Search found 13252 matches

by alex_686
Wed Mar 27, 2024 1:19 pm
Forum: Investing - Theory, News & General
Topic: Never selling shares
Replies: 57
Views: 4259

Re: Never selling shares

Most people use the 4% rule and sell shares in retirement. But if one can build a stock portfolio that throws off enough money without hurting growth that much and you never have to sell shares, wouldn’t that be ideal? Buffett says his holding period is “forever”. Couldn’t my father say the same? No. Receiving dividends is from a accounting and rational economic viewpoint the equivalent of selling. You can search all of the dividend irrelevant threads out there. Yes, it is a complex, nuanced, and contentious subject. So lets put in specific format. Dividend yields are about 3% and variable. So you have a choice of either 1) spending a 1/3 less, 2) saving a 1/3 more or 3) working a 1/3 longer. So there are negative impacts. And ignore Buffe...
by alex_686
Tue Mar 26, 2024 9:42 pm
Forum: Investing - Theory, News & General
Topic: Never selling shares
Replies: 57
Views: 4259

Re: Never selling shares

As for the dividends: If you had a small business like a fruit stand or some rental apartments and would live off just the income from that, only at Bogleheads people will make you believe that this is the same thing as selling portions of your business piece-meal to your neighbors. There is a difference between income and profits. If I sell apples below cost I certainly can sell the apples in inventory and generate a nice income - until my inventory runs out. I can certainly live off of rents until I need to replace the roof and siding. Here is one of the cognitive errors I was talking about. People tend to confuse earnings (profits) with dividends. Yes, there is a loose relationship between the two. It is loose enough to get one into rea...
by alex_686
Tue Mar 26, 2024 6:59 pm
Forum: Investing - Theory, News & General
Topic: Never selling shares
Replies: 57
Views: 4259

Re: Never selling shares

I understand dividend irrelevance as well why people like to avoid dividend ETFs in taxable etc (even though it is QDI). Do you? The point of Dividend Irrelevance is that dividends don't matter. i.e., they contain no actionable information. If they don't contain actionable information then how can one build any type of rational plan on this information. To extend, I agree that dividends are not free money. They are more like a forced sale. But in that case, since it is forced, why not used that stream of money to finance retirement and not sell any shares? I like his logic, to be honest. That is, you think it is logical to base you decisions on something that you believe is irrelevant? You can't build any rational plan around dividends bec...
by alex_686
Tue Mar 26, 2024 5:09 pm
Forum: Investing - Theory, News & General
Topic: Never selling shares
Replies: 57
Views: 4259

Re: Never selling shares

Most people use the 4% rule and sell shares in retirement. But if one can build a stock portfolio that throws off enough money without hurting growth that much and you never have to sell shares, wouldn’t that be ideal? Buffett says his holding period is “forever”. Couldn’t my father say the same? No. Receiving dividends is from a accounting and rational economic viewpoint the equivalent of selling. You can search all of the dividend irrelevant threads out there. Yes, it is a complex, nuanced, and contentious subject. So lets put in specific format. Dividend yields are about 3% and variable. So you have a choice of either 1) spending a 1/3 less, 2) saving a 1/3 more or 3) working a 1/3 longer. So there are negative impacts. And ignore Buffe...
by alex_686
Tue Mar 26, 2024 10:30 am
Forum: Investing - Theory, News & General
Topic: Why do you think STRIPS are yielding lower than coupon nominal Treasuries
Replies: 9
Views: 641

Re: Why do you think STRIPS are yielding lower than coupon nominal Treasuries

The Treasury yield curve is inverted. https://www.ustreasuryyieldcurve.com/ Note, the yield curve doesn't show what the yield on a 10 year treasury is. You can actually deconstruct a 10 year treasury into 20 different bonds. The 6month coupon, the 12 month coupon, etc. A 10 year strip would be a pure 10 year bond with all the 19 other bond parts stripped away. So if you buy a nominal 10 year you are getting those 19 other bond parts, which thanks to the inverted yield curve, pushes up the yield. Assuming you could reinvest those coupons at the current yield which is a dicey assumption but one that one has to make. If we are talking about the 2 year, probably the illiquidity premium is the difference. STRIPS are not popular so you have to pa...
by alex_686
Mon Mar 25, 2024 6:55 pm
Forum: Investing - Theory, News & General
Topic: Custodial Roth IRA
Replies: 4
Views: 357

Re: Custodial Roth IRA

Yes, if the child has legitimate work.

The IRS has ruled that doing chores around the house doesn’t count. Not even if the chores are working with production animals like dairy cows.
by alex_686
Mon Mar 25, 2024 6:32 pm
Forum: Investing - Theory, News & General
Topic: Trump Media & Technology Group Corp begins trading on NASDAQ as DJT on Tuesday
Replies: 12
Views: 2518

Re: Trump Media & Technology Group Corp begins trading on NASDAQ as DJT on Tuesday

You can’t short new shares for 30 days.

I don’t know when the next reconstitution date for CRSP is, but they don’t do it daily. Bi-annually if I had to guess. It will take a while to determine average daily volume which is a input into free float calculations. If trading volume is low then the weight will be reduced.
by alex_686
Mon Mar 25, 2024 10:02 am
Forum: Investing - Theory, News & General
Topic: Vanguard TDF -- Why are there International Bonds?
Replies: 8
Views: 763

Re: Vanguard TDF -- Why are there International Bonds?

Currency risk is hedged. Cost is zero, risk is zero, and you might get a spot of carry returns fue to USD reserve currency status.

You are citing either older or naive sources. Older as markets have evolved. Naive as this is a complex nuanced situation which requires a fair bit of math. This isn’t something I would recommend for a typical investor however it isn’t that bad with a decent set of computer software.
by alex_686
Sat Mar 23, 2024 7:43 pm
Forum: Personal Investments
Topic: Can I use copycat active ETF to do Tax-Loss Harvesting?
Replies: 13
Views: 857

Re: Can I use copycat active ETF to do Tax-Loss Harvesting?

toddthebod wrote: Sat Mar 23, 2024 6:18 pm If the distributions.are substantially different, it seems reasonable to argue you have an economic reason to make the change.
That would be a tax reason. The reason why distributors are different are due to the corporate structure of the fund.

Are the underlying holdings substantially different? That is the only question that the IRS auditors ever asked me.
by alex_686
Sat Mar 23, 2024 5:06 pm
Forum: Personal Investments
Topic: Can I use copycat active ETF to do Tax-Loss Harvesting?
Replies: 13
Views: 857

Re: Can I use copycat active ETF to do Tax-Loss Harvesting?

aristotelian wrote: Sat Mar 23, 2024 5:01 pm The IRS hasn't given specific guidance as far as I know. You'd be taking a risk.
I worked in this area professionally. While no specific guidance has been offered it would be in a high risk catalog.

If audited the IRS will want to know the economic reasons for the trades. Since they are copycat funds economic reasons are going to be hard to fine.
by alex_686
Sat Mar 23, 2024 11:09 am
Forum: Personal Finance (Not Investing)
Topic: Where do advisory fees show up?
Replies: 11
Views: 618

Re: Where do advisory fees show up?

First what makes you think MiL’s account were paying advisor fees? A 1.45% fee to roll Treasury bills in a $7m portfolio doesn’t seem right. There are standards. I used to work in compliance screening for such things. Brokerage fees would seem to be the preferred cost structure here.

Second, advisor fees would show up in the statements. You can hide or burry them.

Fees are negotiable depending on the level of work. Nobody pays full freight. Large accounts get a reduction. Simple portfolios get a reduction.

I would call up the person and ask.
by alex_686
Fri Mar 22, 2024 5:58 pm
Forum: Personal Investments
Topic: SIPC insurance for accounts over the $500,000 limit
Replies: 40
Views: 3450

Re: SIPC insurance for accounts over the $500,000 limit

Madoff Securities never applied for SIPC coverage, never paid into it, was never audited for it. Coverage was granted retroactive. This was a political decision. You keep claiming to have authoritative knowledge of the investment industry and you keep throwing out howlers like this. Bernie Madoff Investment Securities (BMIS) was one of the oldest broker-dealers on Wall Street, founded in 1960. It had been a member in good standing of the SIPC from the beginning of SIPC. It paid its SIPC dues on schedule and printed the SIPC logo on all of its statements. In fact, Madoff was chairman of the Nasdaq for a while. Of course he was a member of the SIPC. But you are right that it wasn't audited by the SIPC because the SIPC is a worthless organiza...
by alex_686
Fri Mar 22, 2024 5:40 pm
Forum: Personal Finance (Not Investing)
Topic: Do you assume legislative cuts in Social Security and other federal benefits?
Replies: 49
Views: 2124

Re: Do you assume legislative cuts in Social Security and other federal benefits?

billaster wrote: Fri Mar 22, 2024 5:07 pm
alex_686 wrote: Fri Mar 22, 2024 3:17 pm We have got a good 30 years before things get bad. Gen Z is also known as the baby bust generation. As such, it is a relatively small cohort of retirees. Crunch time will be when Gen Y starts retiring.
Boomers in their 60s and 70s are fading fast, soon to all but disappear. There is a small constriction in the middle, a million here a million there, but nothing that seems extreme in a 330 million population.

Image
Today there are 3 workers for every person drawing SS. In 2050 it is estimated that it will be 2:1.

More housewives in the baby boomers cohort. Plus other factors.
by alex_686
Fri Mar 22, 2024 5:36 pm
Forum: Personal Finance (Not Investing)
Topic: Do you assume legislative cuts in Social Security and other federal benefits?
Replies: 49
Views: 2124

Re: Do you assume legislative cuts in Social Security and other federal benefits?

It depends upon the outcome of 2024 election. I don't think so, I think it will be later. As in last minute We have got a good 30 years before things get bad. Gen Z is also known as the baby bust generation. As such, it is a relatively small cohort of retirees. Crunch time will be when Gen Y starts retiring. Isn't that what everyone said about the Baby Boomers retiring? Not only bankrupting Social Security, but dire consequences for the stock market as they all sold their equities to fund retirement, right? Women entering the labor force in a more equitable fashion. That won’t happen again. We had a amazing burst of wage growth in the 90s due to specific technological changes with boasted the average wage earners productivity. The networke...
by alex_686
Fri Mar 22, 2024 5:08 pm
Forum: Personal Investments
Topic: SIPC insurance for accounts over the $500,000 limit
Replies: 40
Views: 3450

Re: SIPC insurance for accounts over the $500,000 limit

I will point out that the Madoff company that was committing the fraud wasn’t SIPC insured. The legit part was covered by SIPC, was audited, and their clients cane out just fine. SIPC coverage was applied to the assets invested via the investment advisory that wasn't SIPC insured though. This is because Madoff had a brokerage. See https://www.sipc.org/cases-and-claims/open-cases/bernard-l-madoff-investment-securities-llc/ Also see Forbes: "SIPC ... agreed that the direct investors in Madoff accounts (the ones whose names were on those accounts) came under SIPC, despite the fact that they were clearly investment-advisory clients and not brokerage-account clients." So yes, SIPC protection was applied to all Madoff investors who had...
by alex_686
Fri Mar 22, 2024 5:06 pm
Forum: Personal Investments
Topic: SIPC insurance for accounts over the $500,000 limit
Replies: 40
Views: 3450

Re: SIPC insurance for accounts over the $500,000 limit

Actually, anyone with $1.731 million invested with Madoff was made whole because the first line of defense is recovery of assets. The second line is SIPC protection up to $500k for securities and the third is additional insurance which Madoff didn't carry. It's also useful to point out that Madoff didn't use a third party custodian. I can’t think of any brokerages that use 3rd party custodians. Are you saying Vanguard doesn't? Why don't you ask Bogleheads to rewrite their wiki then? See https://www.bogleheads.org/wiki/Vanguard_safety Vanguard safety addresses investor concerns that holding all their investments at Vanguard, an investment management company, may put their life's savings at risk. Vanguard (and every other US-regulated mutual...
by alex_686
Fri Mar 22, 2024 3:56 pm
Forum: Personal Investments
Topic: SIPC insurance for accounts over the $500,000 limit
Replies: 40
Views: 3450

Re: SIPC insurance for accounts over the $500,000 limit

Actually, anyone with $1.731 million invested with Madoff was made whole because the first line of defense is recovery of assets. The second line is SIPC protection up to $500k for securities and the third is additional insurance which Madoff didn't carry. It's also useful to point out that Madoff didn't use a third party custodian. I can’t think of any brokerages that use 3rd party custodians. Brokers are required to segregate client assets. As such, clients assets can’t be touched during bankruptcy. There is a exception for clients who are using margin or a securities lending program, in which case they are protected by over-collateralization. This is kind of my day job. These processes are heavily audited. I can only think of one case i...
by alex_686
Fri Mar 22, 2024 3:17 pm
Forum: Personal Finance (Not Investing)
Topic: Do you assume legislative cuts in Social Security and other federal benefits?
Replies: 49
Views: 2124

Re: Do you assume legislative cuts in Social Security and other federal benefits?

Johm221122 wrote: Fri Mar 22, 2024 3:10 pm
syngameon wrote: Fri Mar 22, 2024 3:09 pm It depends upon the outcome of 2024 election.
I don't think so, I think it will be later. As in last minute
We have got a good 30 years before things get bad. Gen Z is also known as the baby bust generation. As such, it is a relatively small cohort of retirees. Crunch time will be when Gen Y starts retiring.
by alex_686
Fri Mar 22, 2024 3:04 pm
Forum: Personal Finance (Not Investing)
Topic: Do you assume legislative cuts in Social Security and other federal benefits?
Replies: 49
Views: 2124

Re: Do you assume legislative cuts in Social Security and other federal benefits?

This isn’t going to be a productive thread.

This is a deeply political question. Not exactly is a bad way, but one that the moderators will limit.

We can talk about the future difficulties that SS will face. Demographics for example.

There are multiple valid solutions out there but they all require political solutions. Cuts in benefits, higher retirement ages, higher taxes, increased immigration are the top options.
by alex_686
Thu Mar 21, 2024 5:41 pm
Forum: Personal Finance (Not Investing)
Topic: In-laws 529 for grandkids, bite my lip or say something?
Replies: 58
Views: 5897

Re: In-laws 529 for grandkids, bite my lip or say something?

Well, I guess this was a polarizing topic! My gut was bite my lip, but it certainly felt good to at least vent here. While we have a great relationship with them, I do worry that they "trust" their FA and this will be more seen as a criticism of him...sigh. FWIW, coming from a family with not that much money myself, I asked my FIL to introduce me to his FA when I was about 24 years old and looking at Roth IRA. I posted a question about what he suggested on a different forum (GetRichSlowly, sadly not around anymore)...and they all told me to run -- he suggested a front load C share high expense ratio target fund. So I've known for a long time what kind of investments this guy offers. Luckily the internet told me to run for the hil...
by alex_686
Thu Mar 21, 2024 4:43 pm
Forum: Personal Investments
Topic: Highly Concentrated Position In Zero Cost Basis Holding
Replies: 23
Views: 1442

Re: Highly Concentrated Position In Zero Cost Basis Holding

Just learned that about 3/4 of the investment is actually held in an IRA while only 1/4 is held in a regular brokerage account. I believe this minimizes the implications of my predicament. Unless I'm mistaken we can leave the approx. 175K of LLY resting in her regular brokerage account alone and await the sad day when the cost-basis is stepped-up. However, unless I'm mistaken we can go ahead and immediately sell the approx. 500K of LLY in her IRA and shift into VTI immediately without any tax consequences. Would that be an accurate assumption? Yes. But one more thing. What is your MIL risk tolerance? Specifically, her ability to take risk? Can she actually hold onto it? Are you responsibly confident that it will be part of her legacy and e...
by alex_686
Thu Mar 21, 2024 2:58 pm
Forum: Personal Investments
Topic: 23 years old, question about investments in taxable acct
Replies: 25
Views: 1948

Re: 23 years old, question about investments in taxable acct

Welcome!

First, write up a IPS. A IPS will list your goals, risk tolerance, and market expectations. Your asset allocation show flow from that.

https://www.bogleheads.org/wiki/Investm ... _statement

Going 100% equities is aggressive - and maybe that is o.k. Question - what are your liquidity requirements / goals? a.k.a. emergency fund? Do you need a slug of your assets is safer things in case of unemployment, down payment for a house (probably a bit young for that but you never know), etc.
by alex_686
Thu Mar 21, 2024 12:12 pm
Forum: Personal Investments
Topic: How to Analyze an Income Fund's performance when losing value
Replies: 9
Views: 564

Re: How to Analyze an Income Fund's performance when losing value

So, dealing with these losing Income Funds is my first step. How do you assess them? They pay dividends but have lost significant value. My gut says sell, sell, sell. I just wanted to hear how you all analyze these funds. I'm prepared to call my broker today and tell him to sell all of them and hold in cash. I would then move it all to my Vanguard account and invest the money there. Thank you in advance. Why did you invest in a income fund? I used to work in mutual fund accounting. Income means dividends. Dividends are about income recognition. i.e. It is about the numbers on your 1099-DIV. A income fund thus promises a steady 1099-DIV and thus steady taxes. Why anyone would want this I am not sure. Income is about taxes. It has nothing to...
by alex_686
Thu Mar 21, 2024 11:39 am
Forum: Personal Finance (Not Investing)
Topic: In-laws 529 for grandkids, bite my lip or say something?
Replies: 58
Views: 5897

Re: In-laws 529 for grandkids, bite my lip or say something?

First, don't look a gift horse in the mouth. Accept the gift with grace. The intention is to benefit their grandchildren and it will benefit their grandchildren.

FAFSA optimization is a bit of a red hearing here. In this day and age, a 529 plan is one of the best ways to leave young children a modest inheritance while limiting it towards worthwhile spending. Lots of logical holes and nuances here, but the other options have more holes and more nuances.

If your relationship with you in-laws is good I would mention that there are better 529 plans out there. Drop some literature in their laps and leave it at that.
by alex_686
Thu Mar 21, 2024 11:19 am
Forum: Investing - Theory, News & General
Topic: Newbie here: Not clear on ETFs vs Mutual Funds
Replies: 26
Views: 1661

Re: Newbie here: Not clear on ETFs vs Mutual Funds

I am just going by portfolio visualizer results so I don't really know how they determined that. Either way it's not enough of difference for me to lose sleep over. While I think the industry is moving towards ETFs, the bulk of my indexed money is still in Vanguard mutual funds. I have worked pricing. I have gone into the weeds. There are nuances. Portfolio Visualizer glosses over the issues. Yes, everyone is going to ETFs. The ETF structure is cheaper to run. Some people say that that the extra 0.03% extra costs is irrelevant. When your expense ratio is 0.07% that is a 33% reduction in costs. I don't think that is irrelevant. I tell people to buy what makes sense to them. On that, mutual funds are going to go the way of standard transmiss...
by alex_686
Thu Mar 21, 2024 11:05 am
Forum: Investing - Theory, News & General
Topic: Newbie here: Not clear on ETFs vs Mutual Funds
Replies: 26
Views: 1661

Re: Newbie here: Not clear on ETFs vs Mutual Funds

I prefer mutual funds because they trade once a day, even though they are more "expensive" a head to head comparison for many Vanguard ETF's vs mutual funds shows no difference or the mutual funds(admiral) slightly doing better. The admiral funds are usually cheap enough and lower expense ratios after that offer diminished savings. It's way better to go from expense ratios of 0.50% to 0.10% than go from 0.10% to .01% Many Vanguard portfolios have a ETF and mutual fund share class. Most of the advantages of ETFs occur at the portfolio level, not the share class level. Next, for the "mutual funds(admiral) slightly doing better", I strongly suspect you are seeing a artifact on how share prices are reported, not on their ac...
by alex_686
Wed Mar 20, 2024 9:55 pm
Forum: Personal Finance (Not Investing)
Topic: Largest banks with worst rates....?
Replies: 33
Views: 1806

Re: Largest banks with worst rates....?

You are more likely to get divorced next year than to transfer your primary checking account. Customers are very sticky.
by alex_686
Wed Mar 20, 2024 9:33 pm
Forum: Investing - Theory, News & General
Topic: Newbie here: Not clear on ETFs vs Mutual Funds
Replies: 26
Views: 1661

Re: Newbie here: Not clear on ETFs vs Mutual Funds

I strongly favor ETFs based on a broad range of narrow technical differences. I don’t think I could make the case on performance. In theory, the dividend reinvestment might happen at a different time and price with ETFs vs MFs. A broker/market maker could insert themselves into the transaction with PFOF and possibly raise costs a bit. Not sure if you can predict this. The performance will at least very slightly diverge between MF and ETF classes. The dividend reinvestment question is a tough nut to crack. There are cases where you come out ahead due to the difference between information vs passive traders. Every dividend at every broker is going to be different. On the flip side, the trading costs of a ETF are more efficient than that of a...
by alex_686
Wed Mar 20, 2024 9:15 pm
Forum: Investing - Theory, News & General
Topic: Is active mutual fund’s capital gain always a bad thing?
Replies: 28
Views: 2325

Re: Is active mutual fund’s capital gain always a bad thing?

Artsdoctor wrote: Wed Mar 20, 2024 9:07 pm It's not sterile for a lot of investors holding the fund in a taxable account.
I don’t think that was the OPs question. I think the OP was asking that if a fund has capital gains distributions doesn’t this imply that the fund has had a profitable year and thus has had positive total returns.

The answer is no, capital gains distributions do not imply anything about a fund’s return. The causal links between tax reporting and a fund’s returns are really poor and janky.

There is too much dross in the data. This approach won’t work.
by alex_686
Wed Mar 20, 2024 9:06 pm
Forum: Investing - Theory, News & General
Topic: Newbie here: Not clear on ETFs vs Mutual Funds
Replies: 26
Views: 1661

Re: Newbie here: Not clear on ETFs vs Mutual Funds

Jeepergeo wrote: Wed Mar 20, 2024 8:57 pm
TX_Aggie wrote: Wed Mar 20, 2024 5:13 pm I should probably add that I'm obviously looking at index funds. So the ETFs and MFs should have close to equally low costs.
Small differences can make a big difference over time.
I used to work with fund performance attribution.

I suspect that the cost structure of ETFs boosts performance by a extra 0.02% a year. This is based on a fair number of assumptions in a dynamic market with other countervailing factors - such as the size of the fund.

I strongly favor ETFs based on a broad range of narrow technical differences. I don’t think I could make the case on performance.
by alex_686
Wed Mar 20, 2024 8:50 pm
Forum: Investing - Theory, News & General
Topic: Is active mutual fund’s capital gain always a bad thing?
Replies: 28
Views: 2325

Re: Is active mutual fund’s capital gain always a bad thing?

Geologist wrote: Wed Mar 20, 2024 8:24 pm I think there is no evidence that other fund companies generally pay attention to tax consequences.
Actually, I can point to a fair amount of regulation that fund management can’t care about distributions unless “tax managed” appears on the fund’s name.

A portfolio manager must treat all shareholders equally. Some shareholders don’t care about taxable distributions, for example those held in retirement accounts. As such, managers can’t take a action that would reduce distributions if it also reduced total returns.

I can only think of a single edge case where a portfolio manager ever considered the tax implications of their trades.
by alex_686
Wed Mar 20, 2024 8:46 pm
Forum: Investing - Theory, News & General
Topic: Is active mutual fund’s capital gain always a bad thing?
Replies: 28
Views: 2325

Re: Is active mutual fund’s capital gain always a bad thing?

I used to work in mutual fund accounting. This entire line of questioning is mostly sterile.

Capital gains distributions are about income recognition per reportable transactions as defined by the IRS. Tax recognition has only the lossless relationship to performance.

There are so many moving parts. Purchases/redemptions from the fund. Carry over losses. Embedded unrealized gains / losses. etc.
by alex_686
Tue Mar 19, 2024 9:10 pm
Forum: Investing - Theory, News & General
Topic: Investment policy for a future low federal funds rate
Replies: 6
Views: 1218

Re: Investment policy for a future low federal funds rate

I am currently reading this book. It is excellent. Low fed returns imply low overall returns. So equities as well as bonds.

https://www.amazon.com/Investing-Amid-L ... 1119860199
by alex_686
Tue Mar 19, 2024 6:32 am
Forum: Personal Finance (Not Investing)
Topic: Lifelong renter looking to become first time (cash) homebuyer - do I need agent? Or only lawyer & inspector?
Replies: 23
Views: 2275

Re: Lifelong renter looking to become first time (cash) homebuyer - do I need agent? Or only lawyer & inspector?

A random story about a buyer who didn’t use a agent to purchase a unit in my condominium.

She was told that the unit came with a assigned underground parking space. It didn’t. Individual parking spaces are owned individually, not by the association. When the building was built it had more units than parking spots. She bought a unit without a parking spot.

She bugged the association president for months demanding her nonexistent spot. I can’t say she misread the fine print - for the print didn’t exist.

You need someone to ask the right questions.

In particular always ask for the budget, reserves, and reserve study. Always.
by alex_686
Sun Mar 17, 2024 11:42 am
Forum: Personal Investments
Topic: Minimum Required Distributions Wrinkle
Replies: 11
Views: 1620

Re: Minimum Required Distributions Wrinkle

diehard wrote: Sun Mar 17, 2024 11:31 am Thanks. The purpose would be to delay my RMDs.
Right, the purpose doesn’t serve a business/economic purpose. Rather the purpose is for tax reasons. This is a big no-no.
by alex_686
Sun Mar 17, 2024 11:21 am
Forum: Personal Investments
Topic: Minimum Required Distributions Wrinkle
Replies: 11
Views: 1620

Re: Minimum Required Distributions Wrinkle

Poorly.

What would be the purpose of selling and then buying back the company? If the purpose is for tax reasons then it is invalid from a tax perspective.

What economic risk is involved? Could the value of the company increase over the course of the year? Or have contracts been put in place to minimize risk? If so this would be considered a “sham transaction” with legal consequences.

This seems like a lot of effort, expense, and risk for a minor tax advantage.
by alex_686
Sat Mar 16, 2024 11:35 am
Forum: Personal Finance (Not Investing)
Topic: UTMA Mystery
Replies: 2
Views: 347

Re: UTMA Mystery

Technically no, however it happens all the time. Best practice would have been to transfer over to a new UTMA at the new firm. When I worked in Custody we would follow the instructions from the custodian - it is their responsibility. Leakage, both minor and major, innocent and malicious happens.

Besides checking the state for lost property you don’t have ant real options. Responsibility lies with the custodian. The only real option would be to sue the custodian. Which, as you imply, isn’t a real or good option here.
by alex_686
Fri Mar 15, 2024 9:21 am
Forum: Investing - Theory, News & General
Topic: What is the appeal of Robinhood
Replies: 85
Views: 6517

Re: What is the appeal of Robinhood

They could have been more conservative about the amount of collateral they were prepared to post. You say that the correct price for GameStop was infinite, the weak link was Robinhood, and "if not them, it would have been another broker." But it WAS them. It was Robinhood that was the weak link, not someone else. Not the traditional brokerages. And it was a combination of insufficient collateral, a strategy of attracting the profitable "betting"-oriented clientele, and a UI that intentionally encourages "betting" behavior. Because of their intentional business strategy, they needed more collateral than traditional brokerages, but had less. What do you mean by “ more conservative about the amount of collateral ...
by alex_686
Thu Mar 14, 2024 5:45 pm
Forum: Personal Investments
Topic: Finding a ticket symbol for 85744W226 in my 401k portfolio
Replies: 5
Views: 570

Re: Finding a ticket symbol for 85744W226 in my 401k portfolio

sport wrote: Thu Mar 14, 2024 5:30 pmUse the value for SSFEX and multiply it by 10/85.
Remember to adjust the factor every time the fund pays a dividend.
by alex_686
Thu Mar 14, 2024 5:07 pm
Forum: Personal Investments
Topic: Finding a ticket symbol for 85744W226 in my 401k portfolio
Replies: 5
Views: 570

Re: Finding a ticket symbol for 85744W226 in my 401k portfolio

It is probably a Collective Investment Trust (CIT). Functionally the same as a mutual fund but cheaper to run. The portfolio manager that runs the public fund probably also runs the CIT. They can only be held in retirement plans.

For example, did you know that mutual funds have to pay news services to publish their NAV and other end of day data? As things go, it is a fairly big expense for funds. CITs don't have to pay that expense.
by alex_686
Thu Mar 14, 2024 1:41 pm
Forum: Personal Finance (Not Investing)
Topic: CIT bond fund question
Replies: 9
Views: 485

Re: CIT bond fund question

exodusNH wrote: Thu Mar 14, 2024 1:35 pm I don't know when the CIT price is published for normal human consumption, but if OP is comparing the price at 5 PM to BND, they're not making a proper comparison.
On that, this is one of the reasons why CITs are more expensive than funds. Funds my publish their NAV by 5:30. Must. We had a backup team of accountants in another state ready to strike the NAV on the off chance that the office caught fire due to the backup generator catching fire during a disaster recovery test. CITs can be a bit more relaxed.
by alex_686
Thu Mar 14, 2024 1:23 pm
Forum: Personal Finance (Not Investing)
Topic: CIT bond fund question
Replies: 9
Views: 485

Re: CIT bond fund question

exodusNH wrote: Thu Mar 14, 2024 1:15 pm I mean the accountants estimating NAV at a single point vs the continuous market pricing, plus the timing of the data being published. If they're looking at BND at 4:30 PM and comparing it to the CIT, they may be looking at yesterday's price for the CIT but the market (and maybe after market) pricing of the ETF.
Yes, it is important to know the difference between a market price and a NAV. However, I am going to quibble.

ETFs publish their NAV every 15 minutes plus at the end of the day. The accounting standard is exactly the same.

The market price isn't a accounting standard.
by alex_686
Thu Mar 14, 2024 1:08 pm
Forum: Personal Finance (Not Investing)
Topic: CIT bond fund question
Replies: 9
Views: 485

Re: CIT bond fund question

exodusNH wrote: Thu Mar 14, 2024 1:03 pm I wouldn't compare it to the ETF. Use the mutual fund. That will have a closer accounting methodology.
Out of curiosity, what accounting methodology are you referring to? I can't think of any differences off hand.
by alex_686
Thu Mar 14, 2024 12:55 pm
Forum: Personal Finance (Not Investing)
Topic: CIT bond fund question
Replies: 9
Views: 485

Re: CIT bond fund question

Funds, either mutual funds or CITs, accrue income daily. It is reflected in the fund's NAV. Distributions have nothing to do with cashflows or economics. The sole purpose if for tax reporting. Let us say that a bond fund is worth $105 and had $5 of income in 2023. When I was in fund accounting we would do a distribution at year end. We would distribute a $5 dividend, leaving you with 1.05 shares, each share worth $100, for a total value of $105. No cash was moved, just journal entries. The distribution would trigger a 1099-DIV to be printed. CITs can only exist in retirement plans, retirement plans don't pay trigger income taxes, so no need to do distributions. I am confused. The funds daily/monthly/yearly total return with dividends reinve...
by alex_686
Thu Mar 14, 2024 9:36 am
Forum: Personal Investments
Topic: EFT's vs Mutual funds and taxes
Replies: 11
Views: 947

Re: EFT's vs Mutual funds and taxes

EFTs ( sic) ' are generally better with taxes in the current year right? Debating if I should just start putting all new money into eft's vs the mutual funds. One needs to get drilled into their head that Vanguard index mutual funds and their cognate ETFs have absolutely identical tax efficiency. ETF tax-efficiency is better than non-index actively-managed mutual funds from non-Vanguard financial institutions. Got it? thanks- I thought I have read and heard multiple times that ETF's don't distribute as much of their income/capital gains on a yearly basis, therefore they defer taxes better vs their mutual fund counterparts Vanguard is special and has a patent to prove it. Some of their funds have both a ETF and mutual fund class. Distributi...
by alex_686
Thu Mar 14, 2024 9:30 am
Forum: Personal Investments
Topic: How to use Google 401k for 2-3 fund portfolio
Replies: 63
Views: 6435

Re: Google 401k choices shockingly bad

Ideally Vanguard itself would document the ratio, but documentation doesn't appear to be Vanguard's strong suit. How important is to get exact ratio / emulate VXUS exactly -- I assume it's ok if I'm 5-10% off? No brokerage does. That’s why you come to Bogleheads for answers. Just pick a ratio and stick with it. 80/20, 85/15, 83/17 for S&P 500/Extended Market. Vanguard’s Total International has 24.7% in Emerging Markets, so 25% is good. But it depends on how you define emerging markets. Morningstar considers Taiwan as developed but Vanguard considers it emerging. It’s 4.9% of Total International, so you could use 20% for EM, if using non-Vanguard funds. To extend a bit, there isn't a exact ratio. Vanguard uses CRSP indexes for the US an...
by alex_686
Thu Mar 14, 2024 6:22 am
Forum: Personal Investments
Topic: How to use Google 401k for 2-3 fund portfolio
Replies: 63
Views: 6435

Re: Google 401k choices shockingly bad

madbrain wrote: Thu Mar 14, 2024 2:44 am
rob wrote: Thu Mar 14, 2024 12:49 am The difference between total market & sp&p500 is overblown in these parts. They are "substantially identical" to steal a term from the IRS :D
A term which the IRS has never used in relation to S&P500 and TSM funds ;)

But yes, the performance certainly is very similar.
Not exactly true, but then again few people have had the privilege of having their wash sale procedure audited by them. For context I used to work in fund accounting.
by alex_686
Wed Mar 13, 2024 10:04 pm
Forum: Personal Investments
Topic: How to use Google 401k for 2-3 fund portfolio
Replies: 63
Views: 6435

Re: Google 401k choices shockingly bad

These sounds like Collective Investment Trusts.

CITs are not mutual funds so are not a separate share class. However that is mostly a academic point.

Due to certain regulatory quirks, retirement plans can offer a CIT fund with a slightly lower expense ratio than a public mutual fund.

Nothing to worry about.
by alex_686
Wed Mar 13, 2024 9:43 pm
Forum: Personal Investments
Topic: How is a broker going to make money off me?
Replies: 62
Views: 6052

Re: How is a broker going to make money off me?

billaster wrote: Wed Mar 13, 2024 9:00 pm Of course all bets are off for active funds which may have more than 100% annual turnover. In that case there may be no direct benchmark to compare against and trading costs are largely unknown.
Not exactly. A actively managed ETF with a really high turnover - lets say over 1,000% - could make a solid argument that its trading costs were zero.

Trading costs are borne by the Authorized Participants. And the price it trades at must be the market profit because the trade is setting the market price hence there isn’t any drag due to trading. Who knows what the trading costs would have been if they had used a exchange.

I do like your analogy to dark matter.
by alex_686
Wed Mar 13, 2024 9:21 pm
Forum: Investing - Theory, News & General
Topic: What is the appeal of Robinhood
Replies: 85
Views: 6517

Re: What is the appeal of Robinhood

Popular investing app Robinhood became the focus of the controversy after it decided to freeze trades for GameStop on Jan. 28. https://www.cnet.com/personal-finance/investing/robinhood-backlash-what-you-should-know-about-the-gamestop-stock-controversy/ Let us be fair to Robinhood. The correct price for GameStop was infinite- or a price functionally as high. That isn’t a valid price. As such, the price would continue to go up until the weakest link broke. That weak link was Robinhood. If not them, it would have been another broker. They stopped trading GameStock because by regulation they couldn’t trade it anymore. As a result of Lehman Brother’s collapse brokers need to post collateral in case they go bankrupt in order to minimize counter ...