Search found 553 matches
- Mon Mar 04, 2024 11:20 am
- Forum: Personal Finance (Not Investing)
- Topic: Financial coach as a side hustle?
- Replies: 22
- Views: 2214
Re: Financial coach as a side hustle?
As others have said, it is really hard to do what you're describing in an ethical way and make a living at it. Our advice would be "I'll do this portfolio review for $X, teach you to auto-pilot on a total-market fund yourself, maybe check in once a year?" It would be very difficult to find enough clients and do this often enough to be profitable. Hence, the existing financial structure is "let me hook you in on this subscription service for life where I drain your accounts and over time end up with 2/3rd of your money. I'll tell you it's too complicated and you need me forever." What you propose is very appealing to me too, I think I'd be good at it and would enjoy helping people. Hell, that's the problem, I do it now to...
- Sun Feb 25, 2024 3:21 pm
- Forum: Investing - Theory, News & General
- Topic: Buffett says Bonds are a terrible investment now. What should we invest in besides stocks?
- Replies: 157
- Views: 32278
Re: Buffett says Bonds are a terrible investment now. What should we invest in besides stocks?
While I agree with the admonitions against "market timing," I also see a difference between investing in bonds at 0.5% and at 5.5%.
I also do not (and did not) see the point of investing in 0.5% bonds or CDs. I'd rather have the money liquid, buy iBonds (which I continued to do), etc. Not only is there almost no upside to buying a 0.5% bond, but the longer your duration, the more downside if rates ever rise.
So I don't consider it "market timing" to say "Yes I will tie up this money for 5 years in a CD for 5% but not for 1%."
I also do not (and did not) see the point of investing in 0.5% bonds or CDs. I'd rather have the money liquid, buy iBonds (which I continued to do), etc. Not only is there almost no upside to buying a 0.5% bond, but the longer your duration, the more downside if rates ever rise.
So I don't consider it "market timing" to say "Yes I will tie up this money for 5 years in a CD for 5% but not for 1%."
- Fri Feb 23, 2024 7:14 am
- Forum: Personal Consumer Issues
- Topic: How do you live healthy?
- Replies: 107
- Views: 8119
Re: How do you live healthy?
Mainly, I have tried to eat better, and eat things in moderation. It is very easy to auto-pilot into an unhealthy diet (at least in America) -- everything is stuffed with sugar, fat, salt, etc. And the cheaper, easier, faster options are usually the least healthy. If you actually look up nutrition info at most restaurants it is shocking -- their aim is for you to enjoy the meal (not be healthy) and a cheap, easy way to do that is to cram a ton of salt, butter, and fat on everything. Sugar is in EVERYTHING in excessive amounts. Not just the obvious culprits like soda, but it's in bread, ketchup, granola bars that are really candy bars, cereal, yogurt, etc. etc. Also most Americans eat way more meat than is healthy for us. And most serving si...
- Sat Feb 10, 2024 12:06 pm
- Forum: Personal Finance (Not Investing)
- Topic: To IRS, We Are One; To Me, We Are Three - Figuring Taxes
- Replies: 18
- Views: 2290
Re: To IRS, We Are One; To Me, We Are Three - Figuring Taxes
The hard part is if you figure out Source 1's income and tax burden first, then add in Source 2 and allocate the additional Tax to Person 2, then Person 1 gets all the benefits of the standard deduction and lower tax brackets vs. Person 2 who will pay at higher marginal rates.
One way is add up all the income, figure out the total taxes, and allocate them proportionally. So if Source 1 made 30% of the total income, they pay 30% of the total tax. This is simple and more fair, but the downside is it treats all income the same, whereas some income (capital gains & dividends for example) are taxed at different rates. Depending on your situation this may be a minor quibble (20% vs. 22%) or a bigger deal.
One way is add up all the income, figure out the total taxes, and allocate them proportionally. So if Source 1 made 30% of the total income, they pay 30% of the total tax. This is simple and more fair, but the downside is it treats all income the same, whereas some income (capital gains & dividends for example) are taxed at different rates. Depending on your situation this may be a minor quibble (20% vs. 22%) or a bigger deal.
- Mon Feb 05, 2024 9:57 am
- Forum: Personal Investments
- Topic: Asset Location in Retirement
- Replies: 4
- Views: 418
Re: Asset Location in Retirement
I will be retiring in a few months and won't have to take RMDs for five years. I've always heard one "rule of thumb" that states to put tax inefficient holdings like bond funds in tax-deferred accounts and tax efficient holdings like index funds in a taxable account. On the other hand, a withdrawal strategy "rule of thumb" says to draw down from taxable accounts first so you can let your tax-deferred accounts grow. It seems that by doing that your tax-deferred accounts won't grow very much and you're drawing down from the holdings that will grow the most over time. The vast majority of my tax deferred accounts are currently in bond funds with a little bit in index funds, mainly to allow me to rebalance in the tax deferr...
- Fri Feb 02, 2024 9:51 pm
- Forum: Investing - Theory, News & General
- Topic: I Bonds Mega Thread (I Bond Heads Rejoice!)
- Replies: 6651
- Views: 1203373
Re: I Bonds Mega Thread (I Bond Heads Rejoice!)
Yes, the limit a person can buy per year is $10,000 (plus $5,000 in paper bonds with your income tax refund). It doesn't matter where the money comes from or if you redeem older I-Bonds or not.etfan wrote: ↑Fri Feb 02, 2024 8:00 pmProbably obvious but just to verify: The limit is $10,000 even if the money came from redeeming a previous one?
Does anyone know if it's possible to view the fixed rate of a certain I Bonds holding on the treasury direct website? It seems to show the combined rate for each but not the breakdown. Do I have to just google it by issue date?
- Thu Feb 01, 2024 6:36 pm
- Forum: Personal Consumer Issues
- Topic: Irrigation systems (home, underground)
- Replies: 17
- Views: 989
Re: Irrigation systems (home, underground)
I'd certainly recommend it, I honestly can't imagine not having one. In my part of the country (southwest) everybody has an irrigation system. A relatively inexpensive luxury that makes your life way better. What I learned though is try and do the whole system with Schedule 40 PVC. Don't use poly line, the black flexible kind. You will constantly have leaks with poly and the whole yard will need to be replaced after about 8 years (if you're lucky). I'm almost convinced landscapers purposely do poly just to create work for themselves. I'm amazed how many corners landscapers will cut. The person in the house before me had the yard done with Class 200 PVC. About the thickness of an egg shell. Maybe saved $100-$200 in pipe versus Schedule 40, ...
- Mon Jan 29, 2024 8:32 pm
- Forum: Personal Finance (Not Investing)
- Topic: Large international incoming wire transfer - will it trigger any alarms?
- Replies: 4
- Views: 634
Re: Large international incoming wire transfer - will it trigger any alarms?
Who cares if it does? You’ve done everything right and have nothing to hide. I received some totally legitimate foreign wire transfers as part of my business. Fidelity permanently shut down all my accounts and banned me from being a customer. I appealed, sent in info about my business, showing how the transfers were legitimate, etc. etc. and they didn't care, just said the risk department closed my account but wouldn't give me any details why. (I can only guess that foreign wire transfers have a higher incidence of fraud.) OP, not trying to scare you, but that happened to me with Fidelity, and it sucked. Years later I tried to open an HSA with them and was denied. This is the only bank/business/etc. where I've ever had an issue remotely li...
- Sat Jan 27, 2024 3:03 pm
- Forum: Personal Finance (Not Investing)
- Topic: 20-30X income, is that the "retirement rut"?
- Replies: 90
- Views: 13512
Re: 20-30X income, is that the "retirement rut"?
I get what OP is saying. Although it may not be perfectly rational to think of income in terms of daily swings/market volatility, or retirement funds in terms of multiples of income (rather than expenses), it is at least psychologically jarring to think about working hard for a year for a $10K bonus then watching your stock portfolio go up by more than that in a day without lifting a finger. However, I have trained myself to ignore those short-term fluctuations (and even middle-term dips of a year or more) and figure they will probably all work out in 30 years or so. OP, while the $100K you earn (minus taxes) may not feel super relevant compared to a $2M portfolio -- as odds are the $2M portfolio will average more than $100K per year on its...
- Fri Jan 26, 2024 12:48 pm
- Forum: Investing - Theory, News & General
- Topic: Infinity withdrawal rate
- Replies: 20
- Views: 2769
Re: Infinity withdrawal rate
Summary: This is a fixed percentage withdrawal strategy that uses conservative smoothing over the last 8 years (their estimate of how long downturns usually last) to reduce (upward) volatility of spending. annual withdrawal = fixed_withdrawal_rate * min(current_portfolio_balance, trailing_8_year_average_portfolio_balance) They recommend using a 3.5% fixed withdrawal rate with a 60/40 stock-bond allocation. Reasonable and conservative strategy. Endless? I don't know. You can't subdivide a penny. Thank you for doing that work -- that was a very helpful summary & quotes of the strategy. It does seem like a reasonably conservative strategy (without requiring an absurd amount of over-saving) and tries to account for various scenarios. Does ...
- Thu Jan 25, 2024 9:51 am
- Forum: Personal Investments
- Topic: Early Retirement Plan - Age 38 w/over $2 million
- Replies: 120
- Views: 28642
Re: Early Retirement Plan - Age 38 w/over $2 million
Make sure you've thought about the objections to FIRE brought up here: https://wggtb.substack.com/p/the-fire-movement?utm_campaign=post&utm_medium=web Some are straw men for most FIRErs but there are some legitimate criticisms of the movement too. I'm sorry, I couldn't get through that blog post. "Some are straw men"... I found almost every point completely wrong. I had to stop when it said most people planning FIRE assume 12-15% investment returns... meanwhile almost every post I see here is along the lines of "Is 8% too optimistic going forward, shouldn't we assume a lower return with these high P/E ratios, what if we have a way worse outcome than the very worst outcome ever in history," etc. Also the idea that pe...
- Sat Jan 06, 2024 10:12 am
- Forum: Personal Investments
- Topic: Early Retirement Plan - Age 38 w/over $2 million
- Replies: 120
- Views: 28642
Re: Early Retirement Plan - Age 38 w/over $2 million
I don't think it is helpful or constructive to say that my current spending with kids, which I have maintained for close to a decade, is meager or miserable. There are really 2 questions jumbled together here: 1. Is your estimate of expenses going forward for a long period of time accurate/reasonable, and 2. If so, can you retire financially? For #1, while your figure of $40K certainly sounds low for a family of 4 in a MCOL area, it is not impossible. However, it is more difficult than it sounds to accurately track all expenses, including lumpy expenses. For example, you say you have no car payment, but do you have paid off cars that you keep for X years and then replace? Do you account for that expense (divided by X) in your annual budget...
- Sat Jan 06, 2024 9:32 am
- Forum: Personal Consumer Issues
- Topic: Hot Water Heater (Good deal or did I get scammed?)
- Replies: 51
- Views: 7256
Re: Hot Water Heater (Good deal or did I get scammed?)
I think you did OK. Perhaps not as cheap as it could have been had you sourced the unit yourself, etc. (I put in a 27KW electric unit for $350 + $250 in wires/parts and did the labor myself) but for someone else to handle everything, upgrade gas lines, work up in the attic, etc. etc. it could have been much worse. I personally am a big fan of tankless water heaters, less to go wrong and especially if up in an attic. So long as the units are sized properly for your usage/climate so you get enough hot water, it's nice to never run out of hot water, and not have 50 gallons of water sitting above your head waiting to leak. One pet peeve/nitpick/joke: I see no need for a "hot water heater," I personally use a unit that heats up cold wa...
- Wed Sep 13, 2023 9:25 pm
- Forum: Personal Investments
- Topic: Bonds Versus Paying Down Debt
- Replies: 31
- Views: 2011
Re: Bonds Versus Paying Down Debt
Since you can pay off the car loan with a single paycheck, then whether you keep the money and invest in bonds or pay it off early should be a rounding error to your big picture finances. Do whichever you prefer (I'd pay it off just for simplicity, one less thing to deal with, but I'd build up a bit more of an emergency fund first.)
- Sat Jul 29, 2023 4:30 pm
- Forum: Personal Consumer Issues
- Topic: Best Purchase < $1000?
- Replies: 231
- Views: 28459
Re: Best Purchase < $1000?
Xfinity mobile service. When Xfinity started their service, we moved our 2 lines over from AT&T and service went from $90/mo to free + tax/fees, or about $4/mo. It's now up to $17.20/mo for both lines, including tax/fees. A hefty increase in cost, but still a great purchase. It's working out even better for Comcast, which is keeping you shackled to their ISP service. That's the main reason they offer Xfinity Mobile at such attractive prices. Even if you don't have a competitor to Comcast for internet, you could easily save $30/mo or more by signing up as a new customer every 12 months, especially easy to do if there are two of you. But you can't do this easily if you're held captive by Xfinity Mobile. Even with Xfinity Mobile (couldn't...
- Fri Jul 14, 2023 5:38 pm
- Forum: Personal Investments
- Topic: Is selling I-bonds in the current environment a wise move?
- Replies: 86
- Views: 8537
Re: Is selling I-bonds in the current environment a wise move?
It took me over 10 years to build up a meaningful amount of I bonds and I assume others are in a similar place. They are meant to be a chunk of my bond fund allotment through early retirement and to protect money against inflation over the long term. They also serve as my emergency fund and the primary ballast in my investing portfolio. Nothing better than zero volatility to help smooth stock market crashes out. Unless you were trying some sort of short-term interest rate play on $10,000, which is an insignificant amount of money, why in the world would you sell now for a potentially brief (6 month, 1 year) boost in interest of a whopping .7% before taxes? (Tax deferred and city/state exempt is a significant advantage for I bonds in some s...
- Mon Jul 10, 2023 10:07 pm
- Forum: Personal Consumer Issues
- Topic: Difference between "accepting insurance vs. being in-network for a physical?
- Replies: 22
- Views: 1433
Re: Difference between "accepting insurance vs. being in-network for a physical?
I would trust the BCBS directory much more than relying on the doctor's office claiming they're in-network.
As mkc said, there are a wide variety of Blue Cross plans, many of which have different networks. There are Blue Cross plans where almost every doctor is in-network and others where almost none are. So the office just saying "Yeah, we accept Blue Cross" doesn't help you.
As mkc said, there are a wide variety of Blue Cross plans, many of which have different networks. There are Blue Cross plans where almost every doctor is in-network and others where almost none are. So the office just saying "Yeah, we accept Blue Cross" doesn't help you.
- Sat Jul 08, 2023 1:30 pm
- Forum: Personal Consumer Issues
- Topic: someone with my name keeps using my email address
- Replies: 137
- Views: 9115
Re: someone with my name keeps using my email address
If someone opened an account at a bank, phone company, etc. with my email address I would absolutely not just leave it open. I would either contact the person, contact the bank, or click "reset password" (thus locking the person out of the account since they can't access the password reset email that would come to me, but not accessing it myself). Whether it's some sort of phishing attempt or identify theft, or even just an honest mistake, I don't want a random bank account or phone records with my email address out there. When that person gets into money laundering I don't want my info on there or any tie to me. I have not seen one shred of evidence that *I* would somehow be breaking the law by doing the above when someone else i...
- Sat Jul 08, 2023 1:08 pm
- Forum: Personal Finance (Not Investing)
- Topic: Florida insurance options
- Replies: 123
- Views: 15724
Re: Florida insurance options
Unfortunately there is no one "cheapest" insurer for everyone (although some are generally on the lower or higher end). I have switched auto insurance many times over the years, sometimes away from Company X to Y for better rates, only to come back to Company X a year or two later because now their rates are lower. (Generally, insurers want a certain blend of customers for risk purposes, so for example if they have too many 50-year-old men in your zip code with your type of car, they don't say "We won't insure you," they raise their rates on you higher. Meanwhile Company Y is in the opposite position and lowers rates for people in your demographic. But these trends constantly change.) The best bet is just to check prices...
- Sat Jul 08, 2023 11:04 am
- Forum: Personal Consumer Issues
- Topic: someone with my name keeps using my email address
- Replies: 137
- Views: 9115
Re: someone with my name keeps using my email address
If there is a way to contact him (perhaps a phone number in one of the emails sent to you), you could try to ask him nicely to stop using the address.
If he refuses or you don't want to deal with that, perhaps calling the doctor's office and cancelling his appointment will do the trick and make him be more careful in the future.
If he refuses or you don't want to deal with that, perhaps calling the doctor's office and cancelling his appointment will do the trick and make him be more careful in the future.
- Wed Jul 05, 2023 9:22 pm
- Forum: Investing - Theory, News & General
- Topic: Fidelity has removed the ability to see number of shares
- Replies: 73
- Views: 8701
Re: Fidelity has removed the ability to see number of shares
Glad I'm not the only one driven nuts by this. Every other brokerage I've ever seen easily lets me (a) see how many shares of each investment I own, and (b) download monthly/quarterly/annual statements. Not Fidelity Net Benefits. Some may not care about the number of shares, but I find it to be basic information that I use in my tracking spreadsheet. The "statements" are also a bit odd. I guess they get the job done but most places let you download well-formatted statements instead of just kinda saving the webpage as a PDF. They also don't give detailed transaction history, just an aggregate summary. Every time I'm using Fidelity, I end up having to jump through hoops and try to remember the non-intuitive ways to find basic inform...
- Thu Feb 02, 2023 12:48 pm
- Forum: Personal Investments
- Topic: Treasuries or CDs for 1 and 2 year cash?
- Replies: 8
- Views: 1352
Re: Treasuries or CDs for 1 and 2 year cash?
A few pros and cons. Both are about as safe as it's possible to be.
If broken early, CDs usually have a 3-month interest penalty, while Treasuries are sold at market price (could be more or less than par).
Treasuries are state sales tax free.
Other than that, I generally just go for whichever pays the highest rate (APY/YTM) that matches the time horizon I'm looking for.
If broken early, CDs usually have a 3-month interest penalty, while Treasuries are sold at market price (could be more or less than par).
Treasuries are state sales tax free.
Other than that, I generally just go for whichever pays the highest rate (APY/YTM) that matches the time horizon I'm looking for.
- Thu Jan 26, 2023 4:43 pm
- Forum: Personal Investments
- Topic: Can brokered CDs lose money?
- Replies: 9
- Views: 1311
Re: Can brokered CDs lose money?
If you hold it to maturity, then no, it will pay the full par value back at maturity (plus the interest you collect along the way).
But if you choose to sell early, then the price could fluctuate up or down depending on movements in interest rates.
But if you choose to sell early, then the price could fluctuate up or down depending on movements in interest rates.
- Mon Jan 02, 2023 2:41 pm
- Forum: Personal Investments
- Topic: Tracking your net worth. Now is a good time to start.
- Replies: 99
- Views: 13929
Re: Tracking your net worth. Now is a good time to start.
I find it helpful to track periodically for several reasons. One is I also break down asset allocation and make sure I'm still within range of where I want to be. I also do find it very helpful to track for psychological reasons -- deferring gratification and saving can sometimes be difficult, and it helps me to see the progression over time, to see a (kinda) tangible result from my saving & planning & investing. (And yes, it's a bit like a video game, trying to raise a high score.) It also helps to see if I'm on track, how close I might be getting to FI, when I might be able to retire and how much income I could expect to draw from my savings, etc. (most of this is for a bit down the road, just general musings for now). For what it...
- Sun Dec 25, 2022 12:50 pm
- Forum: Personal Investments
- Topic: What are you doing with your iBonds?
- Replies: 133
- Views: 18732
Re: What are you doing with your iBonds?
What is the rationale for selling iBonds? The big issue with iBonds is that you can only buy 10k per year, so even though it is awesome when inflation spikes, 10k doesn’t really move the needle on a 1 mil portfolio. My plan is to max out my iBonds every year, so that if inflation ever spikes I have a large amount of money protected from inflation, not just 10k. Is this the wrong thought process? No, you have it exactly right, IMO. I have been buying for 10 years so I was able to build up a decent chunk over time. Then when inflation hit, while others scrambled to buy as much as they could in 1 year, they did what they were supposed to and I had a nice chunk of fixed income earning ~10%. I don't see any reason to deviate from that course, a...
- Wed Dec 21, 2022 7:39 pm
- Forum: Personal Investments
- Topic: Real (after-tax) yield calculation for I Bonds: Fun with ChatGPT
- Replies: 25
- Views: 1877
Re: Real (after-tax) yield calculation for I Bonds: Fun with ChatGPT
I keep hearing about how "AI" is going to take all of our jobs, even advanced jobs, any day now. And then I see stuff like this.
So long as I have a tab in Excel called "Scenario 1" and I make a new one that it calls "Scenario 1 (2)," I think we're OK.
So long as I have a tab in Excel called "Scenario 1" and I make a new one that it calls "Scenario 1 (2)," I think we're OK.
- Fri Dec 16, 2022 9:05 pm
- Forum: Investing - Theory, News & General
- Topic: Already expected fed fund rate hikes do not cause bond rates to go up - don't try to time the bond market
- Replies: 69
- Views: 7651
Re: Planned fed fund rate hikes do not cause bond rates to go up
For example in January the fund buys a 6 month bond with a yield of 2%. After 3 months it sells the bond. The bond would return 2% during this period. The fund would use the proceeds to buy a new 6 month bond with yields of 3%. It makes 3% return for 3 months and then sells and buys a 6 month bond with a yield of 4%. So despite rising interest rates it still makes money. You cannot sell a bond yielding 2% at par when new bonds are yielding 3%. So you will lose principal. And these were all expected rate increases, yes? So it is entirely possible to lose money on bonds (if you sell before maturity or hold a bond fund) even during expected rate increases. They are bonds with different maturities and therefore different interest rates. For mu...
- Fri Dec 16, 2022 8:35 pm
- Forum: Investing - Theory, News & General
- Topic: Already expected fed fund rate hikes do not cause bond rates to go up - don't try to time the bond market
- Replies: 69
- Views: 7651
Re: Planned fed fund rate hikes do not cause bond rates to go up
...You cannot sell a bond yielding 2% at par when new bonds are yielding 3%... You can't. So you will lose principal. I don't think that's "losing principal." You lost money , certainly. But it wasn't because the bond to pay its debts to the penny, or because fear it wouldn't. You lost money because you weren't willing to wait for the bond to make those contractual payments. That's not the bond's fault. Yes of course if you hold to maturity, you get back the full par value + interest payments. But the poster was talking about selling early. When rates rise and you sell early you will generally lose principal, money, whatever you want to call it. The bond you bought for $1,000 will sell for less than that if someone else can buy a...
- Thu Dec 15, 2022 3:16 pm
- Forum: Investing - Theory, News & General
- Topic: Already expected fed fund rate hikes do not cause bond rates to go up - don't try to time the bond market
- Replies: 69
- Views: 7651
Re: Planned fed fund rate hikes do not cause bond rates to go up
You cannot sell a bond yielding 2% at par when new bonds are yielding 3%. So you will lose principal. And these were all expected rate increases, yes? So it is entirely possible to lose money on bonds (if you sell before maturity or hold a bond fund) even during expected rate increases.skierincolorado wrote: ↑Thu Dec 15, 2022 1:43 pm For example in January the fund buys a 6 month bond with a yield of 2%. After 3 months it sells the bond. The bond would return 2% during this period. The fund would use the proceeds to buy a new 6 month bond with yields of 3%. It makes 3% return for 3 months and then sells and buys a 6 month bond with a yield of 4%. So despite rising interest rates it still makes money.
- Thu Dec 08, 2022 12:09 pm
- Forum: Personal Finance (Not Investing)
- Topic: Buy 2006 BMW 325i for $22,500
- Replies: 72
- Views: 5201
Re: Buy 2006 BMW 325i for $22,500
Considering a brand new 2006 BMW 325i went for around $30,000 MSRP... I'd say it's depreciated more than that in 17 years.
- Thu Oct 27, 2022 9:21 am
- Forum: Personal Finance (Not Investing)
- Topic: HSA strategy
- Replies: 14
- Views: 1580
Re: HSA strategy
We’re doing the same thing — allowing our balance to accrue. My employer’s HSA provider isn’t very good and changes from time-to-time so I let the money pile up as cash there and then periodically (once a year) do an indirect rollover into my Fidelity HSA where it’s invested. With that said, I’ve been lax about saving documentation. I’m anticipating having more than enough medical expenses later in life to justify withdrawals. Anyone else taking this lackadaisical approach to record-keeping? Yes. I also think the likelihood is most people will have more than enough medical expenses in retirement to burn through an HSA (and if my family magically doesn't, I'll take that outcome!). But I do keep scans of major receipts stashed in a folder on...
- Fri Oct 14, 2022 12:15 pm
- Forum: Personal Investments
- Topic: Help make sense of my brokered CD
- Replies: 10
- Views: 1415
Re: Help make sense of my brokered CD
What cas said above is correct. To simplify a bit:
The CD cost was $999.42, plus a $1 commission, so you paid a total of $1,000.42, and received back $1,000 at maturity, losing 42 cents.
For interest, you received $5.04 at maturity, but paid $3.07 to the old owner for the time he held it. So you earned $1.97 in interest.
Subtract the 42 cents you lost (due to the commission) and you netted $1.55.
On larger amounts and higher interest rates and longer durations these small amounts (like the $1 commission) are less of a factor.
Generally all you care about is the "Yield to Maturity" (or Yield to Worst if it is callable, though I personally avoid callable CDs), which accounts for all of this and gives you a nice annual number.
The CD cost was $999.42, plus a $1 commission, so you paid a total of $1,000.42, and received back $1,000 at maturity, losing 42 cents.
For interest, you received $5.04 at maturity, but paid $3.07 to the old owner for the time he held it. So you earned $1.97 in interest.
Subtract the 42 cents you lost (due to the commission) and you netted $1.55.
On larger amounts and higher interest rates and longer durations these small amounts (like the $1 commission) are less of a factor.
Generally all you care about is the "Yield to Maturity" (or Yield to Worst if it is callable, though I personally avoid callable CDs), which accounts for all of this and gives you a nice annual number.
- Fri Oct 14, 2022 10:05 am
- Forum: Personal Consumer Issues
- Topic: Roofer walking around the neighborhood
- Replies: 38
- Views: 4475
Re: Roofer walking around the neighborhood
These guys are scammers. They send out mailers all the time that "we've found homes with storm damage in your area" (even though there has been no storm). Then they will magically find (or create) damage while up there, and promise you a new roof with your insurance company paying.
What they don't mention is that we all pay for these scams in insurance prices that have gotten out of control, partly due to paying for lots of unnecessary new roofs and imaginary "storm damage."
What they don't mention is that we all pay for these scams in insurance prices that have gotten out of control, partly due to paying for lots of unnecessary new roofs and imaginary "storm damage."
- Sat Sep 17, 2022 9:04 pm
- Forum: Personal Consumer Issues
- Topic: Water heater replacement, etc
- Replies: 66
- Views: 6420
Re: Water heater replacement, etc
Depending on how far the install location is from your circuit breaker, have you considered a tankless unit?
Two immediate benefits are that they're small (so should fit pretty much anywhere) and you don't even need to turn them off when you go out of town.
Two immediate benefits are that they're small (so should fit pretty much anywhere) and you don't even need to turn them off when you go out of town.
- Wed Sep 14, 2022 8:26 am
- Forum: Personal Consumer Issues
- Topic: UPS Fake Delivery Attempt
- Replies: 45
- Views: 10427
Re: UPS Fake Delivery Attempt
I suspect that the delivery drivers are simply being asked to deliver too many packages by the computer algorithms that pack the trucks. If they get behind at all, they can't catch up, and 'Delivery Attempted' has been the way that they can get home at a reasonable hour while receiving the least bit of pushback from their supervisors. Sometimes I see these drivers still out and about past 7pm, so I try to be reasonable in my reactions. Pretty common, both companies put too many packages on as few trucks as possible to maximize profit and this is the result, not much you can do about it. I think these 2 posts pretty much nail what is going on. I had a strange one where I was home all day and the status said "Delivery Attempted -- could...
- Tue Sep 06, 2022 8:43 am
- Forum: Investing - Theory, News & General
- Topic: Why People Make Dumb Financial Decisions on Purpose By Ben Carlson
- Replies: 53
- Views: 7584
Re: Why People Make Dumb Financial Decisions on Purpose By Ben Carlson
It is an interesting thought experiment, but for most of us money has serious decreasing marginal utility. If I had the 100% chance to hit "enough" -- maybe more than $1M but $5M would definitely do it (meaning I'm set for life, don't have to worry about working or market returns or even unexpected expenses) -- I don't think I would give that up, even for a 50% chance of $50M (mathematically still 5x better than guaranteed $5M) or $100M or $1B. The difference to me between $5M and $50M just wouldn't be that much -- I don't have much interest in the stuff that extra zero could buy me (at least not compared to what the first $5M does). It's also a good reminder that different people have different values, different priorities, diffe...
- Mon Sep 05, 2022 2:48 pm
- Forum: Personal Investments
- Topic: Fixed Withdrawal Rate - 5 or 6%?
- Replies: 214
- Views: 18875
Re: Fixed Withdrawal Rate - 5 or 6%?
Exactly this. All of these retirement spending threads get derailed by people saying "just save 50x instead of 25x" or "be able to survive even if your portfolio drops 50% the first year" or whatever. Yes it is possible to increase the success rate from 97% to 99% by doubling your target portfolio value, but it may mean working another decade or more at a job you hate and missing out on a lot of life, perhaps even a job that destroys your health so you die early with lots of money left in the bank. Once you have that level of money (50-100x or more) then it doesn't really make sense to talk about allocations or safe withdrawal rates or whether you adjust withdrawals for inflation or not -- anything short of setting huge...
- Sun Sep 04, 2022 2:38 pm
- Forum: Personal Investments
- Topic: Fixed Withdrawal Rate - 5 or 6%?
- Replies: 214
- Views: 18875
Re: Fixed Withdrawal Rate - 5 or 6%?
Constant % withdrawal is almost certainly a method unlikely to withstand contact with reality. People just don’t live their lives matching their annual spending to market performance fluctuations. $80k this year, oh no $60k next year, oh sweet $95k the following year! There has to be some type of reasonable banding placed around the dollar amounts to make that practical and account for unanticipated spending needs. People often say “you’ll never run out of money with constant % withdrawal” which of course is nonsense because eventually you’ll reach a point in a bad enough market environment where your real spending needs are simply more than the constant % would allow. You would have to have lots of flexibility. IOW if you need 80K at the ...
- Wed Aug 31, 2022 10:05 am
- Forum: Personal Investments
- Topic: Buying T-Bills
- Replies: 5
- Views: 951
Re: Buying T-Bills
Since the Fed already telegraphed their plans for rates, I don't see how that information helps predict future t-bill rates. All of the market participants know it so it is already baked in. Of course, something could happen between now and then that causes the Fed to change their plan, and that would affect t-bill rates. As with stocks, public information is not useful for beating the market. I'm buying now, but I might be wrong. Or right. If you wait, you miss out on the interest you would have earned by buying now. This pretty much nails it. Unless you have some inside info (which is technically illegal to act on), you don't know better than "the market" whether and when rates will go up or down by more or less than currently ...
- Fri Aug 05, 2022 12:08 pm
- Forum: Personal Consumer Issues
- Topic: How to say "No" for an extended warranty?
- Replies: 117
- Views: 7478
Re: How to say "No" for an extended warranty?
The best tip I know of (other than the basics of being firm) is not to give reasons or get into a discussion about it. They are trained to have a rebuttal ready for any reason you can provide. So just repeating "No, I don't want it" or something equally straightforward doesn't give them a foothold to debate you.
- Thu Aug 04, 2022 11:31 am
- Forum: Personal Investments
- Topic: Stock up +28075.96%, what would you do?
- Replies: 71
- Views: 8044
Re: Stock up +28075.96%, what would you do?
Congratulations! While the 100% logical thing to do is sell it all (even if you believe in picking stocks that are low, you already did that and it's no longer "low"), another perfectly reasonable approach is to sell most of it, lock in a nice chunk of amazing gains, and keep a small amount as play money, where if it somehow goes up another 1000%+, you are still quite happy... but if it goes back down, no big deal since you already are way ahead of the game.
- Tue Aug 02, 2022 11:17 am
- Forum: Personal Investments
- Topic: Rolling over savings bond to something else?
- Replies: 22
- Views: 2225
Re: Rolling over savings bond to something else?
Keep in mind that I am not thinking of replacing her riskless cash asset and replace them with riskier ones. I am looking at her sizable savings account which is only yielding 0.01% interest and figured that I can probably increase the interest rate to 1.5% without risk or any effort. I could even go further and replace some of that cash with a 1 year riskless CD with 2.5-3% interest. However, getting her to do a 1 year CD might prove challenging since she's always worry that she will need the money, despite that she has may be several years of cash. This is why I am swapping the savings bond to CD, conceptually, we are just swapping one bond with another. Note that when I say savings bond, it's the series EE with the crappy interest rate....
- Mon Aug 01, 2022 4:22 pm
- Forum: Personal Consumer Issues
- Topic: People who has FIRE + Stay the course, how to deal with boredom?
- Replies: 134
- Views: 13971
Re: People who has FIRE + Stay the course, how to deal with boredom?
To those who have FIRE and Stay the course (no tampering/no active trading, so no use of following the market as it may create an urge to deviate from the course) What do you do specifically to not get bored with this proven but boring stay-the-course method? Many others have commented on finding other more fun hobbies instead of tinkering with finances but I assume that's not really what you mean. I personally do enjoy tracking spending and investing on spreadsheets, so I check my accounts once a month and track them, keep an eye on my AA, maybe even tinker a bit especially when it comes to buying individual bonds/treasuries/CDs. That lets me spend some time keeping an eye on things and not getting "bored." That doesn't mean I m...
- Mon Aug 01, 2022 9:08 am
- Forum: Personal Investments
- Topic: 6 Month Treasuries for Holding Some of Our Savings?
- Replies: 46
- Views: 5770
Re: 6 Month Treasuries for Holding Some of Our Savings?
Yes it definitely makes sense. One option is to keep a ladder of liquidity: enough for a few month's of expenses/emergency in something liquid (the Vanguard money market funds are now paying like 1.85% or so), then some 3, 6, 12, 24, etc. month treasuries (or non-callable brokered CDs if the rate is higher). This ensures you have enough ready cash to meet expenses/emergencies, with something liquid coming up every few months (that can be re-invested). Right now the rates on all durations are pretty flat, so not too much of a benefit going out longer unless you want to "lock in" that rate for a longer time. On the longer end, CD yields seem to beat Treasuries a bit. In my experience, it is easy buying & holding both at Vanguard...
- Fri Jul 29, 2022 11:55 am
- Forum: Personal Consumer Issues
- Topic: Scaring away mockingbirds
- Replies: 40
- Views: 4168
Re: Scaring away mockingbirds
- Fri Jul 29, 2022 11:54 am
- Forum: Personal Finance (Not Investing)
- Topic: Does paying additional principal make sense in inflationary environment?
- Replies: 19
- Views: 2584
Re: Does paying additional principal make sense in inflationary environment?
In theory, it doesn't make a lot of sense to pay down a loan with a rate lower than inflation... but that is assuming you can do something with that money that earns at least the rate of inflation going forward. For example, if you can buy a 3.5% CD instead of pre-paying a 2% mortgage, it may make sense (depending on taxes).
BUT "inflation" does magically mean you have more money later on to pay back the mortgage with "inflated dollars." If you stick cash under a mattress it will not benefit you to pay off your mortgage later. If you don't get a raise at work, or are on a fixed pension, those later dollars aren't any bigger than they are today.
BUT "inflation" does magically mean you have more money later on to pay back the mortgage with "inflated dollars." If you stick cash under a mattress it will not benefit you to pay off your mortgage later. If you don't get a raise at work, or are on a fixed pension, those later dollars aren't any bigger than they are today.
- Thu Jul 28, 2022 8:27 pm
- Forum: Personal Consumer Issues
- Topic: Scaring away mockingbirds
- Replies: 40
- Views: 4168
Re: Scaring away mockingbirds
That sounds like pretty unusual behavior. We have a ton of mockingbirds around year-round (half a dozen or so in my yard), they're out & about all the time during the day, but I've never heard one make a ruckus at night.
I'd go with a wooden owl or something to scare it away.
I'd go with a wooden owl or something to scare it away.
- Thu Jul 28, 2022 3:57 pm
- Forum: Investing - Theory, News & General
- Topic: Vanguard's Money Market Rates Jumping around
- Replies: 36
- Views: 4637
Re: Vanguard's Money Market Rates Jumping around
I probably keep more liquid cash than most do, and I understand there may be reasons to do so (big expense coming up or whatever). But it's hard to believe it would be optimal to keep "much more" than $100K in a fully-liquid MM fund. Even if you wanted it safe, you could buy some ladder of short-term treasuries going out a few years and earn much better rates than 1.53% or 1.56%. If you have a big expense coming up very soon, then the few basis points you miss out on in the few weeks we're talking about is a rounding error. Worst comes to worst, if you are determined to keep $1,000,000 in liquid MM funds, then it may reduce your earnings by a whole $300 a year if you pick the wrong fund. It is costing you more than that to keep so...
- Wed Jul 27, 2022 12:33 pm
- Forum: Personal Investments
- Topic: how to compare brokered CDs
- Replies: 10
- Views: 1269
Re: how to compare brokered CDs
I don't think you're missing anything. So long as the bank is FDIC insured (which I would think, but am not 100% sure, that all offered via Vanguard would be), and the CD is not callable, there's shouldn't be any difference if the rate and term are the same. Possibly some may credit interest quarterly vs. semi-annually or something?
- Tue Jul 26, 2022 9:42 am
- Forum: Investing - Theory, News & General
- Topic: Harry Browne Permanent Portfolio Discussion (Cont'd)
- Replies: 876
- Views: 211209
Re: Harry Browne Permanent Portfolio Discussion (Cont'd)
The only defensive portfolio that's done better than the PP this year is the All Seasons portfolio, which has a large allocation to long term treasuries. It's done about twice the return of the PP. But there's an inflation risk holding that much in long treasuries that needs to be balanced. I wish I could agree, but after many years of pretty religiously following the PP strategy, I bailed a few months ago. Treasuries don't make sense now, at least not as 25% of the portfolio. Harry Browne's PP worked well for decades, including some retroactive backtesting, but it's important to note that at the beginning treasury yields were high, and although they've obviously see-sawed over the short and medium turn, over the decades they've come down....