It is unclear to me whether a contribution to my grandchildren’s Trump accounts would be tax deductible. If not, you would be using after tax money to contribute to an IRA account that will be taxed at regular income tax rates. From a tax perspective wouldn’t it be better to give them the cash to invest in stocks where the increases after 30 or 40 years would be taxed at capital gains rates?
They make it sound as if there is no risk to this loan. Fidelity puts up cash in their bank account to cover the possibility that the borrower doesn’t replace the securities. What if there is a financial crisis and Fidelity/you can’t get access to the money in the bank account because the account is frozen? What if the bank account isn’t covered by FDIC or other government guarantee and some or all of that money is gone? What if you can eventually get your cash collateral out of the account, but not until months or years later? And what if you eventually get cash back but you have lost interest on that money for all that time? I don’t know if these “what if’s” are possible or if there are other “what if’s” that could stand in the way of you recovering your securities or cash equivalents plus interest. But I still believe in the “no free lunch” idea. Maybe the risk of loss is low here but I can’t believe the risk of loss is zero.
Seems as if Medicare does limit what it will pay for.
This is NYT headline from today’s paper: Trump Administration Will Limit Medicare Spending on Pricey BandagesIn an about-face, the administration is cracking down on so-called skin substitutes, overused treatments that cost Medicare more than $10 billion last year. This may make sense and may be justifiable. But who is to say what is done to restrict coverage in the future will be justifiable.
"Medicare for All," one payer for all medical care in the United States, might make sense from an efficiency perspective, but fear that it would be unfair to health care providers (I've heard that Medicare rates don't fairly compensate doctors, nurses, hospitals etc.) and also fear one entity making decisions about the healthcare I'm entitled to receive.
If there is an inflation adjustment for capital gains then capital gains should no longer receive the lower tax rates. They should be taxes at the same rates as income tax.
Agree with your conclusion that valuation measures are no predictor of short-term stock-market movements. But what about the longer term, say 10 or 20 years. Do you think today’s high valuations make it unlikely that stock-market returns the next 10 years will be lower than average and that maybe it would be more prudent to put 10-year money into bonds rather than stocks (at least US stocks).
With these tariffs we may be headed for a recession, but we may also be headed for substantial increase in inflation (stagflation). Puts Federal Reserve in a pickle. They may decide to increase rates, pushing bonds down more, to try to keep inflation in check.
I use a bucket approach for my bonds. I try to match the duration of the bonds to the time when I will likely need the money. The money I'll need over the next year is kept in money market funds. The money I will need within the next two years is kept in bond funds with a two-year duration period. The money I will need five years from now I hold in bond funds with a five-year or so duration and the rest in bond funds with a seven or eight-year duration. Hopefully, this will earn a higher return overall for my bond investments than keeping everything in short-term bond funds. (Most of the time you receive higher interest rates on longer-term bonds.)
Comments
It is unclear to me whether a contribution to my grandchildren’s Trump accounts would be tax deductible. If not, you would be using after tax money to contribute to an IRA account that will be taxed at regular income tax rates. From a tax perspective wouldn’t it be better to give them the cash to invest in stocks where the increases after 30 or 40 years would be taxed at capital gains rates?
Post: Trump Accounts
Link to comment from August 17, 2025
They make it sound as if there is no risk to this loan. Fidelity puts up cash in their bank account to cover the possibility that the borrower doesn’t replace the securities. What if there is a financial crisis and Fidelity/you can’t get access to the money in the bank account because the account is frozen? What if the bank account isn’t covered by FDIC or other government guarantee and some or all of that money is gone? What if you can eventually get your cash collateral out of the account, but not until months or years later? And what if you eventually get cash back but you have lost interest on that money for all that time? I don’t know if these “what if’s” are possible or if there are other “what if’s” that could stand in the way of you recovering your securities or cash equivalents plus interest. But I still believe in the “no free lunch” idea. Maybe the risk of loss is low here but I can’t believe the risk of loss is zero.
Post: Free Lunch?
Link to comment from August 12, 2025
Seems as if Medicare does limit what it will pay for. This is NYT headline from today’s paper: Trump Administration Will Limit Medicare Spending on Pricey BandagesIn an about-face, the administration is cracking down on so-called skin substitutes, overused treatments that cost Medicare more than $10 billion last year. This may make sense and may be justifiable. But who is to say what is done to restrict coverage in the future will be justifiable.
Post: I have a challenge for you. It’s one of the most significant financial and controversial issues facing the U.S.
Link to comment from July 16, 2025
"Medicare for All," one payer for all medical care in the United States, might make sense from an efficiency perspective, but fear that it would be unfair to health care providers (I've heard that Medicare rates don't fairly compensate doctors, nurses, hospitals etc.) and also fear one entity making decisions about the healthcare I'm entitled to receive.
Post: I have a challenge for you. It’s one of the most significant financial and controversial issues facing the U.S.
Link to comment from July 15, 2025
If there is an inflation adjustment for capital gains then capital gains should no longer receive the lower tax rates. They should be taxes at the same rates as income tax.
Post: Some people are never satisfied
Link to comment from July 11, 2025
Thanks Jonathan, that seems like the most prudent approach.
Post: Ignore Valuations?
Link to comment from May 21, 2025
Agree with your conclusion that valuation measures are no predictor of short-term stock-market movements. But what about the longer term, say 10 or 20 years. Do you think today’s high valuations make it unlikely that stock-market returns the next 10 years will be lower than average and that maybe it would be more prudent to put 10-year money into bonds rather than stocks (at least US stocks).
Post: Ignore Valuations?
Link to comment from May 21, 2025
With these tariffs we may be headed for a recession, but we may also be headed for substantial increase in inflation (stagflation). Puts Federal Reserve in a pickle. They may decide to increase rates, pushing bonds down more, to try to keep inflation in check.
Post: What to do as the Bear Approaches
Link to comment from April 9, 2025
I use a bucket approach for my bonds. I try to match the duration of the bonds to the time when I will likely need the money. The money I'll need over the next year is kept in money market funds. The money I will need within the next two years is kept in bond funds with a two-year duration period. The money I will need five years from now I hold in bond funds with a five-year or so duration and the rest in bond funds with a seven or eight-year duration. Hopefully, this will earn a higher return overall for my bond investments than keeping everything in short-term bond funds. (Most of the time you receive higher interest rates on longer-term bonds.)
Post: How Do Allocate the Bond Portion of Your Portfolio?
Link to comment from March 21, 2025
Are inflation protected single premium income annuities (SPIAs) available with no inflation cap?
Post: Laying Down a Floor
Link to comment from September 14, 2024