Search found 9783 matches

by Doc
Fri Apr 06, 2007 3:00 pm
Forum: Personal Investments
Topic: Roth 401(k) "Conversion"
Replies: 21
Views: 5971

ROTH vs TIRA/401k etc

see http://diehards.org/forum/viewtopic.php?t=1366 After you have contributed up to the matching amount, a 401k, ROTH or TIRA all give the same future value if the tax rate now and at withdrawal are the same. If the tax rate at withdrawal is higher than now go with the ROTH. If the tax rate is going...
by Doc
Fri Apr 06, 2007 11:20 am
Forum: Personal Investments
Topic: Roth 401(k) "Conversion"
Replies: 21
Views: 5971

Re: roth vs. trad ira

Al wrote: Just my two cents but I don't understand why this has to be constantly rehashed since the math is so straightforward. Because some people who haven’t looked at the math at all or made incorrect basic assumptions have publicized “rules of thumb” that incorrectly says “put your highest retur...
by Doc
Thu Apr 05, 2007 11:39 am
Forum: Personal Investments
Topic: Roth 401(k) "Conversion"
Replies: 21
Views: 5971

LH2004, a question

Not if you understand the Buddha nature of taxation.
I understand the math and agree with your conclusion but what is meaning of referecne to "the Buddha nature of taxation"?
by Doc
Wed Apr 04, 2007 4:54 pm
Forum: Personal Investments
Topic: Taxable account dilemma
Replies: 16
Views: 4581

Al, on compromising.

Al wrote: So no one should ever own tax exempt bonds since they earn less than taxable bonds? Do they make sense on there own? Yes. They often earn as much as MM accounts or short term CD’s so they can make sense without the tax considerations. They may not be the best but they still make sense. The...
by Doc
Wed Apr 04, 2007 11:37 am
Forum: Personal Investments
Topic: Taxable account dilemma
Replies: 16
Views: 4581

On compromising.

Al wrote: One compromise we have made … Back when I was making investment decisions for a living I learned that you should never make a decision to invest or not invest based on tax implications. If the decision doesn’t make sense before taxes don’t do it. In this situation you have the reverse. If ...
by Doc
Wed Apr 04, 2007 11:18 am
Forum: Investing - Theory, News & General
Topic: TIRA vs Roth Question raised by Doc
Replies: 48
Views: 24808

lucky7

lucky7 wrote: Suffice to say for me the TIPRA law allowing conversions is clearly a good choice/option. It may be very good for you. It's all about the tax rates. If your tax rate at conversion is thirty five percent and it will be only fifteen percent when you withdrawal you are going to start out ...
by Doc
Wed Apr 04, 2007 10:30 am
Forum: Personal Investments
Topic: Investment grade, treasury or index bond fund
Replies: 6
Views: 2031

Trev, A nitpick.

Trev wrote: Treasury Bonds offer the lowest correlation to equities. Actually Treasury bonds have a maturity of ten plus years and do not have the lowest correlation with equities. Treasury bills with a maturity of less than one year are the ones with the lowest correlation. Treasury notes with matu...
by Doc
Wed Apr 04, 2007 10:10 am
Forum: Investing - Theory, News & General
Topic: TIRA vs Roth Question raised by Doc
Replies: 48
Views: 24808

Lucky, you're falling into the rule of thumb trap.

Also certainly would not recommend using some of the retirement monies themselves to pay for the taxes of the conversion, that would be self defeating the larger purpose. Look at the controlling equations that I posted way back at the beginning. Without using outside funds to pay the taxes you have...
by Doc
Tue Apr 03, 2007 4:04 pm
Forum: Investing - Theory, News & General
Topic: TIRA vs Roth Question raised by Doc
Replies: 48
Views: 24808

Re: Future retirees and tax bracket

Livesoft wrote: When we retire this year, we will end up in a much, much lower tax bracket. Furthermore, we have more than 20 years to move money from tIRA to Roth IRA before RMDs kick in, so we don't expect RMD to be a big deal Now that’s an idea with a lot of merit. Invest in 401k/TIRA when your t...
by Doc
Mon Apr 02, 2007 7:40 pm
Forum: Investing - Theory, News & General
Topic: TIRA vs Roth Question raised by Doc
Replies: 48
Views: 24808

Al, Social Security

Al wrote: ... the massive affect of SS taxation on many in the retiree income range. Someone posted a number recently that said how many people were subject to tax on SS. I think the number was about 35%. But many of these will have incomes high enough that they pay tax on the full 85% which is taxa...
by Doc
Mon Apr 02, 2007 2:23 pm
Forum: Personal Investments
Topic: Why not just put all non-retiremn $$ in a LifeStrategy fund?
Replies: 12
Views: 4635

Laura, Hijack debate?

A post asked about life strategy funds. You respond with assertions that one type of tax advantaged account is preferred over another. I believe that you are making broad assumptions that I think are not justified and respond. Is that hijacking a debate?
by Doc
Mon Apr 02, 2007 2:14 pm
Forum: Investing - Theory, News & General
Topic: TIRA vs Roth Question raised by Doc
Replies: 48
Views: 24808

More assumptions.

Emergdoc wrote. Aside from the fact that most beginning investors will probably be in a higher tax bracket at retirement than now while they're having difficulty maxing out their tax-deferred accounts (a debatable point, of course), … except those who will be in a lower tax bracket at withdrawal tim...
by Doc
Mon Apr 02, 2007 2:07 pm
Forum: Investing - Theory, News & General
Topic: TIRA vs Roth Question raised by Doc
Replies: 48
Views: 24808

Setting the assumptions.

Part of the problem with this debate is that there are different assumption made that are often left unstated. I find it useful to put the comparison in the form of equations so that any assumptions are readily apparent. First the debate is about an unmatched 401k or Traditional IRA (TIRA) on one ha...
by Doc
Mon Apr 02, 2007 1:07 pm
Forum: Personal Investments
Topic: Why not just put all non-retiremn $$ in a LifeStrategy fund?
Replies: 12
Views: 4635

Laura, see

http://diehards.org/forum/viewtopic.php?t=268 In that thread you posted the same preference order that you did in this one. You ignored a challenge that the there was no differences in after tax return between tax deferred accounts (401k, TIRA) and tax exempt accounts (Roth) if tax rates remain unch...
by Doc
Sun Apr 01, 2007 11:47 am
Forum: Personal Investments
Topic: Why not just put all non-retiremn $$ in a LifeStrategy fund?
Replies: 12
Views: 4635

Laura: The “four step rule” is not a rule

Laura wrote: 4-Step Rule for Tax Efficient Fund Placement: 1. Put your most tax-inefficient funds in 401ks, 403bs, Traditional IRAs and similar retirement accounts. When full.. 2. Put your next most tax-inefficient funds in your Roth(s). When your Roth(s) are full- There is no difference in the tax ...
by Doc
Mon Mar 26, 2007 9:18 am
Forum: Personal Investments
Topic: Replace VIPSX w/ I Bonds?
Replies: 10
Views: 3960

Tet, Lag time for inflation index.

You still don't have it quite right. TIPS use the CPI at the end of the period and I-bonds at the beginning. Both have a lag. The TIPS lag is two months and I think the I-bonds is about one to three months. This difference is probably not relevant for long term decisions.
by Doc
Sun Mar 25, 2007 11:05 am
Forum: Personal Investments
Topic: Treasuries in taxable? Laura, Larry, Taylor ...please help.
Replies: 35
Views: 15556

Larry, Re: “Free” put and other things.

We’ve discussed this aspect of I-bonds before. While the I-bond put is indeed real it just isn’t worth very much right now. You can get the same effect by buying five year TIPS without incurring the yield penalty with the I-bonds. Arguably the biggest plus factor for I-bonds is the deferment of taxe...
by Doc
Sun Mar 25, 2007 10:58 am
Forum: Personal Investments
Topic: Treasuries in taxable? Laura, Larry, Taylor ...please help.
Replies: 35
Views: 15556

Laura, Say what?

Laura wrote:
Actually, with the exception of yield spread, you are right on target for everything related to investing.
That’s a very strange concept for investing. Never before have I seen anyone on this board say that the “yield spread” is not an important factor when comparing two assets.
by Doc
Sun Mar 25, 2007 10:43 am
Forum: Personal Investments
Topic: Replace VIPSX w/ I Bonds?
Replies: 10
Views: 3960

Re: In answer

tetraclys wrote: Right now VIPSX is yielding 3.54% and I bonds are yielding 4.52%. Right now TIPS are yielding about sixty basis points more than I-bonds. The e/r on VIPSX is less than 60 bp so VIPSX is yielding more than I-bonds. The difference noted in the quote may be due to short term changes in...
by Doc
Sat Mar 24, 2007 12:28 pm
Forum: Personal Investments
Topic: Traditional IRA convert to Roth
Replies: 8
Views: 2828

Chip,

You can even catch a fish in muddy waters. :D
by Doc
Sat Mar 24, 2007 12:19 pm
Forum: Personal Investments
Topic: Treasuries in taxable? Laura, Larry, Taylor ...please help.
Replies: 35
Views: 15556

Laura

laura wrote: ... I bonds but I don't think they should be ruled out entirely as a long term inflation protected investment for someone in a high tax bracket. Tax Rates, time Frame and yield spread all affect the choice of TIPS vs. I-bonds. High tax rates, long time frames and low spreads favor I-bon...
by Doc
Sat Mar 24, 2007 11:53 am
Forum: Personal Investments
Topic: Treasuries in taxable? Laura, Larry, Taylor ...please help.
Replies: 35
Views: 15556

I-bonds?

Laura wrote:
I would probably go with the CA tax exempt and I bond combition if it were me.
Although the spread between TIPS and I-bonds has narrowed there is still over a sixty basis point spread in the real yield making I-bonds less attractive than TIPS for many investors.
by Doc
Sat Mar 24, 2007 10:02 am
Forum: Personal Investments
Topic: Traditional IRA convert to Roth
Replies: 8
Views: 2828

Re: Deductible IRA

The OP doesn't have the option of a deductible TIRA. The 401K is the same as a TIRA. But in any case the equations still apply. If your rate is going to be lower during retirement than now the ROTH may not make sense. For example if you are in 25% bracket now and will be in 15% at retirement you st...
by Doc
Fri Mar 23, 2007 8:20 pm
Forum: Personal Investments
Topic: Traditional IRA convert to Roth
Replies: 8
Views: 2828

Taxes: Then and now

The major criterion is what your tax rate is now and what it will be in the future. The future value of a Roth and a Traditional IRA (TIRA) can be stated in simple equations. ROTH = (Pretax$Invested) x (1-TaxNow) x (Growth) TIRA = (Pretax$Invested) x (Growth) x (1-TaxLater) If the tax rate now is th...
by Doc
Fri Mar 23, 2007 10:32 am
Forum: Personal Investments
Topic: Treasuries in taxable? Laura, Larry, Taylor ...please help.
Replies: 35
Views: 15556

State marginal tax

PartickS wrote:
Marginal rate is not fed + state since state tax is federally deductable
Not necessarily true. Could be taking standard deduction.
by Doc
Thu Mar 22, 2007 11:01 am
Forum: Investing - Theory, News & General
Topic: So, why are bonds so difficult?
Replies: 60
Views: 26891

Bonds vs. Equities

Al wrote: … reflect a starting position that the bond market is inefficient. I don’t think that is the case. Yes some segments of the bond market may be inefficient (muni’s?) but others (Treasuries) are much more efficient than the equity market. The major distinction for owning fixed income is that...
by Doc
Wed Mar 21, 2007 1:53 pm
Forum: Personal Investments
Topic: Vanguard won't give me my money today.
Replies: 20
Views: 8992

RM, you missed the point.

Vanguard says that I can get my money whenever I want and I can get it transferred in a number of ways. It's in writing on their website. (Assuming a website is writing.) I decide I want to make two transfers. After I make the first they tell me I can't make the second. They also tell me that it's t...
by Doc
Wed Mar 21, 2007 12:12 pm
Forum: Personal Investments
Topic: Vanguard won't give me my money today.
Replies: 20
Views: 8992

Ken

OK for you. You don't get to throw the hammer. :D Yeah, I though of those things too but I'm still on a rant. (And I should have used "guarantee" instead of 'assurances".) Still it's kind of disconcerting that they tell you that you can only make one transaction after you have already made it and th...
by Doc
Wed Mar 21, 2007 11:54 am
Forum: Personal Investments
Topic: Vanguard won't give me my money today.
Replies: 20
Views: 8992

Vanguards Take

I put in the second sell order today and it was accepted so at least on outgoing transactions the first doesn't have to "clear" before entering the second. I did call Vg and was told that it was both a security and a money laundering concept. I got a good :lol: out of the rep when I told him it was ...
by Doc
Tue Mar 20, 2007 7:06 pm
Forum: Personal Investments
Topic: Vanguard won't give me my money today.
Replies: 20
Views: 8992

Security Issue?

There is no indication that this is a security issue. If security is compromised, transferring funds to two outside accounts instead of one outside account when the accounts have previously been set up and verified would make absolutely no difference. Mickeyd: For security reasons we don't have any ...
by Doc
Tue Mar 20, 2007 1:42 pm
Forum: Personal Investments
Topic: Vanguard won't give me my money today.
Replies: 20
Views: 8992

Vanguard won't give me my money today.

I just tried to move money from Vanguard MM to our checking accounts. Vanguard will only let me make one transaction. Apparently you can't move money to more than one financial institution on a given day. I tried to set up an automatic transfer for tomorrow to cover what I want to do but I can't do ...
by Doc
Sun Mar 18, 2007 12:06 pm
Forum: Personal Investments
Topic: Short term bonds. Treasury or Investment grade
Replies: 12
Views: 5700

Larry,

Thanks, I had forgotten about the liquidity issue. But that's why you're an adviser and I'm only an investor.
by Doc
Fri Mar 16, 2007 7:39 pm
Forum: Investing - Theory, News & General
Topic: Measuring The True Cost of Vanguard Active Funds
Replies: 11
Views: 5080

Barry, no argument.

I consider this an epidemiology study. If there is a correlation between a y and x then x must cause y. Bull ...!

All the "study" does is give you someplace to look, maybe.
by Doc
Fri Mar 16, 2007 7:34 pm
Forum: Investing - Theory, News & General
Topic: How much do composition of Lehman Bond Indices Change
Replies: 3
Views: 1918

Re: Turnover

TJ, I'm certainly not an expert but one of the major changes in the aggregate bond index over the past xxx yrs has been the advent of Mortgage Backed Securities which went from to zero thirty(?) years ago to 35% now. Over a longer period I think there has been a major shift to Treasuries from corpor...
by Doc
Fri Mar 16, 2007 4:06 pm
Forum: Personal Investments
Topic: Short term bonds. Treasury or Investment grade
Replies: 12
Views: 5700

S/T Treasuries or corporate

I'm thinking it has to do with defaults, but the corp. fund is pretty diversified and has credit quality of AA. The premium for lower credit quality is not just the risk of default. The difference between these two funds is probably a combination of the credit and the state sales tax. Somebody post...
by Doc
Fri Mar 16, 2007 3:52 pm
Forum: Investing - Theory, News & General
Topic: Measuring The True Cost of Vanguard Active Funds
Replies: 11
Views: 5080

Re: A little confusing.

Ken, What you propose makes a lot more sense than the original quote. Barry, your original quote was taken way out of context. The full quote of the abstract seems to be what Ken says it is. Now I have a bone to pick with you for the misleading quote instead of Miller. :) Back to Miller as interpret...
by Doc
Fri Mar 16, 2007 12:14 pm
Forum: Investing - Theory, News & General
Topic: Measuring The True Cost of Vanguard Active Funds
Replies: 11
Views: 5080

Wrong on its face.

From the initial post: At the end of 2004, the mean active expense ratio for the large-cap equity mutual funds tracked by Morningstar was 7% If this were true then the mean total return would underperfom the appropriate benchmark by 7%. Does anyone really belief that the average large cap active fun...
by Doc
Thu Mar 15, 2007 11:13 am
Forum: Personal Investments
Topic: CD vs Bond Funds
Replies: 7
Views: 3629

Re: short vs. long run

... this is comparing apples and oranges. You are comparing the historical performance of bond funds with the current yield of cds. Nobody knows how bonds will perform vs. cds over the next say 7 years. You can guarantee a return of 6.0% by going with the penfed cd. grok I agree with the apples to ...
by Doc
Thu Mar 15, 2007 11:04 am
Forum: Investing - Theory, News & General
Topic: Thinly-traded ETFs
Replies: 5
Views: 1672

Question for Chip

Chip, what do you consider thinly traded?

Since now I am only in SPDRS I never really worried about it but I am thinking about using the Ishares bond ETF's in the future if their total assets are large enough.
by Doc
Wed Mar 14, 2007 3:52 pm
Forum: Personal Investments
Topic: I'm probably asking this too soon in my study....
Replies: 30
Views: 15392

Well said

orthros wrote: ... too many folks who let the tax tail wag the total return dog.
This cannot be said too often. There are many many posts on the old board advocating "tax advantaged" investments where the cost is way more than the tax savings.
by Doc
Wed Mar 14, 2007 12:58 pm
Forum: Personal Investments
Topic: Congressional Hearings on 401k Plans
Replies: 4
Views: 2935

Cynic

zhiwiller wrote:I wonder what would happen to the mutual fund industry if 401k plans were limited to using Index Funds.
We would see a lot of index funds with high fees. :twisted:
by Doc
Wed Mar 14, 2007 11:52 am
Forum: Investing - Theory, News & General
Topic: TIPS Ladder II
Replies: 42
Views: 25185

Re: TIPS Ladder II

If I read Larry correctly I could put 100% of this in one issue that matures in 20 years and do well I don't think that Larry went that far. He said recently that it is less important to have a ladder for TIPS than nominal Treasuries. However I just read a post of his this AM that said he had only ...
by Doc
Tue Mar 13, 2007 3:02 pm
Forum: Personal Investments
Topic: Guidance on TIPS Ladder
Replies: 23
Views: 9497

Re: TIPS OIDs, basis, etc.

Alvin wrote: Of course at that point ($100k) one qualifies for the admiral shares of VIPSX so maybe it needs to be pushed out a little further? - Al Al, I advocate a TIPS ladder only to have more control over the duration and/or timing of the maturities not as a cost savings device. I do use nominal...
by Doc
Tue Mar 13, 2007 2:30 pm
Forum: Personal Investments
Topic: Guidance on TIPS Ladder
Replies: 23
Views: 9497

TIPS OIDs, basis, etc.

thb wrote: What about buying at auction and selling before maturity or buying on secondary market and either hold to maturity or selling before maturity This gets a little trickier. THE OID is only arithmetic. You are still going to get that 1099-OID which gives you all the data you need. Just make ...
by Doc
Tue Mar 13, 2007 12:47 pm
Forum: Personal Investments
Topic: Guidance on TIPS Ladder
Replies: 23
Views: 9497

1099-OID

In my experience - two brokers - the 1099-OID are separate for each issue even though the coupon interest may be lumped.
by Doc
Tue Mar 13, 2007 12:06 pm
Forum: Personal Investments
Topic: Guidance on TIPS Ladder
Replies: 23
Views: 9497

tfb Re: accounting

When you have individual TIPS in taxable account, calculating the OID and accounting for the tax basis becomes a project for the not so inclined. Have you done it? Yes. Actually the OID is not much of a problem as people have said because your broker gives you a 1099-OID each year. If you hold to m...
by Doc
Tue Mar 13, 2007 11:47 am
Forum: Investing - Theory, News & General
Topic: Value of tax deferral and Roth
Replies: 13
Views: 5178

Point Five

In my view, your point #5 may be the most controversial. ... Rather, it is simply a function of how large a pre-tax contribution is going into these higher expected gain investments. What Brian left unsaid is that this larger pre-tax contribution means that you are taking on more risk. You have cha...
by Doc
Tue Mar 13, 2007 11:36 am
Forum: Investing - Theory, News & General
Topic: Bonds vs. Stocks in IRA found to be better 93% of time
Replies: 45
Views: 20787

for Gummy

gummy wrote:The dividends I get are a fixed amount: umpteen cents for each share.
Investors are optimists. We like to think that our dividends will increase every year. Mathematicians may be more realistic. :D
by Doc
Tue Mar 13, 2007 11:31 am
Forum: Investing - Theory, News & General
Topic: Bonds vs. Stocks in IRA found to be better 93% of time
Replies: 45
Views: 20787

It turns out to be a nice problem for a calculus class (sums of geometric series and whatnot). Thanks Russell. Like Al, I though there was a series solution to the problem. My wife actually dug out my calculus book - printed in 1963! I was hoping someone a little closer to the math world would jump...
by Doc
Tue Mar 13, 2007 11:15 am
Forum: Investing - Theory, News & General
Topic: Bonds vs. Stocks in IRA found to be better 93% of time
Replies: 45
Views: 20787

Gummy’s formulation

Then (I Think): A(k) = g A(k-1) + D for k = 1, 2, 3 … n. The problem is that the dividend term D = d (1-t) is not a constant but a factor that needs to be multiplied by the capital. Your initial equation should be A(k) = g A(k-1) + A(k-1) D for k = 1, 2, 3 … n. If you ignore the “cross term” The cr...