Search found 36302 matches

by dbr
Fri Jul 23, 2021 3:19 pm
Forum: Investing - Theory, News & General
Topic: Which TIPS offer the best inflation protection?
Replies: 29
Views: 2721

Re: Which TIPS offer the best inflation protection?

As for "expected inflation", I think that would already be priced into the TIPS, no? Even if the actual mark up in price by the Treasury did not occur yet, the market would already have discounted that. So if I were to purchase those TIPS now, then the mark up due to expected inflation wo...
by dbr
Fri Jul 23, 2021 11:57 am
Forum: Personal Investments
Topic: If you had No Significant Pension or SS what asset allocation would you chose for a 30 year time period?
Replies: 20
Views: 1291

Re: If you had No Significant Pension or SS what asset allocation would you chose for a 30 year time period?

If you mean you are retired and you are planning to take withdrawals from that asset allocation for an estimated 30 years then here are some generalizations: 1. How much you can successfully spend and how much will be left if dominated by the luck of history in the particular period in question. Thi...
by dbr
Fri Jul 23, 2021 10:01 am
Forum: Investing - Theory, News & General
Topic: How do you factor Rental Asset in Asset Allocation
Replies: 64
Views: 4339

Re: How do you factor Rental Asset in Asset Allocation

This is a good one for the BH forum. I am surprised most people aren't saying to SELL the real estate and put it in the BH portfolio. I absolutely look at the equity available in each rental but discount it realistically for costs to sell. Whatever I would net or be able to 1031 into another proper...
by dbr
Fri Jul 23, 2021 9:55 am
Forum: Personal Investments
Topic: What should Asset Allocation be for this Retired Parent
Replies: 19
Views: 950

Re: What should Asset Allocation be for this Retired Parent

I guess my original view grew from the fact that my mom is already receiving a fixed income through her pension. And how much different is a pension from a million dollar portfolio? I can see pros and cons to both. A pension is different from a portfolio with respect to about any and every property...
by dbr
Fri Jul 23, 2021 9:47 am
Forum: Investing - Theory, News & General
Topic: How do you factor Rental Asset in Asset Allocation
Replies: 64
Views: 4339

Re: How do you factor Rental Asset in Asset Allocation

Historically, there have been three primary asset classes, but today financial professionals generally agree that there are four broad classes of assets: Equities (stocks) Fixed-income and debt (bonds) Money market and cash equivalents Real estate and tangible assets https://www.thebalance.com/use-...
by dbr
Fri Jul 23, 2021 9:19 am
Forum: Personal Investments
Topic: What should Asset Allocation be for this Retired Parent
Replies: 19
Views: 950

Re: What should Asset Allocation be for this Retired Parent

For a person living on a pension and Social Security $70k in savings as total assets is inadequate as a financial reserve and should not be at risk. If we imagine her pension and SS to be in the range of $50k annually then 1% earning on $70k is $700 and 5% earning is $3500. Compared to $50k the diff...
by dbr
Fri Jul 23, 2021 9:00 am
Forum: Personal Investments
Topic: Can I buy DirectTreasury bonds or I-bonds in brokerages?
Replies: 16
Views: 1875

Re: Can I buy DirectTreasury bonds or I-bonds in brokerages?

Do interest rates affect TIPS too or just inflation ? Any other factors that effect TIPS Yes, TIPS market pricing is affected by real interest rates. If you sell the Tip bond before maturity you have interest rate risk (it can be either good or bad). If you hold the Tip ind until maturity you don't...
by dbr
Fri Jul 23, 2021 8:46 am
Forum: Personal Investments
Topic: Can I buy DirectTreasury bonds or I-bonds in brokerages?
Replies: 16
Views: 1875

Re: Can I buy DirectTreasury bonds or I-bonds in brokerages?

Destiple wrote: Fri Jul 23, 2021 8:43 am Do interest rates affect TIPS too or just inflation ? Any other factors that effect TIPS
Yes, TIPS market pricing is affected by real interest rates.
by dbr
Fri Jul 23, 2021 8:45 am
Forum: Personal Investments
Topic: What should Asset Allocation be for this Retired Parent
Replies: 19
Views: 950

Re: What should Asset Allocation be for this Retired Parent

I would back off and do more thinking about what purpose our mother has for this money. I would also clearly understand what all of her investments are and how large they are compared to possible needs. It is entirely possible this money should stay exactly where it is or in a similar bank deposit a...
by dbr
Fri Jul 23, 2021 8:40 am
Forum: Personal Investments
Topic: Are Bonds necessary if you have a pension and SS?
Replies: 28
Views: 3278

Re: Are Bonds necessary if you have a pension and SS?

It isn't a question of what is necessary. It is a question of what choice you want to make for how much risk you want to have with your investments. Risk means specifically how variable your returns are including the possibility that the Apple, Microsoft, or Amazon could lose 10%, 20%, or 50% in a y...
by dbr
Fri Jul 23, 2021 8:24 am
Forum: Investing - Theory, News & General
Topic: Standard deviation daily or annual
Replies: 3
Views: 280

Re: Standard deviation daily or annual

Portfolio visualizer says they quote SD of monthly returns. The data they show for total stock index fund , for 3M Company, and for Tesla are respectively 14%, 18%, and 62% from 2011 to 2021.
by dbr
Thu Jul 22, 2021 7:52 pm
Forum: Personal Finance (Not Investing)
Topic: power of attorney for 401(k)/403(b) acct.?
Replies: 3
Views: 313

Re: power of attorney for 401(k)/403(b) acct.?

it's probably just like the easy to find form at Fidelity for transferring assets between Fidelity and other brokers but is not to be used to transfer between Fidelity accounts, a different form that I found harder to find. I think I was able to track it down by Googling for how to transfer between ...
by dbr
Thu Jul 22, 2021 7:05 pm
Forum: Investing - Theory, News & General
Topic: Which TIPS offer the best inflation protection?
Replies: 29
Views: 2721

Re: Which TIPS offer the best inflation protection?

Thank you all for the very informative posts! What I take from the discussion so far is that the price change of TIPS that is due just to the inflation adjustment would be same for all TIPS, no matter what the duration is. So assuming there is no interest rate change, all TIPS should respond to an ...
by dbr
Thu Jul 22, 2021 4:17 pm
Forum: Investing - Theory, News & General
Topic: Which TIPS offer the best inflation protection?
Replies: 29
Views: 2721

Re: Which TIPS offer the best inflation protection?

Vanguard has a paper on this: The Long and Short of TIPS. They find that short-term TIPS has a greater correlation with short-term unexpected inflation compared to intermediate and long TIPS. So they advocate shortening TIPS duration. Personally I don't find this convincing - shouldn't you care mor...
by dbr
Thu Jul 22, 2021 3:38 pm
Forum: Investing - Theory, News & General
Topic: Calculating Asset Allocation
Replies: 13
Views: 798

Re: Calculating Asset Allocation

I would like to have a 60/40 allocation. What is recommended for styles of investing percentages within stocks and bonds categories? I am 65 years old. I haven't been paying too much attention to that aspect. I suggest the concept of the three fund portfolio using US total stock market, Internation...
by dbr
Thu Jul 22, 2021 3:21 pm
Forum: Personal Investments
Topic: Can I buy DirectTreasury bonds or I-bonds in brokerages?
Replies: 16
Views: 1875

Re: Can I buy DirectTreasury bonds or I-bonds in brokerages?

Are tips better than ibonds? Can you buy those in brokerages? There is a secondary market for TIPS. The question which is better does not mean anything. They are just different in a lot of ways and they are the same in the fact that the face value of a bond is periodically indexed according to the ...
by dbr
Thu Jul 22, 2021 2:42 pm
Forum: Personal Investments
Topic: Start building cash reserve or is it cash drag?
Replies: 21
Views: 3145

Re: Start building cash reserve or is it cash drag?

Is it wrong to consider cash as part of your fixed income allocation? So when we say 60/40 we mean 60% in equities and 40% in fixed income such as bonds, CDs, money market accounts, and high yield savings account. If that is the case, then why not include the cash one has in their high yield saving...
by dbr
Thu Jul 22, 2021 2:35 pm
Forum: Investing - Theory, News & General
Topic: Which TIPS offer the best inflation protection?
Replies: 29
Views: 2721

Re: Which TIPS offer the best inflation protection?

Vanguard has a paper on this: The Long and Short of TIPS. They find that short-term TIPS has a greater correlation with short-term unexpected inflation compared to intermediate and long TIPS. So they advocate shortening TIPS duration. Personally I don't find this convincing - shouldn't you care mor...
by dbr
Thu Jul 22, 2021 2:23 pm
Forum: Personal Investments
Topic: help a 77 year old friend organize his assets
Replies: 4
Views: 566

Re: help a 77 year old friend organize his assets

An SPIA can be purchased with a fixed escalator (1%, 2%,3%, etc). While this is not perfect inflation protection, a 3% escalator has a reasonable likelihood of outperforming inflation long term. That is probably true. Note I believe the escalation is implemented even when costs are not increasing, ...
by dbr
Thu Jul 22, 2021 2:20 pm
Forum: Investing - Theory, News & General
Topic: Calculating Asset Allocation
Replies: 13
Views: 798

Re: Calculating Asset Allocation

It depends on how finely you have stratified your definition of assets. The highest level is stocks vs bonds, and that is very simple if the funds you use hold only stocks or bonds in any one fund. If you use target retirement or blended funds of any kind you will have to look up the fund portfolio ...
by dbr
Thu Jul 22, 2021 2:16 pm
Forum: Investing - Theory, News & General
Topic: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks
Replies: 54
Views: 5044

Re: Why Jack Bogle Doesn't (Didn't) Own Non-US Stocks

I don't think this has been discussed here before, so I am very interested in what people have to say about it. I appreciate well crafted sarcasm :sharebeer but I'd rather see 100 threads on this subject, which very well may be the preeminent investing issue of our lifetime, than which brand of dog...
by dbr
Thu Jul 22, 2021 2:04 pm
Forum: Investing - Theory, News & General
Topic: Which TIPS offer the best inflation protection?
Replies: 29
Views: 2721

Re: Which TIPS offer the best inflation protection?

Vanguard has a paper on this: The Long and Short of TIPS. They find that short-term TIPS has a greater correlation with short-term unexpected inflation compared to intermediate and long TIPS. So they advocate shortening TIPS duration. Personally I don't find this convincing - shouldn't you care mor...
by dbr
Thu Jul 22, 2021 1:54 pm
Forum: Personal Investments
Topic: Best index fund calculator?
Replies: 6
Views: 675

Re: Best index fund calculator?

Hello everybody I wanted to get a recommendation if you do not mind posting the link in your reply to me for an index fund calculator , what I would like to do is find out what the future returns would look like if I were to invest $10,000 and contribute $500 per month into the fund and reinvest th...
by dbr
Thu Jul 22, 2021 1:53 pm
Forum: Personal Investments
Topic: help a 77 year old friend organize his assets
Replies: 4
Views: 566

Re: help a 77 year old friend organize his assets

The dividend on a bond fund is interest and taxed as ordinary income, but is state tax exempt. Note that TIPS funds distribute both the real interest coupon and the inflation increment. The principal value is not inflation protected unless the increment is reinvested, if you can figure out how to se...
by dbr
Thu Jul 22, 2021 1:45 pm
Forum: Personal Investments
Topic: Early Retirement - No longer needing to work - Back of Napkin formulas to determine when?
Replies: 68
Views: 7451

Re: Early Retirement - No longer needing to work - Back of Napkin formulas to determine when?

You can stress test a retirement model by looking at how severe the impact might be if you enter a one time large cost at some point in the future. For example try losing $200,000 from your assets one year and see how much that upsets things. You can also place a contingency on spending by seeing ho...
by dbr
Thu Jul 22, 2021 1:28 pm
Forum: Personal Investments
Topic: Early Retirement - No longer needing to work - Back of Napkin formulas to determine when?
Replies: 68
Views: 7451

Re: Early Retirement - No longer needing to work - Back of Napkin formulas to determine when?

First off, don't count your house if you can help it. Yes, if you run out of money near the end, you can sell your house or get a reverse mortgage (which is usually a terrible deal, but something you could do if desperate), but normally the equity in your house is hard to access for living expenses...
by dbr
Thu Jul 22, 2021 1:20 pm
Forum: Personal Investments
Topic: Best index fund calculator?
Replies: 6
Views: 675

Re: Best index fund calculator?

You can try tools like the Monte Carlo simulation in Portfolio Visualizer. Note that the uncertainty in forecasting uncertainty can be large. https://www.portfoliovisualizer.com/monte-carlo-simulation You will also have to change your mind set from living in a deterministic world to living in a stoc...
by dbr
Thu Jul 22, 2021 1:14 pm
Forum: Personal Consumer Issues
Topic: Different size wheels on car
Replies: 29
Views: 1721

Re: Different size wheels on car

This would never work long term with a Subaru AWD system. You can use a mismatch, but only for a short period to limp to a fix (think donut spare). Subaru is fussy about even the tire depth being mismatched, like if you have to replace a tire that had a sidewall cut. The AWD system over-works if wh...
by dbr
Thu Jul 22, 2021 1:09 pm
Forum: Investing - Theory, News & General
Topic: Which TIPS offer the best inflation protection?
Replies: 29
Views: 2721

Re: Which TIPS offer the best inflation protection?

As already pointed out all TIPS present exactly the same offset or indexing for inflation. What "inflation protection" is supposed to mean, I have no idea. People should stop using that term because it is too ambiguous as to what exactly is wanted. And, yes, I know the name is Treasury Inf...
by dbr
Thu Jul 22, 2021 1:02 pm
Forum: Personal Investments
Topic: Early Retirement - No longer needing to work - Back of Napkin formulas to determine when?
Replies: 68
Views: 7451

Re: Early Retirement - No longer needing to work - Back of Napkin formulas to determine when?

First off, don't count your house if you can help it. Yes, if you run out of money near the end, you can sell your house or get a reverse mortgage (which is usually a terrible deal, but something you could do if desperate), but normally the equity in your house is hard to access for living expenses...
by dbr
Thu Jul 22, 2021 10:18 am
Forum: Personal Investments
Topic: Early Retirement - No longer needing to work - Back of Napkin formulas to determine when?
Replies: 68
Views: 7451

Re: Early Retirement - No longer needing to work - Back of Napkin formulas to determine when?

The back of the napkin formula is probably to see if 3%-3.5% of your assets would cover what you want to spend. Important to note that this has to cover everything -- including income taxes, unusual/irregular/capital items like a replacement of central HVAC (hit us one year), un-insured medical (de...
by dbr
Thu Jul 22, 2021 10:05 am
Forum: Personal Investments
Topic: Early Retirement - No longer needing to work - Back of Napkin formulas to determine when?
Replies: 68
Views: 7451

Re: Early Retirement - No longer needing to work - Back of Napkin formulas to determine when?

For back of the napkin math, I would use this: divide annual expenses (including taxes) by the size of your liquid portfolio. If the result is under 4%, you're pretty safe for a traditional ~age 65 retirement. Under 3% would be my target for an early retirement (say 55 or earlier). Under 2% is, in ...
by dbr
Thu Jul 22, 2021 9:57 am
Forum: Personal Investments
Topic: Early Retirement - No longer needing to work - Back of Napkin formulas to determine when?
Replies: 68
Views: 7451

Re: Early Retirement - No longer needing to work - Back of Napkin formulas to determine when?

The back of the napkin formula is probably to see if 3%-3.5% of your assets would cover what you want to spend. A more sophisticated approach that allows more detail to be taken into account is the various retirement planning models of which www.firecalc.com is an example, but there are several. Las...
by dbr
Thu Jul 22, 2021 9:14 am
Forum: Personal Investments
Topic: Vanguard Target Retirement 2045 (VTIVX) OR VFIAX (S&P 500 index fund)
Replies: 10
Views: 1157

Re: Vanguard Target Retirement 2045 (VTIVX) OR VFIAX (S&P 500 index fund)

Hi, I have just rolled over my 401K to IRA and I have around 45K in IRA waiting to be invested. While the fund was in 401K, they were invested in Vanguard Target Retirement 2045 (VTIVX). Which is better - investing 45K again in VTIVX again or in VFIAX (S&P 500 index fund)? Also, should I all in...
by dbr
Thu Jul 22, 2021 9:11 am
Forum: Personal Investments
Topic: 30-Day Yield Negative on TIPS Mutual Fund
Replies: 9
Views: 1547

Re: 30-Day Yield Negative on TIPS Mutual Fund

Prudence wrote: Thu Jul 22, 2021 9:03 am I believe previous posts have explained that the real yields on a Treasury TIPS fund and a Treasury non TIPS fund of the same duration are not much different, true?
I think the risk premium for inflation protected bonds has been tiny most of the time. Maybe someone has numbers for that.
by dbr
Thu Jul 22, 2021 8:58 am
Forum: Personal Investments
Topic: Start building cash reserve or is it cash drag?
Replies: 21
Views: 3145

Re: Start building cash reserve or is it cash drag?

Why not look at what the models say for 50/50 and 40/60 allocations?

There is no reason to amass cash distinct from bonds of all types. You don't have to start investing in something special because you are getting closer to retirement.
by dbr
Thu Jul 22, 2021 8:47 am
Forum: Personal Investments
Topic: 30-Day Yield Negative on TIPS Mutual Fund
Replies: 9
Views: 1547

Re: 30-Day Yield Negative on TIPS Mutual Fund

Does this mean I am losing money by being invested in the fund? I am referring to FIPDX. 30-day yield is -0.96%. Am I paying money to own this fund? Lol. The answer to your specific question is that that the real yield on TIPS is negative and has been for some time. Yes, you are losing money in rea...
by dbr
Thu Jul 22, 2021 8:35 am
Forum: Personal Consumer Issues
Topic: Different size wheels on car
Replies: 29
Views: 1721

Re: Different size wheels on car

One thing I know is that low profile wheels and tires are not a good idea on most American roads for exactly the pothole issue cited. I would consider backing up to the 18" or 17" wheel all around. Note the standard tire on the SEL (no plus) is a 215/55 R17 rather than your 235/40 R19. The...
by dbr
Wed Jul 21, 2021 3:42 pm
Forum: Investing - Theory, News & General
Topic: How do you factor Rental Asset in Asset Allocation
Replies: 64
Views: 4339

Re: How do you factor Rental Asset in Asset Allocation

Home equity of RE (rental or primary residence) is part of NW but not part of AA. It doesn't make sense to count RE in AA as stocks or fixed income. It may not be a stock or fixed income, but it makes sense to include it in one's asset allocation as its own asset class. Why? Are you going to rebala...
by dbr
Wed Jul 21, 2021 2:24 pm
Forum: Personal Investments
Topic: Stable value fund or TBM+stable value fund?
Replies: 42
Views: 2415

Re: Stable value fund or TBM+stable value fund?

Maybe lately, all in the stable value fund, but when bonds start producing again, I would not have everything in the stable value fund. Any specific metric to indicate such a point? Typically SV yields trail bond yields by some time. When interest rates on bonds rise to significantly exceed your SV...
by dbr
Wed Jul 21, 2021 1:27 pm
Forum: Investing - Theory, News & General
Topic: How do you factor Rental Asset in Asset Allocation
Replies: 64
Views: 4339

Re: How do you factor Rental Asset in Asset Allocation

Home equity of RE (rental or primary residence) is part of NW but not part of AA. It doesn't make sense to count RE in AA as stocks or fixed income. It may not be a stock or fixed income, but it makes sense to include it in one's asset allocation as its own asset class. Why? Are you going to rebala...
by dbr
Wed Jul 21, 2021 1:15 pm
Forum: Personal Investments
Topic: Highest yield Vanguard Mutual Fund
Replies: 5
Views: 589

Re: Highest yield Vanguard Mutual Fund

Yield and return are not the same thing. The funds publish YTD, 1,5, 10 year, and since inception returns and also the current SEC yield. Return is the annualized compound average growth rate for an investment held for the period and distributions reinvested. SEC yield is calculated from a formula t...
by dbr
Wed Jul 21, 2021 7:36 am
Forum: Personal Investments
Topic: Short term investment suggestions? Around 5 years.
Replies: 4
Views: 556

Re: Short term investment suggestions? Around 5 years.

Don't forget that 4 years from now you will need the money in one year. If by some chance you put some if it in stocks now, you don't want it there then. That means your stock investing timeline is 4-3-2-1-0 or best not to do it at all. Put differently that short a time is suited to saving rather th...
by dbr
Tue Jul 20, 2021 9:06 pm
Forum: Personal Investments
Topic: Withdraw Methodologies
Replies: 23
Views: 2108

Re: Withdraw Methodologies

Actual withdrawals in retirement are variable. I don't think using a rigid withdrawal scheme as a plan is practical. Those things are for estimating ahead of time that you are in the right ballpark. In fourteen years of retirement our highest spending year spent twice the average for those years and...
by dbr
Tue Jul 20, 2021 1:32 pm
Forum: Personal Investments
Topic: Stable value fund or TBM+stable value fund?
Replies: 42
Views: 2415

Re: Stable value fund or TBM+stable value fund?

You are not going to somehow become signficantly wealthier by "diversifying" stable value to TBM or TIPS. You don't say what fraction of your assets are in bonds. I would not put all of a large portfolio that is more bonds than stocks into a single SV fund. I would not hesitate to just kee...
by dbr
Tue Jul 20, 2021 7:54 am
Forum: Personal Investments
Topic: Return on short-term cash needs/emergency funds
Replies: 12
Views: 1476

Re: Return on short-term cash needs/emergency funds

Is it a good idea to buy I-Bonds in the name of one's children also if they have a SSN apart from in the name of both the parents? Unless someone makes a point of paying taxes on the earnings year by year, keep in mind that a child acquiring I bonds between the ages of 10 and 20 will have those bon...
by dbr
Tue Jul 20, 2021 7:44 am
Forum: Personal Investments
Topic: Dry Powder…Am I thinking of this correctly?
Replies: 56
Views: 5676

Re: Dry Powder…Am I thinking of this correctly?

Dry powder is a metaphor that does not apply to investing. If you are planning to cross the Delaware to attack the British and want to be sure your muskets still fire, then keep your powder dry.
by dbr
Tue Jul 20, 2021 7:42 am
Forum: Personal Investments
Topic: Retired person: VWIAX or VTINX
Replies: 19
Views: 1831

Re: Retired person: VWIAX or VTINX

In short, he told me he just wants his money to make money for him. He currently has it sitting in savings in the bank. He doesn't have any idea as to what he will spend it on in the future. Most likely it will grow and eventually be passed onto his children. Then it should all be in total stock ma...
by dbr
Tue Jul 20, 2021 7:37 am
Forum: Investing - Theory, News & General
Topic: 10% drop of dividend income
Replies: 14
Views: 2435

Re: 10% drop of dividend income

I know dividend is just part of the gain and the total returns in recent years are pretty good. Still, you often hear people talk about consuming their dividends without withdrawing any principals. Curious if anyone keeps track of these numbers (dividend income changes), or any actions one could ta...
by dbr
Tue Jul 20, 2021 7:27 am
Forum: Personal Investments
Topic: Retired person: VWIAX or VTINX
Replies: 19
Views: 1831

Re: Retired person: VWIAX or VTINX

If they have similar stock/bond allocations then it won't matter. Just because there are choices does not mean the choice means anything. Personally I prefer total market indices and some international investing and don't see any magic in the W's. Others differ. You are now down at a choice that can...