Search found 4854 matches

by ogd
Thu Apr 18, 2019 5:31 pm
Forum: Investing - Theory, News & General
Topic: Loans from 401k -- back door investing?
Replies: 57
Views: 4211

Re: Loans from 401k -- back door investing?

The interest rate you are paying yourself is really not relevant because there is no difference between these two scenarios: $50K loan paid back a year later with the same $50K (zero percent interest) followed up by a separate 5K deposit to some other retirement or investment account. $50K loan pai...
by ogd
Thu Apr 18, 2019 2:22 pm
Forum: Investing - Theory, News & General
Topic: Loans from 401k -- back door investing?
Replies: 57
Views: 4211

Re: Loans from 401k -- back door investing?

And, a 401k loan has no tax disadvantages versus an equivalent non-deductible loan. (Of course, comparing it to a completely different loan may have different, and irrelevant, results.) This is the basis for my claim that "double-taxation" is a mental illusion. Exactly. Therefore the loan interest ...
by ogd
Wed Apr 17, 2019 3:53 pm
Forum: Investing - Theory, News & General
Topic: How Much in Tax free Bonds
Replies: 6
Views: 600

Re: How Much in Tax free Bonds

at this point even at a 24% tax rate Muni bond funds come out ahead Do not simply compare yields to understand bond desirability! After all, you wouldn't say Junk Bonds come out way ahead of everything else -- it's clear that there are additional risks involved vs something like Total Bonds and we ...
by ogd
Wed Apr 17, 2019 3:19 pm
Forum: Investing - Theory, News & General
Topic: Loans from 401k -- back door investing?
Replies: 57
Views: 4211

Re: Loans from 401k -- back door investing?

1.875% > 1.125%, therefore do not take a 401k loan. Equivalently, prepay 401k loan before investing in taxable or prepaying debt. Thanks for the numbers! Instructive as always. I'd personally describe the actual utility of a planned (i.e. non-catastrophic) 401k loan with this sample scenario: 1) Yo...
by ogd
Wed Apr 17, 2019 2:59 pm
Forum: Investing - Theory, News & General
Topic: Loans from 401k -- back door investing?
Replies: 57
Views: 4211

Re: Loans from 401k -- back door investing?

The double taxation you're seeing is simply the fact that the interest paid is non-deductible to the borrower. If you accept that any such loan is repaid with non-deductible dollars, the illusion of double taxation vanishes. But if the interest repaid was itself tax deductible, that would be a MAJO...
by ogd
Wed Apr 17, 2019 2:43 pm
Forum: Investing - Theory, News & General
Topic: Loans from 401k -- back door investing?
Replies: 57
Views: 4211

Re: Loans from 401k -- back door investing?

The borrower receives post-tax money and repays the 401k account with post-tax principal and interest, exactly the same as on a car loan. No double taxation occurs here. Yes, there is double taxation of the interest. Please read the thread bumping post again: https://www.bogleheads.org/forum/viewto...
by ogd
Wed Apr 17, 2019 2:11 pm
Forum: Investing - Theory, News & General
Topic: Loans from 401k -- back door investing?
Replies: 57
Views: 4211

Re: Loans from 401k -- back door investing?

The extra 10k is paid with post tax money, so if you have a 25% tax rate, it cost you 13,373 of pre-tax money to add $10k to your 401k. However, it will be treated as pre-tax money at withdrawal and taxed again. You are better off investing in an after-tax 401k, or sticking to the normal channel wh...
by ogd
Sun Apr 14, 2019 12:46 pm
Forum: Investing - Theory, News & General
Topic: Loans from 401k -- back door investing?
Replies: 57
Views: 4211

Re: Loans from 401k -- back door investing?

A 50k loan at 7.5% interest leads to a total amount paid into the account of $60,030. So, over the course of 5 years, you can get an extra 10k ($10,030) into the account vs. not taking a 401k loan. You do have to subtract out the fact that the asset growth is now being done via a side taxable inves...
by ogd
Tue Apr 09, 2019 3:13 pm
Forum: Investing - Theory, News & General
Topic: Selling all equities, discuss why I'm wrong. :)
Replies: 335
Views: 57858

Re: Selling all equities, discuss why I'm wrong. :)

I've tried to out-perform the market, but honestly -- it's just too tiring. I'm sure I've spent much more time thinking about investing after selling all my equities than before. I think I may even go back to my target allocation -- just so I can 'set it and forget it.' I've also been thinking abou...
by ogd
Tue Apr 09, 2019 12:32 am
Forum: Investing - Theory, News & General
Topic: Indexing's share of trading is 1%, VG White Paper
Replies: 11
Views: 1356

Re: Indexing's share of trading is 1%, VG White Paper

This is indeed several times smaller than I thought (from eyeballing stock index turnover % vs large active funds). There must be other hyper-active players we don't have much insight into that are large enough to push the balance more towards active. Cap-based indexing is the only passive strategy ...
by ogd
Tue Apr 09, 2019 12:13 am
Forum: Investing - Theory, News & General
Topic: Should I place bonds in my IRA or Roth IRA
Replies: 25
Views: 1461

Re: Should I place bonds in my IRA or Roth IRA

So why would you suggest to put equities in tax-deferred before Roth? In this case, because the poster only has a good equity fund in 401k, and their bond fund choices are high fee. Sometimes, it's worth paying the high fees if the tax situation improves substantially. If the choice was between tax...
by ogd
Mon Apr 08, 2019 10:30 pm
Forum: Investing - Theory, News & General
Topic: Should I place bonds in my IRA or Roth IRA
Replies: 25
Views: 1461

Re: Should I place bonds in my IRA or Roth IRA

I see your point. Your scenario reinforces that the Roth is the best place for the assert class with the highest expected retired return. How so? I was showing how placing equities in Roth is no better or worse than dialing up an "equities in Traditional" allocation by the expected withdrawal tax. ...
by ogd
Mon Apr 08, 2019 10:01 pm
Forum: Investing - Theory, News & General
Topic: Should I place bonds in my IRA or Roth IRA
Replies: 25
Views: 1461

Re: Should I place bonds in my IRA or Roth IRA

Thanks for providing an example to work from! I will add to your options scenario 2) Equities HALVE while bonds grow 20%. This is just the truism that a dollar withdrawn from Roth is more valuable than a dollar withdrawn from traditional. But if you put equities in Roth and bonds in traditional, you...
by ogd
Mon Apr 08, 2019 9:16 pm
Forum: Investing - Theory, News & General
Topic: Should I place bonds in my IRA or Roth IRA
Replies: 25
Views: 1461

Re: Should I place bonds in my IRA or Roth IRA

Withdrawals are taxed as ordinary income in tax deferred accounts. Generally speaking, without being able to predict the future, wouldn't you want the account that is subject to ordinary income to hold the assets with the lowest expected returns to thereby minimize the amount potentially subject to...
by ogd
Wed Feb 20, 2019 12:39 pm
Forum: Investing - Theory, News & General
Topic: Portfolio visualizer says no rebalance bonus
Replies: 38
Views: 3157

Re: Portfolio visualizer says no rebalance bonus

So what has happened to that ratio over time? If someone decided to maintain their holdings of US stocks and bonds at relative total cap-weight, would they ever need to rebalance, and if so, why? Why didn't e.g. 94 years (since 1926) of 10% stock returns and 5% bond returns (intermediate-term gover...
by ogd
Tue Feb 19, 2019 3:32 pm
Forum: Personal Investments
Topic: Bond funds in 401K
Replies: 4
Views: 563

Re: Bond funds in 401K

Hi Max -- sorry for the late reply, I hadn't noticed yours until just now. Hope this can still help! The one question I have about your response, OGD, is that you call me a 0% taxpayer in this account. Once I take the Gains out of the account, upon my retirement, won't I have to pay taxes on the gai...
by ogd
Wed Jan 30, 2019 8:02 pm
Forum: Personal Investments
Topic: Bond funds in 401K
Replies: 4
Views: 563

Re: Bond funds in 401K

1) Never use tax exempt funds in your tax-advantaged accounts. The market prices the bonds in the funds for tax payers, even high-rate tax payers, and you are a 0% tax payer in this account -- so you're guaranteed a bad deal since you're paying the same price as people for whom tax exempt bonds are ...
by ogd
Mon Jan 14, 2019 5:27 pm
Forum: Investing - Theory, News & General
Topic: Buying ETF intraday vs. buying index fund at NAV
Replies: 3
Views: 360

Re: Buying ETF intraday vs. buying index fund at NAV

Does this line of reasoning check out, or am I missing an obvious consideration? You are missing one obvious meta-consideration: if your intraday buying, after fees and bid/ask spreads, offered you even a minuscule advantage, then you should become a day-trader and leave all of us in the dust. This...
by ogd
Thu Jan 10, 2019 5:34 pm
Forum: Investing - Theory, News & General
Topic: Using TSM for Essential Liabilities- TSM's worst rolling averages
Replies: 18
Views: 1712

Re: Using TSM for Essential Liabilities- TSM's worst rolling averages

In the end, when you really want to know the money will be there there's no substitute over the short and medium term for individual bonds and CDs held to maturity. I don't think this conclusion is warranted. Individual bonds do not reduce risk by virtue of holding to maturity and "not taking losse...
by ogd
Wed Jan 09, 2019 2:30 pm
Forum: Personal Investments
Topic: Bond fund question - relationship between duration, yield, and actual return.
Replies: 9
Views: 479

Re: Bond fund question - relationship between duration, yield, and actual return.

Now, I look at Vanguard Total Bond Market VBTLX and Vanguard Intermediate-Term Treasury Index VSIGX and this is what I see. VBTLX 30-day SEC yield 3.19 (as of 1/4/2019) and duration 6.0 years VSIGX 30-day SEC yield 2.60 (as of 1/4/2019) and duration 5.2 years The treasuries fund VSIGX has considera...
by ogd
Tue Jan 08, 2019 8:40 pm
Forum: Investing - Theory, News & General
Topic: Embarrassed to ask... dividends and Total Return
Replies: 39
Views: 5072

Re: Embarrassed to ask... dividends and Total Return

They don't. Dividends don't make you wealthier at all. They do just the opposite: reduce your return. How do dividends "reduce your return?" Taxes Any time you sell shares or receive a dividend taxes are involved. Assuming at some point you want to use your assets for some tangible purpose, taxes w...
by ogd
Thu May 10, 2018 7:21 pm
Forum: Investing - Theory, News & General
Topic: How does stock buyback benefit investors?
Replies: 78
Views: 7593

Re: How does stock buyback benefit investors?

About time I answer the OP in this thread as well. Occasionally I hear companies return their extra cash to their share holders by stock buybacks. Recently there was a report that Apple will return $100 billion to its share holders by stock buybacks. A typical argument goes like this: A company redu...
by ogd
Thu May 10, 2018 6:55 pm
Forum: Personal Investments
Topic: move out of bonds into money market and online savings
Replies: 19
Views: 3043

Re: move out of bonds into money market and online savings

Hi . I am about 70:30 in stock and bond funds . In the present environment with bond returns not that impressive and also with the online savings , money market and cd rates keep going up , I am thinking of pulling out of bonds into these . What do you think ? The recent bad returns are the price t...
by ogd
Thu May 10, 2018 3:39 pm
Forum: Investing - Theory, News & General
Topic: How does stock buyback benefit investors?
Replies: 78
Views: 7593

Re: How does stock buyback benefit investors?

What about the impact on the shareholder of an index (in whatever form)? If they choose to reinvest dividends, they in essence take the dividend paid by one company in the index & use it to buy parts of all companies in the index. When a stock in the index does a buyback, the index holder doesn't h...
by ogd
Thu May 10, 2018 2:02 pm
Forum: Investing - Theory, News & General
Topic: How does stock buyback benefit investors?
Replies: 78
Views: 7593

Re: How does stock buyback benefit investors?

Let me put your position to you in the form of its logical extension: should management be entirely agnostic about the share price at which it issues shares? PS I realized I haven't answered your question about issuance. I'd argue that this is a considerably more complicated proposal, for two relat...
by ogd
Thu May 10, 2018 1:31 pm
Forum: Investing - Theory, News & General
Topic: How does stock buyback benefit investors?
Replies: 78
Views: 7593

Re: How does stock buyback benefit investors?

Let me put your positions back to you in a form of a question. How exactly do you propose that managements decide between (1) retaining their earnings, (2) issuing a dividend, or (3) buying back their shares, if as you suggest, management must be entirely agnostic about the current market price? I'...
by ogd
Thu May 10, 2018 3:23 am
Forum: Investing - Theory, News & General
Topic: Total Bond - SEC yield breaks 3%
Replies: 104
Views: 14442

Re: Total Bond - SEC yield breaks 3%

Thanks ogd for your reply. I was thinking about brokered CD's all wrong. These do have principle fluctuation One of my points, probably not the best expressed, is that the principal fluctuation is not the issue - it's only a symptom. It's the market telling you "if you want to get out of your old i...
by ogd
Thu May 10, 2018 2:50 am
Forum: Investing - Theory, News & General
Topic: How does stock buyback benefit investors?
Replies: 78
Views: 7593

Re: How does stock buyback benefit investors?

The simplest way is to think about this like a business owner. Say you owned a highly lucrative business with a partner - 50%-50% split. I reckon there would be a price at which you would JUMP at the chance to retire his share in the business, and then there would be a price where you would be will...
by ogd
Thu May 10, 2018 2:36 am
Forum: Investing - Theory, News & General
Topic: How does stock buyback benefit investors?
Replies: 78
Views: 7593

Re: How does stock buyback benefit investors?

This is why the answer to whether stock buybacks benefit investors is this: it depends on the price per share at which the buyback occurs. I couldn't resist answering because I actually think the complete opposite of what you just said: Knowing what we know now (at the time of the buyback), the pri...
by ogd
Tue May 08, 2018 4:07 pm
Forum: Investing - Theory, News & General
Topic: Total Bond - SEC yield breaks 3%
Replies: 104
Views: 14442

Re: Total Bond - SEC yield breaks 3%

An opposing view jalbert -- worth noting that in this article that generally argues that bond ladders can work well, there is no mention of interest rate risk as an advantage for ladders, and the same goes for other articles from Larry's firm. They know what they are talking about and they're quite...
by ogd
Tue May 08, 2018 3:47 pm
Forum: Investing - Theory, News & General
Topic: Total Bond - SEC yield breaks 3%
Replies: 104
Views: 14442

Re: Total Bond - SEC yield breaks 3%

This is a minor point, but with brokered CDs aren't coupons reinvested in the same CD so that the yield held until maturity matches what one expected. There is no guarantee with bonds, since coupons must be reinvested in other bonds. Thanks triceratop! I would classify the inability to invest at sa...
by ogd
Tue May 08, 2018 3:40 pm
Forum: Investing - Theory, News & General
Topic: Total Bond - SEC yield breaks 3%
Replies: 104
Views: 14442

Re: Total Bond - SEC yield breaks 3%

...a brokered CD has the same interest rate risk as a similar duration bond fund (say, Treasuries, to keep the guarantees similar). But, at least currently, the brokered CD has a higher yield. Same risk, higher return so the CD = free lunch? Is this because most invested money is in taxable account...
by ogd
Tue May 08, 2018 2:27 pm
Forum: Investing - Theory, News & General
Topic: Total Bond - SEC yield breaks 3%
Replies: 104
Views: 14442

Re: Total Bond - SEC yield breaks 3%

Kevin's post, demonstrates that a single issue direct CD with low EWP is vastly superior (if you can get these in tax deferred accounts, like an IRA). I think a ladder of brokered CD's would have a similar behavior (with the difference of being better in rising interest rate env, and worse in falli...
by ogd
Mon Apr 23, 2018 4:55 pm
Forum: Personal Finance (Not Investing)
Topic: Strategy for Use of Restricted Stock Units
Replies: 18
Views: 1845

Re: Strategy for Use of Restricted Stock Units

Just to add what others have said, think of RSUs this way. When an RSU vests, your company gives you a cash salary bonus. They then immediately turn around and buy company stock with that cash bonus. If you received a cash bonus instead of RSUs, would you also buy company stock? Both are taxed the ...
by ogd
Thu Apr 05, 2018 6:44 pm
Forum: Personal Investments
Topic: Bond fund vs. CD
Replies: 26
Views: 5951

Re: Bond fund vs. CD

Something caught my eye Kevin, sorry for rewinding a bit. Five-year return of the VG intermediate-term Treasury funds as of 3/31 was 0.86% and 0.85% (all figures here are for Admiral shares), while a 5-year CD of mine that matured in late March returned 2.47% (as I knew it would). So in this case te...
by ogd
Sat Mar 31, 2018 2:20 pm
Forum: Personal Investments
Topic: Explain one more time how balance funds work
Replies: 37
Views: 3879

Re: Explain one more time how balance funds work

Portfolio A = 60% Total US stock fund, 40% Total US Bond rebalanced once a year Portfolio B = 60/40 Total US Stock and Bond fund rebalanced daily (or however frequently the Vanguard 60/40 Balanced fund rebalances) Would it be true that if one of the assets (say stocks) steadily outperformed the oth...
by ogd
Sat Mar 31, 2018 1:25 pm
Forum: Personal Investments
Topic: Explain one more time how balance funds work
Replies: 37
Views: 3879

Re: Explain one more time how balance funds work

My explaining is subpar for sure - which leads to confusion by the reader. It shows I too am confused. Let say you have two portfolios - 1. A Balanced Fund (BF) of 60-40 and 2. A 3 Fund Portfolio (3FP) of 60-40 which is currently at exactly 60-40 (no rebalncing needed) RMD comes along and you must ...
by ogd
Thu Mar 29, 2018 2:45 am
Forum: Personal Investments
Topic: Tax-exempt muni bond mix vs. CA intermediate-term tax-exempt muni-bond fund
Replies: 20
Views: 2924

Re: Tax-exempt muni bond mix vs. CA intermediate-term tax-exempt muni-bond fund

But this is purely because of interest rate hikes, which reduces the bond values (negative YTD). This is not timing, it is just that I was already at capital loss in muni bonds, so I sold them, and bought treasuries with guaranteed gains. For my tax bracket, muni bonds return better returns than tr...
by ogd
Thu Mar 29, 2018 2:33 am
Forum: Personal Investments
Topic: Total return vs dividends
Replies: 54
Views: 7805

Re: Total return vs dividends

I understand that in theory, focusing on total return and selling shares to generate cash is just as good as or perhaps better than relying on dividends for cash flow in retirement. However, I’m having a mental block on what this means in practice. If my portfolio will generate enough dividends and...
by ogd
Thu Mar 29, 2018 2:00 am
Forum: Personal Investments
Topic: bid-ask spread for limit orders
Replies: 24
Views: 2036

Re: bid-ask spread for limit orders

My question is, if you place a limit order, does bid-ask spread matter? It doesn't have to execute immediately. Yes, it does. If a large spread is happening throughout the period, the limit order will probably execute at an unfair price - even if it's a price you were previously okay with. This mig...
by ogd
Thu Mar 29, 2018 12:33 am
Forum: Personal Investments
Topic: Explain one more time how balance funds work
Replies: 37
Views: 3879

Re: Explain one more time how balance funds work

There are circumstances when taking RMDs from a balanced fund would have resulted in lower portfolio balances versus using an initially equivalent portfolio of separate stock and bond funds, without necessarily rebalancing to the target stock:bond allocation of the balanced fund. Yes, but this is e...
by ogd
Tue Mar 27, 2018 10:53 am
Forum: Personal Investments
Topic: Explain one more time how balance funds work
Replies: 37
Views: 3879

Re: Explain one more time how balance funds work

But with this balanced fund you are "forced" to sell, at least in part, that worse porforming holding. How do you reconcile this? It's not a big deal. The fund has been buying stocks after they started dropping and selling bonds, so compared to the beginning of that period you have indeed sold more...
by ogd
Sun Mar 25, 2018 8:20 pm
Forum: Personal Investments
Topic: Wrapping my head around bond funds
Replies: 57
Views: 7503

Re: Wrapping my head around bond funds

I took a small loss on Fidelity's short term bond fund (FSBAX 1-3 year bonds) last year. If I had parked the same amount of money in a CD that came to maturity, obviously things would have been different. Ok, let's analyze this a bit. The CD that came to maturity would have been a very short-term i...
by ogd
Fri Mar 16, 2018 6:37 pm
Forum: Personal Investments
Topic: Wrapping my head around bond funds
Replies: 57
Views: 7503

Re: Wrapping my head around bond funds

I have also researched and found that bond fund correlation with equities increases in a severely down market. Not sure where you read this, but I'm pretty sure it's wrong. It might be referring to certain types of higher-risk bonds that behave more equity like, but the safe bonds we typically reco...
by ogd
Thu Mar 15, 2018 7:58 pm
Forum: Investing - Theory, News & General
Topic: What % of the stock market volume are (primary) tx from index funds
Replies: 4
Views: 1164

Re: What % of the stock market volume are (primary) tx from index funds

Thanks for this. That the transactions triggered by indexfonds really only make up 5% of the total volume is lower then I expected. Understandable when you look at the turnover numbers. For index funds, it's 5% and below. For active funds, it can exceed 100% a year! If it's too low, they're accused...
by ogd
Mon Mar 12, 2018 1:47 pm
Forum: Personal Investments
Topic: Municipal Bond Fund NAV and interest rates
Replies: 19
Views: 2053

Re: Municipal Bond Fund NAV and interest rates

Beware that for munis held less than 6 months there is a rule about the tax free dividends received in the interim -- when selling at a loss, the dividends have to be discounted from the loss to prevent gaming the dividend payment dates. Let's say that one owned the OP's VWITX (Vanguard Intermediat...
by ogd
Sun Mar 11, 2018 8:39 pm
Forum: Personal Investments
Topic: Municipal Bond Fund NAV and interest rates
Replies: 19
Views: 2053

Re: Municipal Bond Fund NAV and interest rates

1) Please explain what happens if I hold this fund long term. Does the principal loss get wiped out or reset? I am failing to grasp this concept. Since it's very unlikely that any of the bonds have actually defaulted (have not checked, but you'd hear about such things), the principal loss should be...
by ogd
Fri Feb 23, 2018 6:57 pm
Forum: Personal Investments
Topic: Still lose with bonds even at duration
Replies: 41
Views: 5465

Re: Still lose with bonds even at duration

The point is, unless someone has a crystal ball that tell them exactly when rates are going to rise and when they will stop rising, there is no way to stay out of bonds and into stable value / CDs without risking either losing additional bond returns, or accepting lower returns in a rising rate env...
by ogd
Thu Feb 22, 2018 11:28 am
Forum: Personal Investments
Topic: Still lose with bonds even at duration
Replies: 41
Views: 5465

Re: Still lose with bonds even at duration

Current: $115,995 @ 2.91% compounded over 6 years: $138,094, interest paid: $18,678, taxes: $6,164, Net: $131,930 Net loss: $1,225 over 6 years Hi stocknoob4111 -- as I was mentioning in another thread, you need to be a little patient when it comes to SEC yield. Since it's a 30-day average, it's in...
by ogd
Wed Feb 21, 2018 7:01 pm
Forum: Personal Investments
Topic: Muni Bond market
Replies: 29
Views: 3456

Re: Muni Bond market

It is $500k. See this blog from Larry’s coauthor and coworker. http://buckinghamadvisor.com/deciding-between-individual-bonds-and-bond-funds-jared-kizer-042413/ Second the thanks for posting this. DanL, continuing what I was saying above: these advisors (well-trusted around here compared to the nor...