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What is the right percentage?

R Quinn  |  Aug 9, 2026

"Dick, I think an excerpt from your post above bears amplification for our younger readers: Your words: "One other difference from many others is that we lived on one income our entire married life and our lifestyle was based on that. In addition, we lived on my base salary only, not total compensation. Any pay above salary was saved." For those who are in a position to do so, living off salary alone (or a specific set point if base compensation is variable) and fighting the temptation to spend or increase the lifestyle when bonuses, equity distributions, perhaps inheritances, investment returns or other windfalls come their way is a great way to build long term wealth. We did basically the same thing and used the variable compensation and any windfalls that came our way to pay off our home mortgage and stuff the kids' 529's full enough to cover their college tuitions. Retirement savings became "Job#1" when there was no longer a mortgage and the 529's were topped off. This approach gives us the option today to actually increase our lifestyle in retirement. I guess you could say- burning the candle on the latter end of adulthood vs living it up in early years when a bonus etc. came along. All that said, spending money is still not something we are very good at after living conservatively our whole lives but I would have never done it any other way."
- Dunn Werking
Read more »

For most retirees, the greatest fear is not death—it is running out of money before they die.

Matt Halperin  |  Aug 6, 2026

"Dan, The short answer is "No". A more detailed response: I actually retired at the end of 2019. As part of my "Bucket" approach, when I rebalanced in 2020, I actually bought equity index funds as part of my annual rebalancing (wish I had done it earlier in 2020). In fact, $100,000 invested in Feb. 2020 just before COVID hit is worth over $250,000 today (with dividends reinvested). I rebalanced well below the Feb level. The "Bucket" approach allows me to essentially "self annuitize" by having progressive buckets with different timeframes and investment mixes. The timeframes are long enough that I don't lose sleep over downturns and just rebalance equity/bond mix in each bucket once or twice a year. I guess you could say in retirement, I just keep doing what I have done since starting to invest in the mid 1980's. Starting with the 1987 equity downturn, I rebalance into downturns by adding equities when the equity % drops below target. The only major downturn I have not rebalanced into since 1987 was 9/11. I was too consumed at work in the aftermath for months and did not want to benefit / profit off of that catastrophe."
- Dunn Werking
Read more »

Medicare Advantage Part C — Not too soon to start planning for 2027

R Quinn  |  Aug 11, 2026

Be the first to comment.
Read more »

Can a Value fund also be a Growth fund?

Harold Tynes  |  Aug 11, 2026

Be the first to comment.
Read more »

Roth Conversions and Taxes

ArticleJohn Urban  |  Aug 8, 2026

EVERY ARTICLE ABOUT Roth conversions says the same thing: pay the tax from taxable money, not from the IRA. That is good advice if you have taxable money. Plenty of retirees do not. Their savings sit almost entirely in a traditional IRA, built from years of 401(k) contributions and a rollover at retirement, with little brokerage money and no cash reserve worth naming. For them, “pay from outside money” is not advice. It is a condition they do not meet. Their real choice is a self-funded conversion or no conversion at all. The familiar warning is that self-funding requires a gross-up. You withdraw money to pay the conversion tax, that withdrawal is itself taxable, so you have to withdraw a little more. Less discussed is what else that withdrawal sets off. It makes more of your Social Security taxable, it raises your Medicare premiums two years later, and in a high-tax state it enlarges the amount that has to leave the IRA. Here is what those three cost, on one household. A cautious conversion Meet Dianne, a composite rather than a real person. She is 66, single, retired to Florida, with $1 million in a traditional IRA and nothing outside it. Social Security pays her $28,000 a year. She is past 59 and a half and already on Medicare. Florida keeps state income tax out of the arithmetic for now. She converts $40,000. Careful, modest, the size people choose when they are trying not to do anything dramatic. The tax on that conversion, paid from a checking account she does not have, would be $4,234. Funding it from the IRA instead, the withdrawal that covers it is $5,125, and her tax rises to match. That extra $891 is 17.4% of the $5,125 she withdrew. Her ordinary-income bracket is 12%. Twelve of those points are the tax on the withdrawal itself, which is the gross-up everybody expects. The other 5.4 points come from $2,300 of her Social Security being pulled into taxable income by that same withdrawal. Paying from cash, $21,500 of her benefit would be taxable. Self-funding, $23,800 is. The difference is caused by how she paid, not by what she converted, and nothing on her return will label it. Not a smaller version of a large one The effect is not linear. Run the same woman at $150,000 and 85% of her benefit, the statutory maximum, is already taxable before she funds the tax. The funding withdrawal drags in nothing further, and this particular cost is zero. That is not an argument for converting more. It is an argument against assuming a small conversion is simply a smaller version of a large one. The one that looks cautious can carry the higher marginal rate. What self-funding actually costs Give Dianne the $150,000 conversion, still with no outside cash, and add the state question. Still in Florida, $195,469 has to leave the traditional IRA to put $150,000 into the Roth. Move her to California, changing nothing else, and it is $219,751. That is $1.30 of IRA spent for every dollar reaching the Roth, against $1.47, and the gap is California income tax compounded through the gross-up. If a move across state lines is anywhere in your plan, the order of operations may matter more than the size of the conversion. But $1.47 invites a conclusion it does not support, and I would rather correct that myself than let it travel. A conversion is taxable whichever pocket pays. Of the $69,751 Dianne withdraws in California, roughly $44,639 replaces cash she would have spent anyway. The incremental cost of self-funding, in wealth given up, is $25,111. About 17% of the conversion, not 47. The bill that arrives in 2028 At that $150,000 conversion, self-funding also costs Dianne $1,735 in higher Medicare premiums, a surcharge of $6,355 rather than $4,620, charged on top of the standard premium, for one year, and hers alone as a single filer. The bill arrives two years late. Medicare sets her 2028 premiums from her 2026 income, so the cost is invisible at the moment she is deciding how to pay the 2026 tax. When it can still make sense Doing nothing is not free either. Money left in a traditional IRA comes out eventually, under required distributions, at whatever rates apply then, possibly to a survivor filing single, possibly to heirs facing a 10-year deadline. Where self-funding still holds up, a few things tend to be true. The rate gap is durable rather than a one-year accident. Whether it repays a cost this size depends on time, future tax rates and investment returns. A temporary dip in income is a thin foundation. A structural window, after retirement and before Social Security or required distributions begin, is more compelling. There is runway, because shrinking the portfolio to change its tax character needs years of tax-free growth to earn back. Age 59 and a half is cleanly behind you. The converted amount is not subject to the 10% additional tax on early distributions. A separate distribution taken to pay the tax generally is, unless an exception applies. And enough is left afterward. Check the balance after the funding withdrawal, not after the conversion. Dianne’s California IRA drops to $780,249, and whether that funds the next 30 years matters more than whether the conversion was tax-efficient. A practical warning about withholding Withholding from the conversion is not a cheaper way to pay the tax. It reduces what reaches the Roth. Elect 24% on Dianne’s $40,000 conversion, as this illustration does rather than as any custodian requires, and $9,600 goes to the IRS while $30,400 lands in the Roth, against $4,234 actually owed. The cash comes back next spring as a refund. The Roth room does not come back at all. Restating the rule Pay the conversion tax from outside cash if you have it. That remains the best answer. It is not an answer for the retiree whose savings are almost entirely in a traditional IRA. For that person, “never pay from the IRA” skips the actual decision, which is whether a self-funded conversion, with its full marginal cost, beats leaving the money where it is. Before deciding, count the gross-up, the Social Security effect, state tax and the Medicare bill two years later. Sometimes that arithmetic still says no. It beats applying a rule written for somebody with a different balance sheet. ________________________________________________________________________________ John Urban is the founder of RetireSmartIRA, a retirement tax-planning app. Earlier, he founded GT Nexus, a supply-chain software company acquired by Infor in 2015. He lives in Northern California with his wife, Kathy, and enjoys time with family, travel, reading, Bay Area sports, and the occasional deep dive into the fine print of the tax code.
Read more »

Risk and Taxes

ArticleAdam M. Grossman  |  Aug 8, 2026

AFTER YEARS OF heady gains in the stock market, many investors are facing the same question: To manage risk, they’d like to cut back on one or more of their holdings. But because of the potentially costly tax bill that might result, they aren’t sure exactly how to do that. How can you square this circle? One easy option would be to donate appreciated assets to charity. But that would make sense only if it aligns with your charitable goals and, of course, if you don’t need those funds for other uses. How else could you strike a balance between managing risk and limiting taxes? Here’s how I would answer this question. Step 1. I’d start by estimating the potential risk level among your holdings. While there’s no single litmus test, you could ask the following questions. First, how large a portion of your assets does any single holding represent? As a rule of thumb, I’d focus first on individual stocks that top 5%. Why 5%? My operating assumption is that any individual stock could experience a 50% decline during a crisis. So if a holding is limited to 5%, then a 50% drop would result in an overall portfolio impact of just 2.5%. I see that as very manageable. To be sure, stocks can certainly decline by more than 50%, but I view this as a reasonable figure for risk management. While I worry most about the risk posed by single stocks, it’s also important to examine the overall composition of your portfolio. That’s because, counterintuitively, a portfolio of 30 stocks could end up being riskier than a group of just 10. Harry Markowitz, the father of Modern Portfolio Theory, explained why. In his initial work back in the 1950s, Markowitz used railroad company stocks to explain the concept of diversification. There’s nothing inherently wrong with railroad stocks, Markowitz explained. But if a portfolio consists of only railroad stocks, then that would be a problem—because companies in the same industry are often impacted by the same economic factors. In other words, a portfolio consisting of a large number of holdings might only appear diversified, so it’s important to look under the hood. Another risk factor to consider: Do you work for a public company and own the company’s stock? If so, that would be a reason to consider diversifying more quickly (within the permitted time windows). What if you own only mutual funds or ETFs? Diversified funds tend to be less risky than individual stocks, but that’s not always the case. The fund industry launches as many as 1,000 new funds each year, including many with very aggressive strategies. So it’s important to check each fund’s holdings. You can find that information on the fund company’s website or on a site like Morningstar (Here, for example, are the top holdings in Vanguard’s S&P 500 index fund). Step 2. Next, you’d want to estimate how much a loss might impact you. As with most questions in personal finance, there are two answers to consider: how it might affect you in dollar terms, and the degree to which a loss would simply be upsetting. Both are important. Step 3. If you determine the holding in question does represent a material risk, then you’d want to estimate the potential tax impact. Here are questions you might ask: What would the tax be if you exited the entire position? Would it push your income into the next capital gains bracket? Are there tax lots with less appreciation you could take advantage of? Do you have losses you could use to offset some of the gains? Do you expect to be in a higher or lower tax bracket next year? Step 4. If you conclude that the tax bill might be significant, what steps could you take to reduce a holding tax-efficiently? Here are strategies to consider: For starters, I suggest deciding on a target percentage for the holding. While ideally I prefer bringing any individual stock down to a 5% weighting, that figure isn’t a rule. All things being equal, the larger a portfolio, the more risk you can afford. After deciding on a target percentage, the simplest approach would be to set up a long-term sale plan—like dollar cost averaging but in reverse. Suppose you’d like to sell 1,200 shares of a given stock. You could sell 100 shares each month for twelve months. You’d do that regardless of whether the stock happens to be up or down that month. That 12-month schedule isn’t a rule. If your holding is very significant, you might opt for a longer timeframe. On the other hand, if you feel the stock has a particularly highflying valuation, you might choose a quicker pace. The key, in my view, is just to get started. As the writer Carveth Read wrote, “it’s better to be roughly right than precisely wrong.” Selling a stock down over time is the simplest way to reduce risk, but it’s hardly the most tax efficient. Another approach that’s been gaining in popularity is known as a 351 exchange fund. With a 351, the idea is that a group of investors, each with their own portfolios of appreciated securities, come together and collaborate to diversify their respective holdings. To provide a simplified illustration, imagine two investors, each with a concentrated holding, one in Microsoft and the other in Apple. Each would benefit by diversifying, and that’s what a 351 exchange fund allows. Each would contribute their respective shares into a common pool that would then hold some Apple and some Microsoft. This new investment would be structured as an ETF, and each investor would be issued shares proportional to the size of their contribution. Importantly, the initial creation of a 351 fund doesn’t entail any tax. Taxes are due only when an investor later sells shares of that ETF. This is a simplified example. In reality, a 351 exchange fund would hold many more than just two holdings. They’re actually required to meet various diversification requirements. As a result, investors in 351 funds may end up feeling sufficiently diversified and thus comfortable holding their fund shares for the long term. That would make this strategy potentially the most tax-efficient way to manage portfolio concentration risk. This is just an overview, though. If you’re interested in 351 strategies, I suggest further research. In July, The Wall Street Journal discussed these funds in some detail. In addition, a firm called Alpha Architect, the largest player in this area, has a number of helpful explanatory videos on its site.   Adam M. Grossman is the founder of Mayport, a fixed-fee wealth management firm. Sign up for Adam's Daily Ideas email, follow him on X @AdamMGrossman and check out his earlier articles.
Read more »

“Gerontocracy” in America

Chris Rush  |  Aug 6, 2026

"I’ll not render an opinion of a book that I have not read, but several age impaired presidents and numerous lawmakers are a fine argument for age limits. Otherwise, like Mark and David write below, it’s no surprise that based on wealth and numbers, we boomers remain a powerful voting bloc."
- DAN SMITH
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Looking Back On My Hard Luck Days

DAN SMITH  |  Aug 7, 2026

"Dick, your 3rd point is so powerful that it overshadows the first two. Connie is going through so much at this time, and she is lucky to have you in her corner. While you strive to take good care of Connie, don’t forget to take care of yourself as well. "
- DAN SMITH
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FIFA Financials

R Quinn  |  Jul 19, 2026

"Me, too. Prices not outlandish."
- Jeff Bond
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Before Someone Else Decides

Kathleen Rehl  |  Aug 2, 2026

"What a difficult and unsettling situation for all of you. You’ve described one of the hardest parts of planning ahead: family members can clearly see that living alone is becoming unsafe, yet the older adult is still entitled to make his own choices—even choices that others find baffling, like adopting a puppy while recovering from surgery. Your words, “we’re living some of it in real time” really struck me. This is precisely the narrow window when candid conversations and acceptable choices may still be possible, before a medical crisis forces the decision. I hope his upcoming surgery goes well and that your family can help him accept some form of support, whether in his home or closer to one of you, while he can still have a meaningful voice in what happens next. Thank you for sharing such a vivid, honest example of why these conversations matter."
- Kathleen Rehl
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Short term and long term Social Security planning

William Perry  |  Aug 4, 2026

"Interesting question Robert that sent me down a rabbit hole. Using the CMS 271 page report with a transmittal letter of June 9, 2026 titled "THE 2026 ANNUAL REPORT OF THE BOARDS OF TRUSTEES OF THE FEDERAL HOSPITAL INSURANCE AND FEDERAL SUPPLEMENTARY MEDICAL INSURANCE (SMI) TRUST FUNDS" the best answer I can find appears to be that the IRMAA contributions are not broken out from the approximate 22% of total revenues that come from beneficiary premiums. Page 13 reads in part - For SMI, government contributions represent the largest source of income. These contributions covered about 75 percent of program costs in 2025. Also, beneficiaries pay monthly premiums for Parts B and D. Those premiums financed roughly 22 percent of the total cost in 2025... "
- William Perry
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Taxing Social Security benefits

R Quinn  |  Aug 6, 2026

"I am going on a reading strike about Social Security. If the title says Social Security I do not read."
- Nick Politakis
Read more »

What is the right percentage?

R Quinn  |  Aug 9, 2026

"Dick, I think an excerpt from your post above bears amplification for our younger readers: Your words: "One other difference from many others is that we lived on one income our entire married life and our lifestyle was based on that. In addition, we lived on my base salary only, not total compensation. Any pay above salary was saved." For those who are in a position to do so, living off salary alone (or a specific set point if base compensation is variable) and fighting the temptation to spend or increase the lifestyle when bonuses, equity distributions, perhaps inheritances, investment returns or other windfalls come their way is a great way to build long term wealth. We did basically the same thing and used the variable compensation and any windfalls that came our way to pay off our home mortgage and stuff the kids' 529's full enough to cover their college tuitions. Retirement savings became "Job#1" when there was no longer a mortgage and the 529's were topped off. This approach gives us the option today to actually increase our lifestyle in retirement. I guess you could say- burning the candle on the latter end of adulthood vs living it up in early years when a bonus etc. came along. All that said, spending money is still not something we are very good at after living conservatively our whole lives but I would have never done it any other way."
- Dunn Werking
Read more »

For most retirees, the greatest fear is not death—it is running out of money before they die.

Matt Halperin  |  Aug 6, 2026

"Dan, The short answer is "No". A more detailed response: I actually retired at the end of 2019. As part of my "Bucket" approach, when I rebalanced in 2020, I actually bought equity index funds as part of my annual rebalancing (wish I had done it earlier in 2020). In fact, $100,000 invested in Feb. 2020 just before COVID hit is worth over $250,000 today (with dividends reinvested). I rebalanced well below the Feb level. The "Bucket" approach allows me to essentially "self annuitize" by having progressive buckets with different timeframes and investment mixes. The timeframes are long enough that I don't lose sleep over downturns and just rebalance equity/bond mix in each bucket once or twice a year. I guess you could say in retirement, I just keep doing what I have done since starting to invest in the mid 1980's. Starting with the 1987 equity downturn, I rebalance into downturns by adding equities when the equity % drops below target. The only major downturn I have not rebalanced into since 1987 was 9/11. I was too consumed at work in the aftermath for months and did not want to benefit / profit off of that catastrophe."
- Dunn Werking
Read more »

Medicare Advantage Part C — Not too soon to start planning for 2027

R Quinn  |  Aug 11, 2026

Be the first to comment.
Read more »

Can a Value fund also be a Growth fund?

Harold Tynes  |  Aug 11, 2026

Be the first to comment.
Read more »

Roth Conversions and Taxes

ArticleJohn Urban  |  Aug 8, 2026

EVERY ARTICLE ABOUT Roth conversions says the same thing: pay the tax from taxable money, not from the IRA. That is good advice if you have taxable money. Plenty of retirees do not. Their savings sit almost entirely in a traditional IRA, built from years of 401(k) contributions and a rollover at retirement, with little brokerage money and no cash reserve worth naming. For them, “pay from outside money” is not advice. It is a condition they do not meet. Their real choice is a self-funded conversion or no conversion at all. The familiar warning is that self-funding requires a gross-up. You withdraw money to pay the conversion tax, that withdrawal is itself taxable, so you have to withdraw a little more. Less discussed is what else that withdrawal sets off. It makes more of your Social Security taxable, it raises your Medicare premiums two years later, and in a high-tax state it enlarges the amount that has to leave the IRA. Here is what those three cost, on one household. A cautious conversion Meet Dianne, a composite rather than a real person. She is 66, single, retired to Florida, with $1 million in a traditional IRA and nothing outside it. Social Security pays her $28,000 a year. She is past 59 and a half and already on Medicare. Florida keeps state income tax out of the arithmetic for now. She converts $40,000. Careful, modest, the size people choose when they are trying not to do anything dramatic. The tax on that conversion, paid from a checking account she does not have, would be $4,234. Funding it from the IRA instead, the withdrawal that covers it is $5,125, and her tax rises to match. That extra $891 is 17.4% of the $5,125 she withdrew. Her ordinary-income bracket is 12%. Twelve of those points are the tax on the withdrawal itself, which is the gross-up everybody expects. The other 5.4 points come from $2,300 of her Social Security being pulled into taxable income by that same withdrawal. Paying from cash, $21,500 of her benefit would be taxable. Self-funding, $23,800 is. The difference is caused by how she paid, not by what she converted, and nothing on her return will label it. Not a smaller version of a large one The effect is not linear. Run the same woman at $150,000 and 85% of her benefit, the statutory maximum, is already taxable before she funds the tax. The funding withdrawal drags in nothing further, and this particular cost is zero. That is not an argument for converting more. It is an argument against assuming a small conversion is simply a smaller version of a large one. The one that looks cautious can carry the higher marginal rate. What self-funding actually costs Give Dianne the $150,000 conversion, still with no outside cash, and add the state question. Still in Florida, $195,469 has to leave the traditional IRA to put $150,000 into the Roth. Move her to California, changing nothing else, and it is $219,751. That is $1.30 of IRA spent for every dollar reaching the Roth, against $1.47, and the gap is California income tax compounded through the gross-up. If a move across state lines is anywhere in your plan, the order of operations may matter more than the size of the conversion. But $1.47 invites a conclusion it does not support, and I would rather correct that myself than let it travel. A conversion is taxable whichever pocket pays. Of the $69,751 Dianne withdraws in California, roughly $44,639 replaces cash she would have spent anyway. The incremental cost of self-funding, in wealth given up, is $25,111. About 17% of the conversion, not 47. The bill that arrives in 2028 At that $150,000 conversion, self-funding also costs Dianne $1,735 in higher Medicare premiums, a surcharge of $6,355 rather than $4,620, charged on top of the standard premium, for one year, and hers alone as a single filer. The bill arrives two years late. Medicare sets her 2028 premiums from her 2026 income, so the cost is invisible at the moment she is deciding how to pay the 2026 tax. When it can still make sense Doing nothing is not free either. Money left in a traditional IRA comes out eventually, under required distributions, at whatever rates apply then, possibly to a survivor filing single, possibly to heirs facing a 10-year deadline. Where self-funding still holds up, a few things tend to be true. The rate gap is durable rather than a one-year accident. Whether it repays a cost this size depends on time, future tax rates and investment returns. A temporary dip in income is a thin foundation. A structural window, after retirement and before Social Security or required distributions begin, is more compelling. There is runway, because shrinking the portfolio to change its tax character needs years of tax-free growth to earn back. Age 59 and a half is cleanly behind you. The converted amount is not subject to the 10% additional tax on early distributions. A separate distribution taken to pay the tax generally is, unless an exception applies. And enough is left afterward. Check the balance after the funding withdrawal, not after the conversion. Dianne’s California IRA drops to $780,249, and whether that funds the next 30 years matters more than whether the conversion was tax-efficient. A practical warning about withholding Withholding from the conversion is not a cheaper way to pay the tax. It reduces what reaches the Roth. Elect 24% on Dianne’s $40,000 conversion, as this illustration does rather than as any custodian requires, and $9,600 goes to the IRS while $30,400 lands in the Roth, against $4,234 actually owed. The cash comes back next spring as a refund. The Roth room does not come back at all. Restating the rule Pay the conversion tax from outside cash if you have it. That remains the best answer. It is not an answer for the retiree whose savings are almost entirely in a traditional IRA. For that person, “never pay from the IRA” skips the actual decision, which is whether a self-funded conversion, with its full marginal cost, beats leaving the money where it is. Before deciding, count the gross-up, the Social Security effect, state tax and the Medicare bill two years later. Sometimes that arithmetic still says no. It beats applying a rule written for somebody with a different balance sheet. ________________________________________________________________________________ John Urban is the founder of RetireSmartIRA, a retirement tax-planning app. Earlier, he founded GT Nexus, a supply-chain software company acquired by Infor in 2015. He lives in Northern California with his wife, Kathy, and enjoys time with family, travel, reading, Bay Area sports, and the occasional deep dive into the fine print of the tax code.
Read more »

Risk and Taxes

ArticleAdam M. Grossman  |  Aug 8, 2026

AFTER YEARS OF heady gains in the stock market, many investors are facing the same question: To manage risk, they’d like to cut back on one or more of their holdings. But because of the potentially costly tax bill that might result, they aren’t sure exactly how to do that. How can you square this circle? One easy option would be to donate appreciated assets to charity. But that would make sense only if it aligns with your charitable goals and, of course, if you don’t need those funds for other uses. How else could you strike a balance between managing risk and limiting taxes? Here’s how I would answer this question. Step 1. I’d start by estimating the potential risk level among your holdings. While there’s no single litmus test, you could ask the following questions. First, how large a portion of your assets does any single holding represent? As a rule of thumb, I’d focus first on individual stocks that top 5%. Why 5%? My operating assumption is that any individual stock could experience a 50% decline during a crisis. So if a holding is limited to 5%, then a 50% drop would result in an overall portfolio impact of just 2.5%. I see that as very manageable. To be sure, stocks can certainly decline by more than 50%, but I view this as a reasonable figure for risk management. While I worry most about the risk posed by single stocks, it’s also important to examine the overall composition of your portfolio. That’s because, counterintuitively, a portfolio of 30 stocks could end up being riskier than a group of just 10. Harry Markowitz, the father of Modern Portfolio Theory, explained why. In his initial work back in the 1950s, Markowitz used railroad company stocks to explain the concept of diversification. There’s nothing inherently wrong with railroad stocks, Markowitz explained. But if a portfolio consists of only railroad stocks, then that would be a problem—because companies in the same industry are often impacted by the same economic factors. In other words, a portfolio consisting of a large number of holdings might only appear diversified, so it’s important to look under the hood. Another risk factor to consider: Do you work for a public company and own the company’s stock? If so, that would be a reason to consider diversifying more quickly (within the permitted time windows). What if you own only mutual funds or ETFs? Diversified funds tend to be less risky than individual stocks, but that’s not always the case. The fund industry launches as many as 1,000 new funds each year, including many with very aggressive strategies. So it’s important to check each fund’s holdings. You can find that information on the fund company’s website or on a site like Morningstar (Here, for example, are the top holdings in Vanguard’s S&P 500 index fund). Step 2. Next, you’d want to estimate how much a loss might impact you. As with most questions in personal finance, there are two answers to consider: how it might affect you in dollar terms, and the degree to which a loss would simply be upsetting. Both are important. Step 3. If you determine the holding in question does represent a material risk, then you’d want to estimate the potential tax impact. Here are questions you might ask: What would the tax be if you exited the entire position? Would it push your income into the next capital gains bracket? Are there tax lots with less appreciation you could take advantage of? Do you have losses you could use to offset some of the gains? Do you expect to be in a higher or lower tax bracket next year? Step 4. If you conclude that the tax bill might be significant, what steps could you take to reduce a holding tax-efficiently? Here are strategies to consider: For starters, I suggest deciding on a target percentage for the holding. While ideally I prefer bringing any individual stock down to a 5% weighting, that figure isn’t a rule. All things being equal, the larger a portfolio, the more risk you can afford. After deciding on a target percentage, the simplest approach would be to set up a long-term sale plan—like dollar cost averaging but in reverse. Suppose you’d like to sell 1,200 shares of a given stock. You could sell 100 shares each month for twelve months. You’d do that regardless of whether the stock happens to be up or down that month. That 12-month schedule isn’t a rule. If your holding is very significant, you might opt for a longer timeframe. On the other hand, if you feel the stock has a particularly highflying valuation, you might choose a quicker pace. The key, in my view, is just to get started. As the writer Carveth Read wrote, “it’s better to be roughly right than precisely wrong.” Selling a stock down over time is the simplest way to reduce risk, but it’s hardly the most tax efficient. Another approach that’s been gaining in popularity is known as a 351 exchange fund. With a 351, the idea is that a group of investors, each with their own portfolios of appreciated securities, come together and collaborate to diversify their respective holdings. To provide a simplified illustration, imagine two investors, each with a concentrated holding, one in Microsoft and the other in Apple. Each would benefit by diversifying, and that’s what a 351 exchange fund allows. Each would contribute their respective shares into a common pool that would then hold some Apple and some Microsoft. This new investment would be structured as an ETF, and each investor would be issued shares proportional to the size of their contribution. Importantly, the initial creation of a 351 fund doesn’t entail any tax. Taxes are due only when an investor later sells shares of that ETF. This is a simplified example. In reality, a 351 exchange fund would hold many more than just two holdings. They’re actually required to meet various diversification requirements. As a result, investors in 351 funds may end up feeling sufficiently diversified and thus comfortable holding their fund shares for the long term. That would make this strategy potentially the most tax-efficient way to manage portfolio concentration risk. This is just an overview, though. If you’re interested in 351 strategies, I suggest further research. In July, The Wall Street Journal discussed these funds in some detail. In addition, a firm called Alpha Architect, the largest player in this area, has a number of helpful explanatory videos on its site.   Adam M. Grossman is the founder of Mayport, a fixed-fee wealth management firm. Sign up for Adam's Daily Ideas email, follow him on X @AdamMGrossman and check out his earlier articles.
Read more »

“Gerontocracy” in America

Chris Rush  |  Aug 6, 2026

"I’ll not render an opinion of a book that I have not read, but several age impaired presidents and numerous lawmakers are a fine argument for age limits. Otherwise, like Mark and David write below, it’s no surprise that based on wealth and numbers, we boomers remain a powerful voting bloc."
- DAN SMITH
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Looking Back On My Hard Luck Days

DAN SMITH  |  Aug 7, 2026

"Dick, your 3rd point is so powerful that it overshadows the first two. Connie is going through so much at this time, and she is lucky to have you in her corner. While you strive to take good care of Connie, don’t forget to take care of yourself as well. "
- DAN SMITH
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FIFA Financials

R Quinn  |  Jul 19, 2026

"Me, too. Prices not outlandish."
- Jeff Bond
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Manifesto

Aug 9, 2026

NO. 71: WE SHOULD take a broad view of our bond holdings—and include our paycheck, Social Security and other bond-like income streams. Result? We may find we have too much in bonds.

Truths

Aug 11, 2026

NO. 33: MOST INVESTORS trail the market averages. That’s true whether a market is considered efficient or inefficient. Before investment costs, we collectively earn the results of the market averages. After costs, we must inevitably earn less. In fact, investors—as a group—will trail the market by a sum equal to the investment costs they incur.

act

Aug 10, 2026

KEEP ENOUGH in cash investments to give yourself a sense of security. It’s tempting to invest as much as possible for long-term growth. But research suggests putting perhaps $5,000 in a savings account or a money market fund can greatly improve our sense of financial wellbeing. If your emergency fund isn’t that large, consider stockpiling some cash.

think

Aug 10, 2026

ENDOWMENT EFFECT. We prize the items we own. We might believe our homes are worth more than they really are and our investments have performed better than they have, making us reluctant to sell. We might also hang on to investments we inherited from our parents, because we endow them with meaning beyond their actual value.

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Manifesto

Aug 9, 2026

NO. 71: WE SHOULD take a broad view of our bond holdings—and include our paycheck, Social Security and other bond-like income streams. Result? We may find we have too much in bonds.

Spotlight: Saving

Path to Retirement

Kenyon Sayler   |  Nov 17, 2023

SOME FRIENDS WERE recently discussing their investment performance. I couldn’t contribute to the conversation—because I have no idea what our investment returns have been.
The fact is, I don’t find performance information all that valuable, plus it’s relatively hard to calculate since you have to account for both price changes and dividend or interest payments. To be sure, investment returns are useful if you’re looking to determine whether a mutual fund manager is adding returns in excess of a benchmark index,

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Spend Nothing

Jonathan Clements   |  Jun 26, 2025

Saving money is the greatest of the financial virtues—and, for much of my adult life, I could hardly have been more virtuous.
This frugality didn’t come naturally. I wasn’t a “born saver.” Rather, I had no choice. Within a few years of graduating university, I found myself married to a PhD student and raising a family in one of the world’s most expensive urban areas. On my junior reporter’s salary, scrimping and saving were the only options.

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Why do many folks fail to save enough for retirement?

Jonathan Clements   |  Jun 5, 2024

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No Time Left for Calculating My Net Worth

Dan Smith   |  Jun 14, 2025

Oh my, I’m beginning to think that some of the articles I find on the internet aren’t really news at all. Below is one I clicked on today. It reminds me of those free dinners that Mike Flack recently posted about. I also think it ties in well with Dave Lancaster’s post about calculating net worth. 
The article didn’t define how it calculated net worth. I assume it includes checking and savings, IRAs and similar accounts,

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Trump Account

Bogdan Sheremeta   |  Feb 21, 2026

TRUMP ACCOUNT WAS created as part of the OBBBA signed on July 4, 2025. I’ve been getting a lot of messages about it, because there is a lot of conflicting information. The IRS has also posted some instructions for the account.
My goal with this post is to walk through the rules and give my take on when (if ever), this account makes sense.
Timing & Creation
First and foremost, no contributions are allowed in this savings account for children until 12 months after the law’s enactment,

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Completing 401(k) Contributions Early

Alice Patrick   |  Jun 22, 2024

When you make out the form to contribute some of your income for a 401K or Roth 401K, your HR department will default to setting equal deductions for each pay period in the year. However, you can change this.
You can request a larger dollar amount per pay period so that your 401K contribution is complete before year end.
This can be helpful if you may be leaving your job, voluntarily or involuntarily, before year end.

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Spotlight: Grossman

A Modest Proposal

Adam M. Grossman   |  Jan 2, 2022

LOOKING BACK OVER the past two years, one word comes to mind: extreme. It’s been a period of extremes in the market and the economy. Many have benefitted, but we’ve also seen excesses that aren’t necessarily healthy—from the rise in NFTs to the craze in SPACs to the boom in day trading. That’s why, as you look ahead to the coming year, the theme I recommend is moderation. Here are six ways you can apply this notion to your finances: Shiny objects. Among other things, this category includes the growth of meme stocks and the proliferation of cryptocurrencies. Apparently, there are now more than 8,000 currencies. The gains in these investments have resulted in a fair amount of FOMO—fear of missing out—among investors. Nonetheless, as you might guess, my recommendation is to continue to keep things simple, tuning out the noise and sticking with less volatile choices. I recognize that, in the middle of a market boom, someone urging caution risks sounding overly conservative. That’s why I think the recent decline in some of the most highflying investments, such as the ARK Innovation ETF, is instructive. In 2020, the fund rose 157%, easily beating the overall market. But last year, it dropped almost 24%, trailing the broad U.S. market by 49 percentage points. If you’ve been feeling any amount of FOMO yourself, that’s a figure to keep in mind. The lesson: The overall stock market is volatile enough, so why seek out even more risk? Instead, seek moderation. Politics. To be sure, the political environment today is highly partisan. Still, and maybe surprisingly, there are some similarities between the parties—at least in terms of economic policy. President Trump appointed Fed Chair Jerome Powell, for example, and President Biden reappointed him. Congress—under Republicans in 2020 and under Democrats in 2021—supplied stimulus to the economy when it needed it most. The similarities may end there. Nonetheless, I see…
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Many Happy Returns

Adam M. Grossman   |  Apr 14, 2019

AS THE OLD SAYING goes, there are lies, damned lies and statistics. And then there’s investment performance, which may deserve a category all its own. This topic came to mind recently when I saw a press release heralding the accomplishments of a retired nonprofit executive. Among the claims: that he had doubled the organization's endowment. This struck me as impressive—until I considered it more critically. What did it mean that he had doubled the endowment? Did it mean that he was a brilliant fundraiser? Was it the endowment manager who was brilliant? Did the executive’s tenure coincide with a bull market that would have doubled any endowment? In isolation, I realized, it was impossible to judge. As individual investors, we are bombarded with claims about investment performance—and it can be hard to make sense of it all. To help you navigate the numbers, here’s a five-step guide to interpreting investment performance. Step 1: Understand the sources of growth The first step is to grasp the basic math of an investment account. It looks like this: Beginning balance on Jan. 1 Plus increases in the value of your investments—or minus any decreases Plus interest and dividends paid by your investments Plus deposits Minus withdrawals Minus investment fees Equals ending balance on Dec. 31 Though this won't show up on your statement, you should also subtract the taxes generated by your investments. That’ll give you the most realistic picture of your results. Step 2: Isolate your investment returns Intuitively, the above formula makes sense, but it's easy to be misled. Suppose your portfolio grew from $100,000 to $120,000 over the course of a year. On the surface, it isn't obvious how much of that came from investment growth and how much came from your own contributions. Of course, if you didn't contribute anything…
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Shining Moment

Adam M. Grossman   |  Mar 31, 2024

GOLD REACHED A NEW high last week, climbing above $2,200 for the first time. Year-to-date, gold is up 8% and, since the end of 2021, it’s gained more than 20%, outpacing the S&P 500. This raises two questions: Can we expect the rally to continue? And does gold deserve a place in your portfolio? To answer these questions, let’s start by looking at the drivers of the recent rally. The first factor is interest rates. While rates are still elevated, and the Federal Reserve has yet to cut its benchmark rate, it’s indicated its intention to do so soon. As a result, other rates have already started to drop. The yield on the 10-year Treasury note has edged down from almost 5% in October to 4.2% today. How do interest rates impact the price of gold? To understand the connection, think about it from the point of view of an investor with cash to invest. Investments are, in a sense, all in competition with each other for investors’ dollars. Because gold doesn’t produce any income, it becomes relatively less attractive when investors can earn more elsewhere. When a simple U.S. government bond offers nearly 5%, gold looks much less appealing. But when interest rates start to come down, the scales begin to tilt back, and that’s what we’ve seen recently. Another factor is geopolitical instability. There’s Russia’s ongoing attack on Ukraine, and terrorists seem to be striking with increasing frequency around the world, with attacks recently in Israel, Russia, Turkey, South Korea and Pakistan. Terrorists have also been attacking cargo ships off the coast of Yemen, disrupting a key global shipping lane. Uncertainty like this makes gold relatively more attractive, because it offers a safe haven that’s independent of any country or currency. There are other reasons, too, for gold’s…
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Underwater Overseas

Adam M. Grossman   |  Oct 6, 2024

IS IT WORTH OWNING international stocks? There’s far from universal agreement. The traditional argument for investing outside the U.S. is straightforward: diversification—since domestic and international stocks don’t move in lockstep, and sometimes diverge significantly. At the same time, however, international stocks have lagged behind their U.S. counterparts for so many years that it’s been trying the patience of even the most tenacious investors. Domestic stocks have outpaced international stocks in eight of the past 10 years. On average, over that period, the U.S. market has returned 12.3% a year, while the most commonly referenced index of international stocks has delivered 4.6% annually. On a cumulative basis, domestic stocks have more than tripled, gaining a cumulative 219%, while international stocks have gained just 57%. That’s enough to make any reasonable person question the value of investing outside the U.S. Though the long-term data indicate a benefit to diversifying, we need to be cautious in using the past as a guide to the future. The economist John Maynard Keynes commented that, “In the long run, we are all dead.” So why, in the face of recent data, would anyone stick with international stocks? Below are five reasons I still recommend international holdings. 1. Performance. Despite Keynes’s quip about the long run, the reality is that you don’t have to go back too far to find periods when international stocks were doing quite well. Most notably, in the years after the dot-com market crash in 2000, international stocks held up much better. If you’d been in retirement at the time and relying on your portfolio for monthly withdrawals, that would have been a great benefit. One challenge in assessing international stocks—which contributes to the debate around them—is that historical data on markets outside the U.S. is limited. Reliable figures on U.S. shares go…
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Blame Game

Adam M. Grossman   |  Feb 9, 2025

FIFTY YEARS AGO, when the first index funds were getting started, critics wasted no time attacking the idea. They called it “un-American” and a “sure path to mediocrity.” But over time, indexing has grown to the point where it now accounts for more than half of all U.S. mutual fund assets. Last year, research firm Morningstar declared that “index funds have officially won.” But this victory seems to have only increased the level of criticism. In an interview last year, David Einhorn, a longtime hedge fund manager, argued that markets are “fundamentally broken” and that passive investing—that is, index funds—are the cause. Here’s how he explained it: As more investors go the route of indexing, the result is that more active managers close up shop. That, in turn, means that fewer research analysts are following individual stocks. In Einhorn’s words, there is now, as a result, “complete apathy” in certain parts of the market. Many smaller companies, Einhorn says, are almost entirely overlooked. “There’s entire segments now… where there’s literally nobody paying any attention.” That’s because the remaining active managers tend to focus their energies on larger companies. Now, even when small companies issue positive news, Einhorn says, their stock prices often don’t react because there aren’t enough investors following them. “These companies could announce almost anything other than a sale of the company and nobody would notice.” This is a problem, Einhorn says, because he feels it’s caused share prices in many cases to become distorted. The large stocks that dominate the top end of the market—Apple, Amazon, Microsoft and so forth—continue to rise because they’re so visible. But lesser-known companies can see their stocks stagnate even when they’re doing well. Einhorn quotes a colleague, who liked to say that, “a bargain that remains a bargain is no bargain.”…
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Follow the Fed

Adam M. Grossman   |  Oct 18, 2020

STOCKS WENT INTO a freefall earlier this year, as I’m sure you recall. But all of a sudden, on March 23, everything changed. The market turned around and, just as quickly as it had dropped, it rebounded. Remarkably, the U.S. stock market is now in positive territory for the year. What happened on March 23? The situation with the virus didn’t get any better. And it wasn’t Congress or the White House. What happened was that the Federal Reserve issued a statement. In that statement, it announced that it would use its “full range of tools” to help rescue the economy. And, just like that, both the stock and bond markets turned positive and haven’t looked back since. But for all the Fed’s power, it’s a somewhat inscrutable entity and not well understood. Perhaps that’s why, at the end of August, when the Fed announced revisions to a document some refer to as the Fed’s “constitution,” it didn’t receive nearly as much attention as it deserved. That document is called the "Statement on Longer-Run Goals and Monetary Policy Strategy." While that might sound arcane, it’s an important document to understand because of the Fed’s enormous power to move markets. By way of background, the Fed first created this policy document in 2012 in the wake of the 2008 financial crisis. It describes in straightforward terms how the Fed sees its mandate. Since 2012, the Fed—despite changes in leadership—has reaffirmed this same document each year. But this summer, as the economy grappled with the impact of the coronavirus, Fed officials realized that it was due for an update. These were the key changes: Employment. The Fed’s dual mandate has always included both controlling inflation and maintaining full employment—and it has always stated them in that order. But in the updated document, the Fed…
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