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chicagobear

I don't understand the point of a bond fund which hedges the foreign currency back to the US dollar. I would want to own foreign bonds to protect me against dollar weakness, but this won't do that.

chicagobear

I would make sure that the loans to individuals are properly documented so they don't try to claim they were gifts when she passes.

chicagobear

I only put money into stocks that I don't think I will need to touch (barring some sort of emergency) for at least ten years, and then just ride it out.

chicagobear

If you were holding for 30 years, I would definitely go with a fixed rate mortgage to lock in today's rates. If it is only for two years, I think I'd pay cash if you comfortably have enough liquidity.

chicagobear

It doesn't sound like you need insurance at all at this point.

chicagobear

I prefer Tbills to TIPS since I don't trust the Fedgov to accurately calculate the inflation component.

chicagobear

VT- which is the Vanguard Total World ETF. The US is historically expensive, but the rest of the world is not so it would give you more downside protection, I think.

chicagobear

You can buy Treasuries for free through Fidelity and they will keep track of them and automatically roll them for you.

chicagobear

What would the loan to value be on the loan? If it is a decent level, I think it would be safe enough but for the risk of rising interest rates. The cost of a lawyer to document the mortgage would come into play as well.

chicagobear

I like simply buying VT for a set it and forget about it equity portfolio. I think a reasonable approach is to keep what you will spend over ten years in fixed income and the rest in VT, directing the dividends to the fixed income each year. Can't get much simpler than that.

chicagobear

I would put ten years worth of expenses into cash so you don't have to touch the stocks, and then the balance into Vanguard World (VT) and let it ride.

chicagobear

Invariably the owner pays the taxes and redeems the property in time unless it is a ghetto property which is being abandoned.

chicagobear

My assets are at Fidelity and I use linked online savings accounts at Goldman Sachs and Barclays for my cash.

chicagobear

Thanks. I've heard the book Bernstein book mentioned. I should buy it. If I recall he heavily advocated treasuries ? I'm not familiar with Floating Rate Notes. My homework to read up on them. Why are they better than intermediate treasury fund or say 5yr ladder ? I'm familiar with Permanent Portfol...

chicagobear

You could read up on the late Harry Browne's Permanent Portfolio. It is 25% equities, 25% long term treasuries, 25% short term treasuries, and 25% gold. I'd read William J. Bernstein's Deep Risk as well. It has good insights on how to allocate assets for the long term. I'd probably put 40% in the Va...

chicagobear

I'd go with total world (VT) rather than just US stocks, but putting money you won't need for ten years in stocks with the rest in cash is pretty much what I do (I own gold too, but I consider that sort of like part of my cash). Long term bond rates would have to go up quite a bit before I'd be inte...

chicagobear

Goldman Sachs Bank pays 1.05% in an FDIC insured savings account.

chicagobear

I certainly could see having foreign currency bonds as a partial hedge to US dollar holdings, but I don't see any point in having hedged bonds.

chicagobear

10% in bullion and 15% in mining shares. They are mostly uncorrelated to my other financial assets.

chicagobear

You can get 1% in some online savings accounts with FDIC insurance.

chicagobear

I've never really understood why the inflation adjustment is taxable. That seems to undermine the usefulness of TIPS. In a highly inflationary period, the adjustment which is supposed to make you whole gets taxed away. It would make more sense to have the principal increase due to inflation be tax ...

chicagobear

I've never really understood why the inflation adjustment is taxable. That seems to undermine the usefulness of TIPS. In a highly inflationary period, the adjustment which is supposed to make you whole gets taxed away. It would make more sense to have the principal increase due to inflation be tax f...

chicagobear

My cousin is (I think) 44 and has spent over $300,000 on IVF (with her own eggs) with no success. I think she is finally giving up. She didn't try to start having children until she got married a couple of years ago. Cinderella stayed too late at the ball. I hope my 27 year old niece is taking notes.

chicagobear

If she doesn't have $5 million and therefore no reason to worry about using up the exemption, she could just give you the money and fill out the gift tax form. No tax will be due.

chicagobear

I'd put the money into an online savings account like GE Capital where you can earn 1.05% right now. If rates go up, you'd rather have the money there than locked up in a CD.

chicagobear

You don't face a Federal estate tax unless you have assets over $5 million and change. To give her income with the principal going elsewhere upon her death, you will need to have your estate set up a trust. You could look into having your estate buy her a lifetime annuity and then the remaining asse...

chicagobear

So how about this sort of framework? I'll assume that she spends $50,000 per year and will receive $50,000 a year in alimony for 8 years. I'll assume that she will get Social Security at that point in the amount of $25,000. So her first 8 years is covered by alimony and needs $25,000 per year afterw...

chicagobear

40% stock/60% fixed income sounds ok, but I would absolutely stay short on the fixed income due to the risk of rising rates. You can get 1% in an online savings account these days. If I were starting from scratch I'd probably be at 40% Vanguard Total World (VT) and 60% cash, but I suppose a short te...

chicagobear

Put it into Vanguard Total World (VT) and let it ride...

chicagobear

I think a mortgage would be ok as long as you don't lend more than (say) 80% of the house's value. Even if they can't make the current payments at some point, they can't stiff you since the house can't be sold without paying you off.

chicagobear

I would file a lawsuit. He probably won't contest it and then you would have a judgment that would be more useful, especially for a claim against his estate.

chicagobear

Take the cash. Inflation will drive the value of a non-COLA pension to close to zero over that long a period of time, IMO.

chicagobear

livesoft wrote:
chicagobear wrote:I wouldn't touch […] gold or even think about it.
There. Fixed that for you.

You can disagree without being a jerk.

chicagobear

I would put ten years worth of expenses in FDIC insured savings accounts and/or short term Treasuries, 25% in gold bullion, and the balance in the Vanguard World Stock Fund (VT). I'd direct the dividends to the savings accounts and sell stock if necessary to replenish the cash. I wouldn't touch the ...

chicagobear

I think he'd be better off with Scott Burns's Margarita Portfolio- one third each in Total Stock Market, Total International, and TIPS.

chicagobear

My husband's will stipulates his daughter's half of his estate will be in a spendthrift trust (about $1.4 million), with her brother as the trustee (he is an attorney, but had nothing to do with drawing up the trust except to ask his dad to bequeath her $100,000 up front from her half to "soft...

chicagobear

No way would I pay off a long term 2% loan. That will be worth a lot if (when) rates rise. In fact, I'd be willing to save any excess cash in a .80% savings account rather than pre-pay the loan, realizing that I have a negative arbitrage situation for a while.

chicagobear

Momus wrote:
Yes, my parents will most likely give their assets to me since I am two "sons" in the family (stupid Chinese culture I know).

What do you mean by two sons?

chicagobear

I can see owning unhedged foreign bonds to protect against US dollar debasement (although I personally prefer gold bullion) but don't see the point of owning hedged foreign bonds. Aren't those effectively dollar bonds due to the hedging?

chicagobear

Presently we will stay the course. I may try asking Wells Fargo if they'll accept $1,000 a month as a good enough payment for another couple years due to financial hardship (the repayment will be about $1300 a month plus about $200 in federal loans). We're breaking almost even on everything current...

chicagobear

I think what to do depends on whether there is equity in the house. If there isn't, then bankruptcy should be evaluated. She can probably keep the 401K even if she files bankrutpcy so I wouldn't take money out to pay creditors.

chicagobear

Make a loan to her with the property as collateral with the loan to be repaid after she dies and the property is sold.

chicagobear

I would be uncomfortable having so much of my net worth vulnerable to inflation of the US dollar. I'd have a lot of equities and gold in addition to fixed income.

chicagobear

sometimesinvestor wrote:I like "the only investment guide you will ever need" by Andrew Tobias though it is not Truly Boglehead

I gave this to my nephew when he graduated from college. Highly recommended.

chicagobear

Gold bullion would do well if the US government defaulted or hyperinflated its debts away.

chicagobear

I certainly understand taking some money off the table due to the risk in stocks when you don't have enough time to make it back due to your age, but I wouldn't put it into bonds at current interest rates. I believe that bonds will be a terrible investment for quite a while due to rising interest ra...

chicagobear

Jerrybaby wrote:Divorce is such a horrible thing. I'm on the tail end of mine now. I feel for you OP.

I didn't see any reference to marriage, alimony, or divorce so It sounds like the child is illegitimate.

chicagobear

Tipping for carry out? *confused look* I wouldn't even consider such a thing.

chicagobear

Now would be an excellent time to sell farmland.

chicagobear

Apmex and Montana Rarities. Tulving is supposedly way behind in his deliveries and is not recommended.

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