperformance): https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&mode=1&timePeriod=2&startYear=1995&firstMonth=10&endYear=2021&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&leverageType=0&leverageRatio=0.0&debtAmount=0&debtInterest=0.0&maintenanceMargin=25.0&leveragedBenchmark=false&portfolioNames=false&portfolioName1=Portfolio+1&portfolio...
by venkman
Mon Nov 01, 2021 11:26 pm
Forum: Personal Investments
Topic: Help with Mom's Retirement
Replies: 15
Views: 1834

Re: Help with Mom's Retirement

I would consider telling her to just take the straight life $4850 payment. Any guarantee period or survivor benefit is basically paying to transfer risk that doesn't need to be transferred, since no one involved needs the money. If she's pulling in more income than she needs, she can earmark the $500k+ of invested assets for heirs and keep it invested aggressively, without having to worry about selling in a downturn.
by venkman
Mon Nov 01, 2021 10:43 pm
Forum: Personal Investments
Topic: What They Don't Tell You on Bogleheads [ETFs, settlement times, and good faith violations]
Replies: 16
Views: 2621

Re: What They Don't Tell You on Bogleheads [ETFs, settlement times, and good faith violations]

telemark wrote: Mon Nov 01, 2021 8:51 pm Further trading within this period may cause you to incur what Fidelity calls a Good Faith Violation, leading to a slap on the wrist and trading restrictions. This could happen, for example, if you meant to buy XYZ but bought XZZ by mistake, then thought "no problem, I'll just exchange one for the other." And if you were expecting that using ETFs would allow rebalancing more frequently, this may not be the case.
If you're rebalancing frequently enough to potentially incur a good faith violation, you aren't "rebalancing;" you're "actively trading."
by venkman
Sat Oct 30, 2021 10:18 pm
Forum: Investing - Theory, News & General
Topic: Investing ideas non-obvious to sophisticated investors
Replies: 40
Views: 4524

Re: Investing ideas non-obvious to sophisticated investors

traveling_salesman wrote: Sat Oct 30, 2021 9:59 am - The "illiquidity" premium doesn't (shouldn't?) exist: I don't see a fundamental reason why assets that are illiquid should give you a higher return. I suppose there is a psychological benefit where not knowing up-to-the-minute prices is comforting.
Given a choice between a highly liquid 20-year zero-coupon Treasury bond yielding 3.5% and an EE savings bond (yielding .10%, but guaranteed to double in value after 20 years, for an effective yield of 3.5%, but only if you hold it the whole 20 years), would you really be indifferent?

As long as liquidity has value to people, illiquid investments will need to entice investors by offering a higher expected return than a similar liquid investment.
by venkman
Thu Oct 28, 2021 11:17 pm
Forum: Personal Investments
Topic: Help with cashing out an annuity
Replies: 6
Views: 1360

Re: Help with cashing out an annuity

Income riders can be pretty complicated, and they are almost always a bad idea if you don't plan to ever use them. There are two separate balances in play with an income rider: 1. The accumulation value. This is the the actual cash value you can get for surrendering the annuity. It increases based on whatever the annuity is invested in (variable or fixed index products). Fees (including the added fee for the income rider) are deducted from this value. 2. The income rider value. This increases by a guaranteed 7% (in this case) a year, BUT the value is only used to calculate the payout amount when the contract is annuitized. You can't ever cash in the annuity for this amount. In most cases, the income rider value will end up being significant...
by venkman
Thu Oct 28, 2021 10:45 pm
Forum: Personal Investments
Topic: Could somebody explain this bond investment to me?
Replies: 11
Views: 1603

Re: Could somebody explain this bond investment to me?

When in doubt, assume markets are efficient, and that anything offering equity-level returns will have equity-level risk.
by venkman
Tue Oct 26, 2021 11:43 pm
Forum: Investing - Theory, News & General
Topic: An advisor for annuity or retirement income gap
Replies: 5
Views: 824

Re: An advisor for annuity or retirement income gap

How much do you anticipate needing to pull from your portfolio annually once you retire? As far as guaranteed lifetime income, there aren't really any alternatives to an annuity. I think they can be a particularly good choice for people who haven't reached their nest egg goal by retirement, since they provide the highest safe payout rate. If you annuitize a portion of your portfolio, the remaining assets don't have to work as hard to produce return, and you can afford to be more aggressive with those assets because of the guaranteed income you've got coming in. The main drawback of annuities is that the money is guaranteed not to be available for heirs. You can run your own annuity quotes at ImmediateAnnuities.com . You might also check out...
by venkman
Sat Oct 23, 2021 10:33 pm
Forum: Personal Finance (Not Investing)
Topic: Worrisome changes since buying an annuity...
Replies: 6
Views: 1637

Re: Worrisome changes since buying an annuity...

Question: Do we need to be worried about the whether the annuity is still viable given all that change, or is that a good reason to dump the annuity and roll into an IRA? Annuities are binding contracts between you and the insurance company. If the insurance company gets bought out, the new company inherits the terms of the contract and has to honor them. If the insurance company itself goes under, the state guaranty association will step in and back up the full accumulated value of the annuity (up to certain limits, which vary by state). KKR has an "A" rating, which is not in the top tier, but is still solid. Whether or not the annuity is still the best place for your money is a separate issue, but I would not be worried about t...
by venkman
Fri Oct 22, 2021 10:26 pm
Forum: Personal Investments
Topic: All eggs in one basket [all money at one firm?]
Replies: 29
Views: 4738

Re: All eggs in one basket

The BH wiki has a section on this topic.

https://www.bogleheads.org/wiki/Vanguard_safety
by venkman
Thu Oct 21, 2021 10:51 pm
Forum: Personal Investments
Topic: why would a fiduciary advisor recommend 60/40 in every account? (no tax location)
Replies: 32
Views: 5178

Re: why would a fiduciary advisor recommend 60/40 in every account? (no tax location)

Raspberry-503 wrote: Thu Oct 21, 2021 2:38 pm But something that I don't get is that they insisted the "right" way to set up my accounts was to have each account in a 60/40 AA, regardless of taxable/non-taxable. At the time I sort of asked why they wouldn't practice "tax location" and they told me they did because the bonds in taxable were tax-efficient (munis and passive ETFs). I wasn't quite savvy enough at the time to realize this was not really an answer.

If it matters, I'm towards the top of the high 22% tax bracket and investment accounts total in the low 7 figures roughly 50% in rollover IRA, 20% in 401(k) and 30% in taxable
My bigger concern about the advisor would be why did they use municipal bonds for someone in the 22% tax bracket?
by venkman
Wed Oct 20, 2021 11:21 pm
Forum: Investing - Theory, News & General
Topic: Questions about Portfolio Allocation and Location
Replies: 7
Views: 972

Re: Questions about Portfolio Allocation and Location

How much work do you want to do managing the portfolio? You could go all-in with Vanguard's 60/40 Lifestrategy Moderate Growth (VASGX), which would get you pretty close to the percentages recommended by your CFP (which look fine to me), and you'd never have to worry about managing or rebalancing. No PAS required.
by venkman
Tue Oct 19, 2021 10:34 pm
Forum: Investing - Theory, News & General
Topic: Alternative investments/assets with bond-like risk?
Replies: 46
Views: 4729

Re: Alternative investments/assets with bond-like risk?

You can sell covered calls and/or cash-secured puts on bond ETF's such as TLT. Even relatively conservative out of the money options should bring in enough to make a small real return.
by venkman
Mon Oct 18, 2021 10:49 pm
Forum: Investing - Theory, News & General
Topic: Passive Investing = Downside Protection?
Replies: 30
Views: 3596

Re: Passive Investing = Downside Protection?

Stock prices are set by the investors who are actively trading. If enough of them start panic selling, it doesn't matter if they're 90% of the market or 10%. When we buy VOO, Vanguard is purchasing the underlying to operate the ETF. They're actively trading on behalf of passive investors. Passive investors are very much part of price setting, because those ETFs are still *actively traded*. Not every "passive investor" is B&H US TSM for decades. People DCAing new monies, selling equities to withdraw money etc etc all impact the bottom line. When we buy VOO, we're buying it on the open market from someone who is selling VOO. Vanguard doesn't have to do anything with the underlying securities. I don't have any data to back it up...
by venkman
Sun Oct 17, 2021 11:00 pm
Forum: Investing - Theory, News & General
Topic: Passive Investing = Downside Protection?
Replies: 30
Views: 3596

Re: Passive Investing = Downside Protection?

Stock prices are set by the investors who are actively trading. If enough of them start panic selling, it doesn't matter if they're 90% of the market or 10%.
by venkman
Sat Oct 16, 2021 10:32 pm
Forum: Personal Finance (Not Investing)
Topic: Pension annuity or Lump Sum
Replies: 14
Views: 2106

Re: Pension annuity or Lump Sum

What percentage of your expenses are already covered by your current income streams, and what percentage (if any) would you need to draw down from your IRA annually? Also, what are your estate goals (i.e. leave a sizeable estate to heirs/charity, or spend down most of the money before you pass)? If your expenses are already covered, you don't need the annuity. But, if you don't care about leaving an estate, the annuity could be a good way to help spend down your money without worrying about it ever running out. If your expenses aren't covered, the annuity would help, and the IRA could be invested for moderate growth to help keep up with inflation. Or, if the annuity and IRA combined are large enough that you would need less than, say, a 2% ...
by venkman
Thu Oct 14, 2021 11:31 pm
Forum: Personal Investments
Topic: Investment/Income options for my widowed Mother
Replies: 15
Views: 1986

Re: Investment/Income options for my widowed Mother

My step-father recently passed away leaving my Mom (61) with a $300,000 life insurance benefit and was hoping for some advice as to how she can best use this to set her up for the future. Her cousin, who is a financial planner, is recommending to put $250,000 in a 30yr annuity with a $1,100/mo payout. Is this the right path? According to Stan the Annuity Man™, annuity companies prefer that people don't annuitize more than 50% of their investable assets. Even so, $150k in a lump sum, immediate, single life annuity would get her close to the extra $700/mo she needs. Alternatively, she could add a 2-3% COLA to the annuity and get a lower starting payout that would increase each year. The remaining $150k could go into a balanced portfolio to k...
by venkman
Wed Oct 13, 2021 11:29 pm
Forum: Personal Investments
Topic: Withdraw rate for VWIAX
Replies: 41
Views: 2878

Re: Withdraw rate for VWIAX

Crystal ball? For long term retirement income the idea is take periodic withdrawals based upon the 4% rule. My original questions center around its feasibility within VWIAX. The 4% rule was formulated in 1994, when bond yields were a lot higher. The 60% bond allocation of VWIAX has a current yield to maturity of 1.7%. If you don't care about having much left over, you should be pretty safe withdrawing 4% annually for 30 years from VWIAX. But, if you don't care about having much left over, you might also consider annuitizing some of the fixed income portion of the portfolio. A 65-year-old can get a lifetime payout around 5.5-6% on an immediate annuity. That gives you some longevity protection, and means the rest of your portfolio doesn't ha...