Bogleheads.org

Northern Flicker

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 ...

Northern Flicker

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...

Northern Flicker

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...

Northern Flicker

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 ...

Northern Flicker

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 ...

Northern Flicker

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 ...

Northern Flicker

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...

Northern Flicker

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 ...

Northern Flicker

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...

Northern Flicker

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...

Northern Flicker

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...

Northern Flicker

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 ...

Northern Flicker

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...

Northern Flicker

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...

Northern Flicker

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 ...

Northern Flicker

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...

Northern Flicker

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...

Northern Flicker

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...

Northern Flicker

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...

Northern Flicker

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...

Northern Flicker

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...

Northern Flicker

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. ...

Northern Flicker

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...

Northern Flicker

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.

Northern Flicker

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...

Northern Flicker

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...

Northern Flicker

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...

Northern Flicker

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...

Northern Flicker

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 ...

Northern Flicker

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 ...

Northern Flicker

Company has a value of X dollars. Company distributes Y dollars of cash from its coffers. Company then has a value of X - Y.

Northern Flicker

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 ...

Northern Flicker

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...

Northern Flicker

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...

Northern Flicker

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...

Northern Flicker

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...

Northern Flicker

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 ...

Northern Flicker

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...

Northern Flicker

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...

Northern Flicker

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...

Northern Flicker

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.

Northern Flicker

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.

Northern Flicker

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...

Northern Flicker

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...

Northern Flicker

...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...

Northern Flicker

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...

Northern Flicker

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 ...

Northern Flicker

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...

Northern Flicker

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Northern Flicker

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...

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