Grossman’s Favorites

ONE WINTER DAY IN 2016, I jotted down a few comments about the financial markets and emailed them to a group of clients. I received a few responses—some of them positive—so I did the same thing the following week, and I’ve continued that practice every week since.

For better or worse, when it comes to investment markets, there’s always something new to discuss. But it can also be helpful to pause and revisit key investment principles from time to time. To that end, below are the 10 articles I’ve written that readers have said they found most useful.

• Free for All (March 2, 2018). Most investors are aware of the Roth IRA as a tax-advantaged savings vehicle. But certain aspects are often misunderstood. Among them: There’s no minimum age to open a Roth IRA. Even if a young person doesn’t have a formal job but has income from babysitting, for example, he or she can still contribute to a Roth.
• Sweat the Big Stuff (Nov. 8, 2020). When we’re early in our career, many of us struggle with a financial conundrum: We know we need to save for the future. But since we don’t know what the future will look like, it’s hard to know how much to save. The solution? I recommend an approach to financial planning I call the John Cleese method.
• Happily Misbehaving (June 17, 2018). If one person spends an extra $100,000 on a house while another spends that same amount on a boat, can we necessarily say that one is right and one is wrong? Financial “efficiency” may be in the eye of the beholder.
• Mutual Distaste (Feb. 6, 2022). Sometimes, I feel like a broken record when I argue in favor of index funds. But that’s because actively managed funds, in my opinion, carry such a long list of flaws. Among them: They can be extremely tax-inefficient. That brings me to Jane, who years ago purchased a mutual fund for $19,000 and later sold it for $287,000. Despite this obvious profit, Jane nonetheless realized a tax loss on her investment. Her story is a cautionary tale for mutual fund investors.
• Six Figures Tiny Taxes (March 7, 2018). In retirement, many things change. Among them: We have a lot more control over our tax bill than we did during our working years. Indeed, effective tax planning might allow a retiree to draw $100,000 from a portfolio while incurring a federal tax rate of just 3%.
• Timing Those Taxes (June 13, 2021). Despite greater control over their tax bills, one obstacle looms large for many retirees: required minimum distributions (RMDs). Congress has helped by nudging up the age at which RMDs must start. That provides more of a window to strategize on how to minimize RMDs—but it’s important to begin this task early and not wait until RMDs begin.
• When to Roth (Oct. 7, 2018). You’ve probably heard about the tax strategy called a Roth conversion, and it may sound appealing. This is one of the more effective tools in minimizing future RMDs. The challenge, though, is that it can be difficult to know when and how much to convert. I recommend a five-step process for answering those two questions.
• Looking Sharpe (May 8, 2018). A discouraging reality about private funds, such as hedge funds, is that the difference between the best and the worst is much wider than it is among publicly available investment funds. That’s one of the reasons I urge individual investors to stay away from them, but it’s not the only reason. Private funds carry many other potential pitfalls.
• Grab an Umbrella (May 2, 2021). In my work as a financial planner, I have—unfortunately—seen many different types of financial disaster. That’s why I urge virtually everyone to get umbrella-liability insurance. There are many questions, though. Among them: Which carrier to choose? And how much coverage to buy?
• Think Like a Winner (June 14, 2020). In theory, investing is easy. But because markets are so unpredictable, it’s often not as easy as it seems. To help navigate the world of personal finance, I suggest adopting a five-faceted mindset—that of an optimist, a pessimist, an analyst, an economist and a psychologist.

This is the fourth installment in a series devoted to the favorite articles and blog posts penned by HumbleDollar’s most prolific writers. The earlier installments were from Dennis Friedman, Mike Zaccardi and Kristine Hayes.

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