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If folks thank you for reaching out and promise to circle back, you know they’ve done time in the corporate world.

Working the Numbers

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.

Read more »

July’s Hits

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.”

Read more »

Don’t Be That Person

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.

Read more »

Take the Low Road

“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.

Read more »

Needing to Know

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,

Read more »

No Vacation

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.

Read more »

Money Guide

Early and Late

HOW MUCH of a haircut will you take if you claim Social Security early? To find out, you need to know your full Social Security retirement age—a crucial piece of information, especially if you’re married and trying to figure out the best strategy for claiming benefits. If you were born between 1943 and 1954 and hence your full Social Security retirement age is 66, your benefit will be reduced by 25% if you claim benefits at age 62, 20% if you claim at 63, 13.3% at 64 and 6.7% at 65. If you were born in 1960 or later and hence your full Social Security retirement age is 67, your benefit will be reduced by 30% if you claim benefits at 62, 25% if you claim at 63, 20% at 64 and so on. For those born between 1955 and 1959, the reduction will fall somewhere between these two numbers. What if you claim benefits after your full retirement age? Your benefit will increase by 8 percentage points for every year you wait. These are known as delayed retirement credits. For instance, if your full retirement age is 66, at which point you would be eligible for $1,000 a month, you could receive $750 if you claim at 62 or $1,320 if you claim at 70—a difference of 76%. Similarly, if your full retirement age is 67 and you’ll be eligible for $1,000 at that point, you could receive $700 at 62 or $1,240 at 70—a difference of 77%. These figures don’t reflect any increases because of inflation. If you live to an average life expectancy, you should—roughly speaking—find that you fare equally well no matter when you claim benefits. This “actuarial equivalence,” however, doesn’t take into account three valuable benefits that tilt the argument in favor of delaying: spousal benefits, survivor benefits and the financial safety net that Social Security provides in case you live longer than expected. What if you claimed Social Security and then realize you took benefits too early? You have two options. First, once you reach your full retirement age, you can suspend your benefit and earn delayed retirement credits. Under new rules that kicked in after April 2016, if you suspend your own benefit, you will also suspend any spousal or family benefits that are being paid based on your earnings record. Second, you could withdraw your application for benefits. This is a onetime option that’s available within 12 months of starting benefits. It can be used before or after your full retirement age. But there’s a sizable price to be paid: You have to repay the benefits already received, including benefits collected by family members based on your earnings record. Next: Breaking Even Previous: Benefits Eligibility Related: When to Claim Social Security? Articles: Early Decision and A Morbid Game
Read more »

Manifesto

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.

Truths

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.

Act

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%.

Think

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.

Second Look

Retirement

Working Late

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.

Read more »

Family Finance

Course Correction

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.

Read more »

Investing

Bonding With Bonds

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.

Read more »

Lists

Taxes: 10 Questions

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?

Read more »
Home Call to Action

Mindset

The Happy Employee

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.

Read more »

Working the Numbers

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.

Read more »

July’s Hits

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.”

Read more »

Don’t Be That Person

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.

Read more »

Take the Low Road

“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.

Read more »

Needing to Know

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,

Read more »

No Vacation

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.

Read more »

Free Newsletter

Home Call to Action

Manifesto

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.

Act

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%.

Truths

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.

Think

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.

Money Guide

Start Here

Early and Late

HOW MUCH of a haircut will you take if you claim Social Security early? To find out, you need to know your full Social Security retirement age—a crucial piece of information, especially if you’re married and trying to figure out the best strategy for claiming benefits. If you were born between 1943 and 1954 and hence your full Social Security retirement age is 66, your benefit will be reduced by 25% if you claim benefits at age 62, 20% if you claim at 63, 13.3% at 64 and 6.7% at 65. If you were born in 1960 or later and hence your full Social Security retirement age is 67, your benefit will be reduced by 30% if you claim benefits at 62, 25% if you claim at 63, 20% at 64 and so on. For those born between 1955 and 1959, the reduction will fall somewhere between these two numbers. What if you claim benefits after your full retirement age? Your benefit will increase by 8 percentage points for every year you wait. These are known as delayed retirement credits. For instance, if your full retirement age is 66, at which point you would be eligible for $1,000 a month, you could receive $750 if you claim at 62 or $1,320 if you claim at 70—a difference of 76%. Similarly, if your full retirement age is 67 and you’ll be eligible for $1,000 at that point, you could receive $700 at 62 or $1,240 at 70—a difference of 77%. These figures don’t reflect any increases because of inflation. If you live to an average life expectancy, you should—roughly speaking—find that you fare equally well no matter when you claim benefits. This “actuarial equivalence,” however, doesn’t take into account three valuable benefits that tilt the argument in favor of delaying: spousal benefits, survivor benefits and the financial safety net that Social Security provides in case you live longer than expected. What if you claimed Social Security and then realize you took benefits too early? You have two options. First, once you reach your full retirement age, you can suspend your benefit and earn delayed retirement credits. Under new rules that kicked in after April 2016, if you suspend your own benefit, you will also suspend any spousal or family benefits that are being paid based on your earnings record. Second, you could withdraw your application for benefits. This is a onetime option that’s available within 12 months of starting benefits. It can be used before or after your full retirement age. But there’s a sizable price to be paid: You have to repay the benefits already received, including benefits collected by family members based on your earnings record. Next: Breaking Even Previous: Benefits Eligibility Related: When to Claim Social Security? Articles: Early Decision and A Morbid Game
Read more »

Second Look

Retirement

Working Late

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.

Read more »

Family Finance

Course Correction

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.

Read more »

Investing

Bonding With Bonds

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.

Read more »

Lists

Taxes: 10 Questions

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?

Read more »

Mindset

The Happy Employee

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.

Read more »