FREE NEWSLETTER

Invest based on dinner seminars, glossy brochures and TV advertisements, and you foot the bill for your own fleecing.

Youth May Triumph

LET ME PLAY THE contrarian. A dominant narrative today is that—compared to earlier generations—younger workers are both economically disadvantaged and less inclined to do anything about it.
Such notions have been bandied about for at least 2,000 years. Horace wrote that “the beardless youth… does not foresee what is useful, squandering his money.” For a more modern take, check out these comments from HumbleDollar contributors and readers lamenting the financial plight of today’s younger generation:

Company “loyalty to employees in large measure no longer exists.”
“Young people are forced to contend with the twin challenges of relatively low salaries and high student loan burdens.”
Baby boomers are “fortunate in a way that’s nearly impossible for Americans today.”
“Many workers are strapped today,

Read more »

A Healthy Sum

AS A KID, I WAS usually one of the last chosen for pickup games, be it softball, basketball or football. My athletic prowess was limited to being the fastest kid in my neighborhood, but it seems I lived in a slow neighborhood. I had moderate success on a local swim team, but again found that success didn’t translate to surrounding communities.
Into my teen years, I was plagued by allergies and asthma. It wasn’t until the late 1970s,

Read more »

Recent Writing

Gardeners Needed

“SOME PEOPLE automatically sell the ‘winners’—stocks that go up—and hold on to their ‘losers’—stocks that go down—which is about as sensible as pulling out the flowers and watering the weeds,” argued Peter Lynch in his 1989 book One Up on Wall Street.
My father worked for Sears for 30 years, delivering washers, freezers and other appliances. Sears rewarded employees with stock, even delivery men like my dad. Over time, through splits and spin-offs,

Read more »

Our Good Fortune

HOW DO WE MEASURE societal wealth? And what triggered this thought?
I started pondering the issue early last year. I had a total left knee joint replacement in January 2023. Not long after, I was sitting in my living room with an ice pack on my knee, having just completed a strenuous set of stretches and exercises.
The room was being warmed by a modern gas fireplace, lit by a remote control. No wood to split,

Read more »

Delayed Reaction

IF YOU’VE READ MY articles, you know I don’t respond to readers’ comments very often. It’s not because I’m quiet or shy. Rather, it’s because I like to be thoughtful in my responses, rather than firing off a quick one- or two-sentence answer in the comments section.
That brings me to four comments that I’ve found myself pondering, often months or even years after the article appeared. Here’s my belated response to each.
Trading up.

Read more »

Happy Conclusion

FOR THE PAST FEW years, I’ve been on a Radiohead kick. For the uninitiated, Radiohead is an English rock band whose lead singer is Thom Yorke, known for his distinctive whining vocals—I mean that in a good way—and innovative songwriting.
As I read about Yorke, a quote from him leaped off the page: “When I was a kid, I always assumed that [fame] was going to answer something—fill a gap. And it does the absolute opposite.”
I immediately thought of the financial corollary.

Read more »
Home Call to Action

There Is a Season

THE FIRST ROCK concert I attended was The Byrds at Bowdoin College in Maine. We stayed nearby at a cabin in the woods. It was there that I had my first experience with marijuana. It was not a good experience—thank goodness. My drug days were short-lived.
One of the songs made famous by The Byrds is Turn! Turn! Turn! The song was written by Pete Seeger, who derived it from verses in the Bible.

Read more »

Non-Leading Indicators

IN TRYING TO FORETELL the economy’s direction, former Federal Reserve Chair Alan Greenspan has shown “a keen interest in men’s underwear,” according to CNN Business. “He sees underwear sales as a key economic predictor.”
This isn’t because Greenspan is preoccupied with nether garments. Rather, says an NPR reporter, he believes that “the garment that is most private is male underpants because nobody sees it except people like in the locker room.”
Yes, the men’s underwear index exists.

Read more »

Not Just Numbers

IN THEIR NEW BOOK The Missing Billionaires, Victor Haghani and James White make an interesting argument. Looking at the number of millionaires in the U.S. in 1900 and doing some math, they estimate that there should be many more billionaires today—thousands more, in fact—than there are. The question Haghani and White ask: Where did they go? Or, more specifically, where did their wealth go?
The authors consider possible explanations, including taxes—especially estate taxes—and the 1929 crash.

Read more »

Paying to Avoid Pain

IN RECENT YEARS, I’ve confronted a choice: I could fund my solo Roth 401(k)—or I could use the dollars to cover the tax bill on a large Roth conversion. I wish I could do both. But after using my earned income to pay living expenses and make financial gifts, I don’t have the necessary cash.
My choice: Go for the big Roth conversion.
Why? In part, it’s because I’m focused on shrinking my traditional IRA before I turn age 75 and have to start taking required minimum distributions (RMDs),

Read more »

Get Educated

Truths

NO. 128: THE BIGGER our portfolio, the more stock and bond market returns matter. In our 20s, market performance is almost immaterial—and instead the big driver of our nest egg’s growth is the dollars we sock away. By contrast, how markets fare in the years before and after we retire is crucial, because that’s when our portfolio is typically at its largest.

Act

REASSESS YOUR emergency fund. Experts often recommend keeping three-to-six months of living expenses as an emergency fund. Just left a secure job to strike out on your own? You should probably hold more cash. Just retired? Now that losing your job is no longer a risk, you might shrink your emergency fund—and perhaps shutter it entirely.

Think

RISK TOLERANCE. Objectively, we may be able to take a lot of investment risk because we have a secure job and a long time horizon. But before we invest heavily in stocks, we should consider our personal tolerance for risk. This isn’t easy because it changes with the market: We grow braver as stock prices climb—and fearful when the market falls.

Money Guide

Housing Myths

MOST FOLKS SHOULD, at some point, go from renting to owning. But you need to do so with your eyes wide open. Housing is a source of endless confusion—which isn’t surprising given that there are so many moving parts, including attractive tax breaks, fluctuating property prices, leverage from any mortgage debt, and the monthly mortgage payment’s shifting mix of principal and interest. Here are five common myths: “You can’t go wrong with real estate.” You heard this often before and during the early 2000s real estate bubble, but far less frequently since the brutal decline that saw homes lose more than a quarter of their value between mid-2006 and early 2012. The potential for another severe decline should factor into your decision about whether to rent or buy. “My house is the best investment I’ve ever made.” Paying down a mortgage forces people to save and owning a house gives them a place to live. But what about home price appreciation? Historically, that’s been modest and largely offset by the costs of homeownership. “The bank owns half my house.” Not true. The bank merely lent you money. Unless you plan to go into foreclosure, you own 100% of your home—and benefit from any price increase and suffer any decline. “You should take out the largest mortgage possible.” Many homeowners think mortgage interest is some sort of financial freebie. Think again. If you’re in the 22% federal income tax bracket, pay $1 of mortgage interest and itemize your deductions, you’ll save just 22 cents in federal taxes—which means the other 78 cents is coming out of your pocket. “Our new kitchen added $100,000 to our home’s value.” The home may have climbed in value. But the boost from the new kitchen was almost certainly less than its cost. Homeowners typically don’t fully recoup the cost of remodeling projects. Next: Real Estate Returns Previous: Five Reasons to Rent
Read more »

Manifesto

NO. 57: WE FAVOR possessions for their lasting value, but often we get greater happiness when we spend money on experiences. Forget the new car. Instead, take the family to Paris.

Voices

What should be the top priorities for those in their 20s?

"50-30-20 Or as I taught the kids: 20-50-30 Pay yourself (save) 20% Keep you living expenses to 50% of your income Enjoy your life (especially while you are young!) with 30% for "wants"."
- Rob Thompson
Read more »

What's the best place to stash money you'll spend soon?

"BOXX ETF is interesting for cash in a taxable account, particularly for those in a high marginal tax bracket. A yield slightly above Vanguard Money Market (after fees) and you can defer taxation with 'income' taxed as a capital gain."
- Mike Zaccardi
Read more »

Second Look

Retirement

Retire to What?

AS I PREPARED TO retire at the relatively young age of 52, it was important to me not to become isolated, not to lose touch with the world beyond my home. My husband continues to work, leaving me on my own for much of the day. I consider myself a social person. All my jobs have involved working with employees and customers, from my first job as a delicatessen cashier through to running my own landscape maintenance company with 25 employees and hundreds of accounts.

Read more »

Family Finance

The Office

AFTER NEARLY 50 YEARS in the employee benefits profession, there are a few conversations that stand out—and they all relate to money. What people do, or don’t do, when it comes to money never ceases to amaze me. All the stories below are true.
I received a call from a recently deceased employee’s wife, followed by a call from the same employee’s other wife, both named Mary. One was in New Jersey and the other in South Carolina,

Read more »

Investing

Why They Believe

THE 19TH CENTURY feud between the Hatfields and the McCoys doesn’t hold a candle to the debate between supporters of index funds and supporters of active management.
Those in the index fund camp cite decades of data—going back to the 1930s—to support their view that active management is a fool’s errand. In fact, Standard & Poor’s regularly publishes a study it calls SPIVA, short for S&P Index Versus Active. Each time, analysts there reach the same conclusion—that it’s exceedingly difficult for an actively managed fund to beat its benchmark.

Read more »

Lists

What We Lose

WHEN WE RETIRE, we win back control over our daily life. Gone is the boss, the expectation that we’ll be at work at a certain hour, the worry about what the next office email will bring. We have a degree of freedom that, in many cases, we last knew when we were students contemplating a long summer vacation.
But even as we gain that freedom, there’s also much that we lose. If we’re to be happy retirees,

Read more »
Home Call to Action

Mindset

Price on Your Head

WE’RE WORTH SO MUCH more than the value of our homes and our financial accounts. But how much more? Forget your car and household possessions. Unless you have a Chagall hanging in the living room, it’s safe to assume all this stuff will depreciate and eventually be worth little or nothing.
Instead, our three assets with potentially significant value are our regular paycheck, our Social Security retirement benefit and any traditional employer pension we’re entitled to.

Read more »

Free Newsletter

Get Educated

Manifesto

NO. 57: WE FAVOR possessions for their lasting value, but often we get greater happiness when we spend money on experiences. Forget the new car. Instead, take the family to Paris.

Act

REASSESS YOUR emergency fund. Experts often recommend keeping three-to-six months of living expenses as an emergency fund. Just left a secure job to strike out on your own? You should probably hold more cash. Just retired? Now that losing your job is no longer a risk, you might shrink your emergency fund—and perhaps shutter it entirely.

Truths

NO. 128: THE BIGGER our portfolio, the more stock and bond market returns matter. In our 20s, market performance is almost immaterial—and instead the big driver of our nest egg’s growth is the dollars we sock away. By contrast, how markets fare in the years before and after we retire is crucial, because that’s when our portfolio is typically at its largest.

Think

RISK TOLERANCE. Objectively, we may be able to take a lot of investment risk because we have a secure job and a long time horizon. But before we invest heavily in stocks, we should consider our personal tolerance for risk. This isn’t easy because it changes with the market: We grow braver as stock prices climb—and fearful when the market falls.

Money Guide

Begin Here

Housing Myths

MOST FOLKS SHOULD, at some point, go from renting to owning. But you need to do so with your eyes wide open. Housing is a source of endless confusion—which isn’t surprising given that there are so many moving parts, including attractive tax breaks, fluctuating property prices, leverage from any mortgage debt, and the monthly mortgage payment’s shifting mix of principal and interest. Here are five common myths: “You can’t go wrong with real estate.” You heard this often before and during the early 2000s real estate bubble, but far less frequently since the brutal decline that saw homes lose more than a quarter of their value between mid-2006 and early 2012. The potential for another severe decline should factor into your decision about whether to rent or buy. “My house is the best investment I’ve ever made.” Paying down a mortgage forces people to save and owning a house gives them a place to live. But what about home price appreciation? Historically, that’s been modest and largely offset by the costs of homeownership. “The bank owns half my house.” Not true. The bank merely lent you money. Unless you plan to go into foreclosure, you own 100% of your home—and benefit from any price increase and suffer any decline. “You should take out the largest mortgage possible.” Many homeowners think mortgage interest is some sort of financial freebie. Think again. If you’re in the 22% federal income tax bracket, pay $1 of mortgage interest and itemize your deductions, you’ll save just 22 cents in federal taxes—which means the other 78 cents is coming out of your pocket. “Our new kitchen added $100,000 to our home’s value.” The home may have climbed in value. But the boost from the new kitchen was almost certainly less than its cost. Homeowners typically don’t fully recoup the cost of remodeling projects. Next: Real Estate Returns Previous: Five Reasons to Rent
Read more »

Voices

What’s the best way to collect and use credit card rewards?

"Lkke most voices below, I have cards with additional bonus cash back when used for certain categories (gas, groceries, etc). I physically write each bonus group name on the card with a sharpie, so that I remember which card to use when I’m out and about. It only takes a minute (plus some rubbing alcohol) to update each card when categories change. I enjoy the freedom of cash back, rather than directed points, as I get to choose when/where the bonus money is spent (usually with gift cards that have an additional 5% savings). Pay off each every month."
- Jeff
Read more »

Should children be paid for doing chores?

"Yes and no. There is the "belonging to the team (family)" aspect of chores that reflects pulling your weight and contributing to the team's purpose, survival, etc. And then there is the financial life lesson of working hard, doing a good job, and being rewarded for your efforts. Both are critical to a child's upbringing."
- Rob Thompson
Read more »

Which financial companies would you recommend?

"I use Charles Schwab for all my investments except my HSA, which HSA is at Fidelity. I use Affinity Federal Credit Union for my transactional accounts. Why split them? Schwab does not have an HSA, but it is a core product at Fidelity. Why not use Fidelity for everything? They have separate platforms for the HSA, 401K and investments. While it is not clear trying to move funds between them, or find an overall view is difficult. at Fidelity, easy at Schwab All have great service and products that meet my needs at a low price."
- Mark Eckman
Read more »

Second Look

Retirement

Retire to What?

AS I PREPARED TO retire at the relatively young age of 52, it was important to me not to become isolated, not to lose touch with the world beyond my home. My husband continues to work, leaving me on my own for much of the day. I consider myself a social person. All my jobs have involved working with employees and customers, from my first job as a delicatessen cashier through to running my own landscape maintenance company with 25 employees and hundreds of accounts.

Read more »

Family Finance

The Office

AFTER NEARLY 50 YEARS in the employee benefits profession, there are a few conversations that stand out—and they all relate to money. What people do, or don’t do, when it comes to money never ceases to amaze me. All the stories below are true.
I received a call from a recently deceased employee’s wife, followed by a call from the same employee’s other wife, both named Mary. One was in New Jersey and the other in South Carolina,

Read more »

Investing

Why They Believe

THE 19TH CENTURY feud between the Hatfields and the McCoys doesn’t hold a candle to the debate between supporters of index funds and supporters of active management.
Those in the index fund camp cite decades of data—going back to the 1930s—to support their view that active management is a fool’s errand. In fact, Standard & Poor’s regularly publishes a study it calls SPIVA, short for S&P Index Versus Active. Each time, analysts there reach the same conclusion—that it’s exceedingly difficult for an actively managed fund to beat its benchmark.

Read more »
Home Call to Action

Lists

What We Lose

WHEN WE RETIRE, we win back control over our daily life. Gone is the boss, the expectation that we’ll be at work at a certain hour, the worry about what the next office email will bring. We have a degree of freedom that, in many cases, we last knew when we were students contemplating a long summer vacation.
But even as we gain that freedom, there’s also much that we lose. If we’re to be happy retirees,

Read more »

Mindset

Price on Your Head

WE’RE WORTH SO MUCH more than the value of our homes and our financial accounts. But how much more? Forget your car and household possessions. Unless you have a Chagall hanging in the living room, it’s safe to assume all this stuff will depreciate and eventually be worth little or nothing.
Instead, our three assets with potentially significant value are our regular paycheck, our Social Security retirement benefit and any traditional employer pension we’re entitled to.

Read more »