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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

Playing Their Part

OUR RETIREMENT INCOME is built on a slew of financial products and strategies. But we should think less about the gory details of each—and more about the role they play in our overall retirement finances.
The fact is, while each of us comes to retirement with different levels of wealth and different desires, we all want both a sense of financial security today and confidence about our financial future. How can we best meet those twin goals?

Read more »

Family Finance

Left Penniless

AS A PARENT, IT’S my responsibility to teach my children good financial habits. Core among these are deferring gratification, saving diligently, giving generously and making sensible spending choices. I feel it’s also important to make my children aware of financial pitfalls. Succeeding financially—and in life generally—seems to be as much about avoiding self-destructive habits as it is about cultivating good ones.
My wife and I have been homeschooling our children for the last couple of years.

Read more »

Investing

The Apprentice

WE MET IN THE GALLEY, the cafeteria in Vanguard Group’s nautical lexicon. Jack Bogle shook my hand. My pulse raced.
I’d learned about Vanguard’s founder while working at Morningstar. I’d read about him in Jonathan Clements’s Wall Street Journal columns. And I’d devoured his first book, Bogle on Mutual Funds.
“Where’d you go to college?” he asked. “Good board scores?”
We sat down, tucked into our meals—some sort of industrial casserole for me,

Read more »

Lists

Doing Better

IT’S JANUARY 1—A DAY of great hope. Those New Year’s resolutions to save more still seem achievable. Nobody’s investment results have yet fallen behind the market averages. Market pundits can still fantasize that this year they’ll be proven right. In this spirit of optimism, check out my 16 ways to improve your life in 2016. Below, you’ll also find some thoughts on bond-market risk.
16 Ways to Improve Your Life in 2016
1.

Read more »
How to think about money

Mindset

Getting Schooled

MANY BELIEVE WE’VE raised a bunch of financial illiterates. If people were better educated about personal finance, the argument goes, they’d make smarter money decisions.
North Carolina this year became the 20th state to require high schoolers to take a financial literacy class. Its Lieutenant Governor, Dan Forest, said the new law would “ensure future students, prior to graduating high school, will be more financially literate and economically sound in their decision making as adults.”
But many aren’t sold on the idea that a personal finance class in high school is going to make much of a difference.

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

Playing Their Part

OUR RETIREMENT INCOME is built on a slew of financial products and strategies. But we should think less about the gory details of each—and more about the role they play in our overall retirement finances.
The fact is, while each of us comes to retirement with different levels of wealth and different desires, we all want both a sense of financial security today and confidence about our financial future. How can we best meet those twin goals?

Read more »

Family Finance

Left Penniless

AS A PARENT, IT’S my responsibility to teach my children good financial habits. Core among these are deferring gratification, saving diligently, giving generously and making sensible spending choices. I feel it’s also important to make my children aware of financial pitfalls. Succeeding financially—and in life generally—seems to be as much about avoiding self-destructive habits as it is about cultivating good ones.
My wife and I have been homeschooling our children for the last couple of years.

Read more »

Investing

The Apprentice

WE MET IN THE GALLEY, the cafeteria in Vanguard Group’s nautical lexicon. Jack Bogle shook my hand. My pulse raced.
I’d learned about Vanguard’s founder while working at Morningstar. I’d read about him in Jonathan Clements’s Wall Street Journal columns. And I’d devoured his first book, Bogle on Mutual Funds.
“Where’d you go to college?” he asked. “Good board scores?”
We sat down, tucked into our meals—some sort of industrial casserole for me,

Read more »
How to think about money

Lists

Doing Better

IT’S JANUARY 1—A DAY of great hope. Those New Year’s resolutions to save more still seem achievable. Nobody’s investment results have yet fallen behind the market averages. Market pundits can still fantasize that this year they’ll be proven right. In this spirit of optimism, check out my 16 ways to improve your life in 2016. Below, you’ll also find some thoughts on bond-market risk.
16 Ways to Improve Your Life in 2016
1.

Read more »

Mindset

Getting Schooled

MANY BELIEVE WE’VE raised a bunch of financial illiterates. If people were better educated about personal finance, the argument goes, they’d make smarter money decisions.
North Carolina this year became the 20th state to require high schoolers to take a financial literacy class. Its Lieutenant Governor, Dan Forest, said the new law would “ensure future students, prior to graduating high school, will be more financially literate and economically sound in their decision making as adults.”
But many aren’t sold on the idea that a personal finance class in high school is going to make much of a difference.

Read more »