BUM
Thinks s/he gets paid by the post
ESRBob said:
Thats news to me. I thought the minimum was 2 (in NY). I'll check it out.
Any suggestions for improving Work Less Live More?
- Thread starter ESRBob
- Start date
Thats news to me. I thought the minimum was 2 (in NY). I'll check it out.
Ed_The_Gypsy
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Bob,
I would love to see a discusion of how to avoid the tax trap that Scott Burns wrote about, whereby extra income (including from tax-sheltered accounts) while taking SS results in up to a 50% marginal tax rate at relatively low incomes.
There aren't many options, especially when it is late in the game, but there are strategies that can help--especially if you start early. Nords explained his approach to me, involving converting tax-protected accounts to Roths bit by bit. It helps to have investments outside of tax-protected accounts. (Oh, darn.)
Thanks.
Ed
I would love to see a discusion of how to avoid the tax trap that Scott Burns wrote about, whereby extra income (including from tax-sheltered accounts) while taking SS results in up to a 50% marginal tax rate at relatively low incomes.
There aren't many options, especially when it is late in the game, but there are strategies that can help--especially if you start early. Nords explained his approach to me, involving converting tax-protected accounts to Roths bit by bit. It helps to have investments outside of tax-protected accounts. (Oh, darn.)
Thanks.
Ed
calmloki
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
modhatter said:
YEAH! What you said! There has to be another option than the tired old 1031 exchange, keep babysitting the tenants, and pass on the stepped up basis to your heirs advice. Dammit - I want to spend that which our efforts have earned us and not be the classic 72 years old landlord.
I think the private HSA suggested by Peaceful Warrior in another thread bears consideration in addressing the health insurance issue, especially if you are healthy now and your employer will pay you some nominal amount for waiving insurance. High deductible HSAs are pretty inexpensive --the cost may actually be very similar to employer sponsored group coverage for many, and are a way to build a sizeable pre-tax healthcare emergency fund as well as assure yourself of an individual guaranteed renewable policy that you can take with you. They have the potential to make the health care issue moot for many. Tracy
p.s. really enjoyed your book!
p.s. really enjoyed your book!
BUM said:
Yeah, had a NY broker tell me this last week, and I remembered we bought one for an employee of a nonprofit a few years back, although there were other employees in the organization, just none wanting insurance.
Also, I think the overstated "safe 4% withdrawel rate" needs some updating. I have read considerable articles and studies lately that point to a lower withdrawel rate today, based on current stock market evaluations and expected returns for the next decade.
They feel the 4% will not apply for most folks going foward. Some of the articles did mention that the founder of this board was not in agreement with these studies. But I found the articles logical, though I am by no means an expert in the subject.
They feel the 4% will not apply for most folks going foward. Some of the articles did mention that the founder of this board was not in agreement with these studies. But I found the articles logical, though I am by no means an expert in the subject.
Rita, I love Ferri's book -- it came out after Work Less Live More went to press, but thanks for the reminder and it will go in the resources for that investing chapter. Just curious, though, where you saw disagreement between what I had been saying -- I'd like to look more deeply into that area and make sure I haven't unintentionally left something out etc.Gotadimple said:
thx!
Gotadimple
Thinks s/he gets paid by the post
- Joined
- Feb 17, 2007
- Messages
- 2,616
ESRBob said:
Bob,
I think the difference between WLLM and Ferri is in the details. Your book covers a very broad range of subjects. The Ferri book is focused on asset allocation alone and so he provides a more in depth discussion of investing in each asset class (and sub asset class) type. There are differences in the design of asset allocation in Rational Investing and the asset allocation design he suggests.
On page 40, you summarize Rational Investing as ". . . simple, requiring little time or emotional effort." Ferri doesn't disagree with the notion of low correlation asset allocation. The contradiction in Ferri's book is the notion that ". . .it is impossible to design a portfolio that completely neutralizes risk during every market cycle." (p-72).
MPT is a deep subject and you provide a very good overview to the reader, but, you also cover a lot of other subjects to help one consider all the factors of FIRE.
As, you say this is a new book since yours was published.
He has a separate discussion on behavioral finance (Chapter 13 p 243ff) that provides a good discussion of risk tolerance and risk avoidance. Rational Investing, in my view, is about risk avoidance (which is a good thing
). Risk tolerance is a different issue -- he points out that tolerance is what drives decision-making, and even though there is a method for investing to reduce risk, each person's tolerance level could push them to decisions that affect the portfolio outcome adversely.See pp 246-247 where a study looked at the impact of risk tolerance on investors using asset allocation strategies. "It is hard for investors to sell what makes them happy and buy more of what makes them sad, especially during a deep bear market when everyone is gloomy." He concludes you need to understand your tolerance level. That's not a challenge to Rational Investing -- just an add-on that you might want to discuss.
-- Rita
Rita,
Thanks much for the objective comparison -- yes, I see and agree with what you've said here, pretty much The way I look at it, Rational Investing is consistent with Ferri's approach, and that if someone were interested in learning more after reading WLLM, Ferri's would be first book I wold point people to. Even though Bernstein kind of helped me put all the pieces together initially, I think Ferri's book is clearer and frankly better edited, so that is now where I'm pointing people, now that it's out. The differences you point out are nuances or matters of degree or depth, but not of philosphy or even academic foundation.
My only quibble is that I certainly would not ever want to suggest that Rational Investing could eliminate risk 100%. That is impossible for any investing approach, at least if you want to have a real return that you could live on. (all I-bonds might come close to 100% safe, but would give you a 2% withdrawal rate). I'll try to make that clearer next time around, as I wouldn't want to leave people with the wrong impression. Eliminate risk of underperforming the market -- yes, OK, RI can do that. But the market itself goes all over the place, so there is always going to be variation in returns.
Risk tolerance is an important subject -- glad Ferri goes into that in some depth. It is the psychological battle -- that is where the whole thing can be lost. Tto keep you staying the course with an investing strategy during the tough times, and not panicking and doing bad things when the market starts doing its roller coaster impersonations.
Thanks much for the objective comparison -- yes, I see and agree with what you've said here, pretty much The way I look at it, Rational Investing is consistent with Ferri's approach, and that if someone were interested in learning more after reading WLLM, Ferri's would be first book I wold point people to. Even though Bernstein kind of helped me put all the pieces together initially, I think Ferri's book is clearer and frankly better edited, so that is now where I'm pointing people, now that it's out. The differences you point out are nuances or matters of degree or depth, but not of philosphy or even academic foundation.
My only quibble is that I certainly would not ever want to suggest that Rational Investing could eliminate risk 100%. That is impossible for any investing approach, at least if you want to have a real return that you could live on. (all I-bonds might come close to 100% safe, but would give you a 2% withdrawal rate). I'll try to make that clearer next time around, as I wouldn't want to leave people with the wrong impression. Eliminate risk of underperforming the market -- yes, OK, RI can do that. But the market itself goes all over the place, so there is always going to be variation in returns.
Risk tolerance is an important subject -- glad Ferri goes into that in some depth. It is the psychological battle -- that is where the whole thing can be lost. Tto keep you staying the course with an investing strategy during the tough times, and not panicking and doing bad things when the market starts doing its roller coaster impersonations.
