Search found 119 matches

by daydreamin
Tue May 29, 2012 12:32 pm
Forum: Personal Investments
Topic: Help with Portfolio for Near-Retirees
Replies: 19
Views: 1848

Re: Help with Portfolio for Near-Retirees

I really like the wise advice you've been given. The reason you would not merge the rollover IRA into TSP it allows you to use Vanguard's Total International Index Fund, which is the most diversified int'l holding you can use. It holds Large, Medium and Small cap stocks and includes emerging markets. That said, TSP's international fund is fine and do I wonder if it would be wise to simply place all money in Vanguard's LifeStrategy or Target Retirement Funds, along with a TSP L fund. Sure, such a plan doesn't make the most of each accounts strengths, but it might make it easier for your parents to handle dramatic bear markets by not having to witness significant sums of money vaporize in the bad times. You may be managing for them and they ...
by daydreamin
Tue May 29, 2012 10:43 am
Forum: Investing - Theory, News & General
Topic: What's your international stock allocation?
Replies: 39
Views: 4318

Re: What's your international stock allocation?

kimboslice wrote: The problem with high international is currency risk but also there are not as many super well managed foreign companies. There are some of course but the number is just lower.
What exactly do you mean by "super well managed"? Are you talking about ROC? Can you back this up with data or studies? If so, I'd be very interested to see it. Not trying to argue with you, but actually curious to see the information.
by daydreamin
Tue May 29, 2012 10:30 am
Forum: Investing - Theory, News & General
Topic: so what if i wanted to learn day trading
Replies: 103
Views: 10632

Re: so what if i wanted to learn day trading

My husband works in quantitative finance, which is basically day-trading with computer algorithms. All the traders at his company make over 7 figures per year, and that has been sustained for over 10 years (which is as long as the company has been around). How do they do it? Almost all the traders have Ph.D.'s in Math or Computer Science from schools like MIT and Stanford. Everyone works 60+ hours a week studying the markets, analyzing the data, and inventing new and better algorithms. They have a very expensive system of top-notch servers and an entire infrastructure team to manage them. They have connections with brokers around the world and they have negotiating power to get favorable fee structures. I asked him once who was on the other...
by daydreamin
Mon May 28, 2012 12:55 pm
Forum: Personal Investments
Topic: Help with Portfolio for Near-Retirees
Replies: 19
Views: 1848

Re: Help with Portfolio for Near-Retirees

Thanks so much for all the advice. Aggregating everyone's comments, here's what I think I will advise them to do:

1. Merge my father's rollover IRA into his TSP to save on fees.

2. Maybe simplify the holdings, but keep the TIAA-Cref accounts since no one has said otherwise.

3. While my father is still working, focus on maxing out his TSP and paying down the mortgage as much as possible. (Should he contribute up to the $55,500 annual addition limit with catch-up, or just contribute up to the $17,000 elective deferral limit and use additional savings to pay down the mortgage?)

4. After my father retires but before my mother does, focus on maxing out her SEP-IRA and then paying down the mortgage as much as possible.
by daydreamin
Mon May 28, 2012 12:45 pm
Forum: Personal Investments
Topic: Help with Portfolio for Near-Retirees
Replies: 19
Views: 1848

Re: Help with Portfolio for Near-Retirees

I hope this doesn't sound negative, I am just curious. It sounds as if your mother operates a small business and your parents together own and operate rental properties and are interested in adding to that business. So they are apparently fairly financially astute as well as being relatively young. My question is, why are you managing their retirement finances? No problem! While my mother is great at running her small business and they do like investing in real estate, my parents have little to no interest in stocks and bonds as they find these instruments "mysterious" and "dubious", while a piece of real estate is something they can see, touch, and understand. Without me, they would have almost everything in cash and r...
by daydreamin
Mon May 28, 2012 10:11 am
Forum: Personal Investments
Topic: Help with Portfolio for Near-Retirees
Replies: 19
Views: 1848

Re: Help with Portfolio for Near-Retirees

You mention your father is going to receive a federal pension. It is not clear if the SS you mention is for both him and your mother or just hers. Is his pension through FERS or CSRS which was the system for those hired prior to 1984? If it is the latter there may be some SS implications. Unless his rental income is large and those properties are virtually debt free I would be concerned that the mortgage debt we know about is approaching his retirement savings. Regarding Q4, paying down the 3.75% mortgage is likely to a better guaranteed return than anything else. Both my parents are eligible for SS, although he is eligible for more than she is. I'm not sure if his pension is through FERS or CSRS, but he was hired by the government after 1...
by daydreamin
Mon May 28, 2012 10:06 am
Forum: Personal Investments
Topic: Help with Portfolio for Near-Retirees
Replies: 19
Views: 1848

Re: Help with Portfolio for Near-Retirees

I'm surprised they're in the 28% bracket and still eligible for direct Roth IRA contributions -- usually the two are mutually exclusive. $142,700 taxable income is bottom of the 28% bracket, and $173,000 MAGI is the beginning of the Roth phaseout. With a huge mortgage and high property and state income taxes their itemized deductions and personal exemptions probably are greater than the $30,000 difference between these numbers. Their gross income must be well over $200,000. Their savings seem modest for a couple making that much. Moreover, it's hard to be in the 28% bracket without running into the AMT, which makes your rate really 32.5% (over 40% with Maryland tax included, and effectively far higher if you're being phased out of Roth IRA...
by daydreamin
Mon May 28, 2012 10:01 am
Forum: Personal Investments
Topic: Help with Portfolio for Near-Retirees
Replies: 19
Views: 1848

Re: Help with Portfolio for Near-Retirees

On the surface, a mid 6-fig portfolio and near the same in a mortgage is certainly not a good financial profile for someone ready to retire in 1 year. Some of the added information buried in your questions makes it more reasonable, but not exactly what I would prefer. Right. Here's a fuller picture of the monthly income streams they would have in retirement: Net rental income = $3000 Federal pension = $1000 Combined SS for both = $2300 4% withdrawal from portfolio = $2000 TOTAL = $8300 Their current monthly expenses are $5000 for the home, food, and other normal living expenses not including travel or medical care. I figure this leaves a healthy enough margin for travel and medical costs in retirement, but perhaps I am underestimating? Als...
by daydreamin
Sun May 27, 2012 10:17 pm
Forum: Personal Investments
Topic: Help with Portfolio for Near-Retirees
Replies: 19
Views: 1848

Help with Portfolio for Near-Retirees

Hi all, I am in charge of managing my parents' retirement accounts, and as they are near retirement I'd really appreciate it if you could look over their portfolio and tell me what you think. My father is 63 and would like to retire next year. My mother will probably work full-time for another 3 years or so at her small business before cutting back to part-time. Emergency Funds = 10 months of expenses Debt: mortgage of $370,000 on primary residence @ 3.25% Tax Filing Status: married filing jointly Tax Rate: 28% federal 4.75% state (maryland) Age: 63 him, 59 her Desired Asset Allocation: 40% stocks / 60% bonds Current Portfolio: mid-6 figures His TSP 7% Treasuries (G Fund) 14% Fixed Income (F Fund) 4% Common Stock (C Fund) 4% Small-Cap Stock...
by daydreamin
Wed Dec 01, 2010 3:14 pm
Forum: Personal Finance (Not Investing)
Topic: (Very) Small Business Payroll?
Replies: 9
Views: 1614

I also use Quickbooks for my small business, and I subscribe to the payroll service in Quickbooks. They recently changed the pricing - I'm now paying $35/month for Quickbooks Online Plus + $15/month for the payroll service, for a total of $50/month. I don't know what version of Quickbooks you use, but this has been a great solution for me. I find it very easy to use.
by daydreamin
Tue Aug 24, 2010 2:07 pm
Forum: Personal Consumer Issues
Topic: Best medical professions/jobs with a four year degree?
Replies: 74
Views: 9432

Re: Best medical professions/jobs with a four year degree?

Trying to help my daughter with coming up with ideas on "what she wants to do when she grows up?". Still a couple years aways from entering college but she really has no clue at this point what she wants to do. She's about ...16? At that age, I would hardly be worried about not knowing what she wants to do when she grows up. Try encouraging her to find volunteer gigs and/or internships. When I was in high school, I volunteered at a local hospital (literally just walked in and asked at the front desk if they needed any volunteers). While I appreciated learning about all the hard work docs and nurses do, the experience also helped me realize I did not want to work in a hospital. So in that sense, it was very useful. She should just...
by daydreamin
Mon Jun 28, 2010 8:23 pm
Forum: Personal Consumer Issues
Topic: help with anniversary present
Replies: 23
Views: 2952

jef wrote:I would suggest asking her what she would like...
Actually, I suggest the opposite. Speaking as a woman, we love surprises. :)

"Honey, where would you like to go for dinner? Is Saturday at 8 ok?" - sweet, but not particularly sexy.

"Saturday, 8pm. Be ready to go somewhere fancy" - now that gets the pulse going!
Taz wrote: Put together a bound photo book of your first 7 years together.
That's a great idea. I had a boyfriend who did this for Valentine's one year, and I loved it.
by daydreamin
Fri Jun 11, 2010 9:26 am
Forum: Investing - Theory, News & General
Topic: Why zero-coupon bonds only?
Replies: 22
Views: 5305

Valuethinker wrote:
At which point we circle back to credit risk.

The zero coupon muni bond strategy is great, as long as credit risk is held constant.

Zero coupon bonds maximize your credit risk for any equivalently rated issue.
Sorry for being slow, but why does a zero coupon bond maximize your credit risk for an equivalent rating? Is it because if the bond defaults at some point, with a zero-coupon you don't get any money back, whereas with a coupon bond you've gotten some money back in the form of coupon payments up until the default?
by daydreamin
Thu Jun 10, 2010 2:47 pm
Forum: Personal Investments
Topic: How to save for a house?
Replies: 6
Views: 1831

I'm in a similar position - young, and with an uncertain timeline for future expenses such as grad school, down payment, starting a business, etc. My solution is a bit of mental accounting, as follows: Retirement Accounts (401k, Roth IRA) Roughly 1/3 bonds, 1/3 US stocks, 1/3 international stocks Taxable Account Cash, Limited Term Municipal Bonds (VMLTX), Intermediate Term Municipal Bonds (VWITX). I max out my retirement accounts, and then extra savings go into the taxable account, which I think of as my "non-emergency fund". It's there for big expenses which will probably occur, but whose timing is unclear. The general recommendation around here is to keep bonds in tax-advantaged accounts and stocks in taxable. I think that works...
by daydreamin
Wed Jun 09, 2010 10:41 pm
Forum: Personal Consumer Issues
Topic: Search for cheap flights to "anywhere" on a given
Replies: 12
Views: 9869

http://us.lastminute.com/

You can pick specific destination, region ("Caribbean"), or just scroll through a list of what's available right now. I also like that they don't make you pick specific dates. You can just choose "this weekend", "next weekend", etc. I've booked a couple of last-minute mini vacations through this site.
by daydreamin
Wed Jun 09, 2010 4:33 pm
Forum: Personal Finance (Not Investing)
Topic: Understanding the economy
Replies: 31
Views: 4667

If one could truly understand the global economy, that would probably be very useful to investing. But professional money managers can't do it. Professors of economics can't do it. Federal reserve chairmen can't do it. What are the odds that you or I can? Just a few examples from off the top of my head, I'm sure there are many more: Alan Greenspan: "In the business I was in, I was right 70% of the time, but I was wrong 30% of the time." http://www.usatoday.com/money/industries/banking/2010-04-07-financial-crisis-commission_N.htm Ben Bernake: “I don’t fully understand movements in the gold price." http://blogs.wsj.com/economics/2010/06/09/bernanke-puzzled-by-gold-rally/ Paul Krugman: "Few economists saw our current crisis...
by daydreamin
Wed Jun 09, 2010 2:39 pm
Forum: Personal Investments
Topic: Mid 20s Asset Allocation and Portfolio Critique
Replies: 5
Views: 1939

Overall, looks like you are definitely on the right path. A few thoughts: 1) You can use your Roth IRA as an emergency fund, since you can always take out whatever money you've put in. 2) 90/10 is extremely aggressive, as you know. Were you invested during the market downturn of 2008 / 2009? If so, how did you react? If you didn't panic then, and if you're in a very stable job and career, then perhaps 90/10 is fine for you, although age in bonds is the usual guideline. 3) Your tilts are really severe. Large caps make up something like 70% of the US stock market, but less than 25% of your US stock holdings. Almost half of your international holdings are in emerging markets. I personally don't tilt at all, so hopefully someone who does will c...
by daydreamin
Wed Jun 09, 2010 1:45 pm
Forum: Personal Consumer Issues
Topic: Mongolia & China (beijing) trip
Replies: 20
Views: 3275

Ooh, bathrooms. Yes, use McDonald's bathrooms whenever possible. Or another American chain - I think KFC probably also has good bathrooms? Otherwise, be prepared to deal with really dirty squat toilets, and carry toilet paper or a pack of kleenex with you, as Chinese public toilets don't have toilet paper.

Also, if you're not ethnically Chinese and you can speak a few words in Mandarin, the locals think it's really cute and will be much nicer to you.

Hello: Ni Hao
Thank you: Shi shi
Where is ... ?: .... zai na li?

Have fun!
by daydreamin
Wed Jun 09, 2010 1:08 pm
Forum: Personal Consumer Issues
Topic: Mongolia & China (beijing) trip
Replies: 20
Views: 3275

Beijing: - Definitely go to the Forbidden City and the Great Wall. They are very impressive, and most of all huge . Wear comfortable walking shoes. - The Summer Palace is one of my favorite public parks in the whole world. It is gorgeous, and you'll also get to see lots of people doing calligraphy, playing traditional music, practicing tai chi, etc. It can get very hot in summer, though, so bring water. I don't recommend buying bottled water from vendors in the park, as they often just fill bottles with tap water and resell it. - If you like modern art, check out the 798 art district. I was very impressed by the quality of the work there. - If you like antiques and flea markets, Panjiayuan was recently cleaned up for the Olympics in 2008, a...
by daydreamin
Wed Jun 09, 2010 12:55 pm
Forum: Personal Investments
Topic: ETF or Mutual fund
Replies: 12
Views: 2278

Thanks for all the infomation, i'm read more about it. Who can you open a mutual fund account with? WHo are good Fidelty, Vanguard and so forth. Also I heard their is going be a new ETF fund called Inxx, that will contain India's top 30 infostructure compaines. Would that be a good investment? Since India is a rising economy. Fidelity and Vanguard are both good choices with lots of low-cost funds. I personally use Vanguard, as do a lot of other people on this forum. An ETF that focuses on India's top 30 companies is not a good investment for you, for the same reason that technology and health care-focused funds will not be good investments. You'll often hear people say things like, "Invest in China and India, their economies are boomi...
by daydreamin
Wed Jun 09, 2010 11:53 am
Forum: Personal Investments
Topic: Need some Advice 401K IRA and general Savings
Replies: 7
Views: 1425

Welcome, and congratulations on starting to get your finances in better order! Default User gave you great advice. I'm mostly just going to second what he or she said. You should continue contributing 6% to your 401k to get the match. Funnel extra savings beyond that in the following priority: 1. Emergency fund. Since you are the sole breadwinner for your family and you have kid(s?) to support, it's very important that you have a cash reserve in case of job loss. I would first figure out what 6 months of necessary expenses is (mortgage, food, gas, etc.), and build your emergency fund up to that number. I agree with Default User that you should open a Roth IRA and use it as an emergency fund for now - just keep it in cash. You can put in $5,...
by daydreamin
Thu Jun 03, 2010 1:49 pm
Forum: Personal Investments
Topic: 33 Yr Old Portfolio Review
Replies: 6
Views: 2100

Congratulations on the upcoming baby / new house purchase! My first reaction to your porfolio is that you have too many holdings at too high a cost. There's no real benefit from having a 2% allocation to commodities or real estate; it's just too small to make an impact. Here is a suggested readjustment of your portfolio. I'm not super familiar with Schwab, so I've filled out your non-401k portfolio with Vanguard funds. Schwab probably has similar index funds, or you can move your accounts to Vanguard. I've basically segregated your portfolio into two parts - accounts that new money flows into (401k and Roths) and accounts that it doesn't (IRAs). In your 401k and Roths, I've placed one of each asset class: U.S. large caps, mid caps, small ca...
by daydreamin
Thu Jun 03, 2010 12:11 pm
Forum: Investing - Theory, News & General
Topic: Fundamental Indexing
Replies: 75
Views: 11420

Wow. I guess this is yet another lesson in not trusting financial journalism - the way the CNN article gushes on about Arnott and fundamental indexing, you'd think they were writing about a guy who just discovered the cure to cancer. After reading the article, I thought this was really something new and exciting.

Apologies for rehashing an old topic!
by daydreamin
Thu Jun 03, 2010 11:49 am
Forum: Investing - Theory, News & General
Topic: Fundamental Indexing
Replies: 75
Views: 11420

Chuck wrote:I don't have any thoughts, but it's in the wiki (without too much discussion, but a good number of links):

http://www.bogleheads.org/wiki/Alternat ... al_Indexes
Thanks for pointing that out. I hadn't heard of it before, but I'm not surprised the forum has!
by daydreamin
Thu Jun 03, 2010 11:35 am
Forum: Investing - Theory, News & General
Topic: Fundamental Indexing
Replies: 75
Views: 11420

Fundamental Indexing

Basically, it's indexing, but using other measures than market cap to measure company size. Thoughts? http://money.cnn.com/2010/05/24/retirement/retire_rich_arnott.fortune/index.htm Arnott's Big Idea is a concept he calls "fundamental indexing." It's a system that allocates money to stocks based on the economic footprint of the underlying companies rather than by the more common method of market capitalization. It was the bursting of the tech bubble in 2001 that gave Arnott the idea for fundamental indexing. At the time Arnott was working for pension fund manager First Quadrant. George Keane, a veteran money manager who served on the investment committee of the giant New York State Common Retirement Fund, kept telling Arnott, with...
by daydreamin
Wed Jun 02, 2010 11:13 pm
Forum: Personal Consumer Issues
Topic: 80/20 principle
Replies: 17
Views: 3667

Absolutely. I use this principle at work all the time. 80% of a project can usually be done in 20% of the time alloted, so I try to do the big things first before worrying about details. Get it up and get it working before worrying about making it pretty.

It's like building a house - it doesn't take that long to get the walls and roof up, but then you can spend forever picking out paint colors and doorknobs. So do the big things first, and then if you're running short on time you at least have a structure that can do its job.

Another phrase with similar meaning is, "Don't waste your time solving corner cases."
by daydreamin
Wed Jun 02, 2010 10:24 pm
Forum: Personal Consumer Issues
Topic: Hotel lost my clothes
Replies: 38
Views: 7736

That really sounds terrible. There was a recent article in the NYT listing strategies for getting your way in situations like these:

http://www.nytimes.com/2010/05/23/your- ... ler&st=cse

Hopefully some of these will be useful to you. Number 1 seems to be very similar to what nisiprius suggested re: keeping a record of everything.

Also, have you tried talking directly to the person who is in charge of housekeeping and/or laundry? Sometimes lower level staff know more than the manager does about what's going on. Maybe you'll be able to find the person who actually handled your suit, and they'll remember which room they accidentally sent it to.

Good luck!
by daydreamin
Wed Jun 02, 2010 6:33 pm
Forum: Personal Investments
Topic: Personal Asset Allocation Based on Graham Rather than Age
Replies: 70
Views: 24119

Great, thanks. So using the current numbers from Vanguard's website: VTWSX PE = 21.2, earnings yield = 4.71% VBMFX yield = 2.94% The VBMFX yield is the SEC yield from the Vanguard website. There's also the "yield to maturity" (3.3%), the yield from Google finance (4.55%), and the yield from Yahoo finance (3.77%). Not sure which one I should use, but using the SEC yield I get: 4.71 * (100 - stock) = 2.94 * stock 471 - 4.71stock = 2.94stock 471 = 7.65stock stock allocation = 61.5%, bond allocation = 38.5% Is that right? Looking at your chart, that implies we're in a time when stocks are significantly better to buy than bonds. The only time in the past ten years when this formula would have recommended a higher allocation to stocks w...
by daydreamin
Wed Jun 02, 2010 4:32 pm
Forum: Personal Investments
Topic: Personal Asset Allocation Based on Graham Rather than Age
Replies: 70
Views: 24119

CyberBob wrote: Allocating once a year, based on the December 31st earnings yield and bond yields (of the Total Stock and Total Bond index funds) would have given you these allocations over the last 13.5 years (all the data I had readily available):
Very cool stuff. Sorry for being slow, but can you explain exactly how you calculated these allocations?

Where do you find the earnings yield for the Total Stock index? And then what formula do you use to get what the stock/bond allocation should be?

Thanks!
by daydreamin
Wed Jun 02, 2010 1:34 pm
Forum: Personal Investments
Topic: Expense ratio higher than yield on Vanguard money market?
Replies: 8
Views: 5749

Whew. Thanks, guys. But they should put that on the website next to the yield!
by daydreamin
Wed Jun 02, 2010 1:25 pm
Forum: Personal Investments
Topic: Expense ratio higher than yield on Vanguard money market?
Replies: 8
Views: 5749

Expense ratio higher than yield on Vanguard money market?

I just noticed that for Vanguard's Tax Exempt Money Market fund (VMSXX), the expense ratio is listed at 0.17% and the yield at 0.16%.

https://personal.vanguard.com/us/FundsS ... IntExt=INT

Does that actually mean that you are guaranteed to lose money by keeping cash in that fund?! If so... wow.
by daydreamin
Tue May 25, 2010 11:10 pm
Forum: Personal Finance (Not Investing)
Topic: UPDATE - Options for a financial blow [private schooling]
Replies: 67
Views: 8868

I don't need her to get the best education or be top of the class or anything. I just want her to be happy and love to learn. I did alternative schooling until 5th grade and I always wondered at my friends who "hated" school. I loved school, was sad for weekends, and never understood the problem with school until I had to leave my own school. I want my daughter to have that experience as well. I want her to enjoy school for as long as possible. I want her not to be pestered with standardized tests and sticker rewards at school. I want her to love learning. Is that too much to ask? Just my personal anecdote, for what it's worth: I went to a really crappy public elementary school. We didn't have a playground, kids would fight durin...
by daydreamin
Tue May 25, 2010 3:57 pm
Forum: Personal Finance (Not Investing)
Topic: UPDATE - Options for a financial blow [private schooling]
Replies: 67
Views: 8868

The best-case scenario, of course, is that your husband finds another job at a similar private school. But if that doesn't happen, then it seems like you need to figure out what your priorities are amongst a) sending your daughter to the kind of school you like, b) staying in your current house, and c) not relying on gift money from your parents. You can have any two of these things, but not all three.
by daydreamin
Tue May 25, 2010 3:29 pm
Forum: Personal Finance (Not Investing)
Topic: UPDATE - Options for a financial blow [private schooling]
Replies: 67
Views: 8868

I'm not particularly qualified to give advice on this issue, but just as an objective outsider, I see a parent who teaches kindergarten and a child who needs to go to kindergarten. If your husband doesn't get his contract renewed and if you find a higher-paying job, might having him home-school your daughter be an option?
by daydreamin
Tue May 25, 2010 3:15 pm
Forum: Personal Finance (Not Investing)
Topic: Building Co-op
Replies: 12
Views: 1595

This is a pretty good article about the possibilities and challenges of something similar to what you're suggesting, although in an urban area: http://nymag.com/realestate/features/61743/ The group—which began as a collection of strangers—is hoping to create, in essence, an extended family. (There is one person whose parents will live in the building, too.) To build excitement, they have invited people from other communal-living developments to speak about their experiences, and have heard stories of fellow members supporting one another through death and divorce, and children being raised together as if life were a giant, never-ending playdate. One speaker tantalized some of the Brooklyn group when he told of how all the high-school senior...
by daydreamin
Tue May 25, 2010 11:37 am
Forum: Investing - Theory, News & General
Topic: Why do you believe in the Boglehead theory?
Replies: 50
Views: 6410

Re: Why do you believe in the Boglehead theory?

I wish I could believe in the Boglehead philosophy of "staying the course" -- I pulled 100% out at the end of April and am sitting in cash (good luck). I'll admit, I am young and naive, but I got scared in '08. Yeah, I got scared and panic sold in 2008 too. But here's what I believe, and why: 1) No one can time the market. Not Jim Cramer, not Nouriel Roubini, not anybody who publishes an investing newsletter, certainly not you or I. Even if there is someone out there who can successfully and consistently predict what stocks are going to do, he or she has long ago retired to a nice island somewhere. 2) Put your money in things that pay you. This is not a part of the bogleheads philosophy, but once I gave up on the idea of being ab...
by daydreamin
Tue May 25, 2010 10:05 am
Forum: Personal Investments
Topic: asset allocation
Replies: 29
Views: 6565

Rules of thumb are just rough guidelines. I'm 25 and I only have 30% in stocks, because I'm highly risk averse like you. During the bear market of 2008, I panic sold everything, which is how I realized that age in bonds was not going to work for me. I prefer the formula "tolerable loss x 2 in stocks" - anything more than a 15-20% drop in my portfolio would make me panic, so I keep 30-40% in stocks.

I can literally feel the difference with an risk-appropriate asset allocation. In 2008, I was glued to the financial news every day and anxious as all hell, just like you were on May 6. These days, I'm happy when I see dips because it means I get to rebalance at cheaper rates.
by daydreamin
Tue May 25, 2010 12:27 am
Forum: Personal Consumer Issues
Topic: how much savings per year?
Replies: 7
Views: 2036

Why "Post-tax annual income - annual expenses = annual savings"? What about my pre-tax 401k contributions, why do those not account as annual savings?
by daydreamin
Tue May 25, 2010 12:15 am
Forum: Personal Investments
Topic: asset allocation
Replies: 29
Views: 6565

If you panic sold all your stocks on May 6th, then 40% stocks is too much for you. Think about it this way - You only need $6,000 annually to cover your expenses. $6,000 is 2% of $300,000. If you put $300k into TIPs and Total Bond Market, you would be pretty secure in being able to withdraw enough to cover expenses for the rest of your life, adjusted for inflation. So you don't have any need to invest in stocks. But there are other reasons you might want to invest in stocks. If the stock market does well, then you will have more spending money than you thought, never a bad thing. You might want to leave some money to heirs or charity someday. At any rate, I would consider going 75% bonds, 25% stocks. The 80/20 mix you suggest is also fine (...
by daydreamin
Mon May 24, 2010 8:23 pm
Forum: Personal Investments
Topic: Need help with an investment plan
Replies: 5
Views: 1323

Ok, if the cash in your taxable account is to be invested, then that changes things. Here is my revised suggestion for your portfolio: Target allocation: 25% Bonds, 75% Stocks Taxable: $70,200 = 53% 3% individual stocks 25% Total Stock Market VSTMX (ER 0.18 ) 25% Total International VGTSX (ER 0.34 ) Roth: $22,000 = 17% 17% Wellesley VWINX (ER 0.33 ) 401k: $39,700 = 30% 8% Target Retirement 2050 (ER 0.84 ) 22% U.S. Bond Market FBIDX (ER 0.32 ) Total = $131,900 = 100% 1) This portfolio shows $5,000 moved from your cash account to your Roth. 2) I'm still not entirely clear on the details of your 401k. You can use any mutual fund available through Fidelity? That is a pretty damn good selection. But $11k of your money has to sit in a mystery tar...
by daydreamin
Mon May 24, 2010 11:17 am
Forum: Personal Investments
Topic: Need help with an investment plan
Replies: 5
Views: 1323

1. What type of asset allocation would you recommend? % Large cap, small cap, commodities, etc 25% stocks, 75% bonds might be a good start. As for splitting between large cap, small cap, commodities, etc. - do you have a compelling reason not just go with market weight? Any total market index fund will include all of these categories at their respective weights. 2. I'd like to allocate my assets so bonds and other interest income will be in the roth and 401k and I would like to keep the duration of any bond funds small since interest rates are low. Yes, these are both good ideas. 3. My 401k is through fidelity and there are not many good choices, however, I have brokerage link so I can choose any mutual funds offered in there. Hopefully on...
by daydreamin
Mon May 24, 2010 9:49 am
Forum: Investing - Theory, News & General
Topic: How did you make your first $500,000?
Replies: 122
Views: 19071

Maybe someone can help me calculate my annualized return bacause I see so many different ways to do it. I plowed money into equities during the 2008/2009 downturn and here's my last 2 years. I'm just gonna use ratios rather than actual numbers. Balance 5/21/2008 = $100 Contributions = $410 Employer match = $90 Investment gains = $90 Balance 5/21/2010 = $690 Fidelity says I'm down -18.6% during this period saying something about the time value of money. Maybe I'll start a new thread about math. Any ideas about return annualized? Sorry to go off-topic, but I don't understand. If you have investment gains = a positive number, how can your annualized return be -18.6%? I googled "how to calculate annualized return" and found this equa...
by daydreamin
Fri May 21, 2010 10:33 pm
Forum: Personal Consumer Issues
Topic: Buying a new car using amex rewards
Replies: 6
Views: 2114

mathwhiz - I cannot thank you enough for posting that link. It saved me $5,600 off MSRP today on a Honda Accord LX. :)

In case anyone else is interested in using this program, my experience with it was great. I just printed out the price that Amex was offering me, took it to the dealership, and picked out my car. The dealership sneakily tried to tack on the destination charge as extra, before I pointed out that it says in the fine print destination fee should be included in the price. So watch out for that. But otherwise, good stuff.
by daydreamin
Fri May 21, 2010 10:26 pm
Forum: Investing - Theory, News & General
Topic: Keeping cash in multiple currencies?
Replies: 40
Views: 4648

Re: Keeping cash in multiple currencies?

Another thing I want to point out is when individual consumers typically buy foreign currency, they're getting killed on the exchange rate. I work at a foreign exchange firm, and while I'm not involved in sales, I know our salesmen sometimes charge business clients up to 2 and 3% depending on the situation, and those are on big transactions. If you want to convert something like $1000 US to Euro, you're probably going to get charged even more than that. That makes a lot of sense. I think this is more than enough of a reason not to do this. I also understand what several people have been saying about already having exposure to foreign currency through investing in international stocks. Still, if it were easy and cheap to do so at a fair exc...
by daydreamin
Thu May 20, 2010 5:42 pm
Forum: Investing - Theory, News & General
Topic: Keeping cash in multiple currencies?
Replies: 40
Views: 4648

simplesimon wrote:I don't feel there's any reason to put cash at risk. What is your reason?
The goal of this strategy is not to increase risk for increased returns, but to reduce the risk that my cash sitting in USD will lose purchasing power. I could be entirely wrong in thinking that it will do this.
by daydreamin
Thu May 20, 2010 5:39 pm
Forum: Investing - Theory, News & General
Topic: Keeping cash in multiple currencies?
Replies: 40
Views: 4648

Re: Keeping cash in multiple currencies?

The point is, the country you live in is different from other countries, not because of patriotic boosterism, but because that's where you buy stuff. You should hold your cash in the currency you expect to be spending, as best you can predict that. Anything else is currency speculation, plain and simple. And currency speculation is notoriously one of the most risky things you can do with money. I understand what you're saying about currency speculation being risky. However, I'm not convinced that the country you live in is the country where you buy stuff. These days, we buy t-shirts from Guatemala, tulips from Kenya, computer chips from Korea... you get the idea. Things that are 100% produced in the U.S.A. are, in fact, uncommon enough tha...
by daydreamin
Thu May 20, 2010 5:28 pm
Forum: Investing - Theory, News & General
Topic: Keeping cash in multiple currencies?
Replies: 40
Views: 4648

Isn't it just as likely that your need to tap this cash will happen at a time when the USD is low as when it's high vs. other currencies? Do you believe this? If so, isn't it just a wash? Why add the complexity? In the short-term, yes I believe this. And it wouldn't be a wash. When I need to tap my cash reserves, I would look at what currency or currencies had risen, and spend those first. There would be substantial benefit to that. In the long-term, I think the U.S. is losing purchasing power against other countries, especially the BRIC ones. Forgive me if this is verging political; that is not my intention. I'm simply based this on my own traveling experiences. Ten years ago, a dollar bought me much more stuff in China than it does now. ...
by daydreamin
Thu May 20, 2010 4:57 pm
Forum: Investing - Theory, News & General
Topic: Keeping cash in multiple currencies?
Replies: 40
Views: 4648

Keeping cash in multiple currencies?

I think about my money as being of two types - money that I want to grow (invested in bonds and stocks) and money that I want to just be there (cash). I think almost everyone here would agree that money we want to grow should have some international component. So why not the money we keep just to be there? Why not keep part of your emergency fund in US dollars, part in Euros or Swiss Francs, and part in an Asian currency? You could even have fixed % allocations and rebalance between the currencies. I'm not talking about money that you're saving for a specific goal, because those goals have a fixed dollar tag on them. If you need to pay $20,000 tuition next year, that's what you need to pay, in USD. I'm talking about general cash reserves th...
by daydreamin
Wed May 19, 2010 5:55 pm
Forum: Personal Consumer Issues
Topic: Wikipedia [font size] is too big
Replies: 9
Views: 2532

In Firefox (and perhaps other browsers too, though I'm not sure) you can hit Ctrl - and Ctrl + to decrease and increase the font size on a webpage.
by daydreamin
Wed May 19, 2010 4:46 pm
Forum: Personal Investments
Topic: Strategy - Good or Bad during market dips
Replies: 17
Views: 2737

Don't know what your bond / stock allocation is, but let's say you have 50/50. In that case, it could make sense to move 1% from bonds to stocks when stocks drop by 2%, and 1% from stocks to bonds when stocks go up by 2%. This is also known as rebalancing with a very tight band.

As previously mentioned, if you ONLY go from bonds to stock on dips and not the other way, you'll soon be entirely in stocks. And 10% is way too much to move on a 2% dip.