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I think it is quite plausible that there was both small and value outperformance before Fama/French and before there were available funds/ETFs such that retail investors had easy access those factors. My view is that it is less plausible today than in 1993. What you say makes complete sense. Larry has written about premia taking about a 1/3 haircut post publication. That being said, I don’t think the data backs up the thesis. If easy post publication access had that effect, we would see narrowing of the valuation differences between growth and value. Instead recently we have been seeing valuation differences near all time highs. Markets price risk, so in an efficient market we should expect risk premia to not go to 0. Also human nature is ...

DaddyDan wrote: ↑Wed Mar 29, 2023 1:08 pmWithdrawals for rollover tax payments are not exempt from penalty?

This is correct.

Yes, a situation that disproportionately benefited large growth and the MCW TSM. If anything it seems reasonable to expect tilts to do better during more normal times, whatever that might mean. Or did the end of the pandemic or government bailouts or something else disproportionately help SV recently? Time will tell. So in other words when factors out perform it's due to special circumstances, but normally they won't? That seems like special pleading. Isn't it at least plausible factors have some credibility? I like your word “plausible”. There isn’t enough historic data to reach statistical significance, but there is a plausible case. I think it is quite plausible that there was both small and value outperformance before Fama/French and b...

Here is a Boglehead thread on the Cash Deposit offering. I did not find it with the BH search, but I found it with a Bing search: viewtopic.php?t=390825

FreddieFIRE wrote: ↑Wed Mar 29, 2023 8:22 pm What is an "AP?"

Authorized Participant. Wiki here: https://www.bogleheads.org/wiki/Authorized_participants

UpperNwGuy wrote: ↑Wed Mar 29, 2023 6:23 pmI keep as little money as possible in my checking account. It never exceeds one month's expenses, and is usually less.

+1

If one links their settlement account with their bank account, you can have any amount you desire moved to checking in, worst case (long holiday weekend), about 5 days.

LFKB wrote: ↑Wed Mar 29, 2023 7:50 pmI get that debt is psychological for most people but I don’t understand the need/desire for many to pay off their house later in life if rates are low.

2% mortgages were a short term aberration. If you have one, enjoy!

I see no one has responded about the "Cash Deposit" feature. It is even hard to find on the Vanguard website so I don't know what to say about that. May I ask why, if you have a Vanguard brokerage account, you are interested in this feature? Have news reports of recent bank failures caused you to worry about the safety of your Mutual Funds? A couple of thoughts: 1. The bank failures have been due to issues involving "fractional reserves". Banks do not keep all of your money in a vault. They loan most of it out to others who pay interest on the loans. The banks only keep a small portion (i.e. a "fraction") on hand. In a bank run, depositors request withdrawals that exceed the fractional reserve. 2. This is not t...

mmmmbrisket wrote: ↑Tue Mar 28, 2023 10:18 pmI called again this evening, and the rep confirmed everything I said, and verified with others that the funds should show up in my account at close. Unfortunately, that does not appear to be the case.

You are much too anxious: “at close” means the transfer is effective this business day, not that you will see it online at 4:01PM. The processing typically happens overnight and you might not even see the changes the next day. Give it at least 3 business days.

mmmmbrisket wrote: ↑Tue Mar 28, 2023 10:18 pmI'm not exactly sure what to do next in order to escalate the issue.

Nothing at this time. Just take a deep breath and wait a few days.

I am a bit philosophical about my giving - I contribute to organizations that further the things I believe rather than organizations that pull at my heart strings. I often think of my young grandkids and wish to impact their lifetime surroundings.

Take the $23,000 and run.

Whoever sold them a UL policy at age 72 engaged in malpractice. UL policies are beginning to "eat themselves" when folks are in their 70s. Note the effective cost of insurance in year 18 is over $17,000 (he pays $5425, $11,906, comes out of the cash value).

If neither of you have traditional IRAs (which would interfere with the tax benefits), you can each use the backdoor Roth process to put $6500 each into your respective Roth accounts tax free from your current cash savings.

Wiki link here: https://www.bogleheads.org/wiki/Backdoor_Roth

bhjjk19 wrote: ↑Mon Mar 27, 2023 4:22 pm And if you pass will your wife be able to do what you do?

And that, detective, is the right question. (alluding to "I, Robot")

I moved to a one-fund portfolio for that exact reason.

To expand:
1) US Treasuries are guaranteed with the full faith and credit of the United States.
2) Fidelity is required to purchase 100% of the Treasuries that you purchase, there are no fractional reserves like a bank.
3) The Treasuries are held by a 3rd party, not even by Fidelity. If Fidelity closed next week the Treasuries would still be safe and would be distributed to you as quickly as the paperwork could be processed.

Next year at age 70, I will begin social security. My full retirement age (PIA-Primary Insurance Amount) is $3221. Since you waited until age 70, your monthly amount will increase by 8% for each year you waited past full retirement age, which is probably 67 or close to it. Your wife will then be eligible to collect half of yours, assuming it is more than her benefit. The spousal benefit is half of full retirement age (67) not 70. So it will be lower than half of $3221, probably closer to $1,500. The definition of PIA (Primary Insurance Amount) is one’s benefit at Full Retirement Age which is 66 years for someone who was born in 1954. So it will be half of $3221 (if $3221 is actually his 2023 PIA, PIA changes each year with COLA), plus 1 ye...

andyandyandy wrote: ↑Sat Mar 25, 2023 11:22 am2) Are US Treasury purchased at Fidelity safe?

Yes.

Charles Joseph wrote: ↑Sun Mar 26, 2023 7:09 pmThe one-fund solution is tax inefficient, relative to some other options.

Already widely discussed in the 13 pages of this thread.

Parkinglotracer wrote: ↑Sat Mar 25, 2023 2:55 pm And the winner for the most BH post for 2023 is …

The year is young...

TropikThunder wrote: ↑Sat Mar 25, 2023 3:46 pm

David Jay wrote: ↑Sat Mar 25, 2023 10:21 am Be aware that if you lose your job or leave the company, the entire loan must be repaid or it will be treated as an unqualified distribution

I left my employer over a year ago and I’m still making payments under the original terms.

OK, "must" was too strong, but it is true in many cases.

A code "G" is all that is needed. I had one of these in 2022. If you are using a tax preparation program, it will show the amount that was transferred and also show the amount taxable as zero.

One will only get a 1099-R if there is a distribution from the new IRA.

[edit] Obviously, if you are doing the return by hand and follow the directions the result will be the same, the amount of the Rollover in Box 5a and a "zero" in Box 5b.

[edit again] Those box numbers are for a 1040-SR, the numbers may be different for the standard form 1040.

I hold FZROX in Roth. No problem with selling in the future if conditions change.

Stubbie wrote: ↑Thu Mar 23, 2023 1:16 pmNobody turns a phrase like the good Dr!

True. I have really enjoyed his histories. “The Birth of Plenty” is perhaps his best, but “The Splendid Exchange” is right up there.

Be aware that if you lose your job or leave the company, the entire loan must be repaid or it will be treated as an unqualified distribution (assuming one is younger than 59.5). You will owe regular income taxes on the outstanding amount plus a 10% penalty.

If you are over age 59.5 you will still owe taxes on the outstanding amount at regular income tax rates.

stocknoob4111 wrote: ↑Fri Mar 24, 2023 7:59 am I think the $1M figure isn't by itself relevant without considering expenses, current age and other streams like Social Security. Having $500K being 75 with 90% of your expenses covered by SS is very different than $1M retiring at 60 and spending $100K/yr.

This!

We were a fair bit short of $1M at retirement.

We spend less than $70,000 a year and will have over $65,000 a year coming in in SS when we claim in 3 years. Our taxes go down enough when SS starts that we can meet all our basic expenses from SS. Only “lumpy” expenses (replace a vehicle, etc.) will come from our portfolio.

We need a “nest egg” to replace spousal when the first spouse passes, and for any skilled care. But that’s it.

Blue456 wrote: ↑Sat Mar 25, 2023 8:44 am My apologies I don't think I made myself clear. I am very much aware of VSMGX. My point was that besides Vanguard no other brokerage offers simple, cheap, globally diversified mutual fund…

iShares has their “Core Allocation” ETFs which are similar to LS funds but with a few more holdings (SP500+Small Cap instead of Total Market, etc.)
AOA (Aggressive) 80/20
AOR (gRowth) 60/40
AOM (Moderate) 40/60
AOK (Konservative) 30/70

Dave55 wrote: ↑Fri Mar 24, 2023 9:28 pm

David Jay wrote: ↑Thu Mar 23, 2023 5:27 pm You’re considering changing your portfolio based on a tweet?

+1 Priceless!

Dave

“Monsters from the Id” [Dav-id]

"Allstays" is an excellent app. It is not free, but it is something under 20 bucks ($12.95? I bought it 5 years ago).

It shows all campgrounds and other related facilities (dump stations, etc.) on a map. When you click on a campground it brings up information plus reviews.

Withdrawal rate has a huge effect on SOR risk. From my 2020/2021 discussion of SOR (posted here on BH), using historical volatility it is almost impossible for SOR risk to overcome a portfolio over a 30 year period if one is withdrawing something around 3% of current (not initial) portfolio value. It becomes a serious risk (shown in the graphic above with 5%) at withdrawal rates over 4% of initial portfolio. My understanding is that SOR risk is the risk of poor market returns at the beginning of a long retirement period will potentially put the portfolio at risk of not lasting through the period as compared to poor market returns later in the period. My question is at what point does the SOR risk reduce to the point that you wouldn't try t...

Your version of SOR risk is solved by 1) not investing 2) owning assets with little to no expected returns That's simply not what anyone cares about. We want to manage SOR risk while still meeting other objectives. Your definition is totally unactionable - we need to look at SORR in the context of a reasonable retirement plan. If you are excluding value purely because it is volatile you don't understand investment risks properly. We would exclude stocks for bonds the same reason, and taken one step further we would exclude investing altogether because investing involves risks which translate to volatility in pricing. The goal of investing is usually to manage risks while also seeking return. For this purpose you generally don't simply inve...

+1 Many posters on BH have commandeered the term “Sequence of Returns” risk and now use it to pretty much mean “any risk that prevents my portfolio from lasting 30 years”. I would recommending reading one of the many diversification threads. Even assets with 0.8 correlation can help reduce the worst case outcomes. It doesn't even matter if correlations go to 1.0 in a crisis, you have removed the worst outcome of only owning the one that performs worst. It depends on the specifics of the crisis which asset that will be. Exactly. The best way to minimize SW risk is to be thoroughly well-diversified in both stocks and bonds. This is why something like a 50/50 allocation is advisable in retirement. With such a portfolio factor tilts probably w...

Withdrawal rate has a huge effect on SOR risk.

From my 2020/2021 discussion of SOR (posted here on BH), using historical volatility it is almost impossible for SOR risk to overcome a portfolio over a 30 year period if one is withdrawing something around 3% of initial portfolio value.

It becomes a serious risk (shown in the graphic above with 5%) at withdrawal rates over 4% of initial portfolio.

Your version of SOR risk is solved by 1) not investing 2) owning assets with little to no expected returns That's simply not what anyone cares about. We want to manage SOR risk while still meeting other objectives. Your definition is totally unactionable - we need to look at SORR in the context of a reasonable retirement plan. If you are excluding value purely because it is volatile you don't understand investment risks properly. We would exclude stocks for bonds the same reason, and taken one step further we would exclude investing altogether because investing involves risks which translate to volatility in pricing. The goal of investing is usually to manage risks while also seeking return. For this purpose you generally don't simply inve...

Your version of SOR risk is solved by 1) not investing 2) owning assets with little to no expected returns That's simply not what anyone cares about. We want to manage SOR risk while still meeting other objectives. Your definition is totally unactionable - we need to look at SORR in the context of a reasonable retirement plan. If you are excluding value purely because it is volatile you don't understand investment risks properly. We would exclude stocks for bonds the same reason, and taken one step further we would exclude investing altogether because investing involves risks which translate to volatility in pricing. The goal of investing is usually to manage risks while also seeking return. For this purpose you generally don't simply inve...

HeavyChevy wrote: ↑Fri Mar 24, 2023 12:57 pme.g. data time period is too short, shouldn't limit to US, MC analysis is inappropriate, WR is too high (personal finance is personal)? Observed signal appears very strong to me.

Your signal is likely not statistically significant because, using a period of 30 years, there are not even two completely independent periods in 50 years of data.

Short answer is no. Sequence of Risk returns are tied to volatility. Value stocks have equal or higher volatility than the total market. +1 Many posters on BH have commandeered the term “Sequence of Returns” risk and now use it to pretty much mean “any risk that prevents my portfolio from lasting 30 years”. How about "can value stocks mitigate portfolio depletion over 30 years?" and why are the effects so strong in the noted analysis w 50 years of data? e.g. data time period is too short, shouldn't limit to US, MC analysis is inappropriate, WR is too high (personal finance is personal)? Observed signal appears very strong to me. Your observed signal appears to impact portfolio survival. My point is that [portfolio survival != SOR...

Short answer is no. Sequence of Risk returns are tied to volatility. Value stocks have equal or higher volatility than the total market. +1 Many posters on BH have commandeered the term “Sequence of Returns” risk and now use it to pretty much mean “any risk that prevents my portfolio from lasting 30 years”. I would recommending reading one of the many diversification threads. Even assets with 0.8 correlation can help reduce the worst case outcomes. It doesn't even matter if correlations go to 1.0 in a crisis, you have removed the worst outcome of only owning the one that performs worst. It depends on the specifics of the crisis which asset that will be. Exactly. The best way to minimize SW risk is to be thoroughly well-diversified in both ...

“Sequence of Returns” only applies to the mathematical sequence of returns when there is (1) portfolio volatility along with (2) withdrawals that are not adjusted to the changing portfolio balances (i.e. fixed percentage withdrawals, but not exclusive to fixed percentage withdrawals).

I find the following graphic from Jackson National provides a clear illustration. Note that the two lines utilize exactly the same portfolio returns but in reverse yearly sequence:

alex_686 wrote: ↑Fri Mar 24, 2023 11:10 am Short answer is no.

Sequence of Risk returns are tied to volatility. Value stocks have equal or higher volatility than the total market.

+1

Many posters on BH have commandeered the term “Sequence of Returns” risk and now use it to pretty much mean “any risk that prevents my portfolio from lasting 30 years”.

duplicate post

jstage wrote: ↑Thu Mar 23, 2023 11:07 amHowever, has anyone ever heard of the double first payment? We do plan on staying in this home until retirement (25-28 years away) if that impacts anything.

Early principal payments can significantly shorten the duration of a mortgage. The first few years of a 30 year mortgage are almost entirely interest, so immediately putting a few thousand on the principal can shorten the loan duration by years.

I gave my son $2000 (almost 2 month’s payment) to immediately put on his new mortgage when he purchased his starter home in 2020.

Nicolas wrote: ↑Thu Mar 23, 2023 5:47 pm Chart the performance difference between the SP500 and equal weighted over a long period and you’ll have your answer.

This!

Equal weight is a recipe for underperformance.

You’re considering changing your portfolio based on a tweet?

ekid wrote: ↑Thu Mar 23, 2023 2:44 pm....why wouldn't VMFXX be paying more- much more- than .71% ?

Where do you get that number? It looks like that is the 3 year return?

If it is the three year number, remember that interest rates increased rapidly throughout the last year and the 3 year number includes some 2 1/2 years of very low interest rates.

VUSXX is safer than a bank above $250K, because banks only hold fractional assets (that is how they make a profit, they loan out your money).

All of the Treasuries that you own in VUSXX are 100% with the brokerage and are held by a third party custodian. Even if the brokerage firm folded, 100% of the Treasuries would still be held by the custodian to be distributed to the fund holders.

Also note that her income can be used for your contributions through the spousal rule. You could open a tIRA and a Roth and perform the backdoor Roth process each year.

greg24 wrote: ↑Wed Mar 22, 2023 1:03 pmDiscounted price, discounted interest rate, and then your mother has the risk of pretending to be a bank in her old age.

I would start with this list and explain that you can't give them everything on that list. Perhaps counter-offer with their choice of (a) market price and seller-financing or (b) discounted price and buyer gets their own financing.

I have purchased using seller-financing (during the 14% interest rates of '79 - '80), but an 80 year old should probably not be doing this.

MarkBarb wrote: ↑Wed Mar 22, 2023 1:17 pmI do keep a small amount at a bank as well to have liquidity in case there is a problem with my broker.

I keep a checking account with a local Credit Union with a balance for perhaps 4-6 weeks of expenses.

I had the same situation when I applied for Medicare.

The estimate comes back after a while, perhaps the month Medicare actually starts? I can’t remember the exact timing.

One rainy day in that space with small children will change your mind about any of the tiny solutions.

Buy an old Suburban (Expedition, Land Cruiser, whatever) and pull a reasonably sized trailer. We had a 27 foot bunkhouse from the time our two kids were little until the older one left for college. Lots of great memories.

Gaston wrote: ↑Wed Mar 22, 2023 3:58 amPerhaps you are Swiss…?

Did you observe Stef’s avatar?