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Everything posted by EdLaFave

  1. Whyme is correct, the resolution submitted to Congress does not have language about people unwilling to work. It isn’t clear to me if it was in an initial draft or not. It is also worth noting this is a non-binding resolution, not a law. It is more of a statement of ideals and goals. However, if you’re willing to explore ideas you may not initially feel comfortable with then we can have an interesting discussion. A universal basic income would have the government cut everybody a check, giving economic security to EVERYBODY. Very serious people from diverse backgrounds like Thomas Paine, Milton Friedman (libertarian Nobel laureate), Dr. King, etc have all supported UBI. Experiments with the UBI have been conducted around the world (Finland just got some new data on it that I’m planning to read soon). Conservatives like it because it can replace hundreds of social safety net programs. That reduces government bureaucracy and the paternalistic nature of telling people exactly what to spend the money on. It gives individuals more control to decide what is best for them. Technologists like it because we believe there is a very real possibility that AI and automation will continue to put more and more people out of work and if we don’t build some kind of bridge to a new economic system then we will all be in trouble. We also believe that the long term goal for humanity should be to be happy and pursue whatever interests us even if it isn’t profitable. Liberals like it for obvious reasons, it could eradicate poverty. One of the biggest fears is that people will simply stop working, but in the experiments that have been done, the only reduction in work is due to people going to school. When we think about many of the greatest scientific contributions we depend on as a species...they came from very wealthy people who had no economic reason to do the work, but they had the leisure and the interest to pursue it. One of the biggest things that bothers me is thinking about how many geniuses were smothered by poverty, never able to think about more than survival and we all missed out on whatever breakthrough they would have contributed to humanity. ...I could keep going and going, but we will see what your level of interest is.
  2. 16k in 1988 is equivalent to 34k in 2018 according to the first inflation calculator google sent me to. Teachers here in Orange County (Fl) start at 40k now, which is absolutely enough for a dignified existence. You should be able to save for retirement on that salary. I’d be interested to look over data on how teacher salaries have changed over time (adjusting for inflation). Since the financial collapse I feel like I’ve heard a lot about frozen salaries...but I don’t really know since I’ve never studied it.
  3. I know I spend 4.5k per year on food for every meal and I suspect I’d have trouble saving more than 2k if I were to cook every meal myself. You know I am a huge proponent of minimalism so everything you’re saying has value. Any discussion I have with an individual would include this message of personal responsibility because it is all they can control. However, I’ve see the data for income distribution. What we have here is fundamentally a structural problem that cannot be solved by individuals cutting spending. In fact, I wonder how much worse things would get if they all collectively cut spending. So I can’t spend much energy going after individuals’ decisions when it is the structure causing most of the issues.
  4. I don’t have the number, but somebody on this board does (just can’t remember who).
  5. Adjusted for inflation? I support minimalism but... I never cook and I spend roughly 4.5k on food per year. I don’t think saving an extra 2k per year is going to make or break anything. I do not think Gen or older generations were any better with finances than millennials. However older generations certainly had access to cheaper education and depending on how old we’re talking about, they worked when wages hadn’t yet stagnated.
  6. Maybe everybody would suck equally given enough time and power, but I struggle to think of female dominated groups that have lost their minds the way men have. Male dominated groups are easy to name: war prone governments, the Catholic Church, male sports (Penn State for instance), financial industry, frats, and so on. I’m way off topic though. Sorry. I guess my point is to try to judge Vanguard (or anybody) based on their actions rather than our sentimental notions. I’m still a big fan of Vanguard, but I don’t trust them the way I used to. I certainly don’t trust them the way I would trust Bogle.
  7. 403b Your best option is Security Benefit’s NEA DirectInvest, documented here. Lincoln Investment also offers a self directed plan in some areas that is pretty good. Aspire is probably your third best choice, documented here. Plan Member Serivces has a direct plan that is probably your fourth best option, documented here. TIAA likely comes in fifth, but your district may have negotiated a better deal than mine, which is documented here. 457b You should definitely find out if your state has sponsored a 457b, they’re often very good. Unfortunately, NEA DirectInvest isn’t offered as a 457b and you should see if Lincoln’s direct plan is offered as a 457b. Aside from that your best options are Aspire followed by PlanMember’s direct plan. TIAA I think they’re an unethical company that is living off a past reputation of a company that is fundamentally different than they are today. I would still invest with them if they offered you the lowest expenses...but they don’t. People on this form will still speak highly of them. I think that is sentimental. Apparently they sometimes offer a guaranteed 3% return with minimal/no fees that is a good alternative to holding bonds, but that isn’t available in my district.
  8. You can use portfoliovisualizer.com to back test portfolios to get an idea. If you invested $70,000 in 2009 and you put it all in Vanguard’s Total Bond Market (a very “safe” investment) then by 2019 you’d have $99,008. So by any standards, and not to make you feel bad (it’s in the past), you’ve seen terrible results. Yes, those three Vanguard funds in the screen capture are the best/cheapest way to build a fully diversified portfolio. Make sure you read the Investing 101 page, it’ll help you get an idea of how risky your portfolio should be.
  9. Ignore the TPA they have a conflict of interest. When I was pushing for reform they indirectly threatened me with legal action for explaining the exploítive plans to teachers. It is in your best interest to get your money into one of the top notch plans. No amount of spin can change math. As far as 70k becoming 90k over a decade long bull market...that is abysmal. Just how abysmal depends on what assets you were invested in and whether it is appropriate for your personal risk tolerance.
  10. I’m an atheist now, but I was raised Catholic for many years. The first story that broke was quite a surprise to me too, but now I expect it. Maybe it is an oversimplification and I know both genders are capable of awful behavior, but I expect really bad news from any powerful organization run entirely or predominantly by men. Diversity and distribution of power are really great things to have. With respect to Vanguard, literally 100% of my investments are with them. However, I plan to evalute Fidelity’s ZERO funds in a year or so and I will switch if they are as great as they look.
  11. Thanks Tony, I almost couldn’t believe it when his request to connect showed up.
  12. Remember when Vanguard fought against the fiduciary rule? I do. I think it is important to put ideals on a pedestal rather than the people or organizations that we think/hope represent those ideals. Otherwise we're prone to blind loyalty that ultimately hurts people (just look at how the Catholic church continues to make headlines).
  13. To add to what Moe said, this is my horror story. You’ll have a much easier time of it because you can use us as a resource. You’ll get it done.
  14. Adam Bernard has the fancy title of "Vice President, Southeast Region of AXA Advisors, District Manager" and he decided to reach out to me on LinkedIn with the following message: Perhaps a better person than I am would have had more restraint or would have had a better way with words, but I couldn't help myself from replying: To which our good friend Adam could only reply: What folks like Adam do and certainly what companies like AXA do should be illegal. A thief who is direct about their actions gets a lengthy prison sentence for stealing far less, but because these people have a complicated and indirect con, they get to steal without consequence.
  15. Read about Security Benefit’s NEA DirectInvest here. Read about Aspire here. NEA DirectInvest is the superior choice between the two because Aspire adds on an unnecessary 0.15% yearly fee. As others have said, one of the Lincolns offers a self directed program. I can’t remember how it stacks up to the two previously mentioned plans, but it is definitely worth your time to investigate. Also worth your time...list all of your approved vendors in this thread and use google to see if your state has a state sponsored 457b available for you to use. I have no idea what it means to get Aspire through AXA. I may be ignorant, but there is a chance your TPA is confused and/or you’re having a miscommunication. Unless your district is drastically different than mine, remember the TPA isn’t in charge. The TPA is basically a contractor used by and subservient to the district. So if you want change, push the the actual decision makers. In my blog I wrote about the reforms I pushed for...if you do the same, you’ll definitely want to get both Vanguard and Fidelity approved because they’re the best. You can read about the five best plans I’ve documented here Everything Tony mentioned with regards to this question is good stuff, but Inwanted to add one thought. Yes, you may be charged surrender fees to leave AXA and you should fully understand how they work...but in every case I’ve studied it is worth it to pay the surrender fee because the annual fees of staying there are even worse. I wonder why they don’t increase the surrender fees even more honestly.
  16. I haven’t followed this thread too closely so I apologize if I’m missing key details, but I’d be willing to pay up to $0 to buy and sell mutual funds 😀
  17. Folks with pensions are well served to consider how the pension income and social security will affect their tax brackets and their Traditional/Roth mix. To the extent that people take that great advice, this article is wonderful. To the extent that people walk away thinking Roths are clearly the way to go, this article isn't so awesome. The strength of this statement isn't in line with the rigor of the article. The article relied on an entirely hypothetical scenario rather than real world data. They presented us with a hypothetical person who spends well under 90k per year (salary is 90k, they're investing money, and they're paying taxes) and we're told they'll earn 80k through their pension and social security. Well of course that person wouldn't see the benefit (and will likely be hurt) of a traditional retirement account! You know what else this hypothetical person was hurt by? Working much longer than they needed to and/or living most of their life with a lower standard of living than they could have afforded...and apparently will afford in retirement (assuming they're healthy enough to). Obviously I care about math as we all should 🙂 . Roth investments are superior when: 1) You are going to have more income in retirement than you did when working. Everybody has different goals, but I think most people who could potentially fall into this scenario would be happy to avoid it by retiring earlier and/or increasing their standard of living during their working years. 2) You are currently in an artificially low tax bracket. Maybe you're a doctor in residency, maybe you worked a couple months of the year before taking a break from working, maybe you're a poor teacher getting ready to marry a CEO, etc. 3) You are willing to bet on or hedge against much higher taxes by the time you hit retirement. I understand there is a psychological effect of paying taxes at the end, but as we both know a Roth doesn't avoid taxes...it saddles you with a likely larger tax bill every year leading up to retirement. Any money you take out of a traditional retirement account will be treated as ordinary income. I'd have to google the ins and outs of a 403b, but I figured I'd point this out... With IRAs at least, you can retire as early as you want and access the money WITHOUT paying the penalty. I can't remember the section of the tax code, but I think you basically start taking RMDs early. So the odds are you don't have to rely on your taxable account to fully fund an early retirement. I think can probably use your 403b in early retirement to fill up the lower tax brackets (and maybe even convert some of it to a Roth). I'd modify that slightly... In an ideal world we'd save exactly the right amount in a traditional account to fill up our future tax brackets that are less than or equal to our current top marginal tax bracket and then we'd put everything else in a Roth account. As much as my Republican friends and the ghost of Reagan would vehemently disagree, I'm with Steve on this one. Nobody wants to pay money and nobody wants to waste money, but In my mind at least, tax day is the true celebration of America (not the 4th). Nothing is more patriotic than getting hundreds of millions of people on the same page to pool our resources for the common good because without it we wouldn't have a nation. I don't like that this part of civic life is viewed as awful.
  18. I don’t think this is fair and I don’t think it is the author’s intent. The article was pretty explicit about two things 1) There is evidence that rebalancing between stocks and bonds reduces returns because it reduces risk. 2) The trade off between risk/returns means the decision to rebalance is appropriate for a subset of investors. They seem to suggest that choosing not to rebalance is appropriate for a subset of people. I’d argue if you have the risk appetite for that then you should choose a higher stock allocation from the beginning. I don’t think allowing asset allocation drift is ideal for anybody. I don’t know how you define harm. I define harm as decreasing the odds my portfolio will sustain my retirement, which is closely tied to decreasing expected returns. Shifting my portfolio to be more conservative would do just that. As I’ve said if I were to reduce the aggressiveness of my portfolio then it would require some combination of: 1) Working much longer to build up a much larger portfolio that can sustain the lower returns a conservative portfolio will generate. 2) Reduce my standard of living to a much lower level to get by with a lower performing portfolio. Both of those are huge harms. If I wasn’t willing to accept one or both of them then I’d have to accept the much greater harm that is the risk of running out of money before I die. That isn’t true. I’m not one of those people and going more conservative would harm me as described above.
  19. Rebalancing between stocks and bonds decreases expected returns. When people say it allows them to sell high and buy low, they are incorrectly perpetuating a falsehood that rebalancing increases returns. It does not.
  20. Owning just three stocks (all in the same industry no less!) is giving me anxiety just reading about it. As a general rule of thumb, total market index funds are the objectively superior option. You’re in an interesting moral dilemma. On one hand this money belongs to your relative and they ought to have autonomy over their money. On the other hand their mental illness apparently prevents them from making sound decisions, you’re charged with making the best decisions for them, and I don’t know about the rules, but maybe you’re even financially responsible for your relative if their wealth is exhausted. In my opinion, the responsibility you’ve assumed outweighs respecting your relative’s preference (if it even was a preference, it may have been sheer ignorance) for an unnecessarily dangerous investment strategy. In my opinion, you’d be acting in their best interest by transitioning to a fully diversified, low cost portfolio. If your relative’s mental illness didn’t deprive them of their ability to make sound decisions, then my opinion would be different. From a practical standpoint, I’ve never owned individual stocks. My first question is, what are the tax consequences from getting two million in cash due to an aqusition? Are there ways to mitigate what would appear to be a massive tax bill? When it comes to the remaining investments, are the capital gains so substantial that it would be prohibitively expensive to exchange those shares for a total market fund? I assume it is in a taxable account, but maybe not? At the very least the dividends could be redirected to total market funds. ...I’m sure there is a lot more to say, consider, and learn, but these were my first thoughts.
  21. My taxable account represents more than three quarters of my portfolio and keeping my asset allocation in line has been a breeze. I’ve never had to sell anything in my taxable account for the purposes of rebalancing. Using new money to purchase what I have too little of has been the main reason I’ve never had to sell and buy to rebalance. When my taxable account has too much of something, I’ll turn off dividend reinvestment and use that income to buy what I have too little of. When my portfolio becomes too large for these moderate adjustments to be 100% effective, I can do all of my rebalancing in my tax advantaged accounts (where unlike a taxable account selling doesn’t produce a tax bill). As a result neither my taxable account or my tax advantaged accounts will meet my asset allocation on their own, but collectively they will. That’s one of the reasons people shouldn’t think of each account as a mini-standalone portfolio, think of your portfolio as the cumulative result of each account you have.
  22. Rebalancing is absolutely the right thing to do. I want to be very clear about that. The two are related. Rebalancing returns you to your desired stock-bond split. I might agree with the first part, but there is some nuance worth noting. I argue that it isn’t possible to develop a strategy that allows you to buy low and sell high. Doing so would require short term predictive power and I argue that none of us have that. The only antidote to buying high and selling low is to embrace long term investing and try to adopt Buffett’s ideal holding period, which is forever. Some folks require a less risky portfolio to prevent them from making foolish decisions in a crash. To the extent that rebalancing returns an investor’s portfolio to their personal risk tolerance, rebalancing will help people avoid market timing and panic-selling and thus increase returns relative to the disastrous decisions they might have made. However, rebalancing does not help somebody buy low and sell high and it decreases expected returns if you’re rebalancing between stocks and bonds. This is exactly the correct way to view rebalancing. My views on this are more complicated. Let’s assume somebody is a cold blooded machine and they’ll never panic-sell in a crash. If that person is going to rely on a conservative portfolio to sustain them then they’ll require a much larger portfolio than they otherwise would have. That means they’ll have to work longer or accept a lower standard of living. I believe that would be a terrible decision for this hypothetical person. Let’s assume somebody is prone to panic-selling. The damage that person would do with a risky portfolio is orders of magnitude greater than the damage that a conservative portfolio does to their returns and the additional required years of working. Bonds are awesome for this person. In my view, bonds are purely a hedge against behavioral issues. An insurance policy against you burning your own house down. And bonds also buy somebody peace of mind if they’re the type to get anxious with volatility.
  23. I’m currently preoccupied with another task right now, but Google may turn up something. The research referenced in the article linked in this thread concluded that rebalancing lowered returns. I encourage everybody to fact check everything. However, I take this conclusion at face value because it seems so “obvious” to me. Stocks rise faster than bonds, which means most rebalancing events will reduce your stock allocation, which reduces expected future returns. Now for some asset allocations, it would not surprise me if rebalancing increases “risk adjusted returns” and for folks who already prefer those allocations, that is an awesome free lunch. However, even in the cases when/if risk adjusted returns are increased, I still expect total returns to be reduced. ...again fact check me, I’m basically 100% stock so I have no reason to be an expert on this issue.
  24. For reference, the US stock market as a whole was up 8.6% in January. The S&P500 had its best January since 1987. I was surprised by the rebound and I continue to be concerned about high valuations. The Schiller PE is back up to 29.75, which means stocks are rather expensive. ...of course that doesn’t impact my actions, I still dump every paycheck into stocks.
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