FREE NEWSLETTER

The more successful a fund manager, the harder it is for the manager to keep winning—because new investor dollars come flooding in.

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 »

Grab the Roadmap

FINANCIAL SECURITY is within your reach. Don’t believe me? Here’s a roadmap that demonstrates it’s possible for most Americans.
Sam is a 22-year-old college graduate. He begins working right after college, earning $50,000 a year. He saves 20% of his income the first year, equal to $10,000. Each year, he gets a 2% raise. This raise is over and above inflation, which we’ll assume is zero to keep things simple. In addition to saving $10,000 a year,

Read more »

Keeping It Going

AFTER YOU’VE become successful and accumulated wealth, what comes next? Americans are facing this question more often than ever before. CNBC notes that the number of millionaire U.S. households grew by more than 700,000 in 2017. This affluence can create a disconnect between parent and child: One generation created the wealth, while the other grows up surrounded by it.
As a financial planner, I’ve learned the younger generation has two options: They can either destroy the wealth or they can add to the family’s legacy.

Read more »

Money Guide

Managing Earnings

IF YOU'RE LIKE most employees, you don’t have any control over when you receive your wages. Instead, as you seek to limit your annual tax bill, the key financial levers at your disposal include increasing your tax-deductible retirement account contributions, carefully managing your taxable investment accounts and making sure you take full advantage of the available tax deductions and credits. What if you’re a senior executive or a business owner who can influence the company’s payroll policy? You might have more room for maneuver. For instance, if you know federal or state taxes are likely to rise next year, you might arrange for year-end bonuses to be paid this year. If you’re self-employed or own a small business, there’s even more you might do. Got a lot of income in 2018 but suspect 2019 will be thinner? You might hold off billing clients so you get paid in 2019. Think 2019 will be a good year? You might wait until next year to buy new computer equipment or plan on maxing out your SEP IRA or solo 401(k) contributions. Next: Managing Investment Taxes Previous: Alternative Minimum Tax Blogs: Too Late? and This Year or Next?
Read more »

Numbers

LABOR FORCE participation among men ages 65 to 69 has increased from 25% in 1985 to 37% in 2016, according to a Wellesley College researcher. Among women ages 65 to 69, participation has climbed from 15% in 1980 to 28% in 2016.

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

Too Trusting

AFTER SHARING my best investment in my previous post, it’s only fair that I follow up with my biggest blunder. I was 22 and working my first real job, as a high school English teacher in south Texas. Thanks to the job, I quickly kick-started my “adult” life: learning about health insurance, taxes and retirement savings. A colleague introduced me to his brother, who worked as an investment advisor. We scheduled a meeting to talk about my retirement plan. He told me that I should supplement my mandatory contributions to the Teacher Retirement System of Texas with a retirement annuity. He assured me—quickly and authoritatively—that this money was guaranteed to grow over time, no matter what happened in the stock market. Furthermore, I could borrow against this money if I ever needed it. I asked a few basic questions, determined that he seemed trustworthy and had worked with other teachers, signed up and began contributing a portion of every paycheck. A few months later, when I told my Dad about my smart move and showed him the annuity contract, he wasn’t as excited. He pointed out that the promised growth was far less than the stock market’s likely return over the next 30 years. He noted that the fees and early surrender charge on the annuity meant I had very little flexibility and would be earning even less than the promised amount. I felt ashamed by my decision and found myself arguing the advisor’s own points back to my Dad. After some debate, my Dad convinced me of his opinion and I had to admit I had made a bad investment. I quickly pulled my money and paid the penalty. In the process, I learned three important lessons:
  1. Don’t trust anyone who promises you that they can or will beat the market. If they can really do that, they would be rich and wouldn’t need your business.
  2. Never immediately commit to a financial contract or decision. No one should make you feel pressured to sign right away. This is usually an indication that something is awry. Take your time and do your research. Usually, a simple Google search can help identify potential red flags and what questions to ask.
  3. When making financial decisions, seek out people you trust, who have no conflicts of interest, to serve as your sounding board. Bounce ideas off them and listen closely, even if what they say is disappointing and doesn’t fit the narrative you’ve constructed. Your sounding board might be a financial advisor who won’t profit from your decision—or it could be a friend, colleague or parent who has some experience with the product or concept.
Zach Blattner’s previous blogs include Land Grab and Five Tips for a Better Trip. Zach is a former teacher and school leader who now teaches teachers across the Philly/Camden region as a faculty member at Relay GSE. He is a self-taught finance nerd who dispenses advice to his wife, friends, family and anyone else willing to listen.
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

FIND A WELL-RUN CHARITY. There’s a host of sites that can help you identify top-notch charities, including CharityNavigator.org, CharityWatch.org, GiveWell.org, GuideStar.org and MyPhilanthropedia.org. The most efficient charities spend less than 10% of their donations on administration and fundraising, so more ends up with the folks they aim to help.

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

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 »

Grab the Roadmap

FINANCIAL SECURITY is within your reach. Don’t believe me? Here’s a roadmap that demonstrates it’s possible for most Americans.
Sam is a 22-year-old college graduate. He begins working right after college, earning $50,000 a year. He saves 20% of his income the first year, equal to $10,000. Each year, he gets a 2% raise. This raise is over and above inflation, which we’ll assume is zero to keep things simple. In addition to saving $10,000 a year,

Read more »

Keeping It Going

AFTER YOU’VE become successful and accumulated wealth, what comes next? Americans are facing this question more often than ever before. CNBC notes that the number of millionaire U.S. households grew by more than 700,000 in 2017. This affluence can create a disconnect between parent and child: One generation created the wealth, while the other grows up surrounded by it.
As a financial planner, I’ve learned the younger generation has two options: They can either destroy the wealth or they can add to the family’s legacy.

Read more »

Numbers

LABOR FORCE participation among men ages 65 to 69 has increased from 25% in 1985 to 37% in 2016, according to a Wellesley College researcher. Among women ages 65 to 69, participation has climbed from 15% in 1980 to 28% in 2016.

Act

FIND A WELL-RUN CHARITY. There’s a host of sites that can help you identify top-notch charities, including CharityNavigator.org, CharityWatch.org, GiveWell.org, GuideStar.org and MyPhilanthropedia.org. The most efficient charities spend less than 10% of their donations on administration and fundraising, so more ends up with the folks they aim to help.

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

Managing Earnings

IF YOU'RE LIKE most employees, you don’t have any control over when you receive your wages. Instead, as you seek to limit your annual tax bill, the key financial levers at your disposal include increasing your tax-deductible retirement account contributions, carefully managing your taxable investment accounts and making sure you take full advantage of the available tax deductions and credits. What if you’re a senior executive or a business owner who can influence the company’s payroll policy? You might have more room for maneuver. For instance, if you know federal or state taxes are likely to rise next year, you might arrange for year-end bonuses to be paid this year. If you’re self-employed or own a small business, there’s even more you might do. Got a lot of income in 2018 but suspect 2019 will be thinner? You might hold off billing clients so you get paid in 2019. Think 2019 will be a good year? You might wait until next year to buy new computer equipment or plan on maxing out your SEP IRA or solo 401(k) contributions. Next: Managing Investment Taxes Previous: Alternative Minimum Tax Blogs: Too Late? and This Year or Next?
Read more »

Archive

Too Trusting

AFTER SHARING my best investment in my previous post, it’s only fair that I follow up with my biggest blunder. I was 22 and working my first real job, as a high school English teacher in south Texas. Thanks to the job, I quickly kick-started my “adult” life: learning about health insurance, taxes and retirement savings. A colleague introduced me to his brother, who worked as an investment advisor. We scheduled a meeting to talk about my retirement plan. He told me that I should supplement my mandatory contributions to the Teacher Retirement System of Texas with a retirement annuity. He assured me—quickly and authoritatively—that this money was guaranteed to grow over time, no matter what happened in the stock market. Furthermore, I could borrow against this money if I ever needed it. I asked a few basic questions, determined that he seemed trustworthy and had worked with other teachers, signed up and began contributing a portion of every paycheck. A few months later, when I told my Dad about my smart move and showed him the annuity contract, he wasn’t as excited. He pointed out that the promised growth was far less than the stock market’s likely return over the next 30 years. He noted that the fees and early surrender charge on the annuity meant I had very little flexibility and would be earning even less than the promised amount. I felt ashamed by my decision and found myself arguing the advisor’s own points back to my Dad. After some debate, my Dad convinced me of his opinion and I had to admit I had made a bad investment. I quickly pulled my money and paid the penalty. In the process, I learned three important lessons:
  1. Don’t trust anyone who promises you that they can or will beat the market. If they can really do that, they would be rich and wouldn’t need your business.
  2. Never immediately commit to a financial contract or decision. No one should make you feel pressured to sign right away. This is usually an indication that something is awry. Take your time and do your research. Usually, a simple Google search can help identify potential red flags and what questions to ask.
  3. When making financial decisions, seek out people you trust, who have no conflicts of interest, to serve as your sounding board. Bounce ideas off them and listen closely, even if what they say is disappointing and doesn’t fit the narrative you’ve constructed. Your sounding board might be a financial advisor who won’t profit from your decision—or it could be a friend, colleague or parent who has some experience with the product or concept.
Zach Blattner’s previous blogs include Land Grab and Five Tips for a Better Trip. Zach is a former teacher and school leader who now teaches teachers across the Philly/Camden region as a faculty member at Relay GSE. He is a self-taught finance nerd who dispenses advice to his wife, friends, family and anyone else willing to listen.
Read more »
Jonathan Clements

About Jonathan

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