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Getting Older

"I actually like to shovel snow. I know, sick, right? Even though the HOA does a lousy job, I don’t shovel because I know there is a physical hazard that comes with being 73, and working hard in sub-freezing temperatures. I don’t shave every day either, though I have to be extra careful smooching with Chrissy on my off days. Chrissy is a delicate flower.  I still wash my hair every day, but often forget to run a brush through it. Last time I went for a haircut, my barber had to cut out a mat. I now have something in common with Sophie the wonder cat. My barber, who first cut my hair in 1972 at barber college, got a good laugh out of that.  I didn’t used to scare myself when looking at my reflection in a mirror.  Back when the ElderBeerMen were just the beer men, we never talked of high cholesterol and recent PSA test results.  I used to wonder if I would ever suffer a mid-life crisis. Now I’m sad because it seems I’ve missed my chance. These days I’m in bed around the same time I used to be heading out for a night on the town.   Does anyone say ‘night on the town’ any longer?"
- DAN SMITH
Read more »

Carrying Humble Dollar Forward

"Same for me, Andrew. I struggle to think of things to write about that haven't been addressed by other writers, so, I just lurk and respond."
- Dave Melick
Read more »

Perfection, enemy of good

"I think your plan is an excellent launch pad for most people. As I look back, I have benefited from making 401k contributions every two weeks since 1994. Not through some great financial wisdom, it just seemed like a good idea to get the company match (free money) when I started. I set it and mostly forgot it. With the exception of over time increasing contributions with pay raises until I was able to max out the contribution limit. For many years the quarterly paper statement received in the mail was my only window into progress being made and I didn't pay attention to the stock market. Simple. Back then I did not understand the complexities of investing and the potential pitfalls. It is only over the last 5-6 years that I have sought to better educate myself. In retrospect I am sure that I would have been much better off today if low-cost index funds had been available as a choice in my 401K, fortunately I wasn't paying outrageous fees either. Over the past 2-3 years, I have been trying to give some financial advice to my now 30-year-old daughter. At first some suggested reading and websites, to no avail, and some gentle prompts to let me look under the hood of her finances. Eventually, when the time was right for her, she did allow me to take a look under the hood. Unfortunately, I found credit card debt (for which she was making minimum payments) and while she did have a 401k retirement plan, its balance was meagre and she was not saving enough to take full advantage of the company match. Today she has a simple plan:
  1. Credit Card Debt is gone and several cards cancelled
  2. She is automatically saving 10% to her 401K each pay-check
  3. She is invested 100% in a low-cost Target Date Fund
I consider this a major achievement! When I saw the title of your article for some reason it made me think of an interview with Bono from U2 discussing the bands success and longevity. He said, in reference to selecting songs for an album, "good is the enemy of great". That might be the case for a rock band but not necessarily for personal investing / retirement planning."
- Grant Clifford
Read more »

Recency Bias (or: You’re Running Buggy Software)

"I agree that recency bias is important. The “news” can be equally detrimental to our financial plans. I should restate that and say I think we should be very selective about our information sources. I prefer written ones, but AI “slop” is making it even more difficult to get a grasp on reality.  With all of the negativity, what’s the reality for my accounts? I’m using data as of 4/7/2026.  I would hope that HD readers are “long term” investors. By that I mean investing with the intention to hold for 10-15 years.  I do use a long-term approach and it has worked for me. Of course, there are short-term ups, and downs. For example, I own a TIPS fund and even with dividends the current value shows a “loss” of 2.96%. But that fund is only 1.92% of my portfolio ( I prefer to hold bonds). The real decline to the portfolio is 0.058%. That miniscule amount is hardly worth thinking about.  I think it is useful to define investment gyrations as declines or increases. After all, there is no loss incurred (or gain) until one sells and cashes out.  Anything purchased recently may show a short-term decline in value. If we think long-term, it is reasonable to assume there will be an increase in the future. Certain, more volatile stocks or investments may not behave with the overall stock market. That’s the nature of speculation.  My point is, even a 50/50 portfolio can do very well, long term. Mine has. However, I’m retired and so I am prudently more conservative and practice wealth defense. This would not be my approach if I were more than 10 years from retirement.   My portfolio currently shows an increase in value of 0.4% since 12/31/2025. It shows an increase of 10.25% since 12/31/2024. The increase would be greater if I didn’t take RMDs, and if I hadn’t withdrawn 10% in 2023. The S&P 500 shows a recent decline of about 2.6%.  Certain investments have been helpful to me. My Gold and Precious Metals fund shows a recent decline in value, although it is up about 130%. A utility I purchased in 2014 is up 400%. My energy ETF is up about 250%. There are 15 holdings which have more than doubled in value.  Even the S&P 500 shows a 5-year gain of 62%, excluding dividends.  If, after analyzing your portfolio you find it to be too volatile or subject to larger declines recently, let’s say greater than 10%, then perhaps you should re-evaluate your approach. However, if you are young, you may have decades of investing ahead  If the market perturbation is disturbing, take a look at your net worth. With recent real estate value increases many of us have seen an increase in our net worth, even if we fully depreciate automobiles, etc. In my case, because I have not spent all of my annual RMDs, the remainder goes into savings. That too has improved my net worth.  "
- normr60189
Read more »

Blood Money

"Here's a podcast episode on the topic, from Ed Slott & Jeffrey Levine: https://open.spotify.com/episode/0C0CfDdTmFKsR07DBLkuJu?si=2PpP8uw1SJW45ijpYlSJxQ"
- Randy Dobkin
Read more »

Financial regrets about parenthood?

"That would indeed be a terrific article idea, Kristine, especially since financial planning for elder care is top of mind for many still-working couples. My own household is a dream situation for an elderly person. Mama (my MIL) is the center of attention for both her daughters and her son-in-law. Even the dog listens to her."
- Mike Gaynes
Read more »

Any concern?

"I’m near retirement and all set with the portfolio AA initial conditions, specifically with a healthy dose of fixed income ready to weather an inevitable market downturn. What I’m a bit unsure of is refilling my fixed income efficiently &!sufficiently as time goes on. I have the usual plan of rebalancing and its nuances, but we’ll see how it goes. I’m fairly confident, have read a ton and run the numbers but haven’t done this before. Retirement: There’s always that first time ;)."
- Andy Morrison
Read more »

Tax Efficiency

TAX EFFICIENT FUND placement is an often underrated topic. The goal of the tax efficient fund placement is to minimize taxes within your investments, and select the right account for those investments.

But how much does that actually matter?

Vanguard’s research finds that a thoughtful asset location strategy can add significantly more value than an equal location strategy. The value added typically ranges from 5 to 30 basis points of after-tax return, depending on circumstances (e.g., income, portfolio size).

Investors generally have access to different account types, including:

  • Tax-free accounts (Roth IRA, Roth 401(k))
  • Taxable brokerage accounts
  • Tax-deferred accounts (401(k), 403(b), Traditional IRA)

If you are an employee that may not have access to a retirement plan, you could perhaps consider a Solo 401(k) if you have "side hustle" business income.

Generally, if your investments are all in tax-deferred or tax-free accounts, fund placement will not make a huge difference for you. That is because these accounts already come with tax efficiency.

If that's your case, two things become important though:

1. Consideration between pre-tax, like Traditional 401(k) or after-tax account, like Roth 401(k). Put simply, this decision generally comes down to your marginal tax rate now versus marginal tax rate in the future (which isn't something easy to predict due to the ever-changing tax landscape).

2. Account allocation. It becomes equally important where exactly you are investing. Roth accounts grow tax-free and qualified withdrawals are tax-free. You likely don't want to hinder that growth by choosing conservative assets (like fixed income, Money Market Funds, and so on).

Tax-efficient fund placement becomes extremely important when you also have a taxable brokerage account, along with tax-advantaged accounts. Many funds pay dividends and distribute capital gains if placed in your taxable brokerage account. At the end of the year, you receive a 1099 with that income and must pay taxes on the dividends and certain distributions.

One thing to call out from history is that you generally shouldn't hold Target Date Retirement mutual funds (or any "proprietary" funds) in your brokerage account. This is because unexpected redemptions could cause a huge tax bill.

You may remember a Vanguard 2021 fiasco where Vanguard opened an institutional TDF to more investors (lowered the minimum investment from $100M to $5M), which caused smaller retirement plans to sell out of individual funds and move into the institutional fund. This triggered massive unexpected capital gains for anyone invested in the individual funds if held in a brokerage account.

All of those unnecessary taxes could've been avoided by:

  • Choosing investments that don’t distribute many dividends or capital gains
  • Choosing passively managed investments (low portfolio turnover)
  • Placing them in tax-advantaged accounts

Let me give you a simple example:

Let’s say you are in a 22% federal tax bracket and a 5% state tax bracket, and you have some money invested in a dividend fund like Schwab US Dividend Equity ETF (SCHD). SCHD dividends are generally qualified, which means that the dividends get preferential treatment at a 15% federal tax rate for this investor.

The dividend yield is 3.43%. Considering the tax rates, the tax drag is (15% + 5%) * 3.43% = 0.686%.

To put this in perspective, a $10,000 investment will yield ~$343 in annual dividends. The tax impact on that investment will be $60.86.

Of course, if that money was in a Roth IRA, you would pay $0 in taxes on dividend distributions. Alternatively, this is something you may need to decide whether a dividend-focused investing strategy is the right one for you. For example, a Total US Stock Market ETF could have almost 3x less tax drag, and potentially more growth.

As someone in their 20s (who is subject to the Net Investment Income Tax) my focus is 100% on a growth investment strategy, rather than income generation. For someone in their 60s, that strategy could be different (even though selling shares for capital gains is better from a tax timing point of view).

A few more important points:

REIT stocks/ETFs are the least tax-efficient asset class to hold in a brokerage account because their distributions aren’t qualified, so you pay more tax (even though it may qualify for a 199A deduction).

Stocks that don’t pay dividends are the most tax-efficient to hold within your taxable account (Adobe, Amazon, Netflix, and others). However, holding individual stocks may not be the best strategy from an investment and diversification standpoint.

A big benefit of a taxable account is that the money is always easily accessible (liquidity), and you can control your withdrawal timing. While there are strategies that allow you to withdraw from retirement accounts before age 59 (like Rule of 55, 72(t) SoSEPP, Roth conversions), a brokerage account is more flexible. Therefore, analyzing the contributions and investments that go into this account is crucial.

How do you maximize tax efficiency? Let us know in the comments!   Bogdan Sheremeta is a licensed CPA based in Illinois with experience at Deloitte and a Fortune 200 multinational.  

Read more »

The Home Ownership Gamble

"Dana, we experienced something similar with our first and 2nd homes (almost the same year of purchase as well), except that we sold our first home for exactly what we paid for it and had been underwater for the 8 years (4 more than the original plan) we owned it. The 2nd home, the one we raised our kids in and still own has more than tripled in value. Of course we have done lots of improvements that we wanted to and ultimately we have a relationship with our home-comfort, memories, a solid sense of security-and it has been a forced savings that has allowed us to build a certain amount of wealth which we can touch if needed. I see the memes about moving every 2 years and pocketing the increase in value tax free but real estate (like all investments) is volatile and if you're counting on it always going up, there will sometimes be disappointment. But if you are purchasing a home for reasons other than "just" investment" there is nothing like a place of ones own."
- Rachna Condos
Read more »

Simplify Everything

"Kristine: The subscription auto-shipment thing is a great idea too. Like you, we have that set up for our dog food needs (we have two hungry border terriers), and certain over the counter medications and pantry items that we consistently use. That adds to the list of things to not have to remember, not run out of and not have to go shopping for. We also make a weekly Costco run, but at this point it is still something I enjoy and I coordinate that visit with my weekly gasoline fill up. But, thanks for the "Instacart" subscription idea. I'll have to remember that for future reference."
- Doug C
Read more »

Stock Market Contest

"My guess is individual stocks will win but a broad fund will best most others. At least there may be one lesson there."
- Randy Dobkin
Read more »

Why I use a Donor-Advised Fund

"Our after tax account is pretty equally divided between a total market index fund and a tax efficient fund. The performance of the two is very similar. But when doing our taxes this year, I noticed the index fund had major taxable gains; the taxable income on the tax efficient fund was zero. I’m also concerned about leaving my kids— who are high earning professionals— taxable IRAs. We do regular major Roth conversions each year."
- Marilyn Lavin
Read more »

Getting Older

"I actually like to shovel snow. I know, sick, right? Even though the HOA does a lousy job, I don’t shovel because I know there is a physical hazard that comes with being 73, and working hard in sub-freezing temperatures. I don’t shave every day either, though I have to be extra careful smooching with Chrissy on my off days. Chrissy is a delicate flower.  I still wash my hair every day, but often forget to run a brush through it. Last time I went for a haircut, my barber had to cut out a mat. I now have something in common with Sophie the wonder cat. My barber, who first cut my hair in 1972 at barber college, got a good laugh out of that.  I didn’t used to scare myself when looking at my reflection in a mirror.  Back when the ElderBeerMen were just the beer men, we never talked of high cholesterol and recent PSA test results.  I used to wonder if I would ever suffer a mid-life crisis. Now I’m sad because it seems I’ve missed my chance. These days I’m in bed around the same time I used to be heading out for a night on the town.   Does anyone say ‘night on the town’ any longer?"
- DAN SMITH
Read more »

Carrying Humble Dollar Forward

"Same for me, Andrew. I struggle to think of things to write about that haven't been addressed by other writers, so, I just lurk and respond."
- Dave Melick
Read more »

Perfection, enemy of good

"I think your plan is an excellent launch pad for most people. As I look back, I have benefited from making 401k contributions every two weeks since 1994. Not through some great financial wisdom, it just seemed like a good idea to get the company match (free money) when I started. I set it and mostly forgot it. With the exception of over time increasing contributions with pay raises until I was able to max out the contribution limit. For many years the quarterly paper statement received in the mail was my only window into progress being made and I didn't pay attention to the stock market. Simple. Back then I did not understand the complexities of investing and the potential pitfalls. It is only over the last 5-6 years that I have sought to better educate myself. In retrospect I am sure that I would have been much better off today if low-cost index funds had been available as a choice in my 401K, fortunately I wasn't paying outrageous fees either. Over the past 2-3 years, I have been trying to give some financial advice to my now 30-year-old daughter. At first some suggested reading and websites, to no avail, and some gentle prompts to let me look under the hood of her finances. Eventually, when the time was right for her, she did allow me to take a look under the hood. Unfortunately, I found credit card debt (for which she was making minimum payments) and while she did have a 401k retirement plan, its balance was meagre and she was not saving enough to take full advantage of the company match. Today she has a simple plan:
  1. Credit Card Debt is gone and several cards cancelled
  2. She is automatically saving 10% to her 401K each pay-check
  3. She is invested 100% in a low-cost Target Date Fund
I consider this a major achievement! When I saw the title of your article for some reason it made me think of an interview with Bono from U2 discussing the bands success and longevity. He said, in reference to selecting songs for an album, "good is the enemy of great". That might be the case for a rock band but not necessarily for personal investing / retirement planning."
- Grant Clifford
Read more »

Recency Bias (or: You’re Running Buggy Software)

"I agree that recency bias is important. The “news” can be equally detrimental to our financial plans. I should restate that and say I think we should be very selective about our information sources. I prefer written ones, but AI “slop” is making it even more difficult to get a grasp on reality.  With all of the negativity, what’s the reality for my accounts? I’m using data as of 4/7/2026.  I would hope that HD readers are “long term” investors. By that I mean investing with the intention to hold for 10-15 years.  I do use a long-term approach and it has worked for me. Of course, there are short-term ups, and downs. For example, I own a TIPS fund and even with dividends the current value shows a “loss” of 2.96%. But that fund is only 1.92% of my portfolio ( I prefer to hold bonds). The real decline to the portfolio is 0.058%. That miniscule amount is hardly worth thinking about.  I think it is useful to define investment gyrations as declines or increases. After all, there is no loss incurred (or gain) until one sells and cashes out.  Anything purchased recently may show a short-term decline in value. If we think long-term, it is reasonable to assume there will be an increase in the future. Certain, more volatile stocks or investments may not behave with the overall stock market. That’s the nature of speculation.  My point is, even a 50/50 portfolio can do very well, long term. Mine has. However, I’m retired and so I am prudently more conservative and practice wealth defense. This would not be my approach if I were more than 10 years from retirement.   My portfolio currently shows an increase in value of 0.4% since 12/31/2025. It shows an increase of 10.25% since 12/31/2024. The increase would be greater if I didn’t take RMDs, and if I hadn’t withdrawn 10% in 2023. The S&P 500 shows a recent decline of about 2.6%.  Certain investments have been helpful to me. My Gold and Precious Metals fund shows a recent decline in value, although it is up about 130%. A utility I purchased in 2014 is up 400%. My energy ETF is up about 250%. There are 15 holdings which have more than doubled in value.  Even the S&P 500 shows a 5-year gain of 62%, excluding dividends.  If, after analyzing your portfolio you find it to be too volatile or subject to larger declines recently, let’s say greater than 10%, then perhaps you should re-evaluate your approach. However, if you are young, you may have decades of investing ahead  If the market perturbation is disturbing, take a look at your net worth. With recent real estate value increases many of us have seen an increase in our net worth, even if we fully depreciate automobiles, etc. In my case, because I have not spent all of my annual RMDs, the remainder goes into savings. That too has improved my net worth.  "
- normr60189
Read more »

Blood Money

"Here's a podcast episode on the topic, from Ed Slott & Jeffrey Levine: https://open.spotify.com/episode/0C0CfDdTmFKsR07DBLkuJu?si=2PpP8uw1SJW45ijpYlSJxQ"
- Randy Dobkin
Read more »

Financial regrets about parenthood?

"That would indeed be a terrific article idea, Kristine, especially since financial planning for elder care is top of mind for many still-working couples. My own household is a dream situation for an elderly person. Mama (my MIL) is the center of attention for both her daughters and her son-in-law. Even the dog listens to her."
- Mike Gaynes
Read more »

Any concern?

"I’m near retirement and all set with the portfolio AA initial conditions, specifically with a healthy dose of fixed income ready to weather an inevitable market downturn. What I’m a bit unsure of is refilling my fixed income efficiently &!sufficiently as time goes on. I have the usual plan of rebalancing and its nuances, but we’ll see how it goes. I’m fairly confident, have read a ton and run the numbers but haven’t done this before. Retirement: There’s always that first time ;)."
- Andy Morrison
Read more »

Tax Efficiency

TAX EFFICIENT FUND placement is an often underrated topic. The goal of the tax efficient fund placement is to minimize taxes within your investments, and select the right account for those investments.

But how much does that actually matter?

Vanguard’s research finds that a thoughtful asset location strategy can add significantly more value than an equal location strategy. The value added typically ranges from 5 to 30 basis points of after-tax return, depending on circumstances (e.g., income, portfolio size).

Investors generally have access to different account types, including:

  • Tax-free accounts (Roth IRA, Roth 401(k))
  • Taxable brokerage accounts
  • Tax-deferred accounts (401(k), 403(b), Traditional IRA)

If you are an employee that may not have access to a retirement plan, you could perhaps consider a Solo 401(k) if you have "side hustle" business income.

Generally, if your investments are all in tax-deferred or tax-free accounts, fund placement will not make a huge difference for you. That is because these accounts already come with tax efficiency.

If that's your case, two things become important though:

1. Consideration between pre-tax, like Traditional 401(k) or after-tax account, like Roth 401(k). Put simply, this decision generally comes down to your marginal tax rate now versus marginal tax rate in the future (which isn't something easy to predict due to the ever-changing tax landscape).

2. Account allocation. It becomes equally important where exactly you are investing. Roth accounts grow tax-free and qualified withdrawals are tax-free. You likely don't want to hinder that growth by choosing conservative assets (like fixed income, Money Market Funds, and so on).

Tax-efficient fund placement becomes extremely important when you also have a taxable brokerage account, along with tax-advantaged accounts. Many funds pay dividends and distribute capital gains if placed in your taxable brokerage account. At the end of the year, you receive a 1099 with that income and must pay taxes on the dividends and certain distributions.

One thing to call out from history is that you generally shouldn't hold Target Date Retirement mutual funds (or any "proprietary" funds) in your brokerage account. This is because unexpected redemptions could cause a huge tax bill.

You may remember a Vanguard 2021 fiasco where Vanguard opened an institutional TDF to more investors (lowered the minimum investment from $100M to $5M), which caused smaller retirement plans to sell out of individual funds and move into the institutional fund. This triggered massive unexpected capital gains for anyone invested in the individual funds if held in a brokerage account.

All of those unnecessary taxes could've been avoided by:

  • Choosing investments that don’t distribute many dividends or capital gains
  • Choosing passively managed investments (low portfolio turnover)
  • Placing them in tax-advantaged accounts

Let me give you a simple example:

Let’s say you are in a 22% federal tax bracket and a 5% state tax bracket, and you have some money invested in a dividend fund like Schwab US Dividend Equity ETF (SCHD). SCHD dividends are generally qualified, which means that the dividends get preferential treatment at a 15% federal tax rate for this investor.

The dividend yield is 3.43%. Considering the tax rates, the tax drag is (15% + 5%) * 3.43% = 0.686%.

To put this in perspective, a $10,000 investment will yield ~$343 in annual dividends. The tax impact on that investment will be $60.86.

Of course, if that money was in a Roth IRA, you would pay $0 in taxes on dividend distributions. Alternatively, this is something you may need to decide whether a dividend-focused investing strategy is the right one for you. For example, a Total US Stock Market ETF could have almost 3x less tax drag, and potentially more growth.

As someone in their 20s (who is subject to the Net Investment Income Tax) my focus is 100% on a growth investment strategy, rather than income generation. For someone in their 60s, that strategy could be different (even though selling shares for capital gains is better from a tax timing point of view).

A few more important points:

REIT stocks/ETFs are the least tax-efficient asset class to hold in a brokerage account because their distributions aren’t qualified, so you pay more tax (even though it may qualify for a 199A deduction).

Stocks that don’t pay dividends are the most tax-efficient to hold within your taxable account (Adobe, Amazon, Netflix, and others). However, holding individual stocks may not be the best strategy from an investment and diversification standpoint.

A big benefit of a taxable account is that the money is always easily accessible (liquidity), and you can control your withdrawal timing. While there are strategies that allow you to withdraw from retirement accounts before age 59 (like Rule of 55, 72(t) SoSEPP, Roth conversions), a brokerage account is more flexible. Therefore, analyzing the contributions and investments that go into this account is crucial.

How do you maximize tax efficiency? Let us know in the comments!   Bogdan Sheremeta is a licensed CPA based in Illinois with experience at Deloitte and a Fortune 200 multinational.  

Read more »

The Home Ownership Gamble

"Dana, we experienced something similar with our first and 2nd homes (almost the same year of purchase as well), except that we sold our first home for exactly what we paid for it and had been underwater for the 8 years (4 more than the original plan) we owned it. The 2nd home, the one we raised our kids in and still own has more than tripled in value. Of course we have done lots of improvements that we wanted to and ultimately we have a relationship with our home-comfort, memories, a solid sense of security-and it has been a forced savings that has allowed us to build a certain amount of wealth which we can touch if needed. I see the memes about moving every 2 years and pocketing the increase in value tax free but real estate (like all investments) is volatile and if you're counting on it always going up, there will sometimes be disappointment. But if you are purchasing a home for reasons other than "just" investment" there is nothing like a place of ones own."
- Rachna Condos
Read more »

Free Newsletter

Get Educated

Manifesto

NO. 29: WHAT MATTERS to long-term stock investors is the market’s dividend yield and growth in earnings per share. Everything else is noise that can bully and seduce us into foolishness.

act

PREPARE FOR a long life. For a quick gauge of your life expectancy, try the Social Security and Society of Actuaries' Longevity Illustrator calculators. What will you learn? First, the longer you live, the longer you can expect to live. Second, lifespans vary widely. Educated, health-conscious Americans might live three or four years longer than average.

Truths

NO. 27: COST-CONSCIOUS investors can save thousands over their lifetime. Take two investors who salt away $5,000 a year for 40 years. One pays 1% of assets in annual investment costs, while the other incurs 0.1%. If both earn 5% a year before expenses, the cost-conscious investor will amass $618,000, while the high-cost investor garners $494,000.

think

MARKET PORTFOLIO. This is the investable universe—all securities available for purchase. It consists of four sectors of roughly similar size: U.S. stocks, U.S. bonds, foreign stocks and foreign bonds. This is what all investors own and reflects our collective judgment of what securities are worth. Arguably, if you own a different mix, you’re making a market bet.

Savings Initiative

Manifesto

NO. 29: WHAT MATTERS to long-term stock investors is the market’s dividend yield and growth in earnings per share. Everything else is noise that can bully and seduce us into foolishness.

Spotlight: Behavior

Regular HD writers, readers and commentators are just not normal- in a good way

Over the several years I have been writing and commenting on HD it has been made clear that the HD community includes many sophisticated investors and planners. People who use budgets, track expenses, do their best to investigate and then make financial decisions based on information they develop. They use various type of software programs and, of course, their own spreadsheets. They analyze risk and investment expenses. They like details. They think about the future. And,

Read more »

Simplicity Is a Virtue

FORD MOTOR COMPANY introduced the world to the convertible hard top in 1957 with a car called the Skyliner. It was a marvel of engineering.
To retract, the Skyliner hard top first tilted up and away from the front windshield. Then the top folded in half overhead. The trunk lid opened wide. The folded hard top swung into the trunk, which then closed. All by flipping a single dashboard switch. You can see it in operation in this commercial featuring Lucille Ball and Desi Arnaz.

Read more »

Who’s Watching You?

WHEN I ATTENDED Sunday school as a child, I was taught that God is always watching over me. It was a frightening notion, but one I grew accustomed to. My mother would often remind me to “watch your Ps and Qs,” though I wasn’t entirely sure what that meant. Nonetheless, I understood the importance of behaving properly.
Today, it seems we have a different form of surveillance. As George Orwell so aptly depicted in his book 1984,

Read more »

Why I Don’t Drink

HUMANS HAVE ALWAYS celebrated the good times in their lives. These can be massive occasions, such as New Year’s Eve in New York City’s Times Square, or small and personal, such as birthdays. Celebrating is good. But what happens when it’s not?
Adults tend to celebrate with alcohol. For people like me, who lean toward shyness, alcohol can allow us to let loose. It feels good. We smile. People smile back. All is good.

Read more »

Here is my favorite word. What is your favorite word? Perhaps frugal, Roth, spreadsheet, planning, Monte Carlo, dividends? 

My favorite word is “aware.”
I believe that missed opportunities, stress, poor decisions of all types, just many of the things we complain about result from not being aware of what is happening around us. 
Being aware means having knowledge or perception of something. It involves noticing, recognizing, or being conscious of what’s happening either around you or within you.
In essence, being aware is about being connected to what is happening, both internally and externally,

Read more »

Taking It Personally

WHICH FINANCIAL dangers should we focus on? The possibilities seem pretty much endless. In fact, five years ago, I decided to make a list—and ended up offering readers 50 shades of risk.
Yet our notion of risk used to be far more circumscribed.
In the late 1980s, when I started writing about personal finance, insurance was considered important, but it wasn’t much discussed. Instead, the only risk that seemed to merit serious analysis was investment risk,

Read more »

Spotlight: Southworth

Taught by Others

THE DEEPER I SETTLE into semi-retirement, the more I miss something that I didn’t realize was important to me: working with and learning from a diverse group of people. I was lucky that, for most of my four-decade career, I was employed by profit-making and nonprofit organizations that were committed to workforce diversity. I miss how easy it was to be challenged and changed by difference. Sometimes, it was on pop culture. Sometimes, it was on something much more important. During my career, I learned how many things I take for granted as a white male: walking alone safely at night, driving without worrying about random police stops, making more for doing the same work, and the respect I got at work even when others deserved more. Awareness of our society’s diversity seems especially absent from the world of finance. I was reminded of this recently when I spoke to a woman of color who was in her mid-30s. She’s beginning to learn about investing and financial planning. She was, of course, confused by the financial alphabet soup that we forget is a foreign language to most. As I explained Roths, 401(k)s, 403(b)s, ETFs, ESG, cryptocurrencies and mutual funds, I was struck once again by how hard it can be for young people and people of color to break through the cultural, gender and class biases that often come with financial advice. Not everybody grew up with parents who invested in the stock market or even had a bank account. Not everybody today has the chance to own a home or has a job with employee benefits. As a relatively old, white, heterosexual male, it’s easy to forget that any experience, advice or wisdom I bring has been filtered through my racial, cultural and gender lenses. I often assume that…
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Choose Both

IT WAS A WARM MAY night in 1977. I was 19 years old and the manager of a fast-food restaurant. I was also in the middle of a five-year addiction to compulsive gambling that would eventually lead me to the brink of spiritual and financial bankruptcy. It was about 10:30 p.m. and I was cleaning up the store after closing. I was planning on going to the racetrack to catch the last race when I was done. I was emptying the soft drink system when I turned around and saw two men in ski masks pointing guns at me. I burst out laughing—I thought it was a joke. When they ordered me to get down on the floor and crawl over to the safe, I knew they were deadly serious. One of the men ordered me to empty the safe and put all the money in his bag. As I nervously loaded hundreds of dollars in coins into the bag, I noticed out of the corner of my eye that there was a paper cup sitting on my desk stuffed with about $400 in cash. The thought popped into my head that maybe he wouldn’t notice it and I could take it with me to the racetrack that night. After I cleaned out the safe, he asked me, “Is that all the money?” As I tried not to look at the money on the desk, I replied, “Yeah, that’s all the money.” He put the gun to my head and said again, “Is that all the money?” I stuttered, “Uh, there’s some more up there on the desk.” Maybe his gun wasn’t loaded or maybe he was too nervous to realize that I had tried to pull something over on him. Instead of shooting me, he and his partner tied…
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Treasured Trash

WHEN PEOPLE DISCUSS financial matters or take the “A Year to Live” class that I lead, there’s a common refrain: They don’t want to be a burden to their loved ones. They’re concerned about having enough money to take care of themselves when they’re older. But even if we have plenty of money, we can still end up being a burden. How so? Our kids and other loved ones don’t want the stuff we’ve gathered over the years. I was reminded of this recently when talking with some older friends about downsizing. For some, getting rid of beloved books, albums and paper records is like saying goodbye to long-held friendships. When we moved four years ago, we gave away more than 10 boxes of books. We still have too many. I always ask people in my class what their five most precious possessions are, and what they plan to do with them when they’re gone. The good news: People typically hold memories much tighter than material things. The bad news: They usually have no idea who, if anyone, will want the material objects they love. I’ve seen this up close. I was challenged and fortunate to take care of my dad when he went into home hospice care. The six weeks he thought he’d live turned into one year. I spent much of the year dealing with stuff that he and his late wife had accumulated. She was a collector, and had so many teddy bears and dolls that it was hard to get rid of them all. When my dad died, I was grateful that the company that bought his mobile home promised to dispose of any items that remained. I have no idea where they donated the furniture and boxes of china I left behind, but I was relieved…
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Twin Certainties

COMMON WISDOM TELLS us that we all pay taxes and that we all die. As a semi-retired minister, financial coach and tax preparer, I’ve gained an unusual appreciation for these two certainties of life. But never more so than this year. I began my first congregational ministry in August 2001, two weeks before the Sept. 11 terrorist attacks. The first class I offered was titled A Year to Live, in which we met over 12 months to plan and prepare as if we would die at the end of the year. In the aftermath of the 9/11 tragedy, we were each ready to reflect on our own life and eventual death, making peace with as much as we could, while taking care of the spiritual, emotional and practical details surrounding our death. The experience was transformational. I hadn’t taught the class since my dad died in 2019. I spent his last year caring for him. But this January, I decided to teach the class again, knowing the pandemic has made many people more aware, anxious and curious about death. Then, in February, I began preparing income tax returns again. I realized one Saturday morning, as I read HumbleDollar, that I might have a unique perspective on death and taxes—especially this year. Cicely Tyson, the amazing actress and icon who died in January at age 96, said, “Why should I be afraid of death—I don’t know anything about it.” But too many people are afraid of death—and taxes as well—even if they don’t know much about either. I find learning about both, especially with other people, makes death and taxes more comfortable or, at least, tolerable. Here are four lessons I’ve learned about death and taxes from my experiences as a teacher, minister and tax preparer: 1. Reflection is powerful. One of…
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Magic Number

MY MOM AND DAD split up when I was seven years old. Money was an issue for the rest of my childhood. Mom was rarely able to work fulltime and, according to her, child support and alimony were never enough. When I started working a newspaper stand at age 12, I was expected to give 25% of my daily take for rent. Mom also demanded that I save at least 10%. Depending on the headlines, I would make between $1.50 and $3 each day. Each night, I would drop a few coins in my savings cup. I never had an allowance, but I was a high-roller when it came to hanging out with my middle-school friends over cokes and candy bars (which might mean I wasn’t too good at saving). To my mom’s chagrin, I didn’t share her passion for saving money as I grew into young adulthood. Between a growing gambling addiction and a penchant for using credit cards to finance everyday life, my financial life was in ruins by my early 20s. Thankfully, I got help for the gambling addiction and fell in love with a woman who took financial management and budgeting seriously. On our second date, I went to her apartment to pick up her and her three-year-old son to see the latest Disney movie. She invited me into the kitchen for a drink of water. On the refrigerator was her biweekly budget for all the world, and maybe especially me, to see. It wasn’t a rounded-up budget, either. It was a “$78 for food, $11 for telephone, $35 for gas and $43 for savings” type of budget. It scared me so much I almost didn’t ask her out again. I have now been married to her for more than 35 years. While we eventually overcame…
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Bucket List

WHEN YOU’VE BEEN saving and investing for a long time, you have a long list of things you wish you could do over. Like hanging on to Apple, instead of selling at $85 a share. Like buying an index fund, instead of that hot mutual fund that quickly turned cold. My wife calls these “what ifs.” We have a rule not to talk about them because they almost always lead to arguments about who was wrong. Of course, there are also “what ifs” on the positive side. What if we sold everything when the market crashed in 2000-02, 2007-09 and 2020? What if we hadn’t started saving in our 401(k) plans when we got married? What if I hadn’t chosen to leave corporate America to see the country in an RV and later entered seminary? My most positive “what if” these days is this: What if I hadn’t become a devotee of the bucket approach to retirement allocation in the past five years? Most of our negative financial “what ifs” happened when we forgot when we were going to need our money. Selling stocks or mutual funds just because they go up or down is foolish, especially when retirement is 10 or 20 years away. Kathleen and I were foolish a lot over the years, usually when the market boomed or busted. Discovering the bucket approach a few years ago has provided much more peace and financial serenity in our lives. We park two years of cash in certificates of deposit and savings accounts. Money for years three through seven goes into bonds and very-low risk mutual funds. Anything we won’t need for at least seven years is in stocks. Last year, when the stock market briefly crashed, I was—for the first time in my life—calm and serene because I…
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