Search found 1074 matches

by Engineer250
Wed Jul 27, 2016 10:02 pm
Forum: Investing - Theory, News & General
Topic: Help Me Understand: Why Shouldn't AA Be 100% Stocks During Accumulation Phase?
Replies: 268
Views: 37916

Re: Help Me Understand: Why Shouldn't AA Be 100% Stocks During Accumulation Phase?

Sorry to disappoint, but no sarcasm here. It is truly sad that even the suggestion of providing for others might be mistaken for sarcasm. :( I will encourage you to review the original context. It was not about "most Americans (who) probably can't afford to (leave money for their kids)." It was about a couple who had strong resources and could have left more for their kids if they hadn't done something stupid with their investments. Swedroe's message was apparently that they should have just hunkered down and kept everything for themselves. I'm firmly convinced that God does have a sense of humor, and it doesn't always work to the "benefit" of us mortals. My parents are under no obligation to leave anything to me. I pro...
by Engineer250
Wed Jul 27, 2016 8:14 pm
Forum: Investing - Theory, News & General
Topic: Help Me Understand: Why Shouldn't AA Be 100% Stocks During Accumulation Phase?
Replies: 268
Views: 37916

Re: Help Me Understand: Why Shouldn't AA Be 100% Stocks During Accumulation Phase?

Mine and my spouse's retirement accounts in total are probably 2.5x yearly household income now, so what would be the point? Engineer250, That is one way of looking at this. But, unless you save 100% of your income, this represents many more years of your savings. So, let's say you save 15% of your income and the market crashes. You just lost 250% x 50% = 125% of your annual income. But, this represents 125%/15% ~ 8 years worth of savings. If the market does not recover, you will need 8 years to get the money back. KlangFool Interesting way of looking at it. I think it would take me less than 8 years though to catch up. I'm probably saving 3-4x a year more than what I was saving when I started 10 years ago. I expect to be saving 3-4x what ...
by Engineer250
Wed Jul 27, 2016 5:53 pm
Forum: Investing - Theory, News & General
Topic: Help Me Understand: Why Shouldn't AA Be 100% Stocks During Accumulation Phase?
Replies: 268
Views: 37916

Re: Help Me Understand: Why Shouldn't AA Be 100% Stocks During Accumulation Phase?

Whether your allocation is 30/70, 50/50, 80/20, or 100/0. Someone who stands firm at 100/0 is no more brave than someone who stands firm at 50/50. Plenty of 80/20 folks have freaked out in downturns and increased their bond allocation. Many 100/0 folks have done nothing. 2008 is apparently not enough of a battle test for enough people, we'll see what the next downturn brings when we are all tested again. :beer I think a true 50/50 is more brave than a 100/0. A 100/0 can just shrug and say, "oh crap - my portfolio value just dropped 50%. Of course, there's nothing I can do about it until my next paycheck when I'll buy at 50% off. Hey, that's probably good!" OTHO: the 50/50 is at a moment of crisis. His portfolio just dropped 25%, ...
by Engineer250
Wed Jul 27, 2016 3:09 pm
Forum: Investing - Theory, News & General
Topic: Help Me Understand: Why Shouldn't AA Be 100% Stocks During Accumulation Phase?
Replies: 268
Views: 37916

Re: Help Me Understand: Why Shouldn't AA Be 100% Stocks During Accumulation Phase?

This test is for someone who is asking about putting all their eggs in an extremely risky basket but hasn't yet lived through a bear market. By deploying their hard earned cash after a big market decline they will have passed the test and may be a candidate for a highly risky portfolio. I'm saying even a 100% equities person knows that time spent waiting out the market is time wasted. If you can afford to contribute to your IRA $5500 on Jan 1 that's the best. If you don't have $5500 ready to go, it's best to invest as you have the money. Waiting out the market means you give up potential gains the whole time you are waiting. Maybe the only test for a 100% equities person is to see what they do in the event of a downturn. Do they stick to t...
by Engineer250
Wed Jul 27, 2016 2:54 pm
Forum: Investing - Theory, News & General
Topic: Easy question on bond allocation at retirement..
Replies: 16
Views: 4516

Re: Easy question on bond allocation at retirement..

Confuscious wrote: For example why be in 50% bonds if 25% bonds would provide 30 years of expenses? Yes there is volatility but what is volatility if there is hardly any risk?
But if 50% bonds meet your needs just fine, why would you drop it to 25% in order to get more potential upside you don't really need? Maybe if you are trying to increase how much you are going to leave to your heirs, that's the only reason I can think of.
by Engineer250
Wed Jul 27, 2016 2:12 pm
Forum: Investing - Theory, News & General
Topic: are the markets overvalued? Are Grantham/Hussman etal correct?
Replies: 222
Views: 26449

Re: are the markets overvalued? Are Grantham/Hussman etal correct?

coachz wrote:CAPE is dead. Track the HOMER instead.
Please sign me up for your newsletter.
by Engineer250
Wed Jul 27, 2016 11:37 am
Forum: Personal Investments
Topic: How best to allocate our money?
Replies: 5
Views: 1136

Re: How best to allocate our money?

Toons wrote:" aggressively paying down loans,"

Without a doubt.
Pay Down.
Pay Off.
The psychological benefits alone make it worthwhile,
compounded with the financial relief it is a no brainer.
You will feel relieved to have cut loose the ball and chain of
Debt :happy
+1
by Engineer250
Wed Jul 27, 2016 10:56 am
Forum: Personal Investments
Topic: 529 plans?
Replies: 31
Views: 5541

Re: 529 plans?

staythecourse wrote:Worst case is the investments do great and then I just unintentional/ intentional set up a poor man's educational trust to be passed down from generation to generation.
Or one of your descendants can cash it out, pay tax and pay the 10% penalty. If someone left me $800k and I had to pay the penalty and taxes on it...well that's still ballpark $575k left after all that. Sometimes in our tax avoidance minds we perform too many hurdles. I mean, I'd take $575k after paying taxes and penalty rather than $0 just so I could avoid paying taxes.
by Engineer250
Wed Jul 27, 2016 10:46 am
Forum: Investing - Theory, News & General
Topic: Help Me Understand: Why Shouldn't AA Be 100% Stocks During Accumulation Phase?
Replies: 268
Views: 37916

Re: Help Me Understand: Why Shouldn't AA Be 100% Stocks During Accumulation Phase?

To those thinking of going 100% stocks here is a test: Step 1 - Save up 2 years of living expenses in cash Step 2 - Wait until the next 20% decline in the S&P 500 index Step 3 - Deploy half of your cash savings into the stock market after the 20% drop If you complete step 3 you can deploy the other half of your savings in stocks after another big drop in the S&P 500 (preferably at 52-week lows). Step 2 - nope. Sure. But the problem remains. While you're waiting for the S&P to go negative, you're losing out on not having that money invested. Since the stock market on average goes up, on average you'll be worse off waiting for the drop. If you invest the money now, it'll most likely first grow and then contract in the drop, but c...
by Engineer250
Wed Jul 27, 2016 10:16 am
Forum: Investing - Theory, News & General
Topic: are the markets overvalued? Are Grantham/Hussman etal correct?
Replies: 222
Views: 26449

Re: are the markets overvalued? Are Grantham/Hussman etal correct?

nedsaid wrote:Bonds are high because of a sluggish economy and very low inflation. There is also the flight to less risky assets. Stocks look high because of low interest rates and low inflation. There is also a lot of money sloshing around out there. This is not irrational behavior.
I have read that because bond yields are so low, that some of the "flight to safety" investment is going to US stocks as well. The articles seemed to indicate a belief that the US stock market is less volatile and less uncertain than other developed markets out there. So when investors are looking for better returns and what they perceive as the safest equity available they are choosing US stock market.
by Engineer250
Tue Jul 26, 2016 6:32 pm
Forum: Personal Consumer Issues
Topic: What really happens to people who run out of their money in retirement
Replies: 61
Views: 12486

Re: What really happens to people who run out of their money in retirement

I have a friend who has now run out of money before retirement. He is 64, has been unemployed for > 2.5 years, is flat broke with no assets other than an 18 year old car, and lives in a HCOL area (though with a rent-controlled apartment). He has scraped by the last few months with help from family and friends, including me, but that is not a long-term solution. My fear is that he is effectively unemployable now, in part because he had a spotty work history to begin with and he has trouble getting along with people in positions of authority over him. I think his best case scenario is part-time work supplemented by early Social Security, as long as he can work, and then reliance on social safety net programs. I feel really bad for him, becau...
by Engineer250
Tue Jul 26, 2016 5:30 pm
Forum: Personal Investments
Topic: 529 plans?
Replies: 31
Views: 5541

Re: 529 plans?

I do agree 529 plans are great, but just like many great things out there folks just do not utilize them. Not sure why, but I am sure there are disertations on the subject already. In my opinion, 529 plans may be one of the single BEST investment opportunities out there. It is a sure fire way to generate a positive return (just by avoiding taxes) for anyone who has a kid going to college (which is everyone in this country who wants a shot at a good life outside of vocational schools). Good luck. a) Most people don't even know what they are. When I mention it to non-professionals I know, they've never heard of it. b) Most people aren't able to afford maxing out their workplace retirement plan to $18k, let alone starting a Roth IRA, let alon...
by Engineer250
Tue Jul 26, 2016 5:07 pm
Forum: Personal Investments
Topic: 403b Questions - Vanguard Short-Term Federal Fund Admiral Shares (VSGDX)
Replies: 11
Views: 1228

Re: 403b Questions - Vanguard Short-Term Federal Fund Admiral Shares (VSGDX)

Do you have access to target retirement accounts in your 403b? I know you do in Vanguard. You could just pick a target retirement account in each that has the 10% bond balance you want.
by Engineer250
Tue Jul 26, 2016 4:46 pm
Forum: Personal Investments
Topic: Roth IRA as temp emergency fund - MMF or BND or ?
Replies: 11
Views: 1781

Re: Roth IRA as temp emergency fund - MMF or BND or ?

One thing to consider, if you don't know this already, is in the 15% tax bracket, there are no long term capital gains up to the top of the 15% bracket. So if you had say total stock market, e.g. Vanguard VTSMX/VTSAX in a taxable brokerage account you could sell if you have anything in LTCG without tax implications. Just another tool in the investment tool box. I just figured this out maybe one or two months ago! So you are almost first to tell me! Kind of wished I had known sooner. For now though I don't want to put anything remotely representing my emergency fund (3 months of after tax income is my initial goal) in anything that could fluctuate. I doubt I'll get my emergency fund and all my Roths and 401ks maxed out prior to ending up ba...
by Engineer250
Tue Jul 26, 2016 4:15 pm
Forum: Personal Finance (Not Investing)
Topic: Rules of Thumb: Max House Value as % of Net Worth?
Replies: 114
Views: 46212

Re: Rules of Thumb: Max House Value as % of Net Worth?

technovelist wrote:
Rodc wrote:
Engineer250 wrote:
Rodc wrote: No that is not how it works. The Southern guy makes $100K per year and Engineer makes $1.4M.
Clearly my math skills do not justify the income. :oops:

Now you know what all the people who complain about overpayed gov'ment workers are talking about. :P
We understood, just having fun. :)
:sharebeer
Yes I was laughing when I saw your guys' responses, especially liked Rodc's confidence in my earning abilities :wink: :beer
by Engineer250
Tue Jul 26, 2016 1:02 pm
Forum: Personal Finance (Not Investing)
Topic: Rules of Thumb: Max House Value as % of Net Worth?
Replies: 114
Views: 46212

Re: Rules of Thumb: Max House Value as % of Net Worth?

Rodc wrote: No that is not how it works. The Southern guy makes $100K per year and Engineer makes $1.4M.
Clearly my math skills do not justify the income. :oops:

Now you know what all the people who complain about overpayed gov'ment workers are talking about. :P
by Engineer250
Tue Jul 26, 2016 12:57 pm
Forum: Personal Finance (Not Investing)
Topic: Rules of Thumb: Max House Value as % of Net Worth?
Replies: 114
Views: 46212

Re: Rules of Thumb: Max House Value as % of Net Worth?

Many here forget that the subset of people who read websites like Bogleheads or blogs like Financial Samurai are already likely living on the coasts, making incomes far about national averages, and since they have an innate interest in personal finance are already saving a significant amount of their income. Unless you are fabulously wealthy, the home you buy should be a function of your free cash flow. Now you can decide how much of your cash flow you want to devote towards a home (5%, 10%, 25%, etc.) limited only by what a bank will loan you. I agree it's more useful to look at mortgage payment versus income. Value of your home could be like the value of your car, does anyone count that in their net worth? Also what the number would be i...
by Engineer250
Tue Jul 26, 2016 12:01 pm
Forum: Investing - Theory, News & General
Topic: Prepaid part of mortgage counted in AA?
Replies: 16
Views: 1387

Re: Prepaid part of mortgage counted in AA?

Dottie57 wrote:I don't count my home in asset allocation.
Same. I count my mortgage as a liability. 2008 taught me not to count what Zillow or some crazy estimate thinks my house is worth.
by Engineer250
Tue Jul 26, 2016 11:58 am
Forum: Personal Finance (Not Investing)
Topic: How to calculate Emergency fund
Replies: 44
Views: 6245

Re: How to calculate Emergency fund

emoore wrote:
Non7WoodUser wrote:~20% of net worth in cash is the typical amount.
No it's not.
Darn. With my mortgage debt, and an unknown real "equity" in my house, I consider my net worth negative. So that would mean I don't need an emergency fund. :D
by Engineer250
Tue Jul 26, 2016 11:56 am
Forum: Investing - Theory, News & General
Topic: Observation :Will the market go a lot higher ? Most probably
Replies: 13
Views: 3584

Re: Observation :Will the market go a lot higher ? Most probably

Engineer250 wrote:Wish I had your faith in interest rates. Then I would know whether it's a good idea to refinance now, or wait. I suspect whichever decision I make will be the "wrong" one. I'll try to keep you all posted so you can do the opposite :D
Just wanted to update I've decided to wait another couple weeks (confident there won't be a rate hike) in hopes mortgage rates continue to drop. That means we've probably already hit the low and rates are on the way back up again, since I'm probably wrong. Thought I'd let everyone know so they can refi now 8-)
by Engineer250
Tue Jul 26, 2016 11:48 am
Forum: Personal Finance (Not Investing)
Topic: Quit work and become SAHM - advice? regrets?
Replies: 58
Views: 14174

Re: Quit work and become SAHM - advice? regrets?

And I have seen moms who loved the stay at home thing even after the kids were in school or after they left the nest. This is what I've seen the most. Either the mother got so used to not working she never wanted to return, or in some cases her former career was over and she could only get low paid work in retail or something similar to get back into the workplace. I'd go over your finances and make sure that if something happens and you can never return to work your savings and retirement will still be on track. Does staying home mean less money for the kids' college funds? It's hard to say what's more important, but giving your kids a debt free beginning of their careers might have a longer impact if you are still a good mom regardless o...
by Engineer250
Tue Jul 26, 2016 11:41 am
Forum: Personal Finance (Not Investing)
Topic: Rules of Thumb: Max House Value as % of Net Worth?
Replies: 114
Views: 46212

Re: Rules of Thumb: Max House Value as % of Net Worth?

Many here forget that the subset of people who read websites like Bogleheads or blogs like Financial Samurai are already likely living on the coasts, making incomes far about national averages, and since they have an innate interest in personal finance are already saving a significant amount of their income. Unless you are fabulously wealthy, the home you buy should be a function of your free cash flow. Now you can decide how much of your cash flow you want to devote towards a home (5%, 10%, 25%, etc.) limited only by what a bank will loan you. I agree it's more useful to look at mortgage payment versus income. Value of your home could be like the value of your car, does anyone count that in their net worth? Also what the number would be i...
by Engineer250
Tue Jul 26, 2016 12:04 am
Forum: Investing - Theory, News & General
Topic: The Fortitude Required of a Buy-and-Hold Equity Investor
Replies: 37
Views: 4203

Re: The Fortitude Required of a Buy-and-Hold Equity Investor

Phineas J. Whoopee wrote:
Engineer250 wrote:...
So is now the time to buy bonds? :wink:
If you have determined a long-term asset allocation suitable for yourself and your family's future, now is the time to implement it, yes. If you haven't, now is the time to work on determining what it should be. Avoid false precision. As an engineer you know what that means.
PJW
I'm a practical/non-analytical engineer. I pretty much avoid precision at all times, even the true kind. 8-)
by Engineer250
Mon Jul 25, 2016 11:57 pm
Forum: Personal Investments
Topic: Steering the young couple into right direction
Replies: 11
Views: 2011

Re: Steering the young couple into right direction

Morik wrote:
Engineer250 wrote: 25% of your C fund (C:S 4:1 ratio)

That would be 20%. 25% would be a 3:1 ratio.
Not sure which you intended, but wanted to clarify.
Well if your C fund was $100k you would want your S Fund to be $25k. So you would want 25% of your C Fund as your S Fund. Make sense? I agree if you have a big pot of money you need to divide by 5 and not 4 to figure out how much goes in each bucket.
by Engineer250
Mon Jul 25, 2016 11:29 pm
Forum: Investing - Theory, News & General
Topic: The Fortitude Required of a Buy-and-Hold Equity Investor
Replies: 37
Views: 4203

Re: The Fortitude Required of a Buy-and-Hold Equity Investor

Phineas J. Whoopee wrote:
Engineer250 wrote:...
Also I notice every thread about bonds lately seems to be telling people it's too late and now is not the time to buy into bonds with the expectation rates might go up. So just when I am trying to get more info about bonds everyone is telling me to stay away :P
It's only the posters who misunderstand both bonds and portfolio construction who are telling you to stay away.

If necessary to establish credibility, :P .

PJW
So is now the time to buy bonds? :wink:
by Engineer250
Mon Jul 25, 2016 10:45 pm
Forum: Investing - Theory, News & General
Topic: The Fortitude Required of a Buy-and-Hold Equity Investor
Replies: 37
Views: 4203

Re: The Fortitude Required of a Buy-and-Hold Equity Investor

And, why would that be the wrong answer? Especially, if that is good enough to get you there? I made that SERIOUS MISTAKE. I was 100% stock. I sold almost everything when the Telecom bubble burst. I lost 50% of my whole life savings up to the point. The greatest tragedy of this is I was GREEDY for NO REASON. I am a life time 30+% gross income saver. I spend 1/3, save 1/3, and pay 1/3 in tax. I saves one year worth of annual expense every year. I can get there with 0% real return in 25 years. Your goal is to get there with 25 to 40 times annual expense. And, you should adjust your AA based on the size of your portfolio. So, what has that got to do with age? For example, if you win a lottery tomorrow, do you still keep the same AA since you ...
by Engineer250
Mon Jul 25, 2016 8:09 pm
Forum: Investing - Theory, News & General
Topic: The Fortitude Required of a Buy-and-Hold Equity Investor
Replies: 37
Views: 4203

Re: The Fortitude Required of a Buy-and-Hold Equity Investor

Intuitively, you know AGE is not THE ANSWER. The correct answer is the PORTFOLIO size in term of annual expense and / or annual saving. What if your portfolio grows very big before you are 40? You are going to do nothing to protect yourself? <<Hence why I'm going to swing heavy to bonds when I hit age 40, probably go straight to 20 or 30%.>> This is not the right answer. Murphy's Law. Protect yourself. Shift gradually. You are timing the market. It may or may not work out. Why count on luck? KlangFool While you bring up good points, I disagree that age is not the answer. Or that using my age to determine my risk is somehow market timing. What do all the target retirement funds do? I'm just in an aggressive age-based option now, and will be...
by Engineer250
Mon Jul 25, 2016 5:19 pm
Forum: Personal Investments
Topic: TSP only or TSP and Outside IRA Mix?
Replies: 11
Views: 1397

Re: TSP only or TSP and Outside IRA Mix?

I've got 3 years to being vested. I plan on retiring out from Fed, but my pension will only factor into how slow I cross into bonds. I'm starting at a high GS level and expect to retire as a high 14, mid 15, or if luck goes my way, an SES. That's all well and good, but it's only at the 20 year and 30 year marks that the pension starts to become worthwhile. Your income itself is probably less important than whether you are a) living below it and b) how many years you have in the system. I think you have a great attitude, I'm just saying I wouldn't count the pension as a bond equivalent until maybe you are a few years away from retirement and have a really good idea what your pension will be. Now, you are just speculating that if you stay wi...
by Engineer250
Mon Jul 25, 2016 5:12 pm
Forum: Investing - Theory, News & General
Topic: The Fortitude Required of a Buy-and-Hold Equity Investor
Replies: 37
Views: 4203

Re: The Fortitude Required of a Buy-and-Hold Equity Investor

Percentages are also not as relevant as actual dollar amounts. Say you have $200k and it drops 50% ie to $100k then sure you need 100% to recover to $200k but that is still $100k ie exactly the same dollar amount even if the percentages are different. I agree and think that is a less scare-tactics way of putting it. You lost $100k. To get back up to your peak you need to gain $100k. And I think the thing this looks past is comparing the value of your retirement account at the peak and to the valley like either one of those is a valid number. If we're in a bubble, than your house might not really be worth what you think it is. That doesn't mean you lost money in equity that you need to regain, it might mean you just need to understand that ...
by Engineer250
Mon Jul 25, 2016 4:58 pm
Forum: Personal Investments
Topic: TSP to Vanguard?
Replies: 128
Views: 30404

Re: TSP to Vanguard?

If you are a retired government employee with a pension, that money is guaranteed. To my way of thinking, that is my guaranteed income like the G fund. Thus, I have less of a need for guaranteed money that a bond fund (or G Fund) would provide. Thus, I'm still 100% in equitites. After 40 years of investing, I know things go up and down but I'm still way ahead of where I would be by putting my money in "safe" places. A friend of mine was more conservative. We started TSP at the same time. He went 50% C fund and 50% G fund. I went 100% C fund. At retirement, I had 30% more money than he had. That's interesting, I have the opposite strategy. But I don't think I will stay with the government until retirement. I moved my former 401k i...
by Engineer250
Mon Jul 25, 2016 4:49 pm
Forum: Personal Investments
Topic: TSP only or TSP and Outside IRA Mix?
Replies: 11
Views: 1397

Re: TSP only or TSP and Outside IRA Mix?

Your situation sounds a lot like mine 30 years ago. I retired from the government at 58 (10 years ago) and am in a very good financial position. Max your TSP. I was 100% in C fund the whole time. The other options were not available until just before I retired. Although it is often suggested that one reduce their equity percentage as they get older and when they retire, in my case, I didn't and don't think it is a good strategy for you. If you retire from the government, you will have a monthly retirement. That retirement is your "bond" fund. If you do things such as eliminate debt and live below your means, you will have enough social security and retirement to meet your necessities so your TSP and other investments will be avai...
by Engineer250
Mon Jul 25, 2016 4:37 pm
Forum: Personal Consumer Issues
Topic: My experience with "older" used car
Replies: 59
Views: 11840

Re: My experience with "older" used car

I assumed you posted this because you were looking for feedback or to start a discussion so I'll jump in. My opinion is that no cost savings is worth the hassles of owning a car that is 20 years old. Passing up on the Lost time and aggravations is worth something. Buy a reliable car new and keep it for 10 years (if you can afford to do so) is my belief. If you are a mechanic and like working on cars - or have a flexible enough life that spending lots of time bringing it to the shop - maybe the story is different. As you are pointing out - with all the electronics - even keeping a "reliable" car for 10 years is starting to become more questionable (maybe 8 years is the right number now). I think stress and time are huge factors we...
by Engineer250
Mon Jul 25, 2016 4:17 pm
Forum: Investing - Theory, News & General
Topic: Help Me Understand: Why Shouldn't AA Be 100% Stocks During Accumulation Phase?
Replies: 268
Views: 37916

Re: Help Me Understand: Why Shouldn't AA Be 100% Stocks During Accumulation Phase?

LOL, you "think" the margin of safety is there?? Time will tell if that margin is sufficient? You actually ran a firecalc simulation. You weren't sure if 500 years of expenses was enough? Sorry Homer, don't want to take this thread OT. No, I was not being flippant and I am not stupid. The reason (I have explained this many times on this forum) to be very cautious for me is the future of Healthcare in US. I can control all my expenses very well because I am naturally frugal and have no big material wants or needs. However, I can't predict the future of my health or the future of healthcare costs in our society. I live a very healthy/active life but our future health issues are basically random/ unpredictable. That's my main reason...
by Engineer250
Mon Jul 25, 2016 4:12 pm
Forum: Investing - Theory, News & General
Topic: Help Me Understand: Why Shouldn't AA Be 100% Stocks During Accumulation Phase?
Replies: 268
Views: 37916

Re: Help Me Understand: Why Shouldn't AA Be 100% Stocks During Accumulation Phase?

rgs92 wrote:Do you think you are considering going to 100% stocks because the market is at an all time high, having zoomed upward in the last few weeks?
Could that possibly have anything to do with you asking this question right at this time?
Okay but any thread about buying bonds everyone gets told now's not the time to buy bonds either :D
by Engineer250
Mon Jul 25, 2016 4:06 pm
Forum: Investing - Theory, News & General
Topic: John Bogle's home
Replies: 36
Views: 13240

Re: John Bogle's home

An article cited In a recent post cited 67,000 millionaires live in mobile homes. I suspect they chose/prefer to live-below-their-means Mobile homes in California can be pretty pricey. For many older folks it's a decently affordable option, similar to a condo, where they can have their own walls and live in a neighborhood with people their age (a lot of the mobile home parks here have minimum age requirements of 50 or 55). But it's not the dirt cheap trailer park lifestyle here that people might have in mind. I feel like millionaire is a really misleading term these days, someone with 1.5 million could safely draw around $60k a year. Even if you add in social security, that's not going to let you buy fancy real estate in most big cities. 1...
by Engineer250
Mon Jul 25, 2016 3:54 pm
Forum: Investing - Theory, News & General
Topic: The Fortitude Required of a Buy-and-Hold Equity Investor
Replies: 37
Views: 4203

Re: The Fortitude Required of a Buy-and-Hold Equity Investor

I think it's worth noting that a decline in value of 50% requires a corresponding gain of 100% just to get back to even. The first chart you posted is great, but slightly misleading in this sense, as one could assume all percentages are equal when they are not. I don't mean to be nitpicky, but while your statement is accurate I feel like it over exaggerates what is real in order to scare people. Look at the 2008 S&P crash. From the peak pre-crash, the S&P broke even again in 2013. Was it a big % increase from the bottom? Sure. But saying it needs a 100% gain from the bottom means that you are setting the baseline of the market in the valleys, which is no better than setting it by the peaks. And most people didn't go all in to the s...
by Engineer250
Mon Jul 25, 2016 3:38 pm
Forum: Personal Investments
Topic: Feelings changing about AA as annual savings amount increases?
Replies: 28
Views: 4119

Re: Feelings changing about AA as annual savings amount increases?

You're right it doesn't matter at that point (essentially extinction or collapse). I hope that can be avoided. Why must my concern be interpreted that I am a doomsday preparer? On the one hand, you are acting as if you are more intelligent than all the guys running the companies and see things they don't. Don't you think coal manufacturers are adapting to more stringent environmental regulations year after year? The EPA was established in the '70s and the stock market as a whole has gone up since then. Companies might fight certain things, but they will also adapt. It's hard to predict where the next innovations will come from. No one in the 1800s would have predicted obvious technological improvements like the internet, but no one also wo...
by Engineer250
Mon Jul 25, 2016 12:02 pm
Forum: Personal Investments
Topic: TSP only or TSP and Outside IRA Mix?
Replies: 11
Views: 1397

Re: TSP only or TSP and Outside IRA Mix?

Hi I was just replying to your old post when it disappeared. Looks like you've cleaned things up a bit and honed down on what you want. **3-4:1 Ratio of C:S to capture Total US Stock** Noticed this in your last post, the wiki recommends about a 4:1 ratio, but it looks like you've updated your post. https://www.bogleheads.org/wiki/Thrift_Savings_Plan#Replicating_total_stock_market Prev Employer 401k at Fidelity ~$40,000 I would transfer that into the TSP, expense ratios can't be beat. Questions: 1. When I rollover my Fidelity 401k, should I keep same funds or re-allocate like in Question 2? Roll that into your TSP, allocate per your TSP planned allocations. 2. Should I keep the current AA in TSP only or should I open an IRA in Fidelity or Va...
by Engineer250
Mon Jul 25, 2016 10:59 am
Forum: Personal Investments
Topic: Allocation to New Roth IRA (long winded i Know sorry)
Replies: 5
Views: 583

Re: Allocation to New Roth IRA (long winded i Know sorry)

For your Roth IRA look up the 3-fund portfolio: https://www.bogleheads.org/wiki/Three-fund_portfolio Wiki has suggestions for what funds to select at various brokerages, including Schwab. https://www.bogleheads.org/wiki/Three-fund_portfolio#Other_than_Vanguard.2C_Boglehead-style Not the question you asked, but I'm a bit concerned you're focusing on maxing out your Roth ($5.5k/year) but plan to take 4 years to pay off your $14k car loan. You have a lot of ambitions with owning property in the future and even renting out property. Looks like your income will grow a lot coming up. I'd get serious with your budget. I'm not saying don't max out your Roth, I'm saying you need to get that car loan taken care of sooner. As your income rises, you wi...
by Engineer250
Mon Jul 25, 2016 10:48 am
Forum: Personal Investments
Topic: Portfolio Help
Replies: 12
Views: 1614

Re: Portfolio Help

Hi b42, I was in this Target date retirement fund: TIAA-CREF Lifecycle 2050 fund (Institutional) TFTIX. I decided to get out of it (TFTIX) because in 2015 Q3 my return was -8.4. Also it was heavily weight in international about 29%. Back then I was not educated about investing so I started reading up on investing. Yes, I think I made things complicated by getting into 9 funds. Would I have been better off sticking with the target retirement fund? Now I think I need get rid of some funds. Thanks, -Kevin One quarter of poor performance is not necessarily a reason to get out of something. S&P 500 performance for that quarter was around -7%. Add in how internationals were doing and the fund going -8 makes sense. Getting out of things when ...
by Engineer250
Mon Jul 25, 2016 10:41 am
Forum: Personal Investments
Topic: Steering the young couple into right direction
Replies: 11
Views: 2011

Re: Steering the young couple into right direction

$66,000 in TSP and employer is matching up to 5% G Fund- 20% S Fund- 20% C Fund- 20% I Fund- 40% Just want to point out a couple things about the TSP... If you are using C and S fund to replicate US stock market, your S fund should be about 25% of your C fund (C:S 4:1 ratio). So if your US stock is 40% of your TSP, you'd want closer to 8% S Fund and 32% C Fund. If you are purposefully trying to tilt towards small cap that's fine, just thought I'd mention if you weren't aware. https://www.bogleheads.org/wiki/Thrift_Savings_Plan#Replicating_total_stock_market Also I Fund is developed countries only and large cap stocks only. International small cap probably makes up 5% of total international market so this is less of a big deal, but emerging...
by Engineer250
Mon Jul 25, 2016 12:07 am
Forum: Investing - Theory, News & General
Topic: Reliving the Nightmare of the Crisis
Replies: 119
Views: 17358

Re: Reliving the Nightmare of the Crisis

In 2008-2009 we were on the brink of a catastrophe. Now, that we have survived it, our hindsight bias mocks our former fears or triggers groundless bravado. However, a positive outcome was not pre-determined. I like that and agree with it 100%. I was sanguine about my investments but I was young and had very little invested. I was not so sanguine about the economy. I was in a "safe" industry but I still had no idea how far it would ripple. Those who claim they were calm and didn't worry- I'm not saying they were lying, but I can't believe anyone was truly calm and confident during the crisis. I worried a lot for family and friends, and wondered what the future was going to look like. Was there a possibility not just the stock mar...
by Engineer250
Sun Jul 24, 2016 10:45 pm
Forum: Personal Investments
Topic: Roth IRA as temp emergency fund - MMF or BND or ?
Replies: 11
Views: 1781

Re: Roth IRA as temp emergency fund - MMF or BND or ?

One thing to consider, if you don't know this already, is in the 15% tax bracket, there are no long term capital gains up to the top of the 15% bracket. So if you had say total stock market, e.g. Vanguard VTSMX/VTSAX in a taxable brokerage account you could sell if you have anything in LTCG without tax implications. Just another tool in the investment tool box. I just figured this out maybe one or two months ago! So you are almost first to tell me! Kind of wished I had known sooner. For now though I don't want to put anything remotely representing my emergency fund (3 months of after tax income is my initial goal) in anything that could fluctuate. I doubt I'll get my emergency fund and all my Roths and 401ks maxed out prior to ending up ba...
by Engineer250
Sun Jul 24, 2016 10:25 pm
Forum: Investing - Theory, News & General
Topic: Help Me Understand: Why Shouldn't AA Be 100% Stocks During Accumulation Phase?
Replies: 268
Views: 37916

Re: Help Me Understand: Why Shouldn't AA Be 100% Stocks During Accumulation Phase?

... I read an article many years ago that said the problem with the whole age-based formulas were they got you into bonds too early and got you out of stocks too late. ... Fortunately for all of us, except those paying attention their money to the croupiers, they aren't formulas at all. They're rough starting places from which people can begin their thinking, if they have no more specific basis on which to start their deliberations. PJW Right. I didn't mean to imply they were useless. I agree they serve an important place, and I love that things like Target Retirement accounts exist even though I'm not in one, because they provide a good starting point for someone who wants to do research and a good end point for someone who doesn't and ju...
by Engineer250
Sun Jul 24, 2016 9:42 pm
Forum: Personal Investments
Topic: Roth IRA as temp emergency fund - MMF or BND or ?
Replies: 11
Views: 1781

Re: Roth IRA as temp emergency fund - MMF or BND or ?

Epsilon Delta wrote:As long as it says Roth IRA on the top of the statement the MM account counts as a Roth.

The choice of investment depends on your total situation. It looks like your emergency fund is fairly small, so I would suggest leaving the Roth in the MM fund until your taxable emergency fund builds up to a comfortable level. On the other hand if your one of those people who says you only have a 2 month emergency fund but you have another $20,000 in your checking account for cash flow purposes you could be more aggressive.
Thanks that is a relief. No I am not one of those lucky people with a bunch of other taxable savings unfortunately. This is all my liquid/non-retirement money nowadays (see above, stupid roof).
by Engineer250
Sun Jul 24, 2016 9:39 pm
Forum: Investing - Theory, News & General
Topic: Help Me Understand: Why Shouldn't AA Be 100% Stocks During Accumulation Phase?
Replies: 268
Views: 37916

Re: Help Me Understand: Why Shouldn't AA Be 100% Stocks During Accumulation Phase?

There are a few people on here who are following a similar path to me. I plan to stay 100% roughly until aged 40. But then I'm going to hard swing to something like 20-30% bonds/TIPs. I read an article many years ago that said the problem with the whole age-based formulas were they got you into bonds too early and got you out of stocks too late. Obviously if something wiggy happens with the stock market at aged 40 I might delay it by a few years, but i'll still have another several decades until retirement to start increasing my bonds and fixed income. The only thing I regret now about not having bonds is the lack of dry powder as many here put it. If there's another crash I'll do what I can to increase my contributions, which is what I did...
by Engineer250
Sun Jul 24, 2016 9:21 pm
Forum: Personal Investments
Topic: Roth IRA as temp emergency fund - MMF or BND or ?
Replies: 11
Views: 1781

Re: Roth IRA as temp emergency fund - MMF or BND or ?

Hello Engineer250, In my opinion, you are doing some excellent planning. I think it is wise to use your Roth IRA space while you are in the 15% bracket (and perhaps beyond). Regarding your first question, I personally wouldn’t use the Total Bond ETF for an emergency fund. Along with other potential problems, it’s an intermediate-term fund that is probably too volatile. One of the short-term bond ETF’s might be reasonable if you are willing to take a little risk and volatility. I don’t know which one(s) to recommend since I don’t use them for that purpose. Some other people do, I believe. If you and/or your spouse are willing to consider the minor hassle of having additional accounts, you might use myRA -- my Retirement Account -- Roth IRA’...
by Engineer250
Sun Jul 24, 2016 7:33 pm
Forum: Personal Investments
Topic: 20% In REITS?
Replies: 65
Views: 14731

Re: 20% In REITS?

InvestorNewb wrote:
Engineer250 wrote:I'm currently 0.5% REIT of total portfolio.
I assume that is a typo? What is the point of having 0.5% of anything?
Not a typo. Agree 0.5% is nearly pointless. I was trying to build up to 10% with contributions and a rollover that's in process (and so invested nowhere right now).
by Engineer250
Sun Jul 24, 2016 5:30 pm
Forum: Personal Investments
Topic: Bonds at an historic high; time to get out?
Replies: 37
Views: 5103

Re: Bonds at an historic high; time to get out?

Thanks lack_ey, it's sort of starting to come together. I am going to have to favorite this and read this post multiple times I think. If you're holding bonds through that rate increase and it's high and fast enough, you lose money through that period of increasing rates because the price declines more than offset the return from the interest. In this scenario you would have been better off through this period by holding cash or something else instead. What if the rate increases are small and slow? Does it not matter as much then? As shown in some other posts, really, the downside is pretty limited in a generic, relatively safe intermediate-term bond fund... unless interest rates really spike up. There's not all that much to be scared of. N...