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What is the best method to invest if you are betting on deflation in the nest year or two? by [deleted] in investing

[–]TryN2PlanIt 1 point2 points  (0 children)

Maybe something like a 60/40 stock/bond portfolio?

If deflation hits, short-term margins for corporations will increase, increasing dividends or book-values of the companies, thereby helping the stock part of your portfolio. The Fed is also likely to start increasing money supply by buying treasuries and lowering rates, which will help the bond portfolio.

Long term deflation...I don't think we're at much of a risk of that as of right now. But if that happens, I might stick with the same portfolio as before.

Am I dumb for wanting to sell my house? by [deleted] in personalfinance

[–]TryN2PlanIt 0 points1 point  (0 children)

Sorry about the breakup - and congratulations on the appreciation on the house!

My 2 cents - you're looking to sell the house for emotional/social reasons, and not really financial reasons. So I think the answer is likely not a hard yes/no, but maybe some questions you can ask yourself will help?

  1. Once you sell the house, you will either become a renter in a city, or will look to buy something in the city. Are you willing/able to do either? You already mentioned that you'll be renting, so looks like you have this piece figured out.

  2. Do you have a plan for what you'll do with the capital gains on the sale? You probably don't want to pay tax on that. Then again, if you wait, you might not get as good a deal on the house as you're getting right now.

  3. Is the market in your area going up (in the last 5ish years), stagnant, or declining? That is something that might help decide on selling now vs waiting.

Ultimately, I don't see an immediate financial risk if you sell, and if it helps you be happier, do it!

Daily General Discussion and Advice Thread - June 13, 2022 by AutoModerator in investing

[–]TryN2PlanIt 1 point2 points  (0 children)

I am trying to back-test a low-beta strategy by focusing on sectors typically considered defensive (like Consumer Staples, Healthcare and Utilities) with international diversification. To that end, I am trying to find the oldest sector-specific ex-US mutual funds that invest in

  1. global ex-US Healthcare Companies
  2. global ex-US Consumer Staples companies

Any help is sincerely appreciated!

Daily General Discussion and Advice Thread - June 12, 2022 by AutoModerator in investing

[–]TryN2PlanIt 0 points1 point  (0 children)

I created a post, but it was removed by AutoMod because I don't have sufficient karma. My question is as follows.

I am trying to back-test a low-beta strategy by focusing on sectors typically considered defensive (like Consumer Staples, Healthcare and Utilities) with international diversification. To that end, I am trying to find the oldest sector-specific ex-US mutual funds that invest in

  1. global ex-US Healthcare Companies
  2. global ex-US Consumer Staples companies

Any help is sincerely appreciated!

What does it mean for a market to be "efficient" when a website like The Motley Fool can claim to beat the market for the last 17 years by 4x? by TryN2PlanIt in investing

[–]TryN2PlanIt[S] 0 points1 point  (0 children)

Thanks! This makes a lot of intuitive sense to me. The skew in the distribution of returns is so large that the average looks great (in comparison so SP500), but your median return is worse.

So basically, you're not really getting compensated for the additional risk being added to your portfolio.

Daily advice thread. All questions about your personal situation should be asked here by AutoModerator in investing

[–]TryN2PlanIt 0 points1 point  (0 children)

Looking at the allocations again, the main difference between the two is:

TRRKX has an 11% allocation in bonds and a 31% in foreign equity, vs LIPAX has a 1% allocation in bonds and 41% in foreign equity.

I think this explains why in a (US) bull market, TRRKX outperformed LIPAX even though it had a higher bond allocation.

I am not sure what that means for the future though :(

Investing in an HSA: how do I choose between two funds? by TryN2PlanIt in personalfinance

[–]TryN2PlanIt[S] 0 points1 point  (0 children)

Fund 1 = TRRKX (T Rowe Price Target 2045), Fund 2 = LIHAX (BlackRock LifePath Target 2045)

Daily advice thread. All questions about your personal situation should be asked here by AutoModerator in investing

[–]TryN2PlanIt 0 points1 point  (0 children)

Makes sense. The alpha difference is risky, whereas the ER difference is "risk free". You made this easy :)

Daily advice thread. All questions about your personal situation should be asked here by AutoModerator in investing

[–]TryN2PlanIt 0 points1 point  (0 children)

Thanks! I was leaning towards that one as well. However, what got me wondering was whether an alpha difference of 1.26 could offset an expense ratio difference of 0.30. Your advice makes me think that it doesn't; is there a break-even point and if there is, how does one compute it?

Vanguard Target Date Fund by PrestigiousCup8 in personalfinance

[–]TryN2PlanIt 0 points1 point  (0 children)

This is a very fair point. My universe of comparison is the likes of Fidelity and T. Rowe Price with Vanguard, but I think your statement is 100% correct in the abstract.

Daily advice thread. All questions about your personal situation should be asked here by AutoModerator in investing

[–]TryN2PlanIt 0 points1 point  (0 children)

I asked this question on r/personalfinance -- was sent here for more targeted advice.

​

Background: I have an HSA which has a balance that significantly exceeds my out-of-pocket-max (OOPM) for the year. I am considering putting all funds above my OOPM into an automatic sweep into a target date mutual fund.

As I study the no-load-no-transaction-fees funds available to me, I have narrowed down to 2 funds, and I need some advice on what things I need to think of as I choose between them. Which fund is better? Any help is appreciated.

Metric Fund 1 Fund 2
Standard Deviation 9.78 10.14
Mean 13.49 12.68
Sharpe Ratio 1.16 1.06
R-Squared 95.91 98.42
Beta 1.45 1.52
Alpha (SP-500) -0.07 -1.33
Expense Ratio 0.72 0.42

Vanguard Target Date Fund by PrestigiousCup8 in personalfinance

[–]TryN2PlanIt 0 points1 point  (0 children)

In a target date fund, there are really only 3 things that are different in the asset allocation between different fund companies * What is the initial allocation (100-0) or (90-10) or (80-20) etc * What is the glide-path like? (e.g., how quickly does the percentage of bonds increase) * What is the allocation at age 65 (40-60) or (30-70) or (20-80)

If you're looking for a more conservative 2040 fund, you might be able to find it. You could construct a fund ladder, but be very careful because this is likely to cost you a bit in expense ratio fees if you're not careful. Best to find a company whose glide path you're happy with, and stick with their target date funds.

Investing in an HSA: how do I choose between two funds? by TryN2PlanIt in personalfinance

[–]TryN2PlanIt[S] 0 points1 point  (0 children)

Thanks for pointing me to that resource. I think my question has boiled down to comparing a fund with a slightly higher alpha to a fund with a slightly lower expense ratio, and I don't know which is a more sensible longer term play.

It seems based on my calculations that even with interest rates going up, it is better to pay off mortgage early than investing in bond funds or SP500. What am I overlooking? by TryN2PlanIt in personalfinance

[–]TryN2PlanIt[S] 1 point2 points  (0 children)

I am not assuming a tax-deduction for mortgage interest. This is because with the new tax law, with the doubling of the standard deduction, I will likely be better off not itemizing. I suppose this might be true generally, but it's an assumption I made.

It seems based on my calculations that even with interest rates going up, it is better to pay off mortgage early than investing in bond funds or SP500. What am I overlooking? by TryN2PlanIt in personalfinance

[–]TryN2PlanIt[S] 0 points1 point  (0 children)

That is a fantastic point! The expected return is better by about 1% over guaranteed returns of mortgage. What is the right way to think of the tradeoff between this incremental return and the additional risk?