Choose Both
Don Southworth | Jul 14, 2021
IT WAS A WARM MAY night in 1977. I was 19 years old and the manager of a fast-food restaurant. I was also in the middle of a five-year addiction to compulsive gambling that would eventually lead me to the brink of spiritual and financial bankruptcy. It was about 10:30 p.m. and I was cleaning up the store after closing. I was planning on going to the racetrack to catch the last race when I was done. I was emptying the soft drink system when I turned around and saw two men in ski masks pointing guns at me. I burst out laughing—I thought it was a joke. When they ordered me to get down on the floor and crawl over to the safe, I knew they were deadly serious. One of the men ordered me to empty the safe and put all the money in his bag. As I nervously loaded hundreds of dollars in coins into the bag, I noticed out of the corner of my eye that there was a paper cup sitting on my desk stuffed with about $400 in cash. The thought popped into my head that maybe he wouldn’t notice it and I could take it with me to the racetrack that night. After I cleaned out the safe, he asked me, “Is that all the money?” As I tried not to look at the money on the desk, I replied, “Yeah, that’s all the money.” He put the gun to my head and said again, “Is that all the money?” I stuttered, “Uh, there’s some more up there on the desk.” Maybe his gun wasn’t loaded or maybe he was too nervous to realize that I had tried to pull something over on him. Instead of shooting me, he and his partner tied…
Read more » Living With Insecurity
Don Southworth | Dec 30, 2021
HOW DO YOU STAY centered when markets plunge and volatility is off the charts? One of the ways I cope is by pulling out a wonderful financial book to reread. In 1951, Alan Watts wrote The Wisdom of Insecurity: A Message for an Age of Anxiety. But his message is as timely today as it was then. “There is a feeling that we live in a time of unusual insecurity…. Human beings appear to be happy just so long as they have a future to which they can look forward—whether it be a ‘good time’ tomorrow or an everlasting life beyond the grave.” Needless to say, there isn’t a chapter about stocks, mutual funds or financial planning in the entire book. Watts was an American Buddhist teacher who encouraged people to do everything to be aware and conscious of the present moment and not spend so much time planning for a future that never truly materializes, at least in the way we think it will. Given the trillions of dollars we spend on “security” in this country—financial, internet, home and homeland, to name a few—we don’t seem to do a good job of living in the insecure todays and tomorrows that are part of life. Planning and preparing aren’t bad things, of course. But what happens when the things we put our faith in start to break down? I preached a sermon in January 2009 titled The Wisdom of Financial Insecurity. I reflected on the financial bloodbath we’d experienced in 2008. My retirement portfolio dropped 36% and, despite making regular contributions for the previous five years, it was worth less than it had been at the end of 2003. My wife was also in the midst of her second bout with breast cancer. I needed some reminders that, when the…
Read more » Return on Spending
Don Southworth | Oct 4, 2021
WHEN I STARTED MY sales and marketing career, one of the first mantras I learned was, “You have to spend money to make money.” Salespeople like me would always be asking the company to spend more—on commissions, product development and support. The bean counters, as we called them, would always respond by telling us how tight the budget was and how we needed to cut expenses. Especially those expenses they didn’t think we needed, such as business travel and client lunches. When my roles changed over the years and I became responsible for the operations side of organizations, I came to appreciate more fully the plusses and minuses of spending money to make money. While I never overran an organizational budget in the three decades that I was responsible for them, I’ve also never fully left my sales self behind. When I led nonprofits, I often found myself trying to convince others that, to make money, we needed to spend money—on fundraising. But you don’t always have to spend money to make money. In fact, when investing, just the opposite is usually true. As mutual fund and exchange-traded fund expenses have plummeted, performance has improved. In investing, you get what you don’t pay for. What about spending money for expert advice on taxes, retirement planning and estate planning? That may indeed lead to more money—but not always. My computer knows that I’m interested in retirement and finances. I’m reminded of that because of the many brokerage firm, investment and get-rich-quick advertisements I see every day. These organizations clearly believe they need to spend money to make money—for themselves, not me—and, given the size of some of these organizations, they’re right. But before I click on these advertisements, I try to remember another famous mantra: A fool and his money are soon…
Read more » Treasured Trash
Don Southworth | Feb 11, 2022
WHEN PEOPLE DISCUSS financial matters or take the “A Year to Live” class that I lead, there’s a common refrain: They don’t want to be a burden to their loved ones. They’re concerned about having enough money to take care of themselves when they’re older. But even if we have plenty of money, we can still end up being a burden. How so? Our kids and other loved ones don’t want the stuff we’ve gathered over the years. I was reminded of this recently when talking with some older friends about downsizing. For some, getting rid of beloved books, albums and paper records is like saying goodbye to long-held friendships. When we moved four years ago, we gave away more than 10 boxes of books. We still have too many. I always ask people in my class what their five most precious possessions are, and what they plan to do with them when they’re gone. The good news: People typically hold memories much tighter than material things. The bad news: They usually have no idea who, if anyone, will want the material objects they love. I’ve seen this up close. I was challenged and fortunate to take care of my dad when he went into home hospice care. The six weeks he thought he’d live turned into one year. I spent much of the year dealing with stuff that he and his late wife had accumulated. She was a collector, and had so many teddy bears and dolls that it was hard to get rid of them all. When my dad died, I was grateful that the company that bought his mobile home promised to dispose of any items that remained. I have no idea where they donated the furniture and boxes of china I left behind, but I was relieved…
Read more » My Confession
Don Southworth | Dec 23, 2022
I HAVE READ THAT confession is good for the soul. I suspect it’s also good for our financial health—or, at least, I hope so. I have a confession to make as a usually loyal fan, regular reader and occasional contributor to HumbleDollar. I’ve read less than a dozen of the site’s articles in 2022, and I’ve checked my portfolio just as infrequently. This is a new practice for me. I share it somewhat reluctantly because it may or may not be healthy. When I was a regularly practicing minister, it was rare when someone came to me to spill their darkest secrets. My religious tradition doesn’t require regular confession. When I counseled people in financial trouble, one of the first tasks I gave them was to write down everything they earn, spend, owe and own. In every case, I found that sharing honestly was not only good for the soul, but also for just about everything else in their life. Secrets and darkness often destroy; openness and sunlight give life. As I reflect on why I’ve disengaged from finances this year, I realize I’ve learned some good things—and some not-so-good things. I hope you’ll find a truth or two for yourself in my confession. Bad news isn’t fun and I avoid it. In years when the financial markets decline, I often stop looking at my portfolio. I do the opposite when the market is booming. Then I may check and recheck my balances multiple times a day. The bad news is that frequent checking sometimes led me to act impulsively. I’d sometimes sell low or buy during what I thought was a dip. I wish I was more like Warren Buffett, who famously advised, “Be fearful when others are greedy, and greedy when others are fearful.” Most of the time,…
Read more » Santa Claus Rally
Don Southworth | Dec 25, 2021
THERE ARE FEW certainties in life, but December always brings a few. Our neighbors will decorate their houses with bright lights, our mailbox will be stuffed with letters asking for charitable donations and the financial pundits will speculate whether there’ll be a Santa Claus rally this year. If you’re a regular reader of HumbleDollar, you know that a Santa Claus rally has the potential to fill our portfolios with extra dollars via higher stock and mutual fund prices. But the Santa Claus rally I want to share has been much more valuable to me than a few extra percentage points added to my net worth. I was in my early 20s and slowly putting my life back together after bankrupting myself with my compulsive gambling addiction. As the holidays came around, I began feeling lonely and even more depressed than usual. I had lost my money, my girlfriend and most of my self-esteem. A friend suggested I spend Thanksgiving delivering meals to seniors who couldn’t get out of the house. For at least one day, I forgot myself and felt good because of the smiles and joy my deliveries had brought. The Christmas season was going to be even harder. I’m the kind of guy who watches all the holiday movies and cartoons and can’t get enough of the spirit of giving. I decided to leverage my Thanksgiving learnings. I went to the costume shop and bought the most expensive Santa suit I could find. If I had a financial advisor back then, she would have warned against adding the equivalent of a week’s pay to my credit card debt. But more than 35 years later, I can say it was one of the best purchases I ever made. I soon became a volunteer in the Santa Claus helper patrol.…
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Direct Indexing Anyone?
ostrichtacossaturn7593 | May 10, 2026
"Direct indexing is generally not as good as buying broad ultra-low-cost index funds. That said, it could be beneficial in certain circumstances:
· You want to donate to charity in a few years so you can harvest the tax loss and then donate the appreciated securities to the charity, thereby never paying taxes on the appreciation.
· You currently have large taxable long-term gains at the 23.8% marginal federal tax rate (20% +3.8% investment income tax) but soon will be in a lower rate.
· You are in a high tax bracket but have a very short life expectancy and the kids will soon inherit the money with a step-up basis."
Roth ended with this: "Direct indexing is good. It’s just generally not as good as owning broad ETFs."
Thanks to all who responded. Please update here if you use direct indexing and learn something worth sharing.
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