Any intelligent reason to deviate?

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ryanbohle
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Any intelligent reason to deviate?

Post by ryanbohle »

My retirement portfolio is largely consistent with Boglehead philosophy, I am about 60% invested in total stock market index funds, about 30% in total international index funds, and the remaining 10 % is a mix of bonds, publicly traded REITs, cash and crypto. If the correct answer is sit down shut up and stop reading the news, then I will accept that answer. BUT, I was wondering if there was any Boglehead-approved maneuvering to be done given the recent inflation data. Any smart, intelligent changes to be made.

Thank you in advance for your thoughts.

Ryan
mikejuss
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Re: Any intelligent reason to deviate?

Post by mikejuss »

Two thoughts: how old are you? You're holding very little in bonds. Are you O.K. with a lot of portfolio volatility? That's what you're going to get during the next recession. You might also wish to shrink this size of your international holdings to about 20% of your portfolio; 30% is a little high, in my opinion.
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ryanbohle
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Re: Any intelligent reason to deviate?

Post by ryanbohle »

Im 36, Im okay with volatility, I plan to slowly increase my bond allocation with age.
Ive also considered taking about 150-20% of my portfolio and putting investing with a private real estate fund. Somethign fairly safe, with about 6-7% returns, instead of having any bonds at all.
KlangFool
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Re: Any intelligent reason to deviate?

Post by KlangFool »

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Wiggums
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Re: Any intelligent reason to deviate?

Post by Wiggums »

I’m retired and I continue to buy the three fund portfolio on a weekly basis. It doesn’t make sense to sit on the sidelines waiting for something to happen. You can’t pick the top, bottom or a crash with any certainty. You need an asset allocation that you can live with. I don’t match the market news. On a bad day, they have an excuse. On a good day, you should have bought more. You get better advice on this forum than you will from the tv.
mikejuss
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Re: Any intelligent reason to deviate?

Post by mikejuss »

ryanbohle wrote: Thu Jun 10, 2021 8:21 am Im 36, Im okay with volatility, I plan to slowly increase my bond allocation with age.
Ive also considered taking about 150-20% of my portfolio and putting investing with a private real estate fund. Somethign fairly safe, with about 6-7% returns, instead of having any bonds at all.
Then I wouldn't do anything to your portfolio. Your plan sounds fine. I would stay out of real-estate schemes.
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JoMoney
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Re: Any intelligent reason to deviate?

Post by JoMoney »

I think the evidence from history would say "this time" is not "different", and that as a group (in aggregate), people aren't going to out-trade each other to anything extra, and ones allocation (willingness) to accept the risks of stocks shouldn't suddenly change to become more risky... so no, one should:
John Bogle wrote:...I've said, 'Stay-the-course' a thousand times, and I meant it every time.
That said, I'm a bit of a hypocrite, and this past January I personally made some what I believe minor changes to my portfolio after getting 'spooked' about at a few things. I'm not sure it will have the best results, but I had an itch that had to be scratched, and after 12+ years of doing absolutely nothing I did something :? hopefully it leads to me doing even less for more than the next 12 years...
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
dbr
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Re: Any intelligent reason to deviate?

Post by dbr »

ryanbohle wrote: Thu Jun 10, 2021 8:21 am Im 36, Im okay with volatility, I plan to slowly increase my bond allocation with age.
Ive also considered taking about 150-20% of my portfolio and putting investing with a private real estate fund. Something fairly safe, with about 6-7% returns, instead of having any bonds at all.
This would probably be an example of not Boglehead "approved" maneuvering, as long as you are asking, but I have no particular comment on it myself. That is not to say that investment real estate is a bad thing if you know what you are doing, especially those who have direct ownership.

I would wonder what point there is to messing around with REIT stocks or crypto currencies as a fraction of a fraction of a holding. I am not sure crypto is even an investment. Note about 3%-4% of the total stock index is already REIT stocks.
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ryanbohle
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Re: Any intelligent reason to deviate?

Post by ryanbohle »

KlangFool wrote: Thu Jun 10, 2021 8:21 am
ryanbohle wrote: Thu Jun 10, 2021 8:13 am My retirement portfolio is largely consistent with Boglehead philosophy, I am about 60% invested in total stock market index funds, about 30% in total international index funds, and the remaining 10 % is a mix of bonds, publicly traded REITs, cash and crypto. If the correct answer is sit down shut up and stop reading the news, then I will accept that answer. BUT, I was wondering if there was any Boglehead-approved maneuvering to be done given the recent inflation data. Any smart, intelligent changes to be made.

Thank you in advance for your thoughts.

Ryan
ryanbohle,

1) What is your number? Financial Independent? Retirement?


2) You may want to implement a glide path Asset Allocation based on your portfolio size.

<<If the correct answer is sit down shut up and stop reading the news, then I will accept that answer.>>

3) The correct answer is you are prepared. If the market crashes 50% tomorrow and you are laid off, you are prepared. You do not need to do anything with your portfolio. You have a plan. That is true even if you are unemployed for 1 to 2 years.

4) You do not need to care about the news if you are prepared for the worst case.

Are you prepared?

KlangFool
I plan to retire at age 65 in 2050 with 10-15 million pending market returns in the next 29 years.
I do plan to decrease the risk of my portfolio somewhat as i approach retirement, but probably won't start until im 40 or 45 (im currently 36)
I have an emergency fund and I am very much insured, as much as anyone can be.
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ryanbohle
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Re: Any intelligent reason to deviate?

Post by ryanbohle »

dbr wrote: Thu Jun 10, 2021 8:29 am
ryanbohle wrote: Thu Jun 10, 2021 8:21 am Im 36, Im okay with volatility, I plan to slowly increase my bond allocation with age.
Ive also considered taking about 150-20% of my portfolio and putting investing with a private real estate fund. Something fairly safe, with about 6-7% returns, instead of having any bonds at all.
This would probably be an example of not Boglehead "approved" maneuvering, as long as you are asking, but I have no particular comment on it myself. That is not to say that investment real estate is a bad thing if you know what you are doing, especially those who have direct ownership.

I would wonder what point there is to messing around with REIT stocks or crypto currencies as a fraction of a fraction of a holding. I am not sure crypto is even an investment. Note about 3%-4% of the total stock index is already REIT stocks.
The crypto is play money, I used cash above and beyond my pre-specified retirement contributions. :)
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ryanbohle
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Re: Any intelligent reason to deviate?

Post by ryanbohle »

JoMoney wrote: Thu Jun 10, 2021 8:26 am I think the evidence from history would say "this time" is not "different", and that as a group (in aggregate), people aren't going to out-trade each other to anything extra, and ones allocation (willingness) to accept the risks of stocks shouldn't suddenly change to become more risky... so no, one should:
John Bogle wrote:...I've said, 'Stay-the-course' a thousand times, and I meant it every time.
That said, I'm a bit of a hypocrite, and this past January I personally made some what I believe minor changes to my portfolio after getting 'spooked' about at a few things. I'm not sure it will have the best results, but I had an itch that had to be scratched, and after 12+ years of doing absolutely nothing I did something :? hopefully it leads to me doing even less for more than the next 12 years...
Im intrigued, care to shre your "minor change"?
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Re: Any intelligent reason to deviate?

Post by KlangFool »

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dbr
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Re: Any intelligent reason to deviate?

Post by dbr »

PS I haven't changed anything in how we invest in maybe the last twenty years. Changes before that were for circumstances and personal reasons and not "events" or "environments."
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ryanbohle
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Re: Any intelligent reason to deviate?

Post by ryanbohle »

KlangFool wrote: Thu Jun 10, 2021 8:48 am
ryanbohle wrote: Thu Jun 10, 2021 8:21 am Im 36, Im okay with volatility, I plan to slowly increase my bond allocation with age.
Ive also considered taking about 150-20% of my portfolio and putting investing with a private real estate fund. Somethign fairly safe, with about 6-7% returns, instead of having any bonds at all.
ryanbohle,

If you do not know your number, how do you know that you are X years from Financial Independent/Retirement? Then, how do you know Y% in bond is the right number for you?

Asset Allocation should be based on portfolio size. It has nothing to do with age.

For example, how do you know that you are not 10 years from FI/Retirement now?

<<Ive also considered taking about 150-20% of my portfolio and putting investing with a private real estate fund. Somethign fairly safe, with about 6-7% returns, instead of having any bonds at all.>>

If it is fairly safe, how could it returns 6% to 7%? If it is risky, why choose this versus total stock index fund that are more diversified?

Why do you think this represents a good risk versus reward?

KlangFool
Very good questions, I make over 400K / year as a pulmonary and critical care physician. I will be financially independent long before I retire, I am hoping to contribute to the legacy of my family, and contribute to the wealth and provide for generations beyond me, plus I am one of the fortuante people who enjoys what they do. I put 20% into retirement, and live well whithin my means. The 10-15M is based on a 7-10% average annual returns on my portfolio. I am looking for an investment with less risk that the stock market, but more risk (and more expected return) than a Bond. I think I found it with this....

https://dlpcapitalpartners.com/dlp-positive-note-fund/

"DLP Positive Note Fund LLC is a (debt) investment opportunity which provides 5-10% FIXED returns. Returns to Note investors are paid prior to equity members and in effect provide a lower risk opportunity to investors."
KlangFool
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Re: Any intelligent reason to deviate?

Post by KlangFool »

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KlangFool
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ryanbohle
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Re: Any intelligent reason to deviate?

Post by ryanbohle »

KlangFool wrote: Thu Jun 10, 2021 8:55 am
ryanbohle wrote: Thu Jun 10, 2021 8:44 am
I plan to retire at age 65 in 2050 with 10-15 million pending market returns in the next 29 years.
I do plan to decrease the risk of my portfolio somewhat as i approach retirement, but probably won't start until im 40 or 45 (im currently 36)
I have an emergency fund and I am very much insured, as much as anyone can be.
ryanbohle,

<< I plan to retire at age 65 in 2050 with 10-15 million pending market returns in the next 29 years. >>

This is obviously false if you spend some time thinking about this.

A) What is your gross income? Let's assume this as X.

B) Are you willing to work if your portfolio return 10X every year?

C) How about 5X?

D) How about X?

E) Your portfolio will earn much more than your gross income way before it became 10 to 15 million.

F) Unless you are willing to work for free, why would you continue working?

G) The correct answer is at what portfolio size, it is no longer worthwhile for you to work?

Many of my peers early retired at their 40s when they have 10 million.

KlangFool
See my response above, in short, my answer is one word....Legacy.

Maybe i'll retire at 60, but my partners who are on their 60s say they dont want to retire, they scaled back but they love what they do, and would be bored otherwise.

Ryan
mikejuss
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Re: Any intelligent reason to deviate?

Post by mikejuss »

ryanbohle wrote: Thu Jun 10, 2021 8:54 amVery good questions, I make over 400K / year as a pulmonary and critical care physician. I will be financially independent long before I retire, I am hoping to contribute to the legacy of my family, and contribute to the wealth and provide for generations beyond me, plus I am one of the fortuante people who enjoys what they do. I put 20% into retirement, and live well whithin my means. The 10-15M is based on a 7-10% average annual returns on my portfolio. I am looking for an investment with less risk that the stock market, but more risk (and more expected return) than a Bond. I think I found it with this....

https://dlpcapitalpartners.com/dlp-positive-note-fund/

"DLP Positive Note Fund LLC is a (debt) investment opportunity which provides 5-10% FIXED returns. Returns to Note investors are paid prior to equity members and in effect provide a lower risk opportunity to investors."
A rate of return of 7%–10% over a 30-year period is going to be difficult to achieve. Take a look at the threads on this forum about returns, and note that many are expecting, after inflation, 1%-3% returns on all-index portfolios.

I'm going to go out on a limb here and say that the term "fixed" above does not mean what you think it means.
Last edited by mikejuss on Thu Jun 10, 2021 9:03 am, edited 2 times in total.
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Re: Any intelligent reason to deviate?

Post by KlangFool »

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KlangFool
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Re: Any intelligent reason to deviate?

Post by KlangFool »

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KlangFool
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dbr
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Re: Any intelligent reason to deviate?

Post by dbr »

I should probably not be negative nor does this imply anything personal, but anecdotally the investors with lots of money who tend to make the worst investment decisions are high earning physicians.

Boglehead investing is a known antidote to that problem. Maybe more accurately Boglehead investing is an inoculation against that problem as long as the victim is not continually exposed to virulent variants such as financial advisors and private investment schemes.

You can take the above comment with a grain of salt, or maybe better with an apple a day as salt tends to produce high blood pressure and other problems.

Also, I think above mentioned whitecoat website is to be recommended.
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ryanbohle
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Re: Any intelligent reason to deviate?

Post by ryanbohle »

KlangFool wrote: Thu Jun 10, 2021 9:04 am
ryanbohle wrote: Thu Jun 10, 2021 9:00 am
See my response above, in short, my answer is one word....Legacy.

Maybe i'll retire at 60, but my partners who are on their 60s say they dont want to retire, they scaled back but they love what they do, and would be bored otherwise.

Ryan
ryanbohle,

It is easy to think this way when you are in your 30s.

You should check out this web site.

https://www.whitecoatinvestor.com/

Many physician retired early.

KlangFool
Ha Ha yes I am aware, LOVE HIM!!! read his books and listen to the Podcast often. Im aware of FIRE, probably isn't for me, but check back in with me when I am 50, we will see.
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ryanbohle
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Re: Any intelligent reason to deviate?

Post by ryanbohle »

dbr wrote: Thu Jun 10, 2021 9:08 am I should probably not be negative nor does this imply anything personal, but anecdotally the investors with lots of money who tend to make the worst investment decisions are high earning physicians.

Boglehead investing is a known antidote to that problem. Maybe more accurately Boglehead investing is an inoculation against that problem as long as the victim is not continually exposed to virulent variants such as financial advisors and private investment schemes.

You can take the above comment with a grain of salt, or maybe better with an apple a day as salt tends to produce high blood pressure and other problems.

Also, I think above mentioned whitecoat website is to be recommended.
I parted ways with my advisor. I am fully invested in low cost index funds, in the asset allocation mentioned above. And have yet to deviate.
ALSO, the DLP Capital investement opportunity is through WCI. (the crypto is outside my retirement, and just for funzies)
renue74
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Re: Any intelligent reason to deviate?

Post by renue74 »

I don't necessarily completely follow a boglehead theory and I think many people on this forum don't. Yes....simple vanguard funds with low cost. But, occasionally I buy crypto, occasionally I buy rental houses, occasionally I adjust my allocation to non-norm allocations. Right now, I'm 47 and have a 50/50 allocation...simply because I moved some funds around to buy a primary home late last year. I haven't reallocated.

It's human nature to want to do better and to question everything. My real estate stuff has paid off. My crypto has not. At the end, I simply try to make more money than I had before and I know that giving 1.5% to my old advisor and paying high expenses didn't work for me. :)
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Re: Any intelligent reason to deviate?

Post by retired@50 »

ryanbohle wrote: Thu Jun 10, 2021 8:54 am
https://dlpcapitalpartners.com/dlp-positive-note-fund/

"DLP Positive Note Fund LLC is a (debt) investment opportunity which provides 5-10% FIXED returns. Returns to Note investors are paid prior to equity members and in effect provide a lower risk opportunity to investors."
I agree that the description of the product looks enticing, but notice the following phrase is also present on that same webpage.
dlp Capital Partners wrote: Past performance is not a guarantee of future performance.

Risk Disclaimer: These investment opportunities have inherent risk factors. These investments are not backed by the FDIC, and no investment can guarantee a profit or protect against a loss
Caveat emptor!

Regards,
This is one person's opinion. Nothing more.
mikejuss
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Re: Any intelligent reason to deviate?

Post by mikejuss »

retired@50 wrote: Thu Jun 10, 2021 9:12 am
ryanbohle wrote: Thu Jun 10, 2021 8:54 am
https://dlpcapitalpartners.com/dlp-positive-note-fund/

"DLP Positive Note Fund LLC is a (debt) investment opportunity which provides 5-10% FIXED returns. Returns to Note investors are paid prior to equity members and in effect provide a lower risk opportunity to investors."
I agree that the description of the product looks enticing, but notice the following phrase is also present on that same webpage.
dlp Capital Partners wrote: Past performance is not a guarantee of future performance.

Risk Disclaimer: These investment opportunities have inherent risk factors. These investments are not backed by the FDIC, and no investment can guarantee a profit or protect against a loss
Caveat emptor!

Regards,
In short, "fixed" does not mean "guaranteed."
KlangFool
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Re: Any intelligent reason to deviate?

Post by KlangFool »

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KlangFool
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ryanbohle
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Re: Any intelligent reason to deviate?

Post by ryanbohle »

mikejuss wrote: Thu Jun 10, 2021 9:16 am
retired@50 wrote: Thu Jun 10, 2021 9:12 am
ryanbohle wrote: Thu Jun 10, 2021 8:54 am
https://dlpcapitalpartners.com/dlp-positive-note-fund/

"DLP Positive Note Fund LLC is a (debt) investment opportunity which provides 5-10% FIXED returns. Returns to Note investors are paid prior to equity members and in effect provide a lower risk opportunity to investors."
I agree that the description of the product looks enticing, but notice the following phrase is also present on that same webpage.
dlp Capital Partners wrote: Past performance is not a guarantee of future performance.

Risk Disclaimer: These investment opportunities have inherent risk factors. These investments are not backed by the FDIC, and no investment can guarantee a profit or protect against a loss
Caveat emptor!

Regards,
In short, "fixed" does not mean "guaranteed."
Of course fixed doesn't mean guaranteed. I understand the investment. I give them a certain number of dollars for a certain amount of time, and they give me a fixed return at regular intervals. I get paid first, but if they make a killing using my money, I don't see any more of the returns. Its lower risk than private RIET fund they offer. Yes of course I could lose money, or all of the money. Like I said before, Im looking for an investment with less risk than the stock market, but more risk (and higher expected returns) than a bond fund. This seems like it fits those requirements. Do you disagree?
mikejuss
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Re: Any intelligent reason to deviate?

Post by mikejuss »

ryanbohle wrote: Thu Jun 10, 2021 10:00 am
mikejuss wrote: Thu Jun 10, 2021 9:16 amIn short, "fixed" does not mean "guaranteed."
Of course fixed doesn't mean guaranteed. I understand the investment. I give them a certain number of dollars for a certain amount of time, and they give me a fixed return at regular intervals. I get paid first, but if they make a killing using my money, I don't see any more of the returns. Its lower risk than private RIET fund they offer. Yes of course I could lose money, or all of the money. Like I said before, Im looking for an investment with less risk than the stock market, but more risk (and higher expected returns) than a bond fund. This seems like it fits those requirements. Do you disagree?
I have no idea if this is more or less risky than owning a stock-index fund. In general, Bogleheads don't recommend alternative investments like this. Are the numbers in the table you linked to theoretical returns?
Last edited by mikejuss on Thu Jun 10, 2021 10:08 am, edited 1 time in total.
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ryanbohle
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Re: Any intelligent reason to deviate?

Post by ryanbohle »

mikejuss wrote: Thu Jun 10, 2021 10:07 am
ryanbohle wrote: Thu Jun 10, 2021 10:00 am
mikejuss wrote: Thu Jun 10, 2021 9:16 amIn short, "fixed" does not mean "guaranteed."
Of course fixed doesn't mean guaranteed. I understand the investment. I give them a certain number of dollars for a certain amount of time, and they give me a fixed return at regular intervals. I get paid first, but if they make a killing using my money, I don't see any more of the returns. Its lower risk than private RIET fund they offer. Yes of course I could lose money, or all of the money. Like I said before, Im looking for an investment with less risk than the stock market, but more risk (and higher expected returns) than a bond fund. This seems like it fits those requirements. Do you disagree?
I have no idea if this is more or less risky than owning a stock-index fund. In general, Bogleheads don't recommend alternative investments like this. How does the broker determine your rate of return?
Go to the link, there is a chart, the return is agreed upon up front, based on the dollar amount and years invested.

https://dlpcapitalpartners.com/dlp-positive-note-fund/

I'd probably do 100K for 5 years.
mikejuss
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Re: Any intelligent reason to deviate?

Post by mikejuss »

ryanbohle wrote: Thu Jun 10, 2021 10:08 am
mikejuss wrote: Thu Jun 10, 2021 10:07 am
ryanbohle wrote: Thu Jun 10, 2021 10:00 am
mikejuss wrote: Thu Jun 10, 2021 9:16 amIn short, "fixed" does not mean "guaranteed."
Of course fixed doesn't mean guaranteed. I understand the investment. I give them a certain number of dollars for a certain amount of time, and they give me a fixed return at regular intervals. I get paid first, but if they make a killing using my money, I don't see any more of the returns. Its lower risk than private RIET fund they offer. Yes of course I could lose money, or all of the money. Like I said before, Im looking for an investment with less risk than the stock market, but more risk (and higher expected returns) than a bond fund. This seems like it fits those requirements. Do you disagree?
I have no idea if this is more or less risky than owning a stock-index fund. In general, Bogleheads don't recommend alternative investments like this. How does the broker determine your rate of return?
Go to the link, there is a chart, the return is agreed upon up front, based on the dollar amount and years invested.

https://dlpcapitalpartners.com/dlp-positive-note-fund/
So those numbers are, in other words, guaranteed? If so, they look pretty darn good. But I find them hard to believe.
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ryanbohle
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Re: Any intelligent reason to deviate?

Post by ryanbohle »

mikejuss wrote: Thu Jun 10, 2021 10:09 am
ryanbohle wrote: Thu Jun 10, 2021 10:08 am
mikejuss wrote: Thu Jun 10, 2021 10:07 am
ryanbohle wrote: Thu Jun 10, 2021 10:00 am
mikejuss wrote: Thu Jun 10, 2021 9:16 amIn short, "fixed" does not mean "guaranteed."
Of course fixed doesn't mean guaranteed. I understand the investment. I give them a certain number of dollars for a certain amount of time, and they give me a fixed return at regular intervals. I get paid first, but if they make a killing using my money, I don't see any more of the returns. Its lower risk than private RIET fund they offer. Yes of course I could lose money, or all of the money. Like I said before, Im looking for an investment with less risk than the stock market, but more risk (and higher expected returns) than a bond fund. This seems like it fits those requirements. Do you disagree?
I have no idea if this is more or less risky than owning a stock-index fund. In general, Bogleheads don't recommend alternative investments like this. How does the broker determine your rate of return?
Go to the link, there is a chart, the return is agreed upon up front, based on the dollar amount and years invested.

https://dlpcapitalpartners.com/dlp-positive-note-fund/
So those numbers are, in other words, guaranteed? If so, they look pretty darn good. But I find them hard to believe.
Don't use the word guaranteed, They could go belly up and lose money. What they promise is I get paid first.
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Re: Any intelligent reason to deviate?

Post by KlangFool »

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KlangFool
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Re: Any intelligent reason to deviate?

Post by mikejuss »

ryanbohle wrote: Thu Jun 10, 2021 10:11 am
mikejuss wrote: Thu Jun 10, 2021 10:09 am
ryanbohle wrote: Thu Jun 10, 2021 10:08 am
mikejuss wrote: Thu Jun 10, 2021 10:07 am
ryanbohle wrote: Thu Jun 10, 2021 10:00 am

Of course fixed doesn't mean guaranteed. I understand the investment. I give them a certain number of dollars for a certain amount of time, and they give me a fixed return at regular intervals. I get paid first, but if they make a killing using my money, I don't see any more of the returns. Its lower risk than private RIET fund they offer. Yes of course I could lose money, or all of the money. Like I said before, Im looking for an investment with less risk than the stock market, but more risk (and higher expected returns) than a bond fund. This seems like it fits those requirements. Do you disagree?
I have no idea if this is more or less risky than owning a stock-index fund. In general, Bogleheads don't recommend alternative investments like this. How does the broker determine your rate of return?
Go to the link, there is a chart, the return is agreed upon up front, based on the dollar amount and years invested.

https://dlpcapitalpartners.com/dlp-positive-note-fund/
So those numbers are, in other words, guaranteed? If so, they look pretty darn good. But I find them hard to believe.
Don't use the word guaranteed, They could go belly up and lose money. What they promise is I get paid first.
I guess I'm really confused (and probably very dense). Please help me understand: if I give these people $1 million to hold over 5 years, am I certain to receive a 7.5% return? If not, where does the 7.5% figure come from?
Last edited by mikejuss on Thu Jun 10, 2021 10:19 am, edited 2 times in total.
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Re: Any intelligent reason to deviate?

Post by KlangFool »

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ryanbohle
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Re: Any intelligent reason to deviate?

Post by ryanbohle »

KlangFool wrote: Thu Jun 10, 2021 10:16 am
ryanbohle wrote: Thu Jun 10, 2021 10:08 am
I'd probably do 100K for 5 years.
ryanbohle,

Why is it worthwhile for you to do that?

A) If you are right and it return 5% to 10% per year, what is your after-tax return?

B) How many percent of your portfolio does this 100K represents?

KlangFool
Im considering making this investment in a Roth account, so the returns would not be taxed. If I do it in my brokerage "taxable" account, the returns would be taxed as capital gains.

right now 100K would be 13% of my investible assets, 11% of my net worth, and 7.5% of my net assets.

Im not sure if it is worthwhile. Right now I am 90% stocks (combo of US and international). like I said, Im looking for an investment with less risk than stocks, but more risk (and higher expected returns) than bonds.
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ryanbohle
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Re: Any intelligent reason to deviate?

Post by ryanbohle »

mikejuss wrote: Thu Jun 10, 2021 10:14 am
ryanbohle wrote: Thu Jun 10, 2021 10:11 am
mikejuss wrote: Thu Jun 10, 2021 10:09 am
ryanbohle wrote: Thu Jun 10, 2021 10:08 am
mikejuss wrote: Thu Jun 10, 2021 10:07 am

I have no idea if this is more or less risky than owning a stock-index fund. In general, Bogleheads don't recommend alternative investments like this. How does the broker determine your rate of return?
Go to the link, there is a chart, the return is agreed upon up front, based on the dollar amount and years invested.

https://dlpcapitalpartners.com/dlp-positive-note-fund/
So those numbers are, in other words, guaranteed? If so, they look pretty darn good. But I find them hard to believe.
Don't use the word guaranteed, They could go belly up and lose money. What they promise is I get paid first.
I guess I'm really confused (and probably very dense). Please help me understand: if I give these people $1 million to hold over 5 years, am I certain to receive a 7.5% return? If not, where does the 7.5% figure come from?
From my standpoint it essentialyl functions like a bond, I give them money and they give me interest, then at the end, if all goes well, I get my principal back. It is a real estate loan fund, the direct and indirect security is "Primarily Notes, and Personal Guarantee from Borrowers and Sponsors"
Last edited by ryanbohle on Thu Jun 10, 2021 10:49 am, edited 1 time in total.
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Re: Any intelligent reason to deviate?

Post by mikejuss »

ryanbohle wrote: Thu Jun 10, 2021 10:41 am
mikejuss wrote: Thu Jun 10, 2021 10:14 am
ryanbohle wrote: Thu Jun 10, 2021 10:11 am
mikejuss wrote: Thu Jun 10, 2021 10:09 am
ryanbohle wrote: Thu Jun 10, 2021 10:08 am

Go to the link, there is a chart, the return is agreed upon up front, based on the dollar amount and years invested.

https://dlpcapitalpartners.com/dlp-positive-note-fund/
So those numbers are, in other words, guaranteed? If so, they look pretty darn good. But I find them hard to believe.
Don't use the word guaranteed, They could go belly up and lose money. What they promise is I get paid first.
I guess I'm really confused (and probably very dense). Please help me understand: if I give these people $1 million to hold over 5 years, am I certain to receive a 7.5% return? If not, where does the 7.5% figure come from?
From my standpoint it essentialyl functions like a bond, I give them money and they give me interest, then at the end, if all goes well, I get my principle back. It is a real estate loan fund, the direct and indirect security is "Primarily Notes, and Personal Guarantee from Borrowers and Sponsors"
I see now: so you get a regular return and (maybe) all of your capital back. I guess I would want to know, before investing, how is this less risky than owning stocks? It's seems like a very concentrated bet on DLP Capital Partners' real-estate acumen. Wouldn't a highly diversified index fund that isn't dependent on a single sector be less risky? I really don't know.
Last edited by mikejuss on Thu Jun 10, 2021 10:53 am, edited 4 times in total.
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Re: Any intelligent reason to deviate?

Post by retired@50 »

ryanbohle wrote: Thu Jun 10, 2021 10:41 am From my standpoint it essentialyl functions like a bond, I give them money and they give me interest, then at the end, if all goes well, I get my principle back. It is a real estate loan fund, the direct and indirect security is "Primarily Notes, and Personal Guarantee from Borrowers and Sponsors"
Hopefully, you'll always have your principles, regardless of what happens with this investment. :shock:

Here's to also hoping that you get your principal back too. :beer

Regards,
This is one person's opinion. Nothing more.
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Re: Any intelligent reason to deviate?

Post by KlangFool »

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Re: Any intelligent reason to deviate?

Post by ryanbohle »

KlangFool wrote: Thu Jun 10, 2021 10:49 am
ryanbohle wrote: Thu Jun 10, 2021 10:39 am
Im considering making this investment in a Roth account, so the returns would not be taxed. If I do it in my brokerage "taxable" account, the returns would be taxed as capital gains.

right now 100K would be 13% of my investible assets, 11% of my net worth, and 7.5% of my net assets.

Im not sure if it is worthwhile. Right now I am 90% stocks (combo of US and international). like I said, Im looking for an investment with less risk than stocks, but more risk (and higher expected returns) than bonds.
ryanbohle,

Which kind of capital gain? Long-term? Short-term? If it is short-term capital gain, you still pay a lot of taxes in the taxable account.

<<Im considering making this investment in a Roth account, so the returns would not be taxed.>>

At your income/tax bracket, the Roth space is highly valuable to you. Why would you choose to waste it on this kind of investment? The Roth should be 100% stock.

<<Im not sure if it is worthwhile.>>

It is not worthwhile.

<<but more risk (and higher expected returns) than bonds.>>

Why? You are 90% stock. Even if the 10% bond return 0%, it won't matter to you. Why waste your time and effort on something that does not matter?

My AA is 60/40. My average annual return over the last 10 year is 7%. It is good enough for me. I do not care even if my 40% bond return 0%.

KlangFool
You make excellent points. Which is why I haven't pulled the trigger on this. I just can't stop thinking about it.
Thanks for playing devils advocate today!

Ryan
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Re: Any intelligent reason to deviate?

Post by climber2020 »

ryanbohle wrote: Thu Jun 10, 2021 10:39 am Im not sure if it is worthwhile. Right now I am 90% stocks (combo of US and international). like I said, Im looking for an investment with less risk than stocks, but more risk (and higher expected returns) than bonds.
Why bother with this?

You have a high income and don't plan on retiring early. Just keep it simple and go 100% stocks.

Or if you really want something that fits those criteria, buy some junk bonds.
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Re: Any intelligent reason to deviate?

Post by KlangFool »

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Re: Any intelligent reason to deviate?

Post by climber2020 »

KlangFool wrote: Thu Jun 10, 2021 11:26 am climber2020,

Or, keep an AA of 70/30. Then, OP can change his mind and retire at any time. Why rule that out unnecessary? It won't matter anyhow.

KlangFool
Well, 70/30 is what I would do, but I have no desire to work until normal retirement age and also have no need to leave behind a large pot of money after I die.

If the OP's goal is to amass the most amount of money possible and has no desire to stop working, 100% equities for a 30+ year time horizon is the AA that is most likely to result in the largest pile of cash at the end.
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Re: Any intelligent reason to deviate?

Post by KlangFool »

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Re: Any intelligent reason to deviate?

Post by ryanbohle »

KlangFool wrote: Thu Jun 10, 2021 12:02 pm
ryanbohle wrote: Thu Jun 10, 2021 8:54 am
I put 20% into retirement, and live well whithin my means. The 10-15M is based on a 7-10% average annual returns on my portfolio.
ryanbohle,

Please verify your numbers. Assuming that you have 1 million now and you save 80K per year, the numbers that I get is 14M to 28M in 29 years. The 3% difference per year over 29 years should resulted in about 2X.

Starting Net Worth $1,000,000
Annual Savings $80,000
Years
Annual Return Rate 29
7.00% $14,101,979
8.00% $17,634,550
9.00% $22,103,011
10.00% $27,753,567

KlangFool
obviously there are a bunch of ways to do the math, as of right now I have 650K in retirement, add my 550K house, and onother about 100K in 529s, crypto and short term cash reserves and I get 1.3M assets (minus my mortgage and a car loan), I am net-worth just over 900K. I was doing the math for the 650K of investible assets.
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Re: Any intelligent reason to deviate?

Post by mikejuss »

KlangFool wrote: Thu Jun 10, 2021 12:02 pm
ryanbohle wrote: Thu Jun 10, 2021 8:54 am
I put 20% into retirement, and live well whithin my means. The 10-15M is based on a 7-10% average annual returns on my portfolio.
ryanbohle,

Please verify your numbers. Assuming that you have 1 million now and you save 80K per year, the numbers that I get is 14M to 28M in 29 years. The 3% difference per year over 29 years should resulted in about 2X.

Starting Net Worth $1,000,000
Annual Savings $80,000
Years
Annual Return Rate 29
7.00% $14,101,979
8.00% $17,634,550
9.00% $22,103,011
10.00% $27,753,567

KlangFool
Is 7% (let alone 10%) a rate of return that can be reasonably expected?
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Re: Any intelligent reason to deviate?

Post by dbr »

FireCalc reports that for those settings and 100% stocks shows a range of results in real dollars of $1M to $29M after 29 years. This assumes contributions are inflation indexed.

In nominal dollars the best year to have started investing would have been 1971 with a final nominal accumulation of $105M and the worst year to have started investing would have been 1889 with a final accumulation after 29 years of about $10M. The worst year since WWII would have been 1953 with a final 29 year accumulation of $22M nominal. For some reason FireCalc does its basic ouputs in real dollars but the spreadsheet of portfolio results you can save is not indexed for inflation.
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Re: Any intelligent reason to deviate?

Post by KlangFool »

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Re: Any intelligent reason to deviate?

Post by KlangFool »

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Re: Any intelligent reason to deviate?

Post by mikejuss »

dbr wrote: Thu Jun 10, 2021 12:14 pm FireCalc reports that for those settings and 100% stocks shows a range of results in real dollars of $1M to $29M after 29 years. This assumes contributions are inflation indexed.

In nominal dollars the best year to have started investing would have been 1971 with a final nominal accumulation of $105M and the worst year to have started investing would have been 1889 with a final accumulation after 29 years of about $10M. The worst year since WWII would have been 1953 with a final 29 year accumulation of $22M nominal. For some reason FireCalc does its basic ouputs in real dollars but the spreadsheet of portfolio results you can save is not indexed for inflation.
Wow--sounds like banking on 7% is not wise.
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