FREE NEWSLETTER

Financial success is graded on a curve—but the yardstick shouldn’t be what others have, but rather what we need.

Dialed In

HOW DO WE GET from here to retirement? Amid the financial markets’ daily turmoil, it might seem like one big crapshoot.
But in truth, navigating this journey is pretty straightforward, because there are just five key variables—our time horizon, current nest egg, savings rate, target nest egg and investment return. With a few tweaks to these “dials,” we may discover it’s far easier to reach our retirement goal. Which dials are most effective? Much depends on how close we are to retirement age.

Read more »

Live It Up

THE HOLIDAY SEASON is here—and retailers will be looking to make up for the sales they lost during the pandemic. Let me offer some advice you won’t hear elsewhere: Go ahead and splurge.
What do I want for Christmas? To be honest, not much. But then again, my wife and I have been spending money in 2020 as if Christmas were a year-long event. We remodeled the house, filled it with new furniture and bought a new car.

Read more »

Ain’t Everything

MONEY IS IMPORTANT. But how do we ensure it has the right importance in our life—and no more? Here are 11 signs we’ve got it about right:

We aren’t jealous of others or lust after the things they have.
We borrow when we must—but we never borrow so much that we stress ourselves out today or put our future self at risk.
We consciously spend a little less today so we enjoy the long-run happiness that comes with money in the bank and the knowledge that we can cope with financial adversity.

Read more »

Late to the Rescue

MY FATHER-IN-LAW William retired from Duke University after teaching there for more than 30 years. He had a good pension, which—along with Social Security—covered all his expenses at the continuing care retirement community (CCRC) where he spent most of his retirement. Almost to the end, he was mentally sharp. I saw no need to inquire about his finances. I was mistaken.
In summer 2014, my wife noticed that William, then age 96, had left a large check for a matured life insurance policy on his desk for a couple of months.

Read more »

Last Stop

I GREW UP in a small apartment. Truth be told, I was never enthusiastic about maintaining a house, but I did so for 45 years. Eight years after I retired in 2010, the house and its stairs became too much for my wife and me.
We considered moving to a smaller one-story house and briefly flirted with a continuing care community. We even looked at one community and found it too expensive, especially having to hand over a partially refundable $900,000 upfront fee,

Read more »

Evasive Action

DEAR FAMILY, you know I don’t typically give unsolicited investment advice. But today, I’m breaking that rule, because I don’t want you to get hurt financially.
I can’t promise that, by following my advice, you’ll be better off in the short run. But I firmly believe that you’ll be better off in the long run, by which I mean in the next five to 10 years. Please take this letter for what it is,

Read more »

Money Guide

Managing Earnings

IF YOU'RE LIKE most employees, you don’t have any control over when you receive your wages. Instead, as you seek to limit your annual tax bill, the key financial levers at your disposal include increasing your tax-deductible retirement account contributions, carefully managing your taxable investment accounts and making sure you take full advantage of the available tax deductions and credits. What if you’re a senior executive or a business owner who can influence the company’s payroll policy? You might have more room for maneuver. For instance, if you know federal or state taxes are likely to rise next year, you might arrange for year-end bonuses to be paid this year. If you’re self-employed or own a small business, there’s even more you might do. Got a lot of income in 2020 but suspect 2021 will be thinner? You might hold off billing clients so you get paid in 2021. Think 2021 will be a good year? You might wait until next year to buy new computer equipment or plan on maxing out your SEP IRA or solo 401(k) contributions. Next: Portfolio Taxes Previous: Alternative Minimum Tax Articles: Too Late? and This Year or Next?
Read more »

Manifesto

NO. 66: WE SHOULD build a low-cost, globally diversified stock and bond portfolio, so we’re highly likely to achieve our goals—no matter which parts of the financial markets shine.

Truths

NO. 4: LOW FIXED living costs are the key to a high savings rate. By keeping our mortgage or rent, car payments, utilities, insurance premiums and other fixed costs to 50% or less of our pretax income, we not only increase the sums available for discretionary “fun” spending like vacations, concerts and eating out, but also we make it far easier to save.

Act

RETHINK CASH investments. What’s the best place to stash money you’ll spend in the next year or you may need for surprise expenses? There’s a host of options, including Treasury bills, money market mutual funds, short-term certificates of deposit and online savings accounts. Check yields regularly on these various options—and be prepared to move your money.

Think

BUYING HAPPINESS. Research suggests we get more happiness from experiences than possessions. Why? While possessions offer lasting value, that’s also a drawback: We have to care for them and watch them deteriorate. By contrast, experiences are over and done, leaving only fond memories, plus they’re often enjoyed with others. That adds to the pleasure.

Second Look

Retirement

Read the Fine Print

IT’S THAT TIME of the year—when we should all reevaluate how much we’re saving in our employer’s 401(k). The 2020 contribution limit is $19,500, up $500 from 2019’s level. For those age 50 and older, the catchup contribution was also raised by $500, to $6,500, so these folks can invest as much as $26,000 in 2020.
In addition, it’s a good time to check we’re getting the most out of our 401(k). What are the rules on the employer match?

Read more »

Family Finance

Where’s My Refund?

WE LOVE to procrastinate. Have you done your taxes yet? IRS data show that nearly a quarter of Americans wait until the last two weeks of tax season to file. It often feels like that nagging task that grows more arduous each year, though the result for many is a juicy refund.
The average federal tax refund is more than $2,800, so it can pay to get your taxes done sooner rather than later.

Read more »

Investing

Almost Zero

IT’S NEVER BEEN cheaper to build a globally diversified portfolio of index funds. In fact, today, you could invest $100,000 and pay just $10 in annual fund expenses—equal to the cost of two Big Macs and a large fries.
Moreover, you don’t need $100,000 to build that portfolio. Not even close. The funds in question—which are managed by Fidelity Investments—have no required investment minimum, which means your four-year-old could start investing with the contents of her piggybank.

Read more »

Lists

Four Thumbs

EVERYBODY WANTS easy answers. But often, things aren’t so simple, especially when it comes to financial conundrums. Consider the four common money questions below—and the rules of thumb that folks frequently rely on.
1. How much do I need saved for retirement? Type this question into Google and most of the answers will recommend that you save some multiple of your income. Some suggest eight-to-10 times income, while others recommend as much as 25 times.

Read more »
Home Call to Action

Mindset

Why, Why, Why

SIMON SINEK broke onto the scene in 2009, asking us to “start with why.” His TED Talk has been viewed millions of times and inspired countless articles. He commands attention and captivates audiences with his message. All good things. For both individuals and organizations, there’s immense value in asking, “What’s my why?”
But what about “who”? In all the enthusiasm over “why,” I don’t think “who” has gotten its due.
When I talk about “who,” I’m talking about your community and your sense of connection to others in that community.

Read more »

Dialed In

HOW DO WE GET from here to retirement? Amid the financial markets’ daily turmoil, it might seem like one big crapshoot.
But in truth, navigating this journey is pretty straightforward, because there are just five key variables—our time horizon, current nest egg, savings rate, target nest egg and investment return. With a few tweaks to these “dials,” we may discover it’s far easier to reach our retirement goal. Which dials are most effective? Much depends on how close we are to retirement age.

Read more »

Live It Up

THE HOLIDAY SEASON is here—and retailers will be looking to make up for the sales they lost during the pandemic. Let me offer some advice you won’t hear elsewhere: Go ahead and splurge.
What do I want for Christmas? To be honest, not much. But then again, my wife and I have been spending money in 2020 as if Christmas were a year-long event. We remodeled the house, filled it with new furniture and bought a new car.

Read more »

Ain’t Everything

MONEY IS IMPORTANT. But how do we ensure it has the right importance in our life—and no more? Here are 11 signs we’ve got it about right:

We aren’t jealous of others or lust after the things they have.
We borrow when we must—but we never borrow so much that we stress ourselves out today or put our future self at risk.
We consciously spend a little less today so we enjoy the long-run happiness that comes with money in the bank and the knowledge that we can cope with financial adversity.

Read more »

Late to the Rescue

MY FATHER-IN-LAW William retired from Duke University after teaching there for more than 30 years. He had a good pension, which—along with Social Security—covered all his expenses at the continuing care retirement community (CCRC) where he spent most of his retirement. Almost to the end, he was mentally sharp. I saw no need to inquire about his finances. I was mistaken.
In summer 2014, my wife noticed that William, then age 96, had left a large check for a matured life insurance policy on his desk for a couple of months.

Read more »

Last Stop

I GREW UP in a small apartment. Truth be told, I was never enthusiastic about maintaining a house, but I did so for 45 years. Eight years after I retired in 2010, the house and its stairs became too much for my wife and me.
We considered moving to a smaller one-story house and briefly flirted with a continuing care community. We even looked at one community and found it too expensive, especially having to hand over a partially refundable $900,000 upfront fee,

Read more »

Evasive Action

DEAR FAMILY, you know I don’t typically give unsolicited investment advice. But today, I’m breaking that rule, because I don’t want you to get hurt financially.
I can’t promise that, by following my advice, you’ll be better off in the short run. But I firmly believe that you’ll be better off in the long run, by which I mean in the next five to 10 years. Please take this letter for what it is,

Read more »

Free Newsletter

Home Call to Action

Manifesto

NO. 66: WE SHOULD build a low-cost, globally diversified stock and bond portfolio, so we’re highly likely to achieve our goals—no matter which parts of the financial markets shine.

Act

RETHINK CASH investments. What’s the best place to stash money you’ll spend in the next year or you may need for surprise expenses? There’s a host of options, including Treasury bills, money market mutual funds, short-term certificates of deposit and online savings accounts. Check yields regularly on these various options—and be prepared to move your money.

Truths

NO. 4: LOW FIXED living costs are the key to a high savings rate. By keeping our mortgage or rent, car payments, utilities, insurance premiums and other fixed costs to 50% or less of our pretax income, we not only increase the sums available for discretionary “fun” spending like vacations, concerts and eating out, but also we make it far easier to save.

Think

BUYING HAPPINESS. Research suggests we get more happiness from experiences than possessions. Why? While possessions offer lasting value, that’s also a drawback: We have to care for them and watch them deteriorate. By contrast, experiences are over and done, leaving only fond memories, plus they’re often enjoyed with others. That adds to the pleasure.

Money Guide

Start Here

Managing Earnings

IF YOU'RE LIKE most employees, you don’t have any control over when you receive your wages. Instead, as you seek to limit your annual tax bill, the key financial levers at your disposal include increasing your tax-deductible retirement account contributions, carefully managing your taxable investment accounts and making sure you take full advantage of the available tax deductions and credits. What if you’re a senior executive or a business owner who can influence the company’s payroll policy? You might have more room for maneuver. For instance, if you know federal or state taxes are likely to rise next year, you might arrange for year-end bonuses to be paid this year. If you’re self-employed or own a small business, there’s even more you might do. Got a lot of income in 2020 but suspect 2021 will be thinner? You might hold off billing clients so you get paid in 2021. Think 2021 will be a good year? You might wait until next year to buy new computer equipment or plan on maxing out your SEP IRA or solo 401(k) contributions. Next: Portfolio Taxes Previous: Alternative Minimum Tax Articles: Too Late? and This Year or Next?
Read more »

Second Look

Retirement

Read the Fine Print

IT’S THAT TIME of the year—when we should all reevaluate how much we’re saving in our employer’s 401(k). The 2020 contribution limit is $19,500, up $500 from 2019’s level. For those age 50 and older, the catchup contribution was also raised by $500, to $6,500, so these folks can invest as much as $26,000 in 2020.
In addition, it’s a good time to check we’re getting the most out of our 401(k). What are the rules on the employer match?

Read more »

Family Finance

Where’s My Refund?

WE LOVE to procrastinate. Have you done your taxes yet? IRS data show that nearly a quarter of Americans wait until the last two weeks of tax season to file. It often feels like that nagging task that grows more arduous each year, though the result for many is a juicy refund.
The average federal tax refund is more than $2,800, so it can pay to get your taxes done sooner rather than later.

Read more »

Investing

Almost Zero

IT’S NEVER BEEN cheaper to build a globally diversified portfolio of index funds. In fact, today, you could invest $100,000 and pay just $10 in annual fund expenses—equal to the cost of two Big Macs and a large fries.
Moreover, you don’t need $100,000 to build that portfolio. Not even close. The funds in question—which are managed by Fidelity Investments—have no required investment minimum, which means your four-year-old could start investing with the contents of her piggybank.

Read more »

Lists

Four Thumbs

EVERYBODY WANTS easy answers. But often, things aren’t so simple, especially when it comes to financial conundrums. Consider the four common money questions below—and the rules of thumb that folks frequently rely on.
1. How much do I need saved for retirement? Type this question into Google and most of the answers will recommend that you save some multiple of your income. Some suggest eight-to-10 times income, while others recommend as much as 25 times.

Read more »

Mindset

Why, Why, Why

SIMON SINEK broke onto the scene in 2009, asking us to “start with why.” His TED Talk has been viewed millions of times and inspired countless articles. He commands attention and captivates audiences with his message. All good things. For both individuals and organizations, there’s immense value in asking, “What’s my why?”
But what about “who”? In all the enthusiasm over “why,” I don’t think “who” has gotten its due.
When I talk about “who,” I’m talking about your community and your sense of connection to others in that community.

Read more »