More than any other financial issue, this one is a function of an individual's personal situation. There is no right answer for all but many different right answers for all. All the formulae in the world, cannot replace the particular wants and needs of an individual....and most of that is purely personal judgment.
What do I not need to touch in 10 years--that is the equity portion
What are emergency funds--need 100% liquidity and safe, non equity and non bond funds
What are bills I will be paying in 1-2 years......that is set aside also into safe, non equity and non bond funds....money market or something like that
what are funds that I could afford to lose 100%....those are very high risk (much riskier than S&P 500) investments. For much of my life, that number was $0!
I don't try to ever time the market. Any equity investments are for the very long term...meaning 10 years or more.. I believe trying to time the market is fruitless.
With publicly traded equity investments, I focus only on index funds. Active funds or stock picking do not impress me.
Finally, within the public equity portion of my portfolio, I attempt to diversify my geographic risk. I diversify greatly outside the US equity market. And I know the US has done quite well compared to other sectors. But the US is now 60% of the world market. See the historic record of Japan.
I find the "% cash, equity, bonds" portfolio resultant makeup is a fall out when the questions are answered above.
financial products are one of the absolute biggest rackets in life
I don't know how people can look in the mirror and sell most of these things to unaware people....completely unethical sticking with index funds for stuff in the market
Been to lots of beautiful places but my fav remains close to home....Amish farmland in the fall. Gazing over a field on a crisp, sunny day, crimson maples as a backdrop, with horses and farmers working. It is just a very peaceful and pretty comfortable setting. Reminds me of home.
Jonathan-Another article that is making us all think about the purpose of all this and how to make the best of things, while we are here. Thank you. Jim
Yes, I have been accused by many of being frugal...or cheap is the impolite way of describing me!! But, finally, I'm changing....last week made a major purchase for wife, family and me that is the opposite of being frugal. After weighing all the pros/cons (spreadsheet and all!....can't get away from that approach!!), I just said the hell with it and made the purchase!! I justified it by telling myself if I did not make that expenditure, it just goes to the kids. So, the hell with the kids and for once my wife/I decided to do what we want to do!! The source of being cheap? That's easy. Growing up, we did not have 2 nickels to rub together!!! Although things have changed, fortunately, that early approach to spending is difficult to change!!!
Good article...makes me think. What immediately comes to mind is , in retrospect, almost all of the extensive business travel I did through much of my career was absurdly inconsequential. Thinking of all the kids' events I missed with that business travel. I'm guessing that about 90% of the business travel I did would be nothing more than a 30-60 minute zoom call today. But at the time, I thought the company's fortunes depended on my particular business meeting going right!! Looking back at things, I was very naive. But, to be fair, those out of town meetings kept me gainfully employed so that the family could be taken care of and put me and the family in the position today. Just too many kids' events were missed. Nice article.
Per usual, more good thoughts Jonathan.
As a fellow "24%er" Roth converter, another thought for readers to consider....
Tax rates are likely going up big time in 2026, so there is likely one more year (2025) to take advantage, when doing Roth conversions, of what will look like low tax rates by 2026. Because of the reasons Jonathan provided, I find the Roth conversion approach an excellent tool for estate planning.
Not to further complicate things, but I'm of an age when IRMAA medicare payment adjustments are another variable for some readers to consider with the Roth conversion.
Appreciate your always objective and helpful thoughts Jonathan.
Exceptional and so objective again.....as I have enjoyed your thoughts for decades now. Having said that, I went the "second home" route last week........and you made me think some more!!!.
Like so many other personal financial planning issues, IT DEPENDS.
Someone who will use the Roth/IRA funds as a source of retirement income is in a very different situation than someone who intends to use the Roth/IRA as nothing more than an estate planning tool for kids/grandkids. The approach one takes with Roth/conversion issues can be very different, as a function of one's personal portfolio/family/income situation. It is tough to generalize on an approach without the exact specifics of the particular personal situation.
Comments:
More than any other financial issue, this one is a function of an individual's personal situation. There is no right answer for all but many different right answers for all. All the formulae in the world, cannot replace the particular wants and needs of an individual....and most of that is purely personal judgment.
Post: Quinn asks himself, Is delaying Social Security to age 70 the right decision?
Link to comment from September 22, 2024
some of questions I ask to make these decisions
- What do I not need to touch in 10 years--that is the equity portion
- What are emergency funds--need 100% liquidity and safe, non equity and non bond funds
- What are bills I will be paying in 1-2 years......that is set aside also into safe, non equity and non bond funds....money market or something like that
- what are funds that I could afford to lose 100%....those are very high risk (much riskier than S&P 500) investments. For much of my life, that number was $0!
- I don't try to ever time the market. Any equity investments are for the very long term...meaning 10 years or more.. I believe trying to time the market is fruitless.
- With publicly traded equity investments, I focus only on index funds. Active funds or stock picking do not impress me.
- Finally, within the public equity portion of my portfolio, I attempt to diversify my geographic risk. I diversify greatly outside the US equity market. And I know the US has done quite well compared to other sectors. But the US is now 60% of the world market. See the historic record of Japan.
I find the "% cash, equity, bonds" portfolio resultant makeup is a fall out when the questions are answered above.Post: Looking for Guidance on Formulating a Well-Balanced Investment Plan
Link to comment from September 16, 2024
financial products are one of the absolute biggest rackets in life I don't know how people can look in the mirror and sell most of these things to unaware people....completely unethical sticking with index funds for stuff in the market
Post: Active vs. Passive ETFs: Fidelity and T. Rowe Price Meet Vanguard by Steve Abramowitz
Link to comment from September 13, 2024
Been to lots of beautiful places but my fav remains close to home....Amish farmland in the fall. Gazing over a field on a crisp, sunny day, crimson maples as a backdrop, with horses and farmers working. It is just a very peaceful and pretty comfortable setting. Reminds me of home.
Post: First Place by Jonathan Clements
Link to comment from September 9, 2024
Jonathan-Another article that is making us all think about the purpose of all this and how to make the best of things, while we are here. Thank you. Jim
Post: No Regrets
Link to comment from September 9, 2024
Yes, I have been accused by many of being frugal...or cheap is the impolite way of describing me!! But, finally, I'm changing....last week made a major purchase for wife, family and me that is the opposite of being frugal. After weighing all the pros/cons (spreadsheet and all!....can't get away from that approach!!), I just said the hell with it and made the purchase!! I justified it by telling myself if I did not make that expenditure, it just goes to the kids. So, the hell with the kids and for once my wife/I decided to do what we want to do!! The source of being cheap? That's easy. Growing up, we did not have 2 nickels to rub together!!! Although things have changed, fortunately, that early approach to spending is difficult to change!!!
Post: Is being frugal a way of life, a necessity, habit or fun? RDQ thinks about it.
Link to comment from August 28, 2024
Good article...makes me think. What immediately comes to mind is , in retrospect, almost all of the extensive business travel I did through much of my career was absurdly inconsequential. Thinking of all the kids' events I missed with that business travel. I'm guessing that about 90% of the business travel I did would be nothing more than a 30-60 minute zoom call today. But at the time, I thought the company's fortunes depended on my particular business meeting going right!! Looking back at things, I was very naive. But, to be fair, those out of town meetings kept me gainfully employed so that the family could be taken care of and put me and the family in the position today. Just too many kids' events were missed. Nice article.
Post: Did we do this all wrong?
Link to comment from August 28, 2024
Per usual, more good thoughts Jonathan. As a fellow "24%er" Roth converter, another thought for readers to consider.... Tax rates are likely going up big time in 2026, so there is likely one more year (2025) to take advantage, when doing Roth conversions, of what will look like low tax rates by 2026. Because of the reasons Jonathan provided, I find the Roth conversion approach an excellent tool for estate planning. Not to further complicate things, but I'm of an age when IRMAA medicare payment adjustments are another variable for some readers to consider with the Roth conversion. Appreciate your always objective and helpful thoughts Jonathan.
Post: A Time to Give
Link to comment from August 24, 2024
Exceptional and so objective again.....as I have enjoyed your thoughts for decades now. Having said that, I went the "second home" route last week........and you made me think some more!!!.
Post: Turning on a Dime
Link to comment from August 13, 2024
Like so many other personal financial planning issues, IT DEPENDS. Someone who will use the Roth/IRA funds as a source of retirement income is in a very different situation than someone who intends to use the Roth/IRA as nothing more than an estate planning tool for kids/grandkids. The approach one takes with Roth/conversion issues can be very different, as a function of one's personal portfolio/family/income situation. It is tough to generalize on an approach without the exact specifics of the particular personal situation.
Post: Quinn has questions. To Roth or not and when?
Link to comment from August 6, 2024