Wednesday, July 21, 2004
Burton Malkiel talk notes
Burton Malkiel gave a talk today (essentially, a condensed summary of a subset of Random Walk Guide to Investment), and here are some notes I took. I was only writing things down that I either did not know, or already forgot, or found interesting.
1. HR 10 = KEOGH: use these if you have a source of income outside main job
2. College savings plans have no tax when you take money out (unlike 401K
distributions, which are taxed as ordinary income).
3. He advised against investing in municipal bond funds (or any bond funds
for that matter), and instead to use US Treasury Direct to buy US Treasuries, and to buy Municipal tax-free AAA insurance bonds directly. This is supposed to save on the index fund fees. I disagree with this approach, as total bon d market index fund fees are REALLY low, whereas you get exposure to all kinds of bonds, including junk bonds, which, in a way, are a somewhat different asset class.
4. Treasuries should be bought newly-issued, to avoid commission.
5. Municipal bonds: buy newly-issued directly as well. (same reason)
6. TIPS (Treasury Inflation Protected Securities): these have a place in
every portfolio, since they are the only 100% certain inflation hedge.
But, keep these inside tax-free (or deferred) retirement accounts.
7. He reinforced the general account allocation wisdom, of keeping high
short term income generating assets inside tax shelters, while keeping
the mainly-long-term-capital-gains appreciation assets in regular
taxable accounts (the assumption being that one has more money than
can fit in ALL tax-free/deferred accounts).
