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COBRA insurance: No need to fear the bite

Heidi - SunnyMoneyDIY  |  Aug 11, 2026

"Heidi, your premium for medical coverage through COBRA is about the same that I paid in 2020, so given inflation, your cost seems to be very reasonable."
- Mark Bergman
Read more »

Medicare Advantage Part C — Not too soon to start planning for 2027

R Quinn  |  Aug 11, 2026

"As to your last sentence Dick, even though we are generally health we chose traditional with a G supplement. Even though it costs more we can “budget” the supplement and Federal part B and move on."
- DavidHLancaster
Read more »

Can a Value fund also be a Growth fund?

Harold Tynes  |  Aug 11, 2026

"Harold, You have all the biggies in investing covered, except I would recommend Ed Slot who is the preeminent source for taxes in retirement."
- DavidHLancaster
Read more »

My Sister – A Reflection One Year Later

Andrew Clements  |  Aug 12, 2026

"Thank you, Jack. Over the past year, I’ve realized that I can’t change the sadness of losing Tory, but I can choose how I remember her. Focusing on the laughter, love, and wonderful memories she left behind has helped make the grief a little easier to carry. I appreciate your kind words."
- Andrew Clements
Read more »

Roth Conversions and Taxes

ArticleJohn Urban  |  Aug 8, 2026

EVERY ARTICLE ABOUT Roth conversions says the same thing: pay the tax from taxable money, not from the IRA. That is good advice if you have taxable money. Plenty of retirees do not. Their savings sit almost entirely in a traditional IRA, built from years of 401(k) contributions and a rollover at retirement, with little brokerage money and no cash reserve worth naming. For them, “pay from outside money” is not advice. It is a condition they do not meet. Their real choice is a self-funded conversion or no conversion at all. The familiar warning is that self-funding requires a gross-up. You withdraw money to pay the conversion tax, that withdrawal is itself taxable, so you have to withdraw a little more. Less discussed is what else that withdrawal sets off. It makes more of your Social Security taxable, it raises your Medicare premiums two years later, and in a high-tax state it enlarges the amount that has to leave the IRA. Here is what those three cost, on one household. A cautious conversion Meet Dianne, a composite rather than a real person. She is 66, single, retired to Florida, with $1 million in a traditional IRA and nothing outside it. Social Security pays her $28,000 a year. She is past 59 and a half and already on Medicare. Florida keeps state income tax out of the arithmetic for now. She converts $40,000. Careful, modest, the size people choose when they are trying not to do anything dramatic. The tax on that conversion, paid from a checking account she does not have, would be $4,234. Funding it from the IRA instead, the withdrawal that covers it is $5,125, and her tax rises to match. That extra $891 is 17.4% of the $5,125 she withdrew. Her ordinary-income bracket is 12%. Twelve of those points are the tax on the withdrawal itself, which is the gross-up everybody expects. The other 5.4 points come from $2,300 of her Social Security being pulled into taxable income by that same withdrawal. Paying from cash, $21,500 of her benefit would be taxable. Self-funding, $23,800 is. The difference is caused by how she paid, not by what she converted, and nothing on her return will label it. Not a smaller version of a large one The effect is not linear. Run the same woman at $150,000 and 85% of her benefit, the statutory maximum, is already taxable before she funds the tax. The funding withdrawal drags in nothing further, and this particular cost is zero. That is not an argument for converting more. It is an argument against assuming a small conversion is simply a smaller version of a large one. The one that looks cautious can carry the higher marginal rate. What self-funding actually costs Give Dianne the $150,000 conversion, still with no outside cash, and add the state question. Still in Florida, $195,469 has to leave the traditional IRA to put $150,000 into the Roth. Move her to California, changing nothing else, and it is $219,751. That is $1.30 of IRA spent for every dollar reaching the Roth, against $1.47, and the gap is California income tax compounded through the gross-up. If a move across state lines is anywhere in your plan, the order of operations may matter more than the size of the conversion. But $1.47 invites a conclusion it does not support, and I would rather correct that myself than let it travel. A conversion is taxable whichever pocket pays. Of the $69,751 Dianne withdraws in California, roughly $44,639 replaces cash she would have spent anyway. The incremental cost of self-funding, in wealth given up, is $25,111. About 17% of the conversion, not 47. The bill that arrives in 2028 At that $150,000 conversion, self-funding also costs Dianne $1,735 in higher Medicare premiums, a surcharge of $6,355 rather than $4,620, charged on top of the standard premium, for one year, and hers alone as a single filer. The bill arrives two years late. Medicare sets her 2028 premiums from her 2026 income, so the cost is invisible at the moment she is deciding how to pay the 2026 tax. When it can still make sense Doing nothing is not free either. Money left in a traditional IRA comes out eventually, under required distributions, at whatever rates apply then, possibly to a survivor filing single, possibly to heirs facing a 10-year deadline. Where self-funding still holds up, a few things tend to be true. The rate gap is durable rather than a one-year accident. Whether it repays a cost this size depends on time, future tax rates and investment returns. A temporary dip in income is a thin foundation. A structural window, after retirement and before Social Security or required distributions begin, is more compelling. There is runway, because shrinking the portfolio to change its tax character needs years of tax-free growth to earn back. Age 59 and a half is cleanly behind you. The converted amount is not subject to the 10% additional tax on early distributions. A separate distribution taken to pay the tax generally is, unless an exception applies. And enough is left afterward. Check the balance after the funding withdrawal, not after the conversion. Dianne’s California IRA drops to $780,249, and whether that funds the next 30 years matters more than whether the conversion was tax-efficient. A practical warning about withholding Withholding from the conversion is not a cheaper way to pay the tax. It reduces what reaches the Roth. Elect 24% on Dianne’s $40,000 conversion, as this illustration does rather than as any custodian requires, and $9,600 goes to the IRS while $30,400 lands in the Roth, against $4,234 actually owed. The cash comes back next spring as a refund. The Roth room does not come back at all. Restating the rule Pay the conversion tax from outside cash if you have it. That remains the best answer. It is not an answer for the retiree whose savings are almost entirely in a traditional IRA. For that person, “never pay from the IRA” skips the actual decision, which is whether a self-funded conversion, with its full marginal cost, beats leaving the money where it is. Before deciding, count the gross-up, the Social Security effect, state tax and the Medicare bill two years later. Sometimes that arithmetic still says no. It beats applying a rule written for somebody with a different balance sheet. ________________________________________________________________________________ John Urban is the founder of RetireSmartIRA, a retirement tax-planning app. Earlier, he founded GT Nexus, a supply-chain software company acquired by Infor in 2015. He lives in Northern California with his wife, Kathy, and enjoys time with family, travel, reading, Bay Area sports, and the occasional deep dive into the fine print of the tax code.
Read more »

What is the right percentage?

R Quinn  |  Aug 9, 2026

"I log on to my investments everyday, just out of habit. My bank sends automatic updates on account balances. I make sure I stick with my theory, but there is no budget. I see no difference between my method at any income level. It’s a forced way to live within one’s means, you can’t spend more than you have. Of course, your example is an exception. There are always exceptions. In the example, it probably means a lower lifestyle, lower budget, lower everything regardless."
- R Quinn
Read more »

Don’t Let a Roth Conversion Trigger a Penalty

John Urban  |  Jul 8, 2026

"Hi Grant, and thanks for the article (John Urban) and this comment. Sorry to be a few months late commenting but I think your approach is very intriguing and I have questions for you if you have time to help me understand your process. Firstly, my situation is retired, no W2 income and RMDs to be satisfied from conventional IRA before the end of the year. Also, not yet concerned over IRMAA impact at this time.  Q1. The 1, 2, 3 process says one can do a rollover contribution to the Roth account with money from a regular brokerage or other non-IRA account within 60 days. Is this correct? I thought that a rollover should be IRA to IRA (Roth and/or conventional). Q2. About the 1, 2, 3, process. Why not make the conversion and pay the taxes directly from the converting IRA at the same time. Brokerage will withhold the amount specified to make it a single operation on my part. THEN I take money from the non IRA account and rollover the amount withheld in taxes into the target Roth account. I realize this violates the guidance that taxes shouldn't be withheld from a conversion, however, since the taxable amount is being deposited almost immediately back into the Roth account then it would seem to be a wash. What are your thoughts? Am I missing something? Thanks, Derek"
- Derek Shuttleworth
Read more »

For most retirees, the greatest fear is not death—it is running out of money before they die.

Matt Halperin  |  Aug 6, 2026

"I understand, thanks, Dunn"
- DAN SMITH
Read more »

Risk and Taxes

ArticleAdam M. Grossman  |  Aug 8, 2026

AFTER YEARS OF heady gains in the stock market, many investors are facing the same question: To manage risk, they’d like to cut back on one or more of their holdings. But because of the potentially costly tax bill that might result, they aren’t sure exactly how to do that. How can you square this circle? One easy option would be to donate appreciated assets to charity. But that would make sense only if it aligns with your charitable goals and, of course, if you don’t need those funds for other uses. How else could you strike a balance between managing risk and limiting taxes? Here’s how I would answer this question. Step 1. I’d start by estimating the potential risk level among your holdings. While there’s no single litmus test, you could ask the following questions. First, how large a portion of your assets does any single holding represent? As a rule of thumb, I’d focus first on individual stocks that top 5%. Why 5%? My operating assumption is that any individual stock could experience a 50% decline during a crisis. So if a holding is limited to 5%, then a 50% drop would result in an overall portfolio impact of just 2.5%. I see that as very manageable. To be sure, stocks can certainly decline by more than 50%, but I view this as a reasonable figure for risk management. While I worry most about the risk posed by single stocks, it’s also important to examine the overall composition of your portfolio. That’s because, counterintuitively, a portfolio of 30 stocks could end up being riskier than a group of just 10. Harry Markowitz, the father of Modern Portfolio Theory, explained why. In his initial work back in the 1950s, Markowitz used railroad company stocks to explain the concept of diversification. There’s nothing inherently wrong with railroad stocks, Markowitz explained. But if a portfolio consists of only railroad stocks, then that would be a problem—because companies in the same industry are often impacted by the same economic factors. In other words, a portfolio consisting of a large number of holdings might only appear diversified, so it’s important to look under the hood. Another risk factor to consider: Do you work for a public company and own the company’s stock? If so, that would be a reason to consider diversifying more quickly (within the permitted time windows). What if you own only mutual funds or ETFs? Diversified funds tend to be less risky than individual stocks, but that’s not always the case. The fund industry launches as many as 1,000 new funds each year, including many with very aggressive strategies. So it’s important to check each fund’s holdings. You can find that information on the fund company’s website or on a site like Morningstar (Here, for example, are the top holdings in Vanguard’s S&P 500 index fund). Step 2. Next, you’d want to estimate how much a loss might impact you. As with most questions in personal finance, there are two answers to consider: how it might affect you in dollar terms, and the degree to which a loss would simply be upsetting. Both are important. Step 3. If you determine the holding in question does represent a material risk, then you’d want to estimate the potential tax impact. Here are questions you might ask: What would the tax be if you exited the entire position? Would it push your income into the next capital gains bracket? Are there tax lots with less appreciation you could take advantage of? Do you have losses you could use to offset some of the gains? Do you expect to be in a higher or lower tax bracket next year? Step 4. If you conclude that the tax bill might be significant, what steps could you take to reduce a holding tax-efficiently? Here are strategies to consider: For starters, I suggest deciding on a target percentage for the holding. While ideally I prefer bringing any individual stock down to a 5% weighting, that figure isn’t a rule. All things being equal, the larger a portfolio, the more risk you can afford. After deciding on a target percentage, the simplest approach would be to set up a long-term sale plan—like dollar cost averaging but in reverse. Suppose you’d like to sell 1,200 shares of a given stock. You could sell 100 shares each month for twelve months. You’d do that regardless of whether the stock happens to be up or down that month. That 12-month schedule isn’t a rule. If your holding is very significant, you might opt for a longer timeframe. On the other hand, if you feel the stock has a particularly highflying valuation, you might choose a quicker pace. The key, in my view, is just to get started. As the writer Carveth Read wrote, “it’s better to be roughly right than precisely wrong.” Selling a stock down over time is the simplest way to reduce risk, but it’s hardly the most tax efficient. Another approach that’s been gaining in popularity is known as a 351 exchange fund. With a 351, the idea is that a group of investors, each with their own portfolios of appreciated securities, come together and collaborate to diversify their respective holdings. To provide a simplified illustration, imagine two investors, each with a concentrated holding, one in Microsoft and the other in Apple. Each would benefit by diversifying, and that’s what a 351 exchange fund allows. Each would contribute their respective shares into a common pool that would then hold some Apple and some Microsoft. This new investment would be structured as an ETF, and each investor would be issued shares proportional to the size of their contribution. Importantly, the initial creation of a 351 fund doesn’t entail any tax. Taxes are due only when an investor later sells shares of that ETF. This is a simplified example. In reality, a 351 exchange fund would hold many more than just two holdings. They’re actually required to meet various diversification requirements. As a result, investors in 351 funds may end up feeling sufficiently diversified and thus comfortable holding their fund shares for the long term. That would make this strategy potentially the most tax-efficient way to manage portfolio concentration risk. This is just an overview, though. If you’re interested in 351 strategies, I suggest further research. In July, The Wall Street Journal discussed these funds in some detail. In addition, a firm called Alpha Architect, the largest player in this area, has a number of helpful explanatory videos on its site.   Adam M. Grossman is the founder of Mayport, a fixed-fee wealth management firm. Sign up for Adam's Daily Ideas email, follow him on X @AdamMGrossman and check out his earlier articles.
Read more »

“Gerontocracy” in America

Chris Rush  |  Aug 6, 2026

"I’ll not render an opinion of a book that I have not read, but several age impaired presidents and numerous lawmakers are a fine argument for age limits. Otherwise, like Mark and David write below, it’s no surprise that based on wealth and numbers, we boomers remain a powerful voting bloc."
- DAN SMITH
Read more »

Looking Back On My Hard Luck Days

DAN SMITH  |  Aug 7, 2026

"Dick, your 3rd point is so powerful that it overshadows the first two. Connie is going through so much at this time, and she is lucky to have you in her corner. While you strive to take good care of Connie, don’t forget to take care of yourself as well. "
- DAN SMITH
Read more »

FIFA Financials

R Quinn  |  Jul 19, 2026

"Me, too. Prices not outlandish."
- Jeff Bond
Read more »

COBRA insurance: No need to fear the bite

Heidi - SunnyMoneyDIY  |  Aug 11, 2026

"Heidi, your premium for medical coverage through COBRA is about the same that I paid in 2020, so given inflation, your cost seems to be very reasonable."
- Mark Bergman
Read more »

Medicare Advantage Part C — Not too soon to start planning for 2027

R Quinn  |  Aug 11, 2026

"As to your last sentence Dick, even though we are generally health we chose traditional with a G supplement. Even though it costs more we can “budget” the supplement and Federal part B and move on."
- DavidHLancaster
Read more »

Can a Value fund also be a Growth fund?

Harold Tynes  |  Aug 11, 2026

"Harold, You have all the biggies in investing covered, except I would recommend Ed Slot who is the preeminent source for taxes in retirement."
- DavidHLancaster
Read more »

My Sister – A Reflection One Year Later

Andrew Clements  |  Aug 12, 2026

"Thank you, Jack. Over the past year, I’ve realized that I can’t change the sadness of losing Tory, but I can choose how I remember her. Focusing on the laughter, love, and wonderful memories she left behind has helped make the grief a little easier to carry. I appreciate your kind words."
- Andrew Clements
Read more »

Roth Conversions and Taxes

ArticleJohn Urban  |  Aug 8, 2026

EVERY ARTICLE ABOUT Roth conversions says the same thing: pay the tax from taxable money, not from the IRA. That is good advice if you have taxable money. Plenty of retirees do not. Their savings sit almost entirely in a traditional IRA, built from years of 401(k) contributions and a rollover at retirement, with little brokerage money and no cash reserve worth naming. For them, “pay from outside money” is not advice. It is a condition they do not meet. Their real choice is a self-funded conversion or no conversion at all. The familiar warning is that self-funding requires a gross-up. You withdraw money to pay the conversion tax, that withdrawal is itself taxable, so you have to withdraw a little more. Less discussed is what else that withdrawal sets off. It makes more of your Social Security taxable, it raises your Medicare premiums two years later, and in a high-tax state it enlarges the amount that has to leave the IRA. Here is what those three cost, on one household. A cautious conversion Meet Dianne, a composite rather than a real person. She is 66, single, retired to Florida, with $1 million in a traditional IRA and nothing outside it. Social Security pays her $28,000 a year. She is past 59 and a half and already on Medicare. Florida keeps state income tax out of the arithmetic for now. She converts $40,000. Careful, modest, the size people choose when they are trying not to do anything dramatic. The tax on that conversion, paid from a checking account she does not have, would be $4,234. Funding it from the IRA instead, the withdrawal that covers it is $5,125, and her tax rises to match. That extra $891 is 17.4% of the $5,125 she withdrew. Her ordinary-income bracket is 12%. Twelve of those points are the tax on the withdrawal itself, which is the gross-up everybody expects. The other 5.4 points come from $2,300 of her Social Security being pulled into taxable income by that same withdrawal. Paying from cash, $21,500 of her benefit would be taxable. Self-funding, $23,800 is. The difference is caused by how she paid, not by what she converted, and nothing on her return will label it. Not a smaller version of a large one The effect is not linear. Run the same woman at $150,000 and 85% of her benefit, the statutory maximum, is already taxable before she funds the tax. The funding withdrawal drags in nothing further, and this particular cost is zero. That is not an argument for converting more. It is an argument against assuming a small conversion is simply a smaller version of a large one. The one that looks cautious can carry the higher marginal rate. What self-funding actually costs Give Dianne the $150,000 conversion, still with no outside cash, and add the state question. Still in Florida, $195,469 has to leave the traditional IRA to put $150,000 into the Roth. Move her to California, changing nothing else, and it is $219,751. That is $1.30 of IRA spent for every dollar reaching the Roth, against $1.47, and the gap is California income tax compounded through the gross-up. If a move across state lines is anywhere in your plan, the order of operations may matter more than the size of the conversion. But $1.47 invites a conclusion it does not support, and I would rather correct that myself than let it travel. A conversion is taxable whichever pocket pays. Of the $69,751 Dianne withdraws in California, roughly $44,639 replaces cash she would have spent anyway. The incremental cost of self-funding, in wealth given up, is $25,111. About 17% of the conversion, not 47. The bill that arrives in 2028 At that $150,000 conversion, self-funding also costs Dianne $1,735 in higher Medicare premiums, a surcharge of $6,355 rather than $4,620, charged on top of the standard premium, for one year, and hers alone as a single filer. The bill arrives two years late. Medicare sets her 2028 premiums from her 2026 income, so the cost is invisible at the moment she is deciding how to pay the 2026 tax. When it can still make sense Doing nothing is not free either. Money left in a traditional IRA comes out eventually, under required distributions, at whatever rates apply then, possibly to a survivor filing single, possibly to heirs facing a 10-year deadline. Where self-funding still holds up, a few things tend to be true. The rate gap is durable rather than a one-year accident. Whether it repays a cost this size depends on time, future tax rates and investment returns. A temporary dip in income is a thin foundation. A structural window, after retirement and before Social Security or required distributions begin, is more compelling. There is runway, because shrinking the portfolio to change its tax character needs years of tax-free growth to earn back. Age 59 and a half is cleanly behind you. The converted amount is not subject to the 10% additional tax on early distributions. A separate distribution taken to pay the tax generally is, unless an exception applies. And enough is left afterward. Check the balance after the funding withdrawal, not after the conversion. Dianne’s California IRA drops to $780,249, and whether that funds the next 30 years matters more than whether the conversion was tax-efficient. A practical warning about withholding Withholding from the conversion is not a cheaper way to pay the tax. It reduces what reaches the Roth. Elect 24% on Dianne’s $40,000 conversion, as this illustration does rather than as any custodian requires, and $9,600 goes to the IRS while $30,400 lands in the Roth, against $4,234 actually owed. The cash comes back next spring as a refund. The Roth room does not come back at all. Restating the rule Pay the conversion tax from outside cash if you have it. That remains the best answer. It is not an answer for the retiree whose savings are almost entirely in a traditional IRA. For that person, “never pay from the IRA” skips the actual decision, which is whether a self-funded conversion, with its full marginal cost, beats leaving the money where it is. Before deciding, count the gross-up, the Social Security effect, state tax and the Medicare bill two years later. Sometimes that arithmetic still says no. It beats applying a rule written for somebody with a different balance sheet. ________________________________________________________________________________ John Urban is the founder of RetireSmartIRA, a retirement tax-planning app. Earlier, he founded GT Nexus, a supply-chain software company acquired by Infor in 2015. He lives in Northern California with his wife, Kathy, and enjoys time with family, travel, reading, Bay Area sports, and the occasional deep dive into the fine print of the tax code.
Read more »

What is the right percentage?

R Quinn  |  Aug 9, 2026

"I log on to my investments everyday, just out of habit. My bank sends automatic updates on account balances. I make sure I stick with my theory, but there is no budget. I see no difference between my method at any income level. It’s a forced way to live within one’s means, you can’t spend more than you have. Of course, your example is an exception. There are always exceptions. In the example, it probably means a lower lifestyle, lower budget, lower everything regardless."
- R Quinn
Read more »

Don’t Let a Roth Conversion Trigger a Penalty

John Urban  |  Jul 8, 2026

"Hi Grant, and thanks for the article (John Urban) and this comment. Sorry to be a few months late commenting but I think your approach is very intriguing and I have questions for you if you have time to help me understand your process. Firstly, my situation is retired, no W2 income and RMDs to be satisfied from conventional IRA before the end of the year. Also, not yet concerned over IRMAA impact at this time.  Q1. The 1, 2, 3 process says one can do a rollover contribution to the Roth account with money from a regular brokerage or other non-IRA account within 60 days. Is this correct? I thought that a rollover should be IRA to IRA (Roth and/or conventional). Q2. About the 1, 2, 3, process. Why not make the conversion and pay the taxes directly from the converting IRA at the same time. Brokerage will withhold the amount specified to make it a single operation on my part. THEN I take money from the non IRA account and rollover the amount withheld in taxes into the target Roth account. I realize this violates the guidance that taxes shouldn't be withheld from a conversion, however, since the taxable amount is being deposited almost immediately back into the Roth account then it would seem to be a wash. What are your thoughts? Am I missing something? Thanks, Derek"
- Derek Shuttleworth
Read more »

For most retirees, the greatest fear is not death—it is running out of money before they die.

Matt Halperin  |  Aug 6, 2026

"I understand, thanks, Dunn"
- DAN SMITH
Read more »

Risk and Taxes

ArticleAdam M. Grossman  |  Aug 8, 2026

AFTER YEARS OF heady gains in the stock market, many investors are facing the same question: To manage risk, they’d like to cut back on one or more of their holdings. But because of the potentially costly tax bill that might result, they aren’t sure exactly how to do that. How can you square this circle? One easy option would be to donate appreciated assets to charity. But that would make sense only if it aligns with your charitable goals and, of course, if you don’t need those funds for other uses. How else could you strike a balance between managing risk and limiting taxes? Here’s how I would answer this question. Step 1. I’d start by estimating the potential risk level among your holdings. While there’s no single litmus test, you could ask the following questions. First, how large a portion of your assets does any single holding represent? As a rule of thumb, I’d focus first on individual stocks that top 5%. Why 5%? My operating assumption is that any individual stock could experience a 50% decline during a crisis. So if a holding is limited to 5%, then a 50% drop would result in an overall portfolio impact of just 2.5%. I see that as very manageable. To be sure, stocks can certainly decline by more than 50%, but I view this as a reasonable figure for risk management. While I worry most about the risk posed by single stocks, it’s also important to examine the overall composition of your portfolio. That’s because, counterintuitively, a portfolio of 30 stocks could end up being riskier than a group of just 10. Harry Markowitz, the father of Modern Portfolio Theory, explained why. In his initial work back in the 1950s, Markowitz used railroad company stocks to explain the concept of diversification. There’s nothing inherently wrong with railroad stocks, Markowitz explained. But if a portfolio consists of only railroad stocks, then that would be a problem—because companies in the same industry are often impacted by the same economic factors. In other words, a portfolio consisting of a large number of holdings might only appear diversified, so it’s important to look under the hood. Another risk factor to consider: Do you work for a public company and own the company’s stock? If so, that would be a reason to consider diversifying more quickly (within the permitted time windows). What if you own only mutual funds or ETFs? Diversified funds tend to be less risky than individual stocks, but that’s not always the case. The fund industry launches as many as 1,000 new funds each year, including many with very aggressive strategies. So it’s important to check each fund’s holdings. You can find that information on the fund company’s website or on a site like Morningstar (Here, for example, are the top holdings in Vanguard’s S&P 500 index fund). Step 2. Next, you’d want to estimate how much a loss might impact you. As with most questions in personal finance, there are two answers to consider: how it might affect you in dollar terms, and the degree to which a loss would simply be upsetting. Both are important. Step 3. If you determine the holding in question does represent a material risk, then you’d want to estimate the potential tax impact. Here are questions you might ask: What would the tax be if you exited the entire position? Would it push your income into the next capital gains bracket? Are there tax lots with less appreciation you could take advantage of? Do you have losses you could use to offset some of the gains? Do you expect to be in a higher or lower tax bracket next year? Step 4. If you conclude that the tax bill might be significant, what steps could you take to reduce a holding tax-efficiently? Here are strategies to consider: For starters, I suggest deciding on a target percentage for the holding. While ideally I prefer bringing any individual stock down to a 5% weighting, that figure isn’t a rule. All things being equal, the larger a portfolio, the more risk you can afford. After deciding on a target percentage, the simplest approach would be to set up a long-term sale plan—like dollar cost averaging but in reverse. Suppose you’d like to sell 1,200 shares of a given stock. You could sell 100 shares each month for twelve months. You’d do that regardless of whether the stock happens to be up or down that month. That 12-month schedule isn’t a rule. If your holding is very significant, you might opt for a longer timeframe. On the other hand, if you feel the stock has a particularly highflying valuation, you might choose a quicker pace. The key, in my view, is just to get started. As the writer Carveth Read wrote, “it’s better to be roughly right than precisely wrong.” Selling a stock down over time is the simplest way to reduce risk, but it’s hardly the most tax efficient. Another approach that’s been gaining in popularity is known as a 351 exchange fund. With a 351, the idea is that a group of investors, each with their own portfolios of appreciated securities, come together and collaborate to diversify their respective holdings. To provide a simplified illustration, imagine two investors, each with a concentrated holding, one in Microsoft and the other in Apple. Each would benefit by diversifying, and that’s what a 351 exchange fund allows. Each would contribute their respective shares into a common pool that would then hold some Apple and some Microsoft. This new investment would be structured as an ETF, and each investor would be issued shares proportional to the size of their contribution. Importantly, the initial creation of a 351 fund doesn’t entail any tax. Taxes are due only when an investor later sells shares of that ETF. This is a simplified example. In reality, a 351 exchange fund would hold many more than just two holdings. They’re actually required to meet various diversification requirements. As a result, investors in 351 funds may end up feeling sufficiently diversified and thus comfortable holding their fund shares for the long term. That would make this strategy potentially the most tax-efficient way to manage portfolio concentration risk. This is just an overview, though. If you’re interested in 351 strategies, I suggest further research. In July, The Wall Street Journal discussed these funds in some detail. In addition, a firm called Alpha Architect, the largest player in this area, has a number of helpful explanatory videos on its site.   Adam M. Grossman is the founder of Mayport, a fixed-fee wealth management firm. Sign up for Adam's Daily Ideas email, follow him on X @AdamMGrossman and check out his earlier articles.
Read more »

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Manifesto

Aug 14, 2026

NO. 56: WE SHOULD hold down our fixed monthly costs, especially car payments and mortgage or rent. If these are too high, we’ll struggle to save, no matter how determined we are.

Truths

Aug 14, 2026

NO. 78: INVESTORS often boost their annual tax bill—by gleefully selling their taxable account’s winners, while refusing to unload losers. But to trim taxes, you should do the opposite: Sell losers, so you have realized capital losses to offset your capital gains and even your ordinary income. Meanwhile, hang onto winners, thus deferring the capital-gains tax bill.

think

Aug 13, 2026

DIVERSIFICATION. While diversifying is important with bonds, it’s crucial with stocks—and involves investing in hundreds and perhaps thousands of companies from a host of market sectors and countries. If we don’t diversify, and instead buy a handful of stocks or a single sector, there’s a danger we’ll take the risk of stock investing—without getting the reward.

act

Aug 12, 2026

GET YOUR CHILDREN age 18 and older to draw up a health care power of attorney, specifying that you can make decisions on their behalf if they become incapacitated. If they have an accident—and you have no power of attorney—you may be unable to make medical decisions for them or even learn basic information about the state of their health.

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Manifesto

Aug 14, 2026

NO. 56: WE SHOULD hold down our fixed monthly costs, especially car payments and mortgage or rent. If these are too high, we’ll struggle to save, no matter how determined we are.

Spotlight: Careers

What’s the best career advice you ever got? 

smr1082   |  Jul 20, 2025

After nearly a four decade career, I sometimes wonder how I survived many early retirement offers and frequent company downsizing initiatives.  One reason may be that I picked up a lot of career advice from colleagues and bosses along the way. I listened to some, but not all. Here are some:
– My first boss on the first day told me, “Be nice to people on the way up. You need their help on the way down.”
 -Always ask “why”?

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The Wages of Success

normr60189   |  Aug 25, 2025

I worked and earned income from 1963 to 2022. I always saved a portion of my earnings. Some was “parked” in real estate, some in the stock market, some in bonds and some in a traditional savings account.
Every dollar I saved represented many hours of true labor. Some was as a business owner, some as an engineer, some was “sweat equity” in my homes and RVs, and some labor was expended by maintaining a commercial property.

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A Target On My Back

Ken Cutler   |  Jul 30, 2024

Early in my career, I took a quiz meant to determine how suitable a person was to be an entrepreneur. A high score indicated that one’s personality and interests were aligned with a life of entrepreneurship. A score close to zero was neutral, indicating neither a proclivity nor an aversion to being an entrepreneur. I scored deep in negative territory. I determined at that point to always be a salaryman, a path that worked out well for me.

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Raise Your Voice

Jonathan Clements   |  Jun 22, 2024

OVER THE PAST SEVEN years, HumbleDollar has become my professional life’s passion. Cancer means I have maybe another year in me—and then it’ll be up to you. My hope: The site will have a life beyond me.
On the site’s homepage, just below the latest articles, you’ll find a new feature dubbed Forum. Will HumbleDollar have a lively future, rather than fading into a dusty collection of old articles? That all depends on whether readers and writers embrace the Forum,

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Never Working a Day in My Life

Cecilia Beverly   |  Sep 5, 2025

I spent most of my early 20s not knowing what I wanted to do with my life – I lost track of how many times I changed my major! After graduating, I moved to Japan and spent a couple of years teaching English and exploring SE Asia. I knew I eventually wanted to go to graduate school, but I also knew that I didn’t want to continue in the field in which I’d (finally) majored. In a twist no one who knew me saw coming,

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Direct Dealings

Marjorie Kondrack   |  Apr 4, 2025

You can’t put 10 pounds of potatoes in a 5 pound bag, but all my life  I gave it a good try, and had a lot of interesting life experiences. I thought of ideas for a small, part time business venture that might provide a new opportunity to explore my creativity, with a flexible work schedule.
I got my chance— a neighbor invited me to a home demonstration party she hosted for a Beauty Consultant who sold cosmetic products. 

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Spotlight: Spears

Games Colleges Play

Greg Spears   |  Sep 13, 2022

WHEN OUR KIDS applied to colleges, the smallest detail of each campus visit mattered a lot. If our daughter admired the student leading our tour, the school skyrocketed in her estimation. If the class our son attended to “get a feel for the place” turned out to be a test period, Grandpa’s alma mater was forever struck from consideration. In economic terms, the college decision features asymmetric information. Colleges know a lot about us from our detailed personal and financial applications. We know only a little about the college, yet we wager a fortune on the hope that it’ll accelerate our child’s growth into adulthood. Into this breach stepped U.S. News & World Report with its college ranking system. It assembles reams of data and boils it all down to one all-knowing statistic: how a school ranks against every other college in the nation. William & Mary, for example, is tied for No. 41 among national universities in the U.S. News 2022-23 rankings—not No. 40, not No. 42. If you suspect such certainty suggests false precision, you’ll find plenty of support in a recent paper by Michael Thaddeus, a Columbia University math professor. Using math and new research, he demolishes his employer’s U.S. News ranking as the second-best college in the nation. He also suggests there are better sites to use when evaluating colleges, which I'll share at the end. In his paper, Thaddeus compared Columbia’s reported U.S. News numbers against publicly available information. Lying is such an ugly word. Let’s just say he found Columbia stretched the truth quite often to raise its ranking. For example, Columbia told U.S. News that 100% of its faculty have PhDs or terminal degrees in their field, a higher percentage than Princeton, MIT, Harvard or Yale. Looking through faculty bios, Thaddeus found 66 cases…
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Inertia’s Rewards

Greg Spears   |  Jan 26, 2022

I ONCE JOINED a book club led by an amazingly smart guy. We were reading a challenging book by Nassim Nicholas Taleb, the philosopher, investor and probabilities expert. Our discussion leader was a Chartered Financial Analyst who had solved one of the most enduring riddles at Vanguard Group, where I worked at the time. For many years—decades, really—Vanguard hadn’t offered an international bond fund. Our founder, Jack Bogle, wasn’t a fan of international investing in general. But he was retired by then, and we did offer several international stock funds. But there was a big problem with international bonds—they were unreliable. We weren’t just being xenophobic. The issue was currency fluctuations. It could wipe out any gain an investor might make internationally when that gain was converted back into U.S. dollars. Exchange rates—luck, really—mattered more to returns than yield, credit quality or anything else we could analyze. That’s when the leader of our book group made a brilliant suggestion to top management. Why not hedge international bonds against currency fluctuations, so that risk was taken out of the equation? He had cut the Gordian knot. Vanguard opened an international bond fund on that basis in 2013. It was a huge favorite with bond investors seeking diversification, the only free lunch in investing. The fund had $119 billion in assets by late 2021, in part because it’s a mainstay of Vanguard’s target-date funds. But this isn’t a tale about bonds or international investing. One day at book club, our leader told us a story about his own investing. Because he was super-smart and a CFA, he was frequently tweaking his portfolio for optimal performance. He had the thing tuned up like a Ferrari. His wife, on the other hand, didn’t work in the investment world. She invested her money in index funds…
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Rich Pickings

Greg Spears   |  Oct 28, 2021

THE NEWSPAPERS ARE full of reports that a new tax on billionaires may be uncorked. The Washington Post even ran an article estimating what the 10 richest Americans would pay over the next five years should it pass. I take no stand on the politics of the proposal. But I have seen enough trial balloons to be skeptical that Elon Musk will soon write a 10-digit check to the U.S. Treasury. As Chuck Collins has written in The Wealth Hoarders, billionaires pay their advisers millions to hide trillions. Collins is the great-grandson of hot dog king Oscar Mayer, so he’s seen how wealth works from the inside. The fledgling tax proposal does meet one important objective, as espoused by the late Senator Russell Long, the longtime chair of the tax-writing Senate Finance Committee. As Long once noted, many people have the same plea: “Don’t tax you, don’t tax me, tax that fellow behind the tree.” A proposal to tax just the ultra-wealthy does indeed aim the tax gun at somebody else. But can we count on billionaires to stand still? Collins says there are two main ways that the wealthiest deflect taxes. The first is to assign lobbyists to Washington to ward off a blow before it’s imposed. That, no doubt, is happening right now. The second way is to deploy talented professionals with highly specialized knowledge to adeptly navigate a complex tax landscape. Several recent dumps of secret legal papers have shown that—should it get that far—assets can be moved offshore or to tax-friendly states like South Dakota. Of course, if options A and B don’t work, there’s always the nuclear option—giving the money away. That’s the idea behind the giving pledge endorsed by Bill Gates and Warren Buffett, two of the tax proposal’s principal targets. Signers of the…
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Not Staying the Course

Greg Spears   |  Sep 19, 2025

THE MOST FAMOUS expression at Vanguard is to ‘stay the course.’ It’s meant to suggest that investors should remain steadfast and not sell stocks in a downturn. This has proven great advice over the decades, but I’ve not been staying the course lately. I’ve been selling stock funds and buying bond funds this summer. Yet I think my actions would have the blessings of Vanguard founder Jack Bogle, who made the phrase ‘stay the course’ famous. Mr. Bogle used to have lunch with the crew in the cafeteria, called the Galley in keeping with Vanguard’s nautical naming style. There, he would dispense wisdom to all comers. Bogle advised keeping investing as simple as possible (though not too simple), and this included his ideas about asset allocation. During one lunch conversation, he said that the adage that you should own your age in bonds was generally correct, but he might make one adjustment. I’m 69 years old, so if I followed the traditional rule, I would invest 69% of my portfolio in bond funds and 31% in stocks. Bogle suggested tweaking the formula by subtracting your age from 110 and owning that percentage of stocks. By this adjustment to the rule, I would invest 59% bonds and 41% stocks. At summer’s start, 70% of my retirement assets were in stocks. I’ve profited from being overweight in stocks. So, why not let it ride? Well, I don’t need to make more money in the market. I do need to protect what I’ve got. When the market briefly corrected earlier this year, I admit I had regrets. After it recovered, I felt I was offered a do-over. I didn't stay the course. After a season of selling, I’ve whittled my stock holdings down to roughly 45%. The remainder is in bonds and money…
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Six Ways to Grow Income

Greg Spears   |  Dec 18, 2025

The best financial advice I know is “live on less than you earn and save the difference.” For too many, though, there’s nothing left over to save after paying the bills. Basic living costs seem much higher these days. Housing can take an outsized bite of family income as rents and housing prices have risen. Factor in other big expenses like health insurance, childcare, and student loan repayment, and there may not be any money left to save at month’s end. I propose a new chapter in the financial planning curriculum—ways to make more money. That wasn’t a core subject in my Certified Financial Planner program. The unstated assumption, I think, is that clients who consult with a CFP are already well-fixed. To get started, I’ll pitch six ideas. It does feel like I’m stating the obvious, however. You probably have good ideas from your life. Please add them in comments—I look forward to reading them. Here are mine: If still in school, know what your college major pays before you—or your child or grandchild—graduates. You can look up the average first-year earnings of many majors at specific colleges at a site called CollegeSimply. I learned from this site that at Purdue University, biology graduates earn $33,500 a year, on average, versus $69,200 for mechanical engineers. Try to major in something that pays. If you’re already in the workforce, continue your education by earning a professional designation or advanced degree. Many employers, like mine, will pay the full tuition for a job-related degree, including an MBA or CFP. For white collar workers, these degrees are the equivalent of belonging to a union. Job hop for a pay bump. I wrote about this once during the pandemic, when job seekers briefly held the upper hand in salary negotiations. A reader commented…
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Avoiding Alzheimer’s

Greg Spears   |  Sep 13, 2024

I NEVER PURCHASED long-term-care insurance, even though the personal finance magazine I wrote for in the 1990s often recommended it. To the magazine’s editors, it seemed like another logical step in retirement preparation. I had two reasons to decide against it, however. First, it seemed a huge expense. We were advised to buy it around age 60, long before any presumed decline. I was younger than that and unprepared to pay hundreds a month for decades when I didn’t know if I’d ever use the coverage. Second, I simply don’t want to end up in a nursing home. Why, I wondered, would I buy an insurance policy designed to pay my way there? I realize, of course, that I’m playing with fire. That’s why I take so much interest in behaviors that may ward off Alzheimer’s disease, one of the greatest reasons that people find themselves in nursing homes. Alzheimer’s can begin with simple memory loss and builds to the point where people can’t manage their lives. It affects nearly seven million Americans and its incidence is growing. If current trends continue, as many as 13 million Americans will suffer from the disease by 2050, according to the Alzheimer’s Association. For many years, I have roughly followed the Mediterranean diet, which is rich in olive oil, fresh fruits and vegetables. That diet is associated with a 23% lower incidence of dementia among Europeans who follow it closely. I also exercise five or six days a week, as vigorous people have a lower incidence of Alzheimer’s, too. I like to run but, when it gets too hot, I swim at my gym. I also began lifting weights last year at the recommendation of a friend who’s in his 80s and doing well. These efforts of mine take time and energy and,…
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