Search found 598 matches

by TD2626
Mon Oct 09, 2017 12:32 am
Forum: Investing - Theory, News & General
Topic: Our most important decision in one minute
Replies: 4
Views: 1493

Re: Our most important decision in one minute

Good point - Asset allocation is generally much more important than specific technical questions. I think I spend too much time thinking about minor technicalities (like "Could the value factor exposure in a dividend fund partially compensate for that fund's higher tax drag in a taxable account?) wh...
by TD2626
Sun Oct 08, 2017 9:52 pm
Forum: Personal Finance (Not Investing)
Topic: Question About Long Term Care
Replies: 75
Views: 6893

Re: Question About Long Term Care

I think family history of longevity should be a factor when deciding in this type of insurance. There is always academic research that can be consulted instead of speculating on this topic. For example: "Blame the parents? The association between parental longevity and successful ageing" by Gjonça&...
by TD2626
Sun Oct 08, 2017 12:27 am
Forum: Investing - Theory, News & General
Topic: measurement of success of investment(s)
Replies: 52
Views: 4708

Re: measurement of success of investment(s)

What do you mean? The market portfolio is the 500 best stocks in the country based on large cap performance. A particular fund has an index which is unique to that fund. Like a dividend fund based on a dividend index perhaps, it's benchmark. That's all. That is absolutely not the market portfolio f...
by TD2626
Sat Oct 07, 2017 11:51 pm
Forum: Investing - Help with Personal Investments
Topic: mimicking duration of total bond using municipal bond funds
Replies: 5
Views: 793

Re: mimicking duration of total bond using municipal bond funds

I read over this thread. Interesting math and ideas. If you wished, you could also use 0% short - 58% intermediate and 42% long. It probably won't matter much which of the solutions you use, but I prefer to keep things simple. The short-term bonds are for stability, though, and even if overall risk ...
by TD2626
Sat Oct 07, 2017 11:16 pm
Forum: Investing - Theory, News & General
Topic: Relative Importance of Savings Rate, Asset Allocation, and Investment Selection
Replies: 21
Views: 1921

Re: Relative Importance of Savings Rate, Asset Allocation, and Investment Selection

I have been wondering the answer to this question: What percentage of the average Boglehead investor's success is due to having a high savings rate and living below one's means? What percentage of the average Boglehead investor's success is attributable to stock/bond/cash asset allocation? What per...
by TD2626
Sat Oct 07, 2017 11:00 pm
Forum: Investing - Theory, News & General
Topic: Exposure Distributions in Equivalent-Risk Portfolios
Replies: 6
Views: 614

Re: Exposure Distributions in Equivalent-Risk Portfolios

Here are my opinions on this subject: Portfolio A: Plain Vanilla Portfolio Uses Total World Stock and Total Bond. A relatively standard 60/40 portfolio, say. ---This portfolio has simplicity and little complexity. It has substantial theoretical merit. However, from an intellectual perspective I wond...
by TD2626
Sat Oct 07, 2017 10:41 pm
Forum: Investing - Theory, News & General
Topic: Dividends vs. Capital Gains for Spending Needs?
Replies: 212
Views: 18697

Re: Dividends vs. Capital Gains for Spending Needs?

Some funds distribute capital gains and you have to pay taxes on those too. Selecting funds that trade infrequently or using Vanguard funds that funnel gains to in-kind etf redemptions can limit distributions. However, broad index funds (such as those at Fidelity) can distribute capital gains. I ag...
by TD2626
Sat Oct 07, 2017 10:08 pm
Forum: Investing - Theory, News & General
Topic: Dividends vs. Capital Gains for Spending Needs?
Replies: 212
Views: 18697

Re: Dividends vs. Capital Gains for Spending Needs?

KlangFool, I can give you (some) of my reasons for liking dividends. 1). Since both of are parents are gone (I' am on my own & can't borrow money from them in a emergency). In a emergency I can use my credit card & pay if off with the next dividend payment. (Financial Security). 2). Compounding, th...
by TD2626
Sat Oct 07, 2017 9:45 pm
Forum: Investing - Theory, News & General
Topic: Dividends vs. Capital Gains for Spending Needs?
Replies: 212
Views: 18697

Re: Dividends vs. Capital Gains for Spending Needs?

Some funds distribute capital gains and you have to pay taxes on those too. Selecting funds that trade infrequently or using Vanguard funds that funnel gains to in-kind etf redemptions can limit distributions. However, broad index funds (such as those at Fidelity) can distribute capital gains. I ag...
by TD2626
Sat Oct 07, 2017 9:16 pm
Forum: Investing - Theory, News & General
Topic: Dividends vs. Capital Gains for Spending Needs?
Replies: 212
Views: 18697

Re: Dividends vs. Capital Gains for Spending Needs?

Some funds distribute capital gains and you have to pay taxes on those too. Selecting funds that trade infrequently or using Vanguard funds that funnel gains to in-kind etf redemptions can limit distributions. However, broad index funds (such as those at Fidelity) can distribute capital gains. I agr...
by TD2626
Sat Oct 07, 2017 1:33 pm
Forum: Investing - Theory, News & General
Topic: Dividends vs. Capital Gains for Spending Needs?
Replies: 212
Views: 18697

Re: Dividends vs. Capital Gains for Spending Needs?

<<(Of course, "divided stock fund" is a imperfect proxy for "value stock fund")>> Why go for the proxy when you get the real thing? Because the dividend fund can do double duty and the value index fund can't. Basically, the dividend fund is a "double imperfect proxy" - it's an imperfect proxy for a...
by TD2626
Sat Oct 07, 2017 1:25 pm
Forum: Investing - Theory, News & General
Topic: Relative Importance of Savings Rate, Asset Allocation, and Investment Selection
Replies: 21
Views: 1921

Re: Relative Importance of Savings Rate, Asset Allocation, and Investment Selection

And here are two numbers: 4.86% and 4.44%. They are the past 10-year average annual growth rate of two funds. The 0.42% difference is pretty small and might be attributed to difference in expense ratio or taxes or something else. One is Vanguard LifeStrategy Moderate Growth and one is LifeStrategy ...
by TD2626
Sat Oct 07, 2017 12:42 pm
Forum: Investing - Theory, News & General
Topic: Dividends vs. Capital Gains for Spending Needs?
Replies: 212
Views: 18697

Re: Dividends vs. Capital Gains for Spending Needs?

As for the tax implications, we are in the 15% bracket and pay taxes on the dividends anyway so ... why not spend them? If you invest in Total Stock Market, whose dividends are mostly qualified, isn't the tax rate essentially zero in the 15% bracket? Correct. I believe VTSAX was 93% qualified last ...
by TD2626
Sat Oct 07, 2017 12:32 pm
Forum: Investing - Theory, News & General
Topic: Dividends vs. Capital Gains for Spending Needs?
Replies: 212
Views: 18697

Re: Dividends vs. Capital Gains for Spending Needs?

I don't really think this kind of testing is needed, or even helpful. You can calculate with mathematical precision what your losses would have been with a dividend tilt. There is no need for a backtest. What's more, if your goal is a value tilt there are more tax efficient ways to achieve that. It...
by TD2626
Fri Oct 06, 2017 11:52 pm
Forum: Investing - Theory, News & General
Topic: Dividends vs. Capital Gains for Spending Needs?
Replies: 212
Views: 18697

Re: Dividends vs. Capital Gains for Spending Needs?

I don't really think this kind of testing is needed, or even helpful. You can calculate with mathematical precision what your losses would have been with a dividend tilt. There is no need for a backtest. What's more, if your goal is a value tilt there are more tax efficient ways to achieve that. It...
by TD2626
Fri Oct 06, 2017 11:11 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Evidence Of Shrinking Alpha
Replies: 5
Views: 1193

Re: Larry Swedroe: Evidence Of Shrinking Alpha

I think that markets are fairly efficient over short time scales and very efficient over long time scales. Of course there are inefficiencies, as it still takes computers nanoseconds for computers to process information. However, new information is incorporated very quickly into the market. The ques...
by TD2626
Fri Oct 06, 2017 10:38 pm
Forum: Investing - Theory, News & General
Topic: Relative Importance of Savings Rate, Asset Allocation, and Investment Selection
Replies: 21
Views: 1921

Relative Importance of Savings Rate, Asset Allocation, and Investment Selection

I have been wondering the answer to this question: What percentage of the average Boglehead investor's success is due to having a high savings rate and living below one's means? What percentage of the average Boglehead investor's success is attributable to stock/bond/cash asset allocation? What perc...
by TD2626
Fri Oct 06, 2017 9:43 pm
Forum: Investing - Theory, News & General
Topic: Dividends vs. Capital Gains for Spending Needs?
Replies: 212
Views: 18697

Re: Dividends vs. Capital Gains for Spending Needs?

I really don't want to get into this argument again. However, I would like to point out some items to (Physician On Fire) for future reference. 1). Not everyone lives in California. 2). Not everyone is in the 25% tax bracket. 3). Not every State imposes high taxes on dividends. 4). Everyone is not ...
by TD2626
Fri Oct 06, 2017 8:04 pm
Forum: Investing - Theory, News & General
Topic: Dividends vs. Capital Gains for Spending Needs?
Replies: 212
Views: 18697

Re: Dividends vs. Capital Gains for Spending Needs?

Principal is one type of capital, but there are many others. Principal is money somebody owes to somebody else. You might owe it, or somebody might owe it to you. Unlike other types of capital, you have some reasonable expectation (but defaults and bankruptcies sometimes occur) that whoever it is w...
by TD2626
Fri Oct 06, 2017 7:34 pm
Forum: Investing - Theory, News & General
Topic: Dividends vs. Capital Gains for Spending Needs?
Replies: 212
Views: 18697

Re: Dividends vs. Capital Gains for Spending Needs?

I spend from my dividend pocket and my capital gains pocket. I didn't feel the tax drag of dividends until I sold most of my BRK to become more diversified. Spending only dividends is a way some people discipline their spending. The dividend puzzle has been discussed for a long time. It is good for...
by TD2626
Fri Oct 06, 2017 7:15 pm
Forum: Investing - Theory, News & General
Topic: Time Value of Money (Young Investors)
Replies: 29
Views: 2327

Re: Time Value of Money (Young Investors)

I think it's important for young people to realize the time value of money and important of saving early. This should be drilled into their head in high school. 5k invested @ 18 years old = 120k @ 65 years old (assuming 7% growth) 5k invested @ 30 years old = 50k @ 65 years old 5k invested every ye...
by TD2626
Fri Oct 06, 2017 6:56 pm
Forum: Investing - Theory, News & General
Topic: Exposure Distributions in Equivalent-Risk Portfolios
Replies: 6
Views: 614

Re: Exposure Distributions in Equivalent-Risk Portfolios

Which of the following portfolios would be best? Assume that the exact size of the tilts (generally 5-10% tilts) are adjusted so that each portfolio can be reasonably thought to have roughly the same expected risk and return of the standard 60/40 portfolio. I don't think "best" is knowable when per...
by TD2626
Fri Oct 06, 2017 5:50 pm
Forum: Investing - Theory, News & General
Topic: Time Value of Money (Young Investors)
Replies: 29
Views: 2327

Re: Time Value of Money (Young Investors)

I think it's important for young people to realize the time value of money and important of saving early. This should be drilled into their head in high school. 5k invested @ 18 years old = 120k @ 65 years old (assuming 7% growth) 5k invested @ 30 years old = 50k @ 65 years old 5k invested every ye...
by TD2626
Fri Oct 06, 2017 5:28 pm
Forum: Investing - Theory, News & General
Topic: Dividends vs. Capital Gains for Spending Needs?
Replies: 212
Views: 18697

Re: Dividends vs. Capital Gains for Spending Needs?

Bogleheads: Would you rather own stock funds that automatically pay you enough in dividends to cover your spending needs or own funds that pay little to no dividends, forcing you to sell shares? Best wishes. Taylor I believe a dividend tilt can be reasonable for some due to convenience and simplici...
by TD2626
Thu Oct 05, 2017 2:33 pm
Forum: Personal Consumer Issues
Topic: How do you value your time?
Replies: 97
Views: 4617

Re: How do you value your time?

Obviously, if someone is employed hourly and is literally choosing between working and getting paid for those hours or taking time off to, say, clean the house or mow the lawn, then the math (work vs hire a service) suddenly becomes "real" and a lot more important!
by TD2626
Thu Oct 05, 2017 2:24 pm
Forum: Investing - Help with Personal Investments
Topic: Millionaire Next Door (Thank you Bogleheads)
Replies: 81
Views: 12234

Re: Millionaire Next Door (Thank you Bogleheads)

Congratulations - and this is how it's done! By quietly working hard, saving a lot, and investing wisely, nearly anyone can secure their financial future. It's great that you're one of the few to do this successfully!
by TD2626
Thu Oct 05, 2017 2:17 pm
Forum: Personal Finance (Not Investing)
Topic: Question About Long Term Care
Replies: 75
Views: 6893

Re: Question About Long Term Care

I think LTCi has been confused for a way to fund long term care as opposed to fund a low probability event yet very high cost case of needing long term care (where assets may be depleted). If long term care becomes a high probability need then premiums must go up. There is no free lunch. True. But ...
by TD2626
Thu Oct 05, 2017 11:55 am
Forum: Personal Consumer Issues
Topic: How do you value your time?
Replies: 97
Views: 4617

Re: How do you value your time?

I value my time at a fairly low rate. The benefits of saving money are substantial enough that I will sometimes work an hour to save even a few dollars - i.e. a "value of time" of a few dollars an hour. Doing the calculation, though, is helpful. If you spend 10 hours and save $5, that's most likely ...
by TD2626
Wed Oct 04, 2017 12:47 am
Forum: Investing - Theory, News & General
Topic: Shooting for the moon as a young investor
Replies: 19
Views: 2283

Re: Shooting for the moon as a young investor

The idea that if you're young you can afford to lose money is, in my opinion, entirely backward - you have more time to let compounding earn for you. On reflection I suspect that you are right. On the one hand it's easy to say "you are young, you can always save another $50K later." On the other ha...
by TD2626
Wed Oct 04, 2017 12:36 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Different Kind Of Momentum
Replies: 6
Views: 1017

Re: Larry Swedroe: Different Kind Of Momentum

Thanks for posting both the Swedroe article and the AQR paper; I read through both. While the research seems thorough, it is in my opinion concerning. Indeed, I feel some of the things that are being advocated by proponents "smart-beta" and heavily factor tilted strategies is concerning. I value Swe...
by TD2626
Wed Oct 04, 2017 12:07 am
Forum: Investing - Theory, News & General
Topic: Shooting for the moon as a young investor
Replies: 19
Views: 2283

Re: Shooting for the moon as a young investor

A leveraged ETF such as UPRO might fit the bill. It has way bigger swings than the S&P, but also way bigger returns, and you can't lose more than you invest. Avoid this speculative product - these are specialized vehicles for short-term traders only. The Bogleheads Wiki (https://www.bogleheads.org/...
by TD2626
Tue Oct 03, 2017 11:53 pm
Forum: Investing - Theory, News & General
Topic: Shooting for the moon as a young investor
Replies: 19
Views: 2283

Re: Shooting for the moon as a young investor

Gambling is unacceptable. It is in no way "efficient" and can in no way be considered an "investment". One is taking on an enormous risk in exchange for a negative expected return. Speculation, as well, is not acceptable. Non-systematic risks (the risks involved in concentrated portfolios of small n...
by TD2626
Tue Oct 03, 2017 11:38 pm
Forum: Investing - Theory, News & General
Topic: Exposure Distributions in Equivalent-Risk Portfolios
Replies: 6
Views: 614

Exposure Distributions in Equivalent-Risk Portfolios

Note: This is a theoretical post intended to examine where along a risk-return spectrum, for a constant, pre-defined level of desired overall portfolio risk/return, one should attempt to get one’s return. There are a lot of assumptions about market efficiency and which risk/return levels assets shou...
by TD2626
Tue Oct 03, 2017 12:03 am
Forum: Personal Finance (Not Investing)
Topic: net income vs net asset => what do i make of it, and how to keep growing!
Replies: 7
Views: 815

Re: net income vs net asset => what do i make of it, and how to keep growing!

If person A has 0k in assets he does not have a flashy car, a nice watch, an expensive house... those are all assets. Of course, they wouldn't actually have $0.00 in assets, just as the OP probably doesn't actually have $0.00 in net worth. This is a very rough illustration and I'm rounding a lot. O...
by TD2626
Mon Oct 02, 2017 11:13 pm
Forum: Investing - Theory, News & General
Topic: Larry Swedroe: Financializing Commodities
Replies: 10
Views: 1395

Re: Larry Swedroe: Financializing Commodities

Unfortunately, the time when "they once did" was "prior to 2006, when they were close to uninvestible by ordinary retail investors." And the time they stopped providing a diversification benefit was, pretty much, the fairly substantial period of time when they started to be widely recommended to or...
by TD2626
Mon Oct 02, 2017 10:54 pm
Forum: Investing - Theory, News & General
Topic: Why Long-Term Corporate Bonds (e.g. VBLTX) so Unpopular?
Replies: 15
Views: 2473

Re: Why Long-Term Corporate Bonds (e.g. VBLTX) so Unpopular?

If the market for long-term bonds were dominated by retail investors, then we should probably see an inflation risk premium priced into long-term bonds based on the uncertainty of long-term inflation and the undesirability of bearing that risk. But these types of buyers are not the ones primarily s...
by TD2626
Mon Oct 02, 2017 10:33 pm
Forum: Investing - Theory, News & General
Topic: The Future of Active vs Index Investing
Replies: 33
Views: 2920

Re: The Future of Active vs Index Investing

On an unrelated note, it could be possible to envision an "active", non-index fund that specifically tries to be cheaper than, and have less turnover than, an index fund. For example, such a fund would try to have less turnover than an index fund (to lower tax drag) and it would not have to pay lic...
by TD2626
Mon Oct 02, 2017 10:04 pm
Forum: Personal Finance (Not Investing)
Topic: net income vs net asset => what do i make of it, and how to keep growing!
Replies: 7
Views: 815

Re: net income vs net asset => what do i make of it, and how to keep growing!

So: 100k income 100k assets 100k debt Net worth = assets - debt = 100k assets - 100k debt = $0.00 Bogleheads more focus on a "net worth" mentality instead of an "income" mentality. Income can come and go - one can loose a job suddenly, for example. It's a philosophy. Compare two people: Person A: In...
by TD2626
Mon Oct 02, 2017 9:41 pm
Forum: Investing - Theory, News & General
Topic: The Future of Active vs Index Investing
Replies: 33
Views: 2920

Re: The Future of Active vs Index Investing

One issue for taxable investors is tax drag. Funds with high turnover (like most active funds) distribute larger capital gains distributions, and some of these gains can be short-term gains. Even if fee drag is reduced, can the tax drag issue be solved? If it helps, we're already pretty much at the ...
by TD2626
Mon Oct 02, 2017 9:19 pm
Forum: Investing - Theory, News & General
Topic: Current Bull Market could last years
Replies: 89
Views: 10879

Re: Current Bull Market could last years

Apparently few actually read the OP's article. I went and read it. It turns out that although the focus is on stocks, it discusses also discusses like high yield bonds. What do you think that the implications are of the first graph in the article on an investor considering a long-term 5 or 10% alloc...
by TD2626
Mon Oct 02, 2017 9:07 pm
Forum: Investing - Theory, News & General
Topic: Buffett's idea of risk vs risk as in the formula: 'willingness, ability and need'
Replies: 50
Views: 2950

Re: Buffett's idea of risk vs risk as in the formula: 'willingness, ability and need'

You can define risk in any way you want. The facts about how stocks behave are not affected by a definition. I agree - how you personally define risk has no affect on market behavior. (How society in general views risk may affect stocks is a different story.) How one defines risk does, though, chan...
by TD2626
Mon Oct 02, 2017 8:56 pm
Forum: Personal Finance (Not Investing)
Topic: Question About Long Term Care
Replies: 75
Views: 6893

Re: Question About Long Term Care

Rate increases and lack of lifetime coverage is the reason the asset based policies are gaining traction. You are are an insurance salesman, correct? Could you comment on what the average commission is when you sell a LTCI product? Also, it would be useful to know the largest companies who still wr...
by TD2626
Mon Oct 02, 2017 2:29 am
Forum: Investing - Theory, News & General
Topic: Why Long-Term Corporate Bonds (e.g. VBLTX) so Unpopular?
Replies: 15
Views: 2473

Re: Why Long-Term Corporate Bonds (e.g. VBLTX) so Unpopular?

In my opinion, a fund like VBLTX (with 40% long term treasuries and 60% long term investment grade corporate) is a reasonable option as an addition to a portfolio. Note it's not a corporate-only fund, and it's not a junk bond fund. It provides the potential for substantial total return, (in exchange...
by TD2626
Mon Oct 02, 2017 1:33 am
Forum: Personal Finance (Not Investing)
Topic: Question About Long Term Care
Replies: 75
Views: 6893

Re: Question About Long Term Care

A somewhat reorganized version of my postings in an earlier, long thread on this subject (https://www.bogleheads.org/forum/viewtopic.php?f=2&t=222589): I think that Long Term Care Insurance can be worth it for many. I feel it should be bought as insurance, not as a hybrid product that combines insur...
by TD2626
Mon Oct 02, 2017 1:04 am
Forum: Investing - Theory, News & General
Topic: Buffett's idea of risk vs risk as in the formula: 'willingness, ability and need'
Replies: 50
Views: 2950

Re: Buffett's idea of risk vs risk as in the formula: 'willingness, ability and need'

You mean increase, but yes you have the right statement. A discussion is here: http://www.norstad.org/finance/risk-and-time.html Yes, I meant increase; I corrected the wording of my post. I read the Norstad paper - It was quite interesting. However, one might note that if the question is how likely...
by TD2626
Sun Oct 01, 2017 9:39 pm
Forum: Investing - Theory, News & General
Topic: How do you determine the emergency fund size?
Replies: 65
Views: 16151

Re: How do you determine the emergency fund size?

This is a framework that I like... but it's just my opinion and my way of thinking about things. First, what are emergency fund assets? In my opinion, one could consider a 2-tier strategy. Tier 1 assets have liquidity and the expectation of protection of nominal principal - FDIC coverage strongly pr...
by TD2626
Sun Oct 01, 2017 6:55 pm
Forum: Personal Finance (Not Investing)
Topic: Question About Long Term Care
Replies: 75
Views: 6893

Re: Question About Long Term Care

Someone who buys a LTCI policy in their 50s and pays a flat premium for 30-40 years clearly has a much higher risk of needing the insurance in their 80s than in their 50s and 60s. I don't think you mean this the way I read it. Everyone who is still healthy at 50 has a much higher risk of needing it...
by TD2626
Sun Oct 01, 2017 6:37 pm
Forum: Investing - Theory, News & General
Topic: Buffett's idea of risk vs risk as in the formula: 'willingness, ability and need'
Replies: 50
Views: 2950

Re: Buffett's idea of risk vs risk as in the formula: 'willingness, ability and need'

Here's an example of how I view things: If (based on long-run historical data) the average annual return is, say, 10% and the standard deviation of the annual returns are 20%, after 10 years of investing the standard deviation would be (based on the standard error/standard deviation of the mean for...
by TD2626
Sun Oct 01, 2017 5:52 pm
Forum: Personal Finance (Not Investing)
Topic: Question About Long Term Care
Replies: 75
Views: 6893

Re: Question About Long Term Care

The chance of needing the insurance in one's 50s and 60s is not negligible - that coverage is an important component of the insurance. And that is why some employers pay for the basic coverage when you are working. They are more interested in getting you back to work than subsidizing your retiremen...
by TD2626
Sun Oct 01, 2017 5:42 pm
Forum: Personal Finance (Not Investing)
Topic: Question About Long Term Care
Replies: 75
Views: 6893

Re: Question About Long Term Care

Hi Cincyguy. The biggest thing you can do to keep your LTCi bill under control is to accept the highest deductible/longest elimination period you can afford. In your case this would seem to be a one year elimination period. This is so much cheaper because the insurance companies know that the major...