Search found 7276 matches

by Northern Flicker
Tue Apr 20, 2021 10:18 pm
Forum: Personal Investments
Topic: Lots of mess ups - time to clean-up retirement planning
Replies: 12
Views: 1223

Re: Lots of mess ups - time to clean-up retirement planning

You may prefer a simple solution: 403b and both Roth IRAs: Vanguard Target Retirement 2040 - Do I transfer the Vanguard 500 Fund to the Target or just put new allocations for the Roth there? 401K: American Funds Balanced Fund Taxable account: Total US Stock Market Index Fund -or- Total Int'l Stock ...
by Northern Flicker
Tue Apr 20, 2021 10:03 pm
Forum: Personal Consumer Issues
Topic: Why leasing a new car is always the best option even if you intend to keep it forever
Replies: 115
Views: 10993

Re: Why leasing a new car is always the best option even if you intend to keep it forever

I disagree that the dealer has better information than I do on depreciation. Anyone can look at what 2018 Honda Accords are going for now and compare that against original MSRP. The dealer knows more than just the MSRP of the 2018 sales. The dealer knows actual final selling price of 2018 models bo...
by Northern Flicker
Tue Apr 20, 2021 5:50 pm
Forum: Personal Consumer Issues
Topic: Why leasing a new car is always the best option even if you intend to keep it forever
Replies: 115
Views: 10993

Re: Why leasing a new car is always the best option even if you intend to keep it forever

Relative to an outright purchase, a car lease is a put on the car asset. It has a variable strike price, set by the terms of the contract applied to the state of the car at contract termination. The lease origination fee is the cost of the put. The car dealer has better information than you do to es...
by Northern Flicker
Tue Apr 20, 2021 5:33 pm
Forum: Personal Investments
Topic: Lots of mess ups - time to clean-up retirement planning
Replies: 12
Views: 1223

Re: Lots of mess ups - time to clean-up retirement planning

You may prefer a simple solution: 403b and both Roth IRAs: Vanguard Target Retirement 2040 401K: American Funds Balanced Fund Taxable account: Total US Stock Market Index Fund -or- Total Int'l Stock Index Fund -or- both (don't realize a taxable gain to consolidate them) The above is actually a more ...
by Northern Flicker
Tue Apr 20, 2021 12:23 pm
Forum: Investing - Theory, News & General
Topic: I Bonds variable rate @ 3.54% in May
Replies: 113
Views: 13084

Re: I Bonds variable rate @ 3.54% in May

I am less studied on the fixed income side. Who should be buying I Bonds? Retirees? Near retirees? Young accumulators that need additional fixed income exposure and should bypass/diversify from 401k Total Bond fund? My opinion is that it makes sense if you have assets in a taxable account that you ...
by Northern Flicker
Tue Apr 20, 2021 1:15 am
Forum: Investing - Theory, News & General
Topic: I Bonds variable rate @ 3.54% in May
Replies: 113
Views: 13084

Re: I Bonds variable rate @ 3.54% in May

I am less studied on the fixed income side. Who should be buying I Bonds? Retirees? Near retirees? Young accumulators that need additional fixed income exposure and should bypass/diversify from 401k Total Bond fund? My opinion is that it makes sense if you have assets in a taxable account that you ...
by Northern Flicker
Mon Apr 19, 2021 10:40 pm
Forum: Investing - Theory, News & General
Topic: Is passive investing leading to bigger market inefficiencies?
Replies: 56
Views: 3938

Re: Is passive investing leading to bigger market inefficiencies?

I was responding to your other point which was that passive investing might get too big for its own good, depriving the market of enough active trading to maintain efficiency Well, we know that 100% passive investors are too many, for obvious reasons. So, my educated guess was simply that there mus...
by Northern Flicker
Mon Apr 19, 2021 10:20 pm
Forum: Investing - Theory, News & General
Topic: I Bonds variable rate @ 3.54% in May
Replies: 113
Views: 13084

Re: I Bonds variable rate @ 3.54% in May

I am less studied on the fixed income side. Who should be buying I Bonds? Retirees? Near retirees? Young accumulators that need additional fixed income exposure and should bypass/diversify from 401k Total Bond fund? My opinion is that it makes sense if you have assets in a taxable account that you ...
by Northern Flicker
Mon Apr 19, 2021 7:58 pm
Forum: Investing - Theory, News & General
Topic: Is passive investing leading to bigger market inefficiencies?
Replies: 56
Views: 3938

Re: Is passive investing leading to bigger market inefficiencies?

As market inefficiencies increase, the number of active trades should increase. If active trading started to become too infrequent to maintain an efficient market, active investing would increase to exploit the opportunities. This is pretty much... the point I was making? Not sure why you're framin...
by Northern Flicker
Mon Apr 19, 2021 7:48 pm
Forum: Personal Investments
Topic: Help me understand Bond Fund returns vs EE Bond over 20 years
Replies: 6
Views: 918

Re: Help me understand Bond Fund returns vs EE Bond over 20 years

It depends on the rate of change of interest rates and when the changes happen. If rates stay low for 19+ years and then suddenly spike to 10%, then the E bond will win. If rates spike to 10% next month and then stay flat for 19 years and 11 months, then the intermediate bond fund will win. But ther...
by Northern Flicker
Mon Apr 19, 2021 4:51 pm
Forum: Investing - Theory, News & General
Topic: Is passive investing leading to bigger market inefficiencies?
Replies: 56
Views: 3938

Re: Is passive investing leading to bigger market inefficiencies?

I don't think they are uniformly distributed, but I am assuming that the efficiency of the market should increase with the fraction of active market participants with respect to the total, everything else being equal. Is it such a strong assumption to make? Yes. The graveyard of mathematical financ...
by Northern Flicker
Mon Apr 19, 2021 3:57 pm
Forum: Personal Investments
Topic: How should I invest in my 401k account
Replies: 21
Views: 1864

Re: How should I invest in my 401k account

If you can save enough to do a meaningful megabackdoor Roth, I would do trad 401K and maximize your contribution. The max normal trad contribution will leave more budget slack for the extended backdoor Roth. I would only consider a Roth normal contribution if you were actually able to fully max out ...
by Northern Flicker
Mon Apr 19, 2021 3:45 pm
Forum: Investing - Theory, News & General
Topic: Is passive investing leading to bigger market inefficiencies?
Replies: 56
Views: 3938

Re: Is passive investing leading to bigger market inefficiencies?

Inefficiencies does not equal arbitrage. In March 2020, some index ETFs were on discount in comparison to their holdings by more than 10+%. Arbitrage exploits inefficiencies when there is enough liquidity to do so. Liquidity issues are a barrier to arbitrage and the source of inefficiencies persist...
by Northern Flicker
Mon Apr 19, 2021 3:41 pm
Forum: Investing - Theory, News & General
Topic: Is passive investing leading to bigger market inefficiencies?
Replies: 56
Views: 3938

Re: Is passive investing leading to bigger market inefficiencies?

Market takes a finite time for new information to be priced in. The smaller the fraction of stock pickers and active investors with respect to the total of market participants, the slower will be the adaptation of the market to perturbations from new information coming in. This is just arbitrary sp...
by Northern Flicker
Mon Apr 19, 2021 3:39 pm
Forum: Investing - Theory, News & General
Topic: Is passive investing leading to bigger market inefficiencies?
Replies: 56
Views: 3938

Re: Is passive investing leading to bigger market inefficiencies?

Do you have a basis for that statement? Every individual makes their imperfect price estimation, and for the law of large numbers the more individuals participate the closer you should get to the accurate price, more or less like when you flip a certain number of coins you'll get closer and closer ...
by Northern Flicker
Mon Apr 19, 2021 3:32 pm
Forum: Personal Consumer Issues
Topic: Why leasing a new car is always the best option even if you intend to keep it forever
Replies: 115
Views: 10993

Re: Why leasing a new car is always the best option even if you intend to keep it forever

The lease gives you an option to sell the car back to the dealer at a predetermined price. How much are the additional lease fees at time of acquisition? The fees don't make sense if you drive light miles as you won't want to turn in a car with low miles and known maintenance record when the lease i...
by Northern Flicker
Sun Apr 18, 2021 4:29 pm
Forum: Investing - Theory, News & General
Topic: Is passive investing leading to bigger market inefficiencies?
Replies: 56
Views: 3938

Re: Is passive investing leading to bigger market inefficiencies?

Good luck with that then. Let us know how that goes. I'll stick with my boring investments and leave the excitement to you. I only invest in boring index funds as you do, but we need to acknowledge that the reason why we can do it is that other people are doing the dirty job of asset pricing for us...
by Northern Flicker
Sun Apr 18, 2021 4:18 pm
Forum: Investing - Theory, News & General
Topic: What’s the problem with dividends?
Replies: 271
Views: 14861

Re: What’s the problem with dividends?

I can hold a DFA fund (DFFVX or DFSTX) in a 401K to filter out REITs and pair either with a large or large/mid cap fund, so not an unsolvable problem for me. I was writing my thoughts more generally, which is that I would like to see REIT-less indices so that people can set their REIT exposure expli...
by Northern Flicker
Sun Apr 18, 2021 2:58 pm
Forum: Investing - Theory, News & General
Topic: What’s the problem with dividends?
Replies: 271
Views: 14861

Re: What’s the problem with dividends?

What I would favor is indexes that exclude REITs. Then these could be held in a taxable account, and equity investors could set their REIT allocation in a tax-qualified account. Splitting int'l so that countries that deliver qualified dividends could be held in a taxable account, and those that don...
by Northern Flicker
Sun Apr 18, 2021 2:51 pm
Forum: Personal Investments
Topic: How should I invest in my 401k account
Replies: 21
Views: 1864

Re: How should I invest in my 401k account

My company offers a bunch of funds to invest in our 401k. However, none of the funds mirrors VTI, VXUS, or BND, and I'm not sure how much I should invest in each. Here are the funds they offer: - Large caps: VAN IS S&P500 IDX TR - 0.011% VANG RUS 1000 GR TR - 0.020% VANG RUS 1000 VAL TR - 0.020...
by Northern Flicker
Sun Apr 18, 2021 2:03 am
Forum: Investing - Theory, News & General
Topic: What’s the problem with dividends?
Replies: 271
Views: 14861

Re: What’s the problem with dividends?

1. Most forum members here loose total return by allocating to bonds. If the bonds stops them from worrying about financial trouble, it is worth is. The same can be said for dividends. If the regular dividend payments reduce your stress during downturns, it is worth it. Dividend-oriented stocks can...
by Northern Flicker
Sat Apr 17, 2021 8:57 pm
Forum: Investing - Theory, News & General
Topic: Is passive investing leading to bigger market inefficiencies?
Replies: 56
Views: 3938

Re: Is passive investing leading to bigger market inefficiencies?

Stocks are more liquid today than when indexing was less pervasive. Illiquidity is a barrier to arbitrage. Liquid markets are generally more efficient than less liquid markets, so I would guess that the market is more efficient today than when index investing was a smaller slice of market activity. ...
by Northern Flicker
Sat Apr 17, 2021 8:22 pm
Forum: Investing - Theory, News & General
Topic: What’s the problem with dividends?
Replies: 271
Views: 14861

Re: What’s the problem with dividends?

It is very difficult to imagine what retirement portfolio and income management will look like when someone is say 35-40. But a portfolio of stocks with s higher than average dividend yield may drive more realized income than you want or need, push you into a higher medicare IRMAA bracket, and have...
by Northern Flicker
Sat Apr 17, 2021 8:17 pm
Forum: Investing - Theory, News & General
Topic: “Take risk on equity side”
Replies: 58
Views: 4677

Re: “Take risk on equity side”

Tingting1013 wrote: Sat Apr 17, 2021 12:29 pm It means don’t hold long term bonds.

It’s terrible advice.
Actually it refers to not taking risk on the bond side that has equity correlation, especially not taking credit exposure risk.
by Northern Flicker
Sat Apr 17, 2021 6:09 pm
Forum: Investing - Theory, News & General
Topic: What’s the problem with dividends?
Replies: 271
Views: 14861

Re: What’s the problem with dividends?

Well, there is a behavioral component to dividends. Investors receiving regular higher dividends might be, from a behavioral perspective, more likely to stay the course. The biggest enemy to the average investor's performance is themselves by far - selling low (fear), buying high (FOMO), they often...
by Northern Flicker
Sat Apr 17, 2021 3:45 pm
Forum: Investing - Theory, News & General
Topic: What’s the problem with dividends?
Replies: 271
Views: 14861

Re: What’s the problem with dividends?

It is true that depletion of shares would not follow a straight line for 25 years because everything is not static. I was not offering the pount to be taken literally, but to demonstrate that buybacks at a high enough level harm liquidity. The flaw in the logic is not that buybacks increase the valu...
by Northern Flicker
Sat Apr 17, 2021 3:10 pm
Forum: Investing - Theory, News & General
Topic: What’s the problem with dividends?
Replies: 271
Views: 14861

Re: What’s the problem with dividends?

Stock buybacks have limitations. Share buybacks reduce liquidity of the remaining shares. Consider a utikity company that has a history of delivering about a 4% dividend. Stock buybacks would buy back all of the shares in 25 years. At some point in the process liquidity problems would make share buy...
by Northern Flicker
Sat Apr 17, 2021 2:03 pm
Forum: Investing - Theory, News & General
Topic: What’s the problem with dividends?
Replies: 271
Views: 14861

Re: What’s the problem with dividends?

Well, there is a behavioral component to dividends. Investors receiving regular higher dividends might be, from a behavioral perspective, more likely to stay the course. The biggest enemy to the average investor's performance is themselves by far - selling low (fear), buying high (FOMO), they often...
by Northern Flicker
Sat Apr 17, 2021 2:00 pm
Forum: Investing - Theory, News & General
Topic: What’s the problem with dividends?
Replies: 271
Views: 14861

Re: What’s the problem with dividends?

No, but a company with Y dollars of cash on hand is worth Y-Z more than if it instead had Z dollars of cash on hand, all else equal with Z < Y. Cash on hand unquestionably adds value to the conpany relative to not having it. Another way to see it is if you buy a share of stock at the moment before ...
by Northern Flicker
Sat Apr 17, 2021 2:43 am
Forum: Investing - Theory, News & General
Topic: What’s the problem with dividends?
Replies: 271
Views: 14861

Re: What’s the problem with dividends?

Company values aren’t based entirely on the total cash on hand, or cash on hand minus debt. No, but a company with Y dollars of cash on hand is worth Y-Z more than if it instead had Z dollars of cash on hand, all else equal with Z < Y. Cash on hand unquestionably adds value to the company relative ...
by Northern Flicker
Sat Apr 17, 2021 2:08 am
Forum: Investing - Theory, News & General
Topic: What’s the problem with dividends?
Replies: 271
Views: 14861

Re: What’s the problem with dividends?

Company has a value of X dollars. Company distributes Y dollars of cash from its coffers. Company then has a value of X - Y.
by Northern Flicker
Sat Apr 17, 2021 12:45 am
Forum: Investing - Theory, News & General
Topic: What’s the problem with dividends?
Replies: 271
Views: 14861

Re: What’s the problem with dividends?

Kenneth French has studied the dividend phenomenon and has documented that, historically, dividend paying stocks have provided higher total returns, with lower standard deviation of those returns, compared to non-dividend paying stocks. This may be a case of investors being willing to pay a higher ...
by Northern Flicker
Fri Apr 16, 2021 11:46 pm
Forum: Investing - Theory, News & General
Topic: Value etf’s that actually contain value?
Replies: 42
Views: 2645

Re: Value etf’s that actually contain value?

If I’ve missed other threads on this, feel free to re-direct me to those threads! I’ve been looking at various value etf’s for lcv, scv, and international value. The problem that I’m seeing is that many of the holdings aren’t value stocks, they’re just bad companies that are cheap for a reason. Are...
by Northern Flicker
Fri Apr 16, 2021 11:39 pm
Forum: Personal Investments
Topic: Most secure Two factor authentication out of Fidelity, Vanguard, Charles Schwab?
Replies: 20
Views: 2331

Re: Most secure Two factor authentication out of Fidelity, Vanguard, Charles Schwab?

All of my taxable investments are Vanguard index fund ETFs and I am interested in moving them to do a different custodian. Vanguard offers the use of hardware keys (Yubikey) but since they allow a SMS backup, it doesn't provide any additional security. (SMS two factor authentication has its own set...
by Northern Flicker
Fri Apr 16, 2021 11:18 pm
Forum: Investing - Theory, News & General
Topic: For those adding Crypto as an asset class to their AA
Replies: 145
Views: 8416

Re: For those adding Crypto as an asset class to their AA

What size allocation are you targeting? I don't know how people model crypto using the usual MPT analysis tools to even begin to answer this question in an empirical manner. Well one problem is that even a small amount of crypto has in the past caused a sharp increase in volatility. It is not a div...
by Northern Flicker
Fri Apr 16, 2021 10:30 pm
Forum: Investing - Theory, News & General
Topic: Beginning to evaluate the holdings of Vanguard Target Retirement Funds
Replies: 138
Views: 8445

Re: Beginning to evaluate the holdings of Vanguard Target Retirement Funds

In general, TDFs throughout the industry have increased the stock percentages at a given age (i.e. implemented a glide path that is less steep over a large segment of life course. This has been motivated by observations about lifespan, length of retirement etc. that define a longer horizon than pre...
by Northern Flicker
Fri Apr 16, 2021 8:13 pm
Forum: Investing - Theory, News & General
Topic: Beginning to evaluate the holdings of Vanguard Target Retirement Funds
Replies: 138
Views: 8445

Re: Beginning to evaluate the holdings of Vanguard Target Retirement Funds

Looking at 2040 funds... T Rowe Price's 2040 fund is about 76% stock: https://www.troweprice.com/literature/public/country/us/language/en/literature-type/quarterly-factsheet/sub-type/mf-single-class?productCode=TRJ&currency=USD FWIW, T. Rowe Price has two series of target date funds. The above ...
by Northern Flicker
Fri Apr 16, 2021 2:39 pm
Forum: Investing - Theory, News & General
Topic: Beginning to evaluate the holdings of Vanguard Target Retirement Funds
Replies: 138
Views: 8445

Re: Beginning to evaluate the holdings of Vanguard Target Retirement Funds

Vanguard is neither actively managing the allocation for these funds nor timing the markets with the allocation. They increased their int'l stock allocation and added int'l bonds in response to research they did on how it may reduce volatility. These were strategic changes. Strategic changes have ti...
by Northern Flicker
Fri Apr 16, 2021 1:00 am
Forum: Personal Finance (Not Investing)
Topic: Does it make sense that a car dealer needs to do a hard pull if you pay in full by check (cash)?
Replies: 79
Views: 7212

Re: Does it make sense that a car dealer needs to do a hard pull if you pay in full by check (cash)?

Wire the money. No pull, no wait, $30 or whatever (or free if you have money at Fidelity or many brokerages). Or, and this is probably what I would do, call their bluff and walk. "I'm not thawing my credit, I don't remember my PINs and I drove 2.5 hours to get here. If I leave I'm not coming b...
by Northern Flicker
Fri Apr 16, 2021 12:55 am
Forum: Personal Finance (Not Investing)
Topic: Before Medicare begins: Use your HSA tax free funding distribution
Replies: 13
Views: 1254

Re: Before Medicare begins: Use your HSA tax free funding distribution

Also, if you have the cash to do the HSA contribution but are just trying to convert the tIRA funds, you can do an HSA contribution and Roth conversion for the same amount. There is no net taxable income, and it is equivalent to the QHSAFD plus a Roth contribution in the same amount, but you don't n...
by Northern Flicker
Thu Apr 15, 2021 11:28 pm
Forum: Personal Investments
Topic: thinking about adding some REIT
Replies: 104
Views: 5737

Re: thinking about adding some REIT

CloseEnough wrote: Thu Apr 15, 2021 7:22 am Suggest taking a look at TIREX (TIAA Cref real estate fund). I think a small but meaningful allocation to REIT is good for diversification.
All you need is a large enough portfolio to meet the $2M minimum for TIREX with your REIT allocation. TCREX has a $2500 minimum.
by Northern Flicker
Thu Apr 15, 2021 11:14 pm
Forum: Investing - Theory, News & General
Topic: What’s the problem with dividends?
Replies: 271
Views: 14861

Re: What’s the problem with dividends?

abuss368 wrote: Thu Apr 15, 2021 8:32 pm I believe in many respects we are dancing on the head of a pin. It simply does not matter.

Tony
That certainly is not the case if you buy individual health insurance on an ACA exchange and qualify for a premium tax credit, or are on medicare and trying to stay under IRMAA limits.
by Northern Flicker
Thu Apr 15, 2021 11:11 pm
Forum: Investing - Theory, News & General
Topic: What’s the problem with dividends?
Replies: 271
Views: 14861

Re: What’s the problem with dividends?

Dividends force you to realize those gains based on their schedule. So, if everything else is equivalent, as you mentioned, selling stock is better than dividends. There is a reason to prefer capital gains and no reason to prefer dividends. Agreed. There also is a 2nd issue. Suppose a mutual fund i...
by Northern Flicker
Wed Apr 14, 2021 11:51 pm
Forum: Personal Investments
Topic: thinking about adding some REIT
Replies: 104
Views: 5737

Re: thinking about adding some REIT

Do you have a reason for buying REITs other than a comment from your advisor? I find his stated rationale ("you have cash"), while it might be a good point to invest in *something*, I find the pivot to REITs, *specifically*, to be worthy of more elaboration for investing in a particular s...
by Northern Flicker
Wed Apr 14, 2021 11:38 pm
Forum: Investing - Theory, News & General
Topic: Beginning to evaluate the holdings of Vanguard Target Retirement Funds
Replies: 138
Views: 8445

Re: Beginning to evaluate the holdings of Vanguard Target Retirement Funds

...Intentionally or not, Vanguard is effectively burying the cost of managing their Target Retirement and LifeStrategy funds within the cost of the underlying funds, and the amount isn't small. In fact, it's probably 5 or 6 bps of expenses being reported on the financial statements of the underlyin...
by Northern Flicker
Wed Apr 14, 2021 11:24 pm
Forum: Personal Finance (Not Investing)
Topic: Does it make sense that a car dealer needs to do a hard pull if you pay in full by check (cash)?
Replies: 79
Views: 7212

Re: Does it make sense that a car dealer needs to do a hard pull if you pay in full by check (cash)?

Wire the money. No pull, no wait, $30 or whatever (or free if you have money at Fidelity or many brokerages). Or, and this is probably what I would do, call their bluff and walk. "I'm not thawing my credit, I don't remember my PINs and I drove 2.5 hours to get here. If I leave I'm not coming b...
by Northern Flicker
Wed Apr 14, 2021 5:39 pm
Forum: Investing - Theory, News & General
Topic: Beginning to evaluate the holdings of Vanguard Target Retirement Funds
Replies: 138
Views: 8445

Re: Beginning to evaluate the holdings of Vanguard Target Retirement Funds

And I believe it was Alex who raised an interesting point, why the heck are the expense ratios on the Target Retirement funds more than their underlying funds? Example: Target 2025 fee is 0.13%; TSM is approx. 0.04%, International Index is 0.11% and Total Bond is 0.05% - so HOW do they arrive at a ...
by Northern Flicker
Wed Apr 14, 2021 3:42 pm
Forum: Personal Investments
Topic: thinking about adding some REIT
Replies: 104
Views: 5737

Re: thinking about adding some REIT

If you have zero REIT exposure, then you are not holding a market index fund. Whether you add a REIT fund can only be answered in the context of reviewing the portfolio. If sidelined cash needs to be deployed, and you are not just deploying into an existing asset allocation, then that is implying th...
by Northern Flicker
Tue Apr 13, 2021 8:20 pm
Forum: Personal Investments
Topic: Multiple years of expenses in cash when starting retirement
Replies: 104
Views: 8113

Re: Multiple years of expenses in cash when starting retirement

What they should consider is instead of having a few years of low taxes followed by high taxes for the rest of their lives (after 72), it may be better to "level" their Taxable Income throughout all their reaming years, in order to "level" out their taxes. They can make a big di...