Defined Benefit Plan for Self Employed That sounds about right. I believe you could instead project a higher ROR and contribute less. You would still fund the pension plan up to the
IRS limit ($225K/year pension
@retirement). You would invest for higher returns and wouldn't even have to contribute as much to get the same level of benefits. But see below for risk.
Are you sure that you were being told that you should not invest for higher return, or did your actuaries say that they would use a lower rate of return for projections? They have to use a credible ROR for projections to determine the max you can contribute. The object is to reach the max permitted balance at retirement. The lower the assumed ROR, the more you can contribute, at least initially.
Regardless, the amount you can/must contribute is recalculated annually. If you project a low (but credible) ROR and perform better, your subsequent contributions will be reduced. If you project a higher (still credible) ROR and underperform, your subsequent min contribution requirements may be increased, possibly substantially.
I trust the actuaries explained to you how you are committing to maintaining high contribution levels for several
years (otherwise you risk seeing the IRS disqualify your plan).
Here's a 2016 guide from from Schwab with an example of someone age 55, planning to retire at age 65. (See p.3). Schwab also uses a low projected ROR (here, 3.98%). Note that because you're younger (presumably with more
years to retirement), all else being equal, you'd be able to contribute less than the $166K shown. So I'm curious where the $250K figure you gave came from.
https://www.schwab.com/public/file/P-1604569/SLS25840-05-ST.pdf
Defined Benefit Plan for Self Employed Hello,
I am self employed, and 50 years old. My business started picking up in the last two years and this year I will have significant cash flow which I want to put in a pre-tax account. I have heard that a defined benefit plan can help me contribute as much as $250,000 per year.
However, during the discussion with the actuarial firm, I was told that the investment return of the plan should be low or kept low. This prevents over funding the plan and sizable contributions can be made each year. If the investment returns are high, the size of the contributions can decrease.
Has anyone in this forum encountered this situation before? I am not sure it is wise to invest money at 3-5% growth rate when the market returns are higher.
Thanks.
Two Top Fixed-Income Portfolio Managers Exit Eaton Vance: Kathleen Gaffney & Henry Peabody: (EVBAX) I stayed with Dan Fuss when Kathleen Gaffney left her fund at Eaton Vance (glad I did). Her fund has all the potential to do really well with a small asset and the experience she acquired from Dan Fuss. Sadly this did not translated anywhere near that. Instead, EVBAX went thorough several years of under-performance trailing LSBDX as msf noted the "swinging for the fences" as shown in the volatility.
Two Top Fixed-Income Portfolio Managers Exit Eaton Vance: Kathleen Gaffney & Henry Peabody: (EVBAX) "compared to the flagship bond fund of the others." NEFZX? AUM $7.3B. LSBDX, $10.9B.
"'Dan Fuss pioneered the benchmark-agnostic, multisector approach to fixed-income that has defined the firm’s flagship Loomis Sayles Bond (LSBDX) since 1991." ... said Alfonzo Bruno, Manager Research Analyst at Morningstar.“
https://www.loomissayles.com/internet/InternetData.nsf/0/2F18CD9C1404261D852583F500624095/$FILE/MSTARAWARDSFORINVESTINGEXCELLENCE.pdfFWIW, over the past five
years (7/21/14 to 7/19/19) even NEFZX has outpaced EVABX, 9.21% annualized vs. 9.10%. LSBDX did better, at 11.32%. (It's still possible to coax this info out of M*, though not as easy as before.
As far as beating other funds for the first quarter of 2016 (one quarter, really?), I don't need M* to remind me that Gaffney went swinging for the fences. She was holding even more non-bond securities than LSBDX. For a short time it worked, until it didn't.
M*'s comments on her style: Concentrated bets on commodities have made for a wild ride.... The team ... often chooses to simultaneously invest in several correlated groups of assets .... As most commodity-related fare sold off in 2015, for example, the fund had nearly 20% [equity/bond] exposure ... in addition to 15% of its currency exposure in commodity-related currencies.... This explains the fund’s last place finish within the multisector bond Morningstar Category that year, when it trailed ... by 15 percentage points. ... the same profile ignited the fund’s strong subsequent rally."
prsnx TRP global dollar-hedged bonds Sold out of my position in June for the above reasons. Too much risk for the payout. Purchased my state muni bond fund which pays a distribution rate of 2.83% at my tax level with a duration of 5 years. Sleep much better now.
prsnx TRP global dollar-hedged bonds Investing with TRP for bonds is a tough call. I’ve used Spectrum Income (RPSIX) as my primary bond fund at TRP for many years. It’s largest holding is PRCIX, but it also holds plenty of high yield, foreign and EM bonds and dividend stocks. I’ve considered using PRSNX because it’s all bonds with no stocks, but I’m not comfortable holding that much in foreign and EM bonds — particularly with yields so low in many developed foreign nations. Currently, I have about one-third of my TRP bond portion in TRBUX, ultra short bond, because I’m not convinced that interest rates will remain so low.
Bridge way BRUSX I was a shareholder of more than one Bridgeway fund, including BRUSX, but performance has really disappointed. It has been a M* bottom quartile fund for 6 of the past 10 years and for BRAGX, it's 5 out of 10 years as a caboose. While they may have some value funds, BRUSX, BRAGX, and the former Micro Cap fund are/were all growth vehicles. Bridgeway checks a lot of boxes I like; they are small, shareholder friendly, quite transparent, and they do a lot for charity. Unfortunately, their numbers don't make the grade.
Three Fund Managers May Soon Control Nearly Half Of All Corporate Voting Power, Researchers Warn FYI: Actively managed funds have had outflows for the past four
years straight, while index funds have gained
A decade after some of the nation’s largest U.S. banks helped to bring the financial system to its knees, a new kind of “too big to fail” risk may be emerging in a very different corner of the market: index funds.
Three index fund managers currently dominate ownership of shares of publicly traded companies in the U.S., and their control is likely to tighten in coming
years, according to a June research report.
Concentrated ownership — what the authors refer to as the “Giant Three scenario” — means investors and policy makers need to keep a careful eye on the role of fund managers in upholding corporate governance, argue authors Lucian Bebchuk of Harvard Law School and Scott Hirst of Boston University in a working paper titled The Specter of the Giant Three.
Regards,
Ted
https://www.marketwatch.com/story/three-fund-managers-may-one-day-control-nearly-half-of-all-company-voting-shares-researchers-warn-2019-07-17/print
Bridge way BRUSX I have it in both taxable and non-taxable accounts. Yes, the fund has been sub-par for last several years as value as been out of favor. I have a moderate amount in taxable and monthly DCA into non-taxable account.
While I have many other funds, this is more a risk taking investment. I was able to get in when they reorganized the micro-cap fund into the ultra-small company fund. Kicked myself for several years in the late 1990's for not investing when I came across the fund.
I think whatever you decide, will make you the happiest in the long run. I think by my not investing it when I could have has prevented me from selling it now.
You may want consider doing a partial exchange, keeping a foothold in the fund while exchanging monies into a better performing Bridgeway fund such as the Blue Chip Fund or the like since it is in a non-taxable account.
Franklin Mutual International Fund reorganization I gave up on the Mutual Series funds two years ago, and transferred to the Meridian Funds and T Rowe Price. Michael Price is gone, and so is the magic. Get over it. (And please don’t remind me about David Winters and his Wintergreen Fund.)
Facebook Faces ESG Index Music In the world of ESG investing, governance means operating a business in a responsible manner for shareholders, employees and—more importantly—customers. It’s in the latter where Facebook has failed.
The list of user-data breaches and personal privacy policy violations at Facebook have been well-documented over the years. Now, as early as this week, the company’s governance troubles are expected to come to a head.
Corporate governance is the word!
How are you using global / international bonds in your portfolios?
a BOND fund? MAINX I'm about 10 years away from retirement so am 70% equities and about 30% in money markets.
@MIkeW, you may want to consider a multi-sector bond fund such as PIMIX to start. In my humble opinion money market funds pay very little and it should be used to meet short term goals. For longer term diversification from equity, bonds are logical choice.
I started with Vanguard Total Bond index
years ago in my 401(K). Over time I learned to use actively managed bonds. Bill Gross was very good but that was awhile back and there are more choices today.
Jonathan Clement's Blog: Solomon On Money: Read Your Bible FYI: THE MOST WIDELY read book of all time, the Bible, has a lot to say about money. According to biblical scholars, money and wealth are mentioned more than 2,000 times. Out of the roughly 40 parables Jesus told, nearly half speak of money.
Why does the Bible make such a big deal about money? The answer belongs in a Sunday sermon, not here. Still, I believe there’s a great deal to be learned from what the Bible says about money.
Below are eight verses, all written by King Solomon. Solomon was the wealthiest man of his time. But he was also renowned for his great wisdom. Although he lived almost 3,000
years ago, his insights on money and wealth remain relevant today. Here’s Solomon on money:
Regards,
Ted
https://humbledollar.com/2019/07/solomon-on-money/
The Agony of Hope Postponed, By A Value Investor FYI: Value investors are known for being a hardy bunch, willing to buy into beaten-down stocks that everyone else thinks are a disaster. But cheap stocks have underperformed horribly over the past 12 years, and even some fund managers who specialize in buying them wonder in private if the technique no longer works. Could value be dead?
Regards,
Ted
a BOND fund? MAINX Thanks
@Crash and
@Junkster for sharing your current holdings. Junkster it sounds like IOFIX is a long term holding for you and not one that you trade in and out of. I'm about 10
years away from retirement so am 70% equities and about 30% in money markets. I've been looking for an entry point into bonds all year but have shied away because I keep expecting rates to rise... have been wrong to date. Certainly hard to establish a position now with the big run up in bonds.
Is there a way to look at net fund flows per year and category?
Is there a way to look at net fund flows per year and category? Hey guys,
This is another somewhat strange question. But is there a resource that shows total fund into equity funds by year? Also, what about by category or asset class?
Here's what I'm trying to look at. What do the total fund equity flows (either positive or negative) look like year by year? I'd like to see the past few years fund flows vs let's say the late 90s or 2005-2007 and compare them to today.
For the other one, I'd like to see a ratio of money going into growth vs value funds (it would be interesting to compare the late 90s vs today) and also international vs domestic funds.
I've seen charts before but not sure how to get one that's up to date. Thanks!
Long Term Is Longer Than You Think Interesting short read. I turn 70 in a few months. Based on my current health status and the life spans of my parents and grandparents, I currently have my investment time horizon set at 21 years. I would be 90 years old at that point. Its been set at 90 since 2014 when I added an annual review of my planning horizon to my annual year-end portfolio review process. So, the chart makes sense to me.
Your investment time horizon seems reasonable. I say that because most everyone seems to overestimate how long they will live and think they will all live to 100. Longevity tables show those around our age ( I am 72) should live to 84/85. My high school and college classmates are dying off at an alarming rate. I am not sure in the U.S. lifespans are still expanding since obesity and being overweight has become so rampant over the past many
years. Anyway, I never think about how many
years I have left. Just try to live each day as if it is my last and spend some time each day on the trails, preferably in the middle of nowhere.
