Re: Translation: Tommy's bored, so he's trolling again

On 2/24/25 17:11, Tom Elam wrote:

On 2/18/2025 6:25 AM, -hh wrote:

On 2/17/25 16:19, Tom Elam wrote:

On 2/15/2025 6:47 PM, -hh wrote:

After nearly two weeks of silence, on 2/15/25 10:36, Tom Elam wrote:

On 2/2/2025 1:41 PM, -hh wrote:

On 2/2/25 6:46 AM, Tom Elam wrote:

On 12/23/2024 7:13 PM, -hh wrote:

On 12/23/24 9:20 AM, Tom Elam wrote:

On 12/20/2024 9:58 PM, -hh wrote:

On 12/20/24 7:05 PM, Tom Elam wrote:

On 12/20/2024 4:26 PM, -hh wrote:

On 12/19/24 1:57 PM, -hh wrote:

On 12/19/24 12:30 PM, Alan wrote:

On 2024-12-19 07:33, Tom Elam wrote:

On 12/18/2024 1:11 PM, Alan wrote:

On 2024-12-18 09:17, -hh wrote:

On 12/18/24 10:29 AM, Tom Elam wrote:

In case you missed it there was an earlier post ...

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Yes, we all saw that troll attempt too.
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In the meantime, I've started to book our first trip for 2025. Its a bit earlier than what we normally do to do this, but airfares were favorable. Plus I discovered that a FFM account that we'd not been paying attention to had built up a healthy balance, so with just ~20% of its balance, got two RT tickets for just $50.66 (total for two).

So where are you going? Or would you rather keep us in suspense?
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:-)

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Alan once again deflects attention away from the issue.

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Alan chose to ignore your bullshit.

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Well, it did make me briefly wonder just how many tickets to Hawaii I could buy from my main FFM account, if I were so inclined...
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...although since his claim was retrospective, retconning here needs to include FFMs already spent on destinations far further afield, such as 120K dropped for a BusinessFirst upgrade on EWR- HKG:  that amount was probably worth 3 FFM coach tickets to HNL just on its own.

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Well, while waiting for my Windows VM to update to version 24H2, I found this:
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<https://awardwallet.com/blog/new-unpublished-united- partner- award- chart/>
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Seems that routes to Hawaii used to be as cheap as just 10K/ pp, so 9 coach RT's for two could have cost as little as just 360K FFM's.
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Overall, the devaluation of FFMs since that era illustrates that all other factors being equal, it makes more sense to use them up fairly proactively instead of hoarding them.
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-hh

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I think I paid 15-20k pp.

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I figured 20K/pp for round trip, so 15K would've needed even less.
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Not to mention about 10 trips to Europe on points too, more than 1 first class. Plus quite a few family ski trips.

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Probably ~50K for business to EU.  Domestic used to be very cheap, like 5K cheap, but no longer: I ran into a quite unreasonably high fare on a domestic itinerary last year, such that I chose to use FFMs instead of paying north of $1K cash and it was 69,600: an illustration of limited competition in some markets as well as the systematic FFM devaluation.
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This is why I take cash rebates instead of points.

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Cashback is certainly more fungible and it doesn't depreciate as fast, but once again, the benefit is from using accumulated balances.  I'm modestly humored that I'd rediscovered up this forgotten FFM account; it will probably net somewhere around five free(ish) flights on its own.

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I'm not a fan of leaving money in an account that does not earn anything. There is the phenomenon called price inflation. That is a tax of sorts on cash balances.

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There's invariably a price to be paid to maintain some ready liquidity for an emergency fund, or even just for fiscal management convenience.
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So, my rebates go reduce current card balances a bit, freeing up cash flow elsewhere. At 0.65% of total income not a major factor, but in retirement every little bit helps.

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I've never even thought about bothering to track cashback balances as a percentage of total Net Worth.  And since 0.65% of a ~$2M Net Worth is $13K - - a pretty high balance for retained cashbacks - - this suggests some other interpretation of what you're saying.
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The only cash balances we own other than currency in our pockets earns something.  The main savings account is 4.5% APR.

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Sure, but HYSA rates have been declining over the past few months in particular; one that we have which was close to 5.5% earlier this year is already down to 4.4% and I expect it to drop further. If one really wants inflation protection without Market risks, you're looking more at TIPS and/or I-Bonds, both of which have their own pros/cons.
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-hh
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You go off the rails again. Way off. Rebates are just another positive cash flow.

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Except that they're not a net positive when you paid more than cash.
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This is a discussion before we've had before: it revealed that you've tended to use large chains where credit cards aren't surcharged, unlike my observation in small businesses where +3% isn't uncommon.
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I never mentioned any net worth contribution.

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Correct; I mentioned it to note that the accumulated cashbacks are contextually insignificant vs net worth.
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Have you not learned that for retirement you need to build diversified positive cash flow streams that give you financial options?

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Irrelevant to credit card cash-backs.  Why have you not learned yet to waste your time chasing ankle-biters?
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That means among other options reducing fixed expenses like interest obligations buying assets like EOS (look it up) that pay cash dividends, and maybe some part-time gig income.

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Still irrelevant to credit card cash-backs...
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But insofar as EOS, I assume you're referring to "Eaton Vance Enhance Equity Income Fund II Common Stock", not the crypto coin of the same name that's down by -85% over the past 5 years.
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If one actually has a free cash flow stream tight enough that monthly dividends are important, then I can see how EOS could be tempting, particularly with it currently paying a ~7.5% dividend rate, which is roughly a +3% for its Risk Premia over US10Y, or +5.4% over the Risk+Inflation Premia of US10YTIP.
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Of course, there's also other questions too, such as its tax implications, for a MUTF, they're likely categorized as Ordinary Dividends instead of Qualified, plus who knows how much the MUTF throws on at the end of the year in STCG, LTCG, etc, which may not even show up as real cash.  It may be fine in a tax-advantaged account, but I'd dig a bit further before contemplating it for a brokerage ... plus for upper marginal income tax brackets, another contender could be the likes of VWAHX.  It also pays out monthly, and its lower return is offset by being Federal Income Tax exempt, which can provide an effective returns boost of 24%-32%/etc.
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-hh

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And you ignore that you might be paying higher prices at those small local places, even with a negotiated cash discount, than you might pay at national chains.

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Nah, I'm aware that there can be a cost to supporting local small businesses; the Walmart family already has more than enough money.
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Plus, how many purchases do you make that are large enough to even bother negotiating on price?

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Why?  Is it hard to see a "3.5% surcharge" sign next to the register?
I'll take a photo of it for you the next time I'm in that shop.
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Eaton Vance is correct. I do not own it, that was just an example. Considering buying some though. I don't do crypto.

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And VHAHX was an example too.
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Even without my dividends we are more than OK on cash flow. That extra cash is used for more travel and entertainment. We just booked a 2 week trip to Italy and Croatia. The dividend fund I do use pays out a before- tax mix of qualified and ordinary dividends with a cost-basis annual yield of 7-8%, just like EOS. There are no capital gains paid out. At the moment if I sell the fund I do own there would be some LTCG. That's a good thing.
So I checked out VHAHX. Sounded interesting at first. It's currently trading at $10.66, about where it was in 2005. The January dividend was $0.034, or about an annual return of 3.8%. And, trading at it's 2005 NAV. Except for a 2022-centered dip dividends have not changed materially since 2015. No growth in dividends either. Even at top tax rates these dividends would not be materially different from what I'm already getting.

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Of course, because its not a fund that's intended to appreciate, but just reliably pay out tax-free dividends.  As such, its rate of return value depends on what the owner's local marginal tax bracket rates are for the dividends, not if the fund's trading value might change.
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After-tax, state and federal, based on my 2024 dividend mix my fund is paying about 5.8% per year. Since in 2020 inception my fund's NAV is up 15%.

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"My fund"? Since you've said it wasn't EOS, its a mystery ...
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My current LTCG gain is less, about 5%, mainly because I bought in starting over 2 years after inception.

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Except that in a retirement income scenario, its more buy-&-hold, so one isn't selling to generate LTCGs.  As I noted, having LTCG+STCGs from a fund is more typical of a MUTF distribution instead of an ETF. Some such funds may only pay out just 1x/year, such as BMCAX, not monthly, plus can be equities based instead of Bonds, so run hot & cold year to year.  That can be fine for discretionary spending, but its far less so for core living expenses.
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Before that I owned AT&T but bailed before the 2022 dividend and resulting stock price collapse. That was a good move.

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An individual equity, not a MUTF/ETF, plus its dividends are quarterly, not monthly.  Contemporary insight from Charley Ellis is that trying to be hands-on vs passive costs the average investor -200 basis points/year in lower portfolio performance.
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Thanks, but I think I'll happily pay the taxes and enjoy the extra after-tax income for now.

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Paying taxes is the "First World" problem to have, although where that can become a bit of a challenge to accept is when one has a better than average year and one's non-advantaged accounts' dividends & gains are a six digit addition onto one's base income.
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-hh
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Got a better idea than my dividend returns at 7.5-8% with some LTCG? Let me know.

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Strategies depend on many factors besides just return rate.
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For example, for the criteria of a reliable income stream, one could have elected a nonqualified annuity a decade ago, which if one shops around could have done comparably well - Alan can attest to how I drove Tom Seim batty by not mentioning the name of the one that I'd invested in which was offering 8%+ back in 2020 when Fed rates were so low; IIRC I pushed the button on it at 8.6% (& part of that is tax- free too).
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It's nice to have the LTCG on top of income for the day when it is cashed out for those who might inherit.

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Which may be for you to pay for LTC, and never make it to heirs.
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This fund's expenses are 0.35% and it's not managed by my brokerage firm. It's in my E*Trade account.

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0.35% sounds decent; the tax-free VWAHX I'd mentioned is just 0.17%
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2% is pretty close for managed stock portfolios that you can buy only by paying a brokerage firm their fees too.

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I'd consider that to be on the high side; think my worst one right now is 1.38%, in a contrarian fund that's also been tagged for divestment.
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The bet is that they will outperform the market, making up for the costs.

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That certainly is the sales pitch for actively managed funds, but the track record on the industry shows otherwise.  Until now I've not thought about looking at portfolio diversification along the Active- Passive Management axis...TIL, our split is ~25% Active-/75% Passive.
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It's also a good idea to have them in tax-advantaged accounts so that dividends and CG are not taxed when realized.

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Depends; if the dividends are qualified and the CG are LTCG, then the net tax rate will be lower in a non-advantaged account, since payouts from a 401k type tax-advantaged get taxed as ordinary income.
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Mine were doing a little better than market after expenses until recently. I'm going to be having a serious talk with my advisor when I get back from Colorado in early March. The funds he has me in at the moment have trailed the market, and not by a little bit, over the last year.

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The market has voted with their wallets on the Active-vs-Passive question:  the Market Caps today are roughly equally distributed at 50-50.  Charley Ellis recently noted the basic reasons why this is; BTW, he's got a brand new book out, just hit the press last week (11 Feb 25): "RETHINKING INVESTING: A VERY SHORT GUIDE TO VERY LONG-TERM INVESTING".
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-hh
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 Good thoughts all. Just to clarify something, in 2003 when I retired, and none too sure the long term future, I bought 2 qualified annuities.

Qualified Annuities are an effective strategy for parking investments which are less tax efficient.  But do be aware that any death benefit option is *not* tax-free like a traditional life insurance policy is.

Still own them but coming up on the decision to take the annuity or not. If not I'll roll them over.
 So here is what I mean about retirement diversity in my case.
 Cash, checking and savings
Qualified savings in stocks, thus RMD income
Dividend funds that also use covered options for income
Social security
Pension plans
Zero debt (unless zero interest)
Paid off home
Gig income

Yes, that's another dimension to diversification, but these can be examined by their relative risk and stacked into more/less reliable of an income stream it provides.
For example, SS, Pension, Annuities & Govt Bonds are contractually based and very reliable.  Stocks (even blue chip dividends) are less so, but still can be pretty good...or perhaps horrid.
 From here, one can sum contemplate the ratio of one's reliable income vs one's core living expenses budget and see if that's within your personal risk tolerance/comfort zone.  For example, someone who's fiscally conservative may want this ratio to exceed 1 (eg, 100% funded).   A lot comes down to comfort with personal spending optionality, what the margins are, what other goals, etc...as well as what one's plan is for managing the portfolio through cognitive & health declines.

Others would say real estate, and that is a very good idea.

Can be quite mixed, as well as work, which becomes more difficult with age.

Ideally you can build enough retirement income to re-invest a portion to offset inflation. Of the above only Social Security and RMD offer some measure of predictable income growth in my case.

Its overly simplistic, but the 'easiest' way to build in an inflation growth factor is to have one's portfolio's income generation rate to have a safety margin above inflation which facilitates a reinvestment feedback loop for "longer", until one finally reaches the tipping point of actual de-accumulation.  The big late in life game-changer there is Assisted Living expenses, for which it perversely pays to keep a chunk of tax-advantaged funds in a 401(k) because with the Schedule A deduction for medical expenses, the tax cost of higher income is offset.
-hh