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QBoy

There is a theory in economics called "rational bubbles." In it, prices deviate from fundamentals, but the bubble component of the price rises in expectation at the required rate of return, so there are no profits to be had from shorting the asset. Even if not exactly true, this theory mig...

QBoy

My story: Many years ago, I gave my future wife a small family heirloom ring when we were engaged and I was a student. Fast forward. On our 25th anniversary, we shopped together for a new ring at Tiffany's when our financial circumstances had much improved. About 4 carats. Overpriced, to be sure. Bu...

QBoy

My view: There are a few very smart investors who can beat the market. But there are many, many investors who claim they are smart and can beat the market. And it takes many years to distinguish the former from the latter. So while the EMH may be false in a strict sense, it is true for all practical...

QBoy

I would prefer BTC over this gamble if one wants diversification. There is a difference. Reasonable theory and evidence indicates that real estate and commodities offer similar Sharpe ratios to equities. That is why adding some to a largely equity portfolio for purposes of diversification makes sen...

QBoy

I use GSG for commodities and VNQ for REITS.

QBoy

Here is the budget Harvard Medical School suggests for its students:

https://meded.hms.harvard.edu/md-cost-attendance

Living expenses are projected to be about $32,000 per year, half of which is for rent.

QBoy

You can set up a dynasty trust, invested by an independent trust like Vanguard. The rules of the trust determine how the benefits are paid out to your descendants. Assuming a 5 percent long-term real return and a doubling of number of descendants every generation, you should pay out only about 2.5 p...

QBoy

You seem to have too much in emerging markets, certainly compared with market weights. I would not take much assurance from the historical simulation because the time frame is very short.

Also, with no bonds, it is aggressive. Are you very risk tolerant?

QBoy

When planning ahead for several decades of retirement, it is useful to have an expected real return in mind. Historically, a balanced portfolio of about half stock and half bonds has produced a real return that averages about 5 percent per year. But bond yields are now very low, and stock valuations...

QBoy

You are in great shape. However, your calculation of 47x is misleading. If you were to sell your house, you would have to rent, and your expenses would rise, so your net worth would be less than 47x expenses. Home equity is tricky, because it is not very liquid. In a perfect world, reverse mortgages...

QBoy

VTI or VT

QBoy

I cannot answer all your questions, but a key question to ask yourself: If you both die, do you want your kids to have full access to your estate at age 18? For my kids, I answered no. Age 18 is very young, and they could easily make decisions that they would later regret. Even age 21 is young if th...

QBoy

Sounds good. However, I would consider adding some international diversification to your equity holdings.

QBoy

Dow 36K is a 20 percent return. The mean return is about 5 (excluding dividends) and the standard deviation is about 15. So this change is a z value of (20-5)/15=1. The distribution tables for the normal distribution put the probability at 16 percent.

QBoy

This issue arose in the middle of another thread, but I thought it should have its own discussion. Suppose that you are ultra high net worth ($30 million or more), and suppose that this amount is much more than you will spend during your life. You want to give some to each of your kids, either while...

QBoy

My wife loves hers.

QBoy

Yes, you have to keep track of all gifts during the year. If you exceed $15k, you need to file a gift tax return. No tax is due. You just use up some of your gift/estate tax exemption. My guess is that if you exceed $15k by a small amount, the IRS won't ever notice. Their goal is to avoid people wri...

QBoy

My wife and I built a vacation house and are glad we did. The best decision we made was finding a great architect. Expensive but worth every penny. The architect in turn introduced us to several contractors that she had worked with. We chose one of those based on previous work of his that we saw and...

QBoy

My rough calculation suggests $2 million.

QBoy

My view: Given that no one can time the market, going immediately to your target asset allocation is optimal. Emotions, however, are an important caveat. You might feel regret if you went immediately to your target and the market soon fell. Would you then get cold feet and reverse course? If yes, th...

QBoy

In light of your young age and the very low level of current interest rates, I might use a 2 percent payout rather than 2.5. That would put your "magic number" around $9 million.

QBoy

Hendricks

QBoy

Based upon your previous threads, I would strongly recommend you retain an architect, both for the design of the home as well as the construction administration. You don't know what you don't know and relying on fellow Bogleheads for advice to guide your interactions with your general contractor an...

QBoy

retiredjg wrote: ↑Fri Sep 11, 2020 7:55 am No problem.

+1

QBoy

The case for the annuity is that it provides insurance against outliving her assets. I am skeptical about the value of the ten-year certain. Without that, she could get a better income from the annuity.

QBoy

The case for hedging is that historically it has given a better risk/return profile for a US investor. That is why Vanguard recommends hedging. However, from a theoretical standpoint, I have never understood the case. The efficient market hypothesis says the typical investor should hold the market p...

QBoy

I would ignore. The main thing that determines the level of risk is the stock/bond ratio, which I gather is on target. The ratio within the bond category seems secondary.

QBoy

I believe that TIPS would protect the real value of the bond under hyperinflation in principle. In practice is another story. Governments that produce hyperinflation are highly dysfunctional, so I would not be surprised to see them change the rules of the game under that circumstance. An example of ...

QBoy

The article suggests reduced stock exposure and more exposure in long-term bonds. It sounds a bit like a risk-parity portfolio. People look at the 1.4 percent yield on 30-year Treasuries in different ways. Some say the yield is at historic lows and so is likely to rise. Some say, not so fast: Look a...

QBoy

Inheriting about $250K (in today's dollars) while in college allowed me to pursue four years of graduate studies without thinking much about money. That investment in human capital has earned the highest return of any investment I have ever made.

QBoy

Here is an hypothesis: Saving is up because people cannot leave their homes to spend. The saving goes into all investment classes, pushing their prices higher, other things being equal. This hypothesis also explains why the stock market is relatively strong given the deep recession we are experienci...

QBoy

You can accomplish this via a trust fund with a third-party trustee, such as Vanguard trust services. The trust document determines how much is paid out, to whom, and under what circumstances. Many states now allow "dynasty trusts," which can go on forever and provide your "UBI" ...

QBoy

Has anyone had any experience with funding a charitable annuity with the remainder value of real estate? This arrangement is sometimes called "charitable annuity for home." It seem like it might be an alternative to a reverse mortgage. In particular, I was wondering (1) Has anyone here don...

QBoy

I am not sure, but I would guess it is floating rate notes. For example, if the principal is repaid after 20 years, but the interest rate adjusts ever six months (based on some benchmark), I believe the bond's maturity is long but its duration is short.

QBoy

Thank you, all, for the input. On the vacation home: It is important to their family lifestyle and may be a retirement home down the line, so they are not interested in selling or renting now, but that could change in the future. On the value of the business: They are not planning to sell, as they e...

QBoy

A friend of mine, who reads this forum but doesn’t contribute, is interested in Bogleheads’ view of the following personal decision he faces. Here is his situation in round numbers: He and his wife are in their mid-50s with grown kids. They run their own business that now makes $700,000 a year (befo...

QBoy

I believe the best way to view the Pease phase-out is as surcharge on high incomes. It is unlikely to affect the marginal value of the mortgage deduction. This is because the limitation on deductions is a function only of income, not of the amount being deducted. Any additional deduction reduces tax...

QBoy

If the sum is large, you might consider a trust that pays the money out gradually over your children's lifetimes. One advantage if properly set up is that the principal will not enter your children's estate when they die and leave the money to your grandchildren.

QBoy

My wife is the type who hates surprise parties thrown for her. I learned that fact when my sister threw her a surprise wedding shower 30+ years ago, with my collaboration. Never made that mistake again. If you want a surprise, how about a surprise trip for the weekend for the two of you to, say, a c...

QBoy

Buying term while you need insurance is fine, but the annuity part is harder to justify, in my view. Insurance is for when you are worried about dying too early. Annuities are for when you are worried about living too long.

QBoy

This does not sound like a good idea to me. In a sense, you are proposing two opposite transactions. An annuity turns a lump-sum into a string of payments until you die, while life insurance turns a string of payments until you die into a lump-sum. By doing both, you a turning a lump-sum into a stri...

QBoy

We are regulars on Nantucket and would recommend early September. By then, the crowds are smaller, but the weather is still great. Many say September is the best month on the island.

QBoy

Hypersion wrote:Wild Animal Park (Safari Park)

I second the Wild Animal Park. Even better than the more famous zoo.

QBoy

A case can be made for a SMALL percentage of your asset allocation in commodities. If one follows this strategy, then when prices fall (as they have recently), you should perhaps buy more to rebalance. If you want to read more on the reason for owning commodities, I suggest this as a starting point:...

QBoy

Thank you, bsteiner. That is very helpful. I think it means that a person gets a much larger benefit from the exemption by acting early. sscritic: Yes, there are individual returns. I did not mean to suggest otherwise. It is just that estate planning is often done as a couple, and the IRS via portab...

QBoy

Try this. Fill out a gift tax return. Pretend you gave the limit of $3.5 million in 2009. Give a gift of $1.75 million in 2013. What do you see? I haven't done it, but that is what I would do if I wanted an answer to your question. P.S. Gift taxes are individual, not joint. Yes, two people can give...

QBoy

The lifetime exemption for the gift/estate tax is now $10.68 million (for a couple) and is indexed to inflation. I am not sure how this works. Suppose that, while living, a couple funds a trust for their descendants with $10.68 million and thus fully uses up their lifetime exemption. Then some years...

QBoy

Is this topic actionable? If not, why aren't the moderators locking it?

QBoy

Because REITs are volatile (higher standard deviation than the overall stock market) and are correlated with the stock market (which limits the diversification value).

QBoy

If you live near a law school, you might find help there. Sometimes there are pro bono organizations on campus, where students are guided by professors. Your case might well interest them.

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