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by Tamalak
Mon Oct 16, 2023 8:18 am
Forum: Investing - Theory, News & General
Topic: earnings yield plus inflation - most straight forward stock return estimate?
Replies: 90
Views: 7617

Re: earnings yield plus inflation - most straight forward stock return estimate?

Earnings yield + inflation is my estimate, but make sure you include the entire world in that calculation, not just the S&P.

If one half of the world has an earnings yield of 4% and the other half has an earnings yield of 8%, that doesn't mean the second half has a better expected forward return. The market is pricing them differently because of different forward earnings. So I would say that the expected return for BOTH of them is their average, 6% plus inflation.

Another good simple forward return estimate (it looks pretty solid in the backtest) is something another poster mentioned in a different topic - Treasury 10 year yield plus 4%.
by Tamalak
Fri Oct 13, 2023 7:07 am
Forum: Personal Investments
Topic: To sell or to hold positions that are showing loss? Revised
Replies: 44
Views: 4054

Re: To sell or to hold positions that are showing loss?

Just for fun, here is a portfolio visualizer of how your holdings would perform, if they were held since all the funds you're in became available. Unfortunately FNILX didn't come out until recently, so it only goes back to 2019: https://www.portfoliovisualizer.com/bac ... 8BxSI2QfIN

I encourage you to play around with portfolio visualizer to get more of a perspective.

Here is one comparing different types of assets going back longer: Domestic and international stocks (VTSMX, VGTSX), conservative bonds (VBMFX), and cash: https://www.portfoliovisualizer.com/bac ... lrOgt5OYIm
by Tamalak
Thu Oct 12, 2023 11:21 am
Forum: Investing - Theory, News & General
Topic: Is the coming pain really "priced in"?
Replies: 206
Views: 25687

Re: Is the coming pain really "priced in"?

I think the market did a good job pricing the 2020 crisis and a much worse job pricing in the 2022 yield hikes
by Tamalak
Thu Oct 12, 2023 8:31 am
Forum: Investing - Theory, News & General
Topic: How do we calculate the real return on TIPS, and why is it currently so high?
Replies: 21
Views: 3900

Re: How do we calculate the real return on TIPS, and why is it currently so high?

Shocking that there was a peak around 2000. What a great time to get into TIPS..
by Tamalak
Thu Oct 12, 2023 7:32 am
Forum: Investing - Theory, News & General
Topic: How do we calculate the real return on TIPS, and why is it currently so high?
Replies: 21
Views: 3900

Re: How do we calculate the real return on TIPS, and why is it currently so high?

TIPS works like every other bond in the world, except the coupon also gives you whatever inflation is. So you calculate its return the same way you do any bond in the world, except that the return is in real terms instead of nominal terms.

That leads to the same weirdness in the secondary market as any bond, where the "expected annual return" is different than the actual coupon, because a chunk of the return (or loss) is from the difference between the price you bought it for and the large payout at the end - which will be reflected in a changing NAV as you get closer to maturity.
by Tamalak
Tue Oct 10, 2023 12:33 pm
Forum: Personal Finance (Not Investing)
Topic: Selling son's house if he abandons it
Replies: 36
Views: 7175

Re: Selling son's house if he abandons it

RationalWalk wrote: Tue Oct 10, 2023 12:10 pm Some of it is mine, as I've been helping with mortgage payments
That is not how it works.

You have to be crystal clear about the facts of the situation - whether said facts are your "main concern" or not - BEFORE any help at all can start happening.
by Tamalak
Tue Oct 10, 2023 11:56 am
Forum: Personal Finance (Not Investing)
Topic: Selling son's house if he abandons it
Replies: 36
Views: 7175

Re: Selling son's house if he abandons it

If it's his house, how would you be the one stuck with foreclosure?
by Tamalak
Tue Oct 10, 2023 9:00 am
Forum: Personal Investments
Topic: Advice on preparing to FIRE in next 1-2 years
Replies: 28
Views: 5930

Re: Advice on preparing to FIRE in next 1-2 years

I'm planning to quit in early-mid 40s with 1.5 million. I feel comfortable with that and I'm not even planning to ex-pat! I think OP you will be fine.
by Tamalak
Mon Oct 09, 2023 12:57 pm
Forum: Investing - Theory, News & General
Topic: Barron's: Stock investors shoud not accept returns less than 9.2%
Replies: 43
Views: 5607

Re: Barron's: Stock investors shoud not accept returns less than 9.2%

abc132 wrote: Mon Oct 09, 2023 12:19 pm People tend to pick whatever conflicting indicator they want to fit their own narrative.

From Jan 1972-present:

CAPE 10
Average CAPE10 1972-present is 21.4. Use 1/CAPE 10 we would expect 4.67% real. With 3.97% inflation we get 8.64% nominal.
Predicted: 4.67% real
Actual: 6.35% real

4% + risk free
Using the 10 year treasury as risk-free
Predicted: 6.26% real
Actual: 6.35% real
I love the idea that 4%+riskfree is a predictor. Exciting if true, right now :D

Is there a chart anywhere of returns for the 10 year treasury vs. the next 10 years of stock returns annualized?
by Tamalak
Mon Oct 09, 2023 11:10 am
Forum: Investing - Theory, News & General
Topic: Barron's: Stock investors shoud not accept returns less than 9.2%
Replies: 43
Views: 5607

Re: Barron's: Stock investors shoud not accept returns less than 9.2%

4.5% is quite a premium.

S&P earnings yield is only something like 4.12%. By default, shouldn't one assume that will be the forward real returns? So even with 3% inflation, that's only 7.12%, well short of what Barron's wants.

Maybe the market is pricing in some strong earnings growth. Or maybe the accepted equity risk premium is way lower.
by Tamalak
Mon Oct 09, 2023 8:43 am
Forum: Investing - Theory, News & General
Topic: understanding rationale for world vs us indices
Replies: 7
Views: 780

Re: understanding rationale for world vs us indices

Good reason to include international:
Diversification

Bad reason to include international:
P/E or CAPE ratio

Good reason to avoid international:
Taxation increases effective ER by 30 points, uncompensated currency volatility

Bad reason to avoid international:
Recent underperformance
by Tamalak
Fri Oct 06, 2023 4:39 pm
Forum: Personal Investments
Topic: Bonds vs Cash?
Replies: 24
Views: 2760

Re: Bonds vs Cash?

retired@50 wrote: Fri Oct 06, 2023 3:58 pm
Tamalak wrote: Fri Oct 06, 2023 12:51 pm
retired@50 wrote: Wed Oct 04, 2023 12:22 pm
cubfan wrote: Wed Oct 04, 2023 12:02 pm ... I really don't like Bonds at all as they aren't even keeping up with inflation. Have considered moving my bond positions into cash while these interest rates are high much better return.
Over the long term, cash tends to lose to inflation too...

See chart.
Image


Regards,
Why did the value of gold stop tracking the dollar around 1870?
I think you mean 1970 instead of 1870... Anyway, I suspect that has to do with Nixon finally removing the U.S. from the gold standard.

See link for details: https://www.federalreservehistory.org/e ... ility-ends

Regards,
No I mean 1870! Check the chart.
by Tamalak
Fri Oct 06, 2023 12:51 pm
Forum: Personal Investments
Topic: Bonds vs Cash?
Replies: 24
Views: 2760

Re: Bonds vs Cash?

retired@50 wrote: Wed Oct 04, 2023 12:22 pm
cubfan wrote: Wed Oct 04, 2023 12:02 pm ... I really don't like Bonds at all as they aren't even keeping up with inflation. Have considered moving my bond positions into cash while these interest rates are high much better return.
Over the long term, cash tends to lose to inflation too...

See chart.
Image


Regards,
Why did the value of gold stop tracking the dollar around 1870?
by Tamalak
Fri Oct 06, 2023 7:55 am
Forum: Investing - Theory, News & General
Topic: Long Treasuries down 55%. Time to bottom fish?
Replies: 416
Views: 52060

Re: Long Treasuries down 55%. Time to bottom fish?

The 30 year just popped past 5% for the first time right in front of my eyes :shock:
by Tamalak
Thu Oct 05, 2023 9:21 am
Forum: Personal Investments
Topic: Going all in on VYM/SCHD?
Replies: 57
Views: 7509

Re: Going all in on VYM/SCHD?

Bonds and dividend funds may both have a high coupon, but that is a misleading similarity. VYM/SCHD's total return is gonna be very similar to total market stocks and nothing like any kind of bond.
by Tamalak
Thu Oct 05, 2023 9:10 am
Forum: Personal Investments
Topic: Where is the excitement about higher bond yields?
Replies: 84
Views: 11296

Re: Where is the excitement about higher bond yields?

TipsQuestions wrote: Thu Oct 05, 2023 8:35 am Keep in mind that when bond returns rise, expected stock returns do as well, so allocating more to bonds may not necessarily make sense.
Yup. This is why I'm excited about higher bond yields even though I'm not even in bonds!
by Tamalak
Wed Oct 04, 2023 2:28 pm
Forum: Investing - Theory, News & General
Topic: Now that long TIPS yields are 60 bp off their highs I will…
Replies: 2937
Views: 611530

Re: Now that long TIPS have surged past 2.25% I will…

[ In the above scenario I do not know if waiting or not waiting for 3 months is considered market timing :confused . Or buying LTPZ now in general is market timing. My advice: ("Tell me great hero but please make it brief..." - Bob Dylan) Don't beat yourself up over it. Buy when you feel like it. You might do better than if you bought today. Or maybe worse. Meanwhile hopefully you are getting 5% plus in a money market, which is beating inflation now anyway, so you are getting what you want with TIPS for the time being one way or another. It was different when some of us started buying TIPS near zero YTM last year- we were scrambling to buy ASAP because money markets were losing 7-8% real and nobody knew in which direction inflati...
by Tamalak
Wed Oct 04, 2023 11:27 am
Forum: Personal Investments
Topic: Investment Advice - all cash currently
Replies: 11
Views: 1200

Re: Investment Advice - all cash currently

I would consolidate your $1.30 into one savings account and not worry any further about it.
by Tamalak
Wed Oct 04, 2023 8:02 am
Forum: Personal Investments
Topic: HELP! I am losing money on VTI and VXUS
Replies: 30
Views: 3742

Re: HELP! I am losing money on VTI and VXUS

In 2015 I invested 90% of my entire net worth into VTI and VXUS. In the intervening time I've been looking around for a better investment than that, and haven't found any. VTI+VXUS just holds up too well, both in backtesting and forward looking expectations. So we're riding the same storm, but I'm real confident in our boat, OP :sharebeer
by Tamalak
Wed Oct 04, 2023 7:25 am
Forum: Personal Investments
Topic: HELP! I am losing money on VTI and VXUS
Replies: 30
Views: 3742

Re: HELP! I am losing money on VTI and VXUS

dmikala wrote: Wed Oct 04, 2023 5:12 am Please help! I invested in VTI and VXUS at bad time and now I seem to be loosing money everyday :( Is there an index and ETF I can invest in to at least offset the losses so my portfolio is more balanced?
Yes, it's recommended to also invest in bonds so.. oh wait :D
by Tamalak
Tue Oct 03, 2023 7:23 pm
Forum: Personal Investments
Topic: Sell everything
Replies: 100
Views: 21773

Re: Sell everything

I wonder if this is why the Equity Risk Premium still seems so low. People with low risk tolerance aren't bailing out of stocks and into bonds.. they're just bailing out of everything :D
by Tamalak
Tue Oct 03, 2023 2:03 pm
Forum: Personal Investments
Topic: BND exceeding my patience - need something different
Replies: 169
Views: 19682

Re: BND exceeding my patience - need something different

burritoLover wrote: Tue Oct 03, 2023 1:57 pm Can't wait until cash and short-term treasuries are yielding <1% at some point and all the new posts will be about getting back into BND. It wouldn't be so ridiculous if it weren't so predictable.
I had my own performance-chasing delusions about bonds and was fortunately disabused of them by this board way back in 2018: viewtopic.php?p=3779143#p3779143
by Tamalak
Tue Oct 03, 2023 1:49 pm
Forum: Personal Investments
Topic: Help with length of dollar cost averaging lump sum
Replies: 9
Views: 867

Re: Help with length of dollar cost averaging lump sum

DCA is just a psychological trick, it doesn't have any actual benefits. So your DCA length should be as short as possible without you getting too afraid to start it immediately.
by Tamalak
Tue Oct 03, 2023 1:44 pm
Forum: Investing - Theory, News & General
Topic: Why not 100% PSLDX? [PIMCO StocksPLUS Long Duration Fund]
Replies: 2106
Views: 391606

Re: Why not 100% PSLDX? [PIMCO StocksPLUS Long Duration Fund]

I see the expense ratio is now listed at 1.71% :shock:
by Tamalak
Tue Oct 03, 2023 1:24 pm
Forum: Investing - Theory, News & General
Topic: Why not 100% PSLDX? [PIMCO StocksPLUS Long Duration Fund]
Replies: 2106
Views: 391606

Re: Why not 100% PSLDX? [PIMCO StocksPLUS Long Duration Fund]

tcrez wrote: Tue Oct 03, 2023 1:18 pm PSLDX borrows at short term rates and invests in long duration bonds....correct?

Given the negative yield curve plus expense ratio ...thats a big time losing proposition right?

assuming interest rates dont change...its borrowing at 5.5%, paying another 1.71% for the expense ratio and investing at 4.75%
But a negative yield curve is predicting that yields go down, not remain unchanged. So yes, the market making a bad guess in the wrong direction is going to lose you money, as it is with practically all investments.
by Tamalak
Tue Oct 03, 2023 12:21 pm
Forum: Personal Investments
Topic: I have about 8 years left until my retirement.
Replies: 14
Views: 4787

Re: I have about 8 years left until my retirement.

In the past 5 years, TQQQ has *doubled*. OP, did your friend really invest in a 3x leveraged stock fund with a timeframe in mind of 2 years?
by Tamalak
Tue Oct 03, 2023 11:48 am
Forum: Investing - Theory, News & General
Topic: How lower can TLT drop from here? [iShares 20+ Year Treasury Bond ETF]
Replies: 87
Views: 11031

Re: How lower can TLT drop from here?

I am kind of puzzled that TLT (iShares 20+ Year Treasury Bond ETF) drops that bad second day in a row, without any apparent reason (at least for me). I can calculate how much it will drop with any additional 1% interest rate increase, but what I don’t understand is why is it moving down that hard now when the rate is steady, unless it just does not reflect the current interest rate correctly and tries to find it’s equilibrium with it. Maybe someone can enlighten? I think TLT tries to answer the question "what will be the average rate over the next 20+ years?" The FED doesn't actually have to do anything for the consensus answer to that to change. All the FED has to do is look stubborn about keeping rates where they are, and TLT w...
by Tamalak
Tue Oct 03, 2023 11:29 am
Forum: Investing - Theory, News & General
Topic: Now that long TIPS yields are 60 bp off their highs I will…
Replies: 2937
Views: 611530

Re: Now that long TIPS have surged past 2.25% I will…

watchnerd wrote: Tue Oct 03, 2023 11:08 am
Tamalak wrote: Tue Oct 03, 2023 10:09 am
What's even more nuts is TIPS was around 2.5% at the start of those listed periods too.. and so has about equaled returns to international stocks.. really pathetic performance by intl!
Some of that might be tied into strong dollar performance, which is correlated with rising interest rates.

I don't know if international looks as bad in local currencies (e.g. Euro).
Nope.. DXY was just as high around 2000-2003 as it is now.

That said, intl' forward PE has dropped from 20 to 13 in the last 20 years. So that's a pretty decent excuse for underperformance in my book.
by Tamalak
Tue Oct 03, 2023 10:27 am
Forum: Investing - Theory, News & General
Topic: Stocks are sinking, bonds are sinking.. where is the benefit of diversification ?
Replies: 102
Views: 13460

Re: Stocks are sinking, bonds are sinking.. where is the benefit of diversification ?

Cash isn't shrinking if it's in a money market. Yields from that are well above YoY inflation.

Diversification benefits falter hard when rates are raised explicitly to combat inflation as opposed to in response to a strong economy. Bonds and stocks tend to have correlated returns in that environment and there's not a lot you can do to unglue them until that environment has passed.
by Tamalak
Tue Oct 03, 2023 10:09 am
Forum: Investing - Theory, News & General
Topic: Now that long TIPS yields are 60 bp off their highs I will…
Replies: 2937
Views: 611530

Re: Now that long TIPS have surged past 2.25% I will…

aj76er wrote: Tue Oct 03, 2023 10:00 am How good is 2.5% real guaranteed returns for 20yrs?

Rolling international (ex-U.S.) equity real CAGR for recent 20yr periods:

2000 - 2020: 1.86%
2001 - 2021: 2.93%
2002 - 2022: 2.94%
2003 - 2023: 3.98% (YTD)

Buying LTPZ at 2% - 3% real yields (and holding for its duration) is locking in equity-like returns.
What's even more nuts is TIPS was around 2.5% at the start of those listed periods too.. and so has about equaled returns to international stocks.. really pathetic performance by intl!
by Tamalak
Tue Oct 03, 2023 9:20 am
Forum: Investing - Theory, News & General
Topic: Now that long TIPS yields are 60 bp off their highs I will…
Replies: 2937
Views: 611530

Re: Now that long TIPS have surged past 2.25% I will…

omg this is nuts. Are we going to have two historic bear years for bonds in a row?

If nothing breaks this is going to be awesome, but I'm increasingly worried something will break.
by Tamalak
Mon Oct 02, 2023 3:08 pm
Forum: Personal Investments
Topic: BND exceeding my patience - need something different
Replies: 169
Views: 19682

Re: BND exceeding my patience - need something different

daacrusher2001 wrote: Mon Oct 02, 2023 2:47 pmBNDs distribution yield is a lot lower than what I can get elsewhere now
BND yield to maturity is now 5%. What are you looking that is a lot higher than that?
by Tamalak
Mon Oct 02, 2023 3:05 pm
Forum: Personal Investments
Topic: BND exceeding my patience - need something different
Replies: 169
Views: 19682

Re: BND exceeding my patience - need something different

the_wiki wrote: Mon Oct 02, 2023 3:03 pm In my mind, the only thing selling BND will do is lock in your $150k losses with no hope of recovery.
This.. "don't lock in your losses" type thinking is often irrational for stocks, but it's exactly correct for (non junk) bonds. ANY loss in BND you will make up in 7 years, after which you will get permanent extra profit from increased yield.
by Tamalak
Mon Oct 02, 2023 2:27 pm
Forum: Personal Finance (Not Investing)
Topic: UPDATE Debating quitting with no new job lined up - possible FIRE?
Replies: 72
Views: 12475

Re: Debating quitting with no new job lined up - possible FIRE?

Even if I was not ready to properly FIRE, if I had any kind of financial bedrock I would never stay in a situation with nasty co workers. The very first and most vital thing financial security gives you is the right to walk away from any kind of BS.
by Tamalak
Mon Oct 02, 2023 2:11 pm
Forum: Investing - Theory, News & General
Topic: Now that long TIPS yields are 60 bp off their highs I will…
Replies: 2937
Views: 611530

Re: Now that long TIPS have surged past 2.25% I will…

watchnerd wrote: Sat Sep 30, 2023 10:42 pm
rockstar wrote: Sat Sep 30, 2023 4:36 pm Eventually, bonds will make more sense than equities.
This is how I model it for Global Equities (VT) at current 10 YR TIPS real yield (2.20%) and 10 YR breakeven inflation (2.35%):

Equities Nominal Return 6.40%
Equities Real Return 4.05%
Real Risk Premium over TIPS 1.85%


If we get to 3% real yield, that would drop the equity real rsk premium over TIPS to 0.85%.
Why do you compare stocks to the 10 year? How do you figure what the duration risk of stocks is?

I use P/E ratio, but it can't be that simple..
by Tamalak
Mon Oct 02, 2023 1:02 pm
Forum: Investing - Theory, News & General
Topic: The unloved 20-year Treasury bond (now over 5%)
Replies: 33
Views: 6575

Re: The unloved 20-year Treasury bond (now over 5%)

Chuck wrote: Mon Oct 02, 2023 12:41 pm 5.05% is only 2.78% over TIPS.

Will inflation be higher or lower than 2.78% for the next 20 years?
TIPS is the safer of the two investments, right? So this would be a prediction by the market that inflation will be lower than 2.78% (although it's probably better to compare TIPS to the 10 or 30 year, not the neglected 20 - so I bet the market is predicting inflation lower than 2.5%)
by Tamalak
Mon Oct 02, 2023 7:45 am
Forum: Personal Finance (Not Investing)
Topic: Will you ever again see such a high ex-ante ERP?
Replies: 14
Views: 3232

Re: Will you ever again see such a high ex-ante ERP?

New question, will we ever see such a LOW ERP again? :annoyed
by Tamalak
Sat Sep 30, 2023 6:36 pm
Forum: Investing - Theory, News & General
Topic: What’s So Bad About Cash (v. Buying a Bond Fund)?
Replies: 122
Views: 9811

Re: What’s So Bad About Cash (v. Buying a Bond Fund)?

Cash is better than bonds because if rates go up, you don't lose money

Bonds are better than cash because if rates go down, you make extra money.
by Tamalak
Fri Sep 29, 2023 2:54 pm
Forum: Investing - Theory, News & General
Topic: What (real) rate of return do you expect from stocks/bonds?
Replies: 19
Views: 1526

Re: What (real) rate of return do you expect from stocks/bonds?

I use a ~10 year moving average of global P/E ratio to determine real rate of return of stocks. Right now it expects 5.7% real. I am picking through this post. You are using something like CAPE 10 but not exactly. What is your rationale? CAPE 10 never made sense to me because it uses CURRENT prices but PAST earnings. So if earnings have increased very quickly over 10 years, CAPE will be unreasonably gloomy about forward returns. Instead I use both PAST prices and PAST earnings. To me, there are two things that will change P/E ratio: 1. changes in expected future earnings (i.e. optimism/pessimism) 2. changes in the discount rate (that is, time value of money driven by things like competing investments, fed rate etc) P/E changes driven by #1...
by Tamalak
Fri Sep 29, 2023 2:26 pm
Forum: Investing - Theory, News & General
Topic: What (real) rate of return do you expect from stocks/bonds?
Replies: 19
Views: 1526

Re: What (real) rate of return do you expect from stocks/bonds?

I use a ~10 year moving average of global P/E ratio to determine real rate of return of stocks. Right now it expects 5.7% real.

For bonds, that's easier, it's just yield minus 3, so 2% real :mrgreen:

But now that I say that, TIPS is returning 2.3%, and it doesn't make sense that TIPS - a safer investment - would offer more real returns than something not inflation-protected.
by Tamalak
Fri Sep 29, 2023 11:03 am
Forum: Investing - Theory, News & General
Topic: What are the "best" indices for stocks, with no tilt?
Replies: 34
Views: 2052

Re: What are the "best" indices for stocks, with no tilt?

GaryA505 wrote: Fri Sep 29, 2023 10:59 am
Tamalak wrote: Fri Sep 29, 2023 10:46 am Since I began investing in 2015 I have been 100% VT. I keep searching for any way to improve on that portfolio and no luck..
Index only please, not index fund
Ok.. well.. the benchmark Vanguard uses for VT is the FTSE Global All Cap Index
by Tamalak
Fri Sep 29, 2023 10:46 am
Forum: Investing - Theory, News & General
Topic: What are the "best" indices for stocks, with no tilt?
Replies: 34
Views: 2052

Re: What are the "best" indices for stocks, with no tilt?

Since I began investing in 2015 I have been 100% VT. I keep searching for any way to improve on that portfolio and no luck..
by Tamalak
Fri Sep 29, 2023 7:49 am
Forum: Investing - Theory, News & General
Topic: Swedroe (9/27/23 Morningstar): “It’s Too Soon to Say the Value Premium Is Dead”
Replies: 88
Views: 9187

Re: Swedroe (9/27/23 Morningstar): “It’s Too Soon to Say the Value Premium Is Dead”

nisiprius wrote: Fri Sep 29, 2023 7:36 am Jared Kizer wrote, in 2015,
it is virtually impossible to determine whether a given factor premium no longer exists precisely because each is capable of extended periods of underperformance. The period of underperformance could either be because “the world has changed” or simply a reasonable point on the distribution of possible outcomes.
Great quote, this is exactly why I would have trouble holding value through one of its "periods of underperformance".. because of the nagging question of, is it really still just a period?
by Tamalak
Fri Sep 29, 2023 7:38 am
Forum: Investing - Theory, News & General
Topic: My stock has lost 17% in 5 days without any announcement: what to do?
Replies: 70
Views: 10586

Re: My stock has lost 17% in 5 days without any announcement: what to do?

17% change ain't even all that much for a random low volume baby cap stock. It's done a swing like that six times in two years. Enjoy the ride!
by Tamalak
Thu Sep 28, 2023 12:16 pm
Forum: Personal Investments
Topic: Advice to invest 400,000 dollars
Replies: 13
Views: 2698

Re: 400k Start investing today

TIPS are giving about 2.5% real right now aren't they? That guarantees the next 30 years with a real growth of 0.5% annualized. After 30 years, OP will have to reevaluate.
by Tamalak
Thu Sep 28, 2023 10:40 am
Forum: Personal Investments
Topic: Can You Help Me Understand This Bond (TIPS) Purchase?
Replies: 23
Views: 1473

Re: Can You Help Me Understand This Bond (TIPS) Purchase?

stevewolfe wrote: Thu Sep 28, 2023 10:39 am
Tamalak wrote: Thu Sep 28, 2023 10:33 am Is the coupon 1.5% real? Or 1.5% nominal?
The coupon is 1.5% real and paid on the inflation adjusted value of the bond.
What happens to the last 0.8% then? Does it get added to the NAV of the bond??
by Tamalak
Thu Sep 28, 2023 10:33 am
Forum: Personal Investments
Topic: Can You Help Me Understand This Bond (TIPS) Purchase?
Replies: 23
Views: 1473

Re: Can You Help Me Understand This Bond (TIPS) Purchase?

stevewolfe wrote: Thu Sep 28, 2023 9:58 am
JSPECO9 wrote: Thu Sep 28, 2023 9:39 am Is the 2.3% real?
Yes, it's real rate. Note the difference between the real yield to maturity (2.3x) vs. the coupon of the bond (1.50) and be sure you understand the difference before you purchase.
Is the coupon 1.5% real? Or 1.5% nominal?
by Tamalak
Thu Sep 28, 2023 9:49 am
Forum: Personal Investments
Topic: Are Short Term Bonds preferable to Total Bond Market Index Funds?
Replies: 60
Views: 7005

Re: Are Short Term Bonds preferable to Total Bond Market Index Funds?

2022 was the worst year for bonds in 100 years. People should not be making investing decisions based on that..
by Tamalak
Thu Sep 28, 2023 7:39 am
Forum: Personal Investments
Topic: What to do with BLV
Replies: 21
Views: 2160

Re: What to do with BLV

It’s hard for me to understand how an asset that has an upside of maybe 7-8 percent return, with a downside of 20-25 percent could be a good investment. Bonds are weird.. the way they work individually is very simple but the way they work in the market, or in a fund is tough to understand. BLV's sustainable upside comes from the yield. For every ~14% BLV drops in price, the annual yield will go up by 1%. So any losses BLV takes will be made up for in AT MOST 14 years by the yield - and then after that the extra yield is pure profit. In a way, it's good that BLV has dropped. It has kind of made an investment in itself. Down now, but with a future expected return of 5% per year instead of 2%. If BLV goes up again in price, you'll get your lo...