Search found 24934 matches

by grabiner
Sun Nov 17, 2019 12:29 am
Forum: Personal Investments
Topic: Taxable account
Replies: 12
Views: 1726

Re: Taxable account

Personally I would still go with an ETF over a mutual fund in a taxable account because the ETF creation/redemption process is fundamentally more tax efficient than a mutual fund. This is not necessary with Vanguard, where the ETF is a share class of the mutual fund, so they share the same (usually...
by grabiner
Sun Nov 17, 2019 12:26 am
Forum: Personal Investments
Topic: Correct Bond Yield of this Fund
Replies: 4
Views: 414

Re: Correct Bond Yield of this Fund

I am sure the David Grabiner is correct. I am not an expert...just an observer. Aren't there many other factors which affect future returns besides just the SEC Yield? It seems like lately that market forces are influencing the NAV (Net Asset Value or the bond fund price). The SEC yield is based on...
by grabiner
Sat Nov 16, 2019 5:52 pm
Forum: Investing - Theory, News & General
Topic: Preparing for a down market
Replies: 78
Views: 6757

Re: Preparing for a down market

OP - there are plenty of times throughout the history of the market where it took FAR longer than 25 (or even 49) months to recover. You might want to consider this rather sobering chart if you haven't seen it previously: https://static.seekingalpha.com/uploads/2018/8/18/saupload_SP500-Real-Time-To...
by grabiner
Sat Nov 16, 2019 5:31 pm
Forum: Personal Investments
Topic: Down Payment or Taxable
Replies: 1
Views: 244

Re: Down Payment or Taxable

You can both invest in a taxable account and save for a down payment. In your tax bracket, the best taxable investment is CA municipal bonds, as you pay 53.8% tax on ordinary income and 36.8% even on qualified dividends. So you could put the money in Vanguard CA Intermediate-Term Tax-Exempt (and all...
by grabiner
Sat Nov 16, 2019 5:19 pm
Forum: Personal Investments
Topic: Tax Optimization
Replies: 12
Views: 1409

Re: Tax Optimization

If you intend to sell your taxable stock, it is usually desirable to sell that stock in preference to IRA withdrawals (other than RMDs, of course). The reason is that the fraction of your IRA withdrawal lost to taxes depends only on the tax bracket, not on when you take the withdrawal. However, the ...
by grabiner
Sat Nov 16, 2019 5:03 pm
Forum: Personal Investments
Topic: Correct Bond Yield of this Fund
Replies: 4
Views: 414

Re: Correct Bond Yield of this Fund

The SEC yield is the number you want in order to evaluate future returns. It is the yield to maturity of the bonds in the fund, minus the expense ratio. Thus, if you held the bonds to maturity, this is the return you would get; if you (or the fund) sells the bonds, it is the return you expect, but y...
by grabiner
Sat Nov 16, 2019 4:41 pm
Forum: Personal Investments
Topic: Charitable gift annuities - doing well by doing good?
Replies: 20
Views: 1116

Re: Charitable gift annuities - doing well by doing good?

Under the tax rules, the charity's interest must be more than 10%. In other words, on an actuarial, net present value basis, the donor must be expected to get back less than 90% of what they put in. Possibly the donor could still come out ahead after tax in limited circumstances, but I'd check the ...
by grabiner
Sat Nov 16, 2019 11:12 am
Forum: Personal Finance (Not Investing)
Topic: Mortgage interest rate deduction benefits
Replies: 3
Views: 666

Re: Mortgage interest rate deduction benefits

$12k standard deduction for all. Interest deduction is only above the standard deduction. But if you are single and donate to charity, you may deduct all your mortgage interest. Given your income, you are paying more than $10,000 in VA state income tax. Thus it would take only $2400 in charity for ...
by grabiner
Sat Nov 16, 2019 10:21 am
Forum: Investing - Theory, News & General
Topic: Tax Deferred : Taxable : Tax Free
Replies: 199
Views: 11074

Re: Tax Deferred : Taxable : Tax Free

why would tax drag be so high? Wouldn’t you just owe 15% of gains? Does your taxable throw off lots of income or do you have zero basis or ? I make my plans assuming I will retire in MD (7.95% state tax), so I will lose 21% of my gains assuming the tax laws reset in 2026, and 23% if they do not res...
by grabiner
Fri Nov 15, 2019 11:33 pm
Forum: Personal Finance (Not Investing)
Topic: Tax question?
Replies: 10
Views: 1184

Re: Tax question?

At the moment, the IRS Publication 525 linked in the previous post is the 2018 publication. Because of the SALT limit in 2018, the situation should be different in the 2019 publication, because you may not have gotten a benefit from the refund. If you itemized deductions in 2018 and reported $10,50...
by grabiner
Fri Nov 15, 2019 11:25 pm
Forum: Personal Finance (Not Investing)
Topic: Should I tax harvest gain this year?
Replies: 9
Views: 549

Re: Should I tax harvest gain this year?

Looks like Social Security income will put me over the limit IF indeed it is used in the calculation. Would love to hear from someone who has been through this and knows for sure about the SS part of this issue. Maybe the Tax Caster will confirm one way or the other so I will give it a try. You hav...
by grabiner
Fri Nov 15, 2019 11:23 pm
Forum: Personal Finance (Not Investing)
Topic: Tax question?
Replies: 10
Views: 1184

Re: Tax question?

At the moment, the IRS Publication 525 linked in the previous post is the 2018 publication. Because of the SALT limit in 2018, the situation should be different in the 2019 publication, because you may not have gotten a benefit from the refund. If you itemized deductions in 2018 and reported $10,500...
by grabiner
Fri Nov 15, 2019 10:53 pm
Forum: Personal Investments
Topic: Vanguard Funds Preliminary Capital Gains Estimates
Replies: 19
Views: 1888

Re: Vanguard Funds Preliminary Capital Gains Estimates

This is a reminder that target-date funds are not good for a taxable account unless you have a very low tax rate. When you get started in the target-date funds, they are mostly stock and appear to be very tax-efficient. But later on, you hold more bonds and you might want to switch to munis, and th...
by grabiner
Fri Nov 15, 2019 10:47 pm
Forum: Investing - Theory, News & General
Topic: Tax Deferred : Taxable : Tax Free
Replies: 199
Views: 11074

Re: Tax Deferred : Taxable : Tax Free

Nominally: Tax-deferred: 35% Taxable: 35% Tax-free: 30% But as I view it: Tax-deferred: 33% Taxable: 34% -7% mortgage Tax-free: 40% That is, I adjust my tax-deferred account for the 31% that I expect to lose to taxes (federal and state, assuming I retire in MD). I adjust my taxable account for the ...
by grabiner
Fri Nov 15, 2019 10:40 pm
Forum: Personal Finance (Not Investing)
Topic: How much is a Roth worth?
Replies: 48
Views: 7395

Re: How much is a Roth worth?

The premium for a Roth over a taxable account varies over time. If you invest in taxable stock, you will pay tax on the dividends every year, and then capital-gains tax when you sell. If you invest in bonds, you will pay tax every year, or lose the difference between muni and corporate yields if yo...
by grabiner
Thu Nov 14, 2019 11:19 pm
Forum: Personal Finance (Not Investing)
Topic: Collection Calls Right After Death
Replies: 35
Views: 2865

Re: Collection Calls Right After Death

My sister’s ex husband recently passed away and a couple weeks later she received a call from a collection agency saying there is $37k owed on HELOC on the House she is living in. The collection agency claims no payment has been on this debt for 6 years but now all of sudden they call her for the f...
by grabiner
Thu Nov 14, 2019 11:09 pm
Forum: Personal Finance (Not Investing)
Topic: HDHP over BCBS Basic for Feds?
Replies: 78
Views: 4397

Re: HDHP over BCBS Basic for Feds?

Also remember non-HDHP plans can be paired with an FSA up to $2700 exempt from federal and state income tax. So $900 savings if you are married in 33% tax bracket. And HDHP holders can use a limited-expense HSA for dental and vision coverage, so you can still get some of that benefit if you buy gla...
by grabiner
Thu Nov 14, 2019 11:01 pm
Forum: Investing - Theory, News & General
Topic: Morningstar percentile rank - VTSAX, VBAIX, VIIIX etc
Replies: 21
Views: 1398

Re: Morningstar percentile rank - VTSAX, VBAIX, VIIIX etc

In looking at this, I would pay more attention to the longer term rankings in the trailing returns table, rather than calendar year results. For example, the 5, 10, and 15 year columns for VBAIX: http://i.imgur.com/UeCvbMO.png This is particularly useful for an index fund, as it reduces the effect ...
by grabiner
Thu Nov 14, 2019 10:55 pm
Forum: Investing - Theory, News & General
Topic: Expected Return For Bond Funds
Replies: 13
Views: 1574

Re: Expected Return For Bond Funds

In Expected return of a bond fund , I conclude that the best estimate of a bond fund return is the SEC yield, plus the average slope of the yield curve at the fund's duration, so there is a small amount of expected capital return. If a fund holds 6-10-year bonds, then in one year, it will sell a 5-y...
by grabiner
Thu Nov 14, 2019 10:46 pm
Forum: Investing - Theory, News & General
Topic: Tax Deferred : Taxable : Tax Free
Replies: 199
Views: 11074

Re: Tax Deferred : Taxable : Tax Free

Nominally: Tax-deferred: 35% Taxable: 35% Tax-free: 30% But as I view it: Tax-deferred: 33% Taxable: 34% -7% mortgage Tax-free: 40% That is, I adjust my tax-deferred account for the 31% that I expect to lose to taxes (federal and state, assuming I retire in MD). I adjust my taxable account for the 2...
by grabiner
Thu Nov 14, 2019 10:33 pm
Forum: Investing - Theory, News & General
Topic: "Retirees' Year-End Tax-Planning Guide"
Replies: 9
Views: 1736

Re: "Retirees' Year-End Tax-Planning Guide"

One more caution: retirees in the 0% capital-gains bracket might not want to harvest taxable gains if they are already taking Social Security. Most retirees in that situation will be in the phase-in of Social Security taxation, so every $1 of gains taxed at 0% leads to 85 cents of SS taxed at 12% fo...
by grabiner
Thu Nov 14, 2019 10:22 pm
Forum: Personal Investments
Topic: Closed End Funds Nuveen Safe?
Replies: 12
Views: 1106

Re: Closed End Funds Nuveen Safe?

Due to their leverage and NAV relationship CEFs are often used in short term trading, and can be very volatile. A fund with 30% plus leverage will react much more than a standard bond fund when interest rates change, in loss or gain in share price. Fees are high but so are the yields. Investors in ...
by grabiner
Thu Nov 14, 2019 10:00 pm
Forum: Personal Investments
Topic: Vanguard Funds Preliminary Capital Gains Estimates
Replies: 19
Views: 1888

Re: Vanguard Funds Preliminary Capital Gains Estimates

One interesting note, which I remember from previous years: Target Retirement 2015 and 2020 are expected to have significant capital gain distributions, while the other Target Retirement funds have little or none. All the Target Retirement funds with declining stock allocations need to rebalance. Th...
by grabiner
Thu Nov 14, 2019 12:36 am
Forum: Personal Investments
Topic: How much to convert from Trad-IRA to Roth
Replies: 31
Views: 1933

Re: How much to convert from Trad-IRA to Roth

I am a bit hesitant to convert, because my RMD's will not be exceptionally high (I only have about $470K in my IRA), and converting will use up carryover losses. You will use up $3K of carryover losses per year whether you convert or not; the only way to change this amount is by having capital gain...
by grabiner
Thu Nov 14, 2019 12:18 am
Forum: Personal Finance (Not Investing)
Topic: Offsetting short-term loss with long-term capital gains to reset cost basis
Replies: 3
Views: 397

Re: Offsetting short-term loss with long-term capital gains to reset cost basis

There is no benefit in resetting the cost basis, and there may be a cost. Suppose you have a $200K capital loss now. You have a fund with a $100K basis which is now worth $200K. If you sell and re-buy, you have a fund with a $200K basis and a $100K loss. Now, suppose that in ten years, you sell the ...
by grabiner
Thu Nov 14, 2019 12:08 am
Forum: Personal Finance (Not Investing)
Topic: 401k loan analysis
Replies: 5
Views: 395

Re: 401k loan analysis

Seems tempting but you didn't include the potential gains from that $50k that you are taking out of your 401k. That would be the biggest reason for me to not take out a 401k loan. You can fix the value of those gains by taking your loan from a bond fund. (If the 401(k) requires that loans be disbur...
by grabiner
Thu Nov 14, 2019 12:00 am
Forum: Personal Finance (Not Investing)
Topic: HELOC impact on credit score
Replies: 2
Views: 327

Re: HELOC impact on credit score

From valuepenguin Will an unused HELOC negatively impact my credit? Leaving a HELOC idle and at a zero balance has no effect on your credit report. Once you absorb the hit to your score for the inquiry and opening the account, there shouldn’t be any other impact, according to Bruce McClary, vice pr...
by grabiner
Wed Nov 13, 2019 11:50 pm
Forum: Personal Investments
Topic: How much to convert from Trad-IRA to Roth
Replies: 31
Views: 1933

Re: How much to convert from Trad-IRA to Roth

Oh. I bet this is the IRS definition that didn't make sense to you: From publication 550 https://www.irs.gov/publications/p550#en_US_2018_publink100010075 Ordinary Dividends Ordinary dividends are the most common type of distribution from a corporation or a mutual fund. They are paid out of earning...
by grabiner
Wed Nov 13, 2019 11:35 pm
Forum: Investing - Theory, News & General
Topic: Dow closing
Replies: 13
Views: 2275

Re: Dow closing

The calculation of the Dow makes it more likely that it will be unchanged than other indexes would be. The Dow weights all 30 stocks equally. The index value is computed by adding all the prices, and then multiplying by a factor to keep the values consistent over time. For example, if the prices to...
by grabiner
Wed Nov 13, 2019 10:45 pm
Forum: Investing - Theory, News & General
Topic: Dow closing
Replies: 13
Views: 2275

Re: Dow closing

The calculation of the Dow makes it more likely that it will be unchanged than other indexes would be. The Dow weights all 30 stocks equally. The index value is computed by adding all the prices, and then multiplying by a factor to keep the values consistent over time. For example, if the prices to...
by grabiner
Tue Nov 12, 2019 10:56 pm
Forum: Personal Finance (Not Investing)
Topic: Risk analysis of having HSA vs. PPO Plan
Replies: 1
Views: 280

Re: Risk analysis of having HSA vs. PPO Plan

Check your plan documents. I would expect that in-network expenses count towards the out-of-network deductible and maximum. Otherwise, if you had met the out-of-network maximum but not the in-network maximum, you would have an incentive to see out-of-network providers, costing the plan more money. I...
by grabiner
Tue Nov 12, 2019 10:43 pm
Forum: Investing - Theory, News & General
Topic: Dow closing
Replies: 13
Views: 2275

Re: Dow closing

The calculation of the Dow makes it more likely that it will be unchanged than other indexes would be. The Dow weights all 30 stocks equally. The index value is computed by adding all the prices, and then multiplying by a factor to keep the values consistent over time. For example, if the prices tot...
by grabiner
Tue Nov 12, 2019 10:35 pm
Forum: Personal Investments
Topic: Muni guidance for $15m portfolio
Replies: 11
Views: 2955

Re: Muni guidance for $15m portfolio

I would suggest paying down the mortgage to $1M (or $750K if the mortgage was taken out too late to be grandfathered into the $1M rule). That is a risk-free return, and it is not deductible from federal tax, so it is probably a better return than you can get on munis. In your high tax bracket, a rea...
by grabiner
Tue Nov 12, 2019 10:31 pm
Forum: Personal Investments
Topic: USRT For HSA
Replies: 2
Views: 245

Re: USRT For HSA

Instead of considering the HSA in isolation, view your HSA as part of your IRA, since both are invested for retirement expenses. Thus, choose your asset allocation first, and then choose the funds for your HSA according to where the HSA has the best options. If the only low-cost fund in your 401(k) ...
by grabiner
Tue Nov 12, 2019 10:28 pm
Forum: Personal Investments
Topic: Tax Gain Harvesting and Dividend Schedule
Replies: 36
Views: 1946

Re: Tax Gain Harvesting and Dividend Schedule

I remembered reading ETFs were more tax efficient than mutual funds, but I think paying the one basis point for the ease of reinvesting dividends is worth it. Non-Vanguard ETFs are more tax-efficient than mutual funds because the ETF structure allows funds to reduce the capital gains they would dis...
by grabiner
Tue Nov 12, 2019 10:23 pm
Forum: Personal Investments
Topic: Have a regular TSP, should I consider a Roth TSP?
Replies: 8
Views: 791

Re: Have a regular TSP, should I consider a Roth TSP?

The Roth TSP is better than the regular TSP if you will retire in a higher tax bracket than your current bracket (so that you lose a smaller percentage to taxes), or in a nearly equal bracket and can max out the Roth TSP (so that you lose the same percentage of the TSP to taxes, but have less in a t...
by grabiner
Tue Nov 12, 2019 10:17 pm
Forum: Personal Investments
Topic: Advice needed for unusual financial situation
Replies: 19
Views: 2897

Re: Advice needed for unusual financial situation

I don't know if I would put money in a high yield risk bond fund if I was struggling for income. You get a higher yield due to risk. My first google search gave me this: "High-yield bond funds invest in "junk" bonds—lower credit quality corporate bonds that carry a higher-than-market yield.Investor...
by grabiner
Tue Nov 12, 2019 10:12 pm
Forum: Personal Investments
Topic: Which BOND Fund in Taxable at 22% Tax Rate
Replies: 27
Views: 3241

Re: Which BOND Fund in Taxable at 22% Tax Rate

Will your tax bracket in retirement also be 22%? Yes, 22% probably unless more dividends from the Bond Funds push me into 24%. If you are in retirement (no earned income), and your only income is from your portfolio, a 55/45 portfolio can have no fed taxes due, assuming you are married and have not...
by grabiner
Tue Nov 12, 2019 10:04 pm
Forum: Personal Investments
Topic: Taxable account
Replies: 12
Views: 1726

Re: Taxable account

Currently in my taxable account I hold VGHCX, VLXVX, VYM, VNQ. Does anyone think these are decent investments? ( I do VTSAX in my back door roth, my 401k Through my job is an S/P 500 index, and have an old 403b that is invested in 50% international vanguard fund) Not too worried right now about the...
by grabiner
Tue Nov 12, 2019 9:54 pm
Forum: Personal Investments
Topic: Buy some VYM [Vanguard High Dividend Yield]?
Replies: 31
Views: 3056

Re: Buy some VYM?

I am already retired (age 60) and am going to need more cash flow. I am thinking of buying $100,000 of VYM in my Schwab brokerage account (I would sell money market shares to do this.) The dividends would not be reinvested, and I would use them for living expenses. I also have a $100,000 home loan ...
by grabiner
Tue Nov 12, 2019 2:37 pm
Forum: Personal Finance (Not Investing)
Topic: 2020 FEHB HDHP - how to calculate vs. traditional plan?
Replies: 5
Views: 485

Re: 2020 FEHB HDHP - how to calculate vs. traditional plan?

To calculate the benefit of the HDHP versus a traditional plan, first compute the day-one cost, what you will pay if you never see the doctor for anything other than a free annual checkup. With a traditional plan, this is the after-tax premium. With an HDHP, this is the after-tax premium, minus the ...
by grabiner
Tue Nov 12, 2019 1:59 pm
Forum: Investing - Theory, News & General
Topic: Debunking Bonds in Taxable
Replies: 155
Views: 18322

Re: Debunking Bonds in Taxable

Thanks for the info with respect to current situation. Those particular caveats do not affect me. However, saying that, if people are subject to these caveats and already have location of equities in taxable and bonds in tax-deferred, wouldn't they just keep them there to avoid current tax hit? Is ...
by grabiner
Mon Nov 11, 2019 11:35 pm
Forum: Investing - Theory, News & General
Topic: Debunking Bonds in Taxable
Replies: 155
Views: 18322

Re: Debunking Bonds in Taxable

If stocks earn 10% a year and taxed at 15% and bonds earn 2% and taxed at 22%, which would you rather have in taxable? If that seems extreme, then do 8% and 3%, 7% and 3.5%. etc etc. Stocks, in my case tax efficient index/passive equity funds in taxable. With the higher expected returns, I'll have ...
by grabiner
Sun Nov 10, 2019 10:03 pm
Forum: Personal Finance (Not Investing)
Topic: Mortgage to prepay or not prepay
Replies: 83
Views: 6783

Re: Mortgage to prepay or not prepay

A: $240K in stock, $160K in bonds, $200K mortgage B: $240K in stock, $60K in bonds, $100K mortgage C: $180K in stock, $220K in bonds, $200K mortgage D: $180K in stock, $120K in bonds, $100K mortgage You are trying to compare A to D. However, it is A and B which are comparable in risk; if the stock ...
by grabiner
Sun Nov 10, 2019 9:41 pm
Forum: Investing - Theory, News & General
Topic: TSP 3-Funds or TSP Target Date Fund?
Replies: 67
Views: 4532

Re: TSP 3-Funds or TSP Target Date Fund?

If 80% stock and 20% G fund has the same risk as 75% stock and 25% F fund, then the G fund gives a better portfolio return at the same risk level. Are these just random numbers or is 80/20 roughly the same risk as 75/25, more or less, as you write here? The TSP's models must imply a significant cor...
by grabiner
Sun Nov 10, 2019 9:36 pm
Forum: Personal Investments
Topic: Holding bonds vs 100% equities
Replies: 367
Views: 22644

Re: Holding bonds vs 100% equities

I think the great point of this discussion is adding an extra variable: the money you may have to use from your retirement portfolio at a random point (typically, if you are unemployed and your job is not stable; but could be for other reasons, imagine medical condition, you are suited, etc). It ma...
by grabiner
Sun Nov 10, 2019 6:40 pm
Forum: Investing - Theory, News & General
Topic: Wait for Social Security - breakeven returns
Replies: 107
Views: 10245

Re: Wait for Social Security - breakeven returns

Also, are you aware that each year you delay starting SS benefits from your Full Retirement Age (FRA) to age 70, your monthly benefit will grow 8% for each year you wait (and the higher benefit will benefit you/your spouse for the rest of your life)? Can you guarantee that you can get those returns...
by grabiner
Sun Nov 10, 2019 6:11 pm
Forum: Personal Investments
Topic: Holding bonds vs 100% equities
Replies: 367
Views: 22644

Re: Holding bonds vs 100% equities

I wonder if the pro 100% stocks crowd would change their views if we have another great depression, with a 80% or more crash in the stock market, or a Japan like stock market that declines for many years. None of these outcomes seem likely due to the past 10 years of US stock performance. Search in...
by grabiner
Sun Nov 10, 2019 6:06 pm
Forum: Personal Finance (Not Investing)
Topic: Mortgage to prepay or not prepay
Replies: 83
Views: 6783

Re: Mortgage to prepay or not prepay

Net worth does not interest me in the least. If the value of my house drops 20% on paper, that makes zero difference in my life: whether I have a mortgage or not, as you note. If my investible assets fall 20%...well, I am accumulating so that also makes no difference to me. That said, I then have t...
by grabiner
Sun Nov 10, 2019 10:07 am
Forum: Personal Finance (Not Investing)
Topic: Mortgage to prepay or not prepay
Replies: 83
Views: 6783

Re: Mortgage to prepay or not prepay

As usual the answer is "it depends": on your mortgage rate, amount of savings, goal (no mortgage at retirement), age, etc. My opinion is paying off down any mortgage that's below 4% is silly. Taxable investing is a much better option for both flexibility and likely returns. I also don't subscribe t...