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What’s the difference between remodeling a home and maintaining it? One’s costly if you do it, the other’s costly if you don’t.

Look Under the Hood

TESLA JUST REPORTED financial results for its most recent quarter. For the fifth time in a row, it announced a profit. This was notable for a few reasons. Among them: Tesla’s increasingly strong performance again raises the question of why it’s been excluded from the S&P 500-stock index.
By way of background, the S&P 500 includes almost all of the 500 most valuable publicly traded companies in the U.S. But Tesla’s stock isn’t included,

Read more »

Irksome Adversaries

WE FIGHT ABOUT money all the time. Politicians argue over how to spend the stuff and who should pay. Couples argue about why there isn’t enough and who’s to blame. And nerdy folks—that would include me—bicker over which investments to buy, when to claim Social Security, the virtues of homeownership and countless other topics.
These debates may amuse others, but I often find them frustrating—because they’re never just about facts and logic. Instead, far too many people come to these arguments with baggage that borders on cargo.

Read more »

The Taxman Cometh

LATE LAST YEAR, Congress voted to kill off the so-called stretch IRA, which had allowed those who inherited retirement accounts to draw them down slowly over their lifetime. Many folks were surprised by the stretch IRA’s demise, but they shouldn’t have been.
When a tax break or some other government provision benefits only a few folks, Congress often changes the law. Think back to 2015. That year, Congress eliminated the ability to “file and suspend” Social Security—another strategy that tended to be exploited only by a privileged few.

Read more »

Easy Street

A FEW YEARS AGO, my future husband and I took a trip to southern Utah to participate in a pistol shooting competition. We were taken by the area’s beauty and easy access to outdoor recreational activities. While there, we looked at a few homes and were pleasantly surprised to find the prices quite reasonable. We decided Utah would be high on our list of places to relocate to once I retired from my job.

Read more »

State of Taxation

ONE OF MY FAVORITE things to do is sit on our local beach with a cold beverage on a beautiful day, and talk finance with interested friends and family members. This past Labor Day weekend, I did just that with a soon-to-be retiree.
One of the big issues facing him and his wife: where to live. He had been relocated to New York by his employer. But he and his wife are natives of the Philadelphia region,

Read more »

Make the Connection

FOR A LIFE to be meaningful, it doesn’t need to be unique—and yet many of us believe that’s necessary. We’re convinced we lack something special, and that paralyzes us. This is a mistake, says the philosopher Iddo Landau, who argues that everybody already possesses what they need for a meaningful existence. We just need to look harder.
I’ve spent years researching and educating myself on how to find and cultivate purpose. This helped me to develop a process to guide clients,

Read more »

Money Guide

New Bond Issues

THE CASE FOR low-cost funds, including index funds, is especially compelling when it comes to bonds. But you might do even better—by buying newly issued Treasury, municipal and corporate bonds, and then holding them to maturity. That way, there’s typically no commission involved, you pay the same offering price as everybody else, including institutional investors, and you don’t have to worry that the dealer has marked up a bond’s price excessively. In the secondary market, where already issued bonds are traded, individuals often pay 2% or 3% more for bonds than institutional investors, and the markup (or markdown if you’re selling) could be as much as 5%. The secondary market can be an especially rough place for retail investors in municipal bonds. To purchase new Treasury bond issues, check out TreasuryDirect.gov. Many new municipal bond issues have a so-called retail order period, which allows individuals to place orders ahead of institutional investors. One problem: Your brokerage firm may not have access to the muni issues you’re interested in. Similarly, it can be difficult to get your hands on new corporate bond issues. It may pay to work with a broker or brokerage firm that specializes in these bonds. The biggest drawback with purchasing individual bonds is the lack of diversification. This isn’t an issue with Treasurys, where a default is highly unlikely (though it may not always seem that way amid all the political wrangling in Washington). But with munis and corporates, the risk of default is real. Unless you have huge sums to invest, you may not be able to buy enough different bond issues to protect yourself against the financial impact of one or two rotten bonds. Next: Bond Yields Previous: Bond Market Costs
Read more »

Manifesto

NO. 59: MOST FOLKS should avoid alternative investments. Yes, they promise returns uncorrelated with the stock market and gains when shares are tumbling. But isn’t that why we own bonds?

Truths

NO. 81: IT PAYS to delay retirement. Postponing gives you more time to save, pay off any debts and collect investment gains. Once you quit the workforce, you’ll be drawing down your nest egg over a shorter expected retirement. You’ll likely also delay claiming Social Security and making any immediate annuity purchase, resulting in larger monthly checks.

Act

ASK WHAT THEY’LL MAKE. When talking to financial advisors—whether it’s a pushy insurance salesperson or a thoughtful financial planner—think about how they make their money and how much you’ll be charged. The way advisors are compensated can bias their recommendations. Meanwhile, if the cost is too high, your chances of decent returns will be slim.

Think

WINNER’S CURSE. If you’re in a bidding war for a house and come out on top, you may suffer the winner’s curse: In beating out other possibly more prudent and knowledgeable bidders, there’s a risk you overpaid. The winner’s curse can also afflict other buyers, such as corporations that win takeover battles or the highest bidders at an art auction.

Second Look

Retirement

Why FI?

“FINANCIAL independence” has become a catchphrase over the past decade—in part because it’s the FI in FIRE, short for financial independence/retire early, a movement that’s captured the imagination of some and earned scorn from others.
The strategies touted by the financial independence movement are simple enough: Earn a large salary. Live frugally. Invest a substantial percentage of your income in low-cost mutual funds. The objective: Accumulate savings equal to at least 25 times your total annual spending.

Read more »

Family Finance

Breaking the Rules

YOU KNOW THOSE timeless financial principles? Sometimes they don’t age so well.
Since I started writing about money in 1985, all kinds of financial principles have gone out the window—and that’s continued right up until 2020. Indeed, if you’re still hewing to the financial wisdom of the 1980s, you’re likely hurting yourself today. Here are four examples:
1. Goodbye, Peter. In the late 1980s, America’s most celebrated fund manager was Fidelity Magellan’s Peter Lynch.

Read more »

Investing

No Vacation

I SOLD MY CONDO last month and the first thing I wanted to do was celebrate. It was such a relief to get rid of it, because owning a second home requires spending precious time maintaining it. At age 69, I can think of better ways to spend my time than looking after a vacation home.
At first, I was reluctant to put the condo up for sale. I had lived there for more than three decades.

Read more »

Lists

Bad News

I’M MANAGING my money with an eye to making it last another three decades. And yet, everywhere I turn, it seems somebody’s insisting I pay attention to what’s happening in the financial markets right now.
This isn’t just a coronavirus phenomenon. It is, alas, standard operating procedure for the financial media.
I understand the game. I’ve spent most of my career as a journalist, so I realize it’s no small undertaking to fill up a newspaper,

Read more »
Home Call to Action

Mindset

Don’t Be That Person

THE TRICKY THING about investing is that there’s no single “right” approach. In an earlier article, I described the approach I favor—what I call the five minds of the investor, which involves being part optimist, pessimist, analyst, economist and psychologist.
But there are many other ways to be successful: You might invest in real estate, or follow a quantitative investment strategy, or invest in private companies. There are plenty of people who do very well with these approaches.

Read more »

Look Under the Hood

TESLA JUST REPORTED financial results for its most recent quarter. For the fifth time in a row, it announced a profit. This was notable for a few reasons. Among them: Tesla’s increasingly strong performance again raises the question of why it’s been excluded from the S&P 500-stock index.
By way of background, the S&P 500 includes almost all of the 500 most valuable publicly traded companies in the U.S. But Tesla’s stock isn’t included,

Read more »

Irksome Adversaries

WE FIGHT ABOUT money all the time. Politicians argue over how to spend the stuff and who should pay. Couples argue about why there isn’t enough and who’s to blame. And nerdy folks—that would include me—bicker over which investments to buy, when to claim Social Security, the virtues of homeownership and countless other topics.
These debates may amuse others, but I often find them frustrating—because they’re never just about facts and logic. Instead, far too many people come to these arguments with baggage that borders on cargo.

Read more »

The Taxman Cometh

LATE LAST YEAR, Congress voted to kill off the so-called stretch IRA, which had allowed those who inherited retirement accounts to draw them down slowly over their lifetime. Many folks were surprised by the stretch IRA’s demise, but they shouldn’t have been.
When a tax break or some other government provision benefits only a few folks, Congress often changes the law. Think back to 2015. That year, Congress eliminated the ability to “file and suspend” Social Security—another strategy that tended to be exploited only by a privileged few.

Read more »

Easy Street

A FEW YEARS AGO, my future husband and I took a trip to southern Utah to participate in a pistol shooting competition. We were taken by the area’s beauty and easy access to outdoor recreational activities. While there, we looked at a few homes and were pleasantly surprised to find the prices quite reasonable. We decided Utah would be high on our list of places to relocate to once I retired from my job.

Read more »

State of Taxation

ONE OF MY FAVORITE things to do is sit on our local beach with a cold beverage on a beautiful day, and talk finance with interested friends and family members. This past Labor Day weekend, I did just that with a soon-to-be retiree.
One of the big issues facing him and his wife: where to live. He had been relocated to New York by his employer. But he and his wife are natives of the Philadelphia region,

Read more »

Make the Connection

FOR A LIFE to be meaningful, it doesn’t need to be unique—and yet many of us believe that’s necessary. We’re convinced we lack something special, and that paralyzes us. This is a mistake, says the philosopher Iddo Landau, who argues that everybody already possesses what they need for a meaningful existence. We just need to look harder.
I’ve spent years researching and educating myself on how to find and cultivate purpose. This helped me to develop a process to guide clients,

Read more »

Free Newsletter

Home Call to Action

Manifesto

NO. 59: MOST FOLKS should avoid alternative investments. Yes, they promise returns uncorrelated with the stock market and gains when shares are tumbling. But isn’t that why we own bonds?

Act

ASK WHAT THEY’LL MAKE. When talking to financial advisors—whether it’s a pushy insurance salesperson or a thoughtful financial planner—think about how they make their money and how much you’ll be charged. The way advisors are compensated can bias their recommendations. Meanwhile, if the cost is too high, your chances of decent returns will be slim.

Truths

NO. 81: IT PAYS to delay retirement. Postponing gives you more time to save, pay off any debts and collect investment gains. Once you quit the workforce, you’ll be drawing down your nest egg over a shorter expected retirement. You’ll likely also delay claiming Social Security and making any immediate annuity purchase, resulting in larger monthly checks.

Think

WINNER’S CURSE. If you’re in a bidding war for a house and come out on top, you may suffer the winner’s curse: In beating out other possibly more prudent and knowledgeable bidders, there’s a risk you overpaid. The winner’s curse can also afflict other buyers, such as corporations that win takeover battles or the highest bidders at an art auction.

Money Guide

Start Here

New Bond Issues

THE CASE FOR low-cost funds, including index funds, is especially compelling when it comes to bonds. But you might do even better—by buying newly issued Treasury, municipal and corporate bonds, and then holding them to maturity. That way, there’s typically no commission involved, you pay the same offering price as everybody else, including institutional investors, and you don’t have to worry that the dealer has marked up a bond’s price excessively. In the secondary market, where already issued bonds are traded, individuals often pay 2% or 3% more for bonds than institutional investors, and the markup (or markdown if you’re selling) could be as much as 5%. The secondary market can be an especially rough place for retail investors in municipal bonds. To purchase new Treasury bond issues, check out TreasuryDirect.gov. Many new municipal bond issues have a so-called retail order period, which allows individuals to place orders ahead of institutional investors. One problem: Your brokerage firm may not have access to the muni issues you’re interested in. Similarly, it can be difficult to get your hands on new corporate bond issues. It may pay to work with a broker or brokerage firm that specializes in these bonds. The biggest drawback with purchasing individual bonds is the lack of diversification. This isn’t an issue with Treasurys, where a default is highly unlikely (though it may not always seem that way amid all the political wrangling in Washington). But with munis and corporates, the risk of default is real. Unless you have huge sums to invest, you may not be able to buy enough different bond issues to protect yourself against the financial impact of one or two rotten bonds. Next: Bond Yields Previous: Bond Market Costs
Read more »

Second Look

Retirement

Why FI?

“FINANCIAL independence” has become a catchphrase over the past decade—in part because it’s the FI in FIRE, short for financial independence/retire early, a movement that’s captured the imagination of some and earned scorn from others.
The strategies touted by the financial independence movement are simple enough: Earn a large salary. Live frugally. Invest a substantial percentage of your income in low-cost mutual funds. The objective: Accumulate savings equal to at least 25 times your total annual spending.

Read more »

Family Finance

Breaking the Rules

YOU KNOW THOSE timeless financial principles? Sometimes they don’t age so well.
Since I started writing about money in 1985, all kinds of financial principles have gone out the window—and that’s continued right up until 2020. Indeed, if you’re still hewing to the financial wisdom of the 1980s, you’re likely hurting yourself today. Here are four examples:
1. Goodbye, Peter. In the late 1980s, America’s most celebrated fund manager was Fidelity Magellan’s Peter Lynch.

Read more »

Investing

No Vacation

I SOLD MY CONDO last month and the first thing I wanted to do was celebrate. It was such a relief to get rid of it, because owning a second home requires spending precious time maintaining it. At age 69, I can think of better ways to spend my time than looking after a vacation home.
At first, I was reluctant to put the condo up for sale. I had lived there for more than three decades.

Read more »

Lists

Bad News

I’M MANAGING my money with an eye to making it last another three decades. And yet, everywhere I turn, it seems somebody’s insisting I pay attention to what’s happening in the financial markets right now.
This isn’t just a coronavirus phenomenon. It is, alas, standard operating procedure for the financial media.
I understand the game. I’ve spent most of my career as a journalist, so I realize it’s no small undertaking to fill up a newspaper,

Read more »

Mindset

Don’t Be That Person

THE TRICKY THING about investing is that there’s no single “right” approach. In an earlier article, I described the approach I favor—what I call the five minds of the investor, which involves being part optimist, pessimist, analyst, economist and psychologist.
But there are many other ways to be successful: You might invest in real estate, or follow a quantitative investment strategy, or invest in private companies. There are plenty of people who do very well with these approaches.

Read more »