I am on the side of diversification from a risk management perspective. Now in my early 60’s, and having benefited from decades of bi-monthly deposits and compounding in my 401k, I find my risk tolerance is decreasing. My look forward retirement plan doesn’t need 10% returns to be successful, therefore optimizing returns is no longer my priority. To that end I have US, international, emerging markets, growth, value, large cap and small cap stocks in various index funds, with specific allocations to each. Weighting is approximately 70% US vs 30% international. When I look at events since the launch of ChatGPT in 2022 it is truly staggering to witness the innovation, how it has grown logarithmically and almost single handedly driven stock market growth since. Projected S&P 500 future earnings growth is now completely dominated by AI related companies. My portfolio in turn has benefited as I own all the players, including the international chip manufacturers. I also look at all this with a degree of suspicion. 300 +/- of the S&P 500 stocks are down year to date. Growth is increasingly being driven by a very narrow group, which is not necessarily unusual - Bessembinder research. But that grouping of top stocks in my mind are all interconnected - eggs in one basket. The amount of money being spent by the hyperscalers is mind boggling, as is the amount of borrowing, and it is difficult to figure out the circular trades and the sustainability of it all. As Warren Buffet said “you find out who is swimming naked when the tide goes out” or something to that effect. I hope that my stock bond allocation and diversified equity portfolio, which deliberately dilutes the concentration of top S&P 500 companies, will hold up a little better should the tide go out. It still has significant exposure to all the S&P 500 names and will be not immune. I am a firm believer that AI related companies will do fabulously well in the future. But I also believe there will be winners and losers, and it is the volatility associated with that I am hoping to temper with diversification which includes an international component.
I read Howard R’s article last year and promptly researched at Schwab and found that none of my ETFs fit their needs.
Two months ago Schwab reached out to gauge my interest and I signed up. Promptly some of my Vanguard bond ETFs from my traditional IRA were snapped up and the equivalent $ value deposited in a separate Securities Lending account which Schwab set up in my name.
Since then the ETFs have moved back and forth frequently. Sometimes they leave and are deposited back the same day and don’t seem to generate any income. If the ETF’s are left in the Lending Account over the weekend they earn income 7 days a week at the specified interest rate even though the markets are closed.
I receive a daily notification of income generated (if any) and on the first business day of the following month the total income earned the previous month is deposited in the lending account and then automatically swept back into the IRA and doesn’t generate taxable income. Dividends from the ETFs unaffected.
Last month’s income total was around $900 and this month is closing in on $1000.
There must be significant “short” selling of bonds right now and that must be generating the interest. The interest rate they give for one ETF fund is 22.5% and another 45%.
I’m guessing this level of activity won’t last long but has been enough for a few free lunches 😊. I have not experienced any issues and it seems to work as advertised.
I read Howard R’s article last year and promptly researched at Schwab and found that none of my ETFs fit their needs. Two months ago Schwab reached out to gauge my interest and I signed up. Promptly some of my Vanguard bond ETFs from my traditional IRA were snapped up and the equivalent $ value deposited in a separate Securities Lending account which Schwab set up in my name. Since then the ETFs have moved back and forth frequently. Sometimes they leave and are deposited back the same day and don’t seem to generate any income. If the ETF’s are left in the Lending Account over the weekend they earn income 7 days a week at the specified interest rate even though the markets are closed. I receive a daily notification of income generated (if any) and on the first business day of the following month the total income earned the previous month is deposited in the lending account and then automatically swept back into the IRA and doesn’t generate taxable income. Dividends from the ETFs unaffected. Last month’s income total was around $900 and this month is closing in on $1000. There must be significant “short” selling of bonds right now and that must be generating the interest. The interest rate they give for one ETF fund is 22.5% and another 45%. I’m guessing this level of activity won’t last long but has been enough for a few free lunches 😊. I have not experienced any issues and it seems to work as advertised.
Last time I purchased new car I researched new and used and the average % the manufacturer’s model typically sold below MSRP. If I recall at the time that particular model new sold 6% below MSRP. I visited dealer and test drove 3-4 days before end of quarter and we were also closing in on the end of model year. I made an offer which was not accepted by the dealer and I left on friendly terms to “let me think about it”. I left my phone number and received a call on the last day of the month and advised my offer was now accepted. I assume they had their quotas/numbers to meet. I was not in a particular hurry and had time on my side which provides a little leverage when timed correctly.
Agree IRMAA threshold is a careful consideration, as is taking distributions before 59.5 yrs of age which will under most circumstances also incur penalties. The above comment was purely addressing the tax penalty situation associated with a large end of year conversion and treating tax payment on the Roth conversion as a witholding, rather than incurring a penalty for underpayment if estimated taxes were paid instead and not reported correctly to the IRS. The multi step process illustrated pays taxes from a brokerage account which is widely regarded as more tax efficient than paying from an IRA when performing the conversion. When performing Roth conversions the impact on gross income and IRMAA premiums from the age 63 onwards as you mentioned are an important consideration. One dollar too much can move you up a bracket and be quite costly. No matter whether the tax is paid from brokerage or from the IRA the amount of tax paid dollar for dollar is the same. Paying taxes from brokerage allows more to be transferred into the Roth ‘tax free’ envelope.
I asked Gemini to develop a strategy for a large 4th quarter roth conversion and desire to treat taxes as a withholding and to take taxes from a brokerage account. After some back and forth arrived at the following. I would be interested if the tax gurus on HD see any fatal flaws? There is one unique loophole if you absolutely want the payment to be classified by the IRS as a withholding rather than an estimated payment.
The IRS treats all retirement account tax withholdings as if they were paid evenly throughout the entire year, regardless of the actual date the withholding took place.
If you want to exploit this rule to completely bypass the need for filing Form 2210 Schedule AI at tax time, you can do a two-part transaction using both your retirement and brokerage accounts:
1. The Pure Conversion: Convert the desired amount from your Traditional IRA to your Roth IRA, selecting 0% withholding so the entire balance moves safely into the Roth.
2. The Tax-Withholding Distribution: Take a separate, deliberate distribution from your Traditional IRA directly to the IRS as a 100% tax withholding to cover the tax bill.
3. The Brokerage Backfill: Immediately use cash from your Schwab brokerage account to execute a 60-day rollover contribution to your Roth IRA to replace the amount you just distributed for taxes from your traditional IRA.
Why this works:
Because the IRS views the tax withheld in Step 2 as having been paid equally across Q1, Q2, Q3, and Q4, it automatically erases any underpayment penalties for the earlier quarters. By backfilling the Roth IRA with cash from your brokerage account within 60 days, you ensure that the total money distributed from your traditional IRA is converted to your Roth IRA, taxes are a withholding and in effect funded from your brokerage account. Warning on the Loophole: You are only allowed one 60-day indirect rollover per 12-month period. If you have already executed an indirect rollover recently, you cannot use this method.
Some interesting YTD (June 22, 2026) stats on S&P 500, Mag 7 and diversification: Mag 7 +1.34% YTD
S&P 500 +9.16% YTD
S&P 493 +14.76% YTD The 493 have been doing the heavy lifting. Mag 7 stocks off their highs: Microsoft -32.23%
Meta -28.63%
Netflix -45.58%
Alphabet -12.60%
Amazon -15.35%
Tesla -17.32%
Nvidia -11.39% The rotation out of Mag 7 has been going on for about a year and the market is still near all time highs. Diversification is doing what we hope it will do and is being achieved with index funds.Where is the money going? Some examples YTD: Russell 2000 (IWM) +21.67% YTD
Small cap value (AVUV) +20.87% YTD
Vanguard Value (VTV) +15.1% YTD
Vanguard mid cap (VO) +11.30%
MSCI Emerging Markets (EEM) +30.78% YTD It is possible to have a diversified portfolio which keeps the overweight of the Mag 7 in the S&P 500 in balance.
I agree that there are other places to keep keep liquid funds other than bank savings accounts. For the last few years I have used Apple savings which is easy to use and funds available at the click of a button (takes a day or two to show up in bank account), current interest rate is 3.4%. An additional consideration is whether or not to keep treasuries, which are intended for the longer view / asset allocation purposes, in tax deferred accounts to avoid the tax drag as dividends are considered ordinary income in a taxable account. Another option is municipal bond etfs in taxable accounts. The dividends are not subject to federal income tax but the income does count towards modified adjusted gross income (MAGI) for IRMAA income bracket calculation which is a consideration from 63 years old and beyond.
It’s been a minute but my early forays performing financial analyses with Chat GPT were very frustrating and seemed more focused on the CYA small print. But things change. Subsequently, I found Gemini to be more useful, but it is ‘eager to please’ and it is easy to go down the rabbit hole. Additionally, I frequently find myself reminding it of meaningful facts from earlier in the dialogue. I have not yet spent much time using Claude. Next on the list. Most recently I started evaluating Roth conversions, customized to my specific portfolio construction and tax situation. With Gemini I arrived at what seems to be a good plan. Before acting on this, I plan on testing this two ways. Firstly, utilizing Claude and if that checks out, then subscribing to Boldin (formerly known as NewRetirement) which is financial modeling and projection platform to triple check the analysis. Which will have to wait for summer travels to be completed 😊
Comments
I am on the side of diversification from a risk management perspective. Now in my early 60’s, and having benefited from decades of bi-monthly deposits and compounding in my 401k, I find my risk tolerance is decreasing. My look forward retirement plan doesn’t need 10% returns to be successful, therefore optimizing returns is no longer my priority. To that end I have US, international, emerging markets, growth, value, large cap and small cap stocks in various index funds, with specific allocations to each. Weighting is approximately 70% US vs 30% international. When I look at events since the launch of ChatGPT in 2022 it is truly staggering to witness the innovation, how it has grown logarithmically and almost single handedly driven stock market growth since. Projected S&P 500 future earnings growth is now completely dominated by AI related companies. My portfolio in turn has benefited as I own all the players, including the international chip manufacturers. I also look at all this with a degree of suspicion. 300 +/- of the S&P 500 stocks are down year to date. Growth is increasingly being driven by a very narrow group, which is not necessarily unusual - Bessembinder research. But that grouping of top stocks in my mind are all interconnected - eggs in one basket. The amount of money being spent by the hyperscalers is mind boggling, as is the amount of borrowing, and it is difficult to figure out the circular trades and the sustainability of it all. As Warren Buffet said “you find out who is swimming naked when the tide goes out” or something to that effect. I hope that my stock bond allocation and diversified equity portfolio, which deliberately dilutes the concentration of top S&P 500 companies, will hold up a little better should the tide go out. It still has significant exposure to all the S&P 500 names and will be not immune. I am a firm believer that AI related companies will do fabulously well in the future. But I also believe there will be winners and losers, and it is the volatility associated with that I am hoping to temper with diversification which includes an international component.
Post: Do I really need International funds in my portfolio? I say no.
Link to comment from November 1, 2026
I read Howard R’s article last year and promptly researched at Schwab and found that none of my ETFs fit their needs. Two months ago Schwab reached out to gauge my interest and I signed up. Promptly some of my Vanguard bond ETFs from my traditional IRA were snapped up and the equivalent $ value deposited in a separate Securities Lending account which Schwab set up in my name. Since then the ETFs have moved back and forth frequently. Sometimes they leave and are deposited back the same day and don’t seem to generate any income. If the ETF’s are left in the Lending Account over the weekend they earn income 7 days a week at the specified interest rate even though the markets are closed. I receive a daily notification of income generated (if any) and on the first business day of the following month the total income earned the previous month is deposited in the lending account and then automatically swept back into the IRA and doesn’t generate taxable income. Dividends from the ETFs unaffected. Last month’s income total was around $900 and this month is closing in on $1000. There must be significant “short” selling of bonds right now and that must be generating the interest. The interest rate they give for one ETF fund is 22.5% and another 45%. I’m guessing this level of activity won’t last long but has been enough for a few free lunches 😊. I have not experienced any issues and it seems to work as advertised.
Post: Securities Lending Fully Paid Program
Link to comment from October 20, 2026
I read Howard R’s article last year and promptly researched at Schwab and found that none of my ETFs fit their needs. Two months ago Schwab reached out to gauge my interest and I signed up. Promptly some of my Vanguard bond ETFs from my traditional IRA were snapped up and the equivalent $ value deposited in a separate Securities Lending account which Schwab set up in my name. Since then the ETFs have moved back and forth frequently. Sometimes they leave and are deposited back the same day and don’t seem to generate any income. If the ETF’s are left in the Lending Account over the weekend they earn income 7 days a week at the specified interest rate even though the markets are closed. I receive a daily notification of income generated (if any) and on the first business day of the following month the total income earned the previous month is deposited in the lending account and then automatically swept back into the IRA and doesn’t generate taxable income. Dividends from the ETFs unaffected. Last month’s income total was around $900 and this month is closing in on $1000. There must be significant “short” selling of bonds right now and that must be generating the interest. The interest rate they give for one ETF fund is 22.5% and another 45%. I’m guessing this level of activity won’t last long but has been enough for a few free lunches 😊. I have not experienced any issues and it seems to work as advertised.
Post: Free Lunch?
Link to comment from October 20, 2026
Last time I purchased new car I researched new and used and the average % the manufacturer’s model typically sold below MSRP. If I recall at the time that particular model new sold 6% below MSRP. I visited dealer and test drove 3-4 days before end of quarter and we were also closing in on the end of model year. I made an offer which was not accepted by the dealer and I left on friendly terms to “let me think about it”. I left my phone number and received a call on the last day of the month and advised my offer was now accepted. I assume they had their quotas/numbers to meet. I was not in a particular hurry and had time on my side which provides a little leverage when timed correctly.
Post: Buying a car in retirement
Link to comment from July 15, 2026
Agree IRMAA threshold is a careful consideration, as is taking distributions before 59.5 yrs of age which will under most circumstances also incur penalties. The above comment was purely addressing the tax penalty situation associated with a large end of year conversion and treating tax payment on the Roth conversion as a witholding, rather than incurring a penalty for underpayment if estimated taxes were paid instead and not reported correctly to the IRS. The multi step process illustrated pays taxes from a brokerage account which is widely regarded as more tax efficient than paying from an IRA when performing the conversion. When performing Roth conversions the impact on gross income and IRMAA premiums from the age 63 onwards as you mentioned are an important consideration. One dollar too much can move you up a bracket and be quite costly. No matter whether the tax is paid from brokerage or from the IRA the amount of tax paid dollar for dollar is the same. Paying taxes from brokerage allows more to be transferred into the Roth ‘tax free’ envelope.
Post: Don’t Let a Roth Conversion Trigger a Penalty
Link to comment from July 13, 2026
I asked Gemini to develop a strategy for a large 4th quarter roth conversion and desire to treat taxes as a withholding and to take taxes from a brokerage account. After some back and forth arrived at the following. I would be interested if the tax gurus on HD see any fatal flaws? There is one unique loophole if you absolutely want the payment to be classified by the IRS as a withholding rather than an estimated payment. The IRS treats all retirement account tax withholdings as if they were paid evenly throughout the entire year, regardless of the actual date the withholding took place. If you want to exploit this rule to completely bypass the need for filing Form 2210 Schedule AI at tax time, you can do a two-part transaction using both your retirement and brokerage accounts: 1. The Pure Conversion: Convert the desired amount from your Traditional IRA to your Roth IRA, selecting 0% withholding so the entire balance moves safely into the Roth. 2. The Tax-Withholding Distribution: Take a separate, deliberate distribution from your Traditional IRA directly to the IRS as a 100% tax withholding to cover the tax bill. 3. The Brokerage Backfill: Immediately use cash from your Schwab brokerage account to execute a 60-day rollover contribution to your Roth IRA to replace the amount you just distributed for taxes from your traditional IRA. Why this works: Because the IRS views the tax withheld in Step 2 as having been paid equally across Q1, Q2, Q3, and Q4, it automatically erases any underpayment penalties for the earlier quarters. By backfilling the Roth IRA with cash from your brokerage account within 60 days, you ensure that the total money distributed from your traditional IRA is converted to your Roth IRA, taxes are a withholding and in effect funded from your brokerage account. Warning on the Loophole: You are only allowed one 60-day indirect rollover per 12-month period. If you have already executed an indirect rollover recently, you cannot use this method.
Post: Don’t Let a Roth Conversion Trigger a Penalty
Link to comment from July 12, 2026
Some interesting YTD (June 22, 2026) stats on S&P 500, Mag 7 and diversification: Mag 7 +1.34% YTD S&P 500 +9.16% YTD S&P 493 +14.76% YTD The 493 have been doing the heavy lifting. Mag 7 stocks off their highs: Microsoft -32.23% Meta -28.63% Netflix -45.58% Alphabet -12.60% Amazon -15.35% Tesla -17.32% Nvidia -11.39% The rotation out of Mag 7 has been going on for about a year and the market is still near all time highs. Diversification is doing what we hope it will do and is being achieved with index funds. Where is the money going? Some examples YTD: Russell 2000 (IWM) +21.67% YTD Small cap value (AVUV) +20.87% YTD Vanguard Value (VTV) +15.1% YTD Vanguard mid cap (VO) +11.30% MSCI Emerging Markets (EEM) +30.78% YTD It is possible to have a diversified portfolio which keeps the overweight of the Mag 7 in the S&P 500 in balance.
Post: Billy’s Certificate – 1937
Link to comment from June 25, 2026
I agree that there are other places to keep keep liquid funds other than bank savings accounts. For the last few years I have used Apple savings which is easy to use and funds available at the click of a button (takes a day or two to show up in bank account), current interest rate is 3.4%. An additional consideration is whether or not to keep treasuries, which are intended for the longer view / asset allocation purposes, in tax deferred accounts to avoid the tax drag as dividends are considered ordinary income in a taxable account. Another option is municipal bond etfs in taxable accounts. The dividends are not subject to federal income tax but the income does count towards modified adjusted gross income (MAGI) for IRMAA income bracket calculation which is a consideration from 63 years old and beyond.
Post: Beyond Bank Accounts
Link to comment from June 13, 2026
It’s been a minute but my early forays performing financial analyses with Chat GPT were very frustrating and seemed more focused on the CYA small print. But things change. Subsequently, I found Gemini to be more useful, but it is ‘eager to please’ and it is easy to go down the rabbit hole. Additionally, I frequently find myself reminding it of meaningful facts from earlier in the dialogue. I have not yet spent much time using Claude. Next on the list. Most recently I started evaluating Roth conversions, customized to my specific portfolio construction and tax situation. With Gemini I arrived at what seems to be a good plan. Before acting on this, I plan on testing this two ways. Firstly, utilizing Claude and if that checks out, then subscribing to Boldin (formerly known as NewRetirement) which is financial modeling and projection platform to triple check the analysis. Which will have to wait for summer travels to be completed 😊
Post: ChatGPT’s Portfolio Advice
Link to comment from June 7, 2026
Look after the pennies and the pounds of coffee will look after themselves? Sorry!
Post: Dickie and his magic beans
Link to comment from May 10, 2026