Search found 46119 matches

by dbr
Wed Mar 27, 2024 10:06 am
Forum: Personal Finance (Not Investing)
Topic: Any advice on how to manaage cashflow when % of income is variable?
Replies: 37
Views: 1719

Re: Any advice on how to manaage cashflow when % of income is variable?

I think you would be helped by keeping an exact tabulation of what you really do spend month after month so you can identify why your spending is out of control relative to your income, even if your income is variable.

By the way, I have often heard the suggestion that your income is your base pay and bonuses and awards go straight into savings as if they were not even available as income. I once worked for a man who retired at 50 on the system of being (admittedly) DINKS, but they lived on his income and 100% of her income went straight to savings.
by dbr
Wed Mar 27, 2024 7:35 am
Forum: Investing - Theory, News & General
Topic: Original proponent of the 30/70 allocation?
Replies: 84
Views: 13373

Re: Original proponent of the 30/70 allocation?

The monkey wrench in the works here is that investment outcomes are highly variable in prospect while asset allocation is a very weak lever for manipulating outcome. Singling out exact allocations to the precision of a single percent point, or even to the precision of 10 percentage points is plain silly. I think it is fine to compare the behavior of 70/30 to 30/70 but probably the only asset allocations that should be considered are 75/25, 50/50, and 25/75, a sop thrown to Benjamin Graham for the advice to hold between 25% and 75% in stocks. I will offer again a view of this tool in which one can vary the asset allocation either while saving or while withdrawing and see what the range of outcomes has been historically and then decide what k...
by dbr
Wed Mar 27, 2024 7:27 am
Forum: Investing - Theory, News & General
Topic: Looking for advice on unhappy experience in VG short term bond fund
Replies: 66
Views: 5591

Re: Looking for advice on unhappy experience in VG short term bond fund

One reason to prefer individual bonds might be a greater level of predictability, regardless of future events. Holding a fund makes it easy to rebalance with other assets, yet in a rising rate environment, it may be difficult to estimate future value for a typical fund at various points in time. With individual nominal Treasury bonds future nominal payments, including maturity, can be calculated in advance. With individual TIPS you also have known payment terms to figure future values relative to CPI-U. With cash-equivalents usually it's possible to determine minimum nominal future amounts. If someone is interested in future predictability, and they are concerned about higher future rates diminishing near-term real or nominal value at futu...
by dbr
Wed Mar 27, 2024 7:16 am
Forum: Investing - Theory, News & General
Topic: Never selling shares
Replies: 57
Views: 4241

Re: Never selling shares

Its fine if it is working. I do that myself because the dividends from equities held in taxable accounts are as much as I choose to withdraw from my portfolio. But what I choose is not because that is what the dividends are; it is because it is what I want to spend with an eye on how well my wealth is surviving if I spend that. It could even happen I would sell shares to spend more if I wanted to. At one point we gave away a bunch of shares we didn't need. Our withdrawal rate that year was 10.8%. Another year our withdrawal rate was negative meaning we both reinvested all the dividends and bought shares with other excess income. The problem is that such a dividend cashing person is doing fake bookkeeping. They are not tracking what their we...
by dbr
Tue Mar 26, 2024 4:18 pm
Forum: Investing - Theory, News & General
Topic: Looking for advice on unhappy experience in VG short term bond fund
Replies: 66
Views: 5591

Re: Looking for advice on unhappy experience in VG short term bond fund

These problems are simple to solve by not buying and owning assets that price on a market but rather are held at fixed price for the duration. There are lots of those including cash in your pocket, bundles of large in the basement, checking accounts, savings accounts, bank CDs, money
market accounts, money market funds, stable value funds, I bonds, etc., etc. Such things are so universally available why would one even start with something that is priced on a market and then try to find some reason that is really ok, sort of.

An alternative is not to come to investing with the requirement that the principal value of the investment has to be fixed. But that is up to the investor.
by dbr
Tue Mar 26, 2024 3:51 pm
Forum: Personal Investments
Topic: Which Bonds Fund To Buy
Replies: 13
Views: 1301

Re: Which Bonds Fund To Buy

However, preservation of assets implies no loss of principal and neither stocks nor bonds provide that surety. If loss of principal (preserving what you have) is a high priority, you'll want to consider cash instruments (money market funds, high-yield savings accounts, CDs) or individual Treasuries that you're willing to hold to maturity (i.e., a bond ladder), or I-bonds. if you recognize the risk involved and think an improved risk-adjusted return, just at a lower total portfolio standard deviation, is what you want (rather than "no loss of principal ever"), then a Total US Bond Market Index fund is fine (e.g., VBTLX, FXNAX, SWAGX, etc.). I am glad you are making this clearcut. My one quibble would be that escaping loss in the m...
by dbr
Tue Mar 26, 2024 10:42 am
Forum: Personal Investments
Topic: Which Bonds Fund To Buy
Replies: 13
Views: 1301

Re: Which Bonds Fund To Buy

There are far more choices in bond funds than reasons to distinguish among them. The risk drivers for bonds are term (meaning duration and maturity) and credit (Treasuries have no credit risk, junk bonds more credit risk). All bond funds are subject to fluctuations in value. When combined as a smaller fraction in a portfolio with stocks it is even less important exactly what bonds you select. I do not think there is any particular choice that is especially recommended and people come up with all sorts of things that probably mostly all work. The one issue that can matter is that investing for a long run plan and investing for a need that is short term and specific are two different things. There are lots of long term choices that are not su...
by dbr
Tue Mar 26, 2024 7:37 am
Forum: Investing - Theory, News & General
Topic: It is really that simple to do it the Bogleheads way?
Replies: 87
Views: 8171

Re: It is really that simple to do it the Bogleheads way?

gtrplayer wrote: Tue Mar 26, 2024 12:06 am I love reading this forum but in some ways it gives the impression the Bogleheads way is more complex than it is. Really, people just like talking about these things. Index, buy and hold investing is easy. As others have said, the challenge comes in holding in when the market gets rough.
Yes, there are lots of complicated discussions. Mostly these have nothing to do with what is needed to make and follow a reasonable investing plan. I read and post a lot on some mathematical and esoteric issues that have no relationship whatsoever to my actual investing. Those posts are pure entertainment and have nothing to do with my real world financial life.
by dbr
Mon Mar 25, 2024 7:35 pm
Forum: Investing - Theory, News & General
Topic: Asset allocation when retirement income needs are not flat
Replies: 9
Views: 992

Re: Asset allocation when retirement income needs are not flat

We are planning to retire on the early side and take social security as late as possible, seems extremely risk averse to put that much future living expenses into TIPs right now, not to mention limiting potential portfolio growth for such a long time. Is the right answer to cover some % of living expenses via TIPs? Or is there a better way to think about this? This is exactly why it is hard to show that this TIPS investment is or isn't a good idea. A person would have to run some sort of statistical modeling of scenarios and compare them. Even in FireCalc, for example, one could run your scenario with nothing but a fixed portfolio with fixed total annual spending and SS starting at a future time vs taking money out of the portfolio and add...
by dbr
Mon Mar 25, 2024 7:07 pm
Forum: Investing - Theory, News & General
Topic: Asset allocation when retirement income needs are not flat
Replies: 9
Views: 992

Re: Asset allocation when retirement income needs are not flat

It is hard to show that there is any special strategy that is clearly better than holding a simple constant asset allocation and recognizing that the facts are that your spending will vary. As an example in 17 years of retirement my withdrawal rate has varied from -1.8% to +10.8% though with a reasonable average of a little under 4%.

I think it can be that a certain identifiable expense could qualify for special treatment depending on the size and duration of the expense relative to the portfolio. A possible example is a TIPS ladder to bridge access to Social Security. Even then it is hard to show that on the probabilities there is much difference in outcome.
by dbr
Mon Mar 25, 2024 7:03 pm
Forum: Investing - Theory, News & General
Topic: Looking for advice on unhappy experience in VG short term bond fund
Replies: 66
Views: 5591

Re: Looking for advice on unhappy experience in VG short term bond fund

Johnnie wrote: Sat Mar 23, 2024 10:56 am

In simple terms, what should I do now? I’m just a regular retirement investor who thought he understood the basics, but feels burned by this investment.

Investing provides a constant stream of unhappy experiences. It is the nature of the beast. The general answer is to persist in the face of continued unhappy experiences. Investing is not for the purpose of enjoyment but by the same token should not be taken as punishment. Those emotional reactions are best simply rejected.
by dbr
Mon Mar 25, 2024 7:00 pm
Forum: Personal Investments
Topic: Please help me organize the fixed income part of my portfolio
Replies: 131
Views: 8404

Re: Please hep me organise the fixed income part of my portfolio

bonesly wrote: Mon Mar 25, 2024 6:20 pm
I certainly agree that the misconceptions about bonds (and bond funds in particular) should be dispelled; they are not safe, they are not ballast, they do not move opposite of stocks; they can have negative total return in a given year.
I think your whole post is helpful.

The real mystery is how there is this dwelling on ideas such as "safe" and "ballast" and on a naive and incorrect concept of correlation. Maybe this happens because someone wants to convey an idea without actually doing the little bit of work and thinking that is required to convey that idea more accurately, and therefore one ends up with misleading metaphors and simple minded statements that are not true.
by dbr
Mon Mar 25, 2024 4:54 pm
Forum: Investing - Theory, News & General
Topic: Viewing your portfolio vs viewing them as separate components
Replies: 14
Views: 1139

Re: Viewing your portfolio vs viewing them as separate components

I have always evaluated investment plan and investment results as a whole.

I don't attempt to align different assets with different purposes.

I am 17 years into retirement and acquired my first investment asset sometime around maybe 1965. Admittedly for the first couple of decades I didn't know enough about investments to even try to imagine different assets being different components in any meaningful way. Somewhere around 40 years ago things began to dawn a little bit.
by dbr
Mon Mar 25, 2024 11:34 am
Forum: Investing - Theory, News & General
Topic: Holding 100% stocks after FI best option for longer time horizons?
Replies: 88
Views: 10556

Re: Holding 100% stocks after FI best option for longer time horizons?

Diversification can certainly be thought of as insurance but it in no way eliminates the risk of catastrophic failure. That risk is best addressed with portfolio size. I agree that the usual concept of diversifying financial assets is about minimizing risk relative to return but does nothing to avoid catastrophe. For example if losing half your money is a catastrophe then holding two assets either one of which could fail is not necessarily better than holding one of them. A relative who is a pilot has made the comment that he prefers single engine planes because with two engines there is twice the chance of something going wrong. One can untangle whether or not that really makes sense, but one should still be careful to be clear what elimi...
by dbr
Mon Mar 25, 2024 11:03 am
Forum: Personal Investments
Topic: Please help me organize the fixed income part of my portfolio
Replies: 131
Views: 8404

Re: Please hep me organise the fixed income part of my portfolio

dogagility wrote: Mon Mar 25, 2024 10:54 am
Target2019 wrote: Mon Mar 25, 2024 7:59 am VIPSX
Vanguard Inflation-Protected Securities Fund Investor Shares
Inflation-Indexed Securities
Risk / reward scale 2
1.81% 30-day SEC yield
This yield probably doesn't encompass the rate that includes whatever future inflation (CPI) will be. Is that correct?
The note on the Vanguard website states that inflation increment is not in this number. It is real rate. Most quotes of SEC yield from most companies are nominal yields and can be very odd sometimes. I recall seeing over 12% SEC on one fund I had a couple of years ago.
by dbr
Mon Mar 25, 2024 10:48 am
Forum: Personal Investments
Topic: Bond choices in 401k
Replies: 35
Views: 3316

Re: Bond choices in 401k

Zekeman wrote: Mon Mar 25, 2024 10:41 am Yes I understand it’s a similar structure as VBTLX.

I’m 63. Probably a few years until retirement.
How close are you to death. That is more relevant unless your plan is to liquidate everything and convert that wealth to some way of providing income that is not taking withdrawals from a store of wealth. An example would be putting the money into an annuity for life income. Note that both an annuity or converting to a TIPS ladder vary in cost with prevailing interest rates, so the timing is not risk free.
by dbr
Mon Mar 25, 2024 10:35 am
Forum: Investing - Theory, News & General
Topic: 10% cash position excessive?
Replies: 27
Views: 2690

Re: 10% cash position excessive?

adave wrote: Sun Mar 24, 2024 6:02 pm I’m sitting on a 10% cash position, would this be considered excessive? Rest of my portfolio fairly risky with heavy tech exposure.
What do you want your portfolio to do and how does 10% in cash affect the hoped for or expected outcome? The answers to this seem to be missing.
by dbr
Mon Mar 25, 2024 10:21 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?

Vanguard updates their white paper regularly, and explains it. https://institutional.vanguard.com/insights-and-research/report/vanguards-approach-to-target-date-funds.html The fixed income allocation also includes hedged exposure to broadly diversified international fixed income. [...] Vanguard research suggests that a strategic allocation to hedged international bonds can further moderate risk in a diversified portfolio (Schlanger et al., 2018). Accordingly, this asset class represents 30% of Vanguard TDFs’ fixed income exposure. Yes, I suggest one download the paper: https://institutional.vanguard.com/content/dam/inst/iig-transformation/insights/pdf/ISGTRGT_112022_Online.pdf and then search for the term "utility" which appears ...
by dbr
Mon Mar 25, 2024 7:30 am
Forum: Personal Investments
Topic: Please help me organize the fixed income part of my portfolio
Replies: 131
Views: 8404

Re: Please hep me organise the fixed income part of my portfolio

VBTLX is a fine option. This person also has a horizon much longer than 8 years. You said 8 years while in fact they are o ly just going to begin retirement then. Their horizon may be more like 20-25 years. They aren’t spending it now, and they aren’t going to drop dead in 8 years, ideally. As a result of your misunderstanding of investment horizon, you’re advocating for shorter duration than what is optimal for them. @ the OP, don’t be afraid of total bond. You can have a mix of nominals and TIPs funds and be very fine I agree with what you are saying. I also get a bit lost with the idea that retirement date is an investment end point. A more realistic picture is that investing is nominally a journey of perhaps 30 years from age 30 to age...
by dbr
Sun Mar 24, 2024 8:18 pm
Forum: Personal Investments
Topic: Bond choices in 401k
Replies: 35
Views: 3316

Re: Bond choices in 401k

Define SD please. Also, so when interest rates go up as they did in 2022 the fund NAV lost 11%. We are now at a theoretical plateau of rates with the likelihood over the next 24 months of those rates to decline which would then drive the returns of this fund higher. And as an aside, let me just make the statement. If I had my druthers, I would take my entire 401(k) and retirement funds and roll them through treasury direct at 5% interest rates per month. But I can’t do that because I cannot take control of all that cash so what instrument would best approximate the ability to do that aside from establishing my own corporation through which I wouldn’t have to take control of the funds.? Thank you. SD is standard deviation of (annual) return...
by dbr
Sun Mar 24, 2024 7:56 pm
Forum: Personal Investments
Topic: Bond choices in 401k
Replies: 35
Views: 3316

Re: Bond choices in 401k

At any rate, 2014, 4% 2015 -1%, 2016, 1%, 2017, 3%, 2018 1%, 2019 8%, 2026% 2021 -1% 2022 -11% 2023 2% So are you telling me that in order to earn these relatively meager returns- There’s also a ton of risk associated with this fund? It’s a significant amount of US treasuries. I see there’s also a roughly 30% percent of corporate bonds as well. Help me better understand this instrument. Thank you. Yes, in those ten years the return was meager and there was some risk, but hardly a ton. A ton of risk is SD of returns of 20% -- for that fund the SD was 4% and the max drawdown was 18% not 50%-60%-70% or more as in stocks for example. This does not predict the next ten years. Interest rates were low and went up. Interest rates are now higher an...
by dbr
Sun Mar 24, 2024 7:38 pm
Forum: Personal Investments
Topic: Please help me organize the fixed income part of my portfolio
Replies: 131
Views: 8404

Re: Please hep me organise the fixed income part of my portfolio

I am looking for something simple I can just buy and hold for next 30 years So a TIPs fund like VIPSX does not mitigate negative interest rate risk ? Especially rising rates? VIPSX had a drawdown of almost 14% in 2022 and almost 13% in 2008. It was a 9% loss in 2013. So, of course you can buy and hold VIPSX and it would be simple for the next 30 years. You can make it complicated by insisting on holding something that never loses money. VIPSX does not do that. It is also possible to buy a TIPS or a TIPS fund when real rates are negative even to start. That was true a couple of years ago and is not true today. Of course if you really mean to buy the investment now and ignore it for 30 years then you could buy a 30 year TIPS at a positive re...
by dbr
Sun Mar 24, 2024 6:11 pm
Forum: Investing - Theory, News & General
Topic: It is really that simple to do it the Bogleheads way?
Replies: 87
Views: 8171

Re: It is really that simple to do it the Bogleheads way?

d) I estimate 8-9%. I know markets can go up and down. I don't see why I should not project returns - I do need to plan. Because return is a statistical variable you want to estimate the mean of the distribution and also the variability. Then you want to estimate a possible error on both of those. Finally you estimate a distribution of possible results in, for example, wealth as a function of time. To get a feel for what the outcome could look here here is a distribution of historical results for the growth of portfolios over time and some statistics on the assets: https://engaging-data.com/visualizing-4-rule/ The average compounded historical return for stocks in that data set from 1871 to 2019 was 6.7% real. The distribution of annual re...
by dbr
Sun Mar 24, 2024 5:37 pm
Forum: Personal Investments
Topic: Bond choices in 401k
Replies: 35
Views: 3316

Re: Bond choices in 401k

So it’s basically a very safe (very low risk) guaranteed return of roughly 3-4% now…would that be a fair characterization? Here is a data sheet I found: https://www.voyaretirementplans.com/fundonepagerscolor/C925.pdf It is benchmarked to a total bond market index--Bloomberg® U.S. Aggregate Bond Index . It is not "very low risk" I don't know what you mean by safe, but I doubt this fund is what you have in mind for that. As a measure of risk a fund like this can lose under normal conditions of interest rate fluctuations some several percent in a short time, perhaps enough to wipe out all your return for a year. Under more extreme conditions of interest rate changes such as the large increases from low yields in 2022 the fund would ...
by dbr
Sat Mar 23, 2024 11:38 am
Forum: Investing - Theory, News & General
Topic: Looking for advice on unhappy experience in VG short term bond fund
Replies: 66
Views: 5591

Re: Looking for advice on unhappy experience in VG short term bond fund

Johnnie wrote: Sat Mar 23, 2024 10:56 am
So I'm tempted to put the whole fixed income allocation in a MMF and live with the up-and-down in rates but steady value in principle.*
If the essence of your question is how to keep a fixed value in principal then the cash equivalent investments such as a MMF, a savings account, or a CD or maybe a stable value fund in a 401k offer that and most everything else does not. If you want that holding inflation indexed then the only option is I bonds.

The answer most people have to your question is that one accepts uncertainty in outcome, which includes losing money at one time or another, and more than one time.
by dbr
Sat Mar 23, 2024 11:31 am
Forum: Personal Investments
Topic: VBILX vs MassMutual Stable Value Diversified HELP please
Replies: 12
Views: 821

Re: VBILX vs MassMutual Stable Value Diversified HELP please

Do you have 15, 20 or more years before you expect to need this money and are willing to ignore short term ups and downs to potentially earn an extra 1-2% per year above the stable value fund? Then the intermediate bond fund might be best. If an investor does have 15, 20 or more years, why would you NOT invest in stocks? Why bond fund? In this historical graphic 100% stocks for 30 years with no cash flows in or out starting at $1M ends up with a 10th percentile value of $3M real and a 90th percentile value of $10M real. 100% bonds ends up between $1m real and $2.6M real. So that is a good question. https://engaging-data.com/visualizing-4-rule/ Of course no one knows for sure how well the 120 years of investments from 1871 to 1989 represent...
by dbr
Sat Mar 23, 2024 10:32 am
Forum: Investing - Theory, News & General
Topic: It is really that simple to do it the Bogleheads way?
Replies: 87
Views: 8171

Re: It is really that simple to do it the Bogleheads way?

These excellent posts explain how easy it is to make investing hard and how hard it is to make investing easy.
by dbr
Sat Mar 23, 2024 10:30 am
Forum: Personal Investments
Topic: VBILX vs MassMutual Stable Value Diversified HELP please
Replies: 12
Views: 821

Re: VBILX vs MassMutual Stable Value Diversified HELP please

Thank you for all the information. Two conflicting opinions has me just as confused as before. :oops: I understand both sides, anyone out there that can offer a tie breaker opinion? No, because the issue turns on what-ifs and trying to predict future interest rates for different assets. There are also different preferences regarding both opportunity and risk. A best answer is probably that you should not be confused about such opinions because over long runs it doesn't make any difference* and over short runs you are trying to make sense of noise. *In the context of portfolios of stocks and bonds exactly what fixed income assets you hold does not matter a lot. Even the allocation you choose is not a very sensitive adjustment to the outcome...
by dbr
Sat Mar 23, 2024 9:28 am
Forum: Investing - Theory, News & General
Topic: TIPS and interest rate sensitivity and duration
Replies: 3
Views: 361

Re: TIPS and interest rate sensitivity and duration

My understanding is that everything with TIPS is done in real dollars, thus ignoring inflation indexing and using real interest rate or real yield.

Here are the actual definitions of Macaulay and Modified Duration. This is very specific mathematical terminology. Many statements that are not definitions are made that sometimes reasonably characterize what duration means and that sometimes produce misleading or just totally misunderstood characterizations of the idea.

https://en.wikipedia.org/wiki/Duration_(finance)

Those definitions are closely related to the definitions for net present value, bond price, and yield to maturity.
by dbr
Sat Mar 23, 2024 9:22 am
Forum: Investing - Theory, News & General
Topic: It is really that simple to do it the Bogleheads way?
Replies: 87
Views: 8171

Re: It is really that simple to do it the Bogleheads way?

tibbitts wrote: Sat Mar 23, 2024 9:16 am
Cyath wrote: Sat Mar 23, 2024 4:58 am So is investing really as easy as buying and holding some recommended index funds? (I have a three-fund portfolio in mind)
The projected returns are 8-9% PA, which is better than what my FA gives me, and does not seem unreasonable given Vanguard's performance.
What's PA?
Per Annum. But investment returns are generally by convention annual returns. There is a little complexity, as you know, between an annual return, Year to Date return, annualized return, Compound Annual Growth Rate (CAGR), arithmetic average return and compound average return.
by dbr
Sat Mar 23, 2024 8:31 am
Forum: Investing - Theory, News & General
Topic: It is really that simple to do it the Bogleheads way?
Replies: 87
Views: 8171

Re: It is really that simple to do it the Bogleheads way?

You have pointed out a huge issue for all of us in many areas, at least in my opinion. For me, the most important areas are the ones with less certainty about outcome regardless of how much we know since there is always that which is unknown. We make our choices and often have to reluctantly accept the consequence of not having made a different choice, at least retrospectively. Personal conclusion is that once an investment approach has been accepted that it is simple but that simple does not mean easy. Tim It is indeed not about what the choice is but about living with that choice in the face of uncertain and unknown outcomes. Investing is risky and nothing makes that go away. The only sure outcome is to have nothing in the first place.
by dbr
Sat Mar 23, 2024 8:26 am
Forum: Personal Investments
Topic: How to Determine Retirement AA? [also VCIT or BND?]
Replies: 12
Views: 1036

Re: Bond fund: VCIT vs BND vs???

Need to think about adding bonds. This is not to sell equities but when contributing new. Will start in tax advantaged space. Debating between VCIT or BND, something else, or just adding a bond heavy balanced fund like VG Wellesley. I know that bonds are meant to ballast portfolio during bear markets, but also keeping in mind that bonds shouldn't drag the portfolio too much during bull markets, where % time in bull markets outnumber % of time in bear markets. So that's why I'm considering VCIT instead of BND. You are falling into the trap of imagining that parsing out all the detailed differences between and among all kinds of bonds actually makes a difference. Note that if you think you need bonds with higher expected return and more risk...
by dbr
Sat Mar 23, 2024 7:47 am
Forum: Investing - Theory, News & General
Topic: It is really that simple to do it the Bogleheads way?
Replies: 87
Views: 8171

Re: It is really that simple to do it the Bogleheads way?

Cyath wrote: Sat Mar 23, 2024 4:58 am
So is investing really as easy as buying and holding some recommended index funds? (I have a three-fund portfolio in mind)
The projected returns are 8-9% PA, which is better than what my FA gives me, and does not seem unreasonable given Vanguard's performance.
The investing is easy. Understanding what is going to happen, based on your last sentence above, might not be so simple.

Never expect the expected return.
by dbr
Fri Mar 22, 2024 8:00 am
Forum: Personal Investments
Topic: VWIAX [Vanguard Wellesley Admiral Shares] for 80+ inlaws?
Replies: 16
Views: 1443

Re: VWIAX [Vanguard Wellesley Admiral Shares] for 80+ inlaws?

I was planning on advising that my inlaws (80+) invest in VWIAX (https://investor.vanguard.com/investment-products/mutual-funds/profile/vwiax). However, with an expense ration of 0.16%, would there be a combination of funds (eg. VFIAX, etc.) that would accomplish the same thing, but have a lower expense ration overall? Thanks for any info. That fund is fine in general. It is not "more fine" than lots of other choices in the same asset allocation range of 40/60 stocks/bonds. It may not be as tax efficient for some investors in a taxable account as other ways of arranging one's holdings. As with any other 40/60 allocation it has the risks of both stocks and bonds. Drawdowns in the past include -19% in 2009, -15% in 2022, -9% in 202...
by dbr
Thu Mar 21, 2024 7:27 am
Forum: Personal Finance (Not Investing)
Topic: Tracking gross or net portfolio value
Replies: 16
Views: 917

Re: Tracking gross or net portfolio value

There is a Wiki article on this: https://www.bogleheads.org/wiki/Tax-adj ... allocation.

I personally don't think this is much helpful. Do track down and read the Reichenstein papers in the references for some financial analysis.

Also see here: https://www.google.com/search?sitesearc ... x+adjusted 71,600 posts on the forum.
by dbr
Thu Mar 21, 2024 7:14 am
Forum: Investing - Theory, News & General
Topic: Are TIPS funds useless?
Replies: 25
Views: 4225

Re: Are TIPS funds useless?

if to be useful means that the investment must track inflation upward and downward as inflation occurs , That is exactly what I was hoping for when I bought my first TIPS fund many years ago. It didn't take long to realize that the value of the fund did NOT track inflation well at all. Suspecting that the price of the fund was moving independently based on fluctuating demand for inflation protection, I did an experiment and purchased an individual TIPS bond (easy to do at Vanguard). After tracking that for a while, I realized that although the market value of an individual TIPS bond is also affected by fluctuating demand, those price movements are irrelevant unless I'm going to sell that TIPS before it matures. If holding to maturity, the ...
by dbr
Wed Mar 20, 2024 12:07 pm
Forum: Investing - Theory, News & General
Topic: Trinity Study Update wiki reference to Monte Carlo
Replies: 4
Views: 574

Re: Trinity Study Update wiki reference to Monte Carlo

https://www.bogleheads.org/wiki/Trinity_study_update#cite_note-1 This wiki which is mainly based on the 2011 update also references a Monte Carlo simulation done by forum member Dick Purcell (who has not posted in a while). The MC results are something that don't seem to align with other freely available MC's I have seen. Net-net, it states: 1. A 4% withdrawal rate has an 87% probability of success over 30 years 2. A 3.5% rate has a 92% success rate over 30 years 3. With 3%, it is 97-98% Is this still valid and should it be included in the wiki? Or is this just one forum member's analysis? This looks like one particular forum member's one particular analysis. By definition an MC simulation is valid on its own terms. I am not sure any MC si...
by dbr
Wed Mar 20, 2024 12:05 pm
Forum: Investing - Theory, News & General
Topic: Trinity Study Update wiki reference to Monte Carlo
Replies: 4
Views: 574

Re: Trinity Study Update wiki reference to Monte Carlo

https://www.bogleheads.org/wiki/Trinity_study_update#cite_note-1 This wiki which is mainly based on the 2011 update also references a Monte Carlo simulation done by forum member Dick Purcell (who has not posted in a while). The MC results are something that don't seem to align with other freely available MC's I have seen. Net-net, it states: 1. A 4% withdrawal rate has an 87% probability of success over 30 years 2. A 3.5% rate has a 92% success rate over 30 years 3. With 3%, it is 97-98% Is this still valid and should it be included in the wiki? Or is this just one forum member's analysis? This looks like one particular forum member's one particular analysis. By definition an MC simulation is valid on its own terms. I am not sure any MC si...
by dbr
Wed Mar 20, 2024 11:45 am
Forum: Investing - Theory, News & General
Topic: Managing Market Risk in Holding a TIPS Fund
Replies: 20
Views: 1542

Re: Managing Market Risk in Holding a TIPS Fund

This is oversimplified or perhaps tangential. I am not sure what you are really trying to do, but it could be that the best answer is that the sensitivity of the NAV, hence fluctuations in return, of a bond fund to interest rate changes is proportional to the duration. Therefore you manage that risk by holding a shorter duration fund. There are TIPS funds and ETFs at short, intermediate, and long durations. Some investors are so obsessed with losing money in a bond fund that rather than stretch for obscure and not really valid "rules" such as twice duration or other mickey mouse one should just not invest in bond funds. They don't meet the needs of that investor. A better choice in that case would be I bonds, or for the nominal i...
by dbr
Wed Mar 20, 2024 10:01 am
Forum: Investing - Theory, News & General
Topic: Managing Market Risk in Holding a TIPS Fund
Replies: 20
Views: 1542

Re: Managing Market Risk in Holding a TIPS Fund

This is oversimplified or perhaps tangential. I am not sure what you are really trying to do, but it could be that the best answer is that the sensitivity of the NAV, hence fluctuations in return, of a bond fund to interest rate changes is proportional to the duration. Therefore you manage that risk by holding a shorter duration fund. There are TIPS funds and ETFs at short, intermediate, and long durations. Some investors are so obsessed with losing money in a bond fund that rather than stretch for obscure and not really valid "rules" such as twice duration or other mickey mouse one should just not invest in bond funds. They don't meet the needs of that investor. A better choice in that case would be I bonds, or for the nominal in...
by dbr
Wed Mar 20, 2024 9:01 am
Forum: Investing - Theory, News & General
Topic: Are TIPS funds useless?
Replies: 25
Views: 4225

Re: Are TIPS funds useless?

I have a question. Would it be fair to say that if people thought of TIPS as a Real Yield investment instead of purely "inflation protection" they might understand the gyrations a little better because aren't they gyrations caused by changes in real yields not inflation? Does that make sense or am I totally off base here? That is helpful. TIPS and I bonds could m ore accurately be called real yield instruments. TIPS still have term risk, meaning NAV variation with changes in real yield and I bonds might be called a real cash equivalent investment. This is much closer to a factual description of how those investments are configured and behave than is trying to label the investment with an idiotic term such as "inflation prote...
by dbr
Wed Mar 20, 2024 8:43 am
Forum: Investing - Theory, News & General
Topic: Are TIPS funds useless?
Replies: 25
Views: 4225

Re: Are TIPS funds useless?

To be more blunt about the issue, if to be useful means that the investment must track inflation upward and downward as inflation occurs, then TIPS funds and TIPS bonds individually don't do that. Therefore they are both useless. I bonds do that, so a person that wants that can use I bonds if they can figure out how to hold the needed total amount of bonds.
by dbr
Tue Mar 19, 2024 8:00 pm
Forum: Investing - Theory, News & General
Topic: Are TIPS funds useless?
Replies: 25
Views: 4225

Re: Are TIPS funds useless?

Looking back at most TIPS etfs, they all experienced negative downturns due to rising interest rates, albeit far less than total bond funds like BND, but it got me thinking, if there ever is rising inflation again, the feds will most likely raise rates again like this time, perhaps not as fast or high, but this will still cause negative affects on bond funds. the rate of return achieved by the TIPS funds was practically negated shortly after from the rising rates, so what was the point , why not just hold BND? Or, alternatively why not just hold TIPS? But, in the long term there is nothing magic either way. Some people might feel that high unexpected inflation is a special risk for them and prefer a real dollar holding. You could argue tha...
by dbr
Tue Mar 19, 2024 9:51 am
Forum: Personal Finance (Not Investing)
Topic: Did you use Real Estate to build wealth?
Replies: 72
Views: 9353

Re: Did you use Real Estate to build wealth?

The only person I personally know who seriously attempted wealth through real estate died with $8M. The question is whether that is more or less than he would have achieved some other way.
by dbr
Mon Mar 18, 2024 9:08 am
Forum: Personal Investments
Topic: Reported bond fund return inconsistancy
Replies: 8
Views: 449

Re: Reported bond fund return inconsistancy

Portfolio Visualizer shows a return for Jan-Feb of 2024 for VBTLX of -1.61% and for SWAGX of -1.53%. Those numbers are a legitimate report for that parameter for that date range. For Jan 2018 to Feb 2024 the data for CAGR are 0.63% and 0.52%.
by dbr
Mon Mar 18, 2024 8:22 am
Forum: Personal Finance (Not Investing)
Topic: Medicare: Getting Part A and D only
Replies: 89
Views: 4986

Re: Medicare: Getting Part A and D only

I'm kicking this around. I know I'm not getting any younger and may change my mind, but for most of the years of my life, I've gone to a Dr once a year, for a physical. Typical Dr office costs are in the $200-400 range (a physical would probably be somewhat more). I'd pay more per year in just a few months of Part B. Thoughts? Too risky? Too something else I'm not thinking of? Very serious, very expensive health problems occur unpredictably no matter your previous health. You can also be seriously injured and even permanently disabled by accident. You have the opportunity to take Medicare and Medigap in one form or another and would be really stupid not to do it. Also, the worst economy in the world is to short change your health insurance...
by dbr
Sun Mar 17, 2024 4:09 pm
Forum: Personal Investments
Topic: Newbie - Front Load End and ER
Replies: 11
Views: 718

Re: Newbie - Front Load End and ER

Just off hand the "evil" front end load may be far less harmful than what seems to be an innocent AUM. In the first place the AUM is charged forever and in the second place as the holding grows the AUM grows with it. The front end load is only billed against the initial purchase. Of course the best thing is no load, no AUM, and a minimal ER.
by dbr
Sun Mar 17, 2024 4:06 pm
Forum: Investing - Theory, News & General
Topic: How to prove that I am not losing money with bond funds?
Replies: 118
Views: 15086

Re: How to prove that I am not losing money with bond funds?

I read so many times that as long as I keep a bond fund to the duration of the bond fund maturity, I will not lose my capital. This is just my opinion, but I think this is one of many instances where you take some platitude and then by changing one word it becomes nonsensical. I see this on BH forums a lot. I believe what you have may have read many times is that changes in interest rate are irrelevant if you buy a bond and hold a bond to maturity. That is true enough to be useful. So by changing that to bond fund it becomes effectively nonsense. That's what I think anyway. Some other people might agree with you. One thing's for sure: if you hold a bond fund long enough, you're likely to make some money eventually. Yes, nonsense indeed. On...
by dbr
Sun Mar 17, 2024 3:49 pm
Forum: Personal Investments
Topic: Newbie - Front Load End and ER
Replies: 11
Views: 718

Re: Newbie - Front Load End and ER

For example, if you have a financial advisor and are paying an assets under management fee, then most likely any loads are waived. That would show as a different class fund, such as R instead of C. In a 401k you should also not be paying loads but it may be hard to find where the actual charges are listed, or in this case that there are none.
by dbr
Sun Mar 17, 2024 3:03 pm
Forum: Investing - Theory, News & General
Topic: Anybody heard stories of well "prepared" retirees running out of money?
Replies: 210
Views: 23834

Re: Anybody heard stories of well "prepared" retirees running out of money?

I can understand the flexibility of probabilities, but I wonder if there are actual & recent real-life cases proving their point , or if it a strategy to get more $ from investors. This might include experiences in which people started with sound recommended practices (like 4% or the above) and had to re-adjust way down permanently & prematurely . I am not talking about normal slow-go/no-go phases and I assume that most prudent (I almost wrote sane) people will use some references to foresee the problem before running out of money, So any case? I don't personally know anyone who ran out of money in retirement, but if one had retired in 2000 and started the 4% SWR adjusted to annual inflation, that person would have had to abandon t...