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Old 12-16-2015, 10:47 PM   #41
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They should have started with a full 100 basis points. This is wimpy start to a long overdue rate tightening. It will be nice when we get over 5 percent again.


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Old 12-16-2015, 10:47 PM   #42
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Hmm, VWINX must not have distributed today then, even though they have the same declaration record date in that table.
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Old 12-16-2015, 10:52 PM   #43
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They should have started with a full 100 basis points. This is wimpy start to a long overdue rate tightening. It will be nice when we get over 5 percent again.


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It's going against the tide of every other nation. Some like Japan have tried to tighten in recent years, only to be forced to go back.

Some "market strategists" are saying it's still premature, with no sign of inflation at all.
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Old 12-16-2015, 11:25 PM   #44
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Yes, in equity funds, balanced funds, and some bond funds, dividend distributions make the fund share price drop.

VWIAX payed out capital gains distributions as well. Those are responsible for most of the drop.

Part of what you are seeing is the difference between an actively managed fund and an index fund. Index funds tend to have much smaller cap gains distributions.
So, are you saying, if you were thinking of buying VWINX, you might time your purchase after a distribution, like now?
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Old 12-16-2015, 11:31 PM   #45
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Way overdue.
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Old 12-16-2015, 11:32 PM   #46
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Way overdue.
I mean, for the 2nd time, or for the 3rd time, or...
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Old 12-17-2015, 04:41 AM   #47
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no sign of inflation, that one always gets me. where do these people buy their groceries?
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Old 12-17-2015, 05:48 AM   #48
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no sign of inflation, that one always gets me. where do these people buy their groceries?
Or health care?

Seriously, though, the crashing of oil prices has had a massive overall impact of inflation in macro terms. It has a ripple effect on a lot of things we buy, but it doesn't feel noticeable with things like food, and *certainly* not medical care.
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Old 12-17-2015, 06:10 AM   #49
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I don't follow, dividend distributions make the fund share price drop?

Other VG funds are not dropping like that.
Follow other dividend equity stocks and you see the same thing. This occurs as the amount paid out no longer belongs to the company/fund and is reflected in reduction in the market cap/value.

Said another way, money transfer from company to your pocket.
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Old 12-17-2015, 06:10 AM   #50
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So, are you saying, if you were thinking of buying VWINX, you might time your purchase after a distribution, like now?
Well, yes, if in a taxable account. If it's getting close to the end of the year, it's best to wait until after distributions.

Be sure to check the dates. They are not all paying on exactly the same day.
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Old 12-17-2015, 06:13 AM   #51
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They should have started with a full 100 basis points. This is wimpy start to a long overdue rate tightening. It will be nice when we get over 5 percent again.


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I very much doubt we will see anything even close to 5% again given the huge run up in the national debt. 5% on $20 trillion is a trillion dollars which is more than a quarter of the national budget for 2016. Given the escalating costs of entitlements, keeping interest rates low is a better political option. Yes I know the FED is supposed to be independent but I don't really believe it is deaf to the consequences of higher interest rates on the federal budget. I believe low rates are hear to stay for a very long time. (I am not attempting to turn this into a political discussion, just trying to point out what I think is a major factor in the decision process for rate hikes).
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Old 12-17-2015, 09:06 AM   #52
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Well, yes, if in a taxable account. If it's getting close to the end of the year, it's best to wait until after distributions.



Be sure to check the dates. They are not all paying on exactly the same day.

Thank you, audreyh1. Mine hasn't paid yet, but I never noticed the dip of price after distributions (I actually never even paid attention) so next time I buy, I will definitely look.


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Old 12-17-2015, 09:44 AM   #53
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Yes, in equity funds, balanced funds, and some bond funds, dividend distributions make the fund share price drop.

VWIAX payed out capital gains distributions as well. Those are responsible for most of the drop.

Part of what you are seeing is the difference between an actively managed fund and an index fund. Index funds tend to have much smaller cap gains distributions.
Another reason is the USD just got stronger. Any international fund will drop when the USD gets stronger.
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Old 12-17-2015, 10:27 AM   #54
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Here's one financial blogger's take on the increase - he created a t-shirt, had a hundred printed, and was giving them away to the first 100 people to tweet him. His name is Matt Phillips and appears to write about financial and economic issues that are published on a web site called Quartz.

Below is his design:

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Old 12-17-2015, 10:36 AM   #55
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It's pretty amazing to see it as a graph like that, BTW. I remember not long ago (less than 10 years ago - it might have been 2006), I opened a savings account at INGDirect because they were paying 5% interest. Oh the good old days.
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Old 12-17-2015, 11:46 AM   #56
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It's pretty amazing to see it as a graph like that, BTW. I remember not long ago (less than 10 years ago - it might have been 2006), I opened a savings account at INGDirect because they were paying 5% interest. Oh the good old days.

Yes, I remember complaining about that rate with CDs too back in that time frame. Glad I threw in the towel or I would still be complaining.


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Old 12-17-2015, 12:07 PM   #57
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Well you may have been getting 5% interest but your mortgage was probably 3-4% higher.
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Old 12-17-2015, 12:31 PM   #58
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When rates are near 0 in a saving account, bond or CD, you have to put your money in the market to make money.

As rates rise, the choice become more difficult. Guaranteed 5%, or take a chance on the market?

People will be shifting back and forth base don their risk tolerance, and it creates a bumpy ride.
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I have a hard time believing that many people (already retired) actually invest in the market when the rates are too low. With volatility, many may not be able to lose any money so I would think they adjust their life style to compensate for no returns instead of risking further loss.
Myself, I would invest considerably in the market if I were getting some kind of return on safe investments. Because I am barely getting any return I am not willing to invest in a volatile market. I'm comfortable so why donate more than I've already lost?
I don't believe the fed has the little guy's best interest in mind at all.
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Thoughts on the Fed Rate increase?
Old 12-17-2015, 12:39 PM   #59
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Thoughts on the Fed Rate increase?

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Well you may have been getting 5% interest but your mortgage was probably 3-4% higher.

Occasionally you caught a break. My mortgage started in 2003 then at 5%, while I snagged a 6% CD in either 2005 or 2006. Refinanced of course since at 3.875%. Somebody is going to wait until the last payment of my 30th year to get all their money back as Im not prepaying.


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Old 12-17-2015, 12:52 PM   #60
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Well you may have been getting 5% interest but your mortgage was probably 3-4% higher.
I rented so I didn't have to worry about that, but I was looking for a house to buy, and I do remember the interest rate being much higher then (Glad I didn't buy, since it was right before the housing bust!) I did buy a house in 1990 or 1991 (can't remember which year) but the mortgage rate was around 10%. WOAH!!
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