Join Early Retirement Today
Reply
 
Thread Tools Display Modes
Old 07-23-2022, 02:07 PM   #61
Thinks s/he gets paid by the post
 
Join Date: Dec 2017
Posts: 1,593
Quote:
Originally Posted by youbet View Post
Actually Vanguard does NOT do what gayl requested. No broker does. It's not possible.

As far as the things you mention Vanguard doing, Schwab does those too. I think it's pretty universal among the various brokerage houses.
MIL is signed up for Vanguard's service. The idea is that they look at the previous year end balance and sell/transfer tIRA sufficient to cover RMD every year in early December. I'll check their math for the initial year but then it should be set and forget if all goes well
RetMD21 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 07-23-2022, 02:16 PM   #62
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RunningBum's Avatar
 
Join Date: Jun 2007
Posts: 13,202
Quote:
Originally Posted by sengsational View Post
And just left it in a money market account?
That question applies equally to those who decided against investing in a bond fund or individual bonds in times of poor bond rates vs. other savings rates so I'm not sure why I'm singled out. But to answer your question, most of it went into TIPS funds, which did a lot better than bond funds in 2021. Not so good in 2022, but still a little better than most bond funds. Leaving it in a money market would have been a reasonable thing to do as well, rather than locking into a very low rate with an individual bond or facing losses in a bond fund.
RunningBum is offline   Reply With Quote
Old 07-23-2022, 07:04 PM   #63
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,263
Quote:
Originally Posted by RetMD21 View Post
MIL is signed up for Vanguard's service. The idea is that they look at the previous year end balance and sell/transfer tIRA sufficient to cover RMD every year in early December. I'll check their math for the initial year but then it should be set and forget if all goes well
I think you can do this for a mutual fund account but not for a brokerage account. When DM had a mutual fund account tIRA her RMD was automatically processed on her birthday (I set it up that way), taxes withheld and the net withdrawals deposited into her taxable mutual fund account.

We converted her tIRA to a brokerage account so we could buy brokered CDs and from what I have looked at we can't do that anymore.

To add insult to injury, the bank account that was linked to her mutual fund tIRA for years needs to be reauthorized.... getting sick of Vanguard's red tape.

Quote:
This bank account can't be used until it's authorized for redemptions. To authorize this bank, print our Bank Transfer Service Form and return it to Vanguard with signatures notarized by a notary public.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is offline   Reply With Quote
Old 07-24-2022, 04:12 PM   #64
Thinks s/he gets paid by the post
 
Join Date: Dec 2017
Posts: 1,593
Quote:
Originally Posted by pb4uski View Post
I think you can do this for a mutual fund account but not for a brokerage account. When DM had a mutual fund account tIRA her RMD was automatically processed on her birthday (I set it up that way), taxes withheld and the net withdrawals deposited into her taxable mutual fund account.

We converted her tIRA to a brokerage account so we could buy brokered CDs and from what I have looked at we can't do that anymore.

To add insult to injury, the bank account that was linked to her mutual fund tIRA for years needs to be reauthorized.... getting sick of Vanguard's red tape.
I don't get it but MIL can do this from her tIRA brokerage account. Her CCRC set up the notarization so that was easy. I have brokered CD's on my tIRA list of options although I haven't actually tried to buy any
RetMD21 is offline   Reply With Quote
Old 07-25-2022, 10:46 AM   #65
Thinks s/he gets paid by the post
gayl's Avatar
 
Join Date: Jun 2004
Location: Diablo Valley (SF Bay Area)
Posts: 2,705
Quote:
Originally Posted by Freedom56 View Post
An individual bond investor would not likely get themselves into a situation where they buy low coupon long duration notes. Would any sane individual bond investor lock of they money in a five year note from Apple with a coupon of 0.55% or just stay in cash/money markets at .45%? The answer is no, they would stay in cash. However bond funds are investing/losing "other peoples money" and really don't care. So your argument makes no sense. Bond funds don't automatically sell their low coupon debt and exchange it for higher coupon debt. That's not how passive ETFs operate.
Not being a bond investor, I decided to just stick in a 30 day CD @ 1.75% while I figure it out. Most of it sorted thru, still sorting thru individual bond VS bond fund to smooth out risk VS just more SCHB
gayl is offline   Reply With Quote
Old 07-25-2022, 01:34 PM   #66
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Aug 2004
Location: Laurel, MD
Posts: 8,309
Quote:
Originally Posted by gayl View Post
Not being a bond investor, I decided to just stick in a 30 day CD @ 1.75% while I figure it out. Most of it sorted thru, still sorting thru individual bond VS bond fund to smooth out risk VS just more SCHB


Seems like a great place to park while you figure it out.
__________________
...with no reasonable expectation for ER, I'm just here auditing the AP class.Retired 8/1/15.
jazz4cash is offline   Reply With Quote
Old 07-26-2022, 06:51 AM   #67
Recycles dryer sheets
 
Join Date: Sep 2021
Posts: 196
Quote:
Originally Posted by gayl View Post
These $$s are just until I need to take RMDs in 1-2 yrs depending on Secure 2.0
1st, I have only skimmed this thread, but this jumped out. I had been thinking the decision between individual bonds or funds to be a solution in search of a problem. But for this length of time? Throw CDs into the mix & the end result likely won't be more than 1-5 basis points different anyway (imho). Sounds like your debate is which will outperform over next 1-2 years -- bonds or equities? Keeping in mind the deep-pocketed fed has tipped their hand...

But I can't help but be curious as to your plan when RMDs start? Why will you be changing then & in what direction?
all4j is offline   Reply With Quote
Old 07-26-2022, 07:39 AM   #68
Thinks s/he gets paid by the post
 
Join Date: Jan 2013
Location: SoCal, Lausanne
Posts: 4,408
Quote:
Originally Posted by gayl View Post
Not being a bond investor, I decided to just stick in a 30 day CD @ 1.75% while I figure it out. Most of it sorted thru, still sorting thru individual bond VS bond fund to smooth out risk VS just more SCHB
You have many options for fixed income - CDs, Treasuries, Individual bonds, Agency notes etc... It's up to you to decide what's suitable for you. They will all return your capital at maturity. Bond funds will not. What people don't get is that the low fees of passive bond funds are an illusion. Funds do not disclose the trading fees when they buy and sell bonds. That is where the real theft occurs. Take a look at daily trades of widely held bonds and you will see some wide disparities in prices paid. The disparities are not happening by accident.
Freedom56 is offline   Reply With Quote
Old 07-26-2022, 06:56 PM   #69
Full time employment: Posting here.
 
Join Date: Oct 2015
Posts: 900
Quick read thru the threads... smarter people than me here, but as a newbie retiree, my MO changed. I went from pure TR with stock/bond ETFs to more of a bucket guy. I retired at the beginning of 2022 with a low 2% WR and made a strategic decision to be safe with 10 yrs of $$ and let the rest run with equities (effectively choosing to "play the game" for legacy reasons). This had me taking initially 5 years of spend and laddering it with individual bonds. I left 6-10 yrs in short/intermediate ETFs (may deploy in individual bonds??). This approach seems to appease my conservative and greedy nature. IN retirement, I do believe there is a stronger argument for some level of laddered bonds... but perhaps that's just me.
DawgMan is offline   Reply With Quote
Old 07-26-2022, 07:19 PM   #70
Thinks s/he gets paid by the post
gayl's Avatar
 
Join Date: Jun 2004
Location: Diablo Valley (SF Bay Area)
Posts: 2,705
Quote:
Originally Posted by all4j View Post
1st, I have only skimmed this thread, but this jumped out. I had been thinking the decision between individual bonds or funds to be a solution in search of a problem. But for this length of time? Throw CDs into the mix & the end result likely won't be more than 1-5 basis points different anyway (imho). Sounds like your debate is which will outperform over next 1-2 years -- bonds or equities? Keeping in mind the deep-pocketed fed has tipped their hand...



But I can't help but be curious as to your plan when RMDs start? Why will you be changing then & in what direction?
Yr 1 RMD: 60% SCHB to brokerage acct / 40% fixed income (75% of this to IRS / 25% to FTB). Adjust yr 2 as needed
gayl is offline   Reply With Quote
Old 07-26-2022, 07:53 PM   #71
Thinks s/he gets paid by the post
 
Join Date: Dec 2017
Posts: 1,593
Quote:
Originally Posted by DawgMan View Post
Quick read thru the threads... smarter people than me here, but as a newbie retiree, my MO changed. I went from pure TR with stock/bond ETFs to more of a bucket guy. I retired at the beginning of 2022 with a low 2% WR and made a strategic decision to be safe with 10 yrs of $$ and let the rest run with equities (effectively choosing to "play the game" for legacy reasons). This had me taking initially 5 years of spend and laddering it with individual bonds. I left 6-10 yrs in short/intermediate ETFs (may deploy in individual bonds??). This approach seems to appease my conservative and greedy nature. IN retirement, I do believe there is a stronger argument for some level of laddered bonds... but perhaps that's just me.
Makes sense to me. A 2% WR with a 60/40 portfolio means you have 20 years of spending in fixed income, right? I am working toward a 10 year tips ladder for bonds.
RetMD21 is offline   Reply With Quote
Old 07-27-2022, 05:56 AM   #72
Full time employment: Posting here.
 
Join Date: Oct 2015
Posts: 900
Quote:
Originally Posted by RetMD21 View Post
Makes sense to me. A 2% WR with a 60/40 portfolio means you have 20 years of spending in fixed income, right?
Well, my revised strategy has me holding no more than 10 years in fixed so that skews my AA to a higher stock position. As mentioned, I could choose the more conservative approach of reducing my stock allocation and "stop playing", but I choose to "keep playing" as I feel 10 years worth of highly discretionary spend (along with levers to pull to reduce spending if needed) is enough to ride out most bear markets.
DawgMan is offline   Reply With Quote
Old 07-27-2022, 08:29 AM   #73
Dryer sheet wannabe
 
Join Date: Feb 2013
Posts: 23
Quote:
Originally Posted by Freedom56 View Post
You have many options for fixed income - CDs, Treasuries, Individual bonds, Agency notes etc... It's up to you to decide what's suitable for you. They will all return your capital at maturity. Bond funds will not. What people don't get is that the low fees of passive bond funds are an illusion. Funds do not disclose the trading fees when they buy and sell bonds. That is where the real theft occurs. Take a look at daily trades of widely held bonds and you will see some wide disparities in prices paid. The disparities are not happening by accident.
Why would you invest in some of the corporate notes you've mentioned at a 3.5% yield (Credit Suisse, Wells Fargo, etc.), when a 6-month T-bill is trading around 3%? It's ~15% more yield, but more credit risk and twice the duration. I'm not disagreeing with you. I'm just curious how you think about this.
BackcountryMe is offline   Reply With Quote
Old 07-27-2022, 11:00 AM   #74
Thinks s/he gets paid by the post
 
Join Date: Jan 2013
Location: SoCal, Lausanne
Posts: 4,408
Quote:
Originally Posted by BackcountryMe View Post
Why would you invest in some of the corporate notes you've mentioned at a 3.5% yield (Credit Suisse, Wells Fargo, etc.), when a 6-month T-bill is trading around 3%? It's ~15% more yield, but more credit risk and twice the duration. I'm not disagreeing with you. I'm just curious how you think about this.
I'm not aware of any 3.5% notes. There was a 3.75% one year note form Citigroup that pays monthly which was good alternative to a one year CD at the time. However before buying a high grade corporate note, I always compare yield with CDs, agency, and treasuries. The corporate notes mentioned and that I bought were high grade notes at the following yields:

CIBC 42 month - 4.47%
Bank of Montreal 36 month - 4.5%
TD Bank 5 year - 5%
Citigroup 5 Year - 5%
Wells Fargo 3 year - 4.5%

All the above notes are safe alternatives to CDs and treasuries. However the bulk of my corporate note buys this year were from the secondary market and were high yield and lower investment grade with YTMs in some cases over 9%. However, I won't put 100% of my capital into high yield. I don't invest in equities at all and high yield notes in my mind are a safer bet than the casino mentality of the stock market.
Freedom56 is offline   Reply With Quote
Old 07-27-2022, 12:42 PM   #75
Recycles dryer sheets
 
Join Date: Sep 2021
Posts: 196
Quote:
Originally Posted by gayl View Post
Yr 1 RMD: 60% SCHB to brokerage acct / 40% fixed income (75% of this to IRS / 25% to FTB). Adjust yr 2 as needed
Thanks. I think I must have misunderstood the post I cited earlier & perhaps muddied the water. I thought previous post was saying you were considering whether to use individual bonds or a bond fund until RMD time when you would change to something else. Usually when selecting "bonds" (or their alternative, I just don't care for the fixed income terminology), someone picks duration/maturity based on their need. That is complicated now due to anticipated frequent rate shifts. So, one has to balance which risk is more important to them.

I think in your case I'd try to not overthink it & build a ladder of some sorts; but not one that stops with year 1 rmd.

btw, I didn't pick up on what "FTB" is...

Good luck & whatever you decide, don't look back!
all4j is offline   Reply With Quote
Old 07-27-2022, 02:27 PM   #76
Thinks s/he gets paid by the post
gayl's Avatar
 
Join Date: Jun 2004
Location: Diablo Valley (SF Bay Area)
Posts: 2,705
Quote:
Originally Posted by all4j View Post
Thanks. I think I must have misunderstood the post I cited earlier & perhaps muddied the water. I thought previous post was saying you were considering whether to use individual bonds or a bond fund until RMD time when you would change to something else. Usually when selecting "bonds" (or their alternative, I just don't care for the fixed income terminology), someone picks duration/maturity based on their need. That is complicated now due to anticipated frequent rate shifts. So, one has to balance which risk is more important to them.



I think in your case I'd try to not overthink it & build a ladder of some sorts; but not one that stops with year 1 rmd.



btw, I didn't pick up on what "FTB" is...



Good luck & whatever you decide, don't look back!
FTB = California state taxes. Ugh.
gayl is offline   Reply With Quote
Old 07-27-2022, 02:54 PM   #77
Thinks s/he gets paid by the post
 
Join Date: Dec 2017
Posts: 1,593
Quote:
Originally Posted by DawgMan View Post
Well, my revised strategy has me holding no more than 10 years in fixed so that skews my AA to a higher stock position. As mentioned, I could choose the more conservative approach of reducing my stock allocation and "stop playing", but I choose to "keep playing" as I feel 10 years worth of highly discretionary spend (along with levers to pull to reduce spending if needed) is enough to ride out most bear markets.
I think when you are "overfunded" a large range of asset allocations will work
RetMD21 is offline   Reply With Quote
Old 07-27-2022, 05:47 PM   #78
Dryer sheet wannabe
 
Join Date: Feb 2013
Posts: 23
Quote:
Originally Posted by Freedom56 View Post
I'm not aware of any 3.5% notes. There was a 3.75% one year note form Citigroup that pays monthly which was good alternative to a one year CD at the time. However before buying a high grade corporate note, I always compare yield with CDs, agency, and treasuries. The corporate notes mentioned and that I bought were high grade notes at the following yields:

CIBC 42 month - 4.47%
Bank of Montreal 36 month - 4.5%
TD Bank 5 year - 5%
Citigroup 5 Year - 5%
Wells Fargo 3 year - 4.5%

All the above notes are safe alternatives to CDs and treasuries. However the bulk of my corporate note buys this year were from the secondary market and were high yield and lower investment grade with YTMs in some cases over 9%. However, I won't put 100% of my capital into high yield. I don't invest in equities at all and high yield notes in my mind are a safer bet than the casino mentality of the stock market.
Thanks for clarifying. I appreciate your perspective. Thanks to you, I pulled out my old copy of Graham's Security Analysis and feverishly re-read the chapters on fixed income investing. I'm not sure I'd buy these in a taxable account yet, but it seems like a no-brainer to replace my VBTLX/BND position with individual bonds. If we've learned anything, those mega banks are too big to fail (and far safer than they once were). I'm not sure I'd go five years out on the curve, but it's nice to be able to earn some decent yield finally.

The only reason to hold BND is if you think the Fed will go dovish again and you don't want to hassle of buying individual notes.
BackcountryMe is offline   Reply With Quote
Old 07-27-2022, 06:18 PM   #79
Thinks s/he gets paid by the post
 
Join Date: Jul 2013
Posts: 1,876
Quote:
Originally Posted by BackcountryMe View Post
The only reason to hold BND is if you think the Fed will go dovish again and you don't want to hassle of buying individual notes.
One doesn't hold total bond funds for appreciation of the NAV. They are held for the dividend.
mrfeh is offline   Reply With Quote
Old 07-27-2022, 06:25 PM   #80
Dryer sheet wannabe
 
Join Date: Feb 2013
Posts: 23
Quote:
Originally Posted by mrfeh View Post
One doesn't hold total bond funds for appreciation of the NAV. They are held for the dividend.
That's so 2006!

The reality is that BND pays almost nothing and with a duration of 8+, you're more likely to get your tushy handed to you in capital losses than you are to make a real return through interest income.
BackcountryMe is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
60% Total Stock Fund and 40% Total Bond Fund or Balanced Mutual Fund? Digital Nomad FIRE and Money 48 10-27-2021 03:48 PM
Focused Bond, Bond Mutual Fund, And Bond ETF Questions clobber FIRE and Money 15 05-10-2020 12:10 PM
Deciding Between Intermediate Bond Fund and Stable Value Fund sengsational FIRE and Money 12 06-13-2013 08:04 PM
Prime Money Market Fund vs. Total Bond Fund two4theroad FIRE and Money 2 04-10-2008 12:46 PM
Bond Fund and Money Market Fund Tax Treatment Question terminator FIRE and Money 4 03-01-2007 06:56 AM

» Quick Links

 
All times are GMT -6. The time now is 01:56 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.