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Estimated annual sales of equity-indexed annuities if salesmen weren’t paid huge commissions: $0,000,000,000.

At Ease

I REMEMBER the first time we met. Josh—not his real name—and I went to rival high schools in the Washington, D.C., area. During our senior year, we competed in a track meet. Someone mentioned that we would be going to the same college in the fall, so I went over to introduce myself—a little awkwardly, as he had just annihilated me in a race. A few months later, knowing few people on campus, we were happy to discover that we’d both enrolled in the college’s Army Reserve Officers’ Training Corps (ROTC) program.

Read more »

“No, I’m Better”

CONVERSATIONS on Twitter aren’t known for their civility. Still, it came as a surprise last week when, out of the blue, author Nassim Nicholas Taleb launched a broadside against investor Clifford Asness, calling his work “crap,” along with other insults.
Asness wasted no time firing back, calling Taleb “very wrong and clearly both nuts and a world class terrible person.”
From there, the insults escalated: nasty, overrated, unoriginal, illogical, pretentious, emetic. That last one I had to look up in the dictionary.

Read more »

Look Forward

IT’S BEEN AN UNHAPPY few months. Stepping outside means risking our health. One out of six U.S. workers is unemployed or soon will be. The stock market has suffered its worst decline since 2007-09. And while we can take steps to help ourselves, the situation is largely out of our control.
Feeling glum? One of my abiding interests is happiness research, and that research offers ideas that can make our current situation a little cheerier.

Read more »

While at Home

WHEN THE COLLEGE where I work switched to a remote learning platform for the remainder of the academic year, I suddenly found myself out of work. The majority of my job responsibilities revolve around preparing laboratory classes for students—students who are no longer on campus.
Thankfully, I’m still receiving a paycheck, but only time will tell whether I’ll be furloughed or have my hours cut back like so many other employees at colleges and universities.

Read more »

Give Me Five

ARE YOU PLANNING to withdraw funds from your Roth IRA? If you aren’t careful, you could owe both taxes and penalties, even though you’ve already paid taxes on the money that went into the Roth. At issue: the IRS’s five-year rule. How do you sidestep its unpleasant consequences? Bear with me while I explain.
First, a word of caution: You don’t have to take distributions from your Roth IRA during your lifetime. Withdrawals are strictly up to you.

Read more »

In and Out

DID I GET SPOOKED? Or did I respond rationally? Possibly a little of both. After buying as the stock market plunged from its Feb. 19 peak, I sold shares into the rally from the March 23 low, though my portfolio remains strongly tilted toward stocks.
Waving the caution flag may even turn out to be the right call over the short term. Still, most of us—me included—shouldn’t be in the business of making market calls,

Read more »

Money Guide

Same-Sex Marriage

THANKS TO THE Supreme Court’s June 2015 decision, same-sex marriage is now legal in all 50 states. If you take advantage, you’ll discover that there are some financial pitfalls to being married—but also some notable advantages: Employee benefits. Many employers extended health and other benefits to their employees’ unmarried partners, in part because gay and lesbian couples couldn’t previously marry. Now that same-sex marriage is legal, employers may be less inclined to offer benefits to unmarried partners, making it financially beneficial to marry. If you are covered by a traditional employer pension plan and you opt to marry, you may also ensure that your spouse receives a survivor benefit, assuming you die first. Social Security. A husband or wife may be eligible to receive both Social Security spousal benefits and survivor benefits based on the other spouse’s earnings record. For more information, check out the retirement chapter. Retirement accounts. If you bequeath your retirement accounts to your spouse, your husband or wife can then treat them as his or her own, rather than as an inherited retirement account. Result: Your spouse may not have to begin drawing down the accounts right away—and that means your husband or wife could enjoy a longer period of tax-deferred growth. This advantage looms larger now that the so-called stretch IRA has been disallowed for most nonspouse beneficiaries, a topic we tackle in the chapter on giving. Estate taxes. Married couples are able to make unlimited gifts to each other during their lifetime and leave unlimited sums to one another upon death. They can also take advantage of the portable federal estate tax exemption. You can learn more in the chapter on giving. Before same-sex marriage was legal, some couples made elaborate estate-planning arrangements, including the use of trusts. If you now choose to marry, these arrangements may be unnecessary. See a lawyer to discuss what steps you should take. Bear in mind that marriage also has some financial drawbacks. For instance, if you have college-bound children and you marry, you may reduce financial aid eligibility. Next: Having a Baby Previous: Getting Married
Read more »

Manifesto

NO. 49: WE SHOULD ensure our family will be okay financially, even if we aren’t around. That means making sure there’s enough money—and making sure our affairs are well-organized.

Truths

NO. 60: SHORT-TERM results matter to long-term investors. Even if you’re investing for the long haul and have a strong stomach for short-term price swings, this volatility can have a huge impact on your long-run returns. Want to retire rich? Pray for lousy markets as you regularly save money during your working years—and buoyant markets as you approach retirement.

Act

CHECK WHO YOU have named as beneficiaries. Your retirement accounts, life insurance and any trusts will typically pass to the beneficiaries specified on those assets and not to the people named in your will. If your family situation has changed, or you simply don’t remember who you have listed, take a few minutes to review your beneficiary designations.

Think

IMPUTED RENT. Folks love to boast about their home’s price appreciation. But after deducting maintenance costs, property taxes and insurance, we might barely break even on the price gain. Instead, often the biggest return comes from the imputed rent—the fact that we get to live in the place. Each year’s imputed rent might equal 6% or 7% of a home’s value.

Second Look

Retirement

Package Deals

THE INSURANCE market for long-term-care coverage has had a checkered history—and yet there’s an increasing need for LTC insurance among aging baby boomers. My advice: Forget the original standalone insurance products and instead focus on the new hybrid policies.
What went wrong with the original standalone products? They proved to be underpriced. With policyholders living longer, insurers found themselves paying out more than anticipated. Policyholders also didn’t drop their policies as often as insurers expected—and the low lapse rate meant insurance companies had less chance to book profits while incurring no LTC expenses.

Read more »

Family Finance

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 »

Investing

April Fool

HERE IS WHY I don’t trade, and don’t make big market bets, and why you shouldn’t, either.
Headlines last Monday at 6 a.m.: Nation Braces for Brutal Week, At Least a Fourth of U.S. Economy Goes Idle, British Prime Minister Boris Johnson Hospitalized.
Headline at 9:30 a.m.: Dow Surges as Tech Stocks Rally
I got spooked last weekend. It was epic. I was actually scared after days of hearing about the bungled federal response to the pandemic and about states fighting over medical supplies.

Read more »

Lists

House Rules

FOLKS USED to say, “You can’t go wrong with real estate.” They sure don’t say that anymore. It’s been a rollercoaster dozen years for home prices—and some experts think another rough patch is in the offing.
Since mid-2006, the S&P CoreLogic Case-Shiller U.S. National Home Price Index first tumbled 27.4% and then bounced back 53.6%, for a cumulative 12-plus year gain of 11.5%, equal to 0.9% a year. Could we be facing another dip?

Read more »
Home Call to Action

Mindset

Truth Be Told

I WASN’T completely honest when I wrote a recent article. HumbleDollar’s editor asked why I reduced my stock position in 2017 from roughly 50% to 25%. He suggested I should mention it in my article. My answer: “At the time I made these changes, I was losing confidence in the sustainability of the bull market and wanted to reduce my risk.” That was true—but it wasn’t the whole truth.
There’s another reason I initially left out the explanation for reducing my stock exposure: I’m simply not comfortable discussing my finances in great detail.

Read more »

At Ease

I REMEMBER the first time we met. Josh—not his real name—and I went to rival high schools in the Washington, D.C., area. During our senior year, we competed in a track meet. Someone mentioned that we would be going to the same college in the fall, so I went over to introduce myself—a little awkwardly, as he had just annihilated me in a race. A few months later, knowing few people on campus, we were happy to discover that we’d both enrolled in the college’s Army Reserve Officers’ Training Corps (ROTC) program.

Read more »

“No, I’m Better”

CONVERSATIONS on Twitter aren’t known for their civility. Still, it came as a surprise last week when, out of the blue, author Nassim Nicholas Taleb launched a broadside against investor Clifford Asness, calling his work “crap,” along with other insults.
Asness wasted no time firing back, calling Taleb “very wrong and clearly both nuts and a world class terrible person.”
From there, the insults escalated: nasty, overrated, unoriginal, illogical, pretentious, emetic. That last one I had to look up in the dictionary.

Read more »

Look Forward

IT’S BEEN AN UNHAPPY few months. Stepping outside means risking our health. One out of six U.S. workers is unemployed or soon will be. The stock market has suffered its worst decline since 2007-09. And while we can take steps to help ourselves, the situation is largely out of our control.
Feeling glum? One of my abiding interests is happiness research, and that research offers ideas that can make our current situation a little cheerier.

Read more »

While at Home

WHEN THE COLLEGE where I work switched to a remote learning platform for the remainder of the academic year, I suddenly found myself out of work. The majority of my job responsibilities revolve around preparing laboratory classes for students—students who are no longer on campus.
Thankfully, I’m still receiving a paycheck, but only time will tell whether I’ll be furloughed or have my hours cut back like so many other employees at colleges and universities.

Read more »

Give Me Five

ARE YOU PLANNING to withdraw funds from your Roth IRA? If you aren’t careful, you could owe both taxes and penalties, even though you’ve already paid taxes on the money that went into the Roth. At issue: the IRS’s five-year rule. How do you sidestep its unpleasant consequences? Bear with me while I explain.
First, a word of caution: You don’t have to take distributions from your Roth IRA during your lifetime. Withdrawals are strictly up to you.

Read more »

In and Out

DID I GET SPOOKED? Or did I respond rationally? Possibly a little of both. After buying as the stock market plunged from its Feb. 19 peak, I sold shares into the rally from the March 23 low, though my portfolio remains strongly tilted toward stocks.
Waving the caution flag may even turn out to be the right call over the short term. Still, most of us—me included—shouldn’t be in the business of making market calls,

Read more »

Free Newsletter

Home Call to Action

Manifesto

NO. 49: WE SHOULD ensure our family will be okay financially, even if we aren’t around. That means making sure there’s enough money—and making sure our affairs are well-organized.

Act

CHECK WHO YOU have named as beneficiaries. Your retirement accounts, life insurance and any trusts will typically pass to the beneficiaries specified on those assets and not to the people named in your will. If your family situation has changed, or you simply don’t remember who you have listed, take a few minutes to review your beneficiary designations.

Truths

NO. 60: SHORT-TERM results matter to long-term investors. Even if you’re investing for the long haul and have a strong stomach for short-term price swings, this volatility can have a huge impact on your long-run returns. Want to retire rich? Pray for lousy markets as you regularly save money during your working years—and buoyant markets as you approach retirement.

Think

IMPUTED RENT. Folks love to boast about their home’s price appreciation. But after deducting maintenance costs, property taxes and insurance, we might barely break even on the price gain. Instead, often the biggest return comes from the imputed rent—the fact that we get to live in the place. Each year’s imputed rent might equal 6% or 7% of a home’s value.

Money Guide

Start Here

Same-Sex Marriage

THANKS TO THE Supreme Court’s June 2015 decision, same-sex marriage is now legal in all 50 states. If you take advantage, you’ll discover that there are some financial pitfalls to being married—but also some notable advantages: Employee benefits. Many employers extended health and other benefits to their employees’ unmarried partners, in part because gay and lesbian couples couldn’t previously marry. Now that same-sex marriage is legal, employers may be less inclined to offer benefits to unmarried partners, making it financially beneficial to marry. If you are covered by a traditional employer pension plan and you opt to marry, you may also ensure that your spouse receives a survivor benefit, assuming you die first. Social Security. A husband or wife may be eligible to receive both Social Security spousal benefits and survivor benefits based on the other spouse’s earnings record. For more information, check out the retirement chapter. Retirement accounts. If you bequeath your retirement accounts to your spouse, your husband or wife can then treat them as his or her own, rather than as an inherited retirement account. Result: Your spouse may not have to begin drawing down the accounts right away—and that means your husband or wife could enjoy a longer period of tax-deferred growth. This advantage looms larger now that the so-called stretch IRA has been disallowed for most nonspouse beneficiaries, a topic we tackle in the chapter on giving. Estate taxes. Married couples are able to make unlimited gifts to each other during their lifetime and leave unlimited sums to one another upon death. They can also take advantage of the portable federal estate tax exemption. You can learn more in the chapter on giving. Before same-sex marriage was legal, some couples made elaborate estate-planning arrangements, including the use of trusts. If you now choose to marry, these arrangements may be unnecessary. See a lawyer to discuss what steps you should take. Bear in mind that marriage also has some financial drawbacks. For instance, if you have college-bound children and you marry, you may reduce financial aid eligibility. Next: Having a Baby Previous: Getting Married
Read more »

Second Look

Retirement

Package Deals

THE INSURANCE market for long-term-care coverage has had a checkered history—and yet there’s an increasing need for LTC insurance among aging baby boomers. My advice: Forget the original standalone insurance products and instead focus on the new hybrid policies.
What went wrong with the original standalone products? They proved to be underpriced. With policyholders living longer, insurers found themselves paying out more than anticipated. Policyholders also didn’t drop their policies as often as insurers expected—and the low lapse rate meant insurance companies had less chance to book profits while incurring no LTC expenses.

Read more »

Family Finance

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 »

Investing

April Fool

HERE IS WHY I don’t trade, and don’t make big market bets, and why you shouldn’t, either.
Headlines last Monday at 6 a.m.: Nation Braces for Brutal Week, At Least a Fourth of U.S. Economy Goes Idle, British Prime Minister Boris Johnson Hospitalized.
Headline at 9:30 a.m.: Dow Surges as Tech Stocks Rally
I got spooked last weekend. It was epic. I was actually scared after days of hearing about the bungled federal response to the pandemic and about states fighting over medical supplies.

Read more »

Lists

House Rules

FOLKS USED to say, “You can’t go wrong with real estate.” They sure don’t say that anymore. It’s been a rollercoaster dozen years for home prices—and some experts think another rough patch is in the offing.
Since mid-2006, the S&P CoreLogic Case-Shiller U.S. National Home Price Index first tumbled 27.4% and then bounced back 53.6%, for a cumulative 12-plus year gain of 11.5%, equal to 0.9% a year. Could we be facing another dip?

Read more »

Mindset

Truth Be Told

I WASN’T completely honest when I wrote a recent article. HumbleDollar’s editor asked why I reduced my stock position in 2017 from roughly 50% to 25%. He suggested I should mention it in my article. My answer: “At the time I made these changes, I was losing confidence in the sustainability of the bull market and wanted to reduce my risk.” That was true—but it wasn’t the whole truth.
There’s another reason I initially left out the explanation for reducing my stock exposure: I’m simply not comfortable discussing my finances in great detail.

Read more »