FREE NEWSLETTER

Want to improve your chances of a comfortable retirement? Find a job you’ll never want to quit.

About Those Bonds

AT THE MUTUAL FUND company where I once worked, the stock and bond teams liked to poke fun at one another. Bond managers viewed the stock-pickers as overpaid storytellers. Meanwhile, the stock-pickers saw the world of bonds as stultifying. “Playing for nickels and dimes” is how one of them put it.
For better or worse, bonds do indeed represent the slow lane. But this year, with bond prices depressed by rising interest rates, investors are wanting to learn more.

Read more »

Rates Up Fed Down

THE FEDERAL RESERVE has been the biggest buyer of Treasury and mortgage-backed bonds for the past decade. In that time, it expanded its balance sheet from about $800 million to more than $8 trillion.
As long as inflation remained low, its bond purchases helped produce a slowly growing economy by keeping interest rates and unemployment low. Now that inflation is at its highest level in 40 years, the Federal Reserve is starting to raise interest rates in response.

Read more »

Short Stuff

Check on Yourself

MEET THE LATEST feature added to HumbleDollar—as well as the website’s first calculator: the Two-Minute Checkup.
How does it work? All you need to do is input up to nine pieces of information, the sort of stuff most of us know off the top of our head. There’s no need to create an account or link to your brokerage firm or bank, and none of your information is saved on HumbleDollar or anywhere else. 

Read more »

Earning a Roth

HAVE YOU GOT children or grandchildren with summer jobs? That means you could put them on the path to financial success—by helping them open a Roth IRA.
My brothers and I always had jobs, including delivering newspapers, bussing tables, mowing lawns and valet parking. My sons also had jobs at an early age, including shucking thousands of ears of corn at our local swim club. Later on, they were lifeguards, along with many of their friends from the swim team.

Read more »

Retirement Is Coming

AM I ALLOWED another rant?

I have a tip for anyone under age 50. Someday—if you’re lucky—you’ll stop working and still need income to live. Most of us call that retirement.

How in the world do people reach their 50s and suddenly have a revelation that retirement is somewhere in their future?

I get it. If you’re in your 20s or even early 30s, it’s time to have fun. But there’s the trap. Fun for too long,

Read more »

Ask Around

AH, SUMMER. Over the July 4 weekend, we spent time relaxing at our neighbor’s house. A three-year-old jumped into the pool from the diving board for the first time. He had a big smile and many supporters.
It’s always fun to chat with neighbors we haven’t seen for a while, and also meet new visitors. One man swimming with his kids turned out to be an investigative reporter for a local news station. We didn’t talk for long,

Read more »

Taking the Plunge

WHEN I WAS LEARNING about investing, dollar-cost averaging was one of the first strategies I read about. Over the years, I’ve come across a number of articles debating the strategy’s virtues, usually comparing it to a onetime lump-sum investment.
Dollar-cost averaging consists of making a series of periodic investments rather than buying all at once. These purchases occur at regular intervals, regardless of the investment’s price that day. Using this strategy, you can purchase more shares when prices are lower.

Read more »

July’s Hits

WHAT INTRIGUED readers during the steamy days of July? Here are last month’s most popular articles:

Many retirees resist taking out a reverse mortgage because of the stigma involved. Get over it, advises Mike Drak.
“One clear takeaway: Only collect things for enjoyment rather than as an investment,” says John Yeigh. “Another is that the sale of a long-term collection can be annoyingly time-consuming.”
If you just received a financial windfall or you’re planning to leave one to your heirs,

Read more »

Longer Reads

Twelve Travel Tips

I RECENTLY VISITED Eastern Europe, where I volunteered to teach English in Poland through an organization called Angloville. I received free room and board at a resort in exchange for conversing from breakfast through dinner with Polish adults who wanted to improve their English.
In addition to meeting Poles and being immersed in Polish culture, I used my free time to explore nearby countries. Planning a vacation abroad? Based on my recent trips to Poland,

Read more »

Bad Guy on Line One

GOOD PARENTS WARN their children about predators who look to take advantage of them. By the same token, good adults should warn and safeguard their elderly parents, as well as the other seniors they care for.
We all use our electronics for accessing information. We sometimes forget the information highway is two-way, and nefarious people use those lines of communication to get to the vulnerable. And it isn’t just about hacking online accounts. Often,

Read more »

My $6,100 Surgery

DICK QUINN RECENTLY wrote about his $233 surgery. I wasn’t so lucky.
When marketplace health plans first became available in 2012 as a result of the Affordable Care Act, my wife and I bought coverage. After my wife signed up for Medicare in 2020, I switched to a solo policy. I’d been counting down the days until I, too, qualified for Medicare at age 65. With a $7,000 deductible on my policy, I was crossing my fingers that my health would remain good.

Read more »

When Debt Is Left

WHAT HAPPENS WHEN a person dies without a will and there isn’t enough money to pay all of his or her debts? Who gets paid and who gets shorted?
I’d always heard that funeral expenses were the first priority, and then unsecured creditors got everything else. I’ve recently learned from personal experience that the rules are more complex—and more generous to widows and widowers.
A 60-year-old friend of mine recently died. He hadn’t written a will.

Read more »

Retirement Riddles

I SPEND SIGNIFICANT time reading the viewpoints of people who are planning for retirement or who are already retired. My frequent reaction: What are they thinking?
When I review retirement planning discussions on Facebook and elsewhere, I often find the participants show little understanding of how to proceed or even what some basic terms mean. Here’s a sampling of the confusion and uncertainty I come across:

Should people aim to replace 70%, 80% or some other percentage of their preretirement income?

Read more »

Getting to Happy

THE MEGA MILLIONS drawing on Friday was worth more than $1 billion. Would you be happy if you’d been the lucky winner?
Last week, I talked about the Vanderbilts. Once the wealthiest family in America, they saw their fortune dwindle because of aggressive spending. Back in the 1890s, for example, the family spent $7 million building the Breakers, a summer home in Newport, Rhode Island. That’s the equivalent of $220 million today. When it was completed,

Read more »

Voices

Does it ever make sense to carry a credit card balance?

"Yes, but only if the interest rate the credit card company is charging is less than what you’re earning on that borrowed money. Which, in the real world, normally means you’re paying off your balances each month. ;)"
- gregorit
Read more »

What do you consider your greatest financial mistakes?

"Before I learned about diversification I had too much of one company’s stock, and paid the price when it took a 50% cut."
- corrupt
Read more »

What do you need to be financially independent?

"A rule of thumb I subscribe to is that the very basic necessities of life (food, clothing, shelter) should be 100% covered by various streams of monthly guaranteed income (social security, pension and/or annuity income). Aspiring to cover our basic cost of monthly living with guaranteed income allows us to take a more long term approach to our other invested assets and a greater percentage of those dollars being allocated to stocks, since short term market volatility isn't directly impacting our near-term lifestyle."
- Newsboy
Read more »

Money Guide

What to Bequeath

YOUR HEIRS WILL likely appreciate what you bequeath them. But some bequests may be appreciated more than others. At the top of the list would probably be a Roth IRA. Yes, estate taxes could be owed if your overall estate is large enough and, yes, your heirs will have to empty the account within 10 years. But there will be no income taxes owed on those withdrawals, and the money in the account could enjoy 10 additional years of tax-free growth after your death. Life insurance can also make an attractive inheritance, especially if you are subject to estate taxes. Why? The proceeds will be income-tax-free to your beneficiaries and, if properly structured, the policy won’t be part of your taxable estate. Still, given how expensive life insurance becomes as you age, you probably shouldn’t buy it solely to ensure an inheritance, unless estate taxes are an issue. You might keep highly appreciated investments held in a regular taxable account and bequeath those. That way, you’ll avoid the embedded capital gains tax bill, thanks to the step-up in basis upon death, and that will leave more money for your heirs. In recent years, there have been various proposals aimed at eliminating the step-up. While nothing has yet become law, it’s an idea that could eventually gain political traction. Keep in mind that you should sell underwater investments, not bequeath them. You can use the tax losses to reduce your income tax bill while you’re alive, but those losses have no tax value after your death. What if you are faced with a choice between bequeathing a traditional retirement account and bequeathing money in a taxable account? Now that the stretch IRA has disappeared, you might look to bequeath investments in a regular taxable account, which will mean more after-tax dollars for your heirs. Finally, your heirs will probably be less happy to inherit assets that are difficult to sell. At issue here are not only illiquid investments, but also time shares, antique cars and second homes. Clearly, if you’re making full use of these assets while you’re alive, you should keep them. But your heirs would probably prefer to receive cash. Next: Trusts Previous: End of the Stretch Article: Stepping Up
Read more »

Manifesto

NO. 4: GOOD SAVINGS habits are the greatest of the financial virtues. If we aren’t good savers, it’s all but impossible to grow wealthy. What if we are? We’ll likely prosper, even if we’re mediocre investors.

Truths

NO. 15: WE FAVOR the familiar. We suffer from home bias, meaning we’re drawn to our employer’s shares, local corporations and stocks of companies whose products we use. We also favor U.S. stocks and shy away from foreign shares. These familiar investments create a portfolio we’re comfortable with—but maybe not one that’s well diversified.

Act

CHECK YOUR Social Security statement to get an estimate of benefits and make sure your earnings record is correct. The easiest way to do this: Set up a “my Social Security” account, preferably adding two-factor authentication. This will also preempt scammers, who might otherwise try to set up an account in your name—and claim your benefits.

Think

INTRINSIC VALUE. It’s easy to get caught up in the stock market’s wild price swings. Feeling unnerved? Never forget that behind those price swings are companies of great value. While we can’t put a precise figure on their intrinsic value, we can get a sense by examining the profits they earn, the dividends they pay and the value of the assets they own.

Second Look

Retirement

Challenging Myself

I JUST TURNED 62. That’s the milestone age when so much of the magic—and the decision-making—of retirement begins to happen.
For the record, although I recently left the workforce early to pursue a long-simmering passion for writing, I won’t be starting Social Security payments early. Nor—unless something changes health-wise—do I intend to begin distributions from my IRAs any time soon. Before I go down those two routes, I plan to live off my taxable-account savings and minimal dividend income for as long as I can.

Read more »

Family Finance

Barely Afloat

YES, I’M STILL AT SEA. Confinement in our cabin is wearing thin. But unfortunately, with ports closed and politicians opposed to us docking in Florida, the end isn’t in sight.
Have you ever wondered what it would be like to be totally dependent on someone who you can’t see and have no contact with? Me neither. But now, I know.
Bottles of water show up at our door, the last one a full gallon.

Read more »

Investing

Better Than Nothing

MONEY MARKET FUNDS and other cash investments are paying interest rates close to zero. This is at a time of turmoil in society and in the economy. This is at a time when both stock and bond markets are at high prices. It seems like we have to choose between collecting very low yields on cash or buying investments with far greater risk.
An alternative to these extremes: How about a “short-term barbell” to hold money you don’t currently want to invest or don’t yet need to spend?

Read more »

Lists

Control What You Can

ASK NOT WHAT the markets can do for you. Ask what you can do for your portfolio.
After 15 turbulent months for stocks, many folks feel they’re at the mercy of the financial markets. But in truth, we’re far from powerless. We may not be able to control the direction of share prices. But here are seven crucial financial levers over which we have a lot of control:
1. We can figure out how much cash we’ll need from our portfolio over the next five years,

Read more »
Home Call to Action

Mindset

Picture This

HAVE YOU EVER considered what you want your retirement to look like? Not just generically, but in vivid detail? If you haven’t, I urge you to go through this exercise as you flesh out your financial goals.
Visualization is used mainly by athletes as they prepare for competition, so that they can get as close to the experience as possible before the competition starts. This was witnessed across the world when American skier Lindsey Vonn’s visualization routine was caught on camera before an Olympic race.

Read more »

Longer Reads

Twelve Travel Tips

I RECENTLY VISITED Eastern Europe, where I volunteered to teach English in Poland through an organization called Angloville. I received free room and board at a resort in exchange for conversing from breakfast through dinner with Polish adults who wanted to improve their English.
In addition to meeting Poles and being immersed in Polish culture, I used my free time to explore nearby countries. Planning a vacation abroad? Based on my recent trips to Poland,

Read more »

Bad Guy on Line One

GOOD PARENTS WARN their children about predators who look to take advantage of them. By the same token, good adults should warn and safeguard their elderly parents, as well as the other seniors they care for.
We all use our electronics for accessing information. We sometimes forget the information highway is two-way, and nefarious people use those lines of communication to get to the vulnerable. And it isn’t just about hacking online accounts. Often,

Read more »

My $6,100 Surgery

DICK QUINN RECENTLY wrote about his $233 surgery. I wasn’t so lucky.
When marketplace health plans first became available in 2012 as a result of the Affordable Care Act, my wife and I bought coverage. After my wife signed up for Medicare in 2020, I switched to a solo policy. I’d been counting down the days until I, too, qualified for Medicare at age 65. With a $7,000 deductible on my policy, I was crossing my fingers that my health would remain good.

Read more »

My $6,100 Surgery

DICK QUINN RECENTLY wrote about his $233 surgery. I wasn’t so lucky.
When marketplace health plans first became available in 2012 as a result of the Affordable Care Act, my wife and I bought coverage. After my wife signed up for Medicare in 2020, I switched to a solo policy. I’d been counting down the days until I, too, qualified for Medicare at age 65. With a $7,000 deductible on my policy, I was crossing my fingers that my health would remain good.

Read more »

When Debt Is Left

WHAT HAPPENS WHEN a person dies without a will and there isn’t enough money to pay all of his or her debts? Who gets paid and who gets shorted?
I’d always heard that funeral expenses were the first priority, and then unsecured creditors got everything else. I’ve recently learned from personal experience that the rules are more complex—and more generous to widows and widowers.
A 60-year-old friend of mine recently died. He hadn’t written a will.

Read more »

Retirement Riddles

I SPEND SIGNIFICANT time reading the viewpoints of people who are planning for retirement or who are already retired. My frequent reaction: What are they thinking?
When I review retirement planning discussions on Facebook and elsewhere, I often find the participants show little understanding of how to proceed or even what some basic terms mean. Here’s a sampling of the confusion and uncertainty I come across:

Should people aim to replace 70%, 80% or some other percentage of their preretirement income?

Read more »

Free Newsletter

Voices

Should U.S. investors own foreign bonds?

"Here's my "filter": We own stocks for "return ON our money" and bonds for "return OF our money". If a foreign bond fund doesn't make you feel comfortable, or your planned allocation to it won't "move the needle", then maybe Uncle Sam should be your holding."
- Rob Thompson
Read more »

What should you look for when buying a home?

"My most important lesson related to house purchase occurred while my husband was in the Army. He had been in ROTC and went on active duty during the Vietnam War. Fortunately, he was stationed at the US Military Academy at West Point. We were both in graduate school at the time and lacked a car; my father drove us around so we could find housing in ONE day-- Tom was too low ranking to qualify for on post housing. We had the minimal amount for a down payment on a modest house, and looked at a couple that we could have afforded and which would have been fine. We decided not to risk a buy and instead found a rental. We stayed at West Point for 3 years; during that time, we saw career army people buy and sell their houses. They rarely planned to stay put for more than 3 years. Nevertheless, they rapidly found houses they thought would "work" for them and bought them. Every junior officer we knew followed this plan, and sold at a profit when their tour was finished. After the army stint, my husband took a job at the University of WI -- Madison. We were not mid-westerners and did not plan to stay (we actually have for almost 50 years!) BUT this time we followed the "army way." We drove to Wisconsin with one week to find a house that would work for us and our two young children The inventory available was very limited, but we found a 3 bedroom ranch that met our needs but was NOT our dream house. We stayed in that house for 5 years. During our initial week looking for housing in Madison, we did identify the small neighborhood in which we wanted to live, but it took us five years to find a house there that we could afford. We were constantly outbid until we came upon a true fixer upper. We were the first people to tour the house and we offered the full asking price. Our offer had no contingencies -- we did not have it inspected (it would never have passed!), we gambled we could sell the ranch house before the closing, and we just held our breath. We sold the ranch for about 25% more than we paid, and closed on both houses the same day! Forty-four years later, my husband and I still live in the fixer uppers. The house over the years has required a lot of work -- both do- it- yourself and bigger projects that were done by professional contractors. But the house in which we raised 3 kids still works well for us as empty nesters. Realtors often claim "location, location, location" are the 3 most important factors in real estate. I totally agree -- today, my neighborhood is as hot as it was 44 years when we moved into it. But I would tell any first time home buyer to determine his/her non-negotiable-- it might not be location for them-- and then proceed from there. No house is going to be "perfect," and it's important not to be overwhelmed by a housing purchase. The lesson from West Point was that what you buy, you can also sell! That approach definitely does work!"
- Marilyn Lavin
Read more »

Is it possible to have too much money?

"No. It is only possible to give or spend too little."
- Moesha
Read more »
Home Call to Action

Manifesto

NO. 4: GOOD SAVINGS habits are the greatest of the financial virtues. If we aren’t good savers, it’s all but impossible to grow wealthy. What if we are? We’ll likely prosper, even if we’re mediocre investors.

Act

CHECK YOUR Social Security statement to get an estimate of benefits and make sure your earnings record is correct. The easiest way to do this: Set up a “my Social Security” account, preferably adding two-factor authentication. This will also preempt scammers, who might otherwise try to set up an account in your name—and claim your benefits.

Truths

NO. 15: WE FAVOR the familiar. We suffer from home bias, meaning we’re drawn to our employer’s shares, local corporations and stocks of companies whose products we use. We also favor U.S. stocks and shy away from foreign shares. These familiar investments create a portfolio we’re comfortable with—but maybe not one that’s well diversified.

Think

INTRINSIC VALUE. It’s easy to get caught up in the stock market’s wild price swings. Feeling unnerved? Never forget that behind those price swings are companies of great value. While we can’t put a precise figure on their intrinsic value, we can get a sense by examining the profits they earn, the dividends they pay and the value of the assets they own.

Money Guide

Start Here

What to Bequeath

YOUR HEIRS WILL likely appreciate what you bequeath them. But some bequests may be appreciated more than others. At the top of the list would probably be a Roth IRA. Yes, estate taxes could be owed if your overall estate is large enough and, yes, your heirs will have to empty the account within 10 years. But there will be no income taxes owed on those withdrawals, and the money in the account could enjoy 10 additional years of tax-free growth after your death. Life insurance can also make an attractive inheritance, especially if you are subject to estate taxes. Why? The proceeds will be income-tax-free to your beneficiaries and, if properly structured, the policy won’t be part of your taxable estate. Still, given how expensive life insurance becomes as you age, you probably shouldn’t buy it solely to ensure an inheritance, unless estate taxes are an issue. You might keep highly appreciated investments held in a regular taxable account and bequeath those. That way, you’ll avoid the embedded capital gains tax bill, thanks to the step-up in basis upon death, and that will leave more money for your heirs. In recent years, there have been various proposals aimed at eliminating the step-up. While nothing has yet become law, it’s an idea that could eventually gain political traction. Keep in mind that you should sell underwater investments, not bequeath them. You can use the tax losses to reduce your income tax bill while you’re alive, but those losses have no tax value after your death. What if you are faced with a choice between bequeathing a traditional retirement account and bequeathing money in a taxable account? Now that the stretch IRA has disappeared, you might look to bequeath investments in a regular taxable account, which will mean more after-tax dollars for your heirs. Finally, your heirs will probably be less happy to inherit assets that are difficult to sell. At issue here are not only illiquid investments, but also time shares, antique cars and second homes. Clearly, if you’re making full use of these assets while you’re alive, you should keep them. But your heirs would probably prefer to receive cash. Next: Trusts Previous: End of the Stretch Article: Stepping Up
Read more »

Second Look

Retirement

Challenging Myself

I JUST TURNED 62. That’s the milestone age when so much of the magic—and the decision-making—of retirement begins to happen.
For the record, although I recently left the workforce early to pursue a long-simmering passion for writing, I won’t be starting Social Security payments early. Nor—unless something changes health-wise—do I intend to begin distributions from my IRAs any time soon. Before I go down those two routes, I plan to live off my taxable-account savings and minimal dividend income for as long as I can.

Read more »

Family Finance

Barely Afloat

YES, I’M STILL AT SEA. Confinement in our cabin is wearing thin. But unfortunately, with ports closed and politicians opposed to us docking in Florida, the end isn’t in sight.
Have you ever wondered what it would be like to be totally dependent on someone who you can’t see and have no contact with? Me neither. But now, I know.
Bottles of water show up at our door, the last one a full gallon.

Read more »

Investing

Better Than Nothing

MONEY MARKET FUNDS and other cash investments are paying interest rates close to zero. This is at a time of turmoil in society and in the economy. This is at a time when both stock and bond markets are at high prices. It seems like we have to choose between collecting very low yields on cash or buying investments with far greater risk.
An alternative to these extremes: How about a “short-term barbell” to hold money you don’t currently want to invest or don’t yet need to spend?

Read more »

Lists

Control What You Can

ASK NOT WHAT the markets can do for you. Ask what you can do for your portfolio.
After 15 turbulent months for stocks, many folks feel they’re at the mercy of the financial markets. But in truth, we’re far from powerless. We may not be able to control the direction of share prices. But here are seven crucial financial levers over which we have a lot of control:
1. We can figure out how much cash we’ll need from our portfolio over the next five years,

Read more »

Mindset

Picture This

HAVE YOU EVER considered what you want your retirement to look like? Not just generically, but in vivid detail? If you haven’t, I urge you to go through this exercise as you flesh out your financial goals.
Visualization is used mainly by athletes as they prepare for competition, so that they can get as close to the experience as possible before the competition starts. This was witnessed across the world when American skier Lindsey Vonn’s visualization routine was caught on camera before an Olympic race.

Read more »