Search found 21201 matches

by grabiner
Mon Feb 19, 2018 11:05 pm
Forum: Personal Finance (Not Investing)
Topic: Should I payoff my Mortgage?
Replies: 25
Views: 1291

Re: Should I payoff my Mortgage?

See Paying down loans versus investing on the wiki. Under the current tax law, I believe you are not itemizing deductions. Therefore, paying the mortgage down or off is a risk-free and tax-free 2.75% return. Is that a good return? If you expect to sell the home in 5 years, paying down the mortgage i...
by grabiner
Mon Feb 19, 2018 10:56 pm
Forum: Personal Finance (Not Investing)
Topic: Which states are similar to NJ in the sense that they do not allow one to deduct contributions to 403b, 457, TSP, etc?
Replies: 2
Views: 301

Re: Which states are similar to NJ in the sense that they do not allow one to deduct contributions to 403b, 457, TSP, et

NJ does not double-tax the same income. If you retire in NJ, you prorate your withdrawals into taxable and non-taxable portions as you do with an IRA. (However, the NJ rules still make Roth TSP better; you won't be taxed on your Roth TSP contributions when you make them, and no state will tax the wi...
by grabiner
Mon Feb 19, 2018 6:29 pm
Forum: Personal Finance (Not Investing)
Topic: Help me Eyeball my Taxes on this sale
Replies: 4
Views: 433

Re: Help me Eyeball my Taxes on this sale

I suspect I will be ending up paying 20% Tax when I include this sale proceeds in the income this year. Remember the way tax brackets work. You pay 15% tax on capital gains up to the amount which makes your total taxable income $425,000 single or $479,000 married, and 20% only on gains above that f...
by grabiner
Mon Feb 19, 2018 6:21 pm
Forum: Investing - Theory, News & General
Topic: "The Effects of Social Security Benefits and RMDs on Tax-Efficient Withdrawal Strategies"
Replies: 6
Views: 1101

Re: "The Effects of Social Security Benefits and RMDs on Tax-Efficient Withdrawal Strategies"

While it wasn't the authors' main point, this article illustrates one benefit of delaying SS to age 70. The article estimates the time it would take to exhaust a portfolio while maintaining a given standard of living. Taking SS later increases that time, because the portfolio will only be exhausted ...
by grabiner
Mon Feb 19, 2018 6:06 pm
Forum: Investing - Help with Personal Investments
Topic: High ER funds with large cap gains - what to do ?
Replies: 7
Views: 520

Re: High ER funds with large cap gains - what to do ?

Another way to get rid of funds that you don't want to hold is to donate to charity. You shouldn't do this just for the tax benefit, but if you are donating several thousand dollars to a charity, you might as well do it with those funds.
by grabiner
Mon Feb 19, 2018 6:04 pm
Forum: Investing - Help with Personal Investments
Topic: How to choose tax exempt bonds
Replies: 3
Views: 286

Re: How to choose tax exempt bonds

Most tax-exempt bonds reduce both your regular and AMT income, so they won't have much effect on whether you pay AMT. (If you do pay AMT, check whether a muni fund holds AMT bonds before buying any.) Why are you paying AMT at all? Do you pay very high state tax? If so, then it does make sense for yo...
by grabiner
Mon Feb 19, 2018 5:54 pm
Forum: Investing - Help with Personal Investments
Topic: Best Investment Options with Zero Earned Income
Replies: 16
Views: 895

Re: Best Investment Options with Zero Earned Income

You might convert your traditional IRA to a Roth IRA up to the top of the 12% tax bracket, or even the 22% bracket if you expect that RMDs and Social Security will give you a high marginal tax rate later in retirement. The tax you pay uses up some of your cash, but you effectively get more tax-defer...
by grabiner
Mon Feb 19, 2018 5:49 pm
Forum: Investing - Help with Personal Investments
Topic: Tax Adjusting a Taxable Account
Replies: 18
Views: 781

Re: Tax Adjusting a Taxable Account

Hi everyone, I recently started investing in a taxable account as of last year. While I picked tax efficient funds I realized doing my taxes this year that different asset classes likely make more sense in taxable so I'm now trying to spread my asset allocation across all my accounts. The wiki has ...
by grabiner
Mon Feb 19, 2018 5:38 pm
Forum: Investing - Help with Personal Investments
Topic: Rebalancing in a Bear Market
Replies: 7
Views: 528

Re: Rebalancing in a Bear Market

What are some of the best methods for rebalancing a portfolio in a bear market? In particular, if a bear market has resulted in a decline in both equities and bonds, what’s the best method? Intuitively you don’t really want to be selling equities at all when they’re down. Would it be best to just r...
by grabiner
Mon Feb 19, 2018 11:55 am
Forum: Investing - Help with Personal Investments
Topic: Why not tax-exempt bonds?
Replies: 23
Views: 2278

Re: Why not tax-exempt bonds?

Thanks David! Thanks for simplifying one of the mysterious ways that bonds work! I've bookmarked your explanation. So that's why Vanguard's popular intermediate muni VWIUX's distribution yield of 2.84% is higher than its 2.26% SEC yield? Is there a measure that gives a good estimate of what a bond ...
by grabiner
Mon Feb 19, 2018 10:12 am
Forum: Investing - Help with Personal Investments
Topic: Why not tax-exempt bonds?
Replies: 23
Views: 2278

Re: Why not tax-exempt bonds?

I didn't check your numbers but I'm not disagreeing with them. But this doesn't make intuitive sense. Intermediate tax exempt is not significantly riskier than total bond, so there is no reason it should return more before taxes. What happens when you do the analysis with SEC yield? Low to High 100...
by grabiner
Sun Feb 18, 2018 10:24 pm
Forum: Personal Finance (Not Investing)
Topic: Why pay off the mortgage with life insurance?
Replies: 6
Views: 637

Re: Why pay off the mortgage with life insurance?

Whether you pay off the mortgage or not, you will need to have money to pay the mortgage. If you make an investment and expect it to make the mortgage payments with little risk (since you have lost the salary which was paying them), you would need about the same amount of money as the mortgage balan...
by grabiner
Sun Feb 18, 2018 10:16 pm
Forum: Personal Finance (Not Investing)
Topic: Payoff Mortgage Early?
Replies: 7
Views: 955

Re: Payoff Mortgage Early?

Welcome to the forum! Looking for input. Current situation is Mortgage Balance about $20K at 3.5%. Liquid Assets ~1.2M. Payoff mortgage with recent market gains or hold the course? Assuming that you won't have a taxable capital gain, paying off this mortgage is probably worthwhile. It gives you a ri...
by grabiner
Sun Feb 18, 2018 10:11 pm
Forum: Personal Finance (Not Investing)
Topic: Ok, so I paid off my car...now what about auto insurance?
Replies: 7
Views: 1130

Re: Ok, so I paid off my car...now what about auto insurance?

Raise the deductible on your collision and comprehensive. The bank probably required a $500 limit to protect its interest in your car, but you will likely save money by raising it to $1500 or $2500. Besides simplifying the handling of claims, this reduces the number of small claims which will raise ...
by grabiner
Sun Feb 18, 2018 10:04 pm
Forum: Investing - Theory, News & General
Topic: Old 401k Statements
Replies: 9
Views: 713

Re: Old 401k Statements

I don't think it matters for 401(k)s, but there is one specific case in which you might need old retirement plan records: if you roll the retirement plan to an IRA, and then withdraw from the IRA in New Jersey. The reason is that NJ does not allow a deduction for contributions to any retirement plan...
by grabiner
Sun Feb 18, 2018 9:47 pm
Forum: Investing - Help with Personal Investments
Topic: personal investment software + mortgage
Replies: 1
Views: 191

Re: personal investment software + mortgage

Welcome to the forum! You could handle this issue by treating your mortgage as a negative bond investment. If you pay $20K per year for the next 15 years on your mortgage, and also have a bond portfolio which will pay $20K in bond coupons and maturity bonds each year, then you are in the same situat...
by grabiner
Sun Feb 18, 2018 9:43 pm
Forum: Investing - Help with Personal Investments
Topic: Why not tax-exempt bonds?
Replies: 23
Views: 2278

Re: Why not tax-exempt bonds?

Are you currently taking SS, or is that coming? Depending upon your current tax bracket, a portion could be taxed. Note that munis don't help with this; muni income is considered income for purposes of SS taxation. If you are in the 12% tax bracket and in the upper SS phase-in, every $1 of either m...
by grabiner
Sun Feb 18, 2018 9:33 pm
Forum: Investing - Help with Personal Investments
Topic: Foreign Tax Credit on Iowa State Income Tax
Replies: 7
Views: 515

Re: Foreign Tax Credit on Iowa State Income Tax

According to Individual Income Tax Provisions in the States , from the Wisconsin Legislative Fiscal Bureau, there is a state foreign tax credit in AL, AZ, HI, IA, MT, NC, and a limited credit in LA. If you live in one of these states (except LA, whether the credit is capped at a low level), this ma...
by grabiner
Sun Feb 18, 2018 6:05 pm
Forum: Personal Finance (Not Investing)
Topic: Question about changes to personal mortgage deductions.
Replies: 11
Views: 812

Re: Question about changes to personal mortgage deductions.

How is a HELOC used for home acquisition? Isn't this one of those piggyback loans that was common during the 2008-9 crisis? I thought those were not used any longer. I was thinking HELOCs are normally taken while you own the house, and the interest is not deductible regardless of how it's used, for...
by grabiner
Sun Feb 18, 2018 1:41 pm
Forum: Personal Finance (Not Investing)
Topic: Pre- vs post-tax saving: Am I thinking it wrong?
Replies: 25
Views: 1596

Re: Pre- vs post-tax saving: Am I thinking it wrong?

Given that some BH folks are big savers, it is possible that their tax rate during post retirement be higher than the tax rate pre retirement. Let's say that you are in the marginal tax rate of 25% if you put $1,000 into the Trad. 401K account, you save 25% tax. Let's assume that you are in 25% mar...
by grabiner
Sun Feb 18, 2018 11:20 am
Forum: Personal Finance (Not Investing)
Topic: Evaluate my pension as investment
Replies: 1
Views: 373

Re: Evaluate my pension as investment

It makes sense to view this as a fixed income investment, because it behaves the way you expect a fixed-income investment to behave. It grows at fixed rates linked to market rates, and will be converted to cash which you can continue to invest. When you do cash this in, you probably intend to roll i...
by grabiner
Sun Feb 18, 2018 11:12 am
Forum: Personal Finance (Not Investing)
Topic: Pre- vs post-tax saving: Am I thinking it wrong?
Replies: 25
Views: 1596

Re: Pre- vs post-tax saving: Am I thinking it wrong?

One factor that often gets overlooked is that by deferring tax liability until later, you have more money today. Since you are a rational investor, you will save that additional money also, and you'll do it in the most tax efficient way available. That money also goes to work for you. It wears glov...
by grabiner
Sun Feb 18, 2018 10:59 am
Forum: Personal Finance (Not Investing)
Topic: Help me Eyeball my Taxes on this sale
Replies: 4
Views: 433

Re: Help me Eyeball my Taxes on this sale

Are all the long-term capital gains taxed at 20%? That is only the rate if the overall income would be in the top tax bracket, which might be the case for you.

In addition, you will pay the 3.8% Net Investment Income tax on all or almost all of the capital gain.
by grabiner
Sun Feb 18, 2018 10:55 am
Forum: Personal Finance (Not Investing)
Topic: Question about changes to personal mortgage deductions.
Replies: 11
Views: 812

Re: Question about changes to personal mortgage deductions.

No, HELOC interest is not deductible period as I have read things, no matter what you spend it for. (If it's an investment property, I guess the cost can offset the rent, but that's all.) Home-equity loans used to improve the property are deductible as home acquisition debt, just as they were befor...
by grabiner
Fri Feb 16, 2018 11:21 pm
Forum: Personal Finance (Not Investing)
Topic: How much would paying a lump sum toward my loan save me?
Replies: 12
Views: 806

Re: How much would paying a lump sum toward my loan save me?

See Paying down loans versus investing on the wiki. Making an extra payment on a 3.5% loan is equivalent to buying a risk-free 3.5% bond; the term of that bond is the time to the eliminated payment. Since you will pay off your loan in a little over three years rather than five, this is as good an in...
by grabiner
Fri Feb 16, 2018 11:11 pm
Forum: Personal Finance (Not Investing)
Topic: what is marginal tax rate?
Replies: 23
Views: 1666

Re: what is marginal tax rate?

The wiki discusses Marginal Tax Rate in some detail. The definition is "the tax rate that will apply to the next marginal – or incremental – amount of income (or deductions). It is calculated by dividing the amount of additional taxes that will be due (or reduced) by the amount of income involved." ...
by grabiner
Fri Feb 16, 2018 11:00 pm
Forum: Investing - Help with Personal Investments
Topic: Which should I use short term corporate or longterm bond index money for roth IRA contribution
Replies: 7
Views: 531

Re: Which should I use short term corporate or longterm bond index money for roth IRA contribution

Hi folks, here is my dilemma. This may be our last Roth IRA contribution for retirement accounts. I have put my emergency money in short term corporate bond index which it lost around $300, while I also have total bond market index which it lost $800 in my brokerage accounts. Which of these I shoul...
by grabiner
Fri Feb 16, 2018 10:55 pm
Forum: Investing - Help with Personal Investments
Topic: Sell individual ETFs and buy Vanguard diversified ETF?
Replies: 2
Views: 376

Re: Sell individual ETFs and buy Vanguard diversified ETF?

B) Put everything in a Vanguard diversified ETF (ASX:VDGR 30% bonds/70% stocks) I'm reluctant to go with B immediately as IEM is up 27%, IOO 17% & SSO 18% (STW is up 7% and SLF .16%) in the last 12 months/since I bought. Unless there is a tax consequence (I don't know how Australia taxes capital ga...
by grabiner
Fri Feb 16, 2018 10:53 pm
Forum: Investing - Help with Personal Investments
Topic: Does the absence of need for a legacy affect your AA or SWR?
Replies: 24
Views: 1672

Re: Does the absence of need for a legacy affect your AA or SWR?

If you don't need to leave a legacy, you can increase your sustainable withdrawal rate by converting most of your assets to an annuity (preferably inflation-adjusted).
by grabiner
Fri Feb 16, 2018 10:50 pm
Forum: Investing - Help with Personal Investments
Topic: Transition AA 100% equities to 70/30
Replies: 4
Views: 517

Re: Transition AA 100% equities to 70/30

Also consider creating a written IPS (Investment Policy Statement) as soon as you can. This will be your guarantee not to mess around with your account every time there is an idea passing in front of you https://www.bogleheads.org/wiki/Investment_policy_statement For example, here is the last parag...
by grabiner
Fri Feb 16, 2018 10:47 pm
Forum: Investing - Help with Personal Investments
Topic: Classification for Global Real Estate ETF (Vanguard)
Replies: 3
Views: 237

Re: Classification for Global Real Estate ETF (Vanguard)

I count it as real estate in my major asset class allocation (US, foreign, real estate, fixed income), and then split my real estate allocation between US and foreign in my subclass allocation. I hold 10% of my portfolio in real estate, so I hold 5% each in Vanguard's US and foreign real estate funds.
by grabiner
Fri Feb 16, 2018 10:44 pm
Forum: Investing - Help with Personal Investments
Topic: Foreign Tax Credit on Iowa State Income Tax
Replies: 7
Views: 515

Re: Foreign Tax Credit on Iowa State Income Tax

According to Individual Income Tax Provisions in the States , from the Wisconsin Legislative Fiscal Bureau, there is a state foreign tax credit in AL, AZ, HI, IA, MT, NC, and a limited credit in LA. If you live in one of these states (except LA, whether the credit is capped at a low level), this mak...
by grabiner
Fri Feb 16, 2018 10:31 pm
Forum: Investing - Help with Personal Investments
Topic: Investing vs paying off debt
Replies: 28
Views: 1625

Re: Investing vs paying off debt

Once you have maxed out your retirement accounts, I would put additional money against the car loan. The reason to pay off the car loan rather than the mortgage is that the car loan is a short-term loan. If there are four years left on the loan and you pay it off in two, then paying off the loan ear...
by grabiner
Fri Feb 16, 2018 8:12 pm
Forum: Investing - Theory, News & General
Topic: New reduced rate on REIT Dividends
Replies: 16
Views: 2316

Re: New reduced rate on REIT Dividends

According to Vanguard, the difference in annualized returns for VNQ for pre-tax and post-tax returns is 1.28% (7.65% vs. 6.37%). That's a difference of 18.0%, slightly worse than the mutual fund. So REITs are not as tax efficient as stock indexes but much more tax efficient than bonds. Computed tax...
by grabiner
Thu Feb 15, 2018 9:16 pm
Forum: Investing - Theory, News & General
Topic: New reduced rate on REIT Dividends
Replies: 16
Views: 2316

Re: New reduced rate on REIT Dividends

Another PM from Larry: People miss the lack of migration leading to low turnover and especially when yields are low, it's not very tax inefficient With the development of ETFs, turnover does not have much effect on tax efficiency. (However, REIT ETF is the only Vanguard stock ETF that distributed c...
by grabiner
Thu Feb 15, 2018 9:13 pm
Forum: Investing - Theory, News & General
Topic: Is Tax-Managed Small Cap (VTMSX) an underrated fund?
Replies: 5
Views: 648

Re: Is Tax-Managed Small Cap (VTMSX) an underrated fund?

Before the development of ETFs, it was hard to have tax-efficient small-cap investment. Now, the fund isn't necessary, but if you want to invest in the S&P 600, it is still less expensive than any ETF tracking that index. And given its 100% qualified dividends, it is more tax-efficient than Vanguard...
by grabiner
Thu Feb 15, 2018 9:08 pm
Forum: Investing - Help with Personal Investments
Topic: Is VTI really "total stock market" with only 1478 holdings?
Replies: 12
Views: 1728

Re: Is VTI really "total stock market" with only 1478 holdings?

The number of holdings isn't particularly relevant. If there are ten small stocks in a particular industry which combine to make 0.1% of the portfolio, your return won't be affected much if the fund chooses to hold 0.1% in only one of those ten, rather than 0.01% in each of them as a true index woul...
by grabiner
Thu Feb 15, 2018 9:03 pm
Forum: Personal Finance (Not Investing)
Topic: I think I filed my back door roth incorrectly in Turbo tax
Replies: 8
Views: 646

Re: I think I filed my back door roth incorrectly in Turbo tax

I noticed that even after you get the federal entered correctly, you then need to go to state and tell TurboTax the basis again Which state? This is necessary in some states because federal and state basis may be different. (NJ, for example, doesn't allow deductions for contributions to a tradition...
by grabiner
Thu Feb 15, 2018 9:00 pm
Forum: Investing - Help with Personal Investments
Topic: Tax efficiency of VFMF US Multifactor ETF?
Replies: 5
Views: 417

Re: Tax efficiency of VFMF US Multifactor ETF?

None of Vanguard's diversified stock ETFs have distributed capital gains other than just after getting started. Therefore, I would expect VFMF to be tax-efficient after its first year. (If it starts in a rising market, it won't be able to avoid capital gains in the first year, this is what happened ...
by grabiner
Thu Feb 15, 2018 8:53 pm
Forum: Investing - Help with Personal Investments
Topic: Equity Dividend Fund / ETF at Schwab?
Replies: 20
Views: 2252

Re: Equity Dividend Fund / ETF at Schwab?

why do people assume that taxes will be lower in the future than now? I would think its going to be the opposite Paying taxes later rather than now is a good deal even if tax rates go up, because the money you don't pay in taxes tends to grow. If you hold a fund which distributes a $10K capital gai...
by grabiner
Thu Feb 15, 2018 8:47 pm
Forum: Investing - Help with Personal Investments
Topic: [Which ETF for my HSA account?]
Replies: 1
Views: 159

Re: [Which ETF for my HSA account?]

If an ETF isn't commission-free but you buy $5000 at a time, that is a one-time cost of $10 to buy and $10 to sell, which is 0.40%. If you hold for 20 years, that is equivalent to an extra 0.02% in expenses. Therefore, the commission isn't particularly important, so it makes more sense to choose the...
by grabiner
Thu Feb 15, 2018 8:39 pm
Forum: Personal Finance (Not Investing)
Topic: Pay off mortgage because of new tax deductions?
Replies: 10
Views: 1835

Re: Pay off mortgage because of new tax deductions?

So r u recommending to payoff the mortgage? Sorry it was not clear for me from your explanation.. Yes. Since you can get higher returns from paying off the mortgage than from investing with the same risk level, you should pay it off. You can then decide whether you want the potential of higher retu...
by grabiner
Thu Feb 15, 2018 8:37 pm
Forum: Investing - Theory, News & General
Topic: What is the most the stock market has ever been down in 5 year period?
Replies: 19
Views: 2944

Re: What is the most the stock market has ever been down in 5 year period?

https://alphaarchitect.com/wp-content/uploads/2014/06/emp_normal1.jpg Actually we know what stock returns look like (see above for monthly returns). They have a positive skew (most months have more gain than expected from the average return) and a fat lower tail with many outliers (far more crashes...
by grabiner
Wed Feb 14, 2018 11:15 pm
Forum: Personal Finance (Not Investing)
Topic: Pay off mortgage because of new tax deductions?
Replies: 10
Views: 1835

Re: Pay off mortgage because of new tax deductions?

See Paying down loans versus investing on the wiki. You can pay off a 9-year mortgage, which would be equivalent to buying a bond portfolio yielding 3% per year with a duration of 4.5 years. Bonds with a duration of 4.5 years don't yield 3%, even in an IRA. Therefore, if you sell bonds like this fro...
by grabiner
Wed Feb 14, 2018 10:56 pm
Forum: Investing - Theory, News & General
Topic: What is the most the stock market has ever been down in 5 year period?
Replies: 19
Views: 2944

Re: What is the most the stock market has ever been down in 5 year period?

If you assume a 5% real return and a 20% standard deviation, then the standard deviation of 5-year annualized returns would be 9%. This means that 1/6 of all 5-year periods would lose more than 4% annualized (18% cumulative), and 1/40 would lose more than 13% annualized (50% cumulative). These are r...
by grabiner
Wed Feb 14, 2018 10:50 pm
Forum: Investing - Theory, News & General
Topic: Best Treasury Bond Fund/ETF for Taxable Accounts
Replies: 17
Views: 1954

Re: Best Treasury Bond Fund/ETF for Taxable Accounts

This being a bond fund, I believe capital gains would either be the same (if short term) or less (if long term) than the taxes on the ordinary income. So couldn't long term capital gains actually be a better way to generate total return than with income? Long-term gains are taxed at a lower rate. S...
by grabiner
Wed Feb 14, 2018 10:41 pm
Forum: Investing - Help with Personal Investments
Topic: Buy or Rent under new Tax Law
Replies: 20
Views: 1703

Re: Buy or Rent under new Tax Law

Under the new tax law, if you take out a $600K mortgage at 4.5%, your interest will be $27K. With $10K in state and local taxes, and some charitable contributions, you will be be able to deduct more than half the interest. Since you are in the 24% tax bracket, the after-tax mortgage rate would be ab...
by grabiner
Wed Feb 14, 2018 10:36 pm
Forum: Investing - Help with Personal Investments
Topic: 1099-DIV does not equal income dividends?
Replies: 8
Views: 1135

Re: 1099-DIV does not equal income dividends?

and all cases involving less than $300/$600 in foreign tax (Single/MFJ) Except to the extent that there is no tax liability. FTC is a non-refundable credit. Is there not also a possible situation, where portfolio income is the main source, and foreign income amounts to a certain percentage of total...
by grabiner
Wed Feb 14, 2018 10:28 pm
Forum: Investing - Help with Personal Investments
Topic: Three Fund Portfolio Excluding TSP?
Replies: 15
Views: 1521

Re: Three Fund Portfolio Excluding TSP?

If most or all of bonds are in the TSP, would you suggest a 50:50 of F:G? I’ve seen that in other threads. I prefer 100% G. For most investments, there is a trade-off between risk and return; higher-yielding bonds lose more money if interest rates rise or if bonds default. The G fund is an exceptio...
by grabiner
Wed Feb 14, 2018 10:26 pm
Forum: Investing - Help with Personal Investments
Topic: When to pay off debt instead of invest?
Replies: 27
Views: 1217

Re: When to pay off debt instead of invest?

not enough info on current assets, etc. the argument about borrowing 80k at 4% is flawed (IMO) since it is a mortgage. you can get a 12 month CD at 2% right now, I think Why is this flawed? FWIW, we will not get a tax benefit from that mortgage (because we already exceed the limit on our primary ho...