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If investors trade often, it could mean they have lots of great investment ideas and lots of profits to take. But probably not.

Saving Time

WE HUMANS CAN be a bit irrational. We’ll struggle to the bitter end over potential losses of property, whether it’s fretting over investment losers, trying to recover money we’ve lent or wrangling over our parents’ estate. But strangely, when it comes to what may be our most valuable resource—time—we collectively shrug off losses as a mere nothing. That “mere nothing” can often have significant financial implications for future monies earned or lost.
Time has specific properties.

Read more »

Heading Home (V)

WITH MY OFFER of $375,000 accepted, I was faced with coming up with $80,000 to cover my 20% down payment and other closing costs. I had additional expenses as well: There was a home inspection, radon test and sewer assessment that all had to be paid for. And because I’d be breaking the lease on my apartment, I would also need an additional $1,800 for that.
Coming up with the first $50,000 was easy.

Read more »

Happy Compromises

A LITTLE WHILE back, a friend—let’s call him Paul—recommended a book with an unusual title: How Not to Die. As you might guess, it’s about health, nutrition and longevity. Since Paul is a cardiologist and knows a thing or two about what can land people in hospital, I took his recommendation seriously and immediately ordered a copy.
When the book arrived, I learned that the prescription for not dying isn’t so simple.

Read more »

Newsletter No. 38

IS THAT BUNDLE of joy really a source of joy? Lots of parents—myself included—think so. But the data suggest otherwise. Numerous academic studies have found that parents tend to be less happy than the childless. The latest HumbleDollar newsletter delves into this thorny issue.
The newsletter also includes our usual list of recent blogs. Our next newsletter—the final one of 2018—is slated for Saturday, Dec. 22.
Follow Jonathan on Twitter @ClementsMoney and on Facebook.

Read more »

Now or Later?

WANT TO CUT your tax bill for this year and next? The main thing is to act—or not act—before Dec. 31, while there’s still time to take advantage of tax angles that can generate dramatic savings.
Once we’re beyond Dec. 31, it’s generally too late to do anything but file Form 1040 on the basis of what took place the preceding year. There are a few exceptions. For instance, in early 2019, you can still make deductible contribu­tions to some tax-deferred retirement accounts,

Read more »

Money Guide

Working Abroad

IF YOU'RE A U.S. citizen working in a foreign country, you will face all kinds of financial hassles—many of them unavoidable. Don't want to add to your headaches? Try to keep your finances as simple as possible, by limiting the number of financial institutions you deal with and the number of investments you own. Even though you work abroad, you have to file a U.S. tax return each year declaring your worldwide income. The filing deadline is typically June 15, not April 15. You can avoid having your income taxed twice—by both the U.S. and the country where you live—by claiming a credit for foreign taxes paid and by taking advantage of the foreign earned income exclusion, which is $104,100 in 2018 and $105,900 in 2019. Still, you could suffer some double taxation, because you might not receive credit on your U.S. tax return for all taxes you paid abroad. To crack down on tax evasion, Congress passed the Foreign Account Tax Compliance Act (FATCA) in 2010, which requires foreign financial institutions to report U.S. account holders. Some foreign banks, which don’t want to deal with the reporting requirements, have stopped opening accounts for U.S. citizens. Those moving abroad can also find it tough to get credit cards, cell phones, internet service and mortgages, because they don’t have a credit history in the country where they’re now working. Because of the hassles of borrowing, you may find it easier to pay cash—assuming you can afford to. Every year, if you have more than $10,000 in all foreign accounts combined, you have to fill out a Foreign Bank and Financial Accounts report, otherwise known as FinCen Form 114 and sometimes just Fbar. The report is filed with the U.S. Treasury. The deadline was recently changed to April 15, from June 30, though you can request an extension to Oct. 15. There’s also a requirement to report foreign financial assets under FATCA, though the threshold is $50,000 and sometimes higher, depending on your situation. The FATCA requirement is met by filing Form 8938 with your U.S. tax return. U.S. citizens working abroad sometimes have difficulty opening a bank account in the U.S. because they don’t have a U.S. address. Some U.S. banks have even taken to closing accounts owned by those living overseas, though there’s no law that requires a U.S. citizen to have a U.S. address. If you work for a foreign company, you may not be contributing to Social Security. That means you should probably save extra on your own to ensure a comfortable retirement. Even if you pay Social Security and Medicare payroll taxes, you likely won’t benefit from Medicare coverage if you choose to remain overseas during retirement. For further information, check out the resources available at AmericansAbroad.org. Next: Nearing Retirement Previous: Working for Yourself Blog: Won in Translation
Read more »

Numbers

WHAT DO AMERICANS buy online? CreditCards.com found that 26% of households purchase groceries online every week. Among weekly purchases, the next most popular categories were prepared foods (21%) and streaming services (13%).

Newsletter

No Kidding

DO CHILDREN BRING happiness? As someone who has invested heavily in small people over the years—I have two children and two stepchildren—I want to believe the answer is “yes.” But the evidence suggests otherwise.
This, I realize, is a touchy subject, so let me offer a few crucial caveats before you fire off that fiery email. The studies cited here offer conclusions based on broad averages. Your experience could be entirely different. Moreover, it may be that children give special meaning to our lives,

Read More »

Archive

Think Less of Me

IN EARLY 2005, when Hannah was age 16 and Henry was 12, I took them out to a local diner and told them exactly how much financial help I’d provide. I would make sure they graduated college debt-free. I would seed a retirement account with $25,000 and a house-down-payment fund with $20,000. On top of that, I’d give them $5,000 upon graduation, plus another $5,000 toward the cost of a wedding or at age 30, whichever came first. Last month, Hannah got engaged. When I made my financial commitments to my children, they reflected my values—and those values haven’t much changed. I ended up being more generous than I initially promised, putting extra money into Hannah and Henry’s retirement and house funds. Investment gains further bolstered the accounts. By the time they graduated college, they both had around $100,000. I even wrote a private mortgage for Hannah, so she could buy her first home. But I’m still not inclined to give Hannah much more than $5,000 toward the cost of her wedding. In a world where almost half of all Americans approaching retirement age have less than $50,000 saved, I find it unfathomable to spend $30,000, and often far more, on a single day of celebration. Every fiber in my body rebels against the notion. Hannah hasn’t pressed me to give more. She understands that I’ve been generous over the years and that I long ago made clear what my values are. She’ll get plenty of help from my ex-wife, her grandmother and her future mother-in-law. At the wedding, I will probably feel a little awkward, because I’ll know I haven’t paid “my fair share.” But I’m still not inclined to give much more than $5,000. On the other hand, when the grandchildren arrive, I’ll be the first to contribute to their college accounts. Those are my values.
Read more »

Truths

NO. 95: WEALTH ISN’T driven solely—or even largely—by investment returns. Divorce, ill-health, unemployment, the cost of raising children and caring for parents, and—most important—your savings habits will likely have a far greater impact on your wealth. The good news: While some of these factors can’t be controlled, some are firmly within your grasp.

Act

DUMP ROTTEN investments. We often keep bum investments for bad reasons: We inherited them, we hate to sell at a loss, we don’t want to admit our mistake, or perhaps it’s our employer’s stock and selling feels disloyal. Got an investment with high costs or which doesn’t improve your portfolio’s diversification? Cut your losses—which could trim your tax bill—and start afresh.

Think

VOLATILITY. A volatile portfolio isn’t just nerve-racking. It also hurts compounding. Suppose portfolio No. 1 gains 10% this year and next, while No. 2 climbs 30%, only to lose 10% in the second year. The portfolios might appear to have the same return. But in fact, No. 1 would have a 21% cumulative gain, vs. 17% for No. 2. Want to reduce volatility? Diversification is the key.

About Jonathan

Jonathan Clements

HumbleDollar is edited by Jonathan Clements, author of From Here to Financial Happiness.

Home Call to Action

Latest Blogs

Saving Time

WE HUMANS CAN be a bit irrational. We’ll struggle to the bitter end over potential losses of property, whether it’s fretting over investment losers, trying to recover money we’ve lent or wrangling over our parents’ estate. But strangely, when it comes to what may be our most valuable resource—time—we collectively shrug off losses as a mere nothing. That “mere nothing” can often have significant financial implications for future monies earned or lost.
Time has specific properties.

Read more »

Heading Home (V)

WITH MY OFFER of $375,000 accepted, I was faced with coming up with $80,000 to cover my 20% down payment and other closing costs. I had additional expenses as well: There was a home inspection, radon test and sewer assessment that all had to be paid for. And because I’d be breaking the lease on my apartment, I would also need an additional $1,800 for that.
Coming up with the first $50,000 was easy.

Read more »

Happy Compromises

A LITTLE WHILE back, a friend—let’s call him Paul—recommended a book with an unusual title: How Not to Die. As you might guess, it’s about health, nutrition and longevity. Since Paul is a cardiologist and knows a thing or two about what can land people in hospital, I took his recommendation seriously and immediately ordered a copy.
When the book arrived, I learned that the prescription for not dying isn’t so simple.

Read more »

Newsletter No. 38

IS THAT BUNDLE of joy really a source of joy? Lots of parents—myself included—think so. But the data suggest otherwise. Numerous academic studies have found that parents tend to be less happy than the childless. The latest HumbleDollar newsletter delves into this thorny issue.
The newsletter also includes our usual list of recent blogs. Our next newsletter—the final one of 2018—is slated for Saturday, Dec. 22.
Follow Jonathan on Twitter @ClementsMoney and on Facebook.

Read more »

Now or Later?

WANT TO CUT your tax bill for this year and next? The main thing is to act—or not act—before Dec. 31, while there’s still time to take advantage of tax angles that can generate dramatic savings.
Once we’re beyond Dec. 31, it’s generally too late to do anything but file Form 1040 on the basis of what took place the preceding year. There are a few exceptions. For instance, in early 2019, you can still make deductible contribu­tions to some tax-deferred retirement accounts,

Read more »

Numbers

WHAT DO AMERICANS buy online? CreditCards.com found that 26% of households purchase groceries online every week. Among weekly purchases, the next most popular categories were prepared foods (21%) and streaming services (13%).

Act

DUMP ROTTEN investments. We often keep bum investments for bad reasons: We inherited them, we hate to sell at a loss, we don’t want to admit our mistake, or perhaps it’s our employer’s stock and selling feels disloyal. Got an investment with high costs or which doesn’t improve your portfolio’s diversification? Cut your losses—which could trim your tax bill—and start afresh.

Truths

NO. 95: WEALTH ISN’T driven solely—or even largely—by investment returns. Divorce, ill-health, unemployment, the cost of raising children and caring for parents, and—most important—your savings habits will likely have a far greater impact on your wealth. The good news: While some of these factors can’t be controlled, some are firmly within your grasp.

Think

VOLATILITY. A volatile portfolio isn’t just nerve-racking. It also hurts compounding. Suppose portfolio No. 1 gains 10% this year and next, while No. 2 climbs 30%, only to lose 10% in the second year. The portfolios might appear to have the same return. But in fact, No. 1 would have a 21% cumulative gain, vs. 17% for No. 2. Want to reduce volatility? Diversification is the key.

Home Call to Action

Free Newsletter

No Kidding

DO CHILDREN BRING happiness? As someone who has invested heavily in small people over the years—I have two children and two stepchildren—I want to believe the answer is “yes.” But the evidence suggests otherwise.
This, I realize, is a touchy subject, so let me offer a few crucial caveats before you fire off that fiery email. The studies cited here offer conclusions based on broad averages. Your experience could be entirely different. Moreover, it may be that children give special meaning to our lives,

Read More »

Money Guide

Start Here

Working Abroad

IF YOU'RE A U.S. citizen working in a foreign country, you will face all kinds of financial hassles—many of them unavoidable. Don't want to add to your headaches? Try to keep your finances as simple as possible, by limiting the number of financial institutions you deal with and the number of investments you own. Even though you work abroad, you have to file a U.S. tax return each year declaring your worldwide income. The filing deadline is typically June 15, not April 15. You can avoid having your income taxed twice—by both the U.S. and the country where you live—by claiming a credit for foreign taxes paid and by taking advantage of the foreign earned income exclusion, which is $104,100 in 2018 and $105,900 in 2019. Still, you could suffer some double taxation, because you might not receive credit on your U.S. tax return for all taxes you paid abroad. To crack down on tax evasion, Congress passed the Foreign Account Tax Compliance Act (FATCA) in 2010, which requires foreign financial institutions to report U.S. account holders. Some foreign banks, which don’t want to deal with the reporting requirements, have stopped opening accounts for U.S. citizens. Those moving abroad can also find it tough to get credit cards, cell phones, internet service and mortgages, because they don’t have a credit history in the country where they’re now working. Because of the hassles of borrowing, you may find it easier to pay cash—assuming you can afford to. Every year, if you have more than $10,000 in all foreign accounts combined, you have to fill out a Foreign Bank and Financial Accounts report, otherwise known as FinCen Form 114 and sometimes just Fbar. The report is filed with the U.S. Treasury. The deadline was recently changed to April 15, from June 30, though you can request an extension to Oct. 15. There’s also a requirement to report foreign financial assets under FATCA, though the threshold is $50,000 and sometimes higher, depending on your situation. The FATCA requirement is met by filing Form 8938 with your U.S. tax return. U.S. citizens working abroad sometimes have difficulty opening a bank account in the U.S. because they don’t have a U.S. address. Some U.S. banks have even taken to closing accounts owned by those living overseas, though there’s no law that requires a U.S. citizen to have a U.S. address. If you work for a foreign company, you may not be contributing to Social Security. That means you should probably save extra on your own to ensure a comfortable retirement. Even if you pay Social Security and Medicare payroll taxes, you likely won’t benefit from Medicare coverage if you choose to remain overseas during retirement. For further information, check out the resources available at AmericansAbroad.org. Next: Nearing Retirement Previous: Working for Yourself Blog: Won in Translation
Read more »

Archive

Think Less of Me

IN EARLY 2005, when Hannah was age 16 and Henry was 12, I took them out to a local diner and told them exactly how much financial help I’d provide. I would make sure they graduated college debt-free. I would seed a retirement account with $25,000 and a house-down-payment fund with $20,000. On top of that, I’d give them $5,000 upon graduation, plus another $5,000 toward the cost of a wedding or at age 30, whichever came first. Last month, Hannah got engaged. When I made my financial commitments to my children, they reflected my values—and those values haven’t much changed. I ended up being more generous than I initially promised, putting extra money into Hannah and Henry’s retirement and house funds. Investment gains further bolstered the accounts. By the time they graduated college, they both had around $100,000. I even wrote a private mortgage for Hannah, so she could buy her first home. But I’m still not inclined to give Hannah much more than $5,000 toward the cost of her wedding. In a world where almost half of all Americans approaching retirement age have less than $50,000 saved, I find it unfathomable to spend $30,000, and often far more, on a single day of celebration. Every fiber in my body rebels against the notion. Hannah hasn’t pressed me to give more. She understands that I’ve been generous over the years and that I long ago made clear what my values are. She’ll get plenty of help from my ex-wife, her grandmother and her future mother-in-law. At the wedding, I will probably feel a little awkward, because I’ll know I haven’t paid “my fair share.” But I’m still not inclined to give much more than $5,000. On the other hand, when the grandchildren arrive, I’ll be the first to contribute to their college accounts. Those are my values.
Read more »
Jonathan Clements

About Jonathan

HumbleDollar is edited by Jonathan Clements, author of From Here to Financial Happiness.