Bogleheads.org

Also, many/most of the first mutual funds that Dimensional converted to the ETF structure were their tax-managed funds. I think it's reasonable to assume that DFA will manage their ETFs as tax-efficiently as is possible for a fund of their style. Resurrecting an old thread to ask...how do folks feel about DFA Ex-US Core 2 (DFAX) in particular vs. alternatives? The main alternative I see is to use VXUS and get the small/value tilt with DISV and DFEV. My thoughts... Pros of DFAX: 1. One fund, simpler approach. 2. Consistent with that, no tax issues if an emerging country becomes developed (and still would have some of that risk with DFEV/AVES). 3. Given the conversion point Vin mentions above, fund managers should be particularly sensitive t...

Thank you for the reply. I've setup a spreadsheet to run these calculations so will be ready once the fund companies post the information. However, I must say, I'm having difficulty finding foreign tax paid figures for DFA even for prior years.

grabiner wrote: ↑Mon Jan 23, 2023 8:02 pm Avantis hasn't published its tax information yet, but those numbers would make AVDV very tax efficient. In a 24% tax bracket, the tax cost would be

Dividend yield * (15%*80.42% + 24%*19.56% -10.26%)

which would be only 7% of the dividend. (Replace 15% and 24% by your own tax rates to calculate your personal tax cost)

In 2021, the dividend was low, but the foreign tax was only 3.6% of the dividend.

Hi, grabiner. I was wondering if you have thoughts on DFA's World Ex-US ETF (DFAX, 0.31%), which was previously Tax Aware World ex US Core Equity, and its relative cost and tax efficiency vs. holding separate funds to achieve similar tilt -- e.g. using VXUS (or VEA, VWO) + AVDV, AVES (or DISV, DFEV) for tilt.

grabiner wrote: ↑Sat Nov 26, 2022 7:17 pm

Sammy_M wrote: ↑Sat Nov 26, 2022 5:30 pm Does anyone know whether investors in AVGE, in the fund-of-funds format, will be eligible to receive a foreign tax credit?

The law changed years ago; funds-of-funds can pass through the foreign tax credit from the underlying funds.

Thank you, grabiner. You are a wealth of knowledge.

Does anyone know whether investors in AVGE, in the fund-of-funds format, will be eligible to receive a foreign tax credit?

Any idea about the factor loads? With DFA's US Core 2 and Ex US Core 2 ETFs, we already have a two-fund approach with approximately 0.2 HML and 0.2 SMB factor loads with reasonable expense ratios of 0.19 and 0.31% respectively. AVGE will need an ER under 0.23% to be attractive. Plus, best to hold US and Intl separately if in a taxable account to avoid losing the foreign tax credit.

Plenty of options here. DFA ETF would be my choice.
https://www.altruistfa.com/tipsfunds.htm

I've been happy with my Salomon Speedcross for trail running, but they run narrow. I like Altras wide toe box for hiking though since feet tend to swell.

Nice to see QSPIX hit the top side of my rebalance band for a change. Not long ago, I was near the point of capitulation. A good reminder not to buy what you cannot stick with.

I like the asset mix of AVIV better, hence my earlier comment about it, but it has liquidity problems likely due to having only $10 million AUM. Larry Swedroe also recently wrote concerning the difference in value premium between large and small stocks: https://alphaarchitect.com/2021/12/02/size-value-profitability-and-investment-factors-in-international-stocks/ One takeaway for investors is that if you are going to seek exposure to the Fama-French factors, consider concentrating that exposure in smaller stocks (other side of that story is here and here). For example, the global value premium in the smallest quintile of stocks was 0.78 percent per month (t-stat = 3.4), while in the largest quintile it was just 0.07 percent per month (t-sta...

DesertInvestor wrote: ↑Mon Dec 06, 2021 12:32 pm I have international in taxable and can't sell without capital gains. So adding small value international or emerging markets will create something not as diversified lets say? Wouldn't it still add something to portfolio with emerging market value and small international value even if index fund is vanguard total international?

You're perfectly fine with Vanguard Total Intl. If you wish to tilt to small value, I'd look at AVDV for developed and AVES for emerging. If you're only looking to tilt to value, but not small, look at AVIV and AVEM.

mrpotatoheadsays wrote: ↑Mon Dec 06, 2021 11:54 am Best in Class ETFs from the Merriman Foundation:

I'm confident that Merriman will ultimately replace EFV with AVIV. The latter is fairly new.

I would appreciate others' thoughts on Avantis International Value (AVIV, 0.25% ER). I am considering holding it within taxable. I already hold AVDV in Roth. My 401K has constrained options so I use American Funds EuroPac Growth. Thus, I look to regain value factor exposure through the Avantis ETFs.

If I need to tax loss harvest, I'd likely use DFA International Value ETF (DFIV, 0.35% ER), which was formerly was the Tax-Managed International Value Portfolio (DTMIX). I'm wondering if it may be worth the 10bp extra to just use it instead of AVIV since I would be holding in taxable.

bsteiner wrote: ↑Wed Nov 24, 2021 11:06 am

fyre4ce wrote: ↑Wed Nov 24, 2021 10:46 am Thanks all. I think the "premium and business" I buy will also include personal tax capability, so I'll give it a try importing data and starting a personal return. If I don't like it I can always go buy TurboTax later...

Edit: Premium + Business is $69.97 at both Walmart.com and Amazon

It will be less than that from time to time, perhaps in the next couple of days.

Indeed. $39.99 today on Amazon.

aristotelian wrote: ↑Tue Nov 23, 2021 7:55 am I am not too familiar with MYGA but with any insurance policy I assume there is a large surrender charge should you need access to the cash.

Do you plan to be in a lower tax bracket in 10 years? That would be a $41k lump sum per $100k of MYGA.

I expect so, but hard to know for sure. One nice advantage of MYGAs is you can reinvest in another MYGA and keep the deferral going. A ladder makes a lot of sense though in case you want to just take the accumulated cash and spread it out over multiple years.

Is this not a solid arbitrage opportunity? As an alternative to doing a MYGA arbitrage strategy via cash-out refi, have you considered using leverage in your investment accounts to free up cash for MYGAs? For instance, let's say you had $1MM across your accounts invested at 60% stock ($600k exposure), 40% bonds ($400k exposure). You could use $500k to get exposure to the $600k of stock and $400k of bonds using futures, options, box spreads, etc., and then put $500k into a ladder of MYGAs. The MYGA rate curve starts to really flatten around year 4 or 5. You could do $100k per year across 5 years and have $100k maturing every year that could be used for rebalancing. The weighted average on a 5 year ladder is somewhere around 2.3% right now. ...

Stinky wrote: ↑Mon Nov 22, 2021 11:59 am I’m not a tax professional, so I can’t opine on the deductibility nor interest paid.

I didn’t see where the linked article said that interest on cash out refi proceeds could be deducted if invested in stocks, but maybe I just missed it.

My suggestion would be to consult your own tax professional about this matter. Also, maybe someone with more tax knowledge than me will weigh in on this thread.

Best to you.

Sorry, I think I was editing my post when you replied. I removed the prior article and linked to Publication 936 (2020), Home Mortgage Interest Deduction. There was a table at the bottom that seems to support the position.

First, I don’t think the interest on the refi is deductible. I did a quick google search and found this. You can find others. https://www.rocketmortgage.com/learn/cash-out-refinance-tax-implications Happy to see you respond, Stinky. It was your posts that brought my attention to MYGAs last year. What I'm finding suggests that the use of the refi proceeds is what matters. If you invest in rental properties, it is deductible interest on Schedule E. If you use the proceeds to invest in stocks (but not tax-exempt bonds), it is deductible on Schedule A (if you itemize). I cannot find anything that addresses annuities. This seems to be the relevant publication. See Table 2 at the bottom: https://www.irs.gov/publications/p936#en_US_2020_publink10...

You can find 10 year MYGAs yielding about 3.5% interest, tax-deferred.

A 10 year fixed mortgage refinance with cash-out for someone with excellent credit is presently around 2.25-2.5%.

It would seem the interest expense would be deductible on Schedule A, line 9, for someone that itemizes. The after-tax interest rate would be 1.7% for someone who has a 32% marginal rate.

Is this not a solid arbitrage opportunity?

^Itemization becomes preferable vs. standard deduction with state and local taxes. In case others find the thread...My research suggests: The portion of the interest on the refinanced mortgage that is used to either pay off the existing mortgage or materially improve or add to the home is deductible on Schedule A (if you itemize). Painting is not considered a material improvement to the home. The portion of the interest expense connected to new investments is deductible on Schedule A if you itemize. This would not apply to tax-exempt investments like municipal bonds.* With passive investments where you do not materially participate, this could only offset investment income. The portion of the interest expense on the new mortgage used to pay...

^Bump

Here is the background: $33K remaining on a primary residence mortgage at 2.63% APR. Given SALT caps, we have taken the standard deduction in recent years so that is the after-tax rate, but that may change next year. Approx $10K needed to paint the home and install new gutters. Since this would improve the home, I understand if we used a loan, the interest would be deductible. $160K variable HELOC set at prime minus 0.5, so now at 2.75%. The proceeds on the HELOC were used to buy land in a 50% owned-LLC which sends a K1. I understand this is deductible on Schedule E, so the after-tax rate is around 1.75% based on our marginal rate. Intend to buy out a car lease in a few months. The buyout price is $22K. This totals $225K, proportions are 15...

I use I-Bonds and EE-Bonds in taxable, stable value in 529, and split 50:50 between TBM and stable value in 401K.

Just wondering if this happened to anyone else. I completed Form 8888 on our tax return and in Section 2 requested $10K of our refund be issued as $5K of I-Series Savings Bonds for both my spouse and myself. Four month later, a paper check comes in for $10K but no I-Bonds and no explanation why.

You might also consider a ladder of multi year guaranteed annuities (MYGAs). You can find better rates than CDs, and MYGAs come with the added benefit of tax deferral on the interest. You don't get FDIC insurance like you do with CDs, but you can mitigate the risk by selecting highly rated issuers.

I'd still leave 25-50% of the fixed income portion of the portfolio in a safe bond fund (or direct treasures) for purposes of rebalancing.

The risk with black bears is pretty low. As stated above, the biggest issue is food storage at night. Use a bear canister or Ursak to store food a way from your camp site. A bear hang is fine but most people stink at it and often do not have suitable trees around. Apart from that, keep your distance, and be prepared to stand your ground (and waive your hiking poles if you have them) if faced with a bluff charge. Running is about the worst thing you can do.

Apologies if this was answered earlier...If you terminate a plan with <250k in April of 2021, when must the 5500 EZ be filed and on what form year? (2020 is all that I can find). Can I cross out the 0 with a 1 and go ahead and send it in?

For me, personally, the promise and allure of commodities lies in how it may behave in high inflationary weather, Scenario #2 or Scenario #3 below. The recent behavior of commodities, shown in the above graph, obviously cannot answer how commodities may behave during high inflation, for the simple reason that in recent years we've had low Scenario #4 inflation. Same allure for me. Given the rise in price/breakeven inflation on TIPS, CCF are more alluring than in years past, but I choose to just maintain a few percent in gold/miners and a few percent in CCF for the long term. I get additional inflation protection from I-Bonds and some individual TIPS held to maturity, but I've got nominal bonds plus a long-term EE-Bond ladder that has inher...

vineviz wrote: ↑Tue Apr 20, 2021 3:58 pm What other risk-free investment can be purchased with a 20-year maturity and a rate of 3.54%? Certainly no CDs will do that.

Not exactly risk-free, but some multi-year guaranteed annuities (MYGAs) are paying very near that on a tax deferred basis, and can be rolled at the maturity to keep the deferral going.

Steve Reading wrote: ↑Mon Aug 17, 2020 1:19 pm There are some funds like CMDY and BCD, that try to pick longer dated contracts, and even contracts that don't show so much contango. These products might have a contango closer to what you see in those monthly reports (probably worse since CMDY is capped at 9 months out).

Just wanted to bump this thread. I am considering shifting a portion of our commodity futures allocation from COMB to either BCD or CMDY. Any current views on these funds?

The only thing I do not see already mentioned is multi-year guaranteed annuities (MYGAs) which are tax deferred. I terms of priority order, I'd put them after Backdoor Roth and I-Bonds.

I don't understand this post... Not the least is which is I Bonds are - shockingly bonds . Yet your AA calls for 0 bonds? So you are doing what exactly? My target AA is 115/0 Well said!! I Bonds are probably the most conservative investment on Earth, so let’s ramp up the risk! But I don’t want to be mean. Just don’t do it. Because up until now it wouldn’t make any sense to buy government bonds on margin. Up until now I have never seen an environment where you can take out a loan and buy government debt at a higher rate. I mean at Ibond loan rates above 3% you could write a 15 or 18 month balance transfer check for 10k and still come out ahead with the 3% fee Agreeing with the person above who said that the only reason I'd do this is if I d...

I just received notice that Fidelity Visa is dropping their Auto Rental Collision Damage Waiver and Extended Warranty Protection as of 4/1. Any 2% cashback cards still offer this? Citi Double?

If you purchase MYGAs using traditional IRA money, does it retain its status as IRA for application of the pro-rata rule (in relation to 'backdoor Roth' strategies)?

Really great tool at https://portfoliocharts.com/portfolio/withdrawal-rates/ to show both SWR and perpetual WR.

I searched and could not find the answer to this question: Who is the legal owner of Series I or EE Bonds that are purchased within a Treasury Direct 'Gift Box'? You must supply the name and SSN of the intended recipient and I am guessing this cannot be changed. However, the bond is not 'delivered' until a later date. Just wondering if creditors of the intended recipient (e.g. child) would be able to force delivery of the gift?

Further to my point above, pick whatever time frame you want, you'll find decent annual alphas: [url=https://www.portfoliovisualizer.com/factor-analysis? I'm fairly new to all this. "alphas" and "factor exposure" are all over my head :confused . A Freedom Fund is a fine approach. All I am saying to you is the problem was not the American Funds (apart from the fact that he paid loads to get into them). The problem was potentially the asset allocation. You're moving him away from what he had by a large degree. If there is no unease on his part for doing it, go ahead and go all Freedom Fund 2025 or 2020 or whatever, just make sure the risk-level is one he is comfortable with. If he has an attachment to his existing funds, ...

Further to my point above, pick whatever time frame you want, you'll find decent annual alphas:
Domestic Regressions

No need to immediately jettison the Am. Funds that fit within his chosen asset allocation. A fine approach for a 61 y/o that wanted to be 40:60 with 70:30 domestic:intl on equities

10% Wash Mutual (AWSHX)
10% Growth (AGHTX) or AMCAP (AMCPX)
08% Fidelity® Small Cap Value Index Fund ( FISVX ) or Fidelity® ZERO Extended Market Index Fund ( FZIPX )
12% EuroPac (AEPGX)

30% Fidelity® US Bond Index Fund (FXNAX) or Fidelity® Short-Term Bond Index Fund ( FNSOX )
30% Fidelity® Inflation-Protected Bond Index Fund (FIPDX)

The only thing that is bad about American Funds* is the front-end load, and that is over and done with. Just don't repeat by buying more. I am not sure the answer to the question about whether you pay sales-loads again with a transfer between funds, because I don't use loaded funds, but one article I found suggested you do not. *If you run AWSHX, AGTHX and AEGPX in Portfolio Visualizer you'll see the alphas aren't bad and the factor exposure is relatively stable. I have them in our 401K and use them because they are better than the index funds available that have 0.30+% ERs. To the OP, I'd focus on getting to the right asset allocation for your father. You have already transferred in-kind to Fidelity and gotten him away from the advisor. Yo...

The above visual would be clearer if the vertical axis read 'unexpected rise' / 'unexpected fall'. It also makes me think of Bernstein's four horsemen, which is nicely summarized by wadepfau : 1. Severe and prolonged high inflation 2. Prolonged deflation 3. Confiscation 4. Devastation Bernstein’s conclusion is that the best long-term defense against deep risk is a globally diversified equity portfolio with tilting toward value and precious metals and natural resource companies, TIPS, and potentially some gold and foreign real estate. Because of inflation, bonds become riskier than stocks over long horizons, while shallow risk makes investors with shorter time horizons more vulnerable with stocks. My take - Dalio is likely referring to nomin...

Why choose? They perform differently at different times, and market timing is tough to get right. We just allocate 3% to each and re-balance. There are many ETF options, but we use SGOL and COMB.

I'd likely be using Vanguard Short Term Bond if I move to UESP, which is getting around 3.1% nominal yield now. Taking off UESP's mgmt fee of 0.2% brings it down to 2.9%. The account is pretty well funded, so 40 bps might be worth a little paperwork.

UESP also has Vanguard Short Term TIPS, which is offering pretty good yields now too.

It wasn't long ago CO CollegeInvest Stable Value was the best home for 529 short-term fixed income. I stayed put in 2018 at 2.29%, but they announced the rate for 2019 at only 2.49%. Seems like time to do a rollover. What is the best place for 529 money that you want to keep relatively safe? (child in high school). I'm thinking Utah UESP with most in Vanguard Short-Term Bond Index and Short-Term TIPS.

The improvement in short term TIPS yields has me thinking of redeeming my 0% real I-Bonds (2011, 2012 and 2016) and investing the proceeds into Vanguard Short-Term Inflation-Protected Securities Index Fund. How would one properly evaluate that decision? I know there is a near-term tax bill and you forever lose the tax deferred "space".

aristotelian (and Watty), while I believe I'm conservative in my assumptions, it is indeed $85K/yr drawdown that I estimate we will need until age 70. From 70 on, after SS kicks in, I figure we'll drawdown $40K/yr. We're not in a low-cost state. My calculations, even prior to using the online calculators, suggest we're about 3-4 years out from "safety". Thus my considering Plan B options as outlined below. JoeRetire , to each his own, but my priorities are shifting based on the realization that giving time (to aging parents and adolescent kids) may be more important than making/giving money. Trouble is, one cannot be assured that if they step away from their career, they will be able to come back to it. Thus I feel it prudent to ...

delamer , I agree healthcare is a major consideration. I'm using 1750/mo and 2k individual and 4k family deductible based on fiqures obtained from the state exchange. That'll go up as we age, but we will also reduce from family to couple plan too. I assume at 65 we'll go on Medicare at 600/mo. I'm using our historical average out of pocket costs for the next decade, then jumping them up to 400/mo from 55-70 and 600/mo from 70 on. The fallback on my strategy, to both unexpected expenses or a downturn in the market, is to aggressively seek for more consulting work or alternatively go back to a lower-paid lower-stress employee position that offers HC. I'm confident that will be a viable strategy for five years or so, but if I am out of the bu...

I'd appreciate some perspectives on whether we might be approaching a "safe" early retirement age in our mid-40s. Our idea of early retirement is for me to do a little consulting when I feel like it, but I don't want to count on that income. If consulting income is there, we'd invest a little of it to further reduce risk, but we'd mostly gift and travel more. EXPENSES Excluding our current mortgage payment, which we could payoff now if we wished, we spend around $85K annually. We have kids in the household, so that could drop after they are out on their own. Healthcare. A few expenses would reduce, but with increased healthcare expenses due to loss of employer contribution, we expect our expenses would go up $10K in early retireme...

grok87 wrote: ↑Thu Aug 23, 2018 6:05 am well i think most commodities are still in contango. so there is likely to be a negative roll impact even with a longer dated futures fund, just delayed?

Fewer rolls though?

Bumping this thread. BCD looks very interesting given the 0.29% ER and longer-dated futures to reduce roll impacts (both + and -).

What are the issues with investing in a fund with low AUM if you hold in tax-advantaged and use a limit order set near the intraday indicative value?

Sandtrap wrote: ↑Wed Apr 04, 2018 3:26 pm Yes. Absolutely true.
There are many ways to set things up. I have quite a few business folk with very substantial assets with LLC's and without, and also with other setups.
As for liability protection even with an LLC, in today's litigious climate, the "deeper pockets" are prime targets.
Of course, umbrella insurance should be more than adequate.

Would you be willing to share more about the other setups?

On your last comment, I would only point out that liability insurance usually contains some exclusions, e.g. mold, lead paint, asbestos.