Search found 29042 matches

by grabiner
Thu Apr 22, 2021 9:33 pm
Forum: Investing - Theory, News & General
Topic: VWAHX (high yield muni) vs. VCITX (LT CA muni)
Replies: 9
Views: 707

Re: VWAHX (high yield muni) vs. VCITX (LT CA muni)

This thread is making VWAHX look like a pretty safe and profitable investment. "Safe" is a relative term, and means different things to different people. From a risk point-of-view, VWAHX acts like it's roughly 75% muni and 25% stock, at least when you look at drawdowns and stddev. I think...
by grabiner
Wed Apr 21, 2021 9:58 pm
Forum: Personal Investments
Topic: VWO/VSS in Roth IRA or taxable?
Replies: 5
Views: 496

Re: VWO/VSS in Roth IRA or taxable?

Thanks retired@50 and grabiner for the replies! I have some new money in taxable and 457(b) to change "current" into "future1" (add more VWO/VSS in taxable) or "future2" (exchange some VXUS for VWO/VSS in Roth IRA). Percentages specified are of my entire portfolio. +--...
by grabiner
Wed Apr 21, 2021 9:55 pm
Forum: Personal Finance (Not Investing)
Topic: Capital gains tax on house sale when moving out of state
Replies: 7
Views: 615

Re: Capital gains tax on house sale when moving out of state

... or move to a state that has no state income tax (like Texas) :D [ You'll still owe non-resident tax to the state where the house is located. Given the high tax rate in CA, you're likely to pay about the same total tax on the sale no matter where you move; you would only pay more if you move som...
by grabiner
Wed Apr 21, 2021 7:44 pm
Forum: Personal Finance (Not Investing)
Topic: Taxes on Sportsbook/Gambling Winnings
Replies: 32
Views: 2420

Re: Taxes on Sportsbook/Gambling Winnings

I can walk into a sportsbook and make a bet in person and get a ticket (just like the old racetracks). If I win, I cash the ticket and no taxes are due assuming I'm under the 600 to 1 limit. Taxes are still due on gambling winnings (or any other form of income) even if they are not reported on a 10...
by grabiner
Wed Apr 21, 2021 7:42 pm
Forum: Personal Finance (Not Investing)
Topic: Capital gains tax on house sale when moving out of state
Replies: 7
Views: 615

Re: Capital gains tax on house sale when moving out of state

You would owe taxes to both states (CA because the gain is sourced there, and your resident state because it taxes all your income), but can take a credit for the double-taxed income. Which way you take the credit depends on the other state. In most states, you take a credit on your resident tax for...
by grabiner
Wed Apr 21, 2021 12:57 pm
Forum: Investing - Theory, News & General
Topic: "Mortgage is a negative bond" - please help me understand
Replies: 303
Views: 15445

Re: "Mortgage is a negative bond" - please help me understand

How should an inflation adjusted pension equivalent to 30% of your highest 3 years of salary be factored into your asset allocation? Is it a positive bond that would potentially offset the mortgage as a negative bond? It isn't a positive bond, but as an annuity, it gives a similar risk reduction. S...
by grabiner
Wed Apr 21, 2021 10:25 am
Forum: Investing - Theory, News & General
Topic: "Mortgage is a negative bond" - please help me understand
Replies: 303
Views: 15445

Re: "Mortgage is a negative bond" - please help me understand

How should an inflation adjusted pension equivalent to 30% of your highest 3 years of salary be factored into your asset allocation? Is it a positive bond that would potentially offset the mortgage as a negative bond? It isn't a positive bond, but as an annuity, it gives a similar risk reduction. S...
by grabiner
Wed Apr 21, 2021 10:18 am
Forum: Personal Consumer Issues
Topic: Oral surgeon said we were legally required to give SS#, then they got hacked
Replies: 54
Views: 6210

Re: Oral surgeon said we were legally required to give SS#, then they got hacked

On a related note, I refuse to give out my phone number when making a purchase. Why do they insist on this (especially you, Tractor Supply)?? I give out an old phone number that no longer is in service when businesses ask for it. It is for marketing purposes. Unfortunately that doesn't work with co...
by grabiner
Wed Apr 21, 2021 10:04 am
Forum: Personal Finance (Not Investing)
Topic: Figuring the FTC,Form 1116
Replies: 1
Views: 148

Re: Figuring the FTC,Form 1116

The international stock fund is a US asset, since it is a holding of a US investment firm. Thus, any capital gain or loss on its sale is US-source income. The other reason not to report this as foreign income is that it is not taxed by a foreign country. If you held the foreign stock directly, you m...
by grabiner
Wed Apr 21, 2021 9:40 am
Forum: Personal Investments
Topic: Total Stock Market Index Market Capitalization
Replies: 10
Views: 1116

Re: Total Stock Market Index Market Capitalization

Good morning - hope everyone is well. In looking at the Large, Mid and small cap make-up of the Total Stock Market Index Fund in the Portfolio Analysis section, I noticed that the market cap weightings of the Fund differ from its Market index - the CRSP total market index. Wondering how this could ...
by grabiner
Wed Apr 21, 2021 9:30 am
Forum: Personal Investments
Topic: What is Fidelity's "deferred annuity"?
Replies: 12
Views: 1374

Re: What is Fidelity's "deferred annuity"?

Someone correct me if I'm wrong, but I think this is essentially equivalent to contributing to a non-deductible traditional IRA. So you don't pay tax on the growth while it's in the account, but you pay tax at ordinary income tax rates on the growth when you withdraw. This avoids tax drag that you'...
by grabiner
Wed Apr 21, 2021 9:23 am
Forum: Personal Investments
Topic: Keeping International allocation in taxable account to benefit from foreign tax credit. Is this still advised?
Replies: 5
Views: 785

Re: Keeping International allocation in taxable account to benefit from foreign tax credit. Is this still advised?

The correct allocation depends on your specific tax situation, but it's almost always close enough that you shouldn't sell for a capital gain to switch. In a moderate tax bracket with no state tax, it's close to break-even; the higher dividend yield of an international fund, and more non-qualified d...
by grabiner
Wed Apr 21, 2021 9:19 am
Forum: Personal Investments
Topic: VWO/VSS in Roth IRA or taxable?
Replies: 5
Views: 496

Re: VWO/VSS in Roth IRA or taxable?

You'll have to estimate your own tax cost, but in your situation, total dividends are more important than qualified dividends, because of the moderate federal and high CA tax. You pay 24.3% tax on qualified dividends (28.1% if you are subject to NIIT), and 33.3% (or 37.1%) on non-qualified dividends...
by grabiner
Wed Apr 21, 2021 9:10 am
Forum: Personal Investments
Topic: Taxes and RMDs
Replies: 11
Views: 1821

Re: Taxes and RMDs

I have the equivalent of approximately 3 years’ worth of RMDs in BND. The idea here is that one is forced to take a RMD and hence I would have to sell in order to take my distribution. You never have to sell an asset when taking an RMD. You are only required to withdraw it and pay taxes on the valu...
by grabiner
Wed Apr 21, 2021 9:03 am
Forum: Investing - Theory, News & General
Topic: "Mortgage is a negative bond" - please help me understand
Replies: 303
Views: 15445

Re: "Mortgage is a negative bond" - please help me understand

So, it seems like the takeaways from this thread are that if you have sufficient funds to pay off the mortgage in a taxable account, and those funds are in lower earning fixed income instrument, consider using the funds to pay off the mortgage. If you have fixed income funds in a tax deferred accou...
by grabiner
Tue Apr 20, 2021 11:55 pm
Forum: Investing - Theory, News & General
Topic: "Mortgage is a negative bond" - please help me understand
Replies: 303
Views: 15445

Re: "Mortgage is a negative bond" - please help me understand

Unexpected inflation is the best thing that can happen to a mortgage holder. Unexpected inflation is the worst thing that can happen to a bond holder. And if you hold a bond portfolio which makes payments each year equal to the mortgage payments, you don't care; the reduction in purchasing power of...
by grabiner
Tue Apr 20, 2021 11:51 pm
Forum: Personal Finance (Not Investing)
Topic: "Nobody's ever regretted paying off the mortgage."
Replies: 491
Views: 32342

Re: "Nobody's ever regretted paying off the mortgage."

For paying off the mortgage, consider the actual duration. If you pay off a 30-year mortgage, your investment has a duration of 12 years, not 30. So, would you buy a bond portfolio with a 12-year duration and a rate equal to the mortgage rate? Similarly, if you pay off a 15-year mortgage, your inve...
by grabiner
Tue Apr 20, 2021 9:08 pm
Forum: Personal Investments
Topic: Payoff Mortgage or Not?
Replies: 19
Views: 1605

Re: Payoff Mortgage or Not?

In addition to the math that grabiner described above, you didn't calculate the tax. If your tax rate is 24% then your investment really need to make 4% before tax to match the 3% mortgage interest rate. Therefore, for taxable investments, I normally use a muni fund for comparison, since most inves...
by grabiner
Tue Apr 20, 2021 9:04 pm
Forum: Personal Finance (Not Investing)
Topic: "Nobody's ever regretted paying off the mortgage."
Replies: 491
Views: 32342

Re: "Nobody's ever regretted paying off the mortgage."

At what point does it make sense to pay OFF the mortgage? Let's say I have a 30 year mortgage at 3% and I plow money into 60/40 instead of paying down the mortgage. When is it prudent to pay it off? With 15 years remaining? Seems like over most 15 year periods, you're very likely to beat 3%. 10 yea...
by grabiner
Tue Apr 20, 2021 8:59 pm
Forum: Investing - Theory, News & General
Topic: "Mortgage is a negative bond" - please help me understand
Replies: 303
Views: 15445

Re: "Mortage is a negative bond" - please help me understand

I guess I’m hung up on the term “negative”. If it’s a negative bond then you need to add more bonds to balance it out. The implication is the opposite, actually: you almost certainly should reduce the marketable bond holdings, using the capital to increase the equity holdings and/or reduce the mort...
by grabiner
Tue Apr 20, 2021 8:51 pm
Forum: Personal Investments
Topic: Mortgage Payoff vs Taxable Account - What else should I consider?
Replies: 57
Views: 4897

Re: Mortgage Payoff vs Taxable Account - What else should I consider?

Not to harp on it, but specifically my question was what else should I consider given that I have an extra $5800 per month to spend on paying down a $640k 7/1 ARM that will adjust in May 2028. Just given those parameters, what would you consider? I put information about income, assets, and liabilit...
by grabiner
Mon Apr 19, 2021 9:03 pm
Forum: Personal Investments
Topic: Take this annuity?
Replies: 16
Views: 1967

Re: Take this annuity?

I reviewed my annuity contract from Vanguard, and learned that at age 65, I could elect to receive a payment for life (‘Option 1’) of $5.87 per thousand per month, which is $70.4 per thousand per year, or 7.04%. This sounds like a pretty good deal! ...... Can anyone point out holes in my thinking? ...
by grabiner
Mon Apr 19, 2021 8:40 pm
Forum: Personal Finance (Not Investing)
Topic: Allure of a HSA?
Replies: 20
Views: 1573

Re: Allure of a HSA?

I'm just trying to see if I'm missing something with a Heath Savings Account (HSA); it seems to be very popular on this site....I just got out of 8 years of military service (therefore never had to worry about health care) and took a job with the government. It seems to me that I have a pretty good...
by grabiner
Mon Apr 19, 2021 8:30 pm
Forum: Personal Investments
Topic: Mortgage Payoff vs Taxable Account - What else should I consider?
Replies: 57
Views: 4897

Re: Mortgage Payoff vs Taxable Account - What else should I consider?

Not to harp on it, but specifically my question was what else should I consider given that I have an extra $5800 per month to spend on paying down a $640k 7/1 ARM that will adjust in May 2028. Just given those parameters, what would you consider? I put information about income, assets, and liabilit...
by grabiner
Mon Apr 19, 2021 8:23 pm
Forum: Personal Investments
Topic: Muni bond logic?
Replies: 8
Views: 758

Re: Muni bond logic?

What is a decent ER for such funds. For mutual funds, I tend to invest in find with ERs less than 0.10. It's about the same for munis, as long as you have a large investment. Admiral shares of Vanguard's muni funds have 0.09% expenses. If you don't have $50K, Vanguard's expenses are 0.17%, although...
by grabiner
Mon Apr 19, 2021 8:08 pm
Forum: Personal Investments
Topic: tax efficient rebalancing in taxable accounts
Replies: 7
Views: 546

Re: tax efficient rebalancing in taxable accounts

I have never needed to sell for a capital gain to rebalance, although I came close in 2007. Here is what I do: Make use of my rebalancing tolerance bands. I will only rebalance for a capital gain if a major asset class (bonds, US stocks) is off by 25% of its own target allocation, or if any asset cl...
by grabiner
Mon Apr 19, 2021 7:58 pm
Forum: Personal Investments
Topic: How to invest cash both in tax advantaged and taxable accounts right now.
Replies: 6
Views: 831

Re: How to invest cash both in tax advantaged and taxable accounts right now.

My husband and I both retired in the last couple of years. We got out of the market to some extent about 2 months before the crash in March 2021 and now have about half of an IRA in cash. We also have substantial cash in a savings account with virtually no return. We are debt free and can be comfor...
by grabiner
Mon Apr 19, 2021 7:53 pm
Forum: Personal Investments
Topic: Take this annuity?
Replies: 16
Views: 1967

Re: Take this annuity?

+1, and consider delaying SS because it is the best annuity you can buy. It increases by about 8% for each year you delay and is inflation adjusted. SS is supposed to be neutral meaning the average person with a normal life life expectancy gets the same payout whether it is delayed or taken at 62. ...
by grabiner
Mon Apr 19, 2021 7:49 pm
Forum: Personal Investments
Topic: Payoff Mortgage or Not?
Replies: 19
Views: 1605

Re: Payoff Mortgage or Not?

Hi, Please help me work through this. We owe about $125K on our home worth $700K. Interest rate is about 3% so it costs us about $375 a month in interest charges. Our monthly payment is $1100 which puts us on schedule to pay off the mortgage in 11 more years. A quick back of an envelope calculation...
by grabiner
Mon Apr 19, 2021 6:15 pm
Forum: Investing - Theory, News & General
Topic: "Mortgage is a negative bond" - please help me understand
Replies: 303
Views: 15445

Re: "Mortage is a negative bond" - please help me understand

After sleeping on it, I think I understand my issue with framing a mortgage as a negative bond. The obligations and income don’t match up for me. If I held a 30 year fixed mortgage and a single 30 year individual Treasury bond - then obviously the mortgage is a negative bond. I’m pretty sure most p...
by grabiner
Mon Apr 19, 2021 6:09 pm
Forum: Investing - Theory, News & General
Topic: Vanguard Multifactor fund VFMF has had a bad year
Replies: 159
Views: 12872

Re: Vanguard Multifactor fund VFMF has had a bad year

Does the high turnover mean this is not ideal to hold in taxable? Diversified stock ETFs rarely distribute capital gains, so this shouldn't be an issue. (When they do distribute capital gains, it tends to be just after they get started, because they don't have stock bought at a wide range of prices...
by grabiner
Mon Apr 19, 2021 6:06 pm
Forum: Personal Finance (Not Investing)
Topic: "Nobody's ever regretted paying off the mortgage."
Replies: 491
Views: 32342

Re: "Nobody's ever regretted paying off the mortgage."

I'll just post this again so we don't lose sight of the non-emotional side of the equation. Anyone paying cash for a house today with the 30 year fixed rate @ 2.75% is going to lose money over 30 years. A lot of money. https://www.forestriverforums.com/forums/members/140841-albums3520-picture21486....
by grabiner
Mon Apr 19, 2021 5:56 pm
Forum: Investing - Theory, News & General
Topic: VTMSX vs VIOO?
Replies: 10
Views: 959

Re: VTMSX vs VIOO?

So theoretically, on the long run, VTMSX/VIOO/IJR should perform better than VB? The smaller cap range means that the S&P small-cap index is likely to outperform the CRSP index when small-caps outperform mid-caps. If small-caps should have higher expected returns as a premium for the additional...
by grabiner
Mon Apr 19, 2021 5:53 pm
Forum: Investing - Theory, News & General
Topic: VTMSX vs VIOO?
Replies: 10
Views: 959

Re: VTMSX vs VIOO?

Alternatively, you could use Vanguard Small-Cap Index; the ETF class VB is even less expensive, although the stocks aren't quite as small. (The CRSP Index that Vanguard uses tracks the bottom 15% of the market; S&P's index is about the bottom 10%.) Isn't the additional difference between CRSP I...
by grabiner
Sun Apr 18, 2021 3:54 pm
Forum: Investing - Theory, News & General
Topic: When can you put bonds in a taxable account?
Replies: 15
Views: 1877

Re: When can you put bonds in a taxable account?

Her taxable income was around 90K and her tax was $14K, so she paid 15% in taxes. However, when I looked at what the "tax rates" are for her level of income I see that it is 24% (a bit confusing). Are you familiar with how tax brackets work? It appears that she is in the 24% bracket, whic...
by grabiner
Sun Apr 18, 2021 3:36 pm
Forum: Personal Finance (Not Investing)
Topic: Property Appraisal Question - obscure situation
Replies: 13
Views: 1450

Re: Property Appraisal Question - obscure situation

The issue is that banks don't hire appraisers directly; this created conflicts of interest, and contributed to the 2008 real estate crisis. Instead, they contract with third-party appraisal referral services, and may get appraisers of varying quality. I had a similar issue when I bought my home in 2...
by grabiner
Sun Apr 18, 2021 3:26 pm
Forum: Personal Finance (Not Investing)
Topic: Prepay Mortgage as EF
Replies: 9
Views: 653

Re: Prepay Mortgage as EF

Prepaying principal doesn't work as an emergency fund. However, if you make a large prepayment of principal, your lender may be willing to recast your mortgage, so that you pay the reduced principal in smaller monthly payments for the original mortgage term. This will decrease your required monthly ...
by grabiner
Sun Apr 18, 2021 3:24 pm
Forum: Personal Finance (Not Investing)
Topic: "Nobody's ever regretted paying off the mortgage."
Replies: 491
Views: 32342

Re: "Nobody's ever regretted paying off the mortgage."

if you are selling a higher yielding asset (bonds) to pay off a liability with lower financial cost then aren't you worse off? If the after-tax mortgage rate was higher than the after-tax bond yield then I understand that it would make sense to pay off the mortgage liability. Do the asset and liabi...
by grabiner
Sun Apr 18, 2021 3:15 pm
Forum: Investing - Theory, News & General
Topic: When can you put bonds in a taxable account?
Replies: 15
Views: 1877

Re: When can you put bonds in a taxable account?

If you have the choice, it is normally better to hold stocks in a taxable account and bonds in a tax-deferred account in the 12% federal bracket. The reason is that the tax cost on stocks is zero in that bracket, with no tax on qualified dividends, nor on long-term gains when you sell them. However,...
by grabiner
Sun Apr 18, 2021 3:12 pm
Forum: Investing - Theory, News & General
Topic: When can you put bonds in a taxable account?
Replies: 15
Views: 1877

Re: When can you put bonds in a taxable account?

Like your mother, I have only taxable accounts, no retirement accounts, and I hold bonds in those accounts. It's not the end of the world. As long as she is in the 20% tax bracket, she's fine with her present holdings. If she somehow ends up in the 24% tax bracket, she may want to consider municipa...
by grabiner
Sun Apr 18, 2021 3:08 pm
Forum: Investing - Theory, News & General
Topic: Long Term Gains vs. Adjusting portfolio
Replies: 6
Views: 617

Re: Long Term Gains vs. Adjusting portfolio

See Paying a tax cost to switch funds on the wiki. Your two funds are probably tax-inefficient enough that they are worth selling; the capital-gains tax you pay for selling them now will be less than the tax on the capital gains they distribute if you continue to hold them. As a side question, for f...
by grabiner
Sun Apr 18, 2021 3:01 pm
Forum: Investing - Theory, News & General
Topic: VIGI tax efficiency?
Replies: 3
Views: 329

Re: VIGI tax efficiency?

The fund doesn't have an unusually high dividend yield (for that, you would use VYMI); instead, it targets companies which have a history of increasing dividends. And unlike Vanguard's other international ETFs, it has 100% qualified dividends, so it is likely to be more tax-efficient than the broad...
by grabiner
Sun Apr 18, 2021 2:59 pm
Forum: Investing - Theory, News & General
Topic: Confused on Interest Rates and Bond Returns
Replies: 6
Views: 773

Re: Confused on Interest Rates and Bond Returns

Falling rates increase the price of existing bonds, thus decreasing the future returns. If you buy a bond with a 3% yield, you will get a 3% return for holding that bond to maturity. But if you have bought this bond and then yields on similar bonds fall to 2%, your bond price will rise so that it al...
by grabiner
Sun Apr 18, 2021 2:56 pm
Forum: Investing - Theory, News & General
Topic: Schwab trying to dissuade me from Vanguard bond funds
Replies: 25
Views: 3446

Re: Schwab trying to dissuade me from Vanguard bond funds

Morningstar rates the two Vanguard CA Muni Funds as Gold and Silver. Morningstar rates the one Schwab CA Muni Fund as Neutral. That is a meaningful difference! You can't always trust Morningstar's ratings, but there is a good reason for this difference. Schwab's fund has 0.49% expenses, while Vangu...
by grabiner
Sun Apr 18, 2021 2:45 pm
Forum: Investing - Theory, News & General
Topic: VIGI tax efficiency?
Replies: 3
Views: 329

Re: VIGI tax efficiency?

The fund doesn't have an unusually high dividend yield (for that, you would use VYMI); instead, it targets companies which have a history of increasing dividends. And unlike Vanguard's other international ETFs, it has 100% qualified dividends, so it is likely to be more tax-efficient than the broad-...
by grabiner
Sun Apr 18, 2021 2:35 pm
Forum: Investing - Theory, News & General
Topic: Roth v. Traditional - Does effective tax rate matter?
Replies: 22
Views: 2150

Re: Roth v. Traditional - Does effective tax rate matter?

Hello, I've been a reader for a couple years, but this is my first time posting. I am familiar with the Traditional vs. Roth article in the wiki and I do not understand why the Child Tax Credit is not relevant to deciding between Traditional and/or Roth. I am in a similar situation as the OP (I act...
by grabiner
Sun Apr 18, 2021 2:30 pm
Forum: Investing - Theory, News & General
Topic: How to see the Vanguard funds classified by risk
Replies: 5
Views: 572

Re: How to see the Vanguard funds classified by risk

To be more precise: Am interested in parking money that I will not be needing for emergencies into a taxable account. I prefer to keep a risk level of 2-3. Bear in mind that the risk level classification scheme used by Vanguard is arbitrary, vague, and nonsensical. Worse, it presumes that risk is a...
by grabiner
Sun Apr 18, 2021 2:27 pm
Forum: Personal Investments
Topic: What to do with excess down payment funds
Replies: 7
Views: 575

Re: What to do with excess down payment funds

Making a larger down payment, even at the same rate, is more attractive than paying down the mortgage later. If you make an extra payment on a 15-year mortgage, that has a 15-year duration (unless you refinance or recast). If you make a larger down payment, that reduces your payment every month, so...
by grabiner
Sun Apr 18, 2021 2:20 pm
Forum: Investing - Theory, News & General
Topic: "Mortgage is a negative bond" - please help me understand
Replies: 303
Views: 15445

Re: "Mortage is a negative bond" - please help me understand

Analyze the volatility of two portfolios: 600k stocks + 400k bonds 600k stocks + 400k bonds + 400k mortgage + 400k home . If one subscribes to the notion that a mortgage is a "negative bond", which I assume is trying to say that it is like being short on bonds, the volatility of the secon...
by grabiner
Sun Apr 18, 2021 2:16 pm
Forum: Investing - Theory, News & General
Topic: VWAHX (high yield muni) vs. VCITX (LT CA muni)
Replies: 9
Views: 707

Re: VWAHX (high yield muni) vs. VCITX (LT CA muni)

It is reasonable to assume that the bond market is efficient; bonds with higher yields have higher risk. Thus, if you live in CA, you have an advantage in using CA munis, as you pay less tax on CA munis than on non-CA munis of the same risk, while investors outside CA pay the same tax on both and sh...