Bogleheads.org

I agree that the main business of banks is to borrow short and lend long and that their purpose is to buffer the difference in time horizons--that's the risk they take, for which they deserve to get compensated. I suppose you could argue that. But I personally fault the customers here. “Uninsured” deposits means exactly that. If you, like the CFO of Roku, decide to leave most of your liquidity in one undiversified uninsured account, you are negligent (and hopefully liable). There are ways to solve this - buying short term treasuries yourself and holding to maturity is inconvenient perhaps but then you don’t lose your shirt. As always, I think the real response is “How would I imagine there might be a literal bank run?” It’s lazy, and CFOs ...

I assume Ally’s problem is their large car loan business?

Why can't the government or some larger bank give SVB a bridge loan for the amount that their bonds are underwater? I think it depends on whether it will instill enough confidence with the depositor. I guess if I have deposit that is under the FDIC limit, then this is not an issue. But if I have over the FDIC limit, I would not want to take a chance. Given the clientele of the bank, I think they will lose a lot of business that the bank may not be viable anyway. Does it take any legislation to offer such a bridge loan or the treasury can do it? I think the speed of the collapse may make it difficult to do... Such a bailout creates too much moral hazard. See https://www.chicagofed.org/-/media/publications/economic-perspectives/1986/ep-sep-o...

I agree that the main business of banks is to borrow short and lend long and that their purpose is to buffer the difference in time horizons--that's the risk they take, for which they deserve to get compensated. I suppose you could argue that. But I personally fault the customers here. “Uninsured” deposits means exactly that. If you, like the CFO of Roku, decide to leave most of your liquidity in one undiversified uninsured account, you are negligent (and hopefully liable). There are ways to solve this - buying short term treasuries yourself and holding to maturity is inconvenient perhaps but then you don’t lose your shirt. As always, I think the real response is “How would I imagine there might be a literal bank run?” It’s lazy, and CFOs ...

Are you suggesting that banks actually match the timing of all assets and liabilities, for example, having cash or cash equivalents to cover all deposits that could be redeemed on demand or close to it? Banks absolutely cannot do this, because it's not how banking works. "Mismatching maturities" IS banking . You deposit money in a checking or savings account. The bank would like to lend that money out and earn interest. You have the right to withdraw your money tomorrow. The bank would prefer to lend your money out for a bit longer than that. :D There is no magic wand you can wave and take the risk out of this. Sure, banks should be concerned about undiversified assets or liabilities, but if you impose 100% capital requirements, ...

Thank you to everyone for taking the time to share your advice, information, and thoughts...and truth. I needed to hear it. … I am looking into supplementing income for a couple of years. I have enjoyed the extra time being at home with my wife and volunteering. Its been great. Personally, I think you shouldn’t be too hard on yourself. Mistakes happen, especially when the stakes are so high. That said, perhaps you could think of this as a opportunity to learn not about the market but about your personal reactions to its movement. FWIW, I do not think you should re-enter the market. No amount of financial advice can help when your gut is screaming to get the hell out of the market (and in fairness to you, there are times when there is real ...

Comp structure seems really weird. Why would a top performer remain at this company? I have seen additive bonuses (company does well you get x, you do well you get x+y). But I don’t get this multiplication business.

This is a very bad idea. It seems like the friend made many mistakes and has found a way to buy out of the problem - you!

In this scenario, what do you think of treating the home value as an investment in bonds and being much more aggressive in my investment portfolio? It makes no sense to me. Your home isn't part of your investment portfolio. Thus, it isn't a bond. If you want to be more aggressive with your investments, just do it. Don't expect your home to help diversify your asset allocation. I am not sure about what this is supposed to mean. An investment generates a cash flow. A house generates imputed rent cash flow. It is an investment. My suggestion to the OP is simple: include everything that affects cash flow in planning how you allocate assets. That includes income, rents, taxes and etc. A house won’t diversify your asset allocation, sure, but it’...

What makes a bond a bond? It isn't "delivers an income stream." (That's a distortion that people sometimes engage in, to sell things that aren't bonds to naïve investors who say they want bonds). The essence of a bond... which is related to the word "binding..." is that a bond is a binding legal agreement, often to pay specific numbers of dollars on specific days. There is a issuer that you can sue in court if they make that exact payment on the appointed day. And, furthermore, for the kinds of bonds ordinary investors invest in, there are ratings agencies--the NRSRO's, nationally recognized statistical ratings agencies--that examine the books of the bond issuer and give "investment grade" ratings to bonds tha...

Thanks for the prior five additional replies regarding LVP. I wonder what houses cost in your areas? I always say I live in a LCOL to MCOL area but I think by some BH's I'm in a very LCOL area. Prior to this very recent increase in housing prices, in my area, one could buy a 3/4 BR 1.5/2 Bath home on .25 acre for $175K to $225K. Houses with plaster walls, hardwood floors, many with slate roofs. $1M houses exist but are rare. Selling a house is often about being in an affordable price range in my area. So, I'm wondering if you are living in much more expensive homes due to higher COL, BUT also if perhaps you like to have a more expensive house than some might choose (nothing wrong with that at all) Dude, you already have a wood floor. Just ...

Shallowpockets wrote: ↑Sun Nov 06, 2022 2:52 am

Journeyman510 wrote: ↑Sat Nov 05, 2022 11:25 pm I'd take into consideration the expectations of future buyers. In my neighborhood LVP is viewed as low end and frowned upon. This is likely market specific.

Wow.
I have no idea of the frowns and such in my neighborhood. Nor do I think that buyers will yeah or nay a house based on flooring alone.

As one data point (as a recent home buyer) we absolutely vetoed houses with LVP. The problem is that many “flippers” put in LVP because it looks nice and is cheaper, so when you see LVP, you instantly start worrying that any renovations you see were done on the cheap. (LVP also feels not as good underfoot if you are barefoot.)

I never thought of this before, but with the current changing interest rate climate, it seems like an important thing to consider. No it doesn't. No they don’t nor is it important. The market has changed. Do you know what the difference is between realized and unrealized loss are? Because I don’t and I work in this field. I assume that the reason boils down to irrational behavior anchoring. I can't tell if your comment is a response to me or the OP. To expound on my previous answer, it doesn't matter if a bond fund holds bonds to maturity or even if an individual holds bonds to maturity if they intend to reinvest in new bonds. The bond whose price plummeted when interest rates rose recovers its lost value bit by bit every day, and the fact...

The question is basically in the title. For the Vanguard total bond funds for instance, does the fund buy and hold bonds to maturity, or does it redeem them before maturity to keep its duration within the parameters of the portfolio strategy?

I never thought of this before, but with the current changing interest rate climate, it seems like an important thing to consider.

Definitely one of the weirder situations to find oneself in. Basically you want to reduce your realized income but not give away money. One way to do it is buy real estate and rent it out. Take the paper loss of depreciation and use it to offset income through rent. When you run out of losses, exchange with a different property.

Over the past few weeks, I’ve heard at least a few people in the trade (broker, mortgage salesman, etc) tell me not to worry too much about the rate, because I can “always refinance after this is over”.

I think the market is pricing in this possibility of refinancing, keeping prices higher than they would be. History suggests this optimism is unwarranted—interest rates were higher for 20+ years with 2% inflation (80s to early 00s) but markets aren’t required to be rational

Would you consider buying an annuity? It exactly solves your problem (and of course you pay for that.)

Might be a good deal considering current interest rates. And a deferred fixed term annuity might be even cheaper.

Gawd, the noise about dividends on here. And the straw men thrown around. Most people who write in favor of dividends here are merely expressing a preference. They're not arguing that it's free money. Then the red herrings get tossed about with the fallacies and the free monies, etcetera and so forth. And on. And on. I personally just prefer dividends and dividend-paying companies. I'd rather have the company decide how much earnings to distribute and when than do it myself. I don't have to worry about selling shares (thankfully I shouldn't have to). To be clear, it's a preference. Nothing more, nothing less. I don't view it as "free money." No fallacy involved. It's a matter of how I prefer to have earnings distributed to me -- ...

The last time I remember someone making a post just to say they were calling the bottom was on September 4th, 2008: The bear market is over I'm going on the record. I think the July 15 lows will hold. If you haven't rebalanced in a while, it's time to dust off your spreadsheet and figure out how much in bonds you need to sell and how much in stocks to buy. VFINX, Vanguard 500 index fund: https://imgur.com/j6qqlBe.png (He later suggested that he be judged, not by how close he came to the bottom in terms of stock prices, but in time, i.e. he was only about six months off.) A great lesson in humility. It seems ill-advised to make claims about the future that depend on things yet to unfold. Who knows what Putin, the Fed, and a butterfly in the...

List it now. With interest rates almost certain to rise, the question is only “rise how much?” which translates directly to “how many fewer buyers?”

KlangFool wrote: ↑Thu Sep 01, 2022 8:51 am OP,

The correct question,

Why are you not prepared for a recession? It could happen at any time.

I am prepared. I do not care whether we are in a recession or not.

KlangFool

Good for you. Please don't assume whether I am prepared or not.

This professor is unsure: https://liberalarts.tamu.edu/blog/2022/ ... recession/ But still, why?

I see the data and it’s very confusing. Job growth slowing down (not the same as unemployment going up), some retail sales (durables) down, but travel is way up. Yet unemployment is at historic lows, and even the housing market is only slowing down, and prices are not dropping (they are just not increasing). Why do very smart people believe there will be a recession? This isn’t just talking heads on TV, it seems like everyone is preparing for a recession—it’s tech companies freezing hiring (and laying off 20% of people, e.g, SNAP), banks holding back dividends, companies cutting travel budgets, closing stores etc. I hope some folks on this forum can help answer this question :) [to the mods: is this an actionable question? I’m not sure but ...

I would like to hear from $10M on how you made it there, how long it took, and what financial support did you receive or not receive I am looking to compare to myself personal and take actional tips to help support myself (and others reading) get there. Myself: -35 yrs old married w/kids in no state income tax area - No financial help from parents (poor) for college, med school, rent, downpayment, home, or wedding. -Debt: None except mortgage, took forever to have $0 school debt. -Dual household income: $500K post-tax -Net worth: $500k in savings (soon to create 2 fund portfolio) -Goal: Hit $10M portfolio by age 52 (kids will be out of HS). Wanting to learn how to get there! This is just math. The keys are: 1) Get a high income 2) Build a ...

Not just has it made it harder to understand, it also seems to change how one sees stocks themselves. Now, the yield that you get from a stock depends on the time of redemption, making it impossible to differentiate “dividend like” earnings from market mood swings.

I think the reason dividend ETFs exist and why companies still declare dividends (despite tax inefficiency) is that providing a dividend is a useful service to shareholders. If I know my investors need an income stream from their holdings, why not just write them a check directly instead of asking them to contact their broker?

Leesbro63 wrote: ↑Tue Jul 12, 2022 11:21 am

homebuyer6426 wrote: ↑Tue Jul 12, 2022 10:27 am Your vehicle is very new. Unless I am missing some information, I see no reason to upgrade.

I’m very “value oriented” about most things. I like a new Lexus every few years. Period. And I’m very aware that it’s much more expensive than keeping one for 10+ years. I don’t golf, travel much, gamble, drink or even buy expensive clothes. I’ve always been a saver. I index. I allocate, I optimize my taxes and other spending. My adult kids are taken care of. [Off-topic comment removed by Flyer24]

Out of curiosity, how do you get rid of your old car? When the time comes, would love to buy a gently used car like yours.

mikejuss, Regardless of income, can someone do better that paying zero taxes? 4% of 300K ~ standard deduction = zero taxes. With 300K in tax-deferred account and 4% withdrawal, the marginal tax rate is 0%. "Roth 401(k) contributions are best for those with lower incomes." This statement is not necessary true either due to Earned Income Tax Credit and Saver's credit. At low enough income, the contribution to Trad 401K may qualify someone for those tax credits. And, the person may have negative taxes. KlangFool So you're suggesting that once someone has reached $300,000 of traditional 401(k) contributions, he or she should begin making Roth 401(k) contributions? What about the present-day tax break that person is forgoing by making...

KlangFool wrote: ↑Fri Jul 08, 2022 6:49 am Stop paying more taxes by contributing to Roth 401K. Switch to Trad 401K instead.

Don't consider Roth 401K unless you have 300K or more in your tax deferred accounts.

KlangFool

Out of context question: why 300K? Depending on Mr Market’s mood I possibly have >300K in tax deferred accounts. Should I be thinking of Roth?

Is there a way I can "recognize" only part of the bonus as income this tax year? No. Perhaps you could ask the company to pay out the bonus over a number of years, instead of a lump sum. IMHO, if you are worried about not lasting 12 months at the company, you should decline the job offer. Thank you for your vote of confidence in my ability to hold down a job. It seems like the old fashioned idea of “hope for the best and plan for the worst” has been replaced by hubris on this forum, except of course when talking about safe withdrawal rates. I would have interpreted the comment as applying more to the company than you, but perhaps that was overly charitable. That said, while it’s a good idea to plan for the downside, there’s some ...

HootingSloth wrote: ↑Fri Jul 08, 2022 6:18 am In general, the claim of right doctrine applies only if, at the time the bonus payment was received, the employee appeared to have an unrestricted right to it, but it is established in a later year that the right was not unrestricted after all. If you are signing something that says your right to the bonus is subject to a requirement that you have to work 12 months, it may be very hard to argue that the claim of right doctrine applies. In the past, a bonus clawback like this would have created a miscellaneous itemized deduction, but I believe such a deduction is no longer usable post-TCJA. So, you may be out of luck from an income tax perspective, if this were to happen.

Oh I see. Good to know… the tax code is such a weird labyrinth!

I think the first question you need to ask is what exactly you want or expect from a real estate salesperson/“agent”? ... To find a buyer. The OP is looking to buy a house. Why would they need an agent to find a buyer? LIke a sales clerk in a store who tries to find you a suit or a dress in stock that you'll like, the real estate salesperson will try to find him/her a house among the listings that he/she will like. Why are you answering for the OP? Who knows exactly what they want other than them? Perhaps they already know the area they want, or even the specific house. Maybe they just want someone to do paperwork and/or do the negotiation. Or maybe the opposite. Who knows. I know I don’t. I suspect you don’t either. I’m OP. B Steiner is r...

JoeRetire wrote: ↑Fri Jul 08, 2022 5:49 am

traveling_salesman wrote: ↑Mon Jun 20, 2022 11:12 amIs there a way I can "recognize" only part of the bonus as income this tax year?

No. Perhaps you could ask the company to pay out the bonus over a number of years, instead of a lump sum.

IMHO, if you are worried about not lasting 12 months at the company, you should decline the job offer.

Thank you for your vote of confidence in my ability to hold down a job.

It seems like the old fashioned idea of “hope for the best and plan for the worst” has been replaced by hubris on this forum, except of course when talking about safe withdrawal rates.

Thank you everyone for these helpful replies! I based on your advice, I’m not going to worry about the tax implications and clawbacks right now, but it is good to know that there are ways to handle it if the need arises.

My wife and I just moved to a new city, and we are planning to buy a house. Please help us figure out which buyers agents are worth hiring!

We have spoken to a few over the phone and while they all seem very friendly, it is difficult to get a sense of how competent they are. (In addition to being good agents, we are looking for someone who understands the neighborhood, and our general BH financial perspective; eg we don’t want to move to a neighborhood just because it is a “prestigious” zip code etc.)

Are there any good questions we should ask as we talk to agents? Any red flags to look for? What non-obvious things can we expect from great agents?

Thank you so much for your help!

I believe the limit is 63k for 2022?

A lot of good posts here from people very much in the know. I wonder if anyone has any insight into the Atlanta ITP market? (Definitely sub-million range...)

1. "Stocks and bonds" portfolios are insufficiently diversified. You might consider adding real-estate (especially non-residential), farmland, etc. (Some endowment book authors also suggest adding gold, but that only seems to be relevant for 100+ year horizons.) 2. You may need to look beyond public markets. Often with large portfolios, you don't care much about the "fair-value" of the portfolio but about the cashflow. So, if you find an opportunity that gives you $50k cashflow over many years, but is not tradeable, that is a great deal. (Hard to find such investments though.) 3. Portfolio size really matters. In my case, I found with less than $2M, I couldn't get much more diversification that public markets, or near-p...

I'm taking a new job next month that has a sizeable sign-on bonus (>$50k) but my employment contract says that the bonus must be returned on a prorated basis if I separate from the company in less than 12 months. (That includes both me resigning, and the company terminating.)

I am somewhat concerned with the state of the economy and was wondering about the tax implications. Is there a way I can "recognize" only part of the bonus as income this tax year? Or if I can only use cash accounting, do I get a tax credit if I have to pay back part of the bonus?

Thank you for your help!

I do not have $5M. But for a few months some years ago, I did some research on this. (I'm telling this upfront because thinking with imaginary money is very different that working with real money... you have a much harder job.) In any case, my research suggested that what you need is "endowment thinking" rather than the SWR thinking that's common here. When you're planning for "only" a 30-year retirement, then the tail-risk of a bad outcome is much smaller than for a 50-60 year lifespan. Note that historical models post WW2 do not have many of these tail risks factored in. Over a 60 year period, there is a possibility that equity risk premiums become much smaller or even negative. This is much less likely over 30 years. ...

no captain hopes for storms when they go sailing. Being prepared for bad weather is one thing, and hoping for it is another. People hoping for a recession remind me of market timers. I don’t need a recession for my investing to succeed (to be fair, nor do I like bubbles).

In any case, to each his own.

Not yet I'm still waiting for the throw in the towel world is ending indicator. I saw one article on WSJ about a lost decade moving forward. I like it better when its front page each and every day that the sky is falling. This is when the real money is made! :beer +1 Have you guys lived through the situations you are describing? People lose jobs: you, your partner, your closest friends. Friends who have spent their lives building businesses have to shutter them because they can’t make payroll. There is genuine fear that yes, this time is really different. If you make it un scratched to the other side, glory be to you; fortune has smiled upon you. Not everyone you know will be that lucky. I for one never want to see 2008 again.

Tanelorn wrote: ↑Sat Jan 08, 2022 8:34 pm

traveling_salesman wrote: ↑Sat Jan 08, 2022 8:04 pm Name GoldHillAdvantage (from https://www.hedgefundnamegenerator.com)

Long
T (AT&T)
FMCC (Fannie Mae)
BAC (Bank of America)

Short
PINS (Pintrest)
PTON (Pelaton)

Fannie Mae (FMCC) trades over the counter and is not eligible for Russell 3000 or the contest. Feel free to edit your post and pick another long stock instead if you wish.

We would like to assure all our long term investors that, even though we seem to have gone long on TVTY instead of T as originally disclosed, this was all part of our long term strategy to protect our investors from the gyrations of the stock markets. Also, please note that our shorts are doing great. Again, this is consistent with our plan (which we will eventually disclose).

Hi everyone,

What are the best alternatives for tax-loss harvesting for these funds?

1. Vanguard FTSE All-World ex-US Small Capital Index Fund (VFSAX)
2. Vanguard Small Cap Value Index Fund (VSIAX)

Mutual funds ideal, but I'll live with ETFs if I must. (It's a sizable short term loss - around $1k)

Thank you for your help!

Name GoldHillAdvantage (from https://www.hedgefundnamegenerator.com)

Long
T (AT&T)
FMCC (Fannie Mae)
BAC (Bank of America)

Short
PINS (Pintrest)
PTON (Pelaton)

Thank you to everyone who made some very interesting points! I like the concentrated value exposure -- less of a high ER fund sounds great.

Great to hear you have made a decision that you like! For what it is worth, Malkiel is also a fan of dividend stocks as a psuedo-bond holding - so you have good company.

If you have advice, I am happy to hear it. If you are pointing out my ignorance, that is no secret - I know very little, which is why I ask people on this forum. I am guiding you to help you understand the products you are considering. I do not know the answers for VFVA, but I do not want to do that work for you. And as for "advice" from me or anyone else, why should you trust what i/they write without doing your own research? Thank you for the effort. But I would like to hear from people who *are* actually familiar with both products. This isn't just "look at the ER and qual dividend" territory -- I am asking about an avowedly active product (VFVA) and one that pretends to be a passive one (VSIAX). There are considerat...

livesoft wrote: ↑Sun Jan 02, 2022 9:25 am A 9-box style grid has 9 numbers in 9 box. It shows the degree of "small" and the degree of "value" that the words "small value" alone do not describe.

I have owned VSIAX | VBR for more than 15 years. The dividends are not "nearly" all qualified. Far from it. This fund is the least tax-efficient of my taxable holdings.

VSIAX is a mid/small fund and since VFVA has a larger average market cap, I cannot believe it is a small-value fund.

If you have advice, I am happy to hear it. If you are pointing out my ignorance, that is no secret - I know very little, which is why I ask people on this forum.

Can I ask you some questions please? 1. What are the Morningstar 9-box style grids for these two ETFs? they are small value. You could look this up :) 2. What are the average market caps for them? Similar $9.9 B for VFVA and $5.9 billion for VSIAX 3. What are the percentage of qualified dividends for them and the dividend yields? Nearly everything is qualified and around 1.8% for both 4. What account(s) do you intend to hold them in? taxable 5. What are their performances over the back 3-months, 6-months, 1-year, 2-years? This is irrelevant 6. What are the expense ratios? .14 for VFVA and 0.07 for VSIAX 7. Now please answer the same questions for AVUV. Thanks! I am not interested in this because I do not understand the product well. OK abo...

I have a rather basic question: folks who don't want to make portfolio decisions based on CAPE: are you opposed to the PE part or to the CA part?