Search found 1969 matches

by Chip
Fri Jan 25, 2008 10:22 am
Forum: Investing - Theory, News & General
Topic: Isn't the REBATE really just a PREBATE?
Replies: 39
Views: 6355

Why do they always put a price tag on the AMT exemption adjustment they do every year? If there's an actual reduction in tax revenue, it seems reasonable to put a price tag on it. The AMT patches do indeed reduce revenue vs. the "unpatched" tax law . But if this latest gizmo is a "prebate", then we...
by Chip
Fri Jan 25, 2008 10:08 am
Forum: Investing - Help with Personal Investments
Topic: Treasury Direct - Records
Replies: 9
Views: 1818

It was a significant hassle figuring out which of the older papers referred to accounts that had been closed and which hadn't. I had the same experience. My Dad was a very good record keeper, and spent significant time showing me his systems. But once he was gone there were still things that I foun...
by Chip
Fri Jan 25, 2008 9:38 am
Forum: Investing - Help with Personal Investments
Topic: Why so important to put index funds in taxable accounts?
Replies: 29
Views: 6660

To put some numbers around it, assume you bought $100K each of VFINX and MQIFX on the last day of trading in 2006. You would have paid $130.59/sh and $21.88/sh, respectively. Your holdings would have been 765.555 shares and 4570.38 shares. Total VFINX dividends+cap gains: $1906.73 (765.755*2.49) Tot...
by Chip
Fri Jan 25, 2008 9:14 am
Forum: Investing - Theory, News & General
Topic: Isn't the REBATE really just a PREBATE?
Replies: 39
Views: 6355

That's the 64K, er, 1.2K question. I don't know the answer, but the articles I've read seem to indicate it's an actual reduction in taxes. Otherwise why would they put a $150B price tag on it?

If it is a prebate (nice word invention, btw), what a colossal waste of time & energy.
by Chip
Fri Jan 25, 2008 6:46 am
Forum: Investing - Theory, News & General
Topic: What will you do with YOUR welfare check?
Replies: 55
Views: 11217

Put me down for two flat screens. And an AV receiver. And a new computer.

Of course I was going to buy all that anyway, so maybe I'm really saving the money instead :shock: .
by Chip
Fri Jan 25, 2008 6:02 am
Forum: Investing - Help with Personal Investments
Topic: CXA for 40% bond in taxable account?
Replies: 5
Views: 1193

Well, you can buy the Vanguard fund at Fido. It'll just cost you $75 to do so :( .
by Chip
Fri Jan 25, 2008 5:47 am
Forum: Investing - Theory, News & General
Topic: ...
Replies: 47
Views: 8517

so they are giving "rebates" to people who do not even pay any income tax?
Unfortunately, it's not a new concept. Research "refundable tax credits" to see what's already enshrined in tax law.
by Chip
Fri Jan 25, 2008 5:22 am
Forum: Investing - Theory, News & General
Topic: Larry Swedroe and the TIPS/Nominal Bond ratio
Replies: 8
Views: 2624

I sure don't have it figured out. But here are some random thoughts: Inflation estimates don't really seem that low to me. The TIPS spread varies from 1.7% to 2.1% along the 2-20 curve. That seems low compared to the 4.1% racked up last year, but maybe not so low for an economy that might be on the ...
by Chip
Thu Jan 24, 2008 3:08 pm
Forum: Investing - Help with Personal Investments
Topic: What to do with old retirement plan?
Replies: 16
Views: 2727

I'm not a tax pro, and you ought to talk to one. With that caveat, it appears to me that you could use some of your tuition and fees to claim the deduction, and the rest of it to claim the lifetime learning credit. The maximum deduction is 4K. Interest, dividends and cap gains are all investment inc...
by Chip
Thu Jan 24, 2008 10:49 am
Forum: Investing - Help with Personal Investments
Topic: Money Market Fund Advice
Replies: 3
Views: 1188

While taxes are important, what you should always be concerned about is your after tax return. In other words, don't worry about how much you pay in taxes, worry about what's left in your pocket after you pay them. If you're in a low tax bracket, Prime Money Market is likely to be your best bet, eve...
by Chip
Thu Jan 24, 2008 10:42 am
Forum: Investing - Help with Personal Investments
Topic: What to do with old retirement plan?
Replies: 16
Views: 2727

A couple of other thoughts: Investment income > $2900 in 2007 was a disqualifier for EIC. You said you were at about $3K, so you might want to look into ways to shift some of that income from 2008 into 2009. I would go ahead and do the rollover to IRA, then conversion to the Roth. The reason is that...
by Chip
Thu Jan 24, 2008 7:00 am
Forum: Investing - Help with Personal Investments
Topic: CXA for 40% bond in taxable account?
Replies: 5
Views: 1193

CXA only has 14M in assets. That would make me think twice.

Why aren't you interested in the Vanguard CA tax-exempt funds?
by Chip
Wed Jan 23, 2008 3:54 pm
Forum: Investing - Help with Personal Investments
Topic: What to do with old retirement plan?
Replies: 16
Views: 2727

You're welcome! As long as you can plan out how you'll meet your upcoming cash needs I think you've got a very good plan. I spoke too soon about the EIC. It looks like you might be over the AGI limit for the EIC if you do the Roth conversion. The 2007 limit is $39,783 for MFJ with 2 children -- it w...
by Chip
Wed Jan 23, 2008 3:01 pm
Forum: Investing - Help with Personal Investments
Topic: What to do with old retirement plan?
Replies: 16
Views: 2727

I was not aware that rolling over into an IRA and then into an IRA doesn't count for the annual limits. Just so I understand you, I can contribute $13K into her Roth this year as long as I pay the taxes on the $8K in order to get it there? Would she have to have $13K in income in order to do this? ...
by Chip
Wed Jan 23, 2008 2:38 pm
Forum: Investing - Theory, News & General
Topic: Question about Tax Cut Premium Federal + State
Replies: 7
Views: 1578

I've used TaxCut for the last several years and have done two Federal returns per year with it. It appears to allow you to do as many as you want (with the aforementioned caveat about efiling fees). That doesn't guarantee this year's version allows it, but it's probably a reasonably safe bet. I've a...
by Chip
Wed Jan 23, 2008 8:20 am
Forum: Investing - Help with Personal Investments
Topic: Interest-only mortgage?
Replies: 23
Views: 3930

To make matters worse, I suspect an IO loan will be higher than 5% if that's what a 15 year is going for. Maybe 5.75%?
by Chip
Mon Jan 21, 2008 3:23 pm
Forum: Investing - Help with Personal Investments
Topic: Taxes on $1 million bonus
Replies: 12
Views: 3099

Assuming they're single, and have no other income, I estimate 2008 federal income taxes at $314,500. That assumes that $60,000 of state taxes will be withheld, $35,000 of which will be deductible (due to the itemized deduction phaseout). $60,000 is about right for GA. It appears CT would be in the 5...
by Chip
Mon Jan 21, 2008 9:27 am
Forum: Investing - Theory, News & General
Topic: A Question for Retirees
Replies: 12
Views: 2652

Here's another vote for using expenses vs. income. Further to livesoft's point, many of the people on this board are not only maxing their retirement plans, but putting away money in taxable accounts & 529s. Plus income taxes usually drop in retirement. 70-80% of pre-retirement income might be a dec...
by Chip
Mon Jan 21, 2008 6:37 am
Forum: Investing - Help with Personal Investments
Topic: Our Current Portfolio
Replies: 24
Views: 5998

401K - We took advantantage of our company allowing Roth IRA recently. My principle reason was diversification of "types of money". Was this prudent? I think it's quite reasonable to diversify from a tax standpoint. But you may be paying too high a price for it (in current taxes), depending on your...
by Chip
Sat Jan 19, 2008 4:44 pm
Forum: Investing - Theory, News & General
Topic: Do you trust TIPS and I-bonds to protect you from inflation?
Replies: 18
Views: 3494

I'm pretty certain they won't keep up with my personal rate of inflation, because I buy a different "basket" than the CPI is figured on. But that's okay, as I don't think there's anything out there that will come closer. So I have about 2/3 of my fixed income in individual TIPS and TIP. If anyone wa...
by Chip
Sat Jan 19, 2008 1:43 pm
Forum: Investing - Theory, News & General
Topic: 10% Haircut
Replies: 58
Views: 13445

I'm down about 7.5% overall since the start of the year. It's not much fun, especially since it's 2+ years worth of spending. But it's happened before and I'm sure it will again.
by Chip
Fri Jan 18, 2008 1:16 pm
Forum: Investing - Help with Personal Investments
Topic: Care to review my debt elimination plan?
Replies: 8
Views: 2627

Why not put all of your debt reduction payments against the credit card debt to start with? It's the highest rate AND not deductible.
by Chip
Fri Jan 18, 2008 8:34 am
Forum: Investing - Help with Personal Investments
Topic: 401k vs Roth 401k
Replies: 2
Views: 1011

As you might expect, opinions vary. Given your high tax bracket and relatively short fuse to early retirement, I think a Roth 401k would be a very bad idea. You'll likely be in a very low tax bracket once you retire. At that point you can convert the 401k into a Roth IRA at a relatively low tax cost...
by Chip
Thu Jan 17, 2008 3:11 pm
Forum: Investing - Help with Personal Investments
Topic: allocating funds for retirement
Replies: 2
Views: 888

You have things right. The commission from the universal life will do a good job of contributing to the salesman's, er, financial advisor's, retirement. Stay away. You are likely getting significant liability protection from your IRA/401k. And you can buy a $2M umbrella liability policy for the rest...
by Chip
Tue Jan 15, 2008 6:40 am
Forum: Investing - Help with Personal Investments
Topic: TIPS values not listed in Fidelity account?
Replies: 6
Views: 1136

All the TIPS in my accounts at Fido look normal -- they are all priced at values that "look" reasonable.

So I guess it's some sort of glitch not affecting all accounts. Not very comforting, I guess.

I assume you tried logging out and logging back in?
by Chip
Tue Jan 15, 2008 6:33 am
Forum: Investing - Help with Personal Investments
Topic: Should I buy this Vanguard EFT from Fidelity?
Replies: 6
Views: 2020

I think it's necessary to keep track, but that's coming from the perspective of someone who enjoys accounting. You can't use average cost basis on an ETF, and Fidelity doesn't track it for you. However, they do keep track of each lot purchased through them, including those from reinvesting dividends...
by Chip
Mon Jan 14, 2008 5:13 pm
Forum: Investing - Help with Personal Investments
Topic: Need help with Adjusting portfolio
Replies: 4
Views: 1080

You might want to start working on figuring out your cost basis now. It is especially complex with the AT&T spinoffs, but there are web resources out there that you can use. First step would probably be to nail down the date of the gift as closely as you can. The way the LT cap gains work in '08 is ...
by Chip
Mon Jan 14, 2008 5:01 pm
Forum: Investing - Help with Personal Investments
Topic: Should I buy this Vanguard EFT from Fidelity?
Replies: 6
Views: 2020

Dividend reinvestment at Fidelity is free, so you won't pay additional commissions for that. I was thinking of the situation where you're regularly adding to your position as you save more money. Diverting dividends and cap gains to a money market account makes your accounting easier, as you don't e...
by Chip
Mon Jan 14, 2008 4:38 pm
Forum: Investing - Help with Personal Investments
Topic: Should I buy this Vanguard EFT from Fidelity?
Replies: 6
Views: 2020

I think it's quite reasonable to purchase the ETF, especially since you avoid the purchase fee and get a lower expense ratio. Offset by the commission and spread you'll pay. If you expect to be adding repeatedly to this position over time you will be paying multiple commissions and spreads. In that ...
by Chip
Mon Jan 14, 2008 4:35 pm
Forum: Investing - Help with Personal Investments
Topic: Need help with Adjusting portfolio
Replies: 4
Views: 1080

You can't "move" the stocks into your IRA without selling them, which triggers capital gains taxes. Only cash can be contributed to an IRA. If your tax bracket is low this year it is likely an ideal time to sell. If you're in the 15% tax bracket, at least some of the capital gains will qualify for t...
by Chip
Sun Jan 13, 2008 4:36 pm
Forum: Investing - Help with Personal Investments
Topic: Specific Identification Method (TAXes )fractional shares?
Replies: 1
Views: 756

Yes and yes.
by Chip
Sat Jan 12, 2008 10:58 am
Forum: Investing - Help with Personal Investments
Topic: HOLDING VALUE IN TAXABLE ?
Replies: 12
Views: 2619

Despite what happened with distributions in the last few years, value funds ought to have more turnover than total market funds. Simply because value stocks can become growth stocks and vice-versa. It's even worse when you divide it into small value and large value, because then the stocks have two ...
by Chip
Sat Jan 12, 2008 8:43 am
Forum: Investing - Theory, News & General
Topic: What is the "official" inflation rate - and who sa
Replies: 7
Views: 1562

malloc, The Bureau of Labor Statistics (BLS) calculates a variety of consumer price indices. Here is the BLS's CPI home page. The index that most people are thinking of when they talk about "the inflation rate" is the CPI-U, the consumer price index for all urban consumers. We don't have data for 12...
by Chip
Fri Jan 11, 2008 6:29 am
Forum: Investing - Help with Personal Investments
Topic: Estimated Income Taxes
Replies: 17
Views: 4468

I don't see the advantage to making the withdrawal in January and paying taxes on the income earned during the year. Why not let it continue to earn within the IRA? The only reason to withdraw in January is if one needed the money to live on. I tried (but obviously failed) to make that clear in the...
by Chip
Thu Jan 10, 2008 3:01 pm
Forum: Investing - Help with Personal Investments
Topic: Estimated Income Taxes
Replies: 17
Views: 4468

You're not "gaining" time value of money, you're just moving it from your IRA to yourself, increasing your tax burden. Why the heck would you want to do that? It's an RMD, so the tax burden is a given -- there's no escaping it. My going in assumption was that the money was desired in January. If th...
by Chip
Thu Jan 10, 2008 2:19 pm
Forum: Investing - Help with Personal Investments
Topic: Estimated Income Taxes
Replies: 17
Views: 4468

Mel & Bruce, That's a very clever strategy, which I'll have to remember when I get to RMD age. I used to do something similar with paycheck withholding (i.e. withholding the entire December paycheck). For those who didn't catch the nuance, the Feds treat estimated tax payments differently from withh...
by Chip
Thu Jan 10, 2008 1:51 pm
Forum: Investing - Theory, News & General
Topic: Essential expenditures
Replies: 21
Views: 3788

I didn't answer the poll because we're retired and living off the portfolio. I can make my after tax income nearly anything I want it to be, so the poll answer would be meaningless. However, if I look at "spending on essentials" vs. total spending, the former is about 60% of the latter. I'm not coun...
by Chip
Wed Jan 09, 2008 4:28 pm
Forum: Investing - Help with Personal Investments
Topic: ...
Replies: 37
Views: 4372

Let's say I keep A for 20 years and in that time A grows to be $200. In that time B and C also grow to $140 and $60 because all they are, are components of A. If you had kept A, and not harvested the losses, you'd owe taxes on $100 worth of cap gains (200 less your original cost of $100). If you lo...
by Chip
Wed Jan 09, 2008 3:40 pm
Forum: Investing - Help with Personal Investments
Topic: Help With NUA New Cost Basis After Transfer from 401k to VG
Replies: 3
Views: 1198

I hope someone with more knowledge jumps in. I'm somewhat familiar with the NUA rules wrt employER contributions. Those require a lump sum distribution of the 401k before they come into play. But it appears that a partial 401k distribution of company stock purchased by the employEE would still quali...
by Chip
Wed Jan 09, 2008 12:14 pm
Forum: Investing - Help with Personal Investments
Topic: Your _mechanics_ for systematic withdrawal from a portfolio?
Replies: 5
Views: 1640

My way is messy. The basics are that I have a 2 year ladder of TNotes (some of which recently were replaced by CDs). One matures every 3 months, and in an amount that's more than enough to cover 3 months of spending when combined with interest/dividend income. As each note matures I project cash flo...
by Chip
Wed Jan 09, 2008 12:05 pm
Forum: Investing - Help with Personal Investments
Topic: Should I (and can I) convert more TIRA to Roth for 2007?
Replies: 9
Views: 1760

Ted, Good move on converting the REIT fund. I suggest you take advantage of the ability to recharacterize after the end of 2008, and convert more in 2008 than you think you'll want to. Then recharacterize a bit in 4/09 to hit the number you want. I've been doing this for five years, usually converti...
by Chip
Wed Jan 09, 2008 11:58 am
Forum: Investing - Help with Personal Investments
Topic: Looking for early retirement advice
Replies: 13
Views: 3488

For clarification, it wasn't me that recommended the TIPS, though I do own them. Like Sidney, I wouldn't be buying at these yields. But honestly, at a 10% allocation it's not going to make a lot of difference what you choose. A few random thoughts: Ten years isn't a lot of time by market standards, ...
by Chip
Wed Jan 09, 2008 10:39 am
Forum: Investing - Theory, News & General
Topic: What's your weighted average expense ratio?
Replies: 27
Views: 8202

.06%, primarily due to only having commission expenses on individual stocks.
by Chip
Wed Jan 09, 2008 8:47 am
Forum: Investing - Theory, News & General
Topic: Do you do your own taxes?
Replies: 53
Views: 14480

Teetlebaum wrote:Hey, this is the last year I'll have to mess with the Limited Partnership I stupidly signed up for! What a nightmare the forms for that are!
Ditto here. It wouldn't happen to be Century Properties 18? That's been my millstone for 24 years.
by Chip
Wed Jan 09, 2008 8:26 am
Forum: Investing - Theory, News & General
Topic: [poll] your 2007 rate of return
Replies: 76
Views: 19413

You're going to have to start considering investing a second job! I assume you're also counting the transaction costs as well as the cost of having money outside the portfolio in a money market or sweep fund. Doc, It'd definitely be a second job... if I had a first job! (early retiree) Though I hav...
by Chip
Wed Jan 09, 2008 7:37 am
Forum: Investing - Help with Personal Investments
Topic: Looking for early retirement advice
Replies: 13
Views: 3488

I think health care is the big gotcha that might derail your plans. I wonder if you'll even be insurable while you're working in the dive industry and out of the country. Then what happens when you come back? I'm sure you know this, but the stock market is really going to have to cooperate for this ...
by Chip
Tue Jan 08, 2008 2:12 pm
Forum: Investing - Help with Personal Investments
Topic: Max size of "free trades" (Wells Fargo, Fidelity G
Replies: 2
Views: 897

With the Fidelity Gold commission schedule there is no limit to the size of the trade you can place for an $8 commission. But there may be significant market impact costs if the trade size is a significant percentage of daily volume. At the Silver and Bronze levels I believe there is a 1000 share li...
by Chip
Tue Jan 08, 2008 1:43 pm
Forum: Investing - Help with Personal Investments
Topic: Bond Fund Help & Roth vs Pre-Tax
Replies: 4
Views: 955

Given your 42+% tax bracket, you might want to reconsider whether Roth 401k contributions are a good idea, vs. pre-tax contributions. If you are a good saver and retire early, you'll likely have good opportunities then to convert pre-tax accounts to Roths at a much lower tax cost. No guarantees, of ...
by Chip
Tue Jan 08, 2008 1:35 pm
Forum: Investing - Help with Personal Investments
Topic: Strategy for moving out of ARM
Replies: 9
Views: 2214

Ash, I agree with Zander: your decision to get an ARM was a good one (you evaluated all the contingencies), and saved you a substantial amount of money. As for when to refinance, it's a market timing decision :shock:. Were I in your shoes I'd pick an interest rate target that you're both happy with ...
by Chip
Tue Jan 08, 2008 1:19 pm
Forum: Investing - Theory, News & General
Topic: [poll] your 2007 rate of return
Replies: 76
Views: 19413

Overall I was up 14.7% for the year, calculated via XIRR (711 cash flows!). Needless to say, I'm happy with the results. Though I keep expenses extremely low, I don't have a typical Boglehead portfolio. 86% of it is in individual stock & bond issues. My average allocation was 72/28. About 10% of sto...