Investing - Index Funds, ETFs, Advisors

Investing - Index Funds, ETFs, Advisors

Indexing vs Active Management for Mutual Funds

A quick definition - for an actively managed mutual fund, a manager or management team selects stocks or bonds to put in the fund. It is hoped that the stock selections will perform better than whatever index there might be for the chosen strategy. For an index fund, the choice of stocks or bonds matches an index such as the S&P 500 (and is kept in sync).

Typically, index funds trade assets less than active funds, have lower management fees, are very diversified, and aren't subject to management changes. The choice of assets in the index is subject to strategy and how they are chosen.

Choosing what index fund to invest in was once easy. Just find the lowest fee S&P 500 fund. No more. Now the question is - what segment of the market do you want to invest in. Big company, medium, small, growth, value, dividends, capital weighting or equal weighting, market segment (health, tech, utilities, ...), what part of the world.

I have always had a philosophical bias against indexed mutual funds. A corporation gets into an index by being successful. But it stays in the index by having a high stock value. And the stock value is enhanced by being purchased by index funds. So once a corporation is in an index, it stays in the index because it is in the index - index funds must buy it. I'm not saying that this is the sole support of the stock price, but it is a factor. And as index funds take over the market, it becomes a bigger factor.

Index funds trade very little. VFINF (Vanguard S&P 500 Index) lists turnover at 4%. Low turnover active fund are typically 25% to 50% (much higher for speculative funds). In addition to trading costs (which I would think are close to zero these days), this incurs taxes. Mutual funds must distribute capital gains and dividends every year, so with active funds in taxable accounts, you will be paying some of the taxes now instead of later.

But performance is what counts. I haven't tried to verify this statistic, but it is commonly reported that 80% of active funds underperform their benchmark index. So 20% of active funds equal or outperform their benchmark index. Can you choose a fund that will outperform? Yes. Will it continue to outperform long term? Maybe.

But performance isn't all that counts. If the funds are in an IRA or Roth IRA, taxes don't matter - yearly distributions and capital gains from sales are not taxed (but of course anything that you take out of an IRA is taxed as income). For tax un-advantaged accounts taxes are critical. Dividends are taxed and capital gains caused by turnover or selling to cover redemptions are taxed. You can't control this. In a down market, redemptions may cause big capital gains right when you can't handle them. If you don't need the distributions for income, you are paying taxes now instead of later. And if you need to sell the fund because of underperformance, capital gains can be prohibitive. This is where index funds are far superior - there is little capital gain from turnover and the fund won't crash due to bad management, so you shouldn't need to sell it.

Exchange Traded Fund (ETF) vs Indexed Mutual Fund

ETFs started in the late 1990s and have become very popular. They are baskets of the stocks, usually chosen from a stock index, that are traded on the stock market. They cover the same investment area as indexed mutual funds. (Actively managed ETFs exist, but not a lot so far).

ETFs have two important advantages over indexed mutual funds. First, you can buy or sell shares whenever the stock market is open, rather than only at the end of the day.

Second (this is my understanding), when someone trades ETF shares, they are usually buying or selling to other people, via the market. Since the fund is not selling stocks there is no tax event for other shareholders. And when someone wants to sell shares but there is no buyer, rather than selling the stocks that comprise the share and paying the seller in cash, the fund gives stocks to the seller who is responsible for the tax event. So no tax event for the fund. This is all transparent to the shareholder. This makes holding an ETF significantly more tax efficient than a mutual fund.

Advisors

I am not going to take a position on whether or not you need an advisor. But here are a couple of things to consider.

A fee based advisor takes a fixed fraction of your assets every year, typically 1%. They like to advertise that they are incentivized for you to make money - as your assets grow their advisor fee grows. This is true. But they still make money even if your assets shrink. They are taking a fraction of your assets, not a fraction of your asset growth.

So is the advisor management going to cover the cost of the 1% fee? Apparently active mutual fund management generally fails to deliver above index performance. So why expect an advisor to do better?

But without an advisor, it's all up to you - choosing a strategy, implementing the strategy, monitoring the implementation, adjusting to the current situation. And this is through distinct investment phases, each having different rules -

• before retirement
• after retirement but before taking Social Security payments
• after taking Social Security payments but before RMDs
  
• after RMDs start.

Samsung Galaxy S22

Samsung Galaxy S22

I've had my Samsung Galaxy S22 phone for about a month now, having replaced a Google Pixel 4a.

The Pixel 4a is a very nice phone, but riddled with bugs, due in part to constant updating of the operating system. For example the always on lock screen works well for months, then after a monthly OS update, I pull it out of my belt pack and the screen is black. This happens regularly until another OS update. Gmail crashes once every few days, then an OS update and it's crashing multiple times every day. My Airpods (wireless earphone) work well for over a year, then an OS update and they will not work on a phone call (but work upon ending the call). Google doesn't seem to understand the importance of basic function.

My search for a reasonably sized phone led me to the iPhone 13 Mini - returned for lack of important function (always on lock screen, clock with current time zone). And there is no 14 Mini. On to the S22.

The S22 is slightly larger than the Pixel 4a, but much heavier. It has an aluminum frame and glass back. It baffles me why plastic isn't the standard - light and tough.

Because of the very narrow screen bezel, a case is needed that lets you hold the phone without accidentally touching the screen (this is common these days). Spigen make a nice one. Of course it covers the back glass, so what was the point of using glass?

It has wireless charging - very handy. I got a phone stand charger (holds the phone upright). Set the phone down a half inch from centered to avoid charging it - the extra half inch should be built into the stand. I added a Magsafe compatible steel ring to the case. This lets you use a Magsafe compatible car phone holder/charger. Very handy.

   

The cameras (3 of them) are on the side of the back of the phone, raised by about a millimeter. When you lay the phone on a table, and touch the screen, the phone inevitably wobbles. Very annoying. I drilled and tapped a hole in the case for a 3mm screw, got a nylon screw and ground the head down to 1mm, cut the thread to 1mm length, screwed it in - no more wobble. I should have paid the extra for black nylon.

   

The fingerprint reader is on the display. If your finger is too dry, it doesn't work - touch it to your tongue to make it work. The Pixel 4a location, on the back of the phone, is much easier to use. But Google decided that Samsung was right and changed their newer phones.

Samsung left off the next alarm time from their lock screen. The next alarm is important since I use my phone as my alarm clock. I would like to glance at it to verify that the correct alarm is set. Sigh.

I installed Nova Launcher, Gboard, Gmail, Calengoo, Talking Alarm Clock Beyond, True Phone Dialer, and my own clock widget, weather widget, calculator, MP3 player. Everything worked. My Airpods work, Gmail hasn't crashed, the lock screen works correctly.

Android 13 came along in early December. Everything still worked!

The camera(s) work well. Nice zoom. I don't use it very much.

So, a successful new phone, but could be better.

Thankfully, Samsung gave up on the rounded display edge. I didn't ever try one, but it must have been torture trying to avoid unintended screen touches. And it made no sense at all if the rounded screen was buried in a case. The vertical elevator control that went along with it is still there, but useless with a case, and I don't know what use it ever had anyway.

I think Google has given up on their squeeze cover. But they shouldn't have given up on the back fingerprint reader.

Why is there a camera bump? On (almost?) all new phones. Why not have the rest of the case as thick as the camera and use the extra volume for a bigger battery?

There is a neat case with a sliding camera cover for the S22 (and others). But is too bulky for me, and the slide is too hard to operate.

A long time ago, I complained about phones not improving. This one has two major improvements since that time - the always on lock screen and wireless charging. Better camera if that's important to you. Better water resistance if that's important to you. 5G maybe a little faster than 4G.

Google - you have lost a customer because of a constant stream of bugs.

Apple - you have lost a potential customer because of basic function. A clock that doesn't tell you what time zone it's displaying the time in isn't telling you the time. An OLED screen that doesn't give you an always on lock screen is not taking advantage of the technology.

Samsung - the next alarm time should be on the always on lock screen. Right now, my screen reads "Sun, December 18". Why abbreviate "Sunday", but not "December"? And the fingerprint symbol has a lot of wasted on pixels. Just a dot would get the job done.

Apple and Google - not everyone wants a monster sized phone.

Lyrical Thoughts

Lyrical Thoughts

It's tough to find good topics to write about. I often have an idea, write about it, then throw it out - maybe not enough to write about, maybe it sounds uninteresting after I see it in writing, maybe I decide it makes me sound too strange. I will take a bit of chance today.

I listen to songs for the music, not the lyrics. I like the voice as a musical instrument, but I don't much care about the lyrics. (Occasionally the lyrics will be so disturbing that it ruins the music.) I love many of Schubert's songs and the singing that is integral to them, even though I don't understand the German lyrics. And I like much instrumental music - symphonies, piano pieces mostly, but that's incidental to this post.

(At last - I have reached the point of this post.)

Sometimes a phrase from a song, along with its melody fragment, sticks with me and makes me think. Here are a few.


"Obladi, Oblada, life goes on, brah, Lala, how the life goes on" - no matter what happens, life goes on (so far). (In my head it's "Lalalala life goes on".)

"All that you have is your soul" - my new philosophy as I get older.

"A line from a poem of my childhood has said that visions of sugarplums were gonna dance in my head" - ideas are always good, even bad ideas.

"Going to the candidates' debate, laugh about it, shout about it, when you've got to choose, every way you look at it, you lose" - why can't we put "none of the above" on the ballot?

"And wept when it was all done for bein' done too soon" - whenever I finish a project - it's the journey, not the destination.

"And the first one now will later be last" - whenever things change.

"Today can last another million years, today could be the end of me" - live in the present.

"Oh lord above, you gotta save the fool" - whenever I do something stupid.


In case you want to quiz yourself on where these came from -
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In order (which was just the order that they came to mind as I wrote this) -

Ob-La-Di, Ob-La-Da - Paul McCartney
All That You Have Is Your Soul - Tracy Chapman (for me, Emmylou Harris' cover)
Leftover Wine - Melanie Safka
Mrs. Robinson - Paul Simon
Done Too Soon - Neil Diamond
The Times They Are A-Changin' - Bob Dylan
11:59 - Jimmy Destri (Blondie)
Sweet Misery - Melanie Safka

(The internet can be very useful. The lyrics for just about any song are a quick search away.)

Just Desserts

Just Desserts

It's dessert time of year. America has some strange concepts of sweets. You can dream of your favorites while reading this.

Cookies, in general, should be crispy. Why do people like soft cookies? It baffles me. But this post is more about specific cookie types. Chocolate chip cookies - the ultimate recipe is Nestle's Toll House. Nothing else is close. Big chocolate chunks, M&Ms, chips made of milk chocolate, pecans, walnuts, all degrade perfection. I do like to add raisins - baked raisins are sweet and chewy and compliment crispy, buttery Toll House cookies.

Many years ago, maybe before 1980, a common cookie was a sugar cookie. Delicious. You can still get sugar cookies, but they don't taste the same. They removed all of the flavor except sweet. Snickerdoodles have some of the flavor, maybe they are the same as the old sugar cookies. But if they are not crispy - blech.

Fruit pies can be delicious. Cherry pie is far preferable to any other fruit. It MUST be served HOT.

Pecan pies are good, but there is too much of the gooey stuff. It should look more like a pizza - flat crust, thin layer of goo, pecans.

Frosted cake - grocery store cake is garbage - there is no flavor, just sweet. Fancy European cakes - dense, not sweet - blech. I don't understand chocolate cake. Chocolate must melt into your tongue to taste right. Cake does not do this. Frosting does. I don't expect to ever make a cake from individual ingredients, so looking at mixes - Ducan Hines Butter Golden or Betty Crocker Butter Recipe Yellow mixes use butter instead of oil. Use a chocolate frosting. The butter from the cake and the chocolate from the frosting hit your tongue to provide a wonderful chocolate/butter flavor.

Brownies - use butter instead of oil. Brownies impart a much better chocolate flavor than chocolate cake. Adding chocolate chips does not improve brownies, it just adds calories. I've want to try using brownie dough to make cookies. These would be crispy/chewy like the edge of ordinary brownies. Sounds good. I hate to bring that many calories into my home.

Chocolate bars, M&Ms - as noted above, chocolate must melt onto your tongue to give a good flavor. High cacao levels prevent this. I like Dark Chocolate M&Ms (50% cacao I think). But they must be heated. I use 58 seconds in a microwave. Plain M&Ms and most milk chocolate bars are too sweet.

A side note - I had to look up the spelling of blech or bleck. Blech is an expression of disgust. Bleck is shoe blacking, black grease, or soot. Same thing I guess.

Caramel should not melt in your mouth. It should be chewy. America's obsession with melt in your mouth caramel has ruined it. I wish I could find consistently chewy caramel/pecans/chocolate pieces, I would love it. With melty caramel - blech.

Toffee seems to be a solid crunchy form of caramel. Toffee, almonds, chocolate make a great combination. Almond Roca is one example, but I think it too sweet.

Cheesecake should melt in your mouth. Otherwise you don't get the sweet cheese flavor. It is not easy to find good cheesecake. And a lot of it is now contaminated with chocolate, caramel, coconut, apple, cinnamon - blech. Strawberries on top are good, especially in a sweet strawberry gooey sauce.

Ice cream - chocolate, banana, or butter pecan. Nothing else is worth the calories. Baskin-Robbins is the only place that understands chocolate ice cream. You have your choice of chocolate or chocolate fudge. Chocolate has more chocolate flavor than anything you can get anywhere else. Chocolate fudge has even more. Chocolate ice cream is meant to melt on your tongue. Adding any kind of chunks ruins it.

Baskin-Robbins makes a wonderful Banana Royale Sundae - ice cream (specify chocolate), banana slices, choose hot fudge topping, whipped cream, crushed almonds, maraschino cherry. And good milkshakes. Milkshakes should be just ice cream and milk, blended. But once, on a trip in Tennesee, I stopped at a B-R to get a chocolate milkshake. I watched as the server loaded the canister with chocolate ice cream and put it in the blender. No milk. Tasty result, but not quite a milkshake. Since then I specify "made with just milk and chocolate ice cream". Adding malt flavor or real banana is good.

Cinnamon buns can be wonderful - full of butter, brown sugar, cinnamon. (This is not a breakfast - it is a dessert.) Wonderful aroma. A butter cream frosting can be a nice addition. A sweet but flavorless frosting is not. I read a book called The Choice by Nicholas Sparks, long ago. At one point the main character wants to surprise his new girlfriend by bringing coffee and cinnamon buns to her in bed. He covers them and walks in. What's under the cover? Anyone that can't smell hot coffee and cinnamon buns from across the room is dead. (Apologies to people with no sense of smell.) (And I'm eternally grateful that Covid didn't take smell and taste from me.)

Crème brûlée and strawberry custard tarts - wonderful custard desserts. (But flan? The texture is awful.)

But the vast majority of desserts are not worth the calories. My mother used to look at restaurant dessert menus delighting on just about every item. I would look at the same items and say "blech".

That's my survey of desserts. Sweet Dreams.

Adventures with MVNOs

Adventures with  MVNOs

Mobile Virtual Network Operators are mobile phone carriers that use the big three networks and provide a reduced price phone service. There are many of these - search on verizon, t-mobile, or att and add "mvno".

I switched from Verizon to Reach Mobile a few months ago after Verizon added a surcharge to my bill. My monthly bill went from about $59 with 2Gb data to about $20 with 2Gb data. Reach uses T-Mobile's network which worked well for me. All was well.

Then a few days ago, around 4:00pm, my voice, text, and data stopped working. I informed Reach and the next morning voice and text worked. I can live without mobile data if I am not on a trip (using Maps). So I informed Reach of the situation, started researching other services, and waited.

US Mobile looked good - low price, Verizon or T-Mobile network, SIM or eSIM. eSIM would let me connect immediately. A SIM would take a couple of days to deliver, but handy to easily switch phones. I ordered a SIM. Then I found some reviews that made US Mobile look very bad.

Ting was recommended to me on Facebook. T-Mobile network, no eSIM support, three days to deliver the SIM, good price, good reviews.

T-Mobile - $50, including taxes and fees, for unlimited data, for old people (55+), using auto pay. Immediate connect with a SIM, supports roaming (MVNOs do not).

Next morning, no data. Since they handled voice and text, I decided to give them another day.

Next morning, no data. I lost my patience and decided that I needed to get past this issue as quickly as possible. Off to the T-Mobile store (just a mile away). The parking lot was almost full - 40 cars. I found a spot and went in, expecting a huge crowd. A couple of minutes to get someone to help - grand opening next door had filled the parking lot. 20 minutes later I had a functional phone. My stress level dropped 90%.

T-Mobile data is a lot faster than Reach/T-Mobile data. Maybe I will try Ting some day when I have forgotten the hell of having no phone.

So from my very limited experience - an MVNO can save you a lot of money, perhaps with noticeably slower mobile data speed, likely with noticeably longer problem resolution time, and with no domestic roaming.

A Postscript Printer for Linux

A Postscript Printer for Linux 

Warning - only of interest to people who need a Postscript printer.

After a lengthy search for an inexpensive mono laser printer with embedded Postscript, for my Linux Ubuntu system, I had given up. Until I lucked onto the Brother HL-L6200DW (which Amazon's search engine did not lead me to). This is a $320 business mono laser printer with WiFi, duplex, and a nice surprise - a 500 page sheet feeder. And an even nicer surprise - embedded Postscript.

For Ubuntu - before you connect the printer, go to Brother's web site, download the LPR driver, and install it. This driver sends data to the printer as Postscript.

Setup is somewhat easier than some WiFi printers because you can enter the WiFi information with the printer's button panel with (small) LCD screen.

I have a PDF book of sheet music (vector graphics, 37 pages). It prints dramatically faster with the LPR driver than with the default driver. And with embedded Postscript I can send Postscript straight to the print queue.

I select the driver by choosing these settings (couldn't find HL-L6200DW, but Brother Postscript emulation is what counts).

• local driver
  
• Brother
• HL-5370DW
• HL-5370DW BR-Script3[en]

Investing - Retirement Money Tips

Investing - Retirement Money Tips

Also see Investing, Investing - More Fun with Investing, Investing - How to Choose a Mutual Fund, Investing - Things I Have Learned in Retirement, and Investing - The Basics of US Income Taxes.

Health Savings Accounts are a great deal (only allowed if you have high deductible health insurance). You put money in, tax exempt, let it grow (optional), then pay for healthcare (not insurance) without ever paying taxes on it. BUT you cannot add any money to it if you are on Medicare. But you can still use the HSA until it runs out. So max it out before you go on Medicare (there are yearly contribution limits). I missed out on using this to full advantage - you must start on it far in advance of going on Medicare.

19 May 2023 - HSAs can be used for Medicare premiums but not Medicare supplemental plan premiums.

After listening to much retirement advice, I have moved my retirement investment thinking toward income instead of total return (income plus asset growth).

I moved a lot of my assets into SCHD and VYM. These are high dividend indexed stock ETFs. Corporate dividends, in general, are qualified so capital gains level taxes. The dividends will be tied to corporate profits, which are tied to the economy. If you buy and hold, you keep getting dividends regardless of the stock price. And you should get dividend growth as the economy and inflation grow.

The best 40/60 (stock/bond) fund for income appears to me to be VWINX (or VWIAX if you can get it - Admiral shares). The stocks are from the same index that VYM uses.

SCHD, VYM, VWINX are down 8-10% for the year (July 2022). Disappointing, but much better than the major indexes. And these are buy, hold, and take the dividend funds so not much point in worrying about asset price fluctuations.

US Treasury inflation adjusted bonds (I Bonds) look like a very good deal. There is a $10,000 per year limit on purchase. You buy them via www.treasurydirect.gov. But the web site reviews are so terrible that I'm afraid to invest in them. The reviews suggest lost accounts and multiple hour phone wait time when trying to address account problems.

BUT (2022-07-28) - at some point you may find that with Social Security, IRA required minimum distributions, maybe a pension, that you need an investment for a tax un-advantaged account that does not add to your taxes. I think that what is best for this is a growth ETF. These two look good - MGK, VUG. They are Vanguard indexed growth funds for huge, large corporations. They have dividends about half the dividends of an S&P 500 ETF. As the investment grows, you will not pay much in taxes. But the percent cost basis keeps shrinking, so when you sell, you will pay. If you never sell, your heirs will get a free cost basis reset! (That's under current tax law.)

There are a number of reasons to start Social Security payments early or late -

• You need money now.
• If you live past 85 you will get more money by delaying.
• You will get more money by taking it before Social Security becomes insolvent (2035?).
• By delaying you get some low income years that are useful for converting IRA assets to a Roth IRA.
• Take the money now while you are in good health and can use it effectively.

• 2024-01-24 - Is this point is WRONG?
  

And one more that I haven't heard, but I think is important. Unlike typical pension or annuity payments or bond interest, Social Security income is inflation adjusted. And the increase is a percentage of the payment, so higher payments give higher dollar adjustments. Delay your Social Security payments for as long as you can to take advantage of this.

2024-01-24 - The cost of living adjustment is not a percentage of your Social Security benefit. It is a percentage of your PIA - primary insurance amount - the benefit that you would be receiving if you started taking benefits at the full retirement age. Your benefit is derived from your PIA and your retirement age - I cannot find documentation of the formula. Is it a constant offset? Yes - then my point is wrong. Is it a percentage offset?  Yes - then my point is correct. Read https://www.ssa.gov/OACT/COLA/colaapplic.html and see if you can figure it out. I have one confirmation that my original statement is correct.

 

Convert your IRA (pre-tax money) to a Roth IRA (tax exempt money) in steps that keep your taxes manageable. Do this while you can control your income tax - before you start Social Security payments (age 62-70), before you start IRA required minimum distributions (currently age 72). Do it during stock market dips so that you pay less income tax on the transfer. Do it in chunks that keep you in a low tax bracket - transfers are taxed as ordinary income. Do it by IRA to Roth transfer within a brokerage so that you don't accidentally break a transfer rule. You can transfer assets in kind so that you are never out of the market and there will be no buy or sell fees. Roth transfers do NOT count toward required minimum distributions.

Investing - The Basics of US Income Taxes

Investing - The Basics of US Income Taxes

(2023-09-14 - I have made a few revisions to, hopefully, make things clearer.)

I have written several posts on investing, trying to illuminate the need for preparing for retirement and some of the different investment devices and how they work. And over many years of investing and a few in retirement, one thing that has become more and more clear to me is that how you handle income tax is very important (and not simple). You need to understand the different tax advantaged accounts (IRA, Roth IRA, etc.) and ordinary accounts and the taxes on different types of income (earned income, interest, dividend, capital gains).

I am writing this, in large part, for myself - to get a coherent, organized model of the US federal income tax code. This complex code has been transformed into a set of massively confusing and near infinite number of forms that obfuscate the rules. Maybe I can untangle it a bit.

I hope it's useful - maybe just as a sleep aid. After finishing this post, I am wondering if it's better to just find a good book on the subject.

Also see Investing, Investing - More Fun with Investing, Investing - How to Choose a Mutual Fund, Investing - Things I Have Learned in Retirement, and Investing - Retirement Money Tips .

There are many details to federal income tax law. Below is the foundation of the tax system as it relates to investing. This is only the foundation - there are many rules about special income sources farming, real estate, small businesses, much more that I know nothing about. The specific numbers are just an example (filing as a single person, 2021). You will have to look up numbers specific to you.

This post looks at these topics.

• Income
• Interest
• Unqualified ordinary dividends
• Qualified dividends
• Short term capital gains
• Long term capital gains
• Capital losses
• IRA, 401K, ... required minimum distributions (RMDs)
  

It does not look at these topics but they are worth digging into after getting past the basics.

• Taxes on social security income
• Foreign taxes
• State taxes
• Deductions (reduce your taxable income)
• Standard deduction (lower limit of itemizing, eliminates itemizing for many people)
• Credits (reduces the amount of tax that you owe)
• Refundable credits (reduces the amount of tax that you owe and if greater than what you owe gives you a refund)
• Exemptions (removes the tax obligation from some income)
• Income based Medicare penalty
• Alternative minimum tax
• Money from pensions and annuities (generally treated like IRAs)
  

Why is this important? Tax details dramatically affect your effective income and there are secondary effects such as

• Social Security payments are taxed based on income.
• Medicare rates are based on income.
• COVID relief payments are based on income.
• Tax rates are based on income.
• Student loan forgiveness will likely be based on income.
  

My Terminology -

• Income - short for taxable income - any money that you get that is not tax exempt. I am not saying that exempt income is not good - it's great - but I don't want to prefix every use of the word income with taxable or exempt. If it's exempt, I will add that qualifier.
  
• Exempt income - any money that would have been income except that it is exempt from income taxes
  
• Earned income - money that is earned from a job or business
  
• Total income - really total taxable income - the sum of earned income, interest, dividends, capital gains, and money from a pre-tax retirement account (IRA, pension, annuity), but not exempt income
  
• Income (tax) rate - the rate of taxation based on the IRS income table
• Income tax - tax on total income, calculated on the IRS Qualified Dividend and Capital Gains Tax Worksheet (which refers you to the Tax Table or Tax Computation Worksheet for the income rate side of the calculation)
• Capital gains short and long
• Short term capital gains
  
• Long term capital gains
  
• Long term capital gains (tax) rate - the rate of taxation based on the IRS long term capital gains table
  
• Qualified dividends are actually qualified ordinary dividends. These are mostly dividends from US corporations.
• Ordinary dividends include qualified and unqualified ordinary dividends.
• Unqualified ordinary dividends ordinary dividends minus qualified dividends
  
• Interest from a bond fund is labeled as dividends, actually unqualified ordinary dividends.
• I use IRA to refer to IRAs, 401Ks, 403Bs, and any other pre-tax retirement accounts.
• I often use Roth to refer to Roth IRAs, Roth 401Ks, Roth 403Bs, and any other after-tax retirement accounts.
  

Please note - when I talk about IRAs, HSAs (health savings accounts) and other tax advantaged accounts, I am not giving all of the rules of these accounts. They are limited by age, holding time, source and size of contribution, income, all of which may change at the whim of our government.

Some general rules (some of these rules are subject to a minimum asset holding time).

• IRA, 401K, ... contributions from earned income are tax exempt, withdrawals are taxed at the income rate.
• Roth IRA, 401K, ... contributions are only from after tax earned income, withdrawals are tax exempt.
• Long term capital gains are taxed at the long term capital gains rate.
• Qualified dividends are taxed as long term capital gains.
• Earned income is taxed at the income rate.
• Interest is taxed at the income rate.
• Unqualified ordinary dividends are taxed at the income rate.
• Short term capital gains are taxed at the income rate.
• Capital losses can offset capital gains, including future capital gains if there is currently nothing to offset.
• Required minimum distributions (RMDs) force you to take yearly IRA withdrawals (and pay income tax on them) starting at a certain age (72 right now). RMD withdrawals may not be transferred to Roth IRAs.
• Tax exempt money is not taxed and is not included in deductions or income calculation.
• Contributions to an IRA are tax exempt, but you must pay income taxes when you withdraw.
• Contributions to health savings accounts are tax exempt and there are no taxes if you withdraw for medical expenses or Medicare premiums (not supplemental insurance premiums).
• There are tax exempt bonds issued by local and state governments (municipal bonds).
• Bonds may be tax exempt to different agencies - city, state, federal.
• There are bond funds that invest in tax exempt bonds.
  

 

Tax Rates

Tax rate on earned income, IRA distributions, pension/annuity payment, interest, unqualified ordinary dividends, short term capital gains

t=total income less deductions, qualified dividends, long term cap gains

t less                    marginal  total tax        total rate
long term capital gains   rate                       range
and qualified dividends                               low   high

<9,950                    10%       t*10%            10.0   10.0
<40,525                   12%       t*12%-199        10.0   11.5
<86,375                   22%       t*22%-4251.5     11.5   17.1
<164,925                  24%       t*24%-5979       17.1   20.4
<209,425                  32%       t*32%-19173      20.4   22.8
<523,600                  35%       t*35%-25455.75   22.8   30.1
>=523,600                 37%       t*37%-35927.75   30.1   37

(These formulas are as used by the IRS. They seem backwards to me, subtracting off the offset from the lower brackets instead of adding on to the lower brackets, but it does simplify the formula.)

Note that I have subtracted out qualified dividends and long term capital gains from total income. This assumes that you are calculating tax on these separately, as noted below.

Tax rate on long term capital gains, qualified dividends

t=total income less deductions

t          tax rate
<40,000     0%
<446,000   15%
>=446,000  20%

Note that long term capital gains rates are a function of total income. They are not marginal rates - cross a line with your total income and all of your long term capital gains get a tax bump.

But you also calculate the tax on your total income via the income rate table. If that is lower than the tax calculated with the combination of income rate / long term capital gains rate, then that is the tax that you owe. It seems to me that is unlikely, but I haven't investigated.

Bond yield vs stock yield

Bond yield vs stock yield for a tax advantaged asset

There is no tax for a Roth withdrawal, and for a regular IRA all withdrawals pay the income rate, so there is no tax difference for bond interest and stock dividends

Bond yield vs stock yield for a tax unadvantaged asset

Looking at the income total rate ranges, you can see that long term capital gains rates are lower than income rates if your total income is below 40,000 or above about 100,000. But between 40,000 and 100,000, not much different. So stock qualified dividends are preferable to bond interest. For me stock dividends saved 20% in taxes vs what I would have owed with bond interest. And with stock dividends, you can use the income rate if it is lower than the long term capital gains rate.

 

Where are your assets?

Where are your assets? This affects taxes on withdrawals. But you can't move assets between accounts pain free. And the pain may be worse than the advantage. Plan ahead.

In a tax unadvantaged account

• A fund that trades growth stocks distributes big capital gains from trades, small dividends from profits.
• A fund that trades dividend or value stocks distributes capital gains from trades, dividends from profits.
• A fund that holds growth stocks (index fund) distributes small capital gains and small dividends, so value goes up and unrealized capital gains go up.
• A fund that holds dividend or value stocks (index fund) distributes small capital gains and big dividends.
• A fund that trades bonds distributes capital gains and unqualified ordinary dividends.
• Bonds or funds that holds bonds (index fund) distributes unqualified ordinary dividends.
  

In an IRA

• All distributions come to you as unqualified ordinary dividends.
• Distributions can be moved to a Roth.
  

In a Roth

• Distributions are not taxed.
• Deposits can only come from earned income (you must have a job) or an IRA conversion.
  

Note that the dividends noted above, unless specified, may be qualified, if the asset is US and is held long enough, or unqualified. And capital gains may be short or long, depending on how long the asset has been held.

Same subject, a few details -

Mutual funds distribute capital gains on sold stocks every year (or quarter or month). And for tax unadvantaged accounts, you must pay taxes on this. Index funds and other funds with low turnover have low capital gains distributions, so low capital gains taxes while you are holding the funds. But the stock values keep going up (historically anyway) while the cost basis stay the same, so unrealized capital gain keeps going up. When it's time to sell the fund, big capital gains taxes.

You can transfer assets from an IRA to a Roth IRA. This requires that you pay income rate taxes on the IRA withdrawal. Then the asset is in a Roth IRA and no more tax is due on the asset or distributions from the asset. Best to pay income taxes when your income is low, or the tax rates are low, or when the asset value is low (during a stock market low).

States have different policies on state taxation of IRA withdrawals. In Kentucky, the first $31000 (not sure of the exact number) of an IRA withdrawal is exempt from state income tax. If you don't need this as income, it is handy to use it for a Roth transfer.

I prefer to maximize my Roth account in preference to my IRA because it can hold any asset without tax consequences. But you might have a special fund in a 401K that you don't want to drain, for example you might be counting on a stable value fund for the long term. 

Where to withdraw when you need money

If you have an IRA required minimum distribution, take that first. There is a big tax consequence if you don't take the RMDs and you can't get around it.

Take cash from a distribution in a tax unadvantaged account. The tax consequences were set when the distribution was done, so no more tax on the cash.

Withdraw assets from a tax unadvantaged account. The taxes will be on capital gains (the asset value minus the cost basis). That is likely much less than withdrawing from an IRA.

As noted above, states have different policies on state taxation of IRA withdrawals. In Kentucky, the first $31000 (still not sure of the exact number) of an IRA withdrawal is exempt from state income tax, so a significantly reduced tax rate for this money.



Where to put different types of assets

I would be happy to have everything in my Roth, but it hurts too much to quickly transfer from my IRA. And there is no way to move my tax unadvantaged assets in the the Roth because I have no earned income (job or business).

So, in a Roth, I put my investments with the best chance of big rewards. If I get lucky with an investment, being tax free is a nice bonus.

In my tax unadvantaged account, I like dividend index stock funds that produce qualified dividends. I will have to pay mostly long term capital gains tax on this income. Hopefully, the dividends will support the stock price. And there should never be a management issue that would push me into selling.

That leaves the safest investments in my IRA, CDs, bonds, 40/60 fund. Assuming these a necessary parts of your portfolio, the slow growth will cause less RMD problems than fast growth assets.

And I can move IRA assets to my Roth slowly, keeping my total income low. Until the RMDs start. It might be better to take some of the pain now.

 

Enough (This has taken over a week.)

Do you have any thoughts, especially on where to put your assets, where to withdraw money, and what type of assets are useful in retirement? I would love to hear them.

iPhone 13 mini

iPhone 13 mini

After learning that iPhones don't have an always on lock screen, I had decided to stick with my Pixel 4a.

But the software is so buggy. On a recent four hour trip, Google Maps went into a loop where every couple of minutes it would tell me to stay on the highway that I was already on. That's not incorrect, but it is annoying. Restarting the trip, restarting the phone did not fix this. This has happened to me before on a trip in Utah- hours of these annoying announcements.

On the same trip to Utah - the camera put very old dates on photos that I had just taken. I thought they were being deleted, but I found them weeks later.

Before I gave up on it, months ago, GMail would freeze several times every day.

Various Android updates have caused the lock screen to not show up after taking the phone out of my belt case. It's working now but this bug has come and gone with the monthly releases.

Flaky connection with my AirPods - low volume, high volume, insufficient volume range, and unwanted disconnects but the Bluetooth menu thinks they are still connected.

And then there is Google's policy of obsoleting useful apps because they aren't keeping up with ever changing requirements and system interfaces.


Meanwhile, Apple has put out a very nice looking phone - iPhone 13 mini. Of course this is the end of the line for the mini - the tech news reports that there will be no iPhone 14 mini. So time to reconsider the 13 mini.

What I "know" is wrong (some of this may have changed since I last had an iPhone)

• No always on lock screen
• Face recognition sounds clunky compared to Google's fingerprint reader (located on the back)
• The glass back is stupid, but I need a phone cover anyway to prevent accidental screen touches with the thin screen bezel
• Limited user configuration on the home screen
• Stuck with Apple's keyboard
• Requires the use of iTunes software to put music on the phone ($130 to add a Windows VM to my Ubuntu system)
  

What looks good and will be interesting to try

• Voice isolation (filters noise from phone calls)
• MagSafe charging and magnetic phone hold
• Smaller size
• 5G (my Pixel 4a is 4G)
• Apple navigation
  

So on with the trial. Day 1

Nice hardware. Nice cover (Apple, expensive, MagSafe). MagSafe looks neat - that's a wireless charging system that uses a ring of magnets to center the phone on the charging area and holds the phone in place.

Oh - the keyboard can be changed. I installed Gboard. But it looks just like the Apple keyboard. No separate number key row (unless you shift).

Face recognition works pretty well. But all it does is unlock - it doesn't bring up the home screen. So pick up the phone, slide the bar up to get the home screen. Not as convenient as the back located fingerprint reader. But if you just washed your hands and did not thoroughly dry them, the fingerprint reader doesn't work, so I'll call this a draw.

It took way too long to get iTunes to work with my virtual machine Windows. I didn't realize that I had to set up USB to pass through to the virtual machine. Once that was done, sync got all my MP3s and playlists transferred.

I installed a lot of apps. I like Gmail so I got it - I hope it doesn't crash like it does with Android.

I looked for a screen off app. This turns off the screen off without pressing a hardware button. I couldn't find anything.

When driving across country, I like to know what time zone I am in. All clock widgets should be able to display the current time zone. I don't know if this is hard to find in Android because I use my own clock app that does it. I can't find anything on the iPhone that does. One app looks like it might, for a $20 charge. But it's not clear.

As noted above - no always on lock screen. I use this often - set my phone down and then I can see the time and notifications by glancing at it. How could they leave this out when they chose the OLED screen?

Weather app, Stock market app look good and are included.

The alarm clock appears to not have ramp up alarm. I didn't see anything about automatic dismiss. And clock widgets don't display the next alarm. No problem - I will find a nice alarm clock app. Same situation as Android.

No solid color wallpaper except black. With Android I choose a dark greenish blue - more pleasant than black.

Day 2

I can't find any alarm clock app that approaches Talking Alarm Clock Beyond for Android - ramp up alarms, automatic dismiss options on the alarms, multiple alarms and countdowns, next alarm time is noted on the clock widget.

One app, with ramp up, noted after I set the alarm - you must leave this app in the foreground or you will not get the requested alarm sound. ???? I have to set the alarm and not touch the phone until it goes off?

Of course iOS has nothing like the Nova home screen for Android - that was expected.

Contacts - there is no grouping, just one long list. That's true of Android too, except when I use True Phone I get all my contact groups - Favorites, Lexington, Dances, Family, Places, etc. I tried adding some contacts to favorites but phone, text, and email for each person were separate, so for four people, I had 12 favorites. And I couldn't make their address a favorite. Address is why I have myself on my favorites list - easy setup for navigating home.

So it comes down to this (each attribute is only counted for one phone) -

iPhone 13 mini

• + excellent size
• + voice isolation - great idea, I never put in the sim card so I didn't try it
• + MagSafe - great idea, I didn't get far along enough to try it.
• - terrible clock widgets
• - terrible alarm clocks
• - no screen off app
• - no always on lock screen
• - poor keyboard - no independent number row, constant shifting for important special characters \,%,$,@
  

Pixel 4a

• - buggy software - Google Maps, Gmail, AirPod connection, camera
• - no visual voice mail (unless you use Google Phone)
• - constantly changing things that obsolete good apps
  

I guess I'm going to stick with my Pixel 4a. After many hours getting ready, many dollars on accessories, I'm returning the iPhone 13 mini.

Next phone, it appears that I will have to switch to Samsung to get a reasonably sized phone.

I have been recommending iPhones to people who ask about iPhone vs Android. No more. Not much difference if you just use the basics. But with some effort, you can get much better results with Android.

Now more hours trying to find a Google Maps alternative so that when it gets in a "stay on this road" loop I can find peace.

Venmo, iPhone, Google Maps, more Android

Venmo, iPhone, Google Maps, more Android

Venmo - a quick note. I have run into three people (that's everyone that I have sent Venmo money to) that have their privacy settings default to visible to friends. That means that when a friend clicks on your name, they can see every Venmo transaction that you have made. Not just to you, but to everyone. Go to Settings, Privacy and set Default Privacy Settings to Private. Then go to Past Transactions and Change All to Private. While you are in the vicinity, look at Friends List and set that as desired. I am assuming that this all works - I have not verified that it does as one would expect.

I was about to replace my Google Pixel 4a phone with an iPhone 13 mini. Then I saw a news article that shocked me. Always on lock screens might finally be coming to the iPhone 14. HUH? iPhones have had OLED screens for years. But they don't have an always on lock screen that shows the time at a glance, without interacting with the phone? Further research confirmed this. I use my phone as a clock - set it on a table or phone stand and I can see the time by looking at the phone. Scratch the iPhone mini. And apparently any future iPhones, since the small form factor is being dropped. This reminds me of European car makers that, for many years, refused to recognize the importance of cup holders in cars.

So looking back at Android phones - I took a trip to Johnson City, TN and needed to get to various places there. Google Maps always tries to find the shortest or "most fuel efficient" route. But that leads to back roads with no handy stores, restaurants, gas, and twice it led to one lane tunnels (one with and one without stoplights to help avoid wrecks). And it's difficult to learn the city with these routes. I could see on the maps that there were four lane roads that could easily be used, generally with a one or two minute ETA penalty. So I started either selecting a different route or ignoring the turn onto the back roads. But Maps has a feature to defeat this. It keeps searching for "better" routes. If it finds one, it displays a choice to switch routes. You have a few seconds to respond, and if you don't, your route changes.  I'm navigating roads that I've never been on and I must divert my attention to Maps to prevent it from ruining my trip.

And you only have these choices - No, Thank You or Accept.  Where is "IF YOU CHANGE MY ROUTE WITHOUT MY PERMISSION, I WILL ..."?

I missed a turn at one point - there was no street name at the corner. In the past, Maps would just say make a U turn. This time it took me on a 2 mile loop through narrow back roads. A U turn would have fixed the problem in a few seconds.

I see a lot of hype about artificial intelligence. I don't see any evidence of artificial intelligence in Maps. Or my Amazon Echo, which is still as stupid as it was when I purchased it.

New Google Store policy - I can't buy a new Kindle book from the Kindle App. I'm about to finish book 5 in a series. I can't just ask for book 6 - I have to go to Amazon and find it. I finish reading a sample from an ebook. I can't just ask to purchase the complete book - I have to go to Amazon and find it. Of course I am stuck with Android (see iPhone issue above).

Google has made their new privacy policy so abstruse that developers don't know how to comply with it. When you submit a revised app, they just say it doesn't comply - read the rules. They don't tell you what rule you have failed to comply with. This caught FairEmail, a superb app that I now use instead of Gmail (which crashes regularly - of course crashing multiple times a day doesn't keep an app out the Google app store). Having been absent from the app store for a while, apparently Google finally communicated the issue, and FairEmail is back in the store. Someone at Google missed their chance to destroy a great app.

Good Products that Stay Around for Decades

Good Products that Stay Around for Decades

Some products that I have used for decades -

Afrin 12 hour nasal spray. This is the most effective over the counter medication that I know of, delivering complete relief within a couple of minutes that lasts for maybe 10 hours. Thankfully you can still get the small .5 ounce bottle without the new pump that forces you to use a full dose when you don't need it. I like the small size for travel.

McDonald's fish sandwiches, Egg McMuffins, and French fries. The last fish sandwich that I got was awful - tough and chewy, apparently due to sitting in a heater for a long time. It may be a while before I try again. Egg McMuffins are my favorite breakfast. I leave off half of the English muffin. (I rarely eat breakfast, mostly just on trips.) Doesn't hurt to add avocado if you have one.

Original (plain) Cheerios are about as good as you can get for low sugar, high fiber, and good taste. Original Cheerios has 4.4 grams of sugar per 100 grams. A side note - there are now 14 other versions of Cheerios (at least), ranging from 21 to 34 grams of sugar per 100 grams.

Uni-ball liquid ink pens, plain black plastic. .3mm ball I think - not noted on the pen, threw out the boxes - rats. Resilient pocket clip. Nice feel. I keep about twenty of them, spread around my home, car, jackets. One is almost always easily found when I need it.

X-acto hobby knife, number 11 blade in a number 2 handle. The number 2 handle (large diameter, solid aluminum) shields the bottom of the number 11 blade (meant for a small diameter handle) from slicing your thumb. And it is more controllable than the number 1 handle. Wonderful. Used for over 50 years.

Mitutoyo dial calipers. My 1970 calipers still work well, but I switched to a metric unit model for my violin shoulder rest. You pick it up and use it. No waiting for electronics to initialize. No battery to wear out (or fall out on the electronic calipers that I tried). I like pure mechanical devices.


Other products, I would have used for decades, but they were killed or ruined by the manufacturer -

Gildan large gray crew socks. For size 12-15 feet. I don't have big feet, but I hate tight socks. The gray ones are not as tight as the black ones, something about the fabric. These are no longer available. When I finish the ones that I purchased in advance, it will be a decade of use. And I would have purchased a lot more.

Many running shoes fall into this category. Nike, Saucony, Asics have made wonderful shoes that were replaced by junk. I'm using Brooks Adrenaline now. It changes every year but has, so far, retained its important attributes.

I used Glide dental floss for many years. It worked well, never broke, had a very nice case. Proctor and Gamble bought Glide. The new Glide breaks regularly. Useless.

Lee jeans, maybe 40 years. Fit me just right. Then they changed the cut, without notice. Couldn't they have kept "Lee Jeans Classic".

Investing - Things I Have Learned in Retirement

Investing - Things I Have Learned in Retirement

This is complicated. And details change every year. And I don't know all the details. So I am going to outline concepts, not specifics.

Also see Investing, Investing - More Fun with Investing, Investing - How to Choose a Mutual Fund, Investing - The Basics of US Income Taxes, and Investing - Retirement Money Tips .

401K to IRA Transfer

This can be done without penalty or taxes after you reach 60 years. The advantage is that you have more control over your assets. But it may take you out of some handy mutual funds or useful benefits. For example, stable value funds were designed for 401ks, and are not available for IRAs.

Do a direct transfer to your brokerage (or read the rules carefully to avoid a trap).


IRA to Roth IRA

You can invest in a Roth IRA only with income that you have payed taxes on. There is no income tax on Roth IRA withdrawals (but read the rules on how long you have to wait before withdrawals).

You are allowed to move assets from an IRA to a Roth IRA. There are currently no limits on your income or the amount of assets that you can move. You must pay income tax on the value of the assets that you move. Have your brokerage do a direct transfer (or read the rules carefully to avoid a trap).

This will increase your income. So look at how it affects your taxes, Medicare payments, maybe other things like COVID relief payments, student loan relief.

The advantage of doing this is that it shields you from future tax increases and the Roth is a good place to put high risk/reward investments because they grow tax free.


Social Security Income

It's well publicized that your Social Security income depends on when you start taking payments. A first approximation is that if you live past 84, you will get more money if you delay payments. This is a choice only if you don't need the money immediately, so it depends on what you do with the money - spend or invest.

There are many reasons to handle this in different ways - income taxes, the availability of other income sources, ability to spend money as you get older.


Required Minimum Distributions

Somewhere around 70 years age (72 right now), there are required minimum distributions on an IRA, 401k (I think any tax advantaged account made up of pre-tax income). It is your responsibility to initiate these withdrawals. The penalty for missing these is huge. You cannot count IRA to Roth conversions toward this withdrawal.


Taxes (revised 2023-09-14)

I'm not a tax expert. Where you withdraw money (IRA, Roth IRA, tax unadvantaged assets) and how much you withdraw affects your tax rate. Note the difference in ordinary income, capital gains, dividends, and interest. Use this to your advantage.

IRA                                  - ordinary income tax
Roth IRA                         - no tax

bond interest                  - interest tax
sold stocks                      - capital gains tax
stock distributions          - dividend tax
stock fund distributions  - cap gains tax, dividend tax
bond fund distributions  - cap gains tax, interest (reported as ordinary dividends)  tax
fund withdrawal              - capital gains tax
 

Dividend taxes - dividends can be "qualified" or "unqualified ordinary". Qualified dividends are a subset of ordinary dividends. Qualified dividends are taxed as long term capital gains. Unqualified ordinary dividends are taxed as income. The rules for a dividend to be qualified are a bit detailed - search on "qualified ordinary dividends", but in general, dividends from a US corporation that you have held long enough are qualified. The year end brokerage tax summary lists total ordinary dividends (includes qualified) and qualified dividends.

Capital gains taxes - capital gains can be short or long depending on how long you held the asset before selling. Short term gains are taxed as income. Long term gains get the long term capital gains rate. 

There are just two rates (actually rate tables). Income, interest, unqualified ordinary dividends, and short term capital gains get the income tax rate. Long term capital gains and qualified dividends get the long term capital gains rate.

As I understand it - for Kentucky, the first $31,000 of retirement income (IRA, 401K, etc. withdrawal) is free of Kentucky income tax (2020, changes every year). This includes an IRA to Roth conversion.

The homestead tax exemption varies by state. In Kentucky it reduces the taxed value of your home by about $39,300 (2020, changes every year) for people at least 65 years old. You must apply to get this exemption.

Tax Unadvantaged Assets

That is stuff that is not in an IRA, Roth IRA, 401K, 403b, etc.

If you have assets that are not tax advantaged, when you withdraw money from these assets you pay capital gains taxes on the difference between the current value and the cost basis. This can be considerably lower than paying income taxes on an IRA withdrawal. So this may be where you want to take money to live on.

(If you have a Roth IRA, there is no tax on a withdrawal. But that's a great place to grow assets for the future.)

Every year, or maybe quarterly or monthly, a mutual fund makes a distribution to cover the capital gains on stocks that it sells and dividends that it has collected. The distribution is a combination of capital gains and dividends, and you pay taxes based on that. If you have the mutual fund set to reinvest distributions, the money is used to buy more shares (this increases the cost basis, assuming the funds assets are growing, and reduces future taxes). If you then take a withdrawal for living expenses, you pay capital gains taxes on the withdrawal. So it is likely preferred to turn off automatic reinvestment, and use the yearly distributions for living expenses.


Indexed Funds vs Managed Funds

If you have a tax unadvantaged mutual fund with a low cost basis (often due to many years of ownership), it may be very expensive to sell due to the capital gains taxes. So what do you do if you suddenly find the fund falling significantly faster than its benchmark index due to a manager change or the manager's luck? I don't know. But this is one BIG reason to stick with index funds. You may miss out on some appreciation that a genius fund manager can offer, but you also miss out on the death spiral of an unlucky manager or a bad new manager.

Also, since index funds seldom sell stocks (the indexes are pretty stable), the capital gains distributions are low. Of course that means that the cost basis percentage goes lower more quickly. So the index fund is more expensive to sell (high capital gains taxes). But, especially for a dividend fund, you may never have to sell.


Asset Value vs Income

Stocks return dividends based on profit, without regard to the stock value. So if you invest in dividend stocks to get dividends, you do not need to be concerned about the stock's price. To a point. If the profits drop, the dividends will drop and the stock price will drop.

But the point is, to a degree, dividend stocks and funds can be a good income source despite being subject to stock value fluctuations.

Similarly bonds and CDs give off a steady dividend despite their value fluctuating with current interest rates. Bonds and CDs held to maturity hold their initial dollar value. Bond fund values fluctuate with interest rates because they reflect the current value of the bonds.


Medicare Trap

Medicare charges you more if your income is too large, first increase at a little over $100,000 I think. If you take a lot of money from an IRA, for living or transfer to Roth, you can expect this hit in two years (as I understand it).

Mutual Funds

These are just funds to look into. I am not making any recommendations.

dividend stocks              - VYM, SCHD
60/40 stock/bond funds - VBIAX, PRWCX, VWELX
40/60 stock/bond funds - VWINX
intermediate bonds       - DODIX, VCORX
short term bonds           - FNSOX
CDs                                - 3%, 3 years looks good

Current Events May 2022

Current Events May 2022

COVID -

This data is from https://www.statista.com/statistics/1104709/coronavirus-deaths-worldwide-per-million-inhabitants/.

The number columns here are COVID deaths per million people for May 1, 2020 and 2021, and April 26,2022.

sorted by 2020
India              1    154    378
Brazil            30   1912   3119
Germany           80    993   1616
Canada           116    642   1023
United States    206   1742   2995
France           360   1539   2046
United Kingdom   404   1882   2575
Spain            525   1673   2194

sorted by 2021
India              1    154    378
Canada           116    642   1023
Germany           80    993   1616
France           360   1539   2046
Spain            525   1673   2194
United States    206   1742   2995
United Kingdom   404   1882   2575
Brazil            30   1912   3119

sorted by 2022
India              1    154    378
Canada           116    642   1023
Germany           80    993   1616
France           360   1539   2046
Spain            525   1673   2194
United Kingdom   404   1882   2575
United States    206   1742   2995
Brazil            30   1912   3119

So how has the US done? As of 2021, 3x the death rate of Canada, 2x the death rate of Germany, not too different from France, Spain, United Kingdom.

But as of 2022, still 3x the death rate of Canada, 2x the death rate of Germany, but considerably worse that France, Spain, UK.

Of course COVID is not over. But the US death rate from COVID has gotten worse in the last year compared to the rest of the world.


DHS Disinformation Governance Board -

Now paused, I don't know what that means. But I just want to know what are/were the people that created it going to say when a Republican takes over.


Investing -

Not good. And worse, bond values are falling almost as fast as stocks. So what is a safe place to put money? Percent changes Jan 1 to May 20 2022 shown.

    S&P 500             FXAIX -17.7%
    dividend stocks?    VYM   -5%
    60/40 funds?        VBIAX -15%
    40/60 funds?        VWINX -8.3%
    intermediate bonds? DODIX -8.5%
    short term bonds?   FNSOX -4%
    CDs                 (3%, 3 years looks good)?
    gold?
    real estate?
 

Subtract inflation from all of these numbers.

The answer - I have no idea. I think I like dividend stocks going forward. Not for the stock value, but for the dividends.


Wind -

I can't remember a windier year. I can't talk on the phone while taking a walk. I can't hear music from my phone without turning it up so loud that I can't stand it. Is this a permanent weather feature?


Ukraine War, Infant Formula Shortage, High Gasoline Prices, Inflation -

I have no idea what to say.


Abortion, Roe v Wade -

The battle over abortion has destroyed our political system. The two sides are completely polarized and this has polarized the two parties and what each stands for. The concept of compromise has been canceled. We are no closer to finding a mutually accepted answer than we were fifty years ago.


The Next President -

Just one comment, given that this is a non-political blog.

I will NOT vote for anyone to be president who is over 70 years old.

(I guess I have one more chance to run.)