Search found 3334 matches

by umfundi
Sat Nov 30, 2013 4:43 pm
Forum: Investing - Theory, News & General
Topic: when is an annuity a good option?
Replies: 35
Views: 3277

Re: when is an annuity a good option?

Reading the Quinn article. I guess one thing I worry about is the insurance company that underwrites the annuity goes out of business? I'm guessing nothing protect a consumer from that? So you'd have to choose wisely. Chris zvez, My annuity is very large (about $1.2 million), it is the DB pension GM gave to Prudential on my behalf. I think companies like Prudential are "too big to fail", so I don't worry about it. Annuities are guaranteed by the insurance industry, subject to the laws of each state. There is not a state guarantee. The limits are quite low, and provisions vary a lot by state. In some states, they protect you if you buy the annuity when you lived there, but in most states you are only protected if you live there wh...
by umfundi
Sat Nov 30, 2013 1:40 pm
Forum: Investing - Theory, News & General
Topic: Investor Intelligence Bearish Sentiment Very Low
Replies: 26
Views: 7673

Re: Investor Intelligence Bearish Sentiment Very Low

No. Nor on any other indicator.

Keith
by umfundi
Sat Nov 30, 2013 12:26 pm
Forum: Investing - Theory, News & General
Topic: Siegel on CAPE shortcomings
Replies: 44
Views: 5200

Re: Siegel on CAPE shortcomings

Along the lines of "if a tree falls", do we think CAPE was a valid metric before it was "discovered"?

Of course, this is science (isn't it?), and so "discovered" is much more apt than "postulated" or "invented".

Keith :P
by umfundi
Sat Nov 30, 2013 12:14 pm
Forum: Personal Investments
Topic: Question about LMP / income flooring.
Replies: 18
Views: 3335

Re: Question about LMP / income flooring.

Thanks Keith. So you draw from tax-advantaged? I've been drawing from the taxable and wondered if I was leaving too much in my TA space. My taxable contains Total Stock and Total International and VMMXX. Our IRA's are Wellesley, Total Bond, Short Term Bond Index and REIT. Bustoff, Yes. Please note, I can tell you what I do and why. I do not know what you should do. I am 63. 10% of our investable assets (IA) are taxable, 90% are tax advantaged, heavily tIRAs. Earlier this year I decided to delay SS, and tried to take a look at the bigger picture. We have a floor in place: My DB pension plus SS (if I took it at 62) would meet our cash flow needs.My wife (now 60) has her own SS entitlement when that time comes. The DB pension is not indexed f...
by umfundi
Sat Nov 30, 2013 8:35 am
Forum: Personal Investments
Topic: Question about LMP / income flooring.
Replies: 18
Views: 3335

Re: Question about LMP / income flooring.

Thanks Keith! B is 3X bigger than 25A. I currently receive a small non-cola pension that together with future social security (mine and spouse) will cover our current living expenses. The wrinkle is that if we both delay SS until 70, we would need to bridge a 10 year gap because my pension is only covering half our current expenses. If I wait the 10 years until I'm 70 to collect SS, inflation may result in higher cost of living expenses for which non-cola pension doesn't offset. Thus, delaying SS would mean spending down at least $200K of investable assets (10 years x 20K) I'm not sure how to invest the $200K needed to cover the next ten years. I would appreciate hearing your thoughts. Bustoff B is 3X bigger than 25A. So, on the face of it...
by umfundi
Sat Nov 30, 2013 6:45 am
Forum: Investing - Theory, News & General
Topic: Bill Bernstein: "Take risk off the table"
Replies: 207
Views: 34384

Re: Bill Bernstein: "Take risk off the table"

Actually, it's two months, according to a message I get from Vanguard when I sell. Victoria Well, it really wasn't about Vanguard, but even so, I don't recall them ever keeping me from buying stocks for two months. Just not the same fund. But thanks... Actually, Vanguard told me yesterday that if I wrote them a letter pointing out the moves were in the context of rebalancing, they would waive the rule. In other words, I rebalanced yesterday. If I wanted to then make a new investment in January to keep the rebalance percentages, they would let me do so. Keith Thank you, Keith. I am curious if it's possible to write them a letter before making the first transaction and then to make two transactions simultaneously. For example, if I have a ta...
by umfundi
Sat Nov 30, 2013 6:35 am
Forum: Investing - Theory, News & General
Topic: Bill Bernstein: "Take risk off the table"
Replies: 207
Views: 34384

Re: Bill Bernstein: "Take risk off the table"

The menacing guy is the Soup Nazi, a Seinfeld classic.

Keith
by umfundi
Sat Nov 30, 2013 1:36 am
Forum: Investing - Theory, News & General
Topic: Bill Bernstein: "Take risk off the table"
Replies: 207
Views: 34384

Re: Bill Bernstein: "Take risk off the table"

Blues wrote:
VictoriaF wrote:Actually, it's two months, according to a message I get from Vanguard when I sell.

Victoria
Well, it really wasn't about Vanguard, but even so, I don't recall them ever keeping me from buying stocks for two months. Just not the same fund. But thanks...
Actually, Vanguard told me yesterday that if I wrote them a letter pointing out the moves were in the context of rebalancing, they would waive the rule.

In other words, I rebalanced yesterday. If I wanted to then make a new investment in January to keep the rebalance percentages, they would let me do so.

Keith
by umfundi
Fri Nov 29, 2013 8:52 pm
Forum: Investing - Theory, News & General
Topic: POLL: Black Friday market close: Green or Red?
Replies: 52
Views: 4642

Re: POLL: Black Friday market close: Green or Red?

Kalo wrote:
Leif wrote:
VictoriaF wrote:
The poll was about S&P500. 0.08 is practically 0, don't you think?

Victoria
I agree close, but the programmer in me would not allow me to accept it.

What is the saying, close only applies for horseshoes and handgrenades?
And in dancing.

:shock:

Kalo
And, most important, close applies in investing.

Keith
by umfundi
Fri Nov 29, 2013 8:20 pm
Forum: Personal Investments
Topic: Question about LMP / income flooring.
Replies: 18
Views: 3335

Re: Question about LMP / income flooring.

In the context of setting up an LMP, it's my understanding that the "safe floor" is meant to provide the income for the shortfall and should equal at least 25X residual living expenses. If I have a shortfall of $20,000 per year then I need a floor of $500,000. How do I adjust for the effects of inflation on the $500,000 over the 25 years. (assuming it's not invested in TIPS) Also, just to confirm I have the correct understanding, the $500,000 isn't supposed to generate the $20,000 from interest income is it ? Lastly, how is an LMP (essentially two buckets) different from the discredited bucket approach ? Thanks Bustoff, Let me try. You should try to ensure a minimum level of income that will meet your basic needs. Calculate your ...
by umfundi
Fri Nov 29, 2013 7:58 pm
Forum: Investing - Theory, News & General
Topic: Bill Bernstein: "Take risk off the table"
Replies: 207
Views: 34384

Re: Bill Bernstein: "Take risk off the table"

Life changes. You may need more than you thought later in life due to a variety of changes. Or, even though you 'think' you need 4% you may need less. If you lock in the annuity - you're locked in. By keeping equities you keep flexibility (albeit with risk). However, I do agree you shouldn't push right to your #. I use the 4% SWR rule but since retirement 6 years ago), have only pulled out 3.7% incl taxes). I thought I'd need 4% too. In an annuity I'd be forced to take it. In equities, that extra untouched 10% has remained invested in stocks and has grown. Now I have a larger portfolio with which to work, and may even result in me taking less than the 3.7% going forward. Sperry, I agree. My point is that 4% is close to the tipping point wh...
by umfundi
Fri Nov 29, 2013 7:38 pm
Forum: Personal Investments
Topic: Financial Windfall
Replies: 8
Views: 2096

Re: Financial Windfall

Within the next several months, I will receive a mid six figures cash inheritance. I'm looking for investment advice for this inheritance. My objective will be some growth but primarily capital preservation. First my personal situation: I will be 71 in January. I am married and have been for more than 48 years. I am a retired Naval Officer earning a mid 5 figures military pension annually. My wife and I receive mid 5 figures in annual social security payments. I have a mid 6 figures IRA from which I will make my first RMD in December. My wife has a low 6 figures IRA from which her first RMD will be required in 2 years. We own our home free and clear and have no debt other than credit card which is paid off each month. We are completely deb...
by umfundi
Fri Nov 29, 2013 7:29 pm
Forum: Investing - Theory, News & General
Topic: Man Throws Away 7,500 Bitcoins
Replies: 11
Views: 2304

Re: Man Throws Away 7,500 Bitcoins

Professor Emeritus wrote:it just has the smell of urban legend to me
There are plenty of hits for: James Howells Bitcoins

Reminds me of the story of the guy who parlayed $5 into millions betting on 6 in Las Vegas roulette. Lost it all on the last spin. He regrets losing that $5.

Keith
by umfundi
Fri Nov 29, 2013 7:20 pm
Forum: Investing - Theory, News & General
Topic: Bill Bernstein: "Take risk off the table"
Replies: 207
Views: 34384

Re: Bill Bernstein: "Take risk off the table"

Browser wrote:If one agrees with Dr. B's propositions (as I do) that 1) if you've won the game then stop playing it, 2) stocks are toxic to retired investors, then it follows that the approach of holding a retirement portfolio with a significant portion of stocks to support a 4% SWR for income withdrawals is wrong-headed. Two schools of thought here.
First, if you *need* 4%, the dumbest thing to do is to take 4%. You need a real plan. Like, an SPIA that will pay you 4% guaranteed, forever.

I think that what Dr. Bernstein says should be seen in the context of ensuring a floor of income that meets your basic needs. Once that is done, you have some leeway to invest for discretionary income. Then, stocks are not toxic to anyone.

Keith
by umfundi
Fri Nov 29, 2013 5:36 pm
Forum: Investing - Theory, News & General
Topic: Malkiel suggests a different asset allocation
Replies: 41
Views: 7083

Re: Malkiel suggests a different asset allocation

Business Week profile: Dr. Burton Gordon Malkiel, also known as Burt, Ph.D. is Chief Investment Officer of Wealthfront Inc..He is a Co-Founder of AlphaShares LLC and serves as its Chief Investment Officer, Manager and Head of Index Committee. Dr. Malkiel serves as an Advisor of CareGain, Inc. Prior to this, Dr. Malkiel was employed at investment-banking department of Citigroup CIB. Dr. Malkiel served as Deputy Chairman of Genmab A/S and has been its Director since April 19, 2007. He serves as a Director of Vanguard Group (Ireland) Limited, Vanguard Group Europe, BKF Asset Management Inc., Baker Fentress Inc., John A. Levin and Co., Inc., Prudential Insurance Company of America, Jeffrey Company, and Neuvis Corp. He has been a Director of The...
by umfundi
Fri Nov 29, 2013 3:40 pm
Forum: Investing - Theory, News & General
Topic: Siegel on CAPE shortcomings
Replies: 44
Views: 5200

Re: Siegel on CAPE shortcomings

I think the point (or the argument) is that executives may have compensation incentives dependent on earnings per (outstanding) share. Stock buybacks reduce the number of shares, so earnings per share may rise even if total earnings do not.

Keith
by umfundi
Fri Nov 29, 2013 12:57 pm
Forum: Investing - Theory, News & General
Topic: Mutual Fund gifts for grand kids
Replies: 5
Views: 1006

Re: Mutual Fund gifts for grand kids

I am seeking some recommendations on mutual funds that would be most appropriate as gifts to my two grandchildren. Sophia is 2 1/2 and Max is 5 months. I want to put $1,000 in each of two new accounts, one for each. I'm thinking of Wellington or Wellesley. 1. What funds do you think fit these long-term gifts? 2. Is it best to put them in my daughters (Mom) name and the kids name? 3. I will be retiring in a few months, so I don't know how often we'll be adding new deposits. Thanks in advance for your thoughts and possible recommendations. :shock: Dave, Given a similar question, I chose Vanguard LifeStrategy Moderate VSMGX. They may have a $3,000 minimum. So far as ownership is concerned, discuss that with your daughter. My opinion (a little...
by umfundi
Fri Nov 29, 2013 12:41 pm
Forum: Investing - Theory, News & General
Topic: POLL: Black Friday market close: Green or Red?
Replies: 52
Views: 4642

Re: POLL: Black Friday market close: Green or Red?

livesoft wrote:It almost seems like lots of orders to sell rebalance out of equities were kept by fund managers until the last few minutes of the session when they said, "Uh-oh, we better do these exchanges that folks asked for."

Or maybe those managers at Vanguard did sell early in the day and then drove prices lower at the end, so that all shareholders got lower after-close NAV and the Vanguard managers got a bonus?
So, the livesoft theory is that since people rebalance on Black Friday, the market direction will be the opposite of the YTD trend? Sounds quite plausible to me!

Keith
by umfundi
Fri Nov 29, 2013 12:37 pm
Forum: Investing - Theory, News & General
Topic: POLL: Black Friday market close: Green or Red?
Replies: 52
Views: 4642

Re: POLL: Black Friday market close: Green or Red?

umfundi wrote: I think the market will be down slightly, since few are paying attention. Let's say, -28.3 on the Dow.
That's not the winning prediction?

I have downloaded all the Thanksgiving Day football scores, and the DJIA history for the day after. My newsletter will be announced shortly. :P

Keith
by umfundi
Fri Nov 29, 2013 12:32 pm
Forum: Investing - Theory, News & General
Topic: Rebalancing on Friday
Replies: 37
Views: 4977

Re: Rebalancing on Friday

Good for us.

I will admit I was not going to rebalance since I was only a couple of percent off, but Malkiel's latest pronouncement set me off. :annoyed

Keith
by umfundi
Thu Nov 28, 2013 10:49 pm
Forum: Investing - Theory, News & General
Topic: Independent Adviser for Vanguard Investors
Replies: 8
Views: 1998

Re: Independent Adviser for Vanguard Investors

Some good advice (low cost funds at Vanguard) but also a promise of a secret sauce for market timing and/or fund picking.

I'd take a pass.

Keith
by umfundi
Thu Nov 28, 2013 10:33 pm
Forum: Investing - Theory, News & General
Topic: POLL: Black Friday market close: Green or Red?
Replies: 52
Views: 4642

Re: POLL: Black Friday market close: Green or Red?

So, I decide to rebalance, and the whole world cares? My trades have been submitted, and I have a stern admonishment from Vanguard they cannot be changed.

I think the market will be down slightly, since few are paying attention. Let's say, -28.3 on the Dow.

I do wish someone would do some data mining to correlate the Detroit Lions' performance in the Thursday Thanksgiving football game to the market on the next day, Friday. Lions' score, opponents' score, margin of loss (or victory) ... There has to be something that fits. Number on the winning quarterback's jersey?

Keith :P
by umfundi
Thu Nov 28, 2013 9:29 pm
Forum: Investing - Theory, News & General
Topic: Rebalancing on Friday
Replies: 37
Views: 4977

Re: Rebalancing on Friday

Calm Man,

I was talking in the context of funds you will use during your lifetime. Leaving a legacy brings a whole set of other considerations. I am sorry to hear about your daughter.

Best wishes,

Keith
by umfundi
Thu Nov 28, 2013 8:37 pm
Forum: Investing - Theory, News & General
Topic: Rebalancing on Friday
Replies: 37
Views: 4977

Re: Rebalancing on Friday

Markets close early tomorrow, so don't be late getting your moves in...
Done. Transactions submitted.
On Friday, bond funds will pay out their November dividend distributions.
Don't care, tax-deferred investments.

Victoria implied I might wait until we get a sense of what the markets are doing tomorrow. I thought about that, then realized I would not do anything differently. So, there we go.

Keith
by umfundi
Thu Nov 28, 2013 2:57 pm
Forum: Investing - Theory, News & General
Topic: Bill Bernstein: "Take risk off the table"
Replies: 207
Views: 34384

Re: Bill Bernstein: "Take risk off the table"

The problem is, we have a new strong signal:

The Lions actually WON a Thanksgiving Day game. I mean, they handily beat Green Bay, not just edged by.

Who knows what this means for the markets tomorrow? :shock:

Keith
by umfundi
Thu Nov 28, 2013 1:16 pm
Forum: Investing - Theory, News & General
Topic: Bill Bernstein: "Take risk off the table"
Replies: 207
Views: 34384

Re: Bill Bernstein: "Take risk off the table"

Taking advantage of extremes of market sentiment is not hard. If your friends are bragging about the big gains they are making from day trading stocks, that is a sign of a bubble. If folks who no nothing about investing start giving you stock tips, that is a sign of a bubble. When you see books about DOW 36,000, that is a sign of a bubble. When magazine covers extol the bull market in stocks that will go on for as far as the eye can see, that is a sign of a bubble. When market experts tell us that old methods of valuation are obsolete, that is a sign of a bubble. Conversely, when everyone has given up on stocks that is a sign of a buying opportunity. When Business Week has "The Death of Equities" on its cover, that is a good sign...
by umfundi
Thu Nov 28, 2013 1:02 pm
Forum: Investing - Theory, News & General
Topic: Bill Bernstein: "Take risk off the table"
Replies: 207
Views: 34384

Re: Bill Bernstein: "Take risk off the table"

Sriracha,

Great post. The Wiki rocks!

As someone else noted, the BH Forums contribute their own noise.

Keith

PS: I assume you are not the guy with a court order: http://www.cnbc.com/id/101231927

(Edited for typo.)
by umfundi
Thu Nov 28, 2013 12:00 pm
Forum: Investing - Theory, News & General
Topic: Bill Bernstein: "Take risk off the table"
Replies: 207
Views: 34384

Re: Bill Bernstein: "Take risk off the table"

Blues wrote:Well, Keith, I don't feel it's fair to ignore Dr. Bill's post early on in this thread:
wbern wrote:There's another dimension to this, which is that high recent returns mean that many savers have, at this point, won the retirement game--that is, they now have, for the first time, an adequate liability matching portfolio. Once you've won the game, you should stop playing it, or at least stop playing it so aggressively.

Bill
To each his own. I choose to err on the side of caution and risk management with my hard earned portfolio.

Regardless of your choice of method, I wish you well.
I fully agree with what Dr. Bernstein says here, excerpted in bold above. I was simply trying to point out, that's not what I am ranting about.

Keith
by umfundi
Thu Nov 28, 2013 10:47 am
Forum: Investing - Theory, News & General
Topic: Bill Bernstein: "Take risk off the table"
Replies: 207
Views: 34384

Re: Bill Bernstein: "Take risk off the table"

As Dr. Bernstein and others on the panel of experts at BH2013 said, staying with your plan is more important than getting the plan exactly right. Yes, "staying the course" is not some stupid slogan. It means, stick with your plan. Which is why I am so frustrated with some of the experts now suggesting you should be tinkering and tampering with your plan. Keith Happy Thanksgiving to all. I don't consider it tinkering but prudent to take appropriate measures when, as Bernstein and Swedroe point out, one is no longer required to take as much risk to fund their retirement (or other goal). Just as you wouldn't invest in equities for a short term goal, once one has amassed a certain amount of wealth sufficient to augment their "sa...
by umfundi
Thu Nov 28, 2013 2:44 am
Forum: Investing - Theory, News & General
Topic: Bill Bernstein: "Take risk off the table"
Replies: 207
Views: 34384

Re: Bill Bernstein: "Take risk off the table"

As Dr. Bernstein and others on the panel of experts at BH2013 said, staying with your plan is more important than getting the plan exactly right.

Yes, "staying the course" is not some stupid slogan. It means, stick with your plan. Which is why I am so frustrated with some of the experts now suggesting you should be tinkering and tampering with your plan.

Keith
by umfundi
Wed Nov 27, 2013 8:05 pm
Forum: Investing - Theory, News & General
Topic: Rebalancing on Friday
Replies: 37
Views: 4977

Re: Rebalancing on Friday

Keith, wouldn't life be good if everything was in accounts not affected so much by taxes, The we could just do life strategy moderate growth everywhere, not have to rebalance or do anything. ... Calm Man, Yes, but ... Only about 15% of our investable net worth is in taxable assets. So, yes, my rebalancing is in the tax-advantaged accounts. But, three years ago I got mad at my situation, and liquidated all of our family's taxable investments to move them to Vanguard. I am glad I did it, although that year our taxable income was a new high that we will likely not see again. We paid the piper then, and it is good now: Using the kids' UTMAs for college and housing and our taxable account to withdraw funds to defer SS, the current taxes are pre...
by umfundi
Wed Nov 27, 2013 7:26 pm
Forum: Investing - Theory, News & General
Topic: Rebalancing on Friday
Replies: 37
Views: 4977

Re: Rebalancing on Friday

letsgobobby wrote:Keith, and none of your motive to rebalance is driven by a high PE10 which clearly predicts an imminent crash?

:sharebeer
On the contrary, I am protesting the very idea that the tea leaves predict anything that is actionable. Period.

By the way, to time the market you have to be correct twice. If PE10 predicts a crash, what is the indicator to return to the market? It's a bunch of mambo-jumbo, and I am distressed to see respected advisers jumping on the bandwagon.

Which part do people not understand? Your AA is not a knob to fine tune your investments.

Keith
by umfundi
Wed Nov 27, 2013 7:05 pm
Forum: Personal Finance (Not Investing)
Topic: Share the (real) ways you do financial arithmetic mentally
Replies: 48
Views: 3895

Re: Share the (real) ways you do financial arithmetic mental

The one easy rule is the rule of 72, for when a sum will double for a given interest rate.

Except, I have never been able to remember anything about it other than there is a rule associated with some number. :(

Keith
by umfundi
Wed Nov 27, 2013 3:27 pm
Forum: Investing - Theory, News & General
Topic: Rebalancing on Friday
Replies: 37
Views: 4977

Re: Rebalancing on Friday

VictoriaF wrote:But Keith, what if everything crashes and burns on Friday?

Victoria
Oh, that's what "Black Friday" means? :oops:

Keith
by umfundi
Wed Nov 27, 2013 3:15 pm
Forum: Investing - Theory, News & General
Topic: Rebalancing on Friday
Replies: 37
Views: 4977

Rebalancing on Friday

Enough, already. I have decided to rebalance my accounts on Friday. Back to my planned AA of 50/50.

This involves moving only a few percent, since I have a large chunk in VSMGX, which rebalances itself. (If anyone cares, my goal is VSMGX 80%, VFSUX 10%, and VBILX 10%.)

Really, the noise has become unbearable. The latest straw is something from Malkiel that bonds are dangerous and that the markets have fundamentally changed since 2011. I guess I missed that memo.

It's a new market high, I can figure out the moves tomorrow and submit them for Friday execution. Then, I'll have fresh monthly statements on Monday. It feels good to reaffirm my plan.

Keith
by umfundi
Tue Nov 26, 2013 7:44 pm
Forum: Personal Finance (Not Investing)
Topic: Share the (real) ways you do financial arithmetic mentally
Replies: 48
Views: 3895

Re: Share the (real) ways you do financial arithmetic mental

My father had a book,

The Trachtenberg Speed System of Mathematics, with all kind of tricks.

The one I shortcut I find most useful is Pounds to Kilograms: Divide by 2, deduct 10% .

Kg to lbs: Double, add 10%.

Keith
by umfundi
Tue Nov 26, 2013 3:03 pm
Forum: Investing - Theory, News & General
Topic: A case for rebalancing
Replies: 13
Views: 1913

Re: A case for rebalancing

Mrxyz wrote:
Call_Me_Op wrote:Been buying EM all along - per IPS. :wink:
Pardon my ignorance, but what is EM? Is it Emerging Market?
Thanks
Yes, EM is Emerging Markets, which the article does not mention.

Keith
by umfundi
Tue Nov 26, 2013 2:45 pm
Forum: Personal Investments
Topic: A self constructed annuity
Replies: 18
Views: 2649

Re: A self constructed annuity

Hmmm, I wonder how a ladder of term SPIAs would look or does it even make sense ? Just thinking out loud here. Hexdump, Here is my own *opinion* . Stay away from all varieties of annuities except Single Premium Immediate Lifetime Annuities. You are much better off to delay SS before you buy an annuity. While you can buy an annuity that is indexed for inflation, they seem expensive to me. My plan is to purchase an annuity that is not indexed for inflation. Then when its value gets eroded, purchase another. There is no point to purchasing a "ladder" of annuities. Just buy them as you need them. There is something called a deferred (rather than immediate) annuity, where you buy it now and payments start later. Seems odd to me. If yo...
by umfundi
Mon Nov 25, 2013 11:54 pm
Forum: Investing - Theory, News & General
Topic: Using Credit Card to Invest
Replies: 32
Views: 4286

Re: Using Credit Card to Invest

techcrium wrote:
FinancialDave wrote:
Well, what could go wrong?
Your investment drops 30% in the month your free CC offer expires!

:oops:
You manage to save $50K a year.

Jan 2014: You apply for a credit card with 50K limit at 0% or 1%. You do a cash advance and immediately buy ETFs.

Aug 2014: You are halfway there and you save 25K in a savings account

Dec 2014: You save the 50K, pay back your cc loan. Your equities drop 30%, you stay the course. Your ETF is worth 35K.

Jan 2015: You apply again for another 50K and start over...(total of 85K)

Dec 2015: Chances are the 85K recovered from the bottom and is now $150K


I don't see anything wrong with that...
Chances Are

Chances are your chances are ...

Keith
by umfundi
Mon Nov 25, 2013 6:41 pm
Forum: Investing - Theory, News & General
Topic: "Stocks, bonds, and your portfolio: A (re)balancing act"
Replies: 1
Views: 599

Re: "Stocks, bonds, and your portfolio: A (re)balancing act"

Exactly.

I not only plan to rebalance, I plan to make those withdrawals from 529 plans for tuition paid, and I plan to plan my IRA contributions early in the New Year.

Keith
by umfundi
Mon Nov 25, 2013 4:12 pm
Forum: Personal Investments
Topic: A self constructed annuity
Replies: 18
Views: 2649

Re: A self constructed annuity

If you want to understand the basic idea of an immediate annuity (which is an insurance contract, not an investment), check out what a "tontine" is: http://en.wikipedia.org/wiki/Tontine If you buy a Single Premium Immediate Annuity you will get a return (not a "yield") which is part investment return, part return of capital, and part "mortality credit" which is the money not paid to those who have died before you. The mortality credit increases the payment beyond any other guaranteed contract you can purchase, as Taylor has pointed out. An annuity is insurance against longevity risk, against ever running out of money or income. Sure, you might die early, but you might also live to be 100. If you want to build y...
by umfundi
Mon Nov 25, 2013 3:10 pm
Forum: Investing - Theory, News & General
Topic: Using Credit Card to Invest
Replies: 32
Views: 4286

Re: Leveraging your Cashflow

livesoft wrote:We did that by borrowing $50K from a 401(k) in order to invest in a 529 plan. I like it.
livesoft,

I am not sure I get it.

A) Borrow from a 401k to purchase a 529. Repay the 401k loan over time.

B) Leave the 401k alone. Invest in the 529 over time.

How is A) better than B)?

Keith
by umfundi
Mon Nov 25, 2013 3:00 pm
Forum: Investing - Theory, News & General
Topic: Using Credit Card to Invest
Replies: 32
Views: 4286

Re: Using Credit Card to Invest

As with all sorts of leverage, when the margin call shows up, what are you going to do? Market declines and unemployment have a reasonable correlation: You borrow money, invest it, the market declines and you lose your job. Now, what?

When I retired in 2008, I paid off my 2.5% home mortgage. I did this to lower my monthly cash flow.

I am not aware of any case where carrying over a balance on a credit card is a good idea. The best you can do is get two month's interest free, but cash advances do not have a grace period. What you are proposing is very risky, and can cause collateral damage to your credit rating.

Keith
by umfundi
Mon Nov 25, 2013 12:39 pm
Forum: Investing - Theory, News & General
Topic: Assessing Inflation fighters
Replies: 7
Views: 1221

Re: Assessing Inflation fighters

Larry,

I am still somewhat confused on this, in terms of an overall strategy.

Yes, TIPS protect against inflation, but they only protect that part of your portfolio that is in TIPS. Also, it seems that by focusing on one particular risk you may be more vulnerable to other risks. In this case, forgoing the opportunity for other types of market participation.

It seems to me that the best overall strategy to deal with inflation (and most other risks) is a broadly diversified portfolio. After, inflation is the change in the price of goods and services, so invest in goods and services.

Keith
by umfundi
Mon Nov 25, 2013 1:30 am
Forum: Investing - Theory, News & General
Topic: How to Invest for Retirement with Rick Ferri
Replies: 11
Views: 3895

Re: How to Invest for Retirement with Rick Ferri

I am also disappointed by the paucity of articles and forums on Investing IN Retirement. It seems that most advice is about planning for retirement and investing for the long haul etc and not as much discussion on the nuts and bolts of what to keep doing (or not doing) during retirement. I am puzzled why that is the case. Same here. Retired now three years. It took me a year to figure out there was a difference between accumulation and distribution stages. I think the life-cycle/liability-matching/safe-floor people are on the right track and there is quite a bit of information on that in the literature if you hunt for it. I eventually figured out that between SS and a DB pension as a "safe floor" I was pretty well set, except tha...
by umfundi
Mon Nov 25, 2013 1:08 am
Forum: Investing - Theory, News & General
Topic: Equal Location or Asset Location?
Replies: 42
Views: 4386

Re: Equal Location or Asset Location?

docneil88 wrote:
umfundi wrote:While we are here, a pop quiz: Who said
If you do own your own home, you will probably find that the house you live in is the best investment you ever made in your life
?
Just googled that expression and the only hit I got for that string was your post above.
Burton G. Malkiel, "A Random Walk Down Wall Street", 4th edition (1985), p. 282.

Fortunately, I do not regard my home as an investment. If I did, it would be the worst I ever made, by far.

Keith
by umfundi
Sun Nov 24, 2013 4:25 pm
Forum: Investing - Theory, News & General
Topic: New Withdrawal Strategies from T. Rowe Price
Replies: 10
Views: 3468

Re: New Withdrawal Strategies from T. Rowe Price

What's missing from all of this is any assessment of needs and risks.

If you NEED 4%, go and buy an indexed (real) SPIA and you will get 4% for the rest of your life with virtually no risk.

Taylor Larimore says he has annuitized his required income, and is now gifting from the remainder during his life.

I agree with Nisiprius, these strategies that are tuned by back testing on historical data are more or less meaningless as strategies for individuals to adopt going forward.

Keith
by umfundi
Sun Nov 24, 2013 4:06 pm
Forum: Personal Finance (Not Investing)
Topic: Lease or buy a car?
Replies: 31
Views: 5200

Re: Lease or buy a car?

We bought a Toyota Solara new in 1999 and it is in great shape today with 180,000 miles on it. Last month we were able to buy a 2004 Lexus RX with 70,000 miles on it. You can save a huge amount of money keeping a car for a long time. If you are going to drive lots of miles there is no question that you should buy rather than lease. I have also bought some used cars, and was surprised by the high costs. Brakes, battery, tires, suspension parts and other maintenance add up quickly. A two-year old car is still depreciating at a pretty good rate. At three years you're looking at brakes and tires, at five years it's battery and suspension. And the other weird stuff like HVAC that costs hundreds because they have to dismantle the entire dashboar...