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If you’re making money on your insurance policies, let’s hope things get better.

Four Reasons to Roth

CONGRESS IS BACK at it, aiming to change the tax laws again. Just since 2017, there’s been the Tax Cuts and Jobs Act (TCJA), the SECURE Act and the CARES Act, each of which contained tax provisions, some very significant. As I type this, Congress and the White House are horse-trading on another round of changes.
Because new legislation is still being negotiated, I think it’s too soon to change your financial plan. But there’s one strategy that makes sense for a lot of people,

Read more »

Work in Progress

RETIREMENT MAY MARK the end of fulltime work—but that doesn’t mean we should stop working on our finances. Even after we quit the workforce, there’s much we can do to strengthen our retirement plan and, indeed, that may be necessary if we find we’re drawing down our nest egg too quickly.
Are you concerned that you might outlive your savings? Consider these six financial tweaks:
1. Work part-time. I’ve heard folks claim that if you’re still doing some work for pay,

Read more »

One Simple Thing

I THOUGHT SAYING goodbye to my coworkers, and walking out my office door for the last time, would be the most memorable moment from the beginning of my retirement. But, no, that moment didn’t come until the next day.
I woke up, got out of bed and walked into the living room. Staring out the front window, I felt this sense of calm and peacefulness that I can’t remember ever feeling before. I felt so relaxed that I could swear I was weightless.

Read more »

The Get Rich Fast

TWO YEARS AGO, I was 100 pounds overweight and constantly hungry. I had been overweight most of my life. But as a father of young kids, I was newly motivated to try to improve my life expectancy. I fortuitously discovered intermittent fasting and the low-carbohydrate way of eating, and instantly had success. Right away, I set an ambitious goal of losing the entire 100 pounds in one year. With a lot of hard work and dedication,

Read more »

Through the Roof

STOP LUSTING AFTER homes on Zillow. It’s time to get serious about the property market—and ask whether houses today are a good value.
Make no mistake: Real estate is red hot. Bloomberg recently reported that demand is so strong that almost half of U.S. homes sell within a week of coming to market. The S&P Case-Shiller U.S. National Home Price Index surged 12% over the 12 months through February, with the Phoenix and San Diego markets leading the way with 17% gains.

Read more »

Robbin’ Who?

TERRY ODEAN has been studying investor behavior for decades. The University of California at Berkeley finance professor has proven again and again that everyday investors often harm their performance by trading too much.
Last year, Odean and his fellow researchers turned their attention to the Robinhood phenomenon. Result? When I spoke to Odean, he said the only thing that surprised him was the magnitude of the self-inflicted investment wounds by users of the free-and-easy trading app.

Read more »

Voices

What investment will perform best over the next 10 years?

"For me that's easy... private companies with great management teams and reasonable valuations. I've made more money investing in early stage companies the last 5 years than I could have ver dreamed of."
- Scrooge_McDuck88
Read more »

What costs are you most loath to pay?

"12b-1 mutual fund fees, especially to a company like TIAA, which is allegedly not-for-profit."
- Michael Hennessy
Read more »

Does it ever make sense to buy actively managed funds?

"As long as the costs (expense ratios) are low, that's all that really matters. It appears that ex-US and EM funds can do fine or better than index funds, but you just have to be careful you don't performance chase. It's funny to look at the investment lineups in 401k plans - they often feature some index funds and a slew of the last 10 years' hottest active funds. And guess what many participants go for... thankfully, target-date funds are becoming mainstays in plan lineups nowawadays."
- Mike Zaccardi
Read more »

Money Guide

How Much to Retire?

ANSWERING THIS question is surprisingly easy. Start by figuring out how much pretax income you want each year in retirement. Next, subtract what you expect to receive from Social Security and any employer pension plan. Whatever amount that leaves—let’s say it’s $40,000 a year—will need to come from your savings. You multiply that $40,000 by 25 and you have your answer: $1 million. Sound like a huge sum? Keep a few things in mind. First, as you save for retirement, you should get substantial help from investment compounding. Much of that help will likely come in your final decade in the workforce. By then, you should have a fair amount amassed, so even modest market returns can mean a big dollar increase in your nest egg’s value. Indeed, it’s possible that, during those final 10 years in the workforce, the value of your portfolio could double. Second, if your nest egg isn’t as plump as you’d like, you might delay retirement by a year or two. That can give a big boost to your portfolio, because you’ll have more time to save and to collect investment gains, while also putting off the moment when you start tapping your nest egg for income. Alternatively, you might explore working part-time in retirement, which can be equally beneficial. Third, if you find yourself falling short of the portfolio you’d hoped for, you can always squeeze more income out of your nest egg by using part of your portfolio to purchase an immediate fixed annuity that pays lifetime income. Similarly, during your initial retirement years, you might opt to cover your living costs entirely out of savings, while delaying Social Security to get a larger check. That’ll give you another stream of guaranteed lifetime income—one that rises each year with inflation. Still coming up short? Look for ways to cut spending. The obvious step: Trade down to a smaller home. If that doesn’t work, you might consider a reverse mortgage, though that should probably be a last resort. Next: Plan an Estate? Previous: What Insurance?
Read more »

Manifesto

NO. 58: IF WE HAVE a long time horizon, we should aim to be owners—by buying our cars, our home and a diversified stock portfolio. The latter will make us part owners of companies large and small.

Truths

NO. 51: ANNUAL FUND expenses are the biggest driver of differences in fund performance. A stock-fund manager may get lucky and post big gains, despite a hefty expense ratio. But that’s rare with bond and money-market funds: Investors should favor the lowest-cost funds, because they invariably dominate each category’s list of top five-year performers.

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.

Second Look

Retirement

Looking Forward

I WAS LISTENING recently to a Bob Dylan song, From a Buick 6. One of the song’s lines is, “I need a dump truck, baby, to unload my head.” That’s how I sometimes feel about the churning in my own mind concerning retirement.
I turned 67 this year. This is probably one of the most critical periods for me as a retiree. There are things in my life I need to sort out,

Read more »

Family Finance

Which Road?

I RECENTLY LEFT my fulltime position at an energy trading company. I had a good run and enjoyed the job. It was mainly the people, both my coworkers and our clients.
I also liked the business travel. It broke up the daily routine and put faces to names, plus there were the awesome ribeye steak dinners with clients. Speaking at conferences was fun, too.
But things evolve. To quote Rocky, “If I can change and you can change,

Read more »

Investing

Proceed with Caution

MY FRIEND Rostislavwho would know, tells me that in Russian there’s no equivalent for the word “privacy.” That’s because privacy—as we understand it—is a foreign concept. Children’s grades are posted publicly in schools and it isn’t considered impolite to ask someone’s salary.
Why is this relevant? As a stock market investor, if you have international exposure, you’ll want to be aware of these cultural differences, because they impact how other countries run their economies and how they regulate—or don’t regulate—their investment markets.

Read more »

Lists

More for Your Money

AT SEVEN O’CLOCK this morning, as my wife and I tried in vain to wake our children for school, we heard a similar response as we went from room to room: “My head hurts.” Nobody wanted to get up.
I have to say, I don’t blame them. It’s the middle of winter here in Boston. The sky is gray and the thermometer seems stuck below zero. It can be hard for anyone to feel motivated,

Read more »
Home Call to Action

Mindset

All Too Human

THE STOCK MARKET this year reminds me of one of those Rorschach inkblot tests. The broad U.S. market has gained more than 4%, including dividends, but it’s difficult to know what to make of it. Bulls point to this year’s tax cuts and believe that the market’s gain makes complete sense. Bears, on the other hand, note that the market has quadrupled in less than 10 years and conclude that it’s at an unsustainably high level.

Read more »

Four Reasons to Roth

CONGRESS IS BACK at it, aiming to change the tax laws again. Just since 2017, there’s been the Tax Cuts and Jobs Act (TCJA), the SECURE Act and the CARES Act, each of which contained tax provisions, some very significant. As I type this, Congress and the White House are horse-trading on another round of changes.
Because new legislation is still being negotiated, I think it’s too soon to change your financial plan. But there’s one strategy that makes sense for a lot of people,

Read more »

Work in Progress

RETIREMENT MAY MARK the end of fulltime work—but that doesn’t mean we should stop working on our finances. Even after we quit the workforce, there’s much we can do to strengthen our retirement plan and, indeed, that may be necessary if we find we’re drawing down our nest egg too quickly.
Are you concerned that you might outlive your savings? Consider these six financial tweaks:
1. Work part-time. I’ve heard folks claim that if you’re still doing some work for pay,

Read more »

One Simple Thing

I THOUGHT SAYING goodbye to my coworkers, and walking out my office door for the last time, would be the most memorable moment from the beginning of my retirement. But, no, that moment didn’t come until the next day.
I woke up, got out of bed and walked into the living room. Staring out the front window, I felt this sense of calm and peacefulness that I can’t remember ever feeling before. I felt so relaxed that I could swear I was weightless.

Read more »

The Get Rich Fast

TWO YEARS AGO, I was 100 pounds overweight and constantly hungry. I had been overweight most of my life. But as a father of young kids, I was newly motivated to try to improve my life expectancy. I fortuitously discovered intermittent fasting and the low-carbohydrate way of eating, and instantly had success. Right away, I set an ambitious goal of losing the entire 100 pounds in one year. With a lot of hard work and dedication,

Read more »

Through the Roof

STOP LUSTING AFTER homes on Zillow. It’s time to get serious about the property market—and ask whether houses today are a good value.
Make no mistake: Real estate is red hot. Bloomberg recently reported that demand is so strong that almost half of U.S. homes sell within a week of coming to market. The S&P Case-Shiller U.S. National Home Price Index surged 12% over the 12 months through February, with the Phoenix and San Diego markets leading the way with 17% gains.

Read more »

Robbin’ Who?

TERRY ODEAN has been studying investor behavior for decades. The University of California at Berkeley finance professor has proven again and again that everyday investors often harm their performance by trading too much.
Last year, Odean and his fellow researchers turned their attention to the Robinhood phenomenon. Result? When I spoke to Odean, he said the only thing that surprised him was the magnitude of the self-inflicted investment wounds by users of the free-and-easy trading app.

Read more »

Free Newsletter

Voices

When have you regretted paying the lowest cost possible?

"When we bought a new house many years ago (that was being built), we went with "builder's grade" on the roof, windows, fixtures, doors, etc. We've replaced all those things over the years. But, I am kind of glad we bought the cheap stuff at first because after living in the house for 15 years we had a better feel for what kind of upgrades we wanted to make."
- SanLouisKid
Read more »

Which financial markets are in a bubble, if any?

"Crypto is the obvious example. Doge coin that was literally created as a joke now has a market cap larger than Ford and Kraft combined. If that's not signs of a bubble that else could possibly beat that? Well maybe Baseball cards lately! But at least those you can enjoy ;)"
- Scrooge_McDuck88
Read more »

What investment will perform best over the next 10 years?

"For me that's easy... private companies with great management teams and reasonable valuations. I've made more money investing in early stage companies the last 5 years than I could have ver dreamed of."
- Scrooge_McDuck88
Read more »
Home Call to Action

Manifesto

NO. 58: IF WE HAVE a long time horizon, we should aim to be owners—by buying our cars, our home and a diversified stock portfolio. The latter will make us part owners of companies large and small.

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. 51: ANNUAL FUND expenses are the biggest driver of differences in fund performance. A stock-fund manager may get lucky and post big gains, despite a hefty expense ratio. But that’s rare with bond and money-market funds: Investors should favor the lowest-cost funds, because they invariably dominate each category’s list of top five-year performers.

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

Start Here

How Much to Retire?

ANSWERING THIS question is surprisingly easy. Start by figuring out how much pretax income you want each year in retirement. Next, subtract what you expect to receive from Social Security and any employer pension plan. Whatever amount that leaves—let’s say it’s $40,000 a year—will need to come from your savings. You multiply that $40,000 by 25 and you have your answer: $1 million. Sound like a huge sum? Keep a few things in mind. First, as you save for retirement, you should get substantial help from investment compounding. Much of that help will likely come in your final decade in the workforce. By then, you should have a fair amount amassed, so even modest market returns can mean a big dollar increase in your nest egg’s value. Indeed, it’s possible that, during those final 10 years in the workforce, the value of your portfolio could double. Second, if your nest egg isn’t as plump as you’d like, you might delay retirement by a year or two. That can give a big boost to your portfolio, because you’ll have more time to save and to collect investment gains, while also putting off the moment when you start tapping your nest egg for income. Alternatively, you might explore working part-time in retirement, which can be equally beneficial. Third, if you find yourself falling short of the portfolio you’d hoped for, you can always squeeze more income out of your nest egg by using part of your portfolio to purchase an immediate fixed annuity that pays lifetime income. Similarly, during your initial retirement years, you might opt to cover your living costs entirely out of savings, while delaying Social Security to get a larger check. That’ll give you another stream of guaranteed lifetime income—one that rises each year with inflation. Still coming up short? Look for ways to cut spending. The obvious step: Trade down to a smaller home. If that doesn’t work, you might consider a reverse mortgage, though that should probably be a last resort. Next: Plan an Estate? Previous: What Insurance?
Read more »

Second Look

Retirement

Looking Forward

I WAS LISTENING recently to a Bob Dylan song, From a Buick 6. One of the song’s lines is, “I need a dump truck, baby, to unload my head.” That’s how I sometimes feel about the churning in my own mind concerning retirement.
I turned 67 this year. This is probably one of the most critical periods for me as a retiree. There are things in my life I need to sort out,

Read more »

Family Finance

Which Road?

I RECENTLY LEFT my fulltime position at an energy trading company. I had a good run and enjoyed the job. It was mainly the people, both my coworkers and our clients.
I also liked the business travel. It broke up the daily routine and put faces to names, plus there were the awesome ribeye steak dinners with clients. Speaking at conferences was fun, too.
But things evolve. To quote Rocky, “If I can change and you can change,

Read more »

Investing

Proceed with Caution

MY FRIEND Rostislavwho would know, tells me that in Russian there’s no equivalent for the word “privacy.” That’s because privacy—as we understand it—is a foreign concept. Children’s grades are posted publicly in schools and it isn’t considered impolite to ask someone’s salary.
Why is this relevant? As a stock market investor, if you have international exposure, you’ll want to be aware of these cultural differences, because they impact how other countries run their economies and how they regulate—or don’t regulate—their investment markets.

Read more »

Lists

More for Your Money

AT SEVEN O’CLOCK this morning, as my wife and I tried in vain to wake our children for school, we heard a similar response as we went from room to room: “My head hurts.” Nobody wanted to get up.
I have to say, I don’t blame them. It’s the middle of winter here in Boston. The sky is gray and the thermometer seems stuck below zero. It can be hard for anyone to feel motivated,

Read more »

Mindset

All Too Human

THE STOCK MARKET this year reminds me of one of those Rorschach inkblot tests. The broad U.S. market has gained more than 4%, including dividends, but it’s difficult to know what to make of it. Bulls point to this year’s tax cuts and believe that the market’s gain makes complete sense. Bears, on the other hand, note that the market has quadrupled in less than 10 years and conclude that it’s at an unsustainably high level.

Read more »