Search found 886 matches

by spdoublebass
Wed Mar 06, 2024 7:50 am
Forum: Investing - Theory, News & General
Topic: TIAA Trad vs bonds in 2023
Replies: 14
Views: 2302

Re: TIAA Trad vs bonds in 2023

The past few years, TIAA trad has just killed intermediate bond funds. It returned 3% when bonds were yielding close to zero, held value as bonds dropped 20%, and now is offering 5.75-6.5 for new money depending on contract. On the flip side, I’m guessing that bonds would do better if rates decline. Putting liquidity restrictions aside for the moment, where would you put new contributions to your fixed income in 2023: intermediate bond funds or TIAA trad? I use TRAD and regular bond funds. That being said, I think many people don't know what they are actually getting with TRAD. For me when I look at my statement I see new money is getting 5.25% (GRA), 5.5% (RCP), 6.25% (RA). BUT, my old money that is already in TRAD is not getting those ne...
by spdoublebass
Wed Dec 13, 2023 12:22 pm
Forum: Investing - Theory, News & General
Topic: Beneficiary, separated....
Replies: 9
Views: 1094

Beneficiary, separated....

This is a question I have regarding a family members situation. Let's say you separate from a souse but do not get divorced and your goal is to leave your retirements accounts to someone other than your spouse. 401k's fall under ERISA laws (which are very new to me). From what I pieced together, the souse would get a portion of the money even if they were not listed as a beneficiary, they have legal right to it. If they rollover their 401k to vanguard, they would then bypass the ERISA laws correct? And you could then list whomever you want as a beneficiary and your spouse would not have legal right to half correct? I just called vanguard and asked them and this was my understanding. The lady was very clear that as long as someone else is li...
by spdoublebass
Sun Oct 22, 2023 1:46 am
Forum: Personal Investments
Topic: Tips fund inside Roth space or IBonds?
Replies: 14
Views: 1273

Re: Tips fund inside Roth space or IBonds?

watchnerd wrote: Sun Oct 22, 2023 12:09 am
spdoublebass wrote: Sat Oct 21, 2023 8:55 pm
watchnerd wrote: Sat Oct 21, 2023 8:40 pm Ick, neither!

Roth should be first prioritized for fast growing assets like stocks.

Put your TIPS in a regular IRA.
You are suggesting someone open up a regular Ira for the sole purpose of TIPS even if they have space left in the Roth (between Ira and 401K)?
No....

But if you've had more than one employer, you probably have a rollover IRA, in addition to your Roth and 401k.

At least I do.
So maybe I wasn’t clear in the OP.

You’re talking about a Roth and a 401k.
I’m talking about someone who only contributes to a Roth IRA and a Roth 401k.
by spdoublebass
Sat Oct 21, 2023 10:04 pm
Forum: Personal Investments
Topic: Tips fund inside Roth space or IBonds?
Replies: 14
Views: 1273

Re: Tips fund inside Roth space or IBonds?u

Thesaints wrote: Sat Oct 21, 2023 9:12 pm
TipsQuestions wrote: Sat Oct 21, 2023 8:58 pm $100 of stocks may be worth more (on an after tax basis) in a Roth than TIRA, but that also means more risk.
How so ?
spdoublebass wrote: Sat Oct 21, 2023 8:58 pm I’m saying that a couple with a 25% savings rate that makes $113k or less wouldn’t max out their Roth space and still be in the 12% bracket. You are not sacrificing space for stocks in your portfolio.
"Max out roth space" it means you can only put 6.5/7.5k in a Roth account this year. Better make them to be 6.5/7.5k that will matter.
No it doesn’t. The person I described above I said has access to a Roth 401k. That’s another $19.5K a year
by spdoublebass
Sat Oct 21, 2023 8:58 pm
Forum: Personal Investments
Topic: Tips fund inside Roth space or IBonds?
Replies: 14
Views: 1273

Re: Tips fund inside Roth space or IBonds?u

A first consideration to be made is that if you put a TIPS fund inside your Roth you can still also buy Savings Bonds, which would be tax-deferred . Whereas, if you did the opposite, TIPS would be taxed immediately. A second consideration is that Roth space is tight and, provided one is not close to withdrawals, it is too precious to waste it with bonds. Not tight for the couples making $113,450K or less a year. After standard deduction they still fall in the 12% bracket. So for these couples they have plenty of Roth space between their Roth IRAs and if they are lucky a Roth 401k. Not sure I follow: Roth space is 7k for anyone, regardless of how much they make. Yes, with a 401k that space becomes quite larger, of course. Still, if you have...
by spdoublebass
Sat Oct 21, 2023 8:55 pm
Forum: Personal Investments
Topic: Tips fund inside Roth space or IBonds?
Replies: 14
Views: 1273

Re: Tips fund inside Roth space or IBonds?

watchnerd wrote: Sat Oct 21, 2023 8:40 pm Ick, neither!

Roth should be first prioritized for fast growing assets like stocks.

Put your TIPS in a regular IRA.
You are suggesting someone open up a regular Ira for the sole purpose of TIPS even if they have space left in the Roth (between Ira and 401K)?
by spdoublebass
Sat Oct 21, 2023 8:29 pm
Forum: Personal Investments
Topic: Tips fund inside Roth space or IBonds?
Replies: 14
Views: 1273

Re: Tips fund inside Roth space or IBonds?

Thesaints wrote: Sat Oct 21, 2023 8:19 pm A first consideration to be made is that if you put a TIPS fund inside your Roth you can still also buy Savings Bonds, which would be tax-deferred.
Whereas, if you did the opposite, TIPS would be taxed immediately.

A second consideration is that Roth space is tight and, provided one is not close to withdrawals, it is too precious to waste it with bonds.
Not tight for the couples making $113,450K or less a year. After standard deduction they still fall in the 12% bracket. So for these couples they have plenty of Roth space between their Roth IRAs and if they are lucky a Roth 401k.
by spdoublebass
Sat Oct 21, 2023 8:16 pm
Forum: Personal Investments
Topic: Tips fund inside Roth space or IBonds?
Replies: 14
Views: 1273

Tips fund inside Roth space or IBonds?

Say you were not using all of your Roth space between an IRA and 401K, I understand not many Bogleheads fit into this category. Would you then prefer to buy A Tips fund inside the Roth retirement account over buying Ibonds? this way the future gains would be tax free? (If the IBonds were going to be used for retirement and not for an EF or educational purposes) (I understand that at some point Roth accounts may not be the best decision and tax deferred accounts can bring you down into a lower tax bracket) This may be a simple question, I just never thought about it before. To me I would think in this case buy a Tips fund in the Roth space until you max it out. Then I bonds would be a great option since they are essentially tax deferred unti...
by spdoublebass
Thu May 25, 2023 6:45 pm
Forum: Personal Investments
Topic: TIAA traditional tradeoff between higher current rate and higher minimum rate
Replies: 78
Views: 8045

Re: TIAA traditional tradeoff between higher current rate and higher minimum rate

crefwatch,

Thanks for posting this link.

Am I reading it correctly that:
RCP plans, the minimum rate will be reset annually
RC plans the minimum rate will be set annually and be valid for 10 years???

So right now, it's saying RC Trad minimum rate is 2.8%, that would be good for ten years is what they are saying correct even if the minimum rate changes again next year?
by spdoublebass
Thu May 25, 2023 8:53 am
Forum: Personal Investments
Topic: TIAA traditional tradeoff between higher current rate and higher minimum rate
Replies: 78
Views: 8045

Re: TIAA traditional tradeoff between higher current rate and higher minimum rate

When TIAA did the update at my school, I got new RC & RCP contracts. Any funds in the old contracts (RA & SRA) remain there; I believe moving money from the old contract to the new one requires a transfer form. At my institution, I also automatically got new RC and RCP contracts. However, funds in the old contracts only remained there after the announced transition date if they were in TIAA or CREF "funds" -- or more accurately, in TIAA or CREF "annuities" (which is what I think they are technically/legally, even before they've been converted to income streams by annuitizing them). That was explained in documents we received well in advance of the transition date, but one had to read things pretty closely to und...
by spdoublebass
Thu May 25, 2023 12:48 am
Forum: Personal Investments
Topic: TIAA traditional tradeoff between higher current rate and higher minimum rate
Replies: 78
Views: 8045

Re: TIAA traditional tradeoff between higher current rate and higher minimum rate

When TIAA did the update at my school, I got new RC & RCP contracts. Any funds in the old contracts (RA & SRA) remain there; I believe moving money from the old contract to the new one requires a transfer form. At my institution, I also automatically got new RC and RCP contracts. However, funds in the old contracts only remained there after the announced transition date if they were in TIAA or CREF "funds" -- or more accurately, in TIAA or CREF "annuities" (which is what I think they are technically/legally, even before they've been converted to income streams by annuitizing them). That was explained in documents we received well in advance of the transition date, but one had to read things pretty closely to und...
by spdoublebass
Sun May 07, 2023 4:04 pm
Forum: Personal Investments
Topic: TBill 1 month vs 2 months interest spread
Replies: 25
Views: 3381

Re: TBill 1 month vs 2 months interest spread

Can someone explain how the debt ceiling crisis will affect T bills maturing?

I invest and don’t look. But I bought some t bills with some money to pay my property tax bill with and they will mature over the next few months.

Thanks
by spdoublebass
Tue Dec 27, 2022 8:17 pm
Forum: Investing - Theory, News & General
Topic: Robert Merton on fixing retirement
Replies: 323
Views: 36529

Re: Robert Merton on fixing retirement

nedsaid wrote: Tue Dec 27, 2022 7:59 pm
If you are younger than age 57, and you didn't want to bother with individual TIPS, I suppose what you would do is have 100% of the portion of your portfolio that you want in TIPS to be in the PIMCO 15+ TIPS ETF. It wouldn't be perfect but that is the best one can do without trying to match duration with individual TIPS.

Seeing that TIPS go out as far as 30 years, you could start the process with individual TIPS at about age 47 1/2, but calculating the average duration of a portfolio of individual TIPS is beyond the ability of most individual investors.

My examples are assuming retiring at age 65.
I know they don’t move the needle for everyone, but you could use IBonds since they can be held for 30 years.
by spdoublebass
Mon Dec 26, 2022 8:18 am
Forum: Investing - Theory, News & General
Topic: Income $120,000, taxes $0 in 2023
Replies: 41
Views: 10448

Re: Income $120,000, taxes $0 in 2023

I know the standard deduction for 2023 joint is $27,700, that doesn't wipe out your $30,700 completely right? The standard deduction increases by $1,500 per person over age 65, so that's an extra $3,000 per couple. Nice. Did not know that. So if we add that $3000 along with what Livesoft pointed out we would be left with: Standard deduction wipes out the ordinary income. Leaves $3k still of TLH carrying forward which would bring the QDI down to $86,250. The joint tax bracket is 0% up until $72,500. We are still roughly $13k off. Again, not trying to be a pain, but just curious how accomplish zero tax I’m assuming the QDI is long term capital gains. In 2023 the 0% bracket for LTCG goes to $89,250 for married filing jointly. Much harder to d...
by spdoublebass
Mon Dec 26, 2022 7:30 am
Forum: Investing - Theory, News & General
Topic: Income $120,000, taxes $0 in 2023
Replies: 41
Views: 10448

Re: Income $120,000, taxes $0 in 2023

22twain wrote: Mon Dec 26, 2022 7:24 am
spdoublebass wrote: Mon Dec 26, 2022 7:11 am I know the standard deduction for 2023 joint is $27,700, that doesn't wipe out your $30,700 completely right?
The standard deduction increases by $1,500 per person over age 65, so that's an extra $3,000 per couple.
Nice. Did not know that.

So if we add that $3000 along with what Livesoft pointed out we would be left with:

Standard deduction wipes out the ordinary income.

Leaves $3k still of TLH carrying forward which would bring the QDI down to $86,250. The joint tax bracket is 0% up until $72,500. We are still roughly $13k off.
Again, not trying to be a pain, but just curious how accomplish zero tax
by spdoublebass
Mon Dec 26, 2022 7:11 am
Forum: Investing - Theory, News & General
Topic: Income $120,000, taxes $0 in 2023
Replies: 41
Views: 10448

Re: Income $120,000, taxes $0 in 2023

Imagine two spouses who both turn 65 on December 30, 2022, and retire from work the same day. They plan to start SS at age 70. They have 2023 ordinary income from interest of $30,700 and QDI of $89,250, so total income of $119,950. On their 2023 1040, the ordinary income would be offset by their standard deduction and the QDI would be taxed at 0%. They therefore will have no federal income tax liability for tax year 2023, on total income of about $120,000. Does anyone disagree with this calculation, using the Qualified Dividends and Capital Gain Tax Worksheet? I am not doubting your calculations at all, but could you elaborate a bit for others to learn a but more? I know the standard deduction for 2023 joint is $27,700, that doesn't wipe o...
by spdoublebass
Fri Dec 23, 2022 11:11 pm
Forum: Investing - Theory, News & General
Topic: Robert Merton on fixing retirement
Replies: 323
Views: 36529

Re: Robert Merton on fixing retirement

Nearly all the comments in this thread concern the decumulation period of retirement planning. But Merton is also proposing that the liability driven investment (LDI) strategy be applied for several years during the accumulation period. Here is how you can employ Merton’s accumulation strategy in your retirement account. A generic example illustrates this. A single 50-year-old intends to retire at age 65. Earlier the AA was heavily tilted toward equities. However, by age 50 the AA was shifting into more bonds and is now 65/35. The 35% in bonds is all in a LT TIPS fund. The liability matching has already begun. As the investor moves closer to age 65 the AA continues to shift toward bonds and a ST TIPS fund is introduced to keep the duration...
by spdoublebass
Fri Oct 28, 2022 3:03 pm
Forum: Personal Investments
Topic: VTI + VT For Moderate Bias to US Market?
Replies: 14
Views: 1682

Re: VTI + VT For Moderate Bias to US Market?

I am not a guru on this forum so please let that sink in before you read my post. I found Bogleheads right away when I start investing. Even though I read as much as I could one thing I had a really hard time with is picking my AA. I did start out slicing and dicing and over a few months, I realized I liked just the market approach. The issue was which market? Having a Straight US or Total World both made sense to me. I could never pick one over the other, so I went with both. I hold 50% VTI and 50% VT. My rational is I'm covered either way. I also think it's funny it puts me at about 25% international which is close to Bogles 20% (if needed) and Vanguards 40%. I like how VT Adjusts to world market weight. I do follow William Sharps market ...
by spdoublebass
Wed Oct 19, 2022 6:15 pm
Forum: Personal Finance (Not Investing)
Topic: Refund from Credit Card for downpayment to contractor.
Replies: 3
Views: 451

Refund from Credit Card for downpayment to contractor.

I recently bought a house and wanted some work done. I got an estimate from a company and accept $3600 worth of work.

They wanted half for a downpayment. I paid $1800 by credit card.

Long story short.

No work was done. They said they would refund my card yesterday and is wasn't returned. I called today and didn't get ahold of them.

I called Chase. They said I have to wait until the end of the cycle and call back on Nov 2 if it's not refunded.

I'm worried the company won't refund me. Will I be out the money? or will the credit card company help me?

I don't have any experience with this stuff.
Thanks
by spdoublebass
Thu Sep 22, 2022 12:17 pm
Forum: Personal Investments
Topic: What exactly is the “x” in 25x?
Replies: 110
Views: 13810

Re: What exactly is the “x” in 25x?

Does 25 mean you expect to not survive that many years after retirement and with $0 in your assets by then give and take some :shock: The 4% rule says that 25x is very likely to last 30 years. And the same study shows that in many circumstances, it will actually grow. Just to clarify, that study also was for a 60/40 portfolio correct? So if you are 30/70, 4% might not be ok. Right? Just about any SWR study, certainly Trinity, has tables of the results for a range of asset allocations and a range of years. 60/40 and 70/30 are hardly different. 20/80 does in fact have worse prospects. If you want to look at a model that lets you set the asset allocation and the spending then you can look at FireCalc or this one that has an excellent graphic ...
by spdoublebass
Thu Sep 22, 2022 12:01 pm
Forum: Personal Investments
Topic: What exactly is the “x” in 25x?
Replies: 110
Views: 13810

Re: What exactly is the “x” in 25x?

sailaway wrote: Wed Sep 21, 2022 10:15 pm
ebeb wrote: Wed Sep 21, 2022 10:12 pm Does 25 mean you expect to not survive that many years after retirement and with $0 in your assets by then give and take some :shock:
The 4% rule says that 25x is very likely to last 30 years. And the same study shows that in many circumstances, it will actually grow.
Just to clarify, that study also was for a 60/40 portfolio correct? So if you are 30/70, 4% might not be ok. Right?
by spdoublebass
Thu Aug 25, 2022 4:38 pm
Forum: Investing - Theory, News & General
Topic: Paul Merriman 2 Funds for Life
Replies: 63
Views: 20859

Re: Paul Merriman 2 Funds for Life

Why would you even need to chart this? It's pretty obvious that since target date funds contain bonds ANY target date fund would underperform the SP500. And yet the 2-Fund-For-Life combo of TDF/SCV with an allocation for an 18-year old beats a 100% allocation of the SP500 (although you'd think otherwise). https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=4&startYear=1985&firstMonth=1&endYear=2022&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...
by spdoublebass
Thu Aug 25, 2022 4:07 pm
Forum: Investing - Theory, News & General
Topic: Paul Merriman 2 Funds for Life
Replies: 63
Views: 20859

Re: Paul Merriman 2 Funds for Life

Just curious if anyone caught Paul Merriman's latest Podcast. I always find him interesting. He came out with a 2 Fund portfolio. https://paulmerriman.com/2-funds-for-life/ Basically it's 1.5 X your age in a TDF, and the remaining in SCV. I was going to point this out to a few youngsters in the family, then for grins did a visualization of just the S&P500 in-lieu of the TDF and what do you know. At 18, the TDF would be in it's most aggressive format and cannot beat the S&P500 / SCV combo: https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=4&startYear=1985&firstMonth=1&endYear=2022&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annua...
by spdoublebass
Fri Aug 05, 2022 11:51 am
Forum: Personal Investments
Topic: SPHD instead of bonds
Replies: 26
Views: 1909

Re: SPHD instead of bonds

What about CD's?

If you are ok with stock, then would you be ok with Corporate bonds?
by spdoublebass
Thu Aug 04, 2022 11:37 am
Forum: Investing - Theory, News & General
Topic: A bond duration glide path for retirement investing
Replies: 217
Views: 45357

Re: A bond duration glide path for retirement investing

Someone please correct me - Let's pretend I'm 60, just retired and I expect to live to 90 (glossing over the obvious problem for now.) The midpoint is 15 years. This "duration matching" thing implies I should have zero rate risk in my bonds when I'm 75? Why? Assuming I maintained a 60-40 allocation in my portfolio, at 75 I'm now 60% stocks and 40 cash. I've got 15 years of 40% of my money doing roughly nothing for me before I kick the bucket. How is this beneficial? I'm still 60% in stocks so my portfolio still has volatility. I've just removed interest rate risk and, importantly, almost all of the bond income for some reason. My equity beta is still .6, I may have international exposure and currency risk etc. etc. I can see this...
by spdoublebass
Thu Aug 04, 2022 10:18 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: 23018

Re: Mortgage negative bond...Don't pay down mortgage early...House is not a bond

If we keep this really simple, Say a couple saves $20K a year, (they put $6k each in a Roth IRA and another $4k each in a Roth 401k), but also has a mortgage, how would they treat their mortgage as a negative bond with an 80/20 AA? Basically, I'm asking how to combine #1 and #2 above. Thanks in advance. I thought I'd try to answer your actual question, in a straightforward mathematical way. Let's say you are 5 years into the mortgage (you've made 60 payments). You need to calculate how much lower your mortgage balance is due to your excess payments. You do this by either looking at the original mortgage amortization schedule that came in the ridiculous pile of papers you signed or with the formula '=PV(0.05/12,360-60,-123.45,,0)', where 12...
by spdoublebass
Mon Aug 01, 2022 4:57 pm
Forum: Investing - Theory, News & General
Topic: TIAA ‘loyalty’ bonus for annuitizing: Do you understand it?
Replies: 51
Views: 9725

Re: TIAA ‘loyalty’ bonus for annuitizing: Do you understand it?

In my mind, the "loyalty" bonus is just a new marketing term for what used to be called "additional amounts". I played around with the retirement estimator at TIAA for my former employer accounts. 100% of my TIAA investments are in Traditional. They clearly separate Additional Amounts from the Loyalty Bonus. For a payout date starting way in the future (25 years, I'm 50) they break down the payments in three separate lines: 1) Guaranteed Amounts - 71% [I've scaled these as a percentage of the total first year payment and rounded] 2) Additional Amounts -- 28% 3) "Loyalty Bonus" [quotes are theirs] - 1% My first Traditional investment was mid 2020. I assume that these projections take into account a 27 year loya...
by spdoublebass
Fri Jul 29, 2022 11:20 am
Forum: Investing - Theory, News & General
Topic: TIAA ‘loyalty’ bonus for annuitizing: Do you understand it?
Replies: 51
Views: 9725

Re: TIAA ‘loyalty’ bonus for annuitizing: Do you understand it?

crefwatch wrote: Fri Jul 29, 2022 11:13 am spdoublebass, nobody is arguing that stocks and fixed-income products have similar long-term records. The age and risk tolerance of any single investor are more important in those respects than are TIAA (or anybody else's) rules.
Thanks for the reply.
I should have said I wrote my comment more for myself. I tend to read these threads and think I should be acting on something do to the loyalty bonus.
by spdoublebass
Fri Jul 29, 2022 9:27 am
Forum: Investing - Theory, News & General
Topic: A bond duration glide path for retirement investing
Replies: 217
Views: 45357

Re: A bond duration glide path for retirement investing

vineviz wrote: Fri Jul 29, 2022 9:11 am
Imagine a retiree whose retirement expenses will be $50,000/year for 30 years. When yields are 1%, the "cost" (aka NPV) of that retirement is $1,290,385. If yields rise to 3%, the "cost" of funding that same retirement drop to just $980,022.
Vineviz,
Is there an online calculator that you can do these types of calculations, or are you just using a spreadsheet.

Thank you for this thread.
by spdoublebass
Fri Jul 29, 2022 9:19 am
Forum: Investing - Theory, News & General
Topic: TIAA ‘loyalty’ bonus for annuitizing: Do you understand it?
Replies: 51
Views: 9725

Re: TIAA ‘loyalty’ bonus for annuitizing: Do you understand it?

As a total laymen, is it worth it?
Is the loyalty bonus better than stocks?

Doesn't it basically come down to I have X years until retirement. My choices are I can contribute to TRAD now and probably get a loyalty bonus, or I could put that in stocks and then move a larger amount of money into TRAD at a later date without a loyalty bonus.
by spdoublebass
Sun Jul 17, 2022 9:38 pm
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: 23018

Re: Mortgage negative bond...Don't pay down mortgage early...House is not a bond

retireIn2020 wrote: Sun Jul 17, 2022 2:07 pm If I had the equivalent of my mortgage balance in a cash account, I'd pay off my mortgage tomorrow no questions asked!
However, since my entire portfolio is in tax advantaged, I'd have to pull an additional 27 to 37 percent to pay Fed/State taxes.
No thank you, I'll keep my 2.7% mortgage, low taxes and 30-year inflation protected payment!
What if you didn’t have it in cash and you didn’t want to pull it out of your tax advantaged accounts?

How would you go forward? Would you put extra money on the mortgage? Or would you put it in something else? That’s what I’m asking.
by spdoublebass
Wed Jul 13, 2022 10:42 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: 23018

Re: Mortgage negative bond...Don't pay down mortgage early...House is not a bond

Can someone summarize what point this thread is making? when I bought a house I borrowed money. When I had an extra dollar I decided to either invest it or pay down my mortgage debt. I paid my two houses off over the last 25 years. Is it more complicated than that? I think it appears from this thread to be more complicated than that. I own two houses one worth say 250 and one worth say 550 - so I own 800K of residential housing. What concept am I missing? I'm with you on this. I don't see how debt can be counted towards asset allocation (its a liability) and don't see how paying down an obligation generates a "return" (it reduces future interest expenses). The negative bond concept seems like its making something pretty straightf...
by spdoublebass
Mon Jul 11, 2022 4:29 pm
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: 23018

Re: Mortgage negative bond...Don't pay down mortgage early...House is not a bond

2. I've read threads saying do not pay down your mortgage early . It took me a minute to understand this concept, but after doing the math on a few examples I see the advantage of putting money into retirement accounts and not paying off your mortgage early. It is not simply a math problem. Paying-off the mortgage provides a risk-free return. Investing involves risks. Which is why I’m not an either or guy. Makes sense to do both to minimize the risk. And you can always recast yourself mortgage in the future to take advantage of the prepayment, so it’s not an all or nothing approach. I'm kind of leaning towards doing a little of both. Investing some in a taxable, even buying I Bonds when appropriate, and also paying a little towards mortgag...
by spdoublebass
Mon Jul 11, 2022 12:58 pm
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: 23018

Re: Mortgage negative bond...Don't pay down mortgage early...House is not a bond

Wow. I've been reading this all over and it's helpful but also theoretical. I was hoping to maybe get a little more specific. Say you are a regular Joe (39) and Jane (45) who make $100k a year and save $20K a year. They also put another $5k aside each year for house repair etc. Say they are currently at 95/5 for an AA. They have a new 25 year mortgage at 5% making biweekly payments. Should they: 1. Pay their mortgage and invest like normal. or 2. Take 20% or so ($4000) from the $20K and invest it in a taxable account planning on paying off the house in 12 years or so. Be invest I mean something split up between stocks and I bonds (not an issue with only $4k a year) or 3. Just put that $4k a year straight on the mortgage as extra. This would...
by spdoublebass
Mon Jul 11, 2022 5:34 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: 23018

Re: Mortgage negative bond...Don't pay down mortgage early...House is not a bond

It seems this isn't as cut and dry as I'd like it to be. Right now my wife and I (age 39 and 45) have an AA of 95/5. We are buying a house and should be closing in two months. I had the idea of putting a percentage of our monthly retirement money towards the mortgage (5% rate). Say I put 20% of our monthly contribution towards the mortgage and pay it off in 12 years or so, is that better or worse than just saving that month and paying of the mortgage as scheduled? I could also just put that in a taxable account and pay it off in a lump sum when I have enough. When I ran a couple scenarios, it didn't change much. However, as was pointed out up thread, I wasn't taking in account sequence of return risk. But also as pointed out up thread, the ...
by spdoublebass
Sun Jul 10, 2022 5:46 pm
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: 23018

Mortgage as a negative bond...Don't pay down mortgage early...House is not a bond

1.I've read a lot of threads as counting a mortgage as a negative bond . I think I understand this in theory. If I have a mortgage at 5%, why be in a bond fund at 3% when I could just pay down my mortgage. 2. I've read threads saying do not pay down your mortgage early . It took me a minute to understand this concept, but after doing the math on a few examples I see the advantage of putting money into retirement accounts and not paying off your mortgage early. 3. I've read read threads on the fact that a paid off house is not a bond . A house doesn't pay a coupon. If my net worth was $1 million and my desired AA was 75/25. If I had a house worth $250K, I wouldn't want to be $750K in stock. So I get it that a house is not a bond. The questio...
by spdoublebass
Sun Jul 10, 2022 3:47 pm
Forum: Personal Finance (Not Investing)
Topic: Biweekly mortgage lower interest rate
Replies: 11
Views: 1062

Re: Biweekly mortgage lower interest rate

The mortgage amount is $152K (after 20% down). The principal and interest payments are around $444 biweekly. This works out to 21 years 9 month. But then why is your 30 year payment so high? PMT(5.75%/12,30*12,-152000) = $887 If you have $710-444=$266 escrow bi-weekly, that is $576 escrow monthly, for a payment of $1,463. Ok. I have gotten more information. It's still not exactly crystal clear, but pretty close. The 25 year mortgage is offered at 5%. Since it's biweekly you pay it off in 21 years 9 months. (weird that they still call it a 25 year mortgage, but whatever). This came to a biweekly payment of around $444 (principal and interest only) At the time I selected that option, the 30 year mortgage was at 5.875% which would have been a...
by spdoublebass
Sun Jul 10, 2022 3:06 pm
Forum: Personal Investments
Topic: Convert mutual fund to ETF
Replies: 11
Views: 933

Re: Convert mutual fund to ETF

sycamore wrote: Sun Jul 10, 2022 2:31 pm In case it matters to you, option 1 (sell, then buy) means you'll be "out of the market" for a period of time.

Sell mutual fund, settles T+1
Buy ETF, settles T+2.

You'll have to wait 1 day after the sale to place the buy order.

That is, unless you have margin enabled on your account or have spare cash/money market sitting around to cover the buy order.
Isn’t another difference the dividend payout and reinvestment dates?

Mutual funds pay out and reinvest the same day. ETFs have a lag I believe.
by spdoublebass
Fri Jul 08, 2022 8:51 pm
Forum: Personal Finance (Not Investing)
Topic: Biweekly mortgage lower interest rate
Replies: 11
Views: 1062

Re: Biweekly mortgage lower interest rate

Hyperchicken wrote: Fri Jul 08, 2022 8:31 pm
spdoublebass wrote: Fri Jul 08, 2022 8:21 pm The mortgage amount is $152K (after 20% down).

The principal and interest payments are around $444 biweekly.
This works out to 21 years 9 month.
But then why is your 30 year payment so high?

PMT(5.75%/12,30*12,-152000) = $887

If you have $710-444=$266 escrow bi-weekly, that is $576 escrow monthly, for a payment of $1,463.
You are right.
This is what I do not understand. I gotta get ahold of this lady. This doesn't add up.
Thank you for helping me out.
by spdoublebass
Fri Jul 08, 2022 8:27 pm
Forum: Personal Finance (Not Investing)
Topic: Biweekly mortgage lower interest rate
Replies: 11
Views: 1062

Re: Biweekly mortgage lower interest rate

I think I might have just answered my own question.

On this site
https://www.bankrate.com/mortgages/bi-w ... alculator/

If I punch in $152k, 5%, 25 years

It basically shows the difference of months payments for 25 years and biweekly, which is often discussed here. So maybe she just quoted me the different rates for a 30 year (5.75%) and a 25 year (5%) and the catch was that to get the 5% I had to do biweekly payments.

That's probably what is going on.
by spdoublebass
Fri Jul 08, 2022 8:21 pm
Forum: Personal Finance (Not Investing)
Topic: Biweekly mortgage lower interest rate
Replies: 11
Views: 1062

Re: Biweekly mortgage lower interest rate

Hyperchicken wrote: Fri Jul 08, 2022 8:11 pm
spdoublebass wrote: Fri Jul 08, 2022 7:49 pm I thought so too, but I asked the person and they said flat out a 25 year mortgage gets paid off in 21 years do to the extra payment. It says 21 years on the loan term for the appraisal.
Then your numbers are off.

Your loan amount is around $264,000 (=PV(5.75%/12,360,-1540)).

Bi-weekly payment:
To pay it off in 25 years: $711.90 (=PMT(5%/26,25*26,-264000)).
To pay it off in 21 years: $781.41 (=PMT(5%/26,21*26,-264000)).
The mortgage amount is $152K (after 20% down).

The principal and interest payments are around $444 biweekly.
This works out to 21 years 9 month.
by spdoublebass
Fri Jul 08, 2022 7:49 pm
Forum: Personal Finance (Not Investing)
Topic: Biweekly mortgage lower interest rate
Replies: 11
Views: 1062

Re: Biweekly mortgage lower interest rate

First time home buyer here. My plan was to just get a typical 30 year fixed mortgage. When I looked at that option they were offering 5.75% which made the monthly payments are $1540 for the house. I then saw I could get a 25 year, biweekly payment mortgage for 5%. I understand that with a biweekly payment you are actually making 13 "monthly" payments instead of 12. That being said, my biweekly payment would be $710. $710 x 26 = $18,460 a year $1540 x 12 = $18,480 a year Normally, I would pick a 30 year mortgage, but in this case with the lower interest rate, I'm inclined to do the 25 year biweekly. A bonus is that since you do make a 13th payment every year you finish the 25 year mortgage in 21ish years. Am I missing anything? if...
by spdoublebass
Fri Jul 08, 2022 7:42 pm
Forum: Personal Finance (Not Investing)
Topic: Biweekly mortgage lower interest rate
Replies: 11
Views: 1062

Biweekly mortgage lower interest rate

First time home buyer here. My plan was to just get a typical 30 year fixed mortgage. When I looked at that option they were offering 5.75% which made the monthly payments are $1540 for the house. I then saw I could get a 25 year, biweekly payment mortgage for 5%. I understand that with a biweekly payment you are actually making 13 "monthly" payments instead of 12. That being said, my biweekly payment would be $710. $710 x 26 = $18,460 a year $1540 x 12 = $18,480 a year Normally, I would pick a 30 year mortgage, but in this case with the lower interest rate, I'm inclined to do the 25 year biweekly. A bonus is that since you do make a 13th payment every year you finish the 25 year mortgage in 21ish years. Am I missing anything? if ...
by spdoublebass
Fri May 13, 2022 11:17 pm
Forum: Personal Investments
Topic: What happens if I DON'T tax loss harvest?
Replies: 80
Views: 11070

Re: What happens if I DON'T tax loss harvest?

sure they have to make withdrawals in 10 years but they won't be crying over all that tax free money. I thought trad IRAs have to be used over 10 years. Not Roth IRAs. Right? first I referenced inherited accounts. You say trad IRA but I'm talking about an inherited IRA . So just to be clear: 1. trad IRAs can be withdrawn by the original owner of the trad IRA according to life tables at the IRS. 2. Roth IRAs do not need to be drawn down at all by the original owner of the Roth IRA. Both inherited IRAs and inherited Roth IRAs have to be spent down by beneficiaries by Dec 31st of the 10th year following the year in which the original owner of the IRA or Roth IRA died. Any money not withdrawn from inherited IRA or inherited Roth IRA by Dec 31s...
by spdoublebass
Wed May 11, 2022 10:50 pm
Forum: Personal Investments
Topic: What happens if I DON'T tax loss harvest?
Replies: 80
Views: 11070

Re: What happens if I DON'T tax loss harvest?

arcticpineapplecorp. wrote: Wed May 11, 2022 7:15 pm

sure they have to make withdrawals in 10 years but they won't be crying over all that tax free money.

I thought trad IRAs have to be used over 10 years.
Not Roth IRAs. Right?
by spdoublebass
Wed May 04, 2022 6:51 pm
Forum: Investing - Theory, News & General
Topic: Bonds: What Are They Doing? Are They Doing Things?? Let's Find Out!
Replies: 2297
Views: 256283

Re: BND freefall

It's not clear what you mean by "be held harmless from interest rates" here. Normally that means that you are insensitive (don't care) whether interest rates go up or down, so that just means that you need to keep the average duration of your bond portfolio roughy equal to your investment horizon. If, for example, you intend to start taking withdrawals five years from now and stop taking them 30 years from now then your investment horizon is roughly 17.5 years since (5+30)/2 = 17.5. So if your bond portfolio has a duration of 17.5 years, a shift in the yield curve won't affect your ability to make the same withdrawals. How much you can withdraw is a different question, and there is no simple formula that will tell you what that w...
by spdoublebass
Mon Apr 18, 2022 3:16 am
Forum: Investing - Theory, News & General
Topic: Can you backdoor into a new Roth IRA account, created just for this purpose?
Replies: 2
Views: 462

Can you backdoor into a new Roth IRA account, created just for this purpose?

I have searched the forum but couldn't find the answer to this question.

Say someone is over the income limits for a Roth and Trad IRA and currently does not have either type of account. Can they open a traditional IRA and make their $6K non deductible contribution to it, and then open a Roth IRA to then convert that non deductible $6K to?

Is it that simple? I know it's more complicated with the pro rata rule, but it doesn't apply here. I wasn't sure if you could open a Roth Ira just to convert money to or not..... That's my question.

Thanks in advance for any help.
by spdoublebass
Sat Apr 16, 2022 11:24 pm
Forum: Personal Finance (Not Investing)
Topic: Where is the line between renting and owning a house?
Replies: 12
Views: 1739

Where is the line between renting and owning a house?

Up until now I have always rented and NEVER regretted it. Became a BH about 5 years ago. I'm 38 and wife is 45. No kids and no kids in future. We gross about $125K, our taxable Income is just over $80K. We save between $25-30K a year for retirement. Our current rent is $1075 a month which includes lawn care and snow removal (big deal in Central NY). I moved in here 3 years ago at $1050 month. For the first time I can say that we could be here for 10+ years, but until now I was never sure. I'm not mr. fix it, and we both work a lot. So the up side to renting for me is I never have to fix anything. Here is my issue: I'm not at war, but the landlord is a bit of a pain, enough to the point where we want to move. Finding a similar house in this ...
by spdoublebass
Tue Apr 05, 2022 12:04 pm
Forum: Investing - Theory, News & General
Topic: Bonds: What Are They Doing? Are They Doing Things?? Let's Find Out!
Replies: 2297
Views: 256283

Re: Bonds in free fall

corn18 wrote: Tue Apr 05, 2022 10:52 am
UpperNwGuy wrote: Tue Apr 05, 2022 10:45 am
corn18 wrote: Tue Apr 05, 2022 9:58 am BND at 52 week low today.
I show BND as having a 2.48 percent SEC yield today. That's not a low.
When you have to sell BND to fund retirement, you sell @ NAV.
And the money in BND that you aren't selling now has a higher yield right?