Search found 24139 matches

by grabiner
Tue Jul 16, 2019 8:29 pm
Forum: Investing - Theory, News & General
Topic: Do you care about your home appreciating?
Replies: 58
Views: 2527

Re: Do you care about your home appreciating?

Unless you are sure it is your forever home, then yes. Sure, your next home will also be more expensive but your equity will increase many times faster due to leverage, so you still come out well ahead. The equity increases at the rate of your home value, regardless of your mortgage. If you own a $...
by grabiner
Tue Jul 16, 2019 8:19 pm
Forum: Personal Investments
Topic: Understanding Bond Fund NAV
Replies: 8
Views: 419

Re: Understanding Bond Fund NAV

To avoid this risk with bond funds, you need to shorten your duration as your time horizon approaches. Money you will be spending in the next year should be in investments with a duration of less than one year, such as money-market funds. Yep, our emergency fund is in a money market. This question/...
by grabiner
Tue Jul 16, 2019 8:10 pm
Forum: Personal Investments
Topic: Not Another Pay off the House or Invest...
Replies: 29
Views: 2236

Re: Not Another Pay off the House or Invest...

Here is the situation that seems borderline: Mortgage: $388k @ 3.875% Years Left on Mortgage: 27 Tax Bracket and Filing Status: 24% MFJ Standard Deduction: $24,600 SALT Cap: $10,000 Available Deduction for Mortage Interest = $24,600 - $10,000 = $14,600 Mortage Interest Paid Last Year: $14,900 ... r...
by grabiner
Tue Jul 16, 2019 8:02 pm
Forum: Personal Investments
Topic: Confused by allocations for Tax Efficiency
Replies: 19
Views: 1306

Re: Confused by allocations for Tax Efficiency

Planned asset allocation: 65% equity/35% bonds. Marginal tax rate: 24% State: CA Shown another way: ROTH: REIT, Small cap value, TIPS, US Aggregate Bond Taxable: International Equity, Small cap equity, Small cap value, S&P 500, Total stock market, Large Cap In CA, I would prefer the TIPS in a taxab...
by grabiner
Tue Jul 16, 2019 7:57 pm
Forum: Personal Investments
Topic: Trigger GEARS - structured notes
Replies: 6
Views: 307

Re: Trigger GEARS - structured notes

In general, a hybrid product is only reasonable as an investment if you want all parts of the hybrid. (This is often the case; for example, a charitable gift annuity is a good deal if you want to both make a large donation to charity and get income from an annuity, and a balanced fund is a good deal...
by grabiner
Tue Jul 16, 2019 7:51 pm
Forum: Personal Investments
Topic: Bond question: VBTLX vs VBILX
Replies: 13
Views: 915

Re: Bond question: VBTLX vs VBILX

VBILX has some tax advantages if you are in CA Or CT or NY. In those three states, a fund must have at least half its holdings in Treasuries for the Treasury portion of the interest to be exempt from state tax. But this applies only if you hold the bond fund in a taxable account, which is not commo...
by grabiner
Tue Jul 16, 2019 7:46 pm
Forum: Personal Investments
Topic: Asset Location - Soliciting Thoughts
Replies: 11
Views: 757

Re: Asset Location - Soliciting Thoughts

Tax-Efficient Placement of Asset Types US tax laws impact the decision that we make about the kind of investments that should go into our investment accounts. I have summarized below the ordering of placement preference for each investment types. the preferred location for each investment type in o...
by grabiner
Tue Jul 16, 2019 7:38 pm
Forum: Personal Investments
Topic: Understanding Bond Fund NAV
Replies: 8
Views: 419

Re: Understanding Bond Fund NAV

What I think I know If interest rates rise the NAV would go down because newly issued bonds yield more and therefore the bonds in the fund are less valuable (inversely, a decline in rates drives the NAV up as the bonds in the fund are more valuable than newly issued bonds). The magnitude of the ris...
by grabiner
Tue Jul 16, 2019 7:22 pm
Forum: Personal Investments
Topic: 529 - lump sum or annual?
Replies: 12
Views: 635

Re: 529 - lump sum or annual?

You can dollar-cost average into the market even if you put all the money into the 529 at once. Contribute $50K now and put $5K in a stock fund and $45K in a bond fund, then move $5K each month from the bond fund to the stock fund until you have reached your target allocation. By putting the money i...
by grabiner
Tue Jul 16, 2019 6:54 pm
Forum: Personal Investments
Topic: VTMFX or VSMGX?
Replies: 23
Views: 1394

Re: VTMFX or VSMGX?

My apologies, I did not mean to hijack the thread and didn't realize my reply would cause that to happen. But since I was asked the question, I do not have salary (as in wages from an employer) but do have: - Taxable interest income - Ordinary dividend income - Capital gains Total for 2018 is ~$50k...
by grabiner
Tue Jul 16, 2019 6:45 pm
Forum: Personal Investments
Topic: VTMFX or VSMGX?
Replies: 23
Views: 1394

Re: VTMFX or VSMGX?

Yes I have income and it’s going up. I want to setup my taxable now so I can put this extra cash to work for me. I have a low cost S&P fund in my 401k and VWILX (Vanguard Intl Admiral). 70/30 split. I’m really not interested in putting any bonds in there since the fund offering is way too limited a...
by grabiner
Mon Jul 15, 2019 11:48 pm
Forum: Personal Finance (Not Investing)
Topic: Investment Records
Replies: 3
Views: 544

Re: Investment Records

Another reason to keep records of IRA and 403(b) contributions: you might withdraw from the IRA or 403(b) in NJ (or in a year that you have to pay NJ non-resident tax). NJ does not allow a deduction for contributions to an IRA or 403(b), so you need to know your previous contributions to avoid doubl...
by grabiner
Mon Jul 15, 2019 10:16 pm
Forum: Personal Finance (Not Investing)
Topic: Investment Records
Replies: 3
Views: 544

Re: Investment Records

For a Roth IRA, you need to keep a record of contributions until you turn 59-1/2, since you can withdraw them tax-free. And after that, at least in theory, you need to be able to prove that you had the Roth IRA for five years. For a traditional IRA, you should only need to keep records long enough f...
by grabiner
Mon Jul 15, 2019 10:08 pm
Forum: Personal Finance (Not Investing)
Topic: EF in Roth IRA for NJ resident and withdrawal consequences
Replies: 14
Views: 611

Re: EF in Roth IRA for NJ resident and withdrawal consequences

In addition, in this case the earnings are only calculated on the Roth account to which you made your contribution. If that account is in a MM fund, you earnings would be very small. Thank you for your illustration but are you sure of that? I read before here that NJ "for taxation purposes" treat a...
by grabiner
Mon Jul 15, 2019 9:39 pm
Forum: Personal Investments
Topic: Low cost index fund Vs Mortgage
Replies: 18
Views: 1091

Re: Low cost index fund Vs Mortgage

Do you max up all your tax-advantaged accounts? If not, how does it makes any sense to pay 20% to 30% taxes in order to save 3+% mortgage interest? While I do agree that maxing out tax-advantaged accounts is a good idea with a mortgage rate this low, this is not a fair comparison. The benefit of pa...
by grabiner
Mon Jul 15, 2019 9:25 pm
Forum: Personal Investments
Topic: Future Value and accruals
Replies: 3
Views: 192

Re: Future Value and accruals

None of these formulas are quite correct, but the monthly accrual formula is closest. Since you are making payments monthly, you need your period to be a month; your "yearly accrual" formula implies one payment per year for 360 years. The fund reports an annualized return. Therefore, you should use ...
by grabiner
Mon Jul 15, 2019 8:32 pm
Forum: Investing - Theory, News & General
Topic: Bond Index Fun math question - do NAV gains off set reduced dividends?
Replies: 2
Views: 296

Re: Bond Index Fun math question - do NAV gains off set reduced dividends?

If the price of a bond rises, its coupon as a dollar amount doesn't change, and it declines only slightly as a percentage. Thus, if a bond fund didn't sell any bonds, its dividend yield per share would not change as the share price rose. But in practice, bond funds sell bonds. If interest rates have...
by grabiner
Mon Jul 15, 2019 8:00 pm
Forum: Investing - Theory, News & General
Topic: POST YOUR QUESTIONS FOR THE EXPERTS PANEL Q&A HERE
Replies: 36
Views: 2772

Re: POST YOUR QUESTIONS FOR THE EXPERTS PANEL Q&A HERE

Now that it is possible to invest in commodities at a low cost (with Vanguard's commodity fund at 0.20% expenses, and several ETFs at 0.25%), who should invest in them?
by grabiner
Mon Jul 15, 2019 7:38 pm
Forum: Personal Investments
Topic: Low cost index fund Vs Mortgage
Replies: 18
Views: 1091

Re: Low cost index fund Vs Mortgage

I have around 100K sitting in TD Ameritrade from last few months. People are saying market will fall down soon but I am not sure how long it will take. I do not want to wait to time the market. I do have primary home mortgage with 3% interest rate. I need experts advise on this - should I use amoun...
by grabiner
Mon Jul 15, 2019 7:23 pm
Forum: Personal Investments
Topic: Low cost index fund Vs Mortgage
Replies: 18
Views: 1091

Re: Low cost index fund Vs Mortgage

I am open for any other ideas too. I am also considering whether to partially pay off my mortgage (3.75% fixed with close to 20 yrs to go) or to invest the money. I called my bank to see my options assuming I could reduce the monthly payment, reduce the term or both. Long story short, they said bot...
by grabiner
Mon Jul 15, 2019 7:15 pm
Forum: Personal Investments
Topic: VTMFX or VSMGX?
Replies: 23
Views: 1394

Re: VTMFX or VSMGX?

Was 24% fed. Probably going to be 32% this year. 6.57% NYS 3% NYC In those tax brackets, you don't want to hold the corporate bonds of LifeStrategy Moderate Growth, nor entirely national (NY-taxable) munis of Tax-Managed Balanced. For a balanced portfolio analogous to TM Balanced, you could use a c...
by grabiner
Mon Jul 15, 2019 7:03 pm
Forum: Personal Investments
Topic: Was going with AXA a bad move?
Replies: 32
Views: 1980

Re: Was going with AXA a bad move?

Yes it was, and sad to say, your friend used you. Because it’s in an annuity, there is probably a mortality and expense fee, likely over 1%. Your “friend” is likely making a very nice commission off of you. The fees will not be spelled out anywhere. Explanation of fees are probably hidden in the pr...
by grabiner
Mon Jul 15, 2019 6:28 pm
Forum: Investing - Theory, News & General
Topic: Tax cost stopping move to indexing
Replies: 68
Views: 3064

Re: Tax cost stopping move to indexing

There are two separate thresholds. A child who provides more than half of his or her support cannot be claimed as a dependent for tax purposes, and is thus entitled to use the higher standard deduction. A child whose earned income is more than half of his or her support is exempt from the kiddie ta...
by grabiner
Sun Jul 14, 2019 8:16 pm
Forum: Personal Investments
Topic: High ER 401k vs Taxable Account
Replies: 21
Views: 750

Re: High ER 401k vs Taxable Account

The other funds listed by name and ER CREF Equity Index R1 0.47% CREF Global Equities R1 0.53% CREF Growth R1 0.49% CREF Stock R1 0.56% If the 401(k) is too large for your US stock allocation, adding Global Equities would be reasonable. I believe that fund is about 1/3 US stock and 2/3 foreign stoc...
by grabiner
Sun Jul 14, 2019 7:53 pm
Forum: Personal Finance (Not Investing)
Topic: 10k every year to mortgage or taxable brokerage
Replies: 20
Views: 1845

Re: 10k every year to mortgage or taxable brokerage

From a pure cash flow perspective, it doesn't make sense to hold 40% in bonds at around 2% and a mortgage at 3.25%. You are literally losing money every month you hold this position. (Although it does depend on how taxes work out.) You are doing the opposite of what you do to make money. You are bo...
by grabiner
Sun Jul 14, 2019 5:20 pm
Forum: Personal Finance (Not Investing)
Topic: 10k every year to mortgage or taxable brokerage
Replies: 20
Views: 1845

Re: 10k every year to mortgage or taxable brokerage

I'm not sure if you've considered this, but you may want to do whatever is necessary to pay off your mortgage before you retire. Doing so reduces your sequence of returns risk. This can be done without making extra mortgage payments; you can make taxable investments which are enough that you can pa...
by grabiner
Sun Jul 14, 2019 5:10 pm
Forum: Investing - Theory, News & General
Topic: Tax cost stopping move to indexing
Replies: 68
Views: 3064

Re: Tax cost stopping move to indexing

You gift the shares directly to your kid. Your kid sells them, paying taxes at their own tax rates (presumably zero, or at least less than yours). Below $39,375 in income is the 0% capital gains bracket. This is an interesting idea, potentially a CG-free 529 substitute for college funding. It doesn...
by grabiner
Sun Jul 14, 2019 4:28 pm
Forum: Personal Finance (Not Investing)
Topic: 10k every year to mortgage or taxable brokerage
Replies: 20
Views: 1845

Re: 10k every year to mortgage or taxable brokerage

See Paying down loans versus investing on the wiki. Making an extra mortgage payment would be equivalent to buying a 23-year risk-free bond (if you intend to stay in the home for the full 23 years) with a 3.25% yield. If you itemize deductions, you can do better than that with a real bond investment...
by grabiner
Sun Jul 14, 2019 4:12 pm
Forum: Personal Finance (Not Investing)
Topic: Yet one more mortgage vs investing - ARM and tax situation
Replies: 5
Views: 500

Re: Yet one more mortgage vs investing - ARM and tax situation

If you don't refinance the ARM now, then extra mortgage payments have a duration of four years, because your mortgage will refinance itself after four years; any remaining balance will cost you interest at the then-current rate. So, since you don't itemize deductions, extra mortgage payments earn a ...
by grabiner
Sun Jul 14, 2019 4:00 pm
Forum: Personal Investments
Topic: High ER 401k vs Taxable Account
Replies: 21
Views: 750

Re: High ER 401k vs Taxable Account

Welcome to the forum! The problem with the 401k is an above average expense ratio, and mediocre selection. There are 15 mutual funds to choose from (listed below) through TIAA-Cref, only four of which are below 1% ER. The closest to entire market of the four is the “CREF Equity Index R1” Which claim...
by grabiner
Sun Jul 14, 2019 3:53 pm
Forum: Investing - Theory, News & General
Topic: Tax cost stopping move to indexing
Replies: 68
Views: 3064

Re: Tax cost stopping move to indexing

You gift the shares directly to your kid. Your kid sells them, paying taxes at their own tax rates (presumably zero, or at least less than yours). Below $39,375 in income is the 0% capital gains bracket. This is an interesting idea, potentially a CG-free 529 substitute for college funding. It doesn...
by grabiner
Sun Jul 14, 2019 3:44 pm
Forum: Personal Investments
Topic: Zero Coupon Bonds and TIPS In Taxable Account
Replies: 7
Views: 708

Re: Zero Coupon Bonds and TIPS In Taxable Account

The tax with the zero coupon bond will be the same as the nominal bond. Not quite. The taxes will be slightly higher on a zero coupon bond than on a coupon bond with the same pretax yield-to-maturity (YTM). The following table compares $1,000 invested in a 10-year zero and a 10-year 2% coupon bond ...
by grabiner
Sun Jul 14, 2019 11:06 am
Forum: Personal Investments
Topic: my mom is a "financial advisor"
Replies: 66
Views: 7140

Re: my mom is a "financial advisor"

When comparing load funds to independent advisors, remember to include not only the front load but also the 12b(1) fee. Most front-load funds charge a 0.25% 12b(1) fee, which also goes to compensate the brokers; this is part of the expense ratio.
by grabiner
Sun Jul 14, 2019 10:42 am
Forum: Investing - Theory, News & General
Topic: 25K Capital Gain tax free for college
Replies: 3
Views: 901

Re: 25K Capital Gain tax free for college

The advantage of this strategy over a 529 is the ability to make use of excess funds if the stock market outperforms college costs (either because the stock market does well, or because the child goes to an inexpensive school or gets a scholarship). Excess funds in a 529 are subject to tax on gains,...
by grabiner
Sun Jul 14, 2019 9:15 am
Forum: Investing - Theory, News & General
Topic: Why isn't the distribution yield a valuable number? (for VWIUX)
Replies: 36
Views: 2211

Re: Why isn't the distribution yield a valuable number? (for VWIUX)

So with VWIUX, day in and day out, the internal mechanics of all of the bond holdings tempered by changes in interest rates (and inflation?) drives the NAV. I would guess that any fear/confidence in the bond market would drive the price of new purchases...and maybe even change the price of existing...
by grabiner
Sun Jul 14, 2019 12:26 am
Forum: Investing - Theory, News & General
Topic: Tax Reform - Revised Kiddie Tax
Replies: 80
Views: 10891

Re: Tax Reform - Revised Kiddie Tax

Ok. So please help me with the math. If my child has 0 earned income, $900 Short Term Capital Loss and $4000 in Qualified Dividends in UTMA, how much LTCG can we take and remain at the 0% tax rate for 2018 under the new rules? The first $1050 of income is not taxed at all, because of the standard d...
by grabiner
Sat Jul 13, 2019 4:27 pm
Forum: Investing - Theory, News & General
Topic: Vanguard account “Your mutual funds are eligible for tax-free conversion to ETFs”
Replies: 21
Views: 2501

Re: Vanguard account “Your mutual funds are eligible for tax-free conversion to ETFs”

Isn't it true that with ETF, you incur capital gain (or loss) only if you sell your ETF shares while you may get hit with capital gains in mutual funds even if you don't do any activity? Not at Vanguard, where the ETF is a share class of the mutual fund; both will distribute the same capital gains ...
by grabiner
Sat Jul 13, 2019 4:11 pm
Forum: Investing - Theory, News & General
Topic: Tax cost stopping move to indexing
Replies: 68
Views: 3064

Re: Tax cost stopping move to indexing

I don’t understand the advice to wait for a significant market downturn and sell. I did not mean to sell and leave the money out of the market. I meant to sell when stock prices have gone down (less cap gains) and buy a replacement fund immediately while prices are down . This accomplishes the goal...
by grabiner
Sat Jul 13, 2019 4:07 pm
Forum: Investing - Theory, News & General
Topic: Tax cost stopping move to indexing
Replies: 68
Views: 3064

Re: Tax cost stopping move to indexing

The bad news is that it kicks out a significant amount of realized capital gain distributions every year. For annual tax purposes, I would like to exchange this fund for an index fund like TSM but my unrealized gain is still significant, about five years-worth of the typical annual realized capital...
by grabiner
Sat Jul 13, 2019 3:45 pm
Forum: Personal Investments
Topic: Keeping it simple across Taxable and 401K - 3+ fund portfolio
Replies: 4
Views: 487

Re: Keeping it simple across Taxable and 401K - 3+ fund portfolio

I would suggest paying down loans in preference to any taxable investing (except for money saved for pre-retirement needs such as a home down payment). Your 401(k) space is valuable, because you can't get it back in future years. But paying down a loan is a risk-free return equal to the loan rate, w...
by grabiner
Sat Jul 13, 2019 3:37 pm
Forum: Personal Investments
Topic: Zero Coupon Bonds and TIPS In Taxable Account
Replies: 7
Views: 708

Re: Zero Coupon Bonds and TIPS In Taxable Account

I agree with other posters that the "phantom income" argument is primarily behavioral. You need to have some source of cash to pay the taxes if the income which is taxed is not paid to you as a dividend. If you have a bond ladder, you can pay the taxes from the maturing bonds; if you have nothing ma...
by grabiner
Sat Jul 13, 2019 3:02 pm
Forum: Personal Investments
Topic: OH no, ANOTHER "Should I pay off my Mortgage with Taxable acct" question, with a bit of a twist?
Replies: 40
Views: 4026

Re: OH no, ANOTHER "Should I pay off my Mortgage with Taxable acct" question, with a bit of a twist?

The decision to pay off the mortgage or not really comes down to your own goals. Do you want to have no mortgage with a smaller bank account or a mortgage with a larger bank account? Deciding to invest the money instead of paying off the house will give you the ability to make considerably more on ...
by grabiner
Fri Jul 12, 2019 9:06 pm
Forum: Investing - Theory, News & General
Topic: For Tracking by Asset Classes is VWAHX 'HiYield' or 'Muni'?
Replies: 7
Views: 347

Re: For Tracking by Asset Classes is VWAHX 'HiYield' or 'Muni'?

Vanguard High-Yield Tax-Exempt, despite the name, is not a junk bond fund; it holds mostly medium-quality bonds (A and BBB). The Vanguard taxable bond fund which is closest to filling the same role in a portfolio is Vanguard Intermediate-Term Corporate Bond Index.

(edited to add clarification)
by grabiner
Fri Jul 12, 2019 7:35 pm
Forum: Personal Investments
Topic: Federal employee financial planning question
Replies: 33
Views: 2468

Re: Federal employee financial planning question

Being an FSO are you allowed to claim = "The FERS Supplement is also called the Special Retirement Supplement or SRS. It is designed to help bridge the money gap for certain FERS who retire before age 62. It will supplement your missing Social Security income until you reach age 62. But not all FER...
by grabiner
Fri Jul 12, 2019 7:27 pm
Forum: Investing - Theory, News & General
Topic: Why isn't the distribution yield a valuable number? (for VWIUX)
Replies: 36
Views: 2211

Re: Why isn't the distribution yield a valuable number? (for VWIUX)

I'm starting to understand bond mechanics...the relation of bond purchase price to distribution yield. Thanks Grabiner! I'm still not convinced that the distribution yield isn't a valuable number. It's the amount that you actually get. When it's paid, the NAV/share price doesn't usually drop. It do...
by grabiner
Thu Jul 11, 2019 6:14 pm
Forum: Personal Finance (Not Investing)
Topic: Evaluating interest-only mortgage
Replies: 13
Views: 1204

Re: Evaluating interest-only mortgage

I'm struggling with a choice between a normal amortizing mortgage and the interest-only equivalent. I thought I'd turn to the collective wisdom of Bogleheads. The loan is a 10/1 jumbo ARM, and the options are: 2.625% for the first 10 years, amortizing (monthly payment ~$5,825), 0.125% lender credit...
by grabiner
Thu Jul 11, 2019 5:56 pm
Forum: Personal Finance (Not Investing)
Topic: Pay student loans via cash-out refinance?
Replies: 41
Views: 1836

Re: Pay student loans via cash-out refinance?

Primary Residence: value $650,000 with $365,000 mortgage at 3.75% (30 year fixed). Monthly mortgage is $1800/month in CA If we were to do cash-out refinance, this is the new number: New mortgage: $483,500 at 3.875% (30 year fixed). Monthly mortgage is $2,277/month Cash out value: $116,000 Effective...
by grabiner
Thu Jul 11, 2019 5:46 pm
Forum: Personal Investments
Topic: Active managed account
Replies: 8
Views: 606

Re: Active managed account

You don't need to wait for the dip, because you will get a tax benefit from any dip.. Suppose that you have a fund with a $40K basis which you sell for $50K, and then the market drops by 20%, dropping your replacement fund to $40K. You can harvest the loss, so you have a $10K capital loss to offset ...
by grabiner
Thu Jul 11, 2019 2:57 pm
Forum: Personal Investments
Topic: Tax liability question re: transferring 401k to Roth IRA
Replies: 6
Views: 432

Re: Tax liability question re: transferring 401k to Roth IRA

You would be doing a Roth Conversion. You will pay tax as if the conversion is ordinary income. If you are in the 22% top tax bracket now, add $70k on. Does that push you up to 24% Fed? State tax also applies. If this is the case, and you do decide you want the money in a Roth, you can save in taxe...
by grabiner
Thu Jul 11, 2019 2:51 pm
Forum: Personal Investments
Topic: Vanguard to Ameriprise... Naah!
Replies: 6
Views: 912

Re: Vanguard to Ameriprise... Naah!

Since you inherited the funds, the cost basis is set to the value on the day of the previous owner's death. Therefore, you can sell these funds for only a small capital gain (taxed at the long-term rate even if you sell within a year of the inheritance), and buy the funds you want.