Bogleheads.org

you might want to read thru Bernstein's article "Playing Inflation Russian Roulette in Retirement" at https://www.advisorperspectives.com/art ... retirement and the discussion on this forum viewtopic.php?t=391371

Seeing the multi-million dollar portfolio reviews on this forum is very unsettling. Difficult looking at the far-away finish line when you've just started the race. I think you are doing great! Don't be discouraged by the numbers now, in 40 years when you're 65 then with compound growth you'll have millions yourself. For example let's use a time machine and see how you would have done if you started 40 years ago. I'm assuming $250/paycheck means $500 month in 2023 dollars. 40 years ago in 1983 an inflation calculator show that would have been $165/mos and using the S&P 500 periodic investment calculator at https://dqydj.com/sp-500-periodic-reinvestment-calculator-dividends/ shows that if someone had started investing $165/mos in the S&...

coachd50 wrote: ↑Sat Mar 25, 2023 5:59 pm Second question- How would you record this in quicken (if you or anyone else is a quicken user).

where do you have the account? Vanguard has a ridiculous way of updating the value of TIPS bonds, they report phantom purchases of additional increments of the bond in order to reflect the inflation adjustment. Fidelity doesn't change the number of shares you own, they just adjust the value of your holding. Don't know about other brokers.

Is my money earning me 5.188% from March 2, 2023 till March 31, 2024 ? Or is that 5.188% a red herring Yes and no. It depends on what you mean by "my money earning me". The replies pointed out the returns you will get and, as you suspected, the coupon payments do not take part in this calculation. In colloquial usage earning a rate means your money compounds at that rate. So if I have a 1-year bond selling for $1000 that has a $50 payment one year from now then I will indeed have 5% more in one year. And to generalize, many people mean by "earning a rate" that their purchase today will grow by that amount at maturity (or, for bonds with more than a 1-year maturity, their purchase today compounded at that rate). But you ...

1) Do I need to actually create an inherited IRA account in my name as the beneficiary or can Vanguard/Charles Schwab pull the assets from the deceased account and put them into an Inherited IRA at Vanguard/Charles Schwab? Not a lawyer, but from what I've read "A beneficiary IRA must be titled in the decedent's name for the benefit of the beneficiary" according to https://finance.zacks.com/title-beneficiary-ira-10103.html And "The number one rule for an inherited IRA is never, never, NEVER put the inherited funds into an IRA in your own name. Don’t request a check payable to you either. Both of those actions create a taxable distribution to you, the beneficiary, and you no longer have a tax deferred account." according ...

They have suggested my mom consider an owner financed sale, in order to speed / ease the closing, as well as potentially lowering her tax burden and benefitting from the interest going to her instead of a bank. Mom can exclude $250K of the sale price from capital gains tax which is 15%. And when her husband passed she likely got his stepped-up basis at the time. The point is the capital gains tax she'd pay by selling to an independent party is probably not much different than what she'll end up paying thru the arrangement you're considering. And, if you consider the $100K discount she is going to give them a tax, probably overall she's better selling it for $1.2 million cash. I understand that dealings with family friends may involve conce...

I started investing in 2006, but I have yet to be able to reach the 300K. Despite my efforts, I've seen minimal progress in my investments, and I recognize that I must be making some mistakes. Here's why I wonder if you've been exchanging between investments and trying to pick times to be in and out of the market. You have $240K now, amassed since 2006. By minimal progress I assume you mean it hasn't grown much. $240K over 16 years with no growth is saving $15K/year, so lets assume an average investment of $12K/year to allow for modest growth. Imagine someone with a 80% stock portfolio, 20% bonds, and they invested their stock holdings 25% international and the othere 75% in the S&P500. How much would they have today by investing $1K/m...

I am a 50-year-old amateur investor <snip> Despite my efforts, I've seen minimal progress in my investments, and I recognize that I must be making some mistakes. Looking at the large number of funds you hold and the quotes above describing yourself, I have to ask: have you been actively trading funds? Following the economic and market news, then selling your holdings you expect to underperform and buying the future winners? Stepping out of the market to avoid losses like after 2008 or when Covid struck? For most people on Bogleheads there are no efforts involved other than saving. Realizing market timing and picking the next "hot" fund doesn't work they just pick an asset allocation they can live with and invest in a small number...

jebwc wrote: ↑Sat Mar 18, 2023 10:13 pm So actually, an argument can be made that you shouldn't save anything in a 401k above what is required to get the match. Now whether you have the discipline to save the excess and not spend it is another question.

Not mentioned yet in the thread is another advantage of significant holdings in a 401k, rebalancing. As decades go by one asset class may outperform and you'd want to sell some of it to rebalance. Also as retirement grows near you may wish to hold more in bonds, again a tax-free trade in a 401k account.

"Would it make sense to move cash into a CD right now? " might be rephrased as "market timing has been shown not to work, but is this time the exception?"

Odds are this time isn't the exception. So many times the market has seemed irrationally low/high. Interest rates seemed like they couldn't go lower/higher. Or the impact of the news on the market or bonds seemed obvious. And yet these clear signals about what the market or bonds would do were wrong. My point is nobody knows whether this is a good time for CDs or not. Sure, you can get opinions. And some will turn out to be right. The trick is identifying them now instead of after the fact.

not a lawyer or accountant, but did see this for simple trusts:

With this type of trust, the trust income is considered taxable to the beneficiaries. That’s true even if they don’t withdraw income from the trust. The trust reports income to the IRS annually and it’s allowed to take a deduction for any amounts distributed to beneficiaries.
https://smartasset.com/estate-planning/ ... plex-trust

So perhaps as long as the K-1 shows the income distributed (even if not sent out in a check) it's ok?

Artsdoctor wrote: ↑Wed Mar 15, 2023 5:26 pm I don't think that people should generally rely on this. Overall, social security will not do a direct deposit to trusts. You can read their formal statement here, scrolling down to "C":

https://secure.ssa.gov/poms.nsf/lnx/0202402060#b

The type of trust people are usually creating where they are the grantor, trustee, and beneficiary is covered in part A & B of that document. It goes on to say Social Security will do a direct deposit to those kind of trusts.

IANAL, though.

shell921 wrote: ↑Tue Mar 14, 2023 5:13 pmWhy does Vanguard, on their investment prices & returns page, list monthly dividend payouts if they only pay these dividends out quarterly?

Are you sure this is true? I know, for example, that money market funds pay dividends daily but it only posts once a month to the account. On the other hand if you sell the money market fund during the month they'll credit you with the interest the funds you sold had earned. My guess is that Vanguard is recording it monthly even if they just post it to the account quarterly. You could always call and ask (or your friend could call if you don't have a Vanguard account).

llw wrote: ↑Tue Mar 14, 2023 4:35 pmwill the 1099-INT indicate how much I earn from Tbills vs SWPPX so that I can report the correct amount that will be exempted from state and local taxes?

Yes. See box 3 of sample image at https://www.investopedia.com/thmb/OGUDD ... 1bcbbc.png

See https://consumer.ftc.gov/articles/debt-collection-faqs and the National Foundation for Debt Counseling article at https://www.nfcc.org/blog/ask-an-expert ... questions/

If you do talk to them on the phone I wouldn't suggest giving any information such as where you bank, your drivers license, etc.

Very timely thread as I’m in the midst of this process now. So even if there was a very serious illness with costs running into six figures the annual out of pocket is $2,700? I ask, as I had an initial conversation with a SHIP counselor and we seemed to gravitate towards N with a comparison to G. My sense was this was due to N or G providing additional protections related to costly procedures and or illness but maybe this was all related to the $2,700 deductible. This could be a mistake on my part as my head was spinning. I'm not an expert on anything related to Medicare but have read this: Medigap Plan G covers Medicare Part B excess charges, while Plan N doesn’t. If a health care provider is legally permitted to charge more than Medicar...

paul e wrote: ↑Tue Mar 14, 2023 8:45 am In an environment where the Fed has indicated a strong rate push in light of rampant inflation, just seems dumb to me to not take advantage of it.

Sounds like you've just answered your own question that started the thread...

The pros as I see it are: - rates are near peak - money will be off limits for the term - FDIC insured if <$250,000 I wouldn't try to predict interest rates. Bill Gross was called "the bond king" for making winning bets on future rates, until he bet wrong a few times. IMO you need a plan you can live with no matter what happens to rates and inflation. So you ought to consider CDs, money market, t-bills, and TIPS. I would not suggest investing in a bond fund since an interest rate rise shortly before you need the money will drop the value of your investment. Me, I'm cautious and would buy TIPS maturing in about 5 years to move the money I have now into the future no matter what happens to inflation. Others are attracted by higher ...

I'm guessing the 76K in your checking account is earning almost nothing. At the very least I'd move most of it into a money market fund.

ForestWolf wrote: ↑Sun Mar 12, 2023 12:12 pm One does have to pay more if one's doctors belong to a major hospital group which charges "facility fees" and other charges in addition to the actual doctor's visit.

Are these fees also covered by a Medicare or Medigap policy? Or are they separate charges you are 100% liable for?

The first thing I'd suggest is to double your savings rate. This is probably much more relevant for the stage you're at than modest changes in investment vehicles. In the article https://money.usnews.com/money/personal-finance/saving-and-budgeting/articles/how-much-should-i-save for example they suggest saving 20% of your gross pay. Right now it appears you and your wife are saving 7%. As the Boglehead wiki says In the initial phase of accumulation of wealth, saving rate has the most impact in increasing the nest egg. The return on investment becomes important only after the nest egg has grown significantly or after it achieved a critical mass https://www.bogleheads.org/wiki/Importance_of_saving_rate You've got perhaps 20 years until retire...

You don't have to reinvest dividends. You can direct those to a MM fund (0 duration) for living expenses, and withdraw additional funds needed from the next lowest duration (least NAV loss from rate rise) fund. If it takes a while for the longest duration fund to recover, you can draw from the funds that are down less as necessary. In your scenario of a 1% increase in rates (let's call it across all durations for ease): Fund 4 (75% of fixed income) drops 18% Fund 3 (10% of fixed income) drops 6% Fund 2 (10% of fixed income) drops 3% Fund 1 (5% of fixed income) doesn't drop If you drain off the dividends then your holdings never recover their original value. In the example above a 1% rise in rates leads to a portfolio drop of more than 14%....

Yes. You can have multiple bond funds with different average durations (including upcoming expenses in a money market fund) and still have your overall fixed income allocation have a longer overall duration. For example: Fund 1 - duration 0 Fund 2 - duration 3 Fund 3 - duration 6 Fund 4 - duration 18 5% Fund 1, 10% Fund 2, 10% Fund 3, 75% Fund 4 = overall fixed income duration of 14.4 years As your time horizon shortens, so does your average duration for duration matching, so you slowly shift the allocation in the longest duration fund into the shorter duration ones as appropriate, while ensuring that upcoming expenses are kept at close to 0 duration. How does this help? Long term interest rates rise 1% and Fund 4 drops 18%, now you lock i...

To be clear, I am not trying to market time; I just don't know what the conventional Boglehead wisdom is on the best approach to this problem. An article addressing this from the wiki is at https://www.bogleheads.org/wiki/Investing_with_a_medium-term_timeline In the end, though, there is no "ideal" portfolio. It comes down to a tradeoff between (to use loaded words) greed and fear. Market investments have greater potential for growth but may drop in value. Bonds can give you certainty of return. If you look at rolling returns such as https://www.thebalancemoney.com/rolling-index-returns-4061795 you'll see that over even 5 and 10 year periods the market has at times had a net loss, although usually it has a gain. If it was me I'd ...

Yes. I did this earlier this year and the cost basis report for VTI showed the same periods and basis (eg. if I had $1K today worth of VTSAX purchased in Jan 2015 I now have $1K worth of VTI purchased on that date). I saved the previous cost basis report so I could compare and it all matched up.

Note that you have to call Vanguard to do the conversion, there isn't a way to do it on the website.

So, I have to potentially wait 2x duration -1 to get my original investment back via reinvesting all coupon/dividend payments. Or I can create a ladder, have the coupons available to spend, and get my original investment back at maturity? The 2x-1 is just a rule of thumb, not a hard-and-true fact. Another estimate is simply duration; if interest rates go up 1% a fund falls by a percentage roughly equal to the duration, but since it earns 1% more each year in duration number of years you're back even. A bond fund is a rolling ladder where bonds are constantly reinvested as they mature (in practice that might be sold prior to maturity but that's a detail and not the concept). However what you're suggesting is not a rolling ladder. It's an al...

BellaBear wrote: ↑Tue Mar 07, 2023 9:42 pm How do you hire a flat fee advisor? Is that through Vanguard?

Vanguard does not have flat-fee advisors. You need to find one outside of Vanguard although you can keep the funds at Vanguard or any other broker you choose. A discussion of recommended flat-fee advisors was at viewtopic.php?t=360823

There's a lot of hindsight reasoning now that of course it was foolish to invest in bonds during the period of near-zero interest rates. Even if one chooses to hold bonds, one still can choose (or has to choose) what duration. In his article https://www.advisorperspectives.com/articles/2022/11/29/playing-inflation-russian-roulette-in-retirement Bernstein wrote The most obvious losers were the folks who in 2021 reached for yield by extending maturities... This is best illustrated at the short end of the nominal Treasury curve: In mid-2021, the three-month yield stood at 0.16%, while the five-year note offered all of 0.29%. In other words, one got 13 bp more yield by extending out 4.75 years. At the risk of being overly harsh, that wasn’t a ...

I now understand that bond prices go back to face value when they're about to mature so if I don't sell, I can expect to get whatever is the interest rate of underlying securities. You don't own bonds, you own a bond fund . Different but related creatures. If you had bought actual bonds they would mature and you'd get back your principal at that time. However you own a fund that is regularly buying and selling bonds to keep it's average duration the same. The fund duration of BIV was about 6 years when you invested, it is 6 years now, and 6 years from now it will still have a duration of 6 years. BIV will never "mature". And as such any interest rate change nearer to the time you sell will affect the return (can be either good or...

Would you not say that a good financial advisor can find you those special investments that you would not find otherwise, and therefore make up that difference - I'm guessing that is rare? No, I would not say this. I would say that advisors that put their clients into those type of investments are very good at generating fees for themselves for access to their "special" investments. As for the clients, in most cases not so good. Sure, there will be hedge funds or FA that do great. The question is can you identify them now? Recall Buffett's bet that a hedge fund manager couldn't pick a small group of hedge funds that would outperform a simple index fund. Buffett won the bet. "Buffett's ultimately successful contention was tha...

I thought I had this understanding that if you held a treasury bond fund to its average duration from time of purchase, your return would be about the same if you bought treasury bonds directly of similar duration and held to maturity. Change "your return would be" to "your expected return would be" and you have it right. If the expectations about interest rates over the two year period that were priced into the actual bonds for sale or the collection of bonds forming the fund had been accurate then the returns would have been similar. And two years ago nobody reason to think any different (or the market prices of bonds would have been different) Turns out those expectations were wrong. I think of this as being akin to ...

Mikosan wrote: ↑Fri Mar 03, 2023 8:25 pm I'm not too concerned about them but I just want to reallocate there Investments so that they continue to grow while minimizing the risk.

higher return is the reward for taking risk. You can put them into gov't bonds; very safe nominal returns (although after inflation maybe not so safe). As they increase their stock exposure expected return rises but so does risk. So they need to decide how much risk they're willing to take and then you can help guide them to an efficient portfolio for that level or risk.

why do you think the IRS will be returning $3,000 to you?

Nobody has a crystal ball to tell you how your un-named company stock will do in the future. If you lean towards being risk-averse you sell and invest the proceeds broadly. If you lean towards accepting risk then you wait to exercise and hope the stock goes up farther. Four stories I know from the dot-com boom. At the time Cisco was a high-flyer and making millionaires out of employees. The NSO options expired in 6 years and were granted at the current market price when you joined; you got a bit more annually but the hire-on was the big chunk. The first story is about people driving $300K+ Toyotas; they were engineers who knew the P/E was crazy and so sold upon vesting and did something sensible with the money like buying the family minivan...

Objective is to keep withdrawals very simple for 80 year old spouse after I die. The rationale is, spouse is not rich but will have ample cash and is not at all interested or competent to invest after my death. Preservation, for her, trumps growth. You may be focusing on the wrong thing(s) here. As to your question as asked, there are many reasonable ways to set investing up. A single fund as you've suggested, or a few funds, or use of a low-cost fiduciary such as Vanguard PAS to manage the account and regularly send her money, etc. But given your description of your spouse as "not at all interested or competent" then other financial issues come to the fore. How will bills get paid, taxes done, repairs to your house arranged, etc...

I am sorry for your loss. A good place to start would be the wiki at https://www.bogleheads.org/wiki/Main_Page There are also some comprehensive books such as "Your Complete Guide to a Successful and Secure Retirement" by Swedroe. You haven't mentioned how old your mother is and whether she is still working, but that would have an impact on the best path going forward. Given the many savings accounts you have found so far it's worth trying to check to make sure you haven't missed any. I don't know of a way to search for all his accounts although such a process may exist. Also it's worth looking into what happens to unclaimed funds in your state. In CA, for example, after 3 years without any activity money is transferred to the sta...

see https://www.investopedia.com/ask/answers/179.asp As has been pointed out, make sure you have funds/ETF that can be held at Vanguard. Some Fidelity funds, such as their zero funds, can't to my understanding. Once you have checked to make sure everything can transfer, then create a Vanguard account and have them initiate the transfer. Depending on the size of your Roth IRA you may be able to get assistance on the phone from Vanguard.

I have learned from my mistakes of the past, and have not touched my vanguard stocks since the market has been on a downturn for the last 2 years. My question is I would like to move some of my equities to treasury bonds ( a much better place to have investments now!) I have watched the drop over the last years and taken no action. However, I am frustrated, thinking that money in total market and small cap could be invested in U.S. treasuries instead! Sounds like you haven't really given up on market timing, just become slower to pull the trigger. If you wanted to hold more bonds to rebalance or because your Investment Policy Statement says that at your age you should that's one thing. But the way I read this you're predicting Treasuries w...

I want to get out of ALL of this and move it into indexed Vanguard funds (probably VTSAX, VTIAX, and VWIUX, with maybe a slight small-cap and/or value tilt). My understanding is that I can treat all of this as an unplanned tax-loss harvesting episode that I'll be applying for the next 20 years to my federal return, but so be it. If I'm wrong about that, please tell me. A good idea, but another option should you want to take some money out of your taxable account in the future is sell an asset at a gain and then use the capital-loss carryover to offset the gain. If they are long-term gains this isn't as tax efficient as using $3K/year since that reduces income that is taxed at ordinary income-tax rates instead of capital gains rates. Of cou...

Vanguard, as of at least the last twenty years of my experience, never tags accounts as being a rollover IRA I would find it to be surprising that you couldn't open a rollover ira at vanguard and they are certainly mentioned in a very shallow dive of their online literature. What I meant is that they don't mark or distinguish the account as holding only money from a 401K rollover. If you want, at Vanguard you can put a 401K rollover into an existing IRA you already have an Vanguard even if that IRA was not created from a 401K rollover add contributions each year to an IRA you first opened via a 401K rollover merge several IRAs at Vanguard, including ones opened via a 401K rollover, into a single IRA As mentioned in my previous reply you ca...

I'm not a tax attorney, CPA, or otherwise qualified to give tax advice. That said, my understanding from this IRS chart is that you are NOT allowed to roll Roth money into an employer 401K or employer Roth 401K. See the chart at https://www.irs.gov/pub/irs-tege/rollover_chart.pdf

I have read blog posts about rolling the pre-tax money in an IRA over to an employer 401K in order to allow a clean Roth conversion, for example at https://www.marottaonmoney.com/how-to-u ... s-to-roth/

Personally, if I was thinking of doing what you're contemplating, I would get professional advice first.

You've discovered that so far you don't have the ability to beat the market by picking stocks and focused funds. If you expect that to change, keep on making picks. If you don't expect to become smarter than the market then you'll probably continue to see similar results.

The Rollover 401k started life out as a company sponsored 401k however when I left the firm I rolled the money into Vanguard as a Rollover 401k, all was good. Then after a couple years morphed into a rollover IRA and now it is a Traditional IRA brokerage account. A 401K is run by a company, an IRA is an account a person directs at a brokerage. It sounds like you are saying that when you left the firm you did not roll the money into your 401K account at your new company which happened to be administered by Vanguard. You rolled the money over to an account you opened at Vanguard at which point it was in an IRA and not a Rollover 401K type account. You can title accounts anything you want, maybe you titled it "Rollover 401K", but it...

deltaneutral83 wrote: ↑Fri Feb 17, 2023 9:37 am I thought the cost basis for all RSU's was $0 meaning you can't have a loss?

The day an RSU vests, assuming you pay $0 for it, then the FMV that day becomes is taxable as ordinary income. The FMV also becomes your cost basis. See https://www.investopedia.com/articles/t ... ck-tax.asp

Effectively on grant day your company has promised to buy X number of shares for you on some future date or set of dates, paying whatever the FMV per share happens to be that day. Even if you have same-day-sale set up there is often a small capital gain/loss since the selling price is unlikely to be exactly the same as the FMV that day.

That leaves the option of rolling them over into an IRA. But I recently learned about the pro-rata rule and having about 20k of pretax funds sit in a traditional IRA means that our path to contribute to a backdoor Roth becomes very unattractive as about 75% of our post tax, backdoor Roth funds would be taxed again. How do they get taxed again? The pro-rata rule, to my understanding, specifically avoids such taxation. See https://www.irahelp.com/slottreport/understanding-pro-rata-rule For example without a rollover you contribute $6,500 in after-tax dollars to a IRA in 2023. You immediately convert it all (the backdoor Roth) and owe no additional tax. In the scenario with a rollover you'd have $20K pretax in an IRA and then add another $6,5...

take a look at the thread "Fee-only non-AUM financial/investment advisor recommendation" viewtopic.php?t=360823

1) Is there a general SWR below which adding a LMP of TIPS/iBonds is unnecessary? For example, if the ratio of portfolio to minimum living expenses is such that one can subsist on 4% per annum, after SS/pension, why LMP? A 4% withdrawal rate may be too high. It may be too low. Depends on what articles you read and which ones you believe. In last year or two I've read articles that say "3.3% is the new 4%" from Morningstar and Kitces saying 4.5% is a minimum SWR and probably it's higher. An additional aspect to consider when contrasting a LMP and a withdrawal rule is that a portfolio is not like a savings account with a steady and predictable rise. Marketwatch wrote this past January that a 60/40 portfolio fell more than 16% in 20...

^^^^^ nope, I'm not sure about it since I didn't do it but it was something I was told when it was much to late to try.

question not clear. When say "how do I protect him/her even after some age mentioned in trust, so they don't lose property due to an event?" who this mean? Surviving spouse? Children?

Children a plural word. Him/her refer to single person. So ask about children or spouse? Confusing.

Make sure you can sign up for the retiree plan after a gap. I found out, to my regret, that at my former megaCorp you had to sign up right after leaving or you were no longer eligible. I didn't sign up because I left for a different job that also had health insurance, but had I signed up for retiree coverae and enrolled in just the cheapest option (the VSP vision plan) then when I actually retired a few years later I could have gone onto the megaCorp retiree health plan during open enrollment.