As a retired fee only advisor, I agree that keeping it simple is normally the best investment philosophy. However, there are a few issues where do-it-yourself investors often stray while striving for simplicity:
Taxes - Bonds should be in IRAs and Roth IRAs and stocks (in ETFs if possible) should be in taxable accounts, and traded as infrequently as possible.
Bonds (including the bond portion of target date funds) do have risks - interest rate and inflation. An investor can protect against these risks by holding individual TIPS in IRAs and Roth IRAs, rolling them over as they mature.
Diversification in equities - Despite the outperformance of the US market over the last decade, there are long periods that international stocks outperform US stocks. 2025 may have been the start of one such period. Similarly, US large cap stocks have outperformed over the last decade, but historically small cap and value stocks normally outperform over long periods. An investor holding 100% of his/her equity allocation in an S&P 500 index fund may be very disappointed in the coming decade (or longer)
Investors would be prudent to know a little about these fundamental principles and how they apply to their individual situations before trying to keep it (too) simple.
Very interesting conversation! Where one comes down on this issue depends upon the granparent's personal college experience, attitude towards college (public vs. private), current financial situation, and (importantly) how many grandchildren.
I personally had a unique college experience, coming from a very moderate income family and being the very first person in my family to go to college. I knew that I personally would be responsible for covering almost all of my college costs, so I let the government educate me, bachelors at a service academy, masters at a large state university, and doctorate at an Ivy League university. Of course, that "cost" me many years of military service, for which I have absolutely no regrets.
I personally feel that the value added by receiving an undergraduate degree from a prestigious private college versus a public college is not worth the (significant) extra expense. Perhaps there is some additional value at the graduate school level in some fields.
Having a "not my problem" attitude, for a grandparent that can easily afford to help with the grandchildren's education, seems a bit coldhearted.
We are now financially secure and have eight grandchildren. Our children are certainly not wealthy, and fully paying for their children's college (anywhere) would be financially stressful to them. Our solution (both currently and in our estate plan) is to pay an amount sufficient for the granchild's undergraduate tuition, room, and board at a state college in the grandchild's state of residency for four years, provided that the grandchild maintain a passing (C) GPA. If the child (or parent) feels that a private school education would be preferable, then they can fund the amount required above our promised support.
However, as this discussion thread illustrates, there are many different solutions to this issue, and all of them seem to be appropriate for that particular family.
Bill,
In addition to the new 1099 "Y' code, I believe you still will be required to have a letter from the charity acknowledging your contribution (if it is over $250) to substantiate it for your tax records, even if it is a QCD. I have had to follow up with several charities to get this letter for QCDs.
As most of you probably know, QCDs (for those old enough to be eligible to use them) are the only way a taxpayer that doesn't itemize can reduce his/her taxable income through charitable means.
Some custodians will send the check directly to the account owner, who then mails it to the charity.
If you are considering QCDs, make sure to request them long before the end of December - most custodians will have a cutoff for them in early to mid. December. Also, if you want the charity to use the contribution for a specific purpose, have the charity state that on the check (the custodian will usually have a line for that on the request form).
As with any other charitable contribution, the charity is required to send the donor a letter acknowledging the contribution. Make sure you get the letter, and keep in in case of an audit.
For taxpayers subject to the IRMAA, QCDs are an excellent way to fine tune your gross income to stay under the next IRMAA. Remember, going one dollar over an IRMAA breakpoint will cost you hundreds in extra Medicare premium payments
As a (now retired) investment professional, I always asked my clients "how long can you weather a market downturn?" The S&P 500 had a negative (inflation adjusted) return for 30 years (1929-59), 25 years (1968-93) and 16 years (2000-16). The Japanese Nikkei 225 has never even come close to its 1990 peak in inflation adjusted terms in the past 35 years. Such a prolonged downturn would have a major impact on any investor needing to make substantial portfolio withdrawals over the next few decades.
For retirees and those approaching retirement, it is advisable to keep the next decade's worth (longer if one can afford it) of anticipated withdrawals in bonds..
As a (now retired) investment professional, I always ask "how long can you weather a downturn". Yes, the markets will usually bounce back, but maybe not for a very long time. For instance the S&P 500 stayed in negative, inflation adjusted, return territory for 30 years (1929-59), 25 years (1968-93), and 16 years (2000-16). The Japanese Nikkei 225 Index has never come remotely close to its 1990 peak in inflation adjusted terms. Retirees and those nearing retirement have to consider the safety of the next decade (possibly more if they can afford it) of withdrawals when setting their portfolio's asset allocation.
How much and when you give, for most of us, somewhat depends on what stage of life you are in. In our family's early (working) years, saving for retirement was the paramount goal. We contributed a reasonable amount to charities, but securing our retirement came first.
We have been very fortunate, and have (like many Humble Dollar readers) arrived at a point that we have far more than we need (or want to spend on ourselves and family), and now, in retirement, we are "making up for lost time" in our charitable giving. We give at least 20% of our annual gross income to charities through Qualified Charitable Distributions from traditional IRAs, and plan on giving at least 20% of our estate to charity (again, through bequests from a sizable traditional IRA).
We firmly believe that those of us that have been blessed with good fortune have an obligation to contribute to the betterment of society - and, it makes good sense, tax-wise!
One of the most common justifcations for collecting at 62 is that the recipient "needs" the money. Since most folks' retirment income is a combinatiion of liquidation of assets and SS benefits, if one "needs" to collect at 62, one simply cannot afford to retire at that age. Far preferable to spend assets down early in retirement and delay SS (for a higher, guaranteed, inflation adjusted payment for life) to protect against the chance of a significantly longer life than anticipated.
The importance of the "break even" age depends heavily on a couples' unique circumstances. For instance, in our case, my spouse (the lower earner) had a benefit on her own record higher than her spousal benefit on mine, but my benefit was significantly higher than hers. She is five years younger than me. We are both in good health. When we ran the projections, her collecting on her own record at age 62 and me waiting until 70 had a very high probability of yielding far more in eventual benefits (possibly hundreds of thousands) for both of us.
As far as "losing" if one dies before the "break even" age, that's a far less important concern than living quite longer than anticipated and having a permanent low SS benefit.
As a financial planner that has prepared hundreds of retirement projections for clients, this article is spot on. However, Dick fails to mention one important source of assumptions, the clients' assumptions. One of the planners responsibilities is to bring up the assumptions the clients forget, such as home maintenance, auto replacement costs, medical costs, etc. Yes, the investment return and volatility assumptions are hugely important, and we always erred on the conservative side on both. It's also important to point out to the client that assuming relatively minor reductions in future expenses can result in significant increases in the success of their strategy. The planner should tell the client there are no guarantees in their future,and this is simply a reasonable roadmap and invariably will require some adjustments (both positive and negative) as events develop.
The main objective of a properly done retirement plan is to either put the client's mind at ease that they are well prepared for retirement or convince a totally unrealistic client that they are headed for disaster, as their assets cannot possibly accomplish their goals.
Although not the focus of Dick's article, a properly done Social Security analysis, especially for a couple, is a huge part of a retirement plan.
Comments
As a retired fee only advisor, I agree that keeping it simple is normally the best investment philosophy. However, there are a few issues where do-it-yourself investors often stray while striving for simplicity:
- Taxes - Bonds should be in IRAs and Roth IRAs and stocks (in ETFs if possible) should be in taxable accounts, and traded as infrequently as possible.
- Bonds (including the bond portion of target date funds) do have risks - interest rate and inflation. An investor can protect against these risks by holding individual TIPS in IRAs and Roth IRAs, rolling them over as they mature.
- Diversification in equities - Despite the outperformance of the US market over the last decade, there are long periods that international stocks outperform US stocks. 2025 may have been the start of one such period. Similarly, US large cap stocks have outperformed over the last decade, but historically small cap and value stocks normally outperform over long periods. An investor holding 100% of his/her equity allocation in an S&P 500 index fund may be very disappointed in the coming decade (or longer)
Investors would be prudent to know a little about these fundamental principles and how they apply to their individual situations before trying to keep it (too) simple.Post: No Such Thing as Easy Money
Link to comment from January 10, 2026
Very interesting conversation! Where one comes down on this issue depends upon the granparent's personal college experience, attitude towards college (public vs. private), current financial situation, and (importantly) how many grandchildren. I personally had a unique college experience, coming from a very moderate income family and being the very first person in my family to go to college. I knew that I personally would be responsible for covering almost all of my college costs, so I let the government educate me, bachelors at a service academy, masters at a large state university, and doctorate at an Ivy League university. Of course, that "cost" me many years of military service, for which I have absolutely no regrets. I personally feel that the value added by receiving an undergraduate degree from a prestigious private college versus a public college is not worth the (significant) extra expense. Perhaps there is some additional value at the graduate school level in some fields. Having a "not my problem" attitude, for a grandparent that can easily afford to help with the grandchildren's education, seems a bit coldhearted. We are now financially secure and have eight grandchildren. Our children are certainly not wealthy, and fully paying for their children's college (anywhere) would be financially stressful to them. Our solution (both currently and in our estate plan) is to pay an amount sufficient for the granchild's undergraduate tuition, room, and board at a state college in the grandchild's state of residency for four years, provided that the grandchild maintain a passing (C) GPA. If the child (or parent) feels that a private school education would be preferable, then they can fund the amount required above our promised support. However, as this discussion thread illustrates, there are many different solutions to this issue, and all of them seem to be appropriate for that particular family.
Post: $92,000 a year is quite an investment. The ROI is real, but maybe not.
Link to comment from December 13, 2025
Bill, In addition to the new 1099 "Y' code, I believe you still will be required to have a letter from the charity acknowledging your contribution (if it is over $250) to substantiate it for your tax records, even if it is a QCD. I have had to follow up with several charities to get this letter for QCDs.
Post: 10 Ways to Give—Without Writing a Check
Link to comment from November 9, 2025
As most of you probably know, QCDs (for those old enough to be eligible to use them) are the only way a taxpayer that doesn't itemize can reduce his/her taxable income through charitable means. Some custodians will send the check directly to the account owner, who then mails it to the charity. If you are considering QCDs, make sure to request them long before the end of December - most custodians will have a cutoff for them in early to mid. December. Also, if you want the charity to use the contribution for a specific purpose, have the charity state that on the check (the custodian will usually have a line for that on the request form). As with any other charitable contribution, the charity is required to send the donor a letter acknowledging the contribution. Make sure you get the letter, and keep in in case of an audit. For taxpayers subject to the IRMAA, QCDs are an excellent way to fine tune your gross income to stay under the next IRMAA. Remember, going one dollar over an IRMAA breakpoint will cost you hundreds in extra Medicare premium payments
Post: 10 Ways to Give—Without Writing a Check
Link to comment from November 8, 2025
As a (now retired) investment professional, I always asked my clients "how long can you weather a market downturn?" The S&P 500 had a negative (inflation adjusted) return for 30 years (1929-59), 25 years (1968-93) and 16 years (2000-16). The Japanese Nikkei 225 has never even come close to its 1990 peak in inflation adjusted terms in the past 35 years. Such a prolonged downturn would have a major impact on any investor needing to make substantial portfolio withdrawals over the next few decades. For retirees and those approaching retirement, it is advisable to keep the next decade's worth (longer if one can afford it) of anticipated withdrawals in bonds..
Post: Is The Stock Market Overvalued?
Link to comment from October 18, 2025
As a (now retired) investment professional, I always ask "how long can you weather a downturn". Yes, the markets will usually bounce back, but maybe not for a very long time. For instance the S&P 500 stayed in negative, inflation adjusted, return territory for 30 years (1929-59), 25 years (1968-93), and 16 years (2000-16). The Japanese Nikkei 225 Index has never come remotely close to its 1990 peak in inflation adjusted terms. Retirees and those nearing retirement have to consider the safety of the next decade (possibly more if they can afford it) of withdrawals when setting their portfolio's asset allocation.
Post: Is The Stock Market Overvalued?
Link to comment from October 18, 2025
How much and when you give, for most of us, somewhat depends on what stage of life you are in. In our family's early (working) years, saving for retirement was the paramount goal. We contributed a reasonable amount to charities, but securing our retirement came first. We have been very fortunate, and have (like many Humble Dollar readers) arrived at a point that we have far more than we need (or want to spend on ourselves and family), and now, in retirement, we are "making up for lost time" in our charitable giving. We give at least 20% of our annual gross income to charities through Qualified Charitable Distributions from traditional IRAs, and plan on giving at least 20% of our estate to charity (again, through bequests from a sizable traditional IRA). We firmly believe that those of us that have been blessed with good fortune have an obligation to contribute to the betterment of society - and, it makes good sense, tax-wise!
Post: Saving and Giving
Link to comment from June 28, 2025
One of the most common justifcations for collecting at 62 is that the recipient "needs" the money. Since most folks' retirment income is a combinatiion of liquidation of assets and SS benefits, if one "needs" to collect at 62, one simply cannot afford to retire at that age. Far preferable to spend assets down early in retirement and delay SS (for a higher, guaranteed, inflation adjusted payment for life) to protect against the chance of a significantly longer life than anticipated.
Post: Breaking even? Why should anyone care? I don’t
Link to comment from May 18, 2025
The importance of the "break even" age depends heavily on a couples' unique circumstances. For instance, in our case, my spouse (the lower earner) had a benefit on her own record higher than her spousal benefit on mine, but my benefit was significantly higher than hers. She is five years younger than me. We are both in good health. When we ran the projections, her collecting on her own record at age 62 and me waiting until 70 had a very high probability of yielding far more in eventual benefits (possibly hundreds of thousands) for both of us. As far as "losing" if one dies before the "break even" age, that's a far less important concern than living quite longer than anticipated and having a permanent low SS benefit.
Post: Breaking even? Why should anyone care? I don’t
Link to comment from May 18, 2025
As a financial planner that has prepared hundreds of retirement projections for clients, this article is spot on. However, Dick fails to mention one important source of assumptions, the clients' assumptions. One of the planners responsibilities is to bring up the assumptions the clients forget, such as home maintenance, auto replacement costs, medical costs, etc. Yes, the investment return and volatility assumptions are hugely important, and we always erred on the conservative side on both. It's also important to point out to the client that assuming relatively minor reductions in future expenses can result in significant increases in the success of their strategy. The planner should tell the client there are no guarantees in their future,and this is simply a reasonable roadmap and invariably will require some adjustments (both positive and negative) as events develop. The main objective of a properly done retirement plan is to either put the client's mind at ease that they are well prepared for retirement or convince a totally unrealistic client that they are headed for disaster, as their assets cannot possibly accomplish their goals. Although not the focus of Dick's article, a properly done Social Security analysis, especially for a couple, is a huge part of a retirement plan.
Post: Assumptions matter most
Link to comment from March 15, 2025