Vanguard’s “BETR” Approach to Roth Conversions

 

A recent paper from Vanguard sheds light on when it makes sense to transfer funds from a traditional IRA to a Roth IRA (a Roth conversion). Recall that the proceeds of a Roth conversion are subject to taxation at the investor’s marginal rate, but the converted funds are tax-free forever (i.e., until the account is depleted either by the investor or his heirs).

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A Tribute to St. Jack

The investing world lost one of its luminaries today with the passing of the legendary John Bogle, the founder of Vanguard and a pioneer of bringing low-cost index investing to ordinary investors. When he started Vanguard in 1975 with a revolutionary idea that an investment company should be owned by its investors, Bogle met fierce resistance with aspersions cast such as “Bogle’s Folly.” Nevertheless, he persisted, and thankfully so. Here are some of our favorite quotes from St. Jack.

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Yet Another Hedge Fund Cautionary Tale

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Simon Lack, the author of The Hedge Fund Mirage: The Illusion of Big Money and Why It’s Too Good to Be True famously issued a challenge for anyone to show that they became rich through investing in hedge funds. After nine years, it is still unmet. With their perverse fee structures, there is no shortage of hedge fund managers who became rich even if their investors did not.

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Low Cost Advisors, No Robos Here!

 

“The Price of Financial Advice Is, Finally, Falling” is the title of a 10/8/2018 Wall Street Journal article by Lisa Beilfuss. The byline reads, “As the rest of Wall Street cuts all kinds of fees in a race to zero, advisers have been the exception. That is starting to change.” This is music to our ears as it should be to all investors who are overpaying for financial advice.

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