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If owning foreign stocks is especially risky for U.S. investors, is owning U.S. shares especially risky for foreigners?

How Are You Planning to Pay for Potential Long Term Care Expenses?

"Scott - I would appreciate either an explanation or a reference for your comment. My understanding is that once a person is in long term care, then their medical expenses will exceed the standard deduction threshold, making use of a regular IRA to pay for LTC a better way to go. Do you have other reasons?"
- Jeff Bond
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Sports Fan by Scott Martin

"Nice article, Scott. I resonate with a lot of your themes. Baseball was my favorite sport as a kid and like you, I loved memorizing all kinds of players’ statistics. After the 1994 MLB strike, I became disillusioned with all the fat cats (both sides) and never again followed major league baseball. I do enjoy watching live baseball games at the minor league stadium in my home town. College football became my main sports interest, but as you point out, it has become just another money-making machine."
- Nuke Ken
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Do you commit Medicare fraud? Hopefully not intentionally.

"Thank you, Marjorie. I suspect there is someone who always downvotes my posts."
- mytimetotravel
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What wisdom can you share?

"Thank you! We have modified two of our three bathrooms to new, better -located sinks and vanities. We have the master bathroom to tackle with the removal of a tub and the installation of an expanded, no or low-lip shower. We are minimalists with nothing in our attic and just holiday decorations in our full basement. I was the executor for my parents’ estates and saw first-hand how ugly things could get when nine children share the estate equally."
- Michael Alberts
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Fidelity ZERO Funds

"Got the number from Fidelity."
- Randy Dobkin
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New ArticlesAll Articles »

Blame Game

FIFTY YEARS AGO, when the first index funds were getting started, critics wasted no time attacking the idea. They called it “un-American” and a “sure path to mediocrity.”
But over time, indexing has grown to the point where it now accounts for more than half of all U.S. mutual fund assets. Last year, research firm Morningstar declared that “index funds have officially won.” But this victory seems to have only increased the level of criticism.

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Taking It Personally

WHICH FINANCIAL dangers should we focus on? The possibilities seem pretty much endless. In fact, five years ago, I decided to make a list—and ended up offering readers 50 shades of risk.
Yet our notion of risk used to be far more circumscribed.
In the late 1980s, when I started writing about personal finance, insurance was considered important, but it wasn’t much discussed. Instead, the only risk that seemed to merit serious analysis was investment risk,

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Trouble Ahead

TED BENNA IS OFTEN called the “father of the 401(k).” In 1980, he implemented the first 401(k) plan based on his somewhat bold interpretation of the Revenue Act of 1978. He certainly couldn’t have envisioned the $11.4 trillion in “defined contribution” 401(k) and 403(b) accounts that we have today.
Individual retirement accounts also took off in the early 1980s, and traditional IRAs now hold an additional $11.3 trillion. Combined, that’s an impressive $23 trillion in tax-deferred retirement assets.

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On My Own Time

WHO OWNS TIME? WE speak of “my time” and “your time” as if it were a possession we hold in our hands. But we can’t stash it away for future use, nor can we trade or transfer our allotment to another person. Is it truly ours? For the moment, let’s say that it is.
Appraising time. How much do we value our time? Some days, we treat it as a precious commodity. On those days,

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Simplicity Is a Virtue

FORD MOTOR COMPANY introduced the world to the convertible hard top in 1957 with a car called the Skyliner. It was a marvel of engineering.
To retract, the Skyliner hard top first tilted up and away from the front windshield. Then the top folded in half overhead. The trunk lid opened wide. The folded hard top swung into the trunk, which then closed. All by flipping a single dashboard switch. You can see it in operation in this commercial featuring Lucille Ball and Desi Arnaz.

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Too Hot to Handle

MARVIN STEINBERG was a psychologist who founded the Connecticut Council on Problem Gambling. During his career, he made some uncomfortable observations about the behavior of stock market investors. In many cases, he felt, investors’ behavior veered awfully close to gambling.
This is the sort of observation that seems like it could be true, but it also seems difficult to quantify. That’s why a recent study by Morningstar analyst Jeffrey Ptak caught my eye.
Ptak wanted to examine investors’ experience with so-called thematic funds.

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Get Educated

think

RISK VS. REWARD. To earn high returns, we need to take high risk. Over the long haul, someone with 80% stocks will likely earn far higher returns than an investor with 80% bonds. Still, it’s called risk for a reason: The extra reward isn’t guaranteed—especially if we take unnecessary risk, such as betting on a handful of stocks rather than a diversified portfolio.

humans

NO. 68: WE SPEND our days focused on goals, but achieving them rarely delivers the happiness we imagine. Instead, it’s the journey we truly enjoy. This is captured by psychologist Mihaly Csikszentmihalyi’s notion of flow. We’re often happiest when engaged in challenging activities we’re passionate about, consider important and feel we’re good at.

act

THROW STUFF OUT. Almost all of us have too many possessions. Those possessions come with an ongoing cost if, say, we rent a storage locker or we feel compelled to own a larger home. A suggestion: Make it a rule that, for every item of clothing or every tchotchke you buy, you have to give away at least one—and perhaps two—items that you already own.

Money Guide

Struggling With Debt

IF YOU ARE WELL above the debt ratio used by lenders, which means you’re devoting more than 36% of your pretax monthly income to servicing your debts, there’s a good chance you have borrowed too much. But you probably don’t need the debt ratio to tell you that because it’s already painfully obvious. What to do? The first step is to put yourself on a cash diet, which means not spending more than you earn and avoiding all new borrowing. Next, start to tackle your debts. Focus on paying down your highest-cost debt first, which will likely be your credit card balances. You might, however, take a slightly different approach if you have, say, student loans or car loans that are almost paid off. If you can get those paid off quickly, it might substantially improve your monthly cash flow, and then you can focus in earnest on paying off those credit cards. This strategy of focusing on paying off the smallest debt first, and then moving on to the next smallest debt and so on, is sometimes called the "snowball method." If you have federal student loans, you might also investigate the federal government's income-based repayment programs, which could lower your monthly payments. Another possibility: If you have built up some home equity, consider setting up a home equity line of credit or refinancing your current mortgage. Either way, you could borrow against your home’s value and use that money to pay off higher-cost debt. If you’ll struggle to cope with the resulting monthly mortgage payments, refinance with a 30-year mortgage rather than anything shorter. Keep two caveats in mind. First, while extending the length of your mortgage should cut your monthly payments, it also means paying more interest over the life of the loan. Second, under the 2017 tax law, interest on home equity loans and lines of credit is no longer tax-deductible. You might also investigate other ways to consolidate debt, such as borrowing from your 401(k) plan or cash-value life insurance, and using that to pay off higher-interest debt. You might even apply for a bank loan, though you may find it difficult to qualify if your finances are in rough shape. In addition, you might investigate refinancing other loans, such as car loans and student loans. As with a mortgage, if you extend the life of these loans, you could reduce the required monthly payments. Finally, steer clear of debt-consolidation companies or other firms promising to help you pay off your debts. All too often, their loans come with exorbitant fees, high interest rates and other drawbacks. What if your debts are so great that you can’t see any way to get yourself back on track? It may be time for more drastic action. Next: Overwhelmed by Debt Previous: Invest vs. Reduce Debt Articles: House of Cards, Finding Hope and $88,000 Nightmare
Read more »

Manifesto

NO. 43: IF OUR GOAL is investment growth, we should almost never buy insurance products. That means no cash-value life insurance, costly variable annuities or indexed annuities.

Second LookAll Articles »

Retirement

Picking My Pension

MY COMPANY SHIFTED in the early 2000s from a traditional defined benefit pension plan, with a formula based on salary and years of service, to a cash-balance pension plan. All new employees would be put in the cash-balance plan. Existing employees had a choice to stay in the traditional plan or move to the new plan.
A generous transition credit for the cash-balance option was offered to current employees. The transition credit was based on a combination of current salary,

Read more »

Family Finance

Value for Your Cash

TERM LIFE INSURANCE is best for most people: It’s affordable, simple to understand and provides the two or three decades of coverage they need. But that doesn’t mean that permanent “cash value” life insurance is always bad.
The most obvious situation: You actually need insurance permanently. Suppose you’re a business owner and you want to provide money for your family to pay inheritance taxes. By buying life insurance, you’d make sure your family receives a pool of income-tax-free money upon your death,

Read more »

Investing

When to Change

IN THE BOOK OF JOAN, a tribute to the comedian Joan Rivers, her daughter Melissa shares some of her late mother’s quirks. Among them: Her mother always drove 40 miles per hour. Regardless of where she was—on the highway, in a school zone, in the driveway—she always drove 40 miles per hour. Melissa’s conclusion: For passengers, this could be hair-raising, but at least her mother was consistent.
When it comes to investing,

Read more »

Lists

Nine Retirement Myths

RETIREMENT PLANNING videos and books can be frustrating because of the conflicting advice from so-called experts. Often, these experts are outside the mainstream. They retired in their 30s, or saved 50% of their income, or claim to be living so frugally in retirement that they need to replace just half of their old salary.

I prefer to think more about average Americans facing the reality and challenges of planning for retirement in the real world.

Read more »
How to think about money

Mindset

Beyond the Obvious

I JUST FINISHED rereading a book every serious investor needs to reread: Moneyball: The Art of Winning an Unfair Game. It was written by Michael Lewis in 2003, but it’s still quite relevant to baseball—and to investing.
It’s the story of the Oakland A’s general manager, Billy Beane, and his struggle to create a competitive baseball team on a limited budget. How does this relate to personal finance? Well, first let me explain my connection to Moneyball.

Read more »

Free Newsletter

Get Educated

Manifesto

NO. 43: IF OUR GOAL is investment growth, we should almost never buy insurance products. That means no cash-value life insurance, costly variable annuities or indexed annuities.

think

RISK VS. REWARD. To earn high returns, we need to take high risk. Over the long haul, someone with 80% stocks will likely earn far higher returns than an investor with 80% bonds. Still, it’s called risk for a reason: The extra reward isn’t guaranteed—especially if we take unnecessary risk, such as betting on a handful of stocks rather than a diversified portfolio.

humans

NO. 68: WE SPEND our days focused on goals, but achieving them rarely delivers the happiness we imagine. Instead, it’s the journey we truly enjoy. This is captured by psychologist Mihaly Csikszentmihalyi’s notion of flow. We’re often happiest when engaged in challenging activities we’re passionate about, consider important and feel we’re good at.

act

THROW STUFF OUT. Almost all of us have too many possessions. Those possessions come with an ongoing cost if, say, we rent a storage locker or we feel compelled to own a larger home. A suggestion: Make it a rule that, for every item of clothing or every tchotchke you buy, you have to give away at least one—and perhaps two—items that you already own.

Money Guide

Start Here

Struggling With Debt

IF YOU ARE WELL above the debt ratio used by lenders, which means you’re devoting more than 36% of your pretax monthly income to servicing your debts, there’s a good chance you have borrowed too much. But you probably don’t need the debt ratio to tell you that because it’s already painfully obvious. What to do? The first step is to put yourself on a cash diet, which means not spending more than you earn and avoiding all new borrowing. Next, start to tackle your debts. Focus on paying down your highest-cost debt first, which will likely be your credit card balances. You might, however, take a slightly different approach if you have, say, student loans or car loans that are almost paid off. If you can get those paid off quickly, it might substantially improve your monthly cash flow, and then you can focus in earnest on paying off those credit cards. This strategy of focusing on paying off the smallest debt first, and then moving on to the next smallest debt and so on, is sometimes called the "snowball method." If you have federal student loans, you might also investigate the federal government's income-based repayment programs, which could lower your monthly payments. Another possibility: If you have built up some home equity, consider setting up a home equity line of credit or refinancing your current mortgage. Either way, you could borrow against your home’s value and use that money to pay off higher-cost debt. If you’ll struggle to cope with the resulting monthly mortgage payments, refinance with a 30-year mortgage rather than anything shorter. Keep two caveats in mind. First, while extending the length of your mortgage should cut your monthly payments, it also means paying more interest over the life of the loan. Second, under the 2017 tax law, interest on home equity loans and lines of credit is no longer tax-deductible. You might also investigate other ways to consolidate debt, such as borrowing from your 401(k) plan or cash-value life insurance, and using that to pay off higher-interest debt. You might even apply for a bank loan, though you may find it difficult to qualify if your finances are in rough shape. In addition, you might investigate refinancing other loans, such as car loans and student loans. As with a mortgage, if you extend the life of these loans, you could reduce the required monthly payments. Finally, steer clear of debt-consolidation companies or other firms promising to help you pay off your debts. All too often, their loans come with exorbitant fees, high interest rates and other drawbacks. What if your debts are so great that you can’t see any way to get yourself back on track? It may be time for more drastic action. Next: Overwhelmed by Debt Previous: Invest vs. Reduce Debt Articles: House of Cards, Finding Hope and $88,000 Nightmare
Read more »
Second LookAll Articles »

Retirement

Picking My Pension

MY COMPANY SHIFTED in the early 2000s from a traditional defined benefit pension plan, with a formula based on salary and years of service, to a cash-balance pension plan. All new employees would be put in the cash-balance plan. Existing employees had a choice to stay in the traditional plan or move to the new plan.
A generous transition credit for the cash-balance option was offered to current employees. The transition credit was based on a combination of current salary,

Read more »

Family Finance

Value for Your Cash

TERM LIFE INSURANCE is best for most people: It’s affordable, simple to understand and provides the two or three decades of coverage they need. But that doesn’t mean that permanent “cash value” life insurance is always bad.
The most obvious situation: You actually need insurance permanently. Suppose you’re a business owner and you want to provide money for your family to pay inheritance taxes. By buying life insurance, you’d make sure your family receives a pool of income-tax-free money upon your death,

Read more »

Investing

When to Change

IN THE BOOK OF JOAN, a tribute to the comedian Joan Rivers, her daughter Melissa shares some of her late mother’s quirks. Among them: Her mother always drove 40 miles per hour. Regardless of where she was—on the highway, in a school zone, in the driveway—she always drove 40 miles per hour. Melissa’s conclusion: For passengers, this could be hair-raising, but at least her mother was consistent.
When it comes to investing,

Read more »
How to think about money

Lists

Nine Retirement Myths

RETIREMENT PLANNING videos and books can be frustrating because of the conflicting advice from so-called experts. Often, these experts are outside the mainstream. They retired in their 30s, or saved 50% of their income, or claim to be living so frugally in retirement that they need to replace just half of their old salary.

I prefer to think more about average Americans facing the reality and challenges of planning for retirement in the real world.

Read more »

Mindset

Beyond the Obvious

I JUST FINISHED rereading a book every serious investor needs to reread: Moneyball: The Art of Winning an Unfair Game. It was written by Michael Lewis in 2003, but it’s still quite relevant to baseball—and to investing.
It’s the story of the Oakland A’s general manager, Billy Beane, and his struggle to create a competitive baseball team on a limited budget. How does this relate to personal finance? Well, first let me explain my connection to Moneyball.

Read more »