Bogleheads.org

gjlynch17

When you hold bonds for safety... I know there are some who "hold bonds for safey" and for no other reason, but some hold bonds for other reasons. Apparently this paper came out after the 2018 discussion ended: https://personal.vanguard.com/pdf/ISGEMB.pdf Its about emerging market bonds and not hig...

gjlynch17

I am resurrecting this thread as I found it after I had come to some of the preliminary questions as the original author regarding the role of high yield bonds in a portfolio. I am in my early fifties and am doing some research and planning in anticipation of a hoped for early retirement in the next...

gjlynch17

I used to be with Optum Bank. They were fine. I switched to Fidelity a year ago. Fidelity is far superior.

gjlynch17

I like the distribution yield. I don't see the downside. The NAV of my holding in Vang. Intermed. mun... VWIUX is the same or higher after the fund pays dividends every month. The after tax distribution yield beats the return on a 3% CD. What's not to like? The SEC Yield is a nonfactor. When the af...

gjlynch17

I think that the distribution yield is very relevant. That's the amount that they pay out monthly. That's the amount that you pay taxes on. I agree that part of the distribution yield is due to IRS DISCOUNT RULES ...From David Grabiner... This is a different phenomenon, caused by IRS rules. If a mu...

gjlynch17

Thank you David. You are very informative and helpful as always. I have learned a lot on these forums.

gjlynch17

Thanks David! I'm still learning. I'd forgotten that some muni funds pay dividends DAILY and not monthly. That would explain why the NAV doesn't drop on dividend days. I keep hearing that Vanguard muni funds pay out some of the principal as interest. I still have a hard time with that. VWIUX's NAV ...

gjlynch17

I'm looking to open an HSA. I'm self-employed so can choose anywhere. Vanguard only has funds at three institutions and two of the three have ridiculous fees and the third, BofA, doesn't have a fund that matches my goals. What I really want is an a VTSAX alternative at a good company with preferabl...

gjlynch17

Actually, maybe not. Brokers make money of of uninvested cash. All of the people who use Fidelity as their bank here have money in FIdelity money market funds--and Bogleheds generally have more money in their checking accounts than the average person. Those funds have expense ratios around .4%. Tha...

gjlynch17

The OP asked a great question. I am more sympathetic to high yield bonds than many posters and believe they have a useful role in a portfolio, especially for retirees. I hope to address this in more depth in future post but generally I am in agreement with William Bernstein (see classic blogpost bel...

gjlynch17

IMHO, the underfunded pension thing argues for zero muni's. Underfunded pensions are a big issue, especially for some states such as Illinois and New Jersey. However, the biggest debtor with unfunded future retirement and health care promises is the U.S. federal government. Many individuals on this...

gjlynch17

I like VSS also. It was one of our largest holdings. However, if you are looking for a good International Developed Market Small Cap ETF, I would recommend Schwab International Small Cap (SCHC). It has an expense ratio of 0.12% (compared to 0.39% for SCZ) and fairly good liquidity.

gjlynch17

The heuristic here seems to be no more than 50% of fixed in muni's, no more than half of these state specific. Cali's credit, generally speaking, is in the bottom quartile of states, but VCADX versus VWIUX for example, has similar amounts of AAA/AA issues (Cali fewer AAA and more AA). I have never ...

gjlynch17

Thanks everyone. How about corporate bonds similar to VFICX (Vanguard Intermediate-Term Investment-Grade Fund Investor Shares 0.2%)? Would you use non Fidelity ETFs for that? When I looked at this approximately a year ago, I was trying to come up with a Fidelity combination that had a similar profi...

gjlynch17

But wouldn’t the gains outweigh the tax benefit of slowing down the growth of a tax advantaged account like a 401k? No, because you get the same gains in either case. Both portfolios end up with $1.5M but the stocks-in-traditional portfolio has more dollars exposed to income tax. Oh I see what you’...

gjlynch17

Thanks for catching the typo. I fixed it in the post. I concur that the inclusion of EM bonds is not always better. What I found interesting is how close the actual returns of the two portfolios were. I do not currently own any EM bonds as I am still in my accumulation phase (~ five years until hop...

gjlynch17

Actually, per the Portfolio Visualizer results linked below, since over the last 12 years a portfolio of 25% US Total Market Index / 25% Total International / 40% US Total Bonds / 10% EM Bonds had better results than a portfolio of 30% US Total Market Index / 30% Total International / 40% US Total ...

gjlynch17

Actually, per the Portfolio Visualizer results linked below, since over the last 12 years a portfolio of 25% US Total Market Index / 25% Total International / 40% US Total Bonds / 10% EM Bonds had better results than a portfolio of 30% US Total Market Index / 30% Total International / 40% US Total ...

gjlynch17

Taxable shouldn't be the first choice given the higher yield of EM bonds. +1. I can't imagine any scenario where it makes sense to put EM bonds in taxable accounts. For better risk adjusted returns, take the allocation from the equity side. Example: going from 60% equities / 40% total bond => 50% e...

gjlynch17

14% of my Beta retirement portfolio is in Emerging Fixed Income (Hedged), using VWOB. I have no complains. However, the active Vanguard offering VEGBX is very intriguing. As a principle I prefer the index but I'm trying to figure out if there's a good case for going active here, let's look at the m...

gjlynch17

Similar situation for me. My plan: do nothing unless I need the money (unlikely). I suspect it will become obvious at some point what I should do. If not, that's ok too. I do (very much) like the American University in Rome idea. I'm going to look into whether that actually works. Would be VERY int...

gjlynch17

Discussion here in 2016 had IUSB ER much higher. Now IUSB ER is now 0.06%, BND is 0.03%, AGG is 0.05%. In turns of yield, IUSB is higher than the other two. If we subtract ER from yield, it seems the net for IUSB is still ahead. Does it change the equation. If this is in a bucket for growth or mone...

gjlynch17

I would use Vanguard's numbers. https://institutional.vanguard.com/VGApp/iip/site/institutional/researchcommentary/article/InvComVanguardGlobal2020# Research Affiliates also has an expected returns model and you can see their forecasts here: https://interactive.researchaffiliates.com/asset-allocati...

gjlynch17

jhawktx wrote: ↑
Thu Jan 02, 2020 6:53 pm
What is VTCLX?

Vanguard Tax Managed Capital Appreciation.

gjlynch17

There is also a good Wiki that substantially summarizes the information in this thread. The data is two years old but probably does not change the conclusion that a combination of VTCLX/VTMSX (in a 90%/10% to more closely approximate VTSAX) is slightly more tax efficient than VTSAX in the 37% tax br...

gjlynch17

Grabiner, thanks for preparing and updating the International Small Cap Wiki.

I believe the expense ratio for VSS should be 0.11%, which Vanguard announced last week.

https://investornews.vanguard/expense-r ... s-for-you/

gjlynch17

Why are Vanguard's forecasts any better than BlackRock or Robeco or BNYMellon or JPMorgan or ResearchAffiliates or GMO? (Okay, they're probably better than GMO.) I'd take an average of several sources if you're going to use them. +1. This is exactly what I do. I am still a few years away from retir...

gjlynch17

I applaud Vanguard for attempting to close the gap they have with the industry's low-cost leaders! Unfortunately, it appears they still have more work to do. Maybe next year. They more than closed the gap in some asset classes, primarily bonds. Vanguard's corporate bond funds (VCSH, VCIT, VCLT and ...

gjlynch17

We are in a similar situation and here are some additional ideas, some of which are discussed above. 1. Backdoor Roth: You and your spouse can convert $12,000 in after-tax income to a Roth 2. HSA: $7,000. 3. Cash Balance Plans are a potentially significant deferral opportunity. Many law firms have t...

gjlynch17

I looked and hadn't seen any discussion of the impending expense changes for Vanguard's Sector Bond Index Funds*. Per the August 31, 2019 annual report released last month (PDF) , the ETFs for the bond index funds are likely going to have ERs of 3 bp vs 7 bp for the Admiral Shares (and 5 bp for the...

gjlynch17

The Fed's rate cuts continue to have an effect on lower rates for savings accounts and money market funds. Fitness Bank, which offers the highest rates on savings accounts so long as one averages 12,500 steps per day, lowered their top rate to 2.60% from 2.75%. Other savings and money market rates t...

gjlynch17

I agree with alex_686 and Northern Flicker on the uncompensated risks of buying individual corporate bonds. However, I am more bullish than alex_686 on fixed maturity date corporate bond ETFs and believe that they can serve an important function in liability matching for retirement income of other k...

gjlynch17

frugaltigris wrote: ↑
Tue Oct 01, 2019 8:43 am
This is good news. Let us see how Fidelity and Vanguard react. My guess is that Fidelity would react and Vanguard would ignore.

Concur this is great news for investors! Vanguard was already ahead with commission free ETFs but Schwab is upping the ante with stocks. I hope Fidelity follows suit.

gjlynch17

I am in a similar situation and am opting for a combination of Items #2 (High Yield Savings) and #3 (Money Market). I avoided CDs due to interest penalties for early withdrawal. The Money Market accounts are primarily for cash management (deposits, bill pay, etc.). For the High Yield Savings, I opte...

gjlynch17

Could this mean a freeze-up in my Vanguard MM funds could happen? Maybe the jump in repo rates will finally make Federal MM funds attractive[?] The Federal MM funds have been underperformers of the new lot since money market reform. I do not believe this has had an impact on Treasury or Federal Mon...

gjlynch17

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gjlynch17

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gjlynch17

International equities may or may not be undervalued right now, but I don't think it's possible to use crisp and simple math to draw such conclusions, because equities are incredibly complex black boxes compared to bonds. Earnings and expected future earnings drive stock returns, and this year's di...

gjlynch17

It *is* possible to calculate the current yield on a hedged international bond, and the formula for a eurobond would be something like: Yield = SEC Yield + (USD short-term interest rate - Euro short-term interest rate) You can try doing that on BNDX (for instance using some money market yields for ...

gjlynch17

COnsider the High Yield Tax Exempt. I have held for many years. Can you explain why this one? I’ve read things about it holding riskier bonds? But the performance looks great!! Added your suggestion to the topic. Thanks. High Yield Tax Exempt (VWALX) is an excellent investment grade municipal bond ...

gjlynch17

iShares iBond ETFs are potentially a great tool for building a bond ladder for specific expenses. For example, I am currently age 50 and hope to retire in approximately five years and I intend to build a bond ladder to Age 70 using some combination of iShares iBonds, CDs, Treasuries, STRIPs and TIPS...

gjlynch17

Do you have existing muni holdings? If so, you may want to mix in some of Vanguard’s high-yield national muni fund (VWALX) along with VWIUX. I have been buying some recently myself as a complement to my existing large blue-chip individual muni bond portfolio. I would not necessarily buy VWALX if it...

gjlynch17

These are all historical, backwards-looking results that have limited predictive value. As has been said before, the rear view mirror is much clearer than the windshield. I still invest internationally, despite recent performance, in the belief that more diversification will pay off in the long run...

gjlynch17

Commercial agreements are, I would assume, a major part of most in house businesses, but I would disagree that they are now - or will continue to be in the future - the primary user of more senior lawyers’ time, and in many cases may not be handled primarily (or at all) by the legal department. In ...

gjlynch17

You have gotten good advice from HEDGEFUNDIE and HockeyFan99. My own perspective is from being in the legal profession (business) for 25 years. I started as a corporate associate at an AmLaw 50 firm in a large city in the mid 1990s and can remember having the same issues you identified. Being an ass...

gjlynch17

Yesterday I decided to log on to my Vanguard account. I noticed on the main web page that they were heavily promoting their active funds. Large banner ads all over the front page about their "flying under the radar" actively managed funds. Another banner about how all of their original funds were a...

gjlynch17

However, I would respectfully suggest that this is a flawed analysis. Without giving you my exact social security numbers, I determined my likely payments starting at both 62 and 70. For each year, I discounted that payment by (1+i)^n where i is some interest rate and n is the number of years away ...

gjlynch17

You are mainly missing one additional factor that has a huge impact on the outcome. There is not only the dividend drag, but the 15-20% LTCG tax when you withdraw. Although it does not slow the compounding, it takes off a huge bite from the equity-in-taxable when you are ready to spend the funds. I...

gjlynch17

I'm confused by the muni in taxable vs BND in deferred math. Maybe someone can help me understand. Right now I'm also in 37+3.8 = 40.8% income bracket with 20+3.8 = 23.8% capital gains. Assume 100,000 in VTSAX and 100,000 in muni/BND. Only difference is placement. 100,000 VTSAX in taxable costs me ...

gjlynch17

Investing in CA's top bracket has caused me to consider VTCLX vs. VTI. I'm putting all new after-tax equity investment into VTCLX now to avoid the huge shave on dividends. Does not seem like a big difference in tax cost between those two. According to my calculations, based on current 30-day yields...

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