If folks thank you for reaching out and promise to circle back, you know they’ve done time in the corporate world.
THIS YEAR’S TAX DAY was the strangest I can remember. Amid the pandemic, the filing deadline had been pushed back to July 15, three months later than usual. And for me, it was our most complicated tax year ever. I had both retirement income and income from various in-state and out-of-state consulting gigs.
But the biggest complication stemmed from last year’s sale of our second home. This was a vacation home that we rented part-time and also used ourselves.
THERE’S SO MUCH more to managing money than just picking investments. Indeed, we can likely add far more value to our financial life by focusing on topics like buying the right home and when to claim Social Security—which may help explain last month’s most popular articles:
“My son-in-law—who’s a financial advisor to high net worth families—casually said to me, ‘You’re wealthy’,” recalls Dick Quinn. “What? Me wealthy? I’m not even close to qualifying as one of his clients.”
THE TRICKY THING about investing is that there’s no single “right” approach. In an earlier article, I described the approach I favor—what I call the five minds of the investor, which involves being part optimist, pessimist, analyst, economist and psychologist.
But there are many other ways to be successful: You might invest in real estate, or follow a quantitative investment strategy, or invest in private companies. There are plenty of people who do very well with these approaches.
“BUYING THE DIP.” It’s a phrase often uttered with contempt by Wall Street strategists and money managers, who look down their nose at everyday investors who instinctively shovel more money into stocks simply because share prices have fallen.
Commentators “caution against” it, dismiss it as “not an investment strategy,” predict it’s going to “die,” argue it could get “very, very nasty” and contend that—when everyday investors buy on dips—it’s a “contrarian signal.” And I got all that based on a quick internet search.
YEARS AGO, when the kids were teenagers, single Dad here was cooking dinner. You guessed it, hot dogs.
I skillfully picked one up from the hot pan with my fingers and tossed it in a bun.
When my daughter began to imitate me, I nearly shrieked. She lacked my years of experience in gauging exactly how hot the sides of the dog would be, how far from the splattering grease I needed to position my fingers,
I SOLD MY CONDO last month and the first thing I wanted to do was celebrate. It was such a relief to get rid of it, because owning a second home requires spending precious time maintaining it. At age 69, I can think of better ways to spend my time than looking after a vacation home.
At first, I was reluctant to put the condo up for sale. I had lived there for more than three decades.
NO. 21: A HIGH income makes it easier to grow wealthy. But no matter how much we earn, we’ll struggle to amass a healthy nest egg—unless we learn to spend less than we earn.
NO. 49: YOU CAN have stability of principal and stability of income but, in a liquid investment, you can’t have both. Money-market funds and savings accounts offer stability of principal, but the rate paid can quickly rise and fall. Most bonds, by contrast, pay the same amount of interest each year until maturity, but they can fluctuate sharply in price.
SET A FLOOR for financial pain. Suppose you have $400,000 saved. What’s the minimum amount below which you never want your portfolio to fall? Let’s say it’s $300,000, or $100,000 less. Divide that $100,000 by 0.35 and you get $286,000. That’s the maximum you should have in stocks. Why 0.35? In a bear market, the average loss is 35%.
ANCHORING. Imagine the S&P 500 is up 20% over the past year. You might balk at buying stocks, because you’re anchored on the market’s old level and feel you’re overpaying at current prices. Or imagine your neighbors sold their home two years ago for $300,000. You might be reluctant to accept less for your home, even if property prices have since fallen.
WE NEED FOLKS to stay in the workforce longer—for their sake and the sake of the economy. And I don’t think it’s a bad thing.
I’ve written in the past about the demographic challenges facing the U.S. and other developed nations. The 10-second recap: Many of the economic issues we fret about—soaring federal government debt, lower long-run GDP growth, a shrinking Social Security Trust Fund—can all be traced to the same root cause. We’re rapidly approaching the point where we don’t have enough workers producing the goods and services that society needs.
OUR DECEMBER financial tradition is for my wife and four daughters to frolic in the holiday shopping minefield, while I decry their irresponsible behavior and try to establish some semblance of financial stewardship. In response, I receive heavy sighs, eye-rolling, and other displays of deep and abiding affection.
Maybe not coincidentally, December is also when we do our financial planning for the year ahead. There is no shortage of such discussions on the web.
FOR MANY YEARS, I didn’t own bonds or anything similar, except some bank certificates of deposit. Frankly, I was clueless.
My first dilemma: Should I invest in bonds if I have a mortgage? It didn’t make sense to me to borrow from the bank and, at the same time, lend out my money at a lower interest rate to a bond issuer. I felt I should pay off my mortgage first. A few friends and even a financial advisor recommended otherwise.
WANT TO BOOST your after-tax wealth? Grab copies of your latest tax return and investment statements—and ask yourself these 10 questions:
What’s your marginal tax rate? That’s the tax rate on the last dollar of income you earn each year. It’s a crucial piece of information as you decide which retirement accounts to fund and how to invest your taxable account. You can get a quick estimate using Dinkytown’s calculator.
Do you expect your marginal tax rate to be higher or lower once you’re retired?
OWNING a business comes with a unique opportunity: the chance to better the lives of your employees. The paycheck you provide helps them pay for their daily expenses and supports the local economy. But there’s an opportunity to do even more: By being thoughtful in how you structure employee benefits, you can ensure they have a more prosperous future, while also helping them lead happier lives today.
Remember, money is simply a tool to help you enjoy your life—and one way to do that is to buy time.
THIS YEAR’S TAX DAY was the strangest I can remember. Amid the pandemic, the filing deadline had been pushed back to July 15, three months later than usual. And for me, it was our most complicated tax year ever. I had both retirement income and income from various in-state and out-of-state consulting gigs.
But the biggest complication stemmed from last year’s sale of our second home. This was a vacation home that we rented part-time and also used ourselves.
THERE’S SO MUCH more to managing money than just picking investments. Indeed, we can likely add far more value to our financial life by focusing on topics like buying the right home and when to claim Social Security—which may help explain last month’s most popular articles:
“My son-in-law—who’s a financial advisor to high net worth families—casually said to me, ‘You’re wealthy’,” recalls Dick Quinn. “What? Me wealthy? I’m not even close to qualifying as one of his clients.”
THE TRICKY THING about investing is that there’s no single “right” approach. In an earlier article, I described the approach I favor—what I call the five minds of the investor, which involves being part optimist, pessimist, analyst, economist and psychologist.
But there are many other ways to be successful: You might invest in real estate, or follow a quantitative investment strategy, or invest in private companies. There are plenty of people who do very well with these approaches.
“BUYING THE DIP.” It’s a phrase often uttered with contempt by Wall Street strategists and money managers, who look down their nose at everyday investors who instinctively shovel more money into stocks simply because share prices have fallen.
Commentators “caution against” it, dismiss it as “not an investment strategy,” predict it’s going to “die,” argue it could get “very, very nasty” and contend that—when everyday investors buy on dips—it’s a “contrarian signal.” And I got all that based on a quick internet search.
YEARS AGO, when the kids were teenagers, single Dad here was cooking dinner. You guessed it, hot dogs.
I skillfully picked one up from the hot pan with my fingers and tossed it in a bun.
When my daughter began to imitate me, I nearly shrieked. She lacked my years of experience in gauging exactly how hot the sides of the dog would be, how far from the splattering grease I needed to position my fingers,
I SOLD MY CONDO last month and the first thing I wanted to do was celebrate. It was such a relief to get rid of it, because owning a second home requires spending precious time maintaining it. At age 69, I can think of better ways to spend my time than looking after a vacation home.
At first, I was reluctant to put the condo up for sale. I had lived there for more than three decades.
NO. 21: A HIGH income makes it easier to grow wealthy. But no matter how much we earn, we’ll struggle to amass a healthy nest egg—unless we learn to spend less than we earn.
SET A FLOOR for financial pain. Suppose you have $400,000 saved. What’s the minimum amount below which you never want your portfolio to fall? Let’s say it’s $300,000, or $100,000 less. Divide that $100,000 by 0.35 and you get $286,000. That’s the maximum you should have in stocks. Why 0.35? In a bear market, the average loss is 35%.
NO. 49: YOU CAN have stability of principal and stability of income but, in a liquid investment, you can’t have both. Money-market funds and savings accounts offer stability of principal, but the rate paid can quickly rise and fall. Most bonds, by contrast, pay the same amount of interest each year until maturity, but they can fluctuate sharply in price.
ANCHORING. Imagine the S&P 500 is up 20% over the past year. You might balk at buying stocks, because you’re anchored on the market’s old level and feel you’re overpaying at current prices. Or imagine your neighbors sold their home two years ago for $300,000. You might be reluctant to accept less for your home, even if property prices have since fallen.
WE NEED FOLKS to stay in the workforce longer—for their sake and the sake of the economy. And I don’t think it’s a bad thing.
I’ve written in the past about the demographic challenges facing the U.S. and other developed nations. The 10-second recap: Many of the economic issues we fret about—soaring federal government debt, lower long-run GDP growth, a shrinking Social Security Trust Fund—can all be traced to the same root cause. We’re rapidly approaching the point where we don’t have enough workers producing the goods and services that society needs.
OUR DECEMBER financial tradition is for my wife and four daughters to frolic in the holiday shopping minefield, while I decry their irresponsible behavior and try to establish some semblance of financial stewardship. In response, I receive heavy sighs, eye-rolling, and other displays of deep and abiding affection.
Maybe not coincidentally, December is also when we do our financial planning for the year ahead. There is no shortage of such discussions on the web.
FOR MANY YEARS, I didn’t own bonds or anything similar, except some bank certificates of deposit. Frankly, I was clueless.
My first dilemma: Should I invest in bonds if I have a mortgage? It didn’t make sense to me to borrow from the bank and, at the same time, lend out my money at a lower interest rate to a bond issuer. I felt I should pay off my mortgage first. A few friends and even a financial advisor recommended otherwise.
WANT TO BOOST your after-tax wealth? Grab copies of your latest tax return and investment statements—and ask yourself these 10 questions:
What’s your marginal tax rate? That’s the tax rate on the last dollar of income you earn each year. It’s a crucial piece of information as you decide which retirement accounts to fund and how to invest your taxable account. You can get a quick estimate using Dinkytown’s calculator.
Do you expect your marginal tax rate to be higher or lower once you’re retired?
OWNING a business comes with a unique opportunity: the chance to better the lives of your employees. The paycheck you provide helps them pay for their daily expenses and supports the local economy. But there’s an opportunity to do even more: By being thoughtful in how you structure employee benefits, you can ensure they have a more prosperous future, while also helping them lead happier lives today.
Remember, money is simply a tool to help you enjoy your life—and one way to do that is to buy time.