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My Sister – A Reflection One Year Later

Andrew Clements  |  Aug 12, 2026

"Thank you, John. Life certainly seems to hold beauty and heartbreak side by side. Losing Tory has reminded me to appreciate the people we love while we have them and to hold tightly to the memories when they’re gone. I appreciate your kind words."
- Andrew Clements
Read more »

COBRA insurance: No need to fear the bite

Heidi - SunnyMoneyDIY  |  Aug 11, 2026

"Heidi, your premium for medical coverage through COBRA is about the same that I paid in 2020, so given inflation, your cost seems to be very reasonable."
- Mark Bergman
Read more »

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

R Quinn  |  Aug 11, 2026

"As to your last sentence Dick, even though we are generally health we chose traditional with a G supplement. Even though it costs more we can “budget” the supplement and Federal part B and move on."
- DavidHLancaster
Read more »

Can a Value fund also be a Growth fund?

Harold Tynes  |  Aug 11, 2026

"Harold, You have all the biggies in investing covered, except I would recommend Ed Slot who is the preeminent source for taxes in retirement."
- DavidHLancaster
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 »

What is the right percentage?

R Quinn  |  Aug 9, 2026

"I log on to my investments everyday, just out of habit. My bank sends automatic updates on account balances. I make sure I stick with my theory, but there is no budget. I see no difference between my method at any income level. It’s a forced way to live within one’s means, you can’t spend more than you have. Of course, your example is an exception. There are always exceptions. In the example, it probably means a lower lifestyle, lower budget, lower everything regardless."
- R Quinn
Read more »

Don’t Let a Roth Conversion Trigger a Penalty

John Urban  |  Jul 8, 2026

"Hi Grant, and thanks for the article (John Urban) and this comment. Sorry to be a few months late commenting but I think your approach is very intriguing and I have questions for you if you have time to help me understand your process. Firstly, my situation is retired, no W2 income and RMDs to be satisfied from conventional IRA before the end of the year. Also, not yet concerned over IRMAA impact at this time.  Q1. The 1, 2, 3 process says one can do a rollover contribution to the Roth account with money from a regular brokerage or other non-IRA account within 60 days. Is this correct? I thought that a rollover should be IRA to IRA (Roth and/or conventional). Q2. About the 1, 2, 3, process. Why not make the conversion and pay the taxes directly from the converting IRA at the same time. Brokerage will withhold the amount specified to make it a single operation on my part. THEN I take money from the non IRA account and rollover the amount withheld in taxes into the target Roth account. I realize this violates the guidance that taxes shouldn't be withheld from a conversion, however, since the taxable amount is being deposited almost immediately back into the Roth account then it would seem to be a wash. What are your thoughts? Am I missing something? Thanks, Derek"
- Derek Shuttleworth
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

"I understand, thanks, Dunn"
- DAN SMITH
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
Read more »

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
Read more »

FIFA Financials

R Quinn  |  Jul 19, 2026

"Me, too. Prices not outlandish."
- Jeff Bond
Read more »

My Sister – A Reflection One Year Later

Andrew Clements  |  Aug 12, 2026

"Thank you, John. Life certainly seems to hold beauty and heartbreak side by side. Losing Tory has reminded me to appreciate the people we love while we have them and to hold tightly to the memories when they’re gone. I appreciate your kind words."
- Andrew Clements
Read more »

COBRA insurance: No need to fear the bite

Heidi - SunnyMoneyDIY  |  Aug 11, 2026

"Heidi, your premium for medical coverage through COBRA is about the same that I paid in 2020, so given inflation, your cost seems to be very reasonable."
- Mark Bergman
Read more »

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

R Quinn  |  Aug 11, 2026

"As to your last sentence Dick, even though we are generally health we chose traditional with a G supplement. Even though it costs more we can “budget” the supplement and Federal part B and move on."
- DavidHLancaster
Read more »

Can a Value fund also be a Growth fund?

Harold Tynes  |  Aug 11, 2026

"Harold, You have all the biggies in investing covered, except I would recommend Ed Slot who is the preeminent source for taxes in retirement."
- DavidHLancaster
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 »

What is the right percentage?

R Quinn  |  Aug 9, 2026

"I log on to my investments everyday, just out of habit. My bank sends automatic updates on account balances. I make sure I stick with my theory, but there is no budget. I see no difference between my method at any income level. It’s a forced way to live within one’s means, you can’t spend more than you have. Of course, your example is an exception. There are always exceptions. In the example, it probably means a lower lifestyle, lower budget, lower everything regardless."
- R Quinn
Read more »

Don’t Let a Roth Conversion Trigger a Penalty

John Urban  |  Jul 8, 2026

"Hi Grant, and thanks for the article (John Urban) and this comment. Sorry to be a few months late commenting but I think your approach is very intriguing and I have questions for you if you have time to help me understand your process. Firstly, my situation is retired, no W2 income and RMDs to be satisfied from conventional IRA before the end of the year. Also, not yet concerned over IRMAA impact at this time.  Q1. The 1, 2, 3 process says one can do a rollover contribution to the Roth account with money from a regular brokerage or other non-IRA account within 60 days. Is this correct? I thought that a rollover should be IRA to IRA (Roth and/or conventional). Q2. About the 1, 2, 3, process. Why not make the conversion and pay the taxes directly from the converting IRA at the same time. Brokerage will withhold the amount specified to make it a single operation on my part. THEN I take money from the non IRA account and rollover the amount withheld in taxes into the target Roth account. I realize this violates the guidance that taxes shouldn't be withheld from a conversion, however, since the taxable amount is being deposited almost immediately back into the Roth account then it would seem to be a wash. What are your thoughts? Am I missing something? Thanks, Derek"
- Derek Shuttleworth
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

"I understand, thanks, Dunn"
- DAN SMITH
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 »

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Manifesto

Aug 14, 2026

NO. 56: WE SHOULD hold down our fixed monthly costs, especially car payments and mortgage or rent. If these are too high, we’ll struggle to save, no matter how determined we are.

Truths

Aug 14, 2026

NO. 78: INVESTORS often boost their annual tax bill—by gleefully selling their taxable account’s winners, while refusing to unload losers. But to trim taxes, you should do the opposite: Sell losers, so you have realized capital losses to offset your capital gains and even your ordinary income. Meanwhile, hang onto winners, thus deferring the capital-gains tax bill.

think

Aug 13, 2026

DIVERSIFICATION. While diversifying is important with bonds, it’s crucial with stocks—and involves investing in hundreds and perhaps thousands of companies from a host of market sectors and countries. If we don’t diversify, and instead buy a handful of stocks or a single sector, there’s a danger we’ll take the risk of stock investing—without getting the reward.

act

Aug 12, 2026

GET YOUR CHILDREN age 18 and older to draw up a health care power of attorney, specifying that you can make decisions on their behalf if they become incapacitated. If they have an accident—and you have no power of attorney—you may be unable to make medical decisions for them or even learn basic information about the state of their health.

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Manifesto

Aug 14, 2026

NO. 56: WE SHOULD hold down our fixed monthly costs, especially car payments and mortgage or rent. If these are too high, we’ll struggle to save, no matter how determined we are.

Spotlight: Life Events

Hitting Repeat

Jonathan Clements   |  Apr 4, 2025

Earlier this week, I asked readers, “If you could go anywhere in the world on your next trip, where would it be? If you could savor any experience, what would it be?”
I didn’t offer my own response—because I didn’t have one. At this point, I don’t have a strong urge to go to some exotic locale or try some new experience. On the other hand, there are places and experiences from my past that call to me.

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My Money Memories

Jonathan Clements   |  Aug 7, 2025

So much of what we do in life involves money, and yet the vast majority of these transactions quickly disappear from our memory. What sticks? Here are nine of my most vivid money memories.
1. My older brothers—who are identical twins—and I were regulars at the local community pool, starting when I was age four. Our parents or our au pair would throw pennies into the pool, and we’d dive in and fish them out.
How much were these pennies worth?

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Sweet Bird of Youth

Marjorie Kondrack   |  Mar 7, 2025

Connecting with younger people is like a rejuvenating fountain of life for me.  Since many of us are fortunate to have children and grandchildren  nearby, we can enjoy being a part of their everyday life,  allowing us to share a special bond with them.
But some of us are restricted by the confines of chronology, and cut off from interaction with younger people. Small wonder that so many seniors retire to college towns. Being around younger people reminds me how thrilling it was when I was young—when the future was bright,

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What’s Really On My Mind

Dennis Friedman   |  Dec 3, 2025

MY RETIREMENT HAS been wonderful so far. Honestly, sometimes I have to stop and remind myself how lucky I am. Rachel and I have our health and enjoy each other’s company, which is not always true when a couple retires. However, there are four things that concern me as I reach my mid-70s.
Loneliness
I tried calling Mark, my old high school friend, a couple of weeks ago, and I haven’t heard from him.

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After Loss, Love Again

kathleenrehl   |  Jul 5, 2025

I belong to a club I never wanted to join: women who have outlived their husbands. Like me, millions of baby boomer women, and now Gen Xers too, will face life without their long-term partner.
Thankfully, today’s widows have more choices than our great-grandmothers did. Some of us embrace living solo. Others are surprised to find companionship again, sometimes even love. That next chapter can be sweet, but it’s also financially complex.
I know this firsthand.

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A Diamond Wedding Anniversary

Marjorie Kondrack   |  Apr 9, 2025

I wore a gown of Chantilly lace—the sun caught the sparkles in my bridal headdress. My husband was resplendent in his tuxedo—the sun was shining on a beautiful April morning —Our wedding day, 60 years ago, April, 1965.
While The choice of a spouse is among the most important decisions most people ever make,  it’s a choice that comes with no guarantees of long term happiness.  That said, we all have an ideal vision of the person we would like to marry. 

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Spotlight: Wasserman

Riding It Out

Jiab Wasserman   |  Apr 27, 2020

IN MID-MARCH, I WENT into lockdown with optimistic thoughts. Perhaps it would give me time to perfect my Spanish, master classical guitar, write more blog posts, start online courses and even begin the book that Jim and I often discuss writing together. I’ve accomplished none of my grand plans. Instead, I’ve been consumed by reading COVID-19 news. I’ve slept poorly and eaten too much. I remain perpetually exhausted. I struggle to focus and lack creativity. Everything takes twice as long as usual. My sense of time and motivation has completely gone out the window. Before I retired in 2018 and we moved to Spain, I worked from home for seven years, so I’m no stranger to spending most of my time in the house. But it’s harder to stay home when you’re retired, without the need to make day-to-day work decisions and interact with colleagues. I’m trying hard not to feel guilty about my mood or lack of accomplishments. Apparently, all this is normal. My feelings of grief are, it turns out, part of a greater collective grief. There have been countless articles about coping with the recent stock market downturn and about how to keep ourselves entertained at home. But very few cover the mental health aspects of today’s stay-at-home orders. The months ahead will be rough on everybody. What to do? Here’s how Jim and I are trying to sustain ourselves through these hard times: 1. Acknowledge loss and grief. According to David Kessler, an expert on grief, understanding the stages of grief is a key place to start. The stages aren’t linear and may not happen in the same order. Jim and I have discussed our emotional responses. As I write this, I flip between sadness and acceptance, while Jim is alternating between anger and acceptance. There…
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In Withdrawal

Jiab Wasserman   |  Mar 11, 2020

RETIREMENT ISN’T JUST about reaching some magic savings number. You also need a strategy for turning that pile of savings into a reliable stream of retirement income that’ll last for the rest of your life. In academic lingo, it’s about changing from accumulation to decumulation—and it’s a topic that my husband Jim and I grapple with, as we figure out how best to cover our retirement expenses. There are three common strategies: Systematic withdrawals. This is the best-known strategy. The goal is to generate a steady, inflation-adjusted flow of income from a volatile investment portfolio. It’s where the famous 4% withdrawal rate comes from. The notion is that, over a 30-year retirement, the most you can safely spend each year from a balanced portfolio of stocks and bonds is roughly 4% of your nest egg’s starting value. That 4% is the sum withdrawn in the first year of retirement, with the dollar amount withdrawn in subsequent years increasing with inflation. If you use the 4% rule, U.S. market history suggests you shouldn’t run out of money, even if we get high inflation and terrible market returns. Time-based buckets. This approach sets up separate pools of investments for different time periods in retirement. You might invest conservatively with high-quality bonds and cash investments in the near-term time bucket, take on moderate risk by investing in bonds and some stocks for the next bucket, and perhaps be even more aggressive by investing exclusively in stocks with the long-term bucket. For example, upon retirement at age 65, a couple might divide their retirement portfolio into three buckets, one for ages 65 to 74, one for 75 to 84, and the third for 85 and beyond. Income floor. With this strategy, expenses are classified as essential or discretionary. Income from bonds, cash investments, Social Security,…
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Takes Skill

Jiab Wasserman   |  Apr 16, 2019

I WAS SELECTED IN 2015 for the “leadership pipeline program” at the major bank where I worked. It was a 10-month-long program for minority employees just below executive level. We were selected to learn all about corporate culture and what it took to advance to the next level. I felt honored to be among such talented and promising employees. Participants were from various departments from across the U.S.—technology, risk management, operations, compliance, human resources, retail banking, commercial lending and investments. The program opened with a one-week in-person training session at the bank’s corporate headquarters in Charlotte, North Carolina, followed by monthly meetings via video conferencing and online courses. Each participant was assigned a mentor from the executive level. The people I met in the program were diverse in terms of experience, education and age. We were all united, however, in wanting to learn the skills necessary to move up the corporate ladder. Rather than particular job skills, however, a major emphasis of the program was networking. “It’s not what you know but who you know.” Over and over, making the right connections was emphasized. The bank encouraged us to join multiple affinity groups (Asian, veteran, Latino, Native American, women, LGBT, African American and so on), to socialize and connect across divisions and departments, and to reach out to executives. In other words, we needed to promote ourselves if we wanted to move up to the next level. The emphasis on self-promotion as a career strategy never quite sat right with me. Partly, it’s because I’m an introvert. But mostly, I saw a problem with focusing so much on building a network. I always thought that the time and energy spent maintaining these relationships and joining the many affinity groups would, instead, be better spent learning new skills. And there’s a big…
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Why Wait?

Jiab Wasserman   |  Nov 1, 2018

MY MOTHER-IN-LAW Doris passed away last year at age 90. In the last few years of her life, she often mentioned that she felt guilty spending any of her money, let alone splurging. She wanted to leave the money to her children, even when her children kept telling her to spend, splurge and enjoy the last few years of her life. Doris didn’t want to worry about her investments. Like a lot of people, she entrusted her money to a nationally known financial company. Unfortunately, the company, like many name-brand money managers, charged an asset under management (AUM) fee above 1%, which I considered high for investing her money in relatively simple index funds. Although she had a good portion invested in stocks, the return she received after the AUM fee was much lower than the return she could have enjoyed with index funds held at a low-fee company like Charles Schwab or Vanguard Group. Doris, however, didn’t want to think about it too much and just assumed that the big name meant best management. Result: Even though Doris thought she was saving money and doing the best for her children, she was unnecessarily wasting part of their inheritance by overpaying for money management. After going through my mother-in-law’s passing, and the accounting and disposition of her estate, I started to think about how my husband and I could best handle our estate. I wanted to avoid or minimize Doris’s two issues: being afraid to spend our retirement money and wasting the estate by having it held by a company with high fees. When I came across M1 Finance, with its no-fee, fractional, automated investing, it struck me that I had found my solution. We have two sons, ages 22 and 23, both recent college graduates, who have just started…
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Harder for Some

Jiab Wasserman   |  Jul 30, 2021

IS SUCCESS WITHIN reach for anybody willing to work hard? We like to think of the U.S. as a meritocracy with a one-to-one correlation between effort and achievement. It’s a notion that allows us to feel that we’re in control of our destiny and that we’ve fully earned the success we enjoy. But in truth, there are many factors that continue to tilt the playing field one way or another. Socioeconomic status, race and gender still sway the game. While the impact of such factors may have been reduced, comprehensive data show they remain important. Warren Buffett is clearly a winner at the success game, but even he says that not every person gets an even chance. Acknowledging persistent gender and race discrimination, he used the phrase "ovarian lottery" at a 1997 shareholder meeting. The ovarian lottery is “the most important event in which you’ll ever participate,” Buffett said. “It’s going to determine way more than what school you go to, how hard you work, all kinds of things.” He noted that he didn’t have to overcome barriers of race or gender. As Buffett admitted, “We won it by being White. You know, no tribute to us, it just happened that way.” [xyz-ihs snippet="Mobile-Subscribe"] Buffett’s comments from 24 years ago are still valid today. Consider three recent studies: A 2019 study by the Bill and Melinda Gates Foundation examined inequality and concluded that, no matter where you're born, “life will be harder if you are born a girl.” A large genome-based study of economic data bluntly challenges the idea of our system being a pure meritocracy, summed up by the headline, “It’s better to be born rich than gifted.” It found that the least-gifted children of high-income parents graduate from college at higher rates than the most-gifted children of low-income parents.…
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Less Is More

Jiab Wasserman   |  Aug 20, 2021

I RECENTLY INJURED my lower back playing tennis. I rested for a day and then decided I was well enough to resume my usual activities. But my haste worsened the pain, extending my recuperation to more than a week. Every move—even sneezing—hurt. Putting on my pants was a major struggle. I was forced to do nothing except rest. Doing nothing was the one of the hardest things I’ve ever done. Ironically, at the time of my injury, I was working with Jim on writing a book on Daoism, and I happened to be focusing on the idea of wu wei or “nonaction.” The notion: We shouldn’t act unnecessarily and instead do so only when we absolutely have to. In the Dao De Ching, Lao Tzu cautions against interfering with the state of things. He sees the world as one of precious balance, where an action that isn’t carefully considered might easily lead to an avalanche of unwanted effects before balance is eventually restored. This got me thinking about the financial world—and about how much better off we’d be if we adopted this kind of cautionary thinking by investing in index funds, keeping costs low and interfering with our portfolio's natural growth as little as possible. History has shown it’s extremely difficult to beat the market averages year in and year out. Sometimes, a rush to action hurts us. As Warren Buffett once observed, "The stock market is a device to transfer money from the impatient to the patient."
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