Search found 7769 matches

by Doc
Thu Apr 19, 2007 2:11 pm
Forum: Investing - Help with Personal Investments
Topic: Value of a Roth $ vs. a Taxable $
Replies: 4
Views: 1791

Here is a useful method.

From what you said, using the discounted value of the future taxes it sounds like you are familiar with doing discounted cash flow calculations. I would find the Internal Rate of Return for each of the assets. IRR of ROTH = F(taxrate, pretax$invested, growth rate, time frame) IRR of Option = F(taxes...
by Doc
Thu Apr 19, 2007 9:04 am
Forum: Investing - Help with Personal Investments
Topic: Vanguard Short-Term Investment-Grade VFSTX
Replies: 4
Views: 2007

Further comments

Everyone, In reverse order: Tnlsea: I was thinking of the recent discussion between Larry and Norbert on “actively managed” bond funds and didn’t want to take sides. Kenster: Actually I think they can now have more than 20% Treasuries. The question is during the five and ten year periods did more tr...
by Doc
Wed Apr 18, 2007 12:19 pm
Forum: Investing - Help with Personal Investments
Topic: Vanguard Short-Term Investment-Grade VFSTX
Replies: 4
Views: 2007

Vanguard Short-Term Investment-Grade VFSTX

I was reading the latest report for this fund last night and notice that it lags its bogey – the Lehman 1-5 Year Credit Index – by considerably more than can be accounted for by the expense ratio. I think I looked at the five and ten year period. I realize that this is an “actively” managed fund and...
by Doc
Tue Apr 17, 2007 7:02 pm
Forum: Investing - Help with Personal Investments
Topic: Anticipated taxable cap gains for 2007 and beyond?
Replies: 14
Views: 3812

Re: Doc....

You suggest looking at the tax returns, not just tax efficiency. Do you mean look at my income tax returns? Or the after tax returns listed alongside the M* tax cost ratios? Doc, BTW, your avatar is scary..... what is it a picture of? 1) Look at after tax returns based on your own tax situation. Th...
by Doc
Tue Apr 17, 2007 6:39 pm
Forum: Investing - Theory, News & General
Topic: 2nd question on pratical application of Larry's Bond Strateg
Replies: 48
Views: 21358

TIPS price and CPI

Larry wrote: Re the second question, why would TIPS which are real return instrument reflect changes in unexpected inflation?... Yes that is the question. You and I agree that since they are real return instruments there shouldn't be any change in price. The person on the other side of the argument ...
by Doc
Tue Apr 17, 2007 12:20 pm
Forum: Investing - Theory, News & General
Topic: STORY: Meet one dissenter from Roth 401 (k) rah-rah chorus
Replies: 22
Views: 6531

Change for Al's two cents

Al,

one can always take out the ROTH money before the taxes are implemented.


The're not quite that dumb. They usually make these things retroactive or at least effective as of the first day the bill was proposed.

Other than that I tend to agree with your arguments.
by Doc
Tue Apr 17, 2007 12:15 pm
Forum: Investing - Help with Personal Investments
Topic: Anticipated taxable cap gains for 2007 and beyond?
Replies: 14
Views: 3812

Ave, At my age, 53, and cirumstances ( now have decent size portfolio that I want to grow carefully) does it make “sense” to sell less efficient funds now, pay cap gains taxes on the sale, and reinvest in more efficient funds? One thing to take into consideration is the likely increases in capital g...
by Doc
Tue Apr 17, 2007 12:07 pm
Forum: Investing - Help with Personal Investments
Topic: Anticipated taxable cap gains for 2007 and beyond?
Replies: 14
Views: 3812

Taylor, I question the reasoning.

Past tax performance and past total return performance are not the same. For example, a tax-managed fund will almost certainly have good tax performance whether or not it has good total return performance. It is very important to use only tax-efficient funds in taxable accounts. "a tax-managed...
by Doc
Tue Apr 17, 2007 11:54 am
Forum: Investing - Theory, News & General
Topic: 2nd question on pratical application of Larry's Bond Strateg
Replies: 48
Views: 21358

Larry, ... since TIPS if held to maturity serve their purpose. The interim volatility that might be experienced over short term bonds is irrelevant Could you elaborate on the difference of TIPS and nominal bonds with respect to marking to market. I can't see where there is much of a distinction. On ...
by Doc
Tue Apr 17, 2007 10:35 am
Forum: Investing - Theory, News & General
Topic: STORY: Don't Qualify for Roth IRA? Slip in the Back Door
Replies: 14
Views: 4229

Re: No thanks

Al, good job! alvinsch wrote: because even tho they will be converting at 35% their marginal tax rate isn't likely to ever go down so they essentially get to increase their tax advantaged accounts after tax value by over 50% (100/65), by shifting from taxable. I hope everyone got this point: "m...
by Doc
Tue Apr 17, 2007 10:28 am
Forum: Investing - Help with Personal Investments
Topic: Anticipated taxable cap gains for 2007 and beyond?
Replies: 14
Views: 3812

Morningstar tax efficiency

Taylor wrote: If your taxable funds are 10-years old, I think that Morningstar's Tax Cost Ratio for mutual funds is about as predictive of relative tax-efficiency as we're going to get. Any shorter period that does not include the prior bull market should not be relied upon. The problem is that M* u...
by Doc
Tue Apr 17, 2007 10:14 am
Forum: Investing - Theory, News & General
Topic: 2nd question on pratical application of Larry's Bond Strateg
Replies: 48
Views: 21358

Yobria wrote: I don't think changing your bond duration based on the yield curve is anything like short term or mechanical stock trading strategies, which we all agree are for chumps. If you are making a distinction between “changing” when speaking of bonds and “trading” when speaking of stocks ther...
by Doc
Mon Apr 16, 2007 7:03 pm
Forum: Investing - Theory, News & General
Topic: 2nd question on pratical application of Larry's Bond Strateg
Replies: 48
Views: 21358

On active management

I find it very interesting that when we talk about fixed income active management becomes acceptable. Now I find it very, very interesting. Larry, for what's it's worth, when I tried to make an argument for active and passive in a different context, I was informed by the powers that be that indexin...
by Doc
Mon Apr 16, 2007 12:12 pm
Forum: Investing - Theory, News & General
Topic: What is the logical thing to do with EM?
Replies: 36
Views: 11123

Same problem with REITS

Al, I had a very similar question with REITS. I rebalanced back to my original purchase even though it is well below my target range.

The logic I used is that the original target was itself arbitrary and I don't really need these sub asset clases anyway
by Doc
Mon Apr 16, 2007 11:38 am
Forum: Investing - Theory, News & General
Topic: 2nd question on pratical application of Larry's Bond Strateg
Replies: 48
Views: 21358

larryswedroe wrote:
You could move to a money fund now if you want to be aggressive in how you manage funds. In effect that is what DFA does with its shifting maturity approach.


I find it very interesting that when we talk about fixed income active management becomes acceptable.
by Doc
Mon Apr 16, 2007 11:29 am
Forum: Investing - Theory, News & General
Topic: The Great Roth IRA vs. Deductible TIRA debate
Replies: 16
Views: 5088

Re: Granpa--Why I chose not to convert

I used three respected mutual fund company professionally designed calculators (Vanguard, T.Rowe Price, & Fidelity). Although the figures were different, all three calculators recommended that we not convert. That was good enough for me. Keep investing simple. The fact that Taylor references th...
by Doc
Mon Apr 16, 2007 11:15 am
Forum: Investing - Theory, News & General
Topic: The Great Roth IRA vs. Deductible TIRA debate
Replies: 16
Views: 5088

For, Spyder

Doc, you have me confused. It wouldn't be a difference of $1555 (in the 28% tax bracket) it would be $1120 ($4000 * .28 ), wouldn't it? You’ve hit upon one of the assumption quandary’s in this “Great Debate.” A $4000 IRA contribution is equivalent to a $5555 contribution in a ROTH assuming 28% and ...
by Doc
Mon Apr 16, 2007 10:28 am
Forum: Investing - Theory, News & General
Topic: The Great Roth IRA vs. Deductible TIRA debate
Replies: 16
Views: 5088

Spyder, Catch 22

If I get enough itemized deductions and the deductible TIRA I could possibly get into the 15% tax bracket


But if you get yourself into the 15% tax bracket you're probably better off with the ROTH. Catch 22.:)

I need to digest you other comment before getting back to you.
by Doc
Sun Apr 15, 2007 1:43 pm
Forum: Investing - Theory, News & General
Topic: The Great Roth IRA vs. Deductible TIRA debate
Replies: 16
Views: 5088

IRA effective limits

Can you explain why there is an higher effective limit on the Roth? The current limit on the TIRA is $4000 pre-tax and the ROTH limit is $4000 post-tax . Putting them on the same basis the ROTH limit is $5555 pre-tax in the 28% bracket. = $4000 / (1-tax) When you start comparing TIRA and ROTH you h...
by Doc
Sun Apr 15, 2007 12:11 pm
Forum: Investing - Theory, News & General
Topic: The Great Roth IRA vs. Deductible TIRA debate
Replies: 16
Views: 5088

Do the math anyway

Taylor wrote: The ultimate outcome will be the result of many factors that cannot be accurately forecast today. and I used three or four different on-line calculators for help. I remember the calculators all came up with different mathematical results. While I agree with Taylor's comments you should...
by Doc
Sun Apr 15, 2007 11:42 am
Forum: Investing - Theory, News & General
Topic: Intermediate Bond v. Total Bond -- the MBS drag??
Replies: 13
Views: 4352

Taylor, Overlooking costs

I suggest you select a bond fund based on low cost, purpose (safety, income,); quality, maturity (matching your time frame), duration (volatility), and correlation with other assets (less is better). I didn't overlook it and even if i did no one saw me do it anyway. In any case, costs are so import...
by Doc
Sat Apr 14, 2007 5:05 pm
Forum: Investing - Theory, News & General
Topic: Intermediate Bond v. Total Bond -- the MBS drag??
Replies: 13
Views: 4352

Pacific, you need to consider all the factors.

Taylor wrote: 2. Bond returns are primarily determined by interest rates, maturity and quality. And I added: Taylor, you left out one of the most important factors - cost. In the case of Total Bond and Intermediate Bond Index all four factors are about the same except for the maturity (or duration)....
by Doc
Sat Apr 14, 2007 4:27 pm
Forum: Investing - Theory, News & General
Topic: Intermediate Bond v. Total Bond -- the MBS drag??
Replies: 13
Views: 4352

Re: A word about using Past Performance of bond funds.

Hi Taylor, Hi: It can be a serious mistake to judge a bond fund based primarily on its past performance. ... 2. Bond returns are primarily determined by interest rates, maturity and quality. ... Taylor, you left out one of the most important factors - cost. And since one of the best measures of cost...
by Doc
Sat Apr 14, 2007 3:51 pm
Forum: Investing - Theory, News & General
Topic: Intermediate Bond v. Total Bond -- the MBS drag??
Replies: 13
Views: 4352

What MBS drag?

You are not looking at all the parameters in the right way. As tfb has pointed out, there should be differences in total return of the three funds you mentioned because they have different credit ratings and therefore different risks and should have different returns. The criticism of MBS has to do ...
by Doc
Sat Apr 14, 2007 3:03 pm
Forum: Investing - Help with Personal Investments
Topic: To Roth or not?
Replies: 92
Views: 36713

Easily Roth. Like others have said, 1. Contribute up to company match (401k, 403b, etc), if available. 2. Max out Roth IRA. 3. Max out annual limit for 401k/403b 4. Invest in taxable. Props to you for getting started early. Max out the Roth if possible and take advantage of your initial low tax bra...
by Doc
Sat Apr 14, 2007 2:08 pm
Forum: Investing - Theory, News & General
Topic: Poll Question on Post vs. Pre-retirement Tax Bracket
Replies: 3
Views: 1392

Generation gap

Bob, You maybe have a generation gap problem here. Many of us in our advancing years didn’t have ROTHS or 401ks or TIRAs. Some of us actually even got pensions from our employers! So if you ask the question of a thirty year old and a sixty year old you might get different answers even if the family ...
by Doc
Sat Apr 14, 2007 1:23 pm
Forum: Investing - Help with Personal Investments
Topic: To Roth or not?
Replies: 92
Views: 36713

Do the math.

Murdoch and Mptfan are debating retirement spending and tax brackets. Even if the tax bracket is higher in retirement the ROTH could still be better if there is enough time for the funds to grow and if the student takes advantage of the extra (pre-tax) amount available in the ROTH. Gentlemen, state ...
by Doc
Sat Apr 14, 2007 1:04 pm
Forum: Investing - Help with Personal Investments
Topic: To Roth or not?
Replies: 92
Views: 36713

Reply to Lucky7

Hi Bob, I didn’t mean to start an argument with you on this subject. In the case under discussion, young graduate student, I think that your conclusion of the ROTH being better is correct. My problem with your argument is that it uses words to describe a situation involving a discounted cash flow an...
by Doc
Sat Apr 14, 2007 11:34 am
Forum: Investing - Help with Personal Investments
Topic: To Roth or not?
Replies: 92
Views: 36713

Re: ROTH IT

Roth it. Think of it this simple way for, 15% tax bracket, for $4000: Which then would you rather do, save $600 up front and later pay full taxes on whatever that $4000 grows to up ... I think this is "dangerous" reasoning. Here's why: There are three factors affecting the ROTH/TIRA choic...
by Doc
Sat Apr 14, 2007 10:28 am
Forum: Investing - Help with Personal Investments
Topic: To Roth or not?
Replies: 92
Views: 36713

Mordoch. a clarification

you're effectively allowed to contribute more into a Roth since its tax free at that point (its true that you're literally allowed to put 4,000 in each.) Saying this a different way: The limits are both the same in dollar terms but the TIRA is pre-tax dollars and the ROTH is after-tax dollars so th...
by Doc
Fri Apr 13, 2007 3:25 pm
Forum: Investing - Theory, News & General
Topic: Total Bond Index --->??
Replies: 10
Views: 4256

Norbert

Is it Larry, who never tires of saying, "Avoid negative convexity", without actually using the term? Yes. Larry's position is to take your risk in equites and have very low risk on the fixed income side. He thinks it is better to get the higher return on the equity side. I don't think he ...
by Doc
Fri Apr 13, 2007 3:18 pm
Forum: Investing - Theory, News & General
Topic: When is it Appropriate to Buy Long Treasuries?
Replies: 17
Views: 6701

Dave, rate predicitions

If you had shorter maturity bonds you could reinvest the money in new higher yielding bonds when the existing bonds matured. Not necessarily. It would depend on the current interest rate environment compared to the coupon rate of your maturing bond. Are you predicting that short term rates will go ...
by Doc
Fri Apr 13, 2007 12:12 pm
Forum: Investing - Theory, News & General
Topic: When is it Appropriate to Buy Long Treasuries?
Replies: 17
Views: 6701

DaveTH, I disagree.

... price fluctuations probably don't matter much to the long-term investor. While short term fluctuations don't matter longer term price fluctuations do matter. Yes, when yields increase and bond prices go down you can deny that you have a loss if you are going to hold to maturity. But you still h...
by Doc
Fri Apr 13, 2007 11:30 am
Forum: Investing - Help with Personal Investments
Topic: To Roth or not?
Replies: 92
Views: 36713

Mptfan, style

Mptfan, In your initial post you wrote. I disagree with this advice. I think you should follow the following order: Mordoch challenged your idea and said why. While he was blunt he attacked the idea not you personally. Later you responded with a personal attack. Later you clarified your point. Here ...
by Doc
Fri Apr 13, 2007 11:06 am
Forum: Investing - Theory, News & General
Topic: 10-year TIPS auction on 4/12/07
Replies: 5
Views: 1966

Low yields

I already put the money I had reserved for this auction in a two year Treasury note. With inflation under control I don't see any reason to tie up funds for ten years (or even five) at this yield.
by Doc
Tue Apr 10, 2007 12:52 pm
Forum: Investing - Help with Personal Investments
Topic: Microsoft Money - Any Tricks?
Replies: 10
Views: 4143

I use it for all my accounts and bill pay. Nearly everything is downloaded directly from the bank or fund company. The only "errors" I have is that TIPS prices form Vanguard are downloaded without regard to the inflation factor and have to be corrected manually. TIPS prices from other brok...
by Doc
Fri Apr 06, 2007 3:00 pm
Forum: Investing - Help with Personal Investments
Topic: Roth 401(k) "Conversion"
Replies: 21
Views: 5665

ROTH vs TIRA/401k etc

see m After you have contributed up to the matching amount, a 401k, ROTH or TIRA all give the same future value if the tax rate now and at withdrawal are the same. If the tax rate at withdrawal is higher than now go with the ROTH. If the tax rate is going to be lower in the future go with the TIRA/4...
by Doc
Fri Apr 06, 2007 11:20 am
Forum: Investing - Help with Personal Investments
Topic: Roth 401(k) "Conversion"
Replies: 21
Views: 5665

Re: roth vs. trad ira

Al wrote: Just my two cents but I don't understand why this has to be constantly rehashed since the math is so straightforward. Because some people who haven’t looked at the math at all or made incorrect basic assumptions have publicized “rules of thumb” that incorrectly says “put your highest retur...
by Doc
Thu Apr 05, 2007 11:39 am
Forum: Investing - Help with Personal Investments
Topic: Roth 401(k) "Conversion"
Replies: 21
Views: 5665

LH2004, a question

Not if you understand the Buddha nature of taxation.


I understand the math and agree with your conclusion but what is meaning of referecne to "the Buddha nature of taxation"?
by Doc
Wed Apr 04, 2007 4:54 pm
Forum: Investing - Help with Personal Investments
Topic: Taxable account dilemma
Replies: 16
Views: 4432

Al, on compromising.

Al wrote: So no one should ever own tax exempt bonds since they earn less than taxable bonds? Do they make sense on there own? Yes. They often earn as much as MM accounts or short term CD’s so they can make sense without the tax considerations. They may not be the best but they still make sense. The...
by Doc
Wed Apr 04, 2007 11:37 am
Forum: Investing - Help with Personal Investments
Topic: Taxable account dilemma
Replies: 16
Views: 4432

On compromising.

Al wrote: One compromise we have made … Back when I was making investment decisions for a living I learned that you should never make a decision to invest or not invest based on tax implications. If the decision doesn’t make sense before taxes don’t do it. In this situation you have the reverse. If ...
by Doc
Wed Apr 04, 2007 11:18 am
Forum: Investing - Theory, News & General
Topic: TIRA vs Roth Question raised by Doc
Replies: 48
Views: 23980

lucky7

lucky7 wrote: Suffice to say for me the TIPRA law allowing conversions is clearly a good choice/option. It may be very good for you. It's all about the tax rates. If your tax rate at conversion is thirty five percent and it will be only fifteen percent when you withdrawal you are going to start out ...
by Doc
Wed Apr 04, 2007 10:30 am
Forum: Investing - Help with Personal Investments
Topic: Investment grade, treasury or index bond fund
Replies: 6
Views: 1826

Trev, A nitpick.

Trev wrote: Treasury Bonds offer the lowest correlation to equities. Actually Treasury bonds have a maturity of ten plus years and do not have the lowest correlation with equities. Treasury bills with a maturity of less than one year are the ones with the lowest correlation. Treasury notes with matu...
by Doc
Wed Apr 04, 2007 10:10 am
Forum: Investing - Theory, News & General
Topic: TIRA vs Roth Question raised by Doc
Replies: 48
Views: 23980

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

Also certainly would not recommend using some of the retirement monies themselves to pay for the taxes of the conversion, that would be self defeating the larger purpose. Look at the controlling equations that I posted way back at the beginning. Without using outside funds to pay the taxes you have...
by Doc
Tue Apr 03, 2007 4:04 pm
Forum: Investing - Theory, News & General
Topic: TIRA vs Roth Question raised by Doc
Replies: 48
Views: 23980

Re: Future retirees and tax bracket

Livesoft wrote: When we retire this year, we will end up in a much, much lower tax bracket. Furthermore, we have more than 20 years to move money from tIRA to Roth IRA before RMDs kick in, so we don't expect RMD to be a big deal Now that’s an idea with a lot of merit. Invest in 401k/TIRA when your t...
by Doc
Mon Apr 02, 2007 7:40 pm
Forum: Investing - Theory, News & General
Topic: TIRA vs Roth Question raised by Doc
Replies: 48
Views: 23980

Al, Social Security

Al wrote: ... the massive affect of SS taxation on many in the retiree income range. Someone posted a number recently that said how many people were subject to tax on SS. I think the number was about 35%. But many of these will have incomes high enough that they pay tax on the full 85% which is taxa...
by Doc
Mon Apr 02, 2007 2:23 pm
Forum: Investing - Help with Personal Investments
Topic: Why not just put all non-retiremn $$ in a LifeStrategy fund?
Replies: 12
Views: 4290

Laura, Hijack debate?

A post asked about life strategy funds. You respond with assertions that one type of tax advantaged account is preferred over another. I believe that you are making broad assumptions that I think are not justified and respond. Is that hijacking a debate?
by Doc
Mon Apr 02, 2007 2:14 pm
Forum: Investing - Theory, News & General
Topic: TIRA vs Roth Question raised by Doc
Replies: 48
Views: 23980

More assumptions.

Emergdoc wrote. Aside from the fact that most beginning investors will probably be in a higher tax bracket at retirement than now while they're having difficulty maxing out their tax-deferred accounts (a debatable point, of course), … except those who will be in a lower tax bracket at withdrawal tim...
by Doc
Mon Apr 02, 2007 2:07 pm
Forum: Investing - Theory, News & General
Topic: TIRA vs Roth Question raised by Doc
Replies: 48
Views: 23980

Setting the assumptions.

Part of the problem with this debate is that there are different assumption made that are often left unstated. I find it useful to put the comparison in the form of equations so that any assumptions are readily apparent. First the debate is about an unmatched 401k or Traditional IRA (TIRA) on one ha...
by Doc
Mon Apr 02, 2007 1:07 pm
Forum: Investing - Help with Personal Investments
Topic: Why not just put all non-retiremn $$ in a LifeStrategy fund?
Replies: 12
Views: 4290

Laura, see

m In that thread you posted the same preference order that you did in this one. You ignored a challenge that the there was no differences in after tax return between tax deferred accounts (401k, TIRA) and tax exempt accounts (Roth) if tax rates remain unchanged with the statement: The debate on Roth...