Point of Interest ... KCMTX Makes Annual Capital Gain Distribution The only reason I see to differentiate between income (dividends) and appreciation is sequence of return risk.
If you invest in a bond, you know that you will receive that same interest payment, month after month, regardless of how the price of the bond fluctuates before maturity. When it matures, you can roll it over and continue on.
If you invest in something that doesn't pay enough interest/dividends to meet your cash needs, then you'll have to sell assets to make up the shortfall. Investing for income and investing for total return may have the same long term performance, but with an equity investment you may be forced to sell at an inopportune time. (You may also wind up selling at a fortuitous time when the market is soaring.)
Investing in income producing securities is one of many ways to manage this risk. If you're really set on a fixed income stream, especially for your base level expenses, annuities can also provide that comfort level.
Regarding IRMAA (Medicare surcharges for higher incomes): 2007 was a significant year, as Junkster mentioned. But that's because IRMAA began in 2007 as part of the Medicare Modernization Act. The thresholds were initially tied to inflation, and rose through 20
10. For example, in 2008, the thresholds were $82K (single) and $
164K (couple), lower than today's $85K/$
170K.
https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2007-Fact-sheets-items/2007-10-01.htmlThe IRMAA thresholds were frozen at the 20
10 levels for 20
11-20
19 by the ACA. Perhaps we should have more discussions about ACA ramifications. (Oh noooooo!)
https://www.kff.org/health-reform/fact-sheet/summary-of-the-affordable-care-act/
Point of Interest ... KCMTX Makes Annual Capital Gain Distribution Thanks
@Junkster . For whom it holds interest, here is the government's income and cost structure for medicare payments. And I agree. I would also like to see more posts and questions about money matters and issues during retirement.
https://www.medicare.gov/your-medicare-costs/part-b-costs/part-b-costs.html@catch22, I have been of the same page as you. For withdrawals from tax-differed plans it is total return that matters. I see nothing to the contrary or anything about breaking down growth returns versus income through distribution when taking withdrawals from and IRA/40
1k in any of my searches.
Generally, my traditional ira account generates enough income (interest, dividends, capital gain distributions) to meet my annaul RMD.
@Old_Skeet I'm still missing your point why this matters for withdrawals in general. I see where it is comforting to you to know you are drawing from an income stream only and aren't drawing down principle, but in general, why would it matter where the RMD or any draw-down came from if all taxed the same? Actually, you aren't drawing from your income, you are drawing from your IRA as a whole.
Investing in a World of Overpriced Assets (With a Single Reasonably-Priced Asset) -- Jeremy Grantham A little weekend food for thought...
"Be brave. It is only at extreme times like this that asset allocation can earn
its keep with non-traditional behavior. I believe a conventional diversified approach
is nearly certain to fail."
"In mid-December last year, I told my colleagues in asset allocation
that I was putting up to 50% of my sister’s and children’s pension funds into Emerging....My sister and children are at about 55% today. Why it was not
100% back then, however, is a
good and very difficult question to answer. Failure of nerve, I suspect."
From:
https://www.gmo.com/docs/default-source/public-commentary/gmo-quarterly-letter.pdf?sfvrsn=48Here are a few EM funds and ETFs that have a value tilt: SIVLX, BEMAX, PRIJX, PZVEX, TFMAX, AZMAX, MAEMX, TLTE, EDIV, and DEM. I own SIVLX and recently added to it and might be drawn to PRIJX but its not available thru Fido. After some more ruminating on the contents of the article, I may decide to add to MEASX as part of a year-end portfolio update.
Point of Interest ... KCMTX Makes Annual Capital Gain Distribution Junkster,
Your are correct $85,000 or less for single and $170,000 or less joint. Glad to know the caps have have been increased.
My apologies.
Skeet
Point of Interest ... KCMTX Makes Annual Capital Gain Distribution This is why I wish this forum had more retirement discussions. Old_Skeet you are still a youngster and apparently haven’t been hit by RMDs yet. It’s under $85,000 and $170,000 for couples with the next bracket being 85,000 to 107,000 and 170,000 to 214,000 for couples. That lowest 85,000 and 170,000 bracket has been that way since at least 2007. Unfortunately beginning in 2018 the next and third bracket changes for the worst meaning it is lowered than from what it had been.
And more than likely most of your social security benefits will be includied when computing your (modified) adjusted gross income which your Medicare income brackets are based on. Going from the lowest bracket to the next will cost an additional $53.50 in Medicare Part B premiums of whatever you had been paying and an additional $133.90 if you slip into the third. There is also an increase of your Part D premiums when you go into a higher income bracket. Unfortunately nothing some of us can do and will have to pay more onerous Medicare premiums based on rising income due to RMDs. One of the few times it doesn’t pay to be single - at least for me.
Barry Ritholtz: Wall Street Wises Up To The Folly Of Forecasting
Barry Ritholtz: Wall Street Wises Up To The Folly Of Forecasting Hi Guys,
Forecasting is a fool's game. "..... "economists had failed to predict
148 of the past
150 recessions."
I extracted that striking statistic from a recent article in The Guardian. Here is the reference:
https://www.theguardian.com/money/2017/sep/02/economic-forecasting-flawed-science-dataSo called expert political and economic judgment simply does not exist. In general, the expert's batting average is dismal.
Yet we often seek it. That doesn't speak well of our judgment criteria. These experts are often called Hedgehogs because of their depth of knowledge in a limited, semi-technical area. That considerable depth of knowledge does not necessarily translate into a more formidable prediction record. Your guesstimate is as good as mine, which is as good as that from any Expert.
Best wishes and although it is not an easy assignment, please stay the course.
Buy, Sell and Ponder December 2017 Hi
@Ted, Are you not window dressing?
Skeet
I always assume in posts like that that the author also indicated earlier the date of purchase(s). So I would be fairly confident
@Ted has done that somewhere along the way. He’s obviously a lot more aggressively positioned than most investors in their 70s or 80s are. I’m happy for his good fortune.
Personally, I’ve strived to leave visible documented “tracks” in the
What Are You Buying, Selling, Pondering? threads as to my purchases and sales of a tactical nature. That’s only fair to readers. Some of those tactical moves reported over the past 3-4 years involved funds like: PRLAX, PRNEX, OPGSX, OREAX, QRAAX (closed) and PIEQX. Not perfect, but at least I’ve tried to be transparent. By that, I mean that if you’re going to write about how much a fund you hold has gained, you should also have noted your purchase at/about the time you bought.
Early this week I reported a small purchase of a gold and precious metals fund (OPGSX). Anyone following the “tracks” would find that I sold it in early September at/near a yearly high. And that it dropped more than
15% in the 3.5 months I was out of it. And, obviously, readers can note how it pans out in the coming months. IMHO these “buying and selling” threads have pretty much run their course. So I probably won’t share future buys and sells. Thanks to those who have contributed and continue to contribute to them.
Regards
Point of Interest ... KCMTX Makes Annual Capital Gain Distribution @MikeM, certain types of investment income receive more favorable tax treatment than others. Some withdrawls form ira's are taxable some are not. The below link will give more information as to how interest, dividends and capital gains are taxed as well for withdrawals from ira's.
https://investor.vanguard.com/investing/taxes/investment-incomeGenerally, my traditional ira account generates enough income (interest, dividends, capital gain distributions) to meet my annaul RMD. With this, my principal stays in tack and often times my principal grows each year. The ira distributions are taxed at my normal income tax rate.
In my taxable account, certain types of income gets treated diffently for taxation. Again, the above link will provide more details on how investment income gets taxed. Some of it is below my normal rate while some of it is tax free ... and, again, some of it is taxed at the normal rate.
I strive to have a good variety of it; and, I am also mindfull not to excced the medicare income threshold where I have to pay increased medicare premiums. I believe for 20
17 for a single filer it is $70,000 and for joint (husband & wife) $
140,000.
Hopefully, others that are reading this will find benefit in our exchanges.
Wishing you the very best this Holiday Season.
Skeet
Buy, Sell and Ponder December 2017 @MFO Members: Update on the returns of the Linkster's six fund boring pedestrian portfolio.
Regards,
Ted
Equity:
MSOPX: 46.29%
TRBCX: 37.56%
QQQ: 34.0
1%
SPY: 2
1.54%
Bond:
PONCX: 7.29%
PBDCX: 6.80%
Buy, Sell and Ponder December 2017 The barometer report week ending Friday December 15, 2017
This week Old_Skeet's market barometer finished the week with a reading of 136 which falls into the overbought area on the barometer's scale. Last week, the barometer reading was 139. So, by the barometer's metrics there is currently less investment value in the S&P 500 Index over the week before. Should the barometer reach a reading below 135 then the Index will be considered extremely overbought on the barometer's scale.
In viewing the technical score reading for the major sectors of the 500 Index I am finding that none are presently undervalued or oversold. Everything is at fairvalue and above. With this, Old_Skeet is still with his cash build mode as a good number of my mutal funds have began to make their yearend distributions. Last week, I added to my muni fund while this week I sat on the sidelines.
This coming week I'll probally add to my convertible securities fund as convertibles have a bond like floor with an equity like upside. Being very conserative presently as to how I approach the market. Remember, for me, building cash this time of the year is much like an automatic rebalance, of sorts, as it reduces my equity allocation while building my cash as my mutal funds make their yearend distributions.
Once I can see how my portfolio bubbles, from an asset allocation basis, I may do some select asset buying as I feel it warranted.
I wish all ... "Good Investing."
Old_Skeet
Point of Interest ... KCMTX Makes Annual Capital Gain Distribution @MikeM,
Thanks for making comment.
What I favor about KCMTX is not it's total return although it is a leader in it's classificaton; but, its ability to generate income. This comes form it being actively engaged in the markets making a good number of buy and sell transactions (turnover 3
18%) thus generating capital gains. When you fully retire ... I'm thinking you will start to look for some more income generation over what your present portfolio generates. If my memory is correct it was in the
1.56% range when I Xrayed it.
One of the great things about investing is that we can each configure our portfolio to fit our own desires. You seek more growth while I'm seeking income along with some growth. From a 20
17 distribution yield perspective I compute PRWCX at 6.4% and KCMTX at
11.5%.
Indeed, both are great funds with each carrying 5*'s from Morningstar.
Thanks again for making comment.
Point of Interest ... KCMTX Makes Annual Capital Gain Distribution
I can also update a prior discussion to confirm both the institutional and R-1 share classes are now available at E*Trade. The R-1 shares are NTF with $100 minimum while the institutional shares require $250K and carry a transaction fee but the expense ratio is 25 basis points lower.
I wonder if Parker would comment on what they think is a reasonable level of assets to manage with this strategy so they don't end up in the same situation as Marketfield or Ivy.
Hi
@LLJBWe manage less than $
100M in the fund currently. I don't know the exact level when capacity would would start to effect performance, but it's a LONG way off (i.e. billions). If we ever got there, I can't say what we'd do. Closing the fund to new investment would be one option.
Thanks Old_Skeet, you build a nice positive case for the fund. But for me only, I don't like to own a lot of funds so I don't see it as a replacement for what I have. I tend to measure all these alternative funds against a good, no make that great balanced fund like PRWCX which I'm lucky enough to own and can add too. PRWCX has a better upside/downside capture ratio, less volatility, a better Sortino ratio, better Sharp ratio, higher Alpha, less risk per M*. I'm not down grading KCMTX 's attributes or return record because they are quite impressive. Just saying I already have something better.
And I'll bring up again. I, and probably many if not most here at MFO have been burnt by the lure of alternative funds before (I didn't own Marketfield or Ivy but you made my point). This one could be different, but I'm sticking with by George Bush quote:
“There's an old saying in Tennessee — I know it's in Texas, probably in Tennessee — that says, fool me once, shame on — shame on you. Fool me — you can't get fooled again.”
:) love that one.
OMG - one of my favorite Bush-isms
@MikeM!
PRWCX is a great fund! I'm proud that anyone would compare us to that fund.
Etf Playbook for 2018
Etf Playbook for 2018
Barry Ritholtz: Wall Street Wises Up To The Folly Of Forecasting FYI: It is that time of year, when the financial industry engages in its annual ritual of making forecasts, which is usually little more than the prelude to looking foolish. Titles like “Outlook for 20
18, “What to expect in the new year,” or some variation thereof litter the landscape. Over the years, it has been my distinct privilege (and truth be told, pleasure) to point out how silly this process is.
Regards,
Ted
https://www.bloomberg.com/view/articles/2017-12-15/wall-street-wises-up-to-the-folly-of-forecasting
Point of Interest ... KCMTX Makes Annual Capital Gain Distribution I can also update a prior discussion to confirm both the institutional and R-1 share classes are now available at E*Trade. The R-1 shares are NTF with $100 minimum while the institutional shares require $250K and carry a transaction fee but the expense ratio is 25 basis points lower. I also checked Fidelity, where the R-1 shares are available NTF with a $5K minimum and Schwab where the availability, minimums and existence of transaction fees are the same as E*Trade.
I wonder if Parker would comment on what they think is a reasonable level of assets to manage with this strategy so they don't end up in the same situation as Marketfield or Ivy.
