Bogleheads.org

According to this old post on the Ed Slott IRA forum, you daughter cannot take the IRA as a spousal IRA, so it must be taken as a beneficiary IRA.

https://www.irahelp.com/forum-post/1366 ... -ex-spouse

I have no idea beyond that.

St. Louis Fed's "How the Fed Implements Monetary Policy" (in plain English), includes: Open Market Operations: Maintaining Ample Reserves Open market operations are the buying and selling of government securities by the Federal Reserve. https://www.stlouisfed.org/in-plain-english/the-fed-implements-monetary-policy Does this not mean that, in addition to other actions, the Fed would buy and sell T-bills in order to keep the short term interest rate near their target? From the same article: The Fed’s administered rates are the key tools for monetary policy when reserves in the banking system are ample. So, the Fed uses open market operations periodically to e nsure the level of reserves in the banking system remain large enough so ...

TheTimeLord wrote: ↑Tue Mar 28, 2023 10:01 am Or put another way, I personally don't invest on the possibility of Global Nuclear War, although others may, even though it is a possibility.

A shorter answer: Why would a build my home next to a Minuteman silo if I have a perfectly suitable alternative that sits outside the incoming blast radius?

It is not a conspiracy theory to say the banks are constructed upon a confidence game. The reason that FDIC insurance exists is to ensure that there is substance to the confidence. It is not needed for direct investments like T-bills or Treasury Mutual Funds because they are fully funded. While I understand the theory behind what you are saying, can you explain to me how (at least in the near term) the financial system can function without banks? Or put another way, I personally don't invest on the possibility of Global Nuclear War, although others may, even though it is a possibility. Actually, I am not arguing against banks at all! They are 100% necessary for reasons far beyond the scope of this thread, but they are precarious tools for ...

It is not a conspiracy theory to say the banks are constructed upon a confidence game. The reason that FDIC insurance exists is to ensure that there is substance to the confidence. It is not needed for direct investments like T-bills or Treasury Mutual Funds because they are fully funded. While I understand the theory behind what you are saying, can you explain to me how (at least in the near term) the financial system can function without banks? Or put another way, I personally don't invest on the possibility of Global Nuclear War, although others may, even though it is a possibility. Actually, I am not arguing against banks at all! They are 100% necessary for reasons far beyond the scope of this thread, but they are precarious tools for ...

CD's are the only thing I am aware of (besides savings accounts, and most checking) that are FDIC insured, therefore, they are superior in that way. But I'm not trying to compare mutual funds and CD. I do not value FDIC insurance as having any additional value over holding T-bills or Treasury Money Markets or Bond funds. In fact Treasuries have one less intermediary to fail between the investor and the full faith and credit of the US Gov't. I also feel that the fundamental credit risk of any conventional Treasury mutual fund is less than any Bank account even fully 100% FDIC insured for the simple reason that a conventional mutual fund is 100% funded with no leverage. The average Bank account (CDs included) are leveraged on average about 5...

Amy Arnott at Morningstar has a good summary of the factors that impact interest rates written from the perspective of how to interpret what the yield curve is telling you. I am not advocating any action on these insights, but it is a good summary of the conventional ways that the bond market behaves and the thinking behind it. Nicely dovetails with my last post

https://www.morningstar.com/articles/11 ... ond-market

John Rekenthaler has a very nice article about Direct Indexing and some investor characteristics to make the strategy appropriate. I think it is a very good summary of much discussed here with a few minor twists.

https://www.morningstar.com/articles/11 ... your-taxes

He has eight investor factors identified:
- High Federal Taxes
- High State Taxes
- Large Direct Index pool of funds
- Ongoing additions/replenishments into the pool
- Schedule D Capital Gains
- Short Term Capital Gains
- Volatile Market Environment
- Pre-Liquidation (don't have plan to sell the assets)

Kevin M wrote: ↑Mon Mar 27, 2023 7:43 pm

retiringwhen wrote: ↑Mon Mar 27, 2023 7:28 pm

Kevin M wrote: ↑Mon Mar 27, 2023 7:18 pm I would call 70% pessimistic, as it's been running at 75-80%, so I would call 80% optimistic and 70% pessimistic. I just changed my TEY calcs to use 75% USGO as an estimate for 2023.

I concur. I switched to 75% after the FEB report on VUSXX. I am using 40% for VMFXX and VMRXX as well base upon their recent reports.

40% = 0% if you live in CA, CT or NY.

Oh yes, not nice.

Kevin M wrote: ↑Mon Mar 27, 2023 7:18 pm I would call 70% pessimistic, as it's been running at 75-80%, so I would call 80% optimistic and 70% pessimistic. I just changed my TEY calcs to use 75% USGO as an estimate for 2023.

I concur. I switched to 75% after the FEB report on VUSXX. I am using 40% for VMFXX and VMRXX as well base upon their recent reports.

index245 wrote: ↑Mon Mar 27, 2023 5:24 pm I'll note I'm not a pure one funder though. I used a SP500 index in taxable, low cost target date funds in tax advantaged. Still one fund per account.

My opinion, not popular in this thread is that your approach is superior for just about anyone who will build a substantial taxable account in their lifetime for minimal additional effort for maintenance. It addresses the most important tax efficiency issues and only requires minor thinking about overall AA. Keep it simple, but not too simple.

evancox10 wrote: ↑Mon Mar 27, 2023 2:05 pm Not tying to derail this into the details of Fed operations, but I am genuinely wondering along with OP why we would see large divergences in treasury rates versus federal funds rate. Is there an expectation these will be arbitraged away? Does it just reflect changing credit risks?

The FFR is not the only influence/variable on rates. This is evidence that other factors are playing hard on the market such as secular expectations of future rates as well as demand for short-term funds as deposits flow out of the banks.

Besides, officially, The Fed is still in an official Quantitative Tightening where Fed Open Market operations are greatly diminished.

Bogle-007 wrote: ↑Sun Mar 26, 2023 10:33 pm How does Turbo Tax (or other tax programs) decipher how much to state tax to charge? Is this info listed on Vanguard's tax form in a way that the program automatically understands?

Vanguard produces a report they publish ont he website under their tax center. You will need to enter data from that form into TT manually. Not hard, but frankly, the way TT asks the questions can be confusing. BTW, I only enter the data for my tax state (NJ) and lump all the other states into the “other” category.

The bond market is way harder to time than the stock market. It just seems easier until you try to actually do it. BTW, I don't think it is easy to time the stock market. Why do you need to time the bond market? Bonds literally tell you how much you will earn over the course of duration when you buy them. You buy them if you like the rates, don't if you don't. See them message that prompted my response. I have no need to time the bond market and when I am tempted, I try hard to remember all the times I got stuff wrong. As good old Yogi supposedly said, "predictions are hard, especially when they are about the future". Most people forget we were arguing about 50 or 75 more bps in rate increases just 30 days ago. The several high p...

Kenkat wrote: ↑Sun Mar 26, 2023 7:40 pm So much for it being plainly obvious that rates were going to keep going up.

The bond market is way harder to time than the stock market. It just seems easier until you try to actually do it.

BTW, I don't think it is easy to time the stock market.

Sorry, I just re-read your post. I originally thought you said 100 acres (saw the 100yds), which would justify a golf cart or UTV. 1.5 acres is not nearly enough room for a UTV by any means. Definitely not a gas job. If your yard isnt big enough to justify a snowmobile, then it isn't big enough for a utv. You wouldn't even use high gear in 100 acres on a UTV, would burn out the belts, let alone 1.5 acres. We have electric golf carts, lifted golf carts with mud tires, polaris and john deere side by sides but we are on acreage. Maybe a golf cart at best but hard to say without seeing your property. Its overkill but it's your money. I have a Honda Pioneer 520 (their little bitty UTV) on a 1/2 acre. Of course, it has a 80' descent on the hill....

The Fed is officially still in the quantitative tightening regime now, not buying in the open market.


With thatvsaid , they are adding massive amounts to their balance sheet by taking deposits at the discount window to support bank solvency.

The Fed doesn't issue Tbills, the U.S. Treasury does that.

This is also a small sign that rates may have reached their current zenith.

Hogan773 wrote: ↑Fri Mar 24, 2023 10:29 am yes the steepness is crazy, which makes it feel like I need to be paying attention!

I am doing the switch again to VMSXX today. I guess from there I will decide if I try to keep watching it or not. Do you think the "sine waves" are predictable enough that I can sort of forecast ahead that I should expect to keep an eye out for the next transition crossover in [X] days or weeks from now?

They are predictable overall, but the frequency is increasing. I don't know if this one will last 28 days like last time. I have a feeling it may be even shorter.

I may give up on this watching/swapping thing haha. I hadn't looked in a couple days and now the VMSXX 7 day yield is shooting up again, so right now it is better than VUSXX tax adjusted. I guess given the reporting lag of the 7-day yield, that means I probably am late again in switching over. So while I haven't thought through this perfectly, my gut is that any benefit here really requires one to pretty much perfectly catch the right crossover points. If one doesn't, but gets "close" then the benefit will be lower and may be just the same as doing nothing, so lots of work for nothing. WORST case if one is too sloppy and really misses the crossover points with a lag, then one may actually be doing worse than just leaving it in VM...

DrivingFun wrote: ↑Fri Mar 24, 2023 8:27 am Can someone explain to me like I'm 5 why national municipal money market is tax free at the federal level, but taxable at the state level (less the proportionate part that was issued in state of residence). However treasury money market is taxable at the federal level but tax free at the state level? Aren't both issues by the government?

It is the law. That is why. There are constitutional reasons, but really it just the specifics of state and federal tax laws. Note, every state has unique laws on both muni and treasury income.

What is your bank that is taking 20 days? Did they do micro-deposits or some other validation scheme? Do you need enter the micro-deposit amounts? Also, regarding holds, generally there is always a 7 day delay on transferring out funds that were just ACH'd in. That is a fraud limitation. That will never go away but there may be additional delays restrictions for new accounts. I just did my annual back door Roth conversion at Fidelity and my wife and I get treated completely differently regarding wait times. go figure. Discover. Already did the micro deposits on the 2nd of march. It just doesn't allow me to add more bank accounts yet. Another question, would cash invested in VUSXX show up as part of the "Funds available to withdraw&quo...

I bought the last 3 TVs at Walmart (43", 50", 55"), it worked perfectly fine. I do stuff myself. I am also very price sensitive.

The worst that can happen is really just a delay in redemptions if the fund seized up for some reason, and VUSXX is actually designed to minimize that risk about as completely as any US mutual fund of any kind, money markets included.

If you are really concerned, keeping a small amount in a different brokerage in a different money market fund would further reduce the risk. I personally don't do that beyond keeping about 2 weeks funds in a HYSA at my credit union. The rest of my cash is in mostly VUSXX and some T-bills.

anon_investor wrote: ↑Wed Mar 22, 2023 8:16 pm Merrill Edge may not let you transfer these institutional share class funds due to contractual limitations. Someone on BHs bought FSIXX, a Fidelity institutional share class money market fund (normally a $1 milllion minimum at Fidelity), at Merrill Edge (only $1k minimum there) and tried to transfer it to Fidelity, and Merrill Edge would not let them.

Seems fair. I am sure Merrill is paying Fidelity a fee to put the fund on their available list to provide a competitive fund in arguably one of the most important categories. They are likely doing all the book-keeping for their retail accounts too.

What is your bank that is taking 20 days? Did they do micro-deposits or some other validation scheme? Do you need enter the micro-deposit amounts?

Also, regarding holds, generally there is always a 7 day delay on transferring out funds that were just ACH'd in. That is a fraud limitation. That will never go away but there may be additional delays restrictions for new accounts.

I just did my annual back door Roth conversion at Fidelity and my wife and I get treated completely differently regarding wait times. go figure.

jeffyscott wrote: ↑Wed Mar 22, 2023 9:01 am Took a while to figure it out, but got there eventually. They show 0 going all the way back to March 2011 and it remains at 0 until Jan 2022:

Yes, since this is the monthly EDGAR snapshot, that is consistent with other data. What is known from Annual USGO % reporting for taxes, there was some Repo activity in previous years but at a much lower level than 24%. 2019 saw a USGO % of 98% and 2020 saw it at only 94%. I can be implied that those less than 100% values came from Federal Reserve bank of NY Repos since they are the only allowed alternative.

jeffyscott wrote: ↑Wed Mar 22, 2023 7:53 am It appears this is something new for VUSXX, since last year it reported 100% of income was from US government obligations.

I just found a great data tool for MMF Repo statistics. From the Office of Financial Research: https://www.financialresearch.gov/money ... l-reserve/

this can drill down and show participation levels in the various Repo markets to various levels of detail.

It is clear from looking at Vanguard Fund level data on the US Treasury Repo market that VUSXX only started in this market in a significant way in the past 90 days.

BTW, this data appears to be an aggregation of the monthly fund reports to EDGAR.

As mentioned there is some state tax advantages to VUSXX over the two mentioned by the OP. What are the differences between VMRXX and VMFXX? The biggest one is that Federal (VMFXX) is used as the settlement fund for Vanguard Brokerages. It also allows check-writing privileges (VMRXX does not). Other than that, there is a small difference in amount of non-USGO assets that VMRXX is allowed to buy, other than that they are the same. I believe the ER difference is driven by the check writing and settlement differences. In practice for the past 6 mos., the two funds have been run almost identically from an investment perspective. That is in part driven by the fact that straight US Treasuries have seen the best yield recently, so everyone goes th...

burritoLover wrote: ↑Tue Mar 21, 2023 2:24 pm There's no non-dividend fund so it would have to be either individual non-dividend paying stocks (yikes) or a fund that has characteristics that tend to include low or no dividend paying stocks (such as growth). But the most diversified way to do that would be to have a value fund (which includes non-dividend payers) in tax-advantaged and a growth fund in taxable. If they have the same index provider, there shouldn't be any overlap between them (generally).

VUG/VTV split works extremely well. Combine with VB and you have a total stock market coverage.

TomatoTomahto wrote: ↑Mon Mar 20, 2023 6:06 am

OverseasBH wrote: ↑Mon Mar 20, 2023 5:56 am Is there a scenario where a dividend focused strategy is rational?

IF I were the beneficiary of a trust where I could spend the income but not touch the principal, I'd probably want the principal in a dividend focused fund. I'm not, so I prefer not to receive dividends.

This is very true, there are real legitimate reasons for certain individuals in certain situations to legitimately prefer dividends for reasons unrelated to their relative return when compared to the overall market.

That does not make them better.

exodusing wrote: ↑Sat Mar 18, 2023 5:29 pm

indexfundfan wrote: ↑Sat Mar 18, 2023 5:18 pm I was holding VUSXX on Etrade and I swapped it to GABXX, which potentially has no repos. It also has a very slightly lower ER.

and a longer average maturity, 32 v 46 days.

About half due to VUSXX holding the Repos I would bet. Most of the other Treasury Only are running around 37-39 days.

My tool is configurable for time frame

what do y'all think about moving from VUSXX to the vgd short term treasury index fund? VGSH is a fine fund, I own a small amount, but it is NOT by any measure comparable to VUSXX. It has a duration of approx. 2 years, it has much more price volatility. Only appropriate if you want to own longer term bonds. I a portion of my fixed income in VGSH and VTIP as part of a barbell approach with much longer term funds. VUSXX, is really for stuff I plan on spending in the next 6 mos. thanks. makes sense. i guess i was thinking of moving half of my vusxx over to vgsh or the admiral version. i really hate paying state taxes on what is supposed to be a treasury fund cheers grok Other options are an auto-roll of 3 or 6 T-bills or SGOV 6 mos. ETF. SGOV ...

What is the size of your company? If you have a group of affected individuals large enough to be worth reaching out to a Labor/ERISA lawyer to see if they can push back on company. Only you can decide if that is worth the potential cost.

I would be interested in your source data, but I am also confused, what is a 1 month ladder? How many tranches do you have in the ladder? 4 tranches with one every week? Similar patterns for the other ones? My laddering scheme showed 4 week ladders (4 steps equally entered into a ladder one every 1/4 every week on a delayed basis into 4 week T-Bills) beating all other durations for investors at a 6.37% state income tax rate. The benefit was pretty minor though 4week ladders beat VUSXX by 4bp, an 8 week by 2bp and 13 weeks losing by 5 to 8 bp depending on how many steps I used. I used data from this site. https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_va...

1 Month T-Bill Ladder - Return averaged 9 basis points higher than VUSXX 2 Month T-Bill Ladder - Return averaged 14 basis points higher than VUSXX 3 Month T-Bill Ladder - Return averaged 12 basis points higher than VUSXX 6 Month T-Bill Ladder - Return averaged 7 basis points lower than VUSXX I would be interested in your source data, but I am also confused, what is a 1 month ladder? How many tranches do you have in the ladder? 4 tranches with one every week? Similar patterns for the other ones? My laddering scheme showed 4 week ladders (4 steps equally entered into a ladder one every 1/4 every week on a delayed basis into 4 week T-Bills) beating all other durations for investors at a 6.37% state income tax rate. The benefit was pretty mino...

scoothome wrote: ↑Sat Mar 18, 2023 11:15 am @retiringwhen

You've created such a cool tool in MM Optimizer. I suggest you start a master thread for it, similar to what Ben Mathew did for TPAW viewtopic.php?t=331368, longinvest did for VPW viewtopic.php?t=120430, BigFoot48 did for RPM viewtopic.php?t=97352, etc.

That way you can announce version updates, users can report bugs and request features, etc. Or maybe you have already started such a thread and I missed it?

I have a version 6 brewing with some thoughts on T-Bill ladders and auto-rolls. Once that settles down, I will start a dedicated thread when I announce that version. Thanks!

..."Requests for Full Withdrawals Withdrawals from the Voya Fixed Plus Account III fund are allowed to pay benefits to participants at any time. However, if the plan, as the Contract Holder, requests a full withdrawal of all participant accounts held in the Voya Fixed Plus Account III, VRIAC will pay amounts in the Voya Fixed Plus Account III, with interest, in five annual payments that will be equal to: ... The individual plan participants have no control over the decision of their employer to change plan providers. Since it was the action of the employer (to change plan providers) that has restricted access by the employees to their funds the employer has effectively barred employees from effectively managing some of their investmen...

grok87 wrote: ↑Sat Mar 18, 2023 8:55 am what do y'all think about moving from VUSXX to the vgd short term treasury index fund?

VGSH is a fine fund, I own a small amount, but it is NOT by any measure comparable to VUSXX. It has a duration of approx. 2 years, it has much more price volatility. Only appropriate if you want to own longer term bonds. I a portion of my fixed income in VGSH and VTIP as part of a barbell approach with much longer term funds.

VUSXX, is really for stuff I plan on spending in the next 6 mos.

So if I wanted to try to swap, what is the most effective way to watch and anticipate the swap points? Should I follow the Sifma index and use that as a predictor because VMSXX SEC yield as reported on Vanguard ultimately follows it with a lag? So when the SIFMA index is heading upward and equals the tax adjusted yield on VUSXX for example then swap out of VUSXX and into VMSXX and vice versa? Other folks have been trying to figure that out, but I think watching the weekly on Wednesday update of the SIFMA index is probably the best approach IF you are willing to do the homework to setup the necessary calculations. The problem is how do you calculate after tax rates for the SIFMA rate mapped to your actual fund (remember expense ratios will ...

@RETIRINGWHEN Wow what a cool spreadsheet! Thanks So I took a look and in Illinois and assuming your "Tranche 2" scenario of just flipping between VMSXX and VUSXX it takes 11 swaps (presumably well-timed) and on $100K that yields extra $132. Or if we are talking about $500K then $660, or a million dollars then $1320, and so forth. If we had to pick one or the other though is it the case that VMSXX itself will do better or will VUSXX. I need to go open up your sheet again to see Yes. you get the idea. Make sure you have both state and Federal rates correct. But if you are a high federal rate taxpayer in IL, then yes, the VMSXX will probably be the best deal. IL has relatively low flat rate, so the muni funds will work best for mos...

This thread and the fund restrictions are an example of the fact that there is no free lunch with fixed income. Most people don’t realize the constraints that must be placed upon SV funds to allow them to keep a stable $1 price AND return competitive returns. I agree, better disclosure is key and one thing I have learned is that DOL managed retirement plans such as 401Ks seem to have much more opaque disclosure, even at Vanguard. It seems like a bad combination. After reading what I could find about my plan’s SV and asking questions of the administrator, I have stopped using them for any significant Fixed Income. They are just not worth it. OTOH, The SEC has worked major regulatory changes on Money Market funds to make the risk trade-offs m...

rocketsrule wrote: ↑Tue Mar 14, 2023 4:56 pm I have a lot of money invested through fidelity. I also have money in Spaxx and Fzdxx. Could you explain to me why? Fzdxx could be risky?

Here is a nice article Fidelity published this week about cash holding including their various MM funds. I think it makes it pretty clear what trade-offs exist between the different funds.

Ways to help keep your cash safe

No date matters, dividends accrue daily and are paid monthly on money market funds. If you sell in the middle of the month you will get a dividend paid out for this accrued amount eventually, either the day after selling everything or at the end of the month with the rest of the monthly dividend payment.

The only impact is when, not how much. Some folks get a bit OCD about the pennies laying around sometimes, but it is just an artifact of how the funds work. The process I described is pretty much true for any money market at Vanguard (settlement or not) and the process is similar at other brokerages too.

As per the M* articles, the Chinese economy did well, its stock returns (for investors) did not. This isn't uncommon. In the period of 2000-2009, US earnings growth was similar to 2010-2020. Stock market returns, however, were not. The former period returned less than bonds, the latter compounded at 15% annualized. It is important to understand there were very different underlying causes. Many EM countries with China being a primary example saw poor investor returns primarily due to massive dilution of shares. Essentially, they kept issuing more and more equity effectively diluting the ownership shares of earlier investors thus their share of profits. The US poor returns were almost completely driven by a lowering P/E multiples driven by i...

bikechuck wrote: ↑Wed Mar 15, 2023 12:04 pm Meanwhile Outer Banks houses are being washed into the ocean. Friends of mine in the Fla. Keys have incurred tens of thousands of dollars of special assessments for hurricane damages. It is getting expensive to purchase home owners insurance in costal areas of Florida if you can find it.

People who build houses on sand bars shouldn't be allowed to buy insurance. The house WILL disappear. It is just a question of when.

People used to understand this and beach housing was appropriately disposable including tents.

edited - quoted fixed to reference to correct attirbution.

The most important take-away is compare like funds to like funds. There are really only 5 types of money market funds. I suggest you choose the risk/return and tax-treatment characteristics first. Chose the class of fund you want to hold, then chose the specific fund based upon ER, return, minimum investment and availability at your brokerage(s). Prime MM - Commercial paper mostly - usually nearly 100% taxable. Gov't Cash Reserves MM - US Gov't backed securities, Repos and some Federal Agency Money - some state tax exemption. Government/Federal MM - US Gov't backed securities, Repos and some Federal Agency Money but usually a bit more conservative and shorter duration - some state tax exemption. Treasury MM and Treasury Only MM - US Treasur...

I have a lot of money invested through fidelity. I also have money in Spaxx and Fzdxx. Could you explain to me why? Fzdxx could be risky? I'm also not sure if I understand the breakdown of it's underlying assets It is not a high risk fund, but it is a classic "Prime" money market that invests in yankee paper, Certificates of Deposit and commercial Repos. Those are generally considered more risky than US Gov't back securities like those held in a fund like VMRXX or a FDRXX which are similar. Basically, due to the higher ER on Fidelity MM funds, to get a competitive yield with a Vanguard fund, they need to take more risk. That is the reality. I am not telling you that Prime MM funds will fold or even break the buck, but the chances...

I am trying to decide which fund to use as my cash account (not core account). The Fidelity FZDXX has an expense ratio of 0.3% versus Vanguard's VMRXX which has an expense of 0.1%. There is a Fidelity $75 transaction fee to make any purchases with Vanguard. It appears that each fund holdings are about the same. Yesterday's (3/13/23) 7-day yield for FZDXX was 4.46% while VMRXX's 7-day yield was 4.53%. I would appreciate any thoughts from the Bogleheads community. Which one would you use and why? Thanks. If you are going to hold the money at Fidelity, hold it in their fund. If at Vanguard, hold the Vanguard fund. Really as simple as that. It almost never pays to pay those transaction fees, especially for a money market fund. You may have bet...