Search found 6228 matches

by avalpert
Fri Dec 01, 2017 5:57 pm
Forum: Investing - Theory, News & General
Topic: Bonds Are Riskier Than People Think
Replies: 142
Views: 18915

Re: Bonds Are Riskier Than People Think

hoops777 wrote: Fri Dec 01, 2017 5:56 pm
hoops777 wrote: Fri Dec 01, 2017 5:45 pm Because I was annoyed that the poster said it was not an investment when by any reasonable definition of what an investment is,it is an investment.Thats all,now go write your book :D
Ironically,the poster who made the statement is the same person who started that thread the other day where I told you to write a book :D
Ha, didn't even notice that.
by avalpert
Fri Dec 01, 2017 5:57 pm
Forum: Investing - Theory, News & General
Topic: Bonds Are Riskier Than People Think
Replies: 142
Views: 18915

Re: Bonds Are Riskier Than People Think

hoops777 wrote: Fri Dec 01, 2017 5:45 pm Because I was annoyed that the poster said it was not an investment when by any reasonable definition of what an investment is,it is an investment.Thats all,now go write your book :D
A reasonable definition of an investment is where you put capital at risk with the expectation of future return - does a CD meet that definition?
by avalpert
Fri Dec 01, 2017 5:42 pm
Forum: Investing - Theory, News & General
Topic: Bonds Are Riskier Than People Think
Replies: 142
Views: 18915

Re: Bonds Are Riskier Than People Think

So I guess investing is now defined by whatever the person believes he is doing.I buy a cd and I am investing.You buy a cd and you are saving.I can actually live with that,but not with someone telling me that I am NOT investing if I buy a CD. I put a good amount of money in a 10 year cd paying 3.4 pct 4 years ago in my SEP.Someone may think it was foolish,but I do not see how it could not be considered an investment.In the end the discussion is meaningless. I don't think the discussion is meaningless - you just might have scratch beneath the surface to see what the meaning is. This isn't a new distinction - calling CDs savings as opposed to investing has a long history that was making a distinction that isn't meaningless (and yet has nothi...
by avalpert
Fri Dec 01, 2017 5:29 pm
Forum: Personal Investments
Topic: I'm 100% international with VEU. Is this wise?
Replies: 57
Views: 6621

Re: I'm 100% international with VEU. Is this wise?

was bringing up 1999 supposed to be a warning about the risk of US valuations or a premonition that we are on the verge of another period of huge US outperformance? YES Yes to both? I don't pretend I can predict when market will turn, so I just focus on investing where i see the greatest value. Over the long run, the value will win out every time. I just got some money today from an ESPP that is ready to invest. Why put that in US stocks just for the sake of some academic diversification guide? Well, mostly because as you said you can't predict when the market will turn and i don't know why you think you are better at seeing the greatest value than the rest of the market that has set the balance of prices where they are today. I mean, you ...
by avalpert
Fri Dec 01, 2017 5:24 pm
Forum: Personal Consumer Issues
Topic: Win Bigly - Scott Adams
Replies: 26
Views: 4934

Re: Win Bigly - Scott Adams

quantAndHold wrote: Fri Dec 01, 2017 5:07 pm If you’re actually interested in persuasion, rather than in a sideways way of discussing politics in Bogleheads, Robert Cialdini’s “Influence” is probably the best current book on the topic. Dale Carnegie is a good place to start as well.
While I too strongly recommend Cialdini's book you can hardly call it current - unless he redid his field research the cases are quite dated even if the lessons timeless.
by avalpert
Fri Dec 01, 2017 5:00 pm
Forum: Investing - Theory, News & General
Topic: Bonds Are Riskier Than People Think
Replies: 142
Views: 18915

Re: Bonds Are Riskier Than People Think

Would you object to someone who didn't consider a savings account an investment? Now sure, a CD may offer a higher rate - but in what other ways is it distinguished from a savings account that it crosses a line from 'savings' to 'investment'? I would object. Would you call T-bills investments? 5-year notes? The 30-year bond? My savings accounts and CDs will return more than many of these more popular "investments". And what about an interest-bearing checking account? Sure. Not that I'd recommend it though. What are you trying to get at exactly? I'm trying to get at the fuzzy line that is used in general discourse to distinguish 'savings' from 'investing' - a quick google search would show that it isn't obvious to everyone where i...
by avalpert
Fri Dec 01, 2017 4:48 pm
Forum: Investing - Theory, News & General
Topic: Bonds Are Riskier Than People Think
Replies: 142
Views: 18915

Re: Bonds Are Riskier Than People Think

saltycaper wrote: Fri Dec 01, 2017 4:42 pm
avalpert wrote: Fri Dec 01, 2017 4:32 pm
Would you object to someone who didn't consider a savings account an investment?

Now sure, a CD may offer a higher rate - but in what other ways is it distinguished from a savings account that it crosses a line from 'savings' to 'investment'?
I would object. Would you call T-bills investments? 5-year notes? The 30-year bond? My savings accounts and CDs will return more than many of these more popular "investments".
And what about an interest-bearing checking account?
by avalpert
Fri Dec 01, 2017 4:41 pm
Forum: Personal Investments
Topic: Should I include cash set aside for home purchase when computing asset allocation
Replies: 20
Views: 1570

Re: Should I include cash set aside for home purchase when computing asset allocation

For my risk tolerance/need, I would like my AA to be about 60/40. I have a fairly large chunk sitting in cash that will be used to finance the construction of a new house over the next year or so. So, the question is whether that chunk of cash should be included in the overall portfolio when considering my AA. If i treat it as a separate bucket, then my current AA (on the rest of the portfolio) is close to 60/40; all is good and I will re-balance that portion as my bands are hit. But, if i treat all my assets as a single pot of money (seems like the right approach?), then I am closer to 50/50 AA, and I need to be moving more money into equities to get to 60/40. I guess in this case, there is the added complexity of maintaining the 60/40 AA...
by avalpert
Fri Dec 01, 2017 4:32 pm
Forum: Investing - Theory, News & General
Topic: Bonds Are Riskier Than People Think
Replies: 142
Views: 18915

Re: Bonds Are Riskier Than People Think

We could argue that the poster who doesn't want the CD to be an investment is a person who does not hold the asset "with the hope that . . ." and does not hold the asset as "goods . . . used in the future to create wealth" therefore for him it is not an investment. I think that is what that poster really has in mind as well, and it doesn't bother me. I can't speak to eye.surgeon's intentions, but it is a curious idea that someone would hold a CD and not expect it to generate income. Presumably they chose the CD instead of a checking or savings account specifically because it will produce more income than those options. Would you object to someone who didn't consider a savings account an investment? Now sure, a CD may of...
by avalpert
Fri Dec 01, 2017 4:15 pm
Forum: Personal Investments
Topic: I'm 100% international with VEU. Is this wise?
Replies: 57
Views: 6621

Re: I'm 100% international with VEU. Is this wise?

panchilly wrote: Fri Dec 01, 2017 3:20 pm
avalpert wrote: Fri Dec 01, 2017 3:06 pm was bringing up 1999 supposed to be a warning about the risk of US valuations or a premonition that we are on the verge of another period of huge US outperformance?
YES
Yes to both?
by avalpert
Fri Dec 01, 2017 4:14 pm
Forum: Personal Finance (Not Investing)
Topic: The College Bubble - investment opportunities after the collapse?
Replies: 114
Views: 12027

Re: The College Bubble - investment opportunities after the collapse?

While we may very well be on the verge of a bursting bubble against college graduates (and education and knowledge in general), short of trying to guess which para-military group will pair with which reality star to offer the quickest pathways to leeching off of autocratic power I don't see investment opportunities arising from the disintegration of our society.
by avalpert
Fri Dec 01, 2017 3:06 pm
Forum: Personal Investments
Topic: I'm 100% international with VEU. Is this wise?
Replies: 57
Views: 6621

Re: I'm 100% international with VEU. Is this wise?

I find it real funny that folks think it is perfectly OK to have 100% of your stocks in US equities but accuse someone who is 100% international of being a gambler. US stocks haven't been this expensive since 1999/2000.. Look how that turned out. How it turned out is that US stocks outperformed non-US stocks by about 40% in USD valuations from 1/1/2000 to present. And that outperformance has resulted in the situation we have now - a period where international stocks are a relative bargain. Huh? You seem to have twisted yourself into a knot - was bringing up 1999 supposed to be a warning about the risk of US valuations or a premonition that we are on the verge of another period of huge US outperformance? Look, I think its great you think yo...
by avalpert
Fri Dec 01, 2017 2:37 pm
Forum: Investing - Theory, News & General
Topic: Amount You Need To Save Annually Over Lifespan
Replies: 80
Views: 12520

Re: Amount You Need To Save Annually Over Lifespan

Assuming the same contribution and linear growth it is a fairly straightforward math problem - but the assumptions involved are arbitrary and almost certainly wrong so the exercise is not a particularly helpful one.

What decision are you trying to make?
by avalpert
Fri Dec 01, 2017 1:01 pm
Forum: Personal Investments
Topic: Is investing in the stock market just like investing in a house for appreciation?
Replies: 33
Views: 2572

Re: Is investing in the stock market just like investing in a house for appreciation?

do not think in terms of 'cash flow' vs 'capital gains' - just focus on total returns of the investment. That's a good point, so let's maybe try to simplify things. You have a large chunk of cash. What do you do with it? Consider 2 options: (1) put it in a stock index fund (or mixed with bonds), and (2) buy a house. Some long time later, you cash out on your decision (i.e. sell the funds or sell the house). Which is likely to get you more money? What are the practical differences to you as an investor? If you were to just buy the house and do nothing with it, you would almost certainly do better with stock. I suppose if you got super lucky - tech boom in your area drives up house prices enormously - then house could do better. But that's e...
by avalpert
Fri Dec 01, 2017 12:56 pm
Forum: Personal Investments
Topic: I'm 100% international with VEU. Is this wise?
Replies: 57
Views: 6621

Re: I'm 100% international with VEU. Is this wise?

No, it isn't wise to exclude about 50% of the global market from your equity holdings - might it work out for you, sure, but it isn't wise.
by avalpert
Fri Dec 01, 2017 12:32 pm
Forum: Personal Investments
Topic: Re: Divs and Cap Gains are killing me - personal
Replies: 151
Views: 24625

Re: Divs and Cap Gains are killing me

Electron wrote: Fri Dec 01, 2017 12:22 pm
ps56k wrote: Wed Nov 29, 2017 3:11 pm That was the initial reason to go with Wellesley - to have a fund that balances Bonds/Stocks - BUT it has 31% turnover
The 31% turnover in Wellesley may not be a problem since the fund is 60% in bonds which typically don't generate a lot of capital gains.
That's not typically true. Bond fund do lots of buying and selling to maintain desired duration exposure and very frequently have to distribute capital gains as a result.
by avalpert
Fri Dec 01, 2017 12:30 pm
Forum: Personal Investments
Topic: Is investing in the stock market just like investing in a house for appreciation?
Replies: 33
Views: 2572

Re: Is investing in the stock market just like investing in a house for appreciation?

Is investing in the stock market just like investing in a house for appreciation? They are both investing for capital gains right? I mean there are obvious differences but I would like a different viewpoint on their similarities vs differences (but more so their similarities). No, they aren't similar in any real consequential way. When you buy a house you buy a depreciating fixed asset (the building) and an asset that is expected to increase with inflation (the land) - anything beyond that is speculation. When you buy a stock you buy a share of a productive business that is expected to operate profitably for the meaningful future. There is risk it will not be able to meet that profitability and in exchange for capital you price your entry ...
by avalpert
Fri Dec 01, 2017 10:44 am
Forum: Personal Investments
Topic: Investing for Cash Flow vs Capital Gains. Which one is better?
Replies: 6
Views: 1444

Re: Investing for Cash Flow vs Capital Gains. Which one is better?

Investing for Cash Flow vs Capital Gains. Which one is better? To my understanding, investing for capital gains (e.g. in the stock market) is heavily taxed and passive income from cash flow investments is the least taxed income. This is incorrect - 'cash flow' is taxed as income at your marginal rates, capital gains are taxed at the lower capital gains rate (will put aside qualified dividends for the moment). I just looked into this deeper and what you said seems to be true. But people also said you can deduct business expenses as usual and that you don't have to pay the additional self-employment taxes. Would this make the tax liability less than those from capital gains from investment accounts? No, you don't pay self employment or FICA ...
by avalpert
Fri Dec 01, 2017 9:21 am
Forum: Personal Investments
Topic: Investing for Cash Flow vs Capital Gains. Which one is better?
Replies: 6
Views: 1444

Re: Investing for Cash Flow vs Capital Gains. Which one is better?

Investing for Cash Flow vs Capital Gains. Which one is better? To my understanding, investing for capital gains (e.g. in the stock market) is heavily taxed and passive income from cash flow investments is the least taxed income. This is incorrect - 'cash flow' is taxed as income at your marginal rates, capital gains are taxed at the lower capital gains rate (will put aside qualified dividends for the moment). So should people invest for capital gains or cash flow? People should invest for total return, not a particular type of return. Also, I believe that if you invest for cash flow (e.g. investment properties), you have a constant stream of income and positive cash flow no matter how good the market is doing (unlike for stocks and funds w...
by avalpert
Thu Nov 30, 2017 10:20 pm
Forum: Personal Investments
Topic: retirement strategy
Replies: 24
Views: 3855

Re: retirement strategy

It sounds like you are talking about the difference between $1.1m in equities and $1.3m in equities - not sure the upside there would make all that much difference for you in the long run whereas the sequence of return risk could cause issues. I'm increasingly leaning towards starting retirement with a lower equity rate and increasing it over time - in you case that could mean starting with the 50/50 and spend from fixed income to take you to 65/35 over time.

Also, I wouldn't create mental buckets - the $200k is still part of your portfolio.
by avalpert
Thu Nov 30, 2017 9:24 pm
Forum: Personal Finance (Not Investing)
Topic: Mega Backdoor Roth via Solo 401k
Replies: 10
Views: 2013

Re: Mega Backdoor Roth via Solo 401k

I can probably have my accountant handle the 1099 for me. Would just need to be on top of him/it like everything else he does. Who did you use online by the way? $2.90 mailed sounds very cheap. I use Tax1099.com . Perfect. So I could do it in the following year along with my 25% employer match after I see how the previous year shook out. (before the standard deadline as I generally don't file extensions) This is all coming together rather nicely. Are you taxed as an S-Corp or a Sole Proprietor. I ask because for a Sole Proprietor the 25% match becomes 20% of adjusted net income (that is because you need to retain the amount of the match as employer funds so it can't count as part of the employee income you are matching) - and for an S-Corp...
by avalpert
Thu Nov 30, 2017 9:20 pm
Forum: Investing - Theory, News & General
Topic: Everyone, Even a Passive Vanguard Investor, is a Factor Investor (Alpha Architect/Jack Vogel, 11-30-17)
Replies: 39
Views: 3062

Re: Everyone, Even a Passive Vanguard Investor, is a Factor Investor (Alpha Architect/Jack Vogel, 11-30-17)

scottj19707 wrote: Thu Nov 30, 2017 9:10 pm "Yes, simply investing in the market (i.e. the Sp500) is not really passive — this is a factor-investing bet."
Boy do I hate it when people equivocate on the word 'passive' to try to imply that it is all the same type of bet in the end.

Otherwise, nothing new here - I'm pretty sure everyone knows that investing in a broad market fund is making a bet that stocks will provide higher returns for the risk - that's why all those life strategy funds exist with different degrees of exposure to equities...
by avalpert
Thu Nov 30, 2017 9:02 pm
Forum: Personal Finance (Not Investing)
Topic: Mega Backdoor Roth via Solo 401k
Replies: 10
Views: 2013

Re: Mega Backdoor Roth via Solo 401k

I use discount solo 401k for my plan - they are well priced, were very responsive as we developed the plan and haven't been any trouble as we maintain it. I act as my own administrator, it isn't difficult or time consuming but you need to be comfortable taking on that responsibility for yourself. What about pro-rate rules are you concerned with? They shouldn't have any impact on you - when you withdraw the after-tax account it is not pro-rated with your pre-tax account. Thank you for the affirmation. I already spoke with Justin who seems to be the owner (based on BBB website). I'm certainly comfortable being my own administrator. Sure beats having to call my current brokerage every time to move money over from my Corp account to the 401k p...
by avalpert
Thu Nov 30, 2017 8:43 pm
Forum: Investing - Theory, News & General
Topic: Vanguard to launch US 'smart beta' ETFs - Will this board burn down?
Replies: 156
Views: 25139

Re: Vanguard to launch US 'smart beta' ETFs - Will this board burn down?

Did you listen to the audio? Would you expect an index fund to have Alpha? I wouldn’t. I would if I was suggesting that factors don't explain the performance of the funds - the lower ER gives it a performance advantage that would show up as alpha. Why would one expect that factors wouldn’t explain the performance of the “index” fund? I would expect factor exposure to explain nearly all the performance of all funds, index or otherwise. What does it being an index have to do with it? That said, you are the one that commented on the different factor exposure of PRF and VOE yet similar performance. I simply noted that they have different factor exposure, one has higher size exposure and one value exposure so having similar outcomes doesn't nec...
by avalpert
Thu Nov 30, 2017 8:32 pm
Forum: Investing - Theory, News & General
Topic: Vanguard to launch US 'smart beta' ETFs - Will this board burn down?
Replies: 156
Views: 25139

Re: Vanguard to launch US 'smart beta' ETFs - Will this board burn down?

GreatOdinsRaven wrote: Thu Nov 30, 2017 8:31 pm Did you listen to the audio?

Would you expect an index fund to have Alpha? I wouldn’t.
I would if I was suggesting that factors don't explain the performance of the funds - the lower ER gives it a performance advantage that would show up as alpha.
by avalpert
Thu Nov 30, 2017 8:29 pm
Forum: Investing - Theory, News & General
Topic: Vanguard to launch US 'smart beta' ETFs - Will this board burn down?
Replies: 156
Views: 25139

Re: Vanguard to launch US 'smart beta' ETFs - Will this board burn down?

It's funny because MCV is an ad hoc way to get exposure to the size factor, so why not make the bet transparent and go SCV. I don't think MCV is an ad hoc way to get exposure to the size factor - it just depends on how much size exposure you want to get for about the same value exposure as SCV funds (at least comparing say VOE and IJS). I was at Gus’s presentation. His slides have overlayed returns charts for PRF (RAFI US 1000 PowerShares “Index”) and VOE (Vanguard Mid-Cap Value “Index”). They essentially look the same. If you run the factor regressions they’re not weighted the same and yet they have performed essentially the same way. Gus makes the point that part of Vanguard’s relative outperformance compared to PRF is because its ER is ...
by avalpert
Thu Nov 30, 2017 8:22 pm
Forum: Personal Finance (Not Investing)
Topic: Lost my job; use part of emergency fund to pay down HELOC?
Replies: 20
Views: 2590

Re: Lost my job; use part of emergency fund to pay down HELOC?

I agree with others - right now is not the time to reduce your liquidity. Paying down the HELOC increase 'cash flow' because you reduced your assets on hand - it decreases flexibility, not increases it.

Hold on to the cash until your employment situation is clarified.
by avalpert
Thu Nov 30, 2017 8:18 pm
Forum: Personal Finance (Not Investing)
Topic: Mega Backdoor Roth via Solo 401k
Replies: 10
Views: 2013

Re: Mega Backdoor Roth via Solo 401k

I use discount solo 401k for my plan - they are well priced, were very responsive as we developed the plan and haven't been any trouble as we maintain it. I act as my own administrator, it isn't difficult or time consuming but you need to be comfortable taking on that responsibility for yourself. What about pro-rate rules are you concerned with? They shouldn't have any impact on you - when you withdraw the after-tax account it is not pro-rated with your pre-tax account. Thank you for the affirmation. I already spoke with Justin who seems to be the owner (based on BBB website). I'm certainly comfortable being my own administrator. Sure beats having to call my current brokerage every time to move money over from my Corp account to the 401k p...
by avalpert
Thu Nov 30, 2017 7:22 pm
Forum: Investing - Theory, News & General
Topic: Which of these investments would you have wanted to hold?
Replies: 6
Views: 1191

Re: Which if these investments would you have wanted to hold?

It looks like the yellow return series was the least nerve rattling. The magenta return series seems pretty scary. But guess what? All three charts depict the same thing. No, they don't. They may have the same overall characteristics in the end but since the X-axis is depicting sequence of time then you can't say they depict the same sequence of events. You don't really provide enough context for the question to be meaningful - if you are investing up front and not touching it again until the end of the period you are truly indifferent between the paths. If you are investing across the period then your outcome could be very different depending on which path it takes and if you are watching it along the way and may act based on that the psy...
by avalpert
Thu Nov 30, 2017 7:17 pm
Forum: Investing - Theory, News & General
Topic: Vanguard to launch US 'smart beta' ETFs - Will this board burn down?
Replies: 156
Views: 25139

Re: Vanguard to launch US 'smart beta' ETFs - Will this board burn down?

triceratop wrote: Thu Nov 30, 2017 6:44 pm It's funny because MCV is an ad hoc way to get exposure to the size factor, so why not make the bet transparent and go SCV.
I don't think MCV is an ad hoc way to get exposure to the size factor - it just depends on how much size exposure you want to get for about the same value exposure as SCV funds (at least comparing say VOE and IJS).
by avalpert
Thu Nov 30, 2017 4:25 pm
Forum: Personal Finance (Not Investing)
Topic: Mega Backdoor Roth via Solo 401k
Replies: 10
Views: 2013

Re: Mega Backdoor Roth via Solo 401k

I use discount solo 401k for my plan - they are well priced, were very responsive as we developed the plan and haven't been any trouble as we maintain it. I act as my own administrator, it isn't difficult or time consuming but you need to be comfortable taking on that responsibility for yourself.

What about pro-rate rules are you concerned with? They shouldn't have any impact on you - when you withdraw the after-tax account it is not pro-rated with your pre-tax account.
by avalpert
Thu Nov 30, 2017 4:21 pm
Forum: Personal Investments
Topic: Roth Transfer to Vanguard - Reinvestment as Single Purchase or Dollar Cost Average
Replies: 4
Views: 632

Re: Roth Transfer to Vanguard - Reinvestment as Single Purchase or Dollar Cost Average

Why wouldn't you want to return to your asset allocation as quickly as you can?
by avalpert
Thu Nov 30, 2017 3:36 pm
Forum: Personal Investments
Topic: 401k Contribution 2018
Replies: 28
Views: 3420

Re: 401k Contribution 2018

It's inferior? I guess I stand corrected. PS - I am rolling my eyes as I type this. I'm not sure what you are rolling your eyes at - the math is fairly straight forward. Really? Say I had $52,000 from a windfall and I wanted to invest it. Say I could either put it all in now or add $1,000 / week. If the market goes up then the lump sum was better. But if the market steadily goes down then the DCA method was better. And which of those two happens more often? Sure, if you can predict which way the market would go you can do better than lump sum investing up front (of course the better choice here would be to not invest at all). But if we accept that we can't predict that - even long into a 'bull' market - then the superior choice is clear. F...
by avalpert
Thu Nov 30, 2017 1:48 pm
Forum: Personal Investments
Topic: 401k Contribution 2018
Replies: 28
Views: 3420

Re: 401k Contribution 2018

Don't be so sure about that. In the grand scheme of thing, majority of people are dollar cost averaging their retirement. No, in the grand scheme of things people lump sum smaller amounts when it becomes available - that isn't dollar cost averaging it is periodic investing and the financial industry has conflated the two situations to argue that DCA makes sense when compared to a lump sum so they can increase transaction costs. Think about what you just said for a second. DCA is the most common form of periodic investing. You are not dropping $10 million of your lifetime earning in your retirement account one time when you're 23 and wait until you're 60 to start withdrawal, you are investing smaller amounts when it becomes available. What ...
by avalpert
Thu Nov 30, 2017 1:32 pm
Forum: Personal Investments
Topic: 401k Contribution 2018
Replies: 28
Views: 3420

Re: 401k Contribution 2018

It's inferior? I guess I stand corrected. PS - I am rolling my eyes as I type this. I'm not sure what you are rolling your eyes at - the math is fairly straight forward. Really? Say I had $52,000 from a windfall and I wanted to invest it. Say I could either put it all in now or add $1,000 / week. If the market goes up then the lump sum was better. But if the market steadily goes down then the DCA method was better. And which of those two happens more often? Sure, if you can predict which way the market would go you can do better than lump sum investing up front (of course the better choice here would be to not invest at all). But if we accept that we can't predict that - even long into a 'bull' market - then the superior choice is clear. F...
by avalpert
Thu Nov 30, 2017 1:14 pm
Forum: Personal Investments
Topic: Where to best set up 401k for Self Employed Contractor?
Replies: 8
Views: 766

Re: Where to best set up 401k for Self Employed Contractor?

cadreamer2015 wrote: Thu Nov 30, 2017 1:05 pm For an individual 401k the employee contribution must be made before 12/31.
That isn't true. If you are taxed as an S-Corp and paid a W2 it does have to be withheld from your paychecks within 2017 - but if you are a sole proprietor you have to elect the contribution in 2017 and then have until you tax filing deadline (including extensions so not 4/15 if you file for an extension even if you file your 1040 by then) to make the contributions just as with employer contributions
by avalpert
Thu Nov 30, 2017 12:36 pm
Forum: Personal Investments
Topic: Decision Needed - How to Invest Rental Income?
Replies: 16
Views: 1291

Re: Decision Needed - How to Invest Rental Income?

As others said, need more detail to provide a specific answer.

As a general response, do not treat your rental income any differently than you would any other cash inflows - what is the optimal way to deploy your cash will be true regardless of the source.
by avalpert
Thu Nov 30, 2017 12:31 pm
Forum: Personal Investments
Topic: 401k Contribution 2018
Replies: 28
Views: 3420

Re: 401k Contribution 2018

I imagine most people around here are a fan of dollar cost averaging. You imagine wrong - a quick search of the (many) past threads would show most to not be fans of DCA because it is inferior to lump sum investing. It's inferior? I guess I stand corrected. PS - I am rolling my eyes as I type this. I'm not sure what you are rolling your eyes at - the math is fairly straight forward. Really? Say I had $52,000 from a windfall and I wanted to invest it. Say I could either put it all in now or add $1,000 / week. If the market goes up then the lump sum was better. But if the market steadily goes down then the DCA method was better. And which of those two happens more often? Sure, if you can predict which way the market would go you can do bette...
by avalpert
Thu Nov 30, 2017 12:27 pm
Forum: Investing - Theory, News & General
Topic: Mutual Funds and Taxation
Replies: 18
Views: 2355

Re: Mutual Funds and Taxation

What about capital gains/dividends in an IRA? I thought those aren't taxed? The context was taxable accounts. Distributions in an IRA are tax deferred and the tax is paid when the money is withdrawn from the IRA. Please don't think IRAs are not taxed. (Also be aware of required minimum distribuiton.) In that sense original contributions, distributions, and capital gains realized when investments are sold to be withdrawn from the IRA are all the same. In the case of a Roth IRA the original contribution was taxed before it was contributed but gains are not taxed. For those reasons it is not meaningful to talk about gains or distributions in an IRA or a Roth IRA because you just look at the withdrawal and tax it when made for an IRA and don't...
by avalpert
Thu Nov 30, 2017 12:05 pm
Forum: Personal Investments
Topic: 401k Contribution 2018
Replies: 28
Views: 3420

Re: 401k Contribution 2018

MrNewEngland wrote: Thu Nov 30, 2017 12:01 pm
avalpert wrote: Thu Nov 30, 2017 11:29 am
MrNewEngland wrote: Wed Nov 29, 2017 4:16 pm I imagine most people around here are a fan of dollar cost averaging.
You imagine wrong - a quick search of the (many) past threads would show most to not be fans of DCA because it is inferior to lump sum investing.
It's inferior? I guess I stand corrected.

PS - I am rolling my eyes as I type this.
I'm not sure what you are rolling your eyes at - the math is fairly straight forward.
by avalpert
Thu Nov 30, 2017 11:53 am
Forum: Personal Investments
Topic: Best way to minimize taxes for sole proprietors (1099)?
Replies: 9
Views: 1386

Re: Best way to minimize taxes for sole proprietors (1099)?

Anyone else have any input on the best way to minimize taxes for sole proprietors (1099)? The basics are there - if you don't have employees use a 401k plan to maximize the amount you can put away pre-tax and claim all legitimate business expenses. Anything else is likely having the tax tail wagging the income dog. Depending on the business and your other income (if you have a W2 job as well), you are unlikely to want to be taxed as an S-Corp and possibly not structure as an LLC (the reason you would is if it offered legitimate liability protection, not tax reasons, which is often not the case). With the S-Corp, in the range that you are paying social security tax by not taking that as income you are also reducing the amount you can put aw...
by avalpert
Thu Nov 30, 2017 11:44 am
Forum: Personal Finance (Not Investing)
Topic: Treatment of lump-sum for unused sick time
Replies: 10
Views: 1716

Re: Treatment of lump-sum for unused sick time

It will almost certainly appear in Box 1 of your W2 and be treated as earned income - that is the correct treatment.
by avalpert
Thu Nov 30, 2017 11:35 am
Forum: Investing - Theory, News & General
Topic: Mutual Funds and Taxation
Replies: 18
Views: 2355

Re: Mutual Funds and Taxation

Just to reinforce the above: There can be dividends which are always taxable (except for tax exempt investments) There can be capital gains distributions which are always taxable (even for tax exempt instruments) There can be capital gains incurred when then investor sells the investment which are always taxable (even for tax exempt investment) There first two are not within the control of the investor. *With taxes there is almost always some odd contingency that can be found about most anything. What about capital gains/dividends in an IRA? I thought those aren't taxed? The context was taxable accounts. Distributions in an IRA are tax deferred and the tax is paid when the money is withdrawn from the IRA. Please don't think IRAs are not ta...
by avalpert
Thu Nov 30, 2017 11:31 am
Forum: Personal Investments
Topic: 401k Contribution 2018
Replies: 28
Views: 3420

Re: 401k Contribution 2018

I've the options of contributing entire amount of $18,500 for 2018 towards 401k in lump sum in month of Jan or spread over 12 months. While contributing lump sum has advantage of longer growth period, spreading over 12 months supports the idea of dollar cost averaging. Please advise which method is better and why? Thank you! The reason to spread it out is most assuredly not to support the idea of DCA - if anything that is the primary reason not to do it. What you do need to consider is how your company does matching contributions (if it does) and whether there is any possibility you will be working somewhere else later in the year in which case you want to be able to take advantage of any matching program they have. Unless that probability...
by avalpert
Thu Nov 30, 2017 11:29 am
Forum: Personal Investments
Topic: 401k Contribution 2018
Replies: 28
Views: 3420

Re: 401k Contribution 2018

MrNewEngland wrote: Wed Nov 29, 2017 4:16 pm I imagine most people around here are a fan of dollar cost averaging.
You imagine wrong - a quick search of the (many) past threads would show most to not be fans of DCA because it is inferior to lump sum investing.
by avalpert
Thu Nov 30, 2017 11:23 am
Forum: Personal Investments
Topic: Best way to minimize taxes for sole proprietors (1099)?
Replies: 9
Views: 1386

Re: Best way to minimize taxes for sole proprietors (1099)?

Anyone else have any input on the best way to minimize taxes for sole proprietors (1099)? The basics are there - if you don't have employees use a 401k plan to maximize the amount you can put away pre-tax and claim all legitimate business expenses. Anything else is likely having the tax tail wagging the income dog. Depending on the business and your other income (if you have a W2 job as well), you are unlikely to want to be taxed as an S-Corp and possibly not structure as an LLC (the reason you would is if it offered legitimate liability protection, not tax reasons, which is often not the case). With the S-Corp, in the range that you are paying social security tax by not taking that as income you are also reducing the amount you can put aw...
by avalpert
Wed Nov 29, 2017 9:21 pm
Forum: Investing - Theory, News & General
Topic: Mutual Funds and Taxation
Replies: 18
Views: 2355

Re: Mutual Funds and Taxation

Dividends distributed in a taxable account are taxed whether you reinvest or not. If the fund manager sells shares and has a net gain, the fund is generally required to distribute that gain to the shareholders. That would be taxable. So how does the Mutual Fund work in general. Lets take an SP500 index fund for an example. So when I buy 1 share of the fund, what does the manager do? He buys proportionally all the 500 shares with the money that I used to purchase the fund share? So when the manager sells/buys stocks in in the fund, all that gets transferred to me in terms of taxation even if I don't sell my fund shares? So Capital Gains/Losses gets transferred to the mutual fund holder even if I don't sell the position? Am I understanding t...
by avalpert
Wed Nov 29, 2017 9:13 pm
Forum: Personal Investments
Topic: Generating earned income for young kids IRA
Replies: 17
Views: 4529

Re: Generating earned income for young kids IRA

Anyone have any other ideas for generating earned income in a kids name? ... I'm talking exclusively about kids too young to have a functional skill worth charging for. ... It's about finding a way to give a kid a head start on saving before they could be expected to have any interest or capability with it. Here's one idea: don't bother (in regards to "generating earned income in a kids name"). Alternatively, gift the kid some money and put it in a custodial, taxable, fund that aims more for capital appreciation than dividends/interest. When the kid stops being your dependent, the investment may be tax gain harvested. Of course, if the kid is in the 25% bracket (and thus subject to LTCG tax) immediately upon filing as a non-depen...
by avalpert
Wed Nov 29, 2017 8:21 pm
Forum: Personal Consumer Issues
Topic: Luggage Update for Travel
Replies: 73
Views: 8052

Re: Luggage Update for Travel

I fail to see what the big deal is about checking a bag. I've never had one lost in dozens of business trips, and in most cases,it only takes an extra 5 minutes or so to retrieve. I didn’t mind checking bags until a trip last winter. My bag was misplaced on a direct flight from Newark to Cayman Islands. We arrived on Xmas Day, and good luck finding swimming stuff on Xmas Day (I usually carry on clothing I will wear on arrival, but long story). The bag showed up 2 days later. On the way home from Cayman, my son’s bag was misplaced for 2 days. I don’t know what the odds are, but thanks United. PS. We jump through hoops now to fly Jet Blue. At the tail end of a 6 month trip we were flying Sri Lanka-Dubai-Amsterdam-Aruba and then spending our ...
by avalpert
Wed Nov 29, 2017 4:01 pm
Forum: Investing - Theory, News & General
Topic: Vanguard to launch US 'smart beta' ETFs - Will this board burn down?
Replies: 156
Views: 25139

Re: Vanguard to launch US 'smart beta' ETFs - Will this board burn down?

rkhusky wrote: Wed Nov 29, 2017 3:58 pm
avalpert wrote: Wed Nov 29, 2017 3:54 pm
rkhusky wrote: Wed Nov 29, 2017 3:24 pm
triceratop wrote: Wed Nov 29, 2017 8:45 am Wouldn't we need to see substantial outperformance of value or any of these factors due to the crowding before the underperformance? Have we seen that yet?
I thought the out performance was prior to Fama-French.
I believe he is suggesting you should see out performance as demand kicks up with the people crowding in - that would occur after the factor becomes popular.
I think factors are already popular.
But did they ever have the big uptick in performance driven by demand as 'commoners' rush into them? Maybe they aren't really as popular as some claim.