Search found 343 matches

by sean.mcgrath
Wed Jun 17, 2020 3:51 am
Forum: Personal Investments
Topic: Tax consequences of IB Stock Yield Enhancement program?
Replies: 48
Views: 2535

Re: Tax consequences of IB Stock Yield Enhancement program?

Some rates I've seen (looking over past statements): MFDX 8.37%, REET 9.13%, SMLF 16.82%, EMGF 8.20%, GSLC 6.06%. In general, the more AUM the lower the borrow rate you'll get since there are so many shares out there floating around. That said, I've also owned some tiny funds (RZV) that had very lo...
by sean.mcgrath
Wed Jun 17, 2020 2:25 am
Forum: Personal Investments
Topic: Tax consequences of IB Stock Yield Enhancement program?
Replies: 48
Views: 2535

Re: Tax consequences of IB Stock Yield Enhancement program?

Is'nt there a risk in lending, it is not insured, besides IB being the borrower and unless they go under, that is all the insurance? Hi annu, I believe there is a theoretical risk, but the short-seller has to put up cash that is segregated at IB. As I posted above: As to the mechanics, according to...
by sean.mcgrath
Wed Jun 17, 2020 2:10 am
Forum: Personal Investments
Topic: Tax consequences of IB Stock Yield Enhancement program?
Replies: 48
Views: 2535

Re: Tax consequences of IB Stock Yield Enhancement program?

Yes I found that too. You can do the same in Client Portal. My AVDV will cost you a whopping borrow rate of 19.15% today, and someone actually borrowed my shares yesterday. I'll surely be able to retire soon off this :-) One thing that's odd though, when I run a report to show SYEP in the section "...
by sean.mcgrath
Wed Jun 17, 2020 2:04 am
Forum: Investing - Theory, News & General
Topic: What famous investing quote reminds you of your investing style?
Replies: 135
Views: 6142

Re: What famous investing quote reminds you of your investing style?

Well, he SHOULD have! True! (although you appear to be an exception to the rule) I was at a wedding, where there was a "Mark Twain quote" on the napkins. My sister-in-law snorted "Mark Twain would never have said that!" We all Googled, found the quote everywhere, but never a source. I always remind...
by sean.mcgrath
Tue Jun 16, 2020 3:15 pm
Forum: Personal Investments
Topic: Tax consequences of IB Stock Yield Enhancement program?
Replies: 48
Views: 2535

Re: Tax consequences of IB Stock Yield Enhancement program?

A minor update: it turns out you can add the short selling fee (%) for your holdings as a field in the IB app. It's sort of fun to see what the market demand is on betting that my ETF will go down (but no, I don't do anything with the information). Right now it will cost you 5.94% to short FNDF, but...
by sean.mcgrath
Tue Jun 16, 2020 2:24 pm
Forum: Investing - Theory, News & General
Topic: What famous investing quote reminds you of your investing style?
Replies: 135
Views: 6142

Re: What famous investing quote reminds you of your investing style?

Well, he SHOULD have! True! (although you appear to be an exception to the rule) I was at a wedding, where there was a "Mark Twain quote" on the napkins. My sister-in-law snorted "Mark Twain would never have said that!" We all Googled, found the quote everywhere, but never a source. I always remind...
by sean.mcgrath
Tue Jun 16, 2020 2:02 pm
Forum: Investing - Theory, News & General
Topic: What famous investing quote reminds you of your investing style?
Replies: 135
Views: 6142

Re: What famous investing quote reminds you of your investing style?

bertilak wrote:
Tue Jun 16, 2020 8:51 am
Mark twain said
  • It's easier to fool a man than to convince him he's been fooled.
Let's test the assertion: Mark Twain never said that.
by sean.mcgrath
Mon Jun 15, 2020 5:12 am
Forum: Personal Investments
Topic: Emerging Markets Multifactor ETF
Replies: 14
Views: 900

Re: Emerging Markets Multifactor ETF

VillageVanguard wrote:
Sun Jun 14, 2020 9:04 pm
Does anyone have a recommended Emerging Market ETF if they use one at all?
For what it's worth, I use FNDE, Russell Fundamental Emerging Markets. One of the lower ERs I was able to find. Of course, recent performance has been miserable, but I have kept to my allocation %. :beer
by sean.mcgrath
Mon Jun 15, 2020 2:17 am
Forum: Personal Finance (Not Investing)
Topic: Should you take a counteroffer from your employer?
Replies: 34
Views: 3490

Re: Should you take a counteroffer from your employer?

Depends on the company and your management chain. Your manger can’t pay you more even if he wants to. But we have a different budget for ‘retention/compete’. It happens more often than you’d think. +1 We also have a different budget for this, and I've yet to see accepting a counter-off be taken as ...
by sean.mcgrath
Sun Jun 14, 2020 1:42 pm
Forum: Personal Consumer Issues
Topic: Retiring Abroad
Replies: 109
Views: 10769

Re: Retiring Abroad

Thanks for the detailed response. I feel like a comfort level with the local language would be good whether it is needed or not. Seems like most people appreciate the effort (except maybe the French!). The French absolutely appreciate the effort (probably because they are proud of their language)! ...
by sean.mcgrath
Sun Jun 14, 2020 1:34 pm
Forum: Personal Consumer Issues
Topic: Retiring Abroad
Replies: 109
Views: 10769

Re: Retiring Abroad

Thanks to everyone for the informative responses. Not really looking to save money, but more interested in the adventure and of the experience of immersion into another culture, etc. Moving to another country only to immediate start searching for the nearest McDonalds is not the experience we’re lo...
by sean.mcgrath
Sun Jun 14, 2020 11:11 am
Forum: Investing - Theory, News & General
Topic: The “Abandon Bonds” strategy
Replies: 200
Views: 16220

Re: The “Abandon Bonds” strategy

I've never used it, but there are monte carlo simulations. I didn't even know that a free tool for doing this appears to exist, until just now: https://www.portfoliovisualizer.com/monte-carlo-simulation Yes, dbr suggested something like this as he felt percentiles would be interesting to look at. I...
by sean.mcgrath
Sun Jun 14, 2020 10:57 am
Forum: Investing - Theory, News & General
Topic: The “Abandon Bonds” strategy
Replies: 200
Views: 16220

Re: The “Abandon Bonds” strategy

I believe in a balanced approach. So, any AA in the 70/30 to 30/70 range with a reasonable size of the emergency fund is a good AA. I am just against the extreme end of the AA. Clear, thanks. *** Edit *** [apologies, Klang, but I couldn't help myself...] 1) You do not need the money. That does not ...
by sean.mcgrath
Sun Jun 14, 2020 10:31 am
Forum: Investing - Theory, News & General
Topic: The “Abandon Bonds” strategy
Replies: 200
Views: 16220

Re: The “Abandon Bonds” strategy

As soon as you need to withdraw from the portfolio, there is always a possibility that you need to withdraw while the market drops 50%. In those cases, the 70/30 will beat 100/0. It is a 50% loss versus a 35% loss for your withdrawal. And, the loss is permanent. There is no recovery from that. P.S....
by sean.mcgrath
Sun Jun 14, 2020 10:02 am
Forum: Investing - Theory, News & General
Topic: The “Abandon Bonds” strategy
Replies: 200
Views: 16220

Re: The “Abandon Bonds” strategy

I've never used it, but there are monte carlo simulations. I didn't even know that a free tool for doing this appears to exist, until just now: https://www.portfoliovisualizer.com/monte-carlo-simulation Yes, dbr suggested something like this as he felt percentiles would be interesting to look at. I...
by sean.mcgrath
Sun Jun 14, 2020 9:47 am
Forum: Investing - Theory, News & General
Topic: The “Abandon Bonds” strategy
Replies: 200
Views: 16220

Re: The “Abandon Bonds” strategy

Fundamental analysis in economics does this. You rely on things like population growth, productivity, political policy, etc. and try to estimate future outcomes. After all the proposition that one will become wealthier by owning part of the means of production (stocks) than by loaning money to peop...
by sean.mcgrath
Sun Jun 14, 2020 9:20 am
Forum: Investing - Theory, News & General
Topic: The “Abandon Bonds” strategy
Replies: 200
Views: 16220

Re: The “Abandon Bonds” strategy

Well, I actually did not state that you stated that... :P :wink: Fair. :sharebeer I don't think anyone is "so certain that it will be the opposite of the past", they are only certain that the future is uncertain. Looking only at US data is also a sort of survivorship bias. As implied here: Past 100...
by sean.mcgrath
Sun Jun 14, 2020 8:59 am
Forum: Investing - Theory, News & General
Topic: The “Abandon Bonds” strategy
Replies: 200
Views: 16220

Re: The “Abandon Bonds” strategy

Hi Klang, Thank you for a very detailed post. A few questions/comments: 1) From 1926 to 2018, the average annual return of 70/30 is 9.1%. The average annual return of 100/0 is 10.1%. The difference is only 1% per year. ... A) The difference between 70/30 and 100/0 is small. B) It could only be signi...
by sean.mcgrath
Sun Jun 14, 2020 7:27 am
Forum: Investing - Theory, News & General
Topic: The “Abandon Bonds” strategy
Replies: 200
Views: 16220

Re: The “Abandon Bonds” strategy

Well the range between high and low is much larger for 100/0 than for less in stocks. So that is a very uncertain outcome. You will also notice that is accounted for by the high being much higher but the lows are all in about the same place. The median is higher for more stocks but is a worse and w...
by sean.mcgrath
Sun Jun 14, 2020 4:44 am
Forum: Investing - Theory, News & General
Topic: The “Abandon Bonds” strategy
Replies: 200
Views: 16220

Re: The “Abandon Bonds” strategy

There is very little extra return to be gain to go beyond 70/30. Klang, this is the part I have been trying to understand. What do you base it on? I understand that the simulations have many limitations but, as I posted above, when I run a 25 year simulation in cFireSim, 100% stocks has a 30% highe...
by sean.mcgrath
Sat Jun 13, 2020 2:38 pm
Forum: Investing - Theory, News & General
Topic: The “Abandon Bonds” strategy
Replies: 200
Views: 16220

Re: The “Abandon Bonds” strategy

That is a question left for the reader. My point is to be aware of it. Keep in mind that one possibility is that the pathway might be one where there is a 50% plunge in assets just before retiring. So the typical way that example is structured is that one would rather accumulate $10M and have that ...
by sean.mcgrath
Sat Jun 13, 2020 2:36 pm
Forum: Investing - Theory, News & General
Topic: The “Abandon Bonds” strategy
Replies: 200
Views: 16220

Re: The “Abandon Bonds” strategy

Basically that becomes an argument that stocks are not risky over long holding times. That concept is of questionable validity. No, you missed the context. We were discussing the specific results of cimfire simulations, so discussing historical returns. No assumption that the future will mirror the...
by sean.mcgrath
Sat Jun 13, 2020 9:40 am
Forum: Investing - Theory, News & General
Topic: The “Abandon Bonds” strategy
Replies: 200
Views: 16220

Re: The “Abandon Bonds” strategy

Well the range between high and low is much larger for 100/0 than for less in stocks. So that is a very uncertain outcome. You will also notice that is accounted for by the high being much higher but the lows are all in about the same place. The median is higher for more stocks but is a worse and w...
by sean.mcgrath
Sat Jun 13, 2020 9:35 am
Forum: Personal Consumer Issues
Topic: Really hard to avoid "Keeping up with the Joneses"!
Replies: 313
Views: 32029

Re: Have you ever kept up with the Jones’?

Typically we don't -- we tend to save/spend for what we value.

However, if I understood your numbers correctly, it sounds like the difference between the two options is less than 10%. That doesn't seem so bad to me. I would go along with a few extra percent if the rest of the family values it.
by sean.mcgrath
Sat Jun 13, 2020 9:22 am
Forum: Investing - Theory, News & General
Topic: The “Abandon Bonds” strategy
Replies: 200
Views: 16220

Re: The “Abandon Bonds” strategy

It is more than just swings. The compounded end result also becomes far more uncertain. How do you analyze that, dbr? It sounds reasonable, but I just tried in cfiresim out of curiosity. I used$1M portfolio, withdraw 4% per year and got: % Equity/High/Low/Median 100/$9.8M/-$54k/$2.5M 70/$5.0M/-$68k...
by sean.mcgrath
Sat Jun 13, 2020 8:55 am
Forum: Investing - Theory, News & General
Topic: The “Abandon Bonds” strategy
Replies: 200
Views: 16220

Re: The “Abandon Bonds” strategy

Exactly. A possible response to low bond yields is to shift more to stocks as long as one understands that is a different game with different consequences. Yes, I decided some years ago to invest 100% equities going forward. If you don't mind the swings (which I never have) it does seem the most ra...
by sean.mcgrath
Fri Jun 12, 2020 5:09 am
Forum: Non-US Investing
Topic: Hedging equities?
Replies: 35
Views: 2149

Re: Hedging equities?

"Simple strategy: not currency-hedge equities, fully currency-hedge bonds." I agree. With our FI we go one step futher. We only hold USD denominated investment grade bonds and cash. Since our regional currency is the USD we see no advantage owning non-USD denominated FI assets other than to hedge a...
by sean.mcgrath
Thu Jun 11, 2020 9:30 am
Forum: Investing - Theory, News & General
Topic: Updates: 60/40 VS 30/70 Allocation for Retirees: Bernstein VS Ferri ? What Did You Do Post Pandemic RBD 3/2020?
Replies: 231
Views: 29121

Re: 60/40 VS 30/70 "Center Of Gravity"@@ Allocation for Retirees ??? Bernstein VS Ferri ?? -- What Would You Do?

Question: 1. Considering Berstein's 2002 recommendation for a 60/40 allocation and also, R. Ferri's suggestion of a 30/70 allocation as the better "center of gravity" for retirees, what do you feel is the best allocation for a retiree? Why 2. If you are not yet a retiree, which allocation would you...
by sean.mcgrath
Thu Jun 11, 2020 8:39 am
Forum: Non-US Investing
Topic: US stock tilt for European investors
Replies: 22
Views: 1083

Re: US stock tilt for European investors

Mr Bogle used to recommend an international (ex-US) allocation of no more than 20%. Vanguard recommends 20-40%. I am wondering if this approach would be worth it for an European investor (such as myself). Is anyone here using this strategy? Do you think that it's wise to reduce ex-US stocks to 30% ...
by sean.mcgrath
Thu Jun 11, 2020 8:09 am
Forum: Non-US Investing
Topic: Hedging equities?
Replies: 35
Views: 2149

Re: Hedging equities?

Do you have any evidence of currencies typically reverting towards "normal" PPP over the long run? Or put another way, why do you believe it's a thing? And if I did want to mitigate that, what options do I have? I am not keen on upping exposure to UK companies and I live and work here, so have enou...
by sean.mcgrath
Thu Jun 11, 2020 8:08 am
Forum: Non-US Investing
Topic: Hedging equities?
Replies: 35
Views: 2149

Re: Hedging equities?

duplicate post
by sean.mcgrath
Tue Jun 09, 2020 6:57 am
Forum: Non-US Investing
Topic: The Mighty USD
Replies: 58
Views: 4509

Re: The Mighty USD

Valuethinker. The reason I believe the USD will not crash is because there is no real alternative. The nearest competitor is the Chinese RMB. IMO it's not even close to being ready. Hi Galeno, You need to be careful not to confuse reserve currency status with value. The US has been the de facto res...
by sean.mcgrath
Tue Jun 09, 2020 5:53 am
Forum: Non-US Investing
Topic: The Mighty USD
Replies: 58
Views: 4509

Re: The Mighty USD

I believe predicting rates in the near term is akin to market timing. However, I do believe that PPP is a real way to measure potential risk over decades. The fact is that the USD is quite overvalued in PPP terms. Probably for good reasons: reserve currency with lots of uncertainty in the world; boo...
by sean.mcgrath
Tue Jun 09, 2020 5:34 am
Forum: Non-US Investing
Topic: Hedging equities?
Replies: 35
Views: 2149

Re: Hedging equities?

Consensus seems to be that volatility of equities is so high that it dwarfs volatility of currency movements -> no need to hedge currency on equity part of portfolio. Thanks both for the links. I have just gone through quickly and will read them more carefully later. At a first glance I see two top...
by sean.mcgrath
Tue Jun 09, 2020 2:55 am
Forum: Investing - Theory, News & General
Topic: You have a second chance to reduce your stock holdIng
Replies: 112
Views: 12827

Re: You have a second chance to reduce your stock holdIng

This is not a post about market timing. There are enough of those. So think about how you felt over the past few months, and maybe that was a sign that your allocation was too aggressive. Since the stock market is back to even today, it’s like the calendar went back to January and granted you a rep...
by sean.mcgrath
Sun Jun 07, 2020 2:32 pm
Forum: Non-US Investing
Topic: Hedging equities?
Replies: 35
Views: 2149

Re: Hedging equities?

Consensus seems to be that volatility of equities is so high that it dwarfs volatility of currency movements -> no need to hedge currency on equity part of portfolio. Hi Tre, Can you give me any links for that? Take a look, e.g., at the French Franc / Euro vs. USD from 1985 until today. I'd love to...
by sean.mcgrath
Sat Jun 06, 2020 5:51 am
Forum: Personal Finance (Not Investing)
Topic: How to remind my wife to ask her father for 6.5k that they owe?
Replies: 18
Views: 2334

Re: How to remind my wife to ask her father for 6.5k that they owe?

I'm mostly in Tomato's camp on this one. One potential approach could be a short e-mail telling them that your father will be sending you money next month, and if they'd rather not wait until the next time they visit they could give the money to him and he will include it.
by sean.mcgrath
Sat Jun 06, 2020 5:38 am
Forum: Non-US Investing
Topic: Hedging equities?
Replies: 35
Views: 2149

Re: Hedging equities?

Hi Aleph, Yes, I can imagine that one would be worried about volatility in the GBP. I am absolutely not an expert, but as an American in Europe, I do pay attention to currencies. For what it's worth, this is how I look at it: This link suggests that GBP hedged ETFs only add 0.1 - 0.3% ER. That's not...
by sean.mcgrath
Sat Jun 06, 2020 2:58 am
Forum: Investing - Theory, News & General
Topic: What picture can paint a thousand Bogle words?
Replies: 36
Views: 4262

Re: What picture can paint a thousand Bogle words?

SimpleGift wrote:
Fri Jun 05, 2020 10:28 am
  • Image
    Source: Vanguard (link to original article is unfortunately lost.)
I would really love to get the original article. Does anyone happen to still have it?
by sean.mcgrath
Fri Jun 05, 2020 8:52 am
Forum: Investing - Theory, News & General
Topic: What picture can paint a thousand Bogle words?
Replies: 36
Views: 4262

Re: What picture can paint a thousand Bogle words?

I can't find it quickly on this computer, but I've always found Bogle's graph of the amount of returns eaten up by investor fees to be very useful.
by sean.mcgrath
Fri Jun 05, 2020 7:48 am
Forum: Investing - Theory, News & General
Topic: Value of Liquidity
Replies: 28
Views: 2207

Re: Value of Liquidity

1. How far below 3.00% would the savings account rate have to go before you reversed the decision and started paying down the debt? 2. How much liquidity is "enough" for you, where the marginal value of another liquid dollar is at or near zero? It's an interesting question, and my personal value to...
by sean.mcgrath
Fri Jun 05, 2020 7:33 am
Forum: Non-US Investing
Topic: Did I mess up? Invested with Vanguard US as an expat
Replies: 12
Views: 1129

Re: Did I mess up? Invested with Vanguard US as an expat

I don't know what you mean by ficticious, it's very real for US. Strictly, the capital gain is fictitious, but the US tax liability on it is not. Under PFIC mark-to-market, you have to pay tax on a pretend gain that may not materialise in future, but must pay it now with real money. In addition, it...
by sean.mcgrath
Fri Jun 05, 2020 7:29 am
Forum: Investing - Theory, News & General
Topic: Concrete benefits to deferring taxes
Replies: 26
Views: 1752

Re: Concrete benefits to deferring taxes

A secondary takeaway is that people don't really care to stick to your boundary conditions. They just add acts of God Ex Machina to the scenario, but that's to be expected, because real life taxes are not like your assumptions. So, if I had to use your assumptions, I can think of a few dumb ideas. ...
by sean.mcgrath
Thu Jun 04, 2020 11:22 am
Forum: Non-US Investing
Topic: Did I mess up? Invested with Vanguard US as an expat
Replies: 12
Views: 1129

Re: Did I mess up? Invested with Vanguard US as an expat

Thanks so much, Sean! What a relief then. One follow-up question, as you mentioned that the account has to be existing before becoming an expat. So I believe I'm fine then, as I invested before moving, but do you know what the test is for when you become an expat. Is it when you've landed in the ot...
by sean.mcgrath
Thu Jun 04, 2020 11:13 am
Forum: Investing - Theory, News & General
Topic: Concrete benefits to deferring taxes
Replies: 26
Views: 1752

Re: Concrete benefits to deferring taxes

A lot of different ways of looking at the problem, and some good potential benefits on top of the obvious ones of shifting to another tax bracket. Thanks all.
by sean.mcgrath
Thu Jun 04, 2020 11:11 am
Forum: Investing - Theory, News & General
Topic: Concrete benefits to deferring taxes
Replies: 26
Views: 1752

Re: Concrete benefits to deferring taxes

However, consider a taxable account, which is not tax advantaged, where you get charged taxes on your interest every year. Then the calculation is more complex, That is the advantage of tax deferral. You get interest from the taxes you would have paid the last year, but you only have to pay the tax...
by sean.mcgrath
Wed Jun 03, 2020 3:01 pm
Forum: Investing - Theory, News & General
Topic: Concrete benefits to deferring taxes
Replies: 26
Views: 1752

Re: Concrete benefits to deferring taxes

Hi Live, When I was working, we paid taxes at 33% marginal income tax rate. When I or my spouse contributed to a 401(k), then we saved 33% income taxes on that contribution. Now that I am retired, we can convert tax-deferred money to a a Roth IRA. Yes, we pay taxes on that conversion, but our curren...
by sean.mcgrath
Wed Jun 03, 2020 2:52 pm
Forum: Investing - Theory, News & General
Topic: Concrete benefits to deferring taxes
Replies: 26
Views: 1752

Re: Concrete benefits to deferring taxes

Not a planned benefit, but a potentially real one. As you age, possibly you and/or spouse may incur significant out of pocket medical expenses which might be deducted from your taxable income. I haven't paid any tax for the past two years because DW's medical deductions exceeded our income. And I'v...
by sean.mcgrath
Wed Jun 03, 2020 2:18 pm
Forum: Investing - Theory, News & General
Topic: Concrete benefits to deferring taxes
Replies: 26
Views: 1752

Concrete benefits to deferring taxes

A simple question with a more complicated elaboration. Question: can you provide me with examples of specific concrete benefits to deferring taxes. Elaboration: obviously there are benefits if you are able to either 1. shift taxes to a time when you have a lower tax rate (e.g., lower tax rate in ret...