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Options in Disguise

Sanjib Saha

Sanjib is a software engineer by profession, but he's now transitioning to early retirement. Self-taught in investments, he passed the Series 65 licensing exam as a non-industry candidate. Sanjib is passionate about raising financial literacy and enjoys helping others with their finances.

Options in Disguise

Sanjib Saha  |  Jun 28, 2022

DO YOU INVEST in options? Think twice before saying that you’d rather go to Vegas. My bold claim: Options investing has a lot in common with investing in stocks and corporate bonds.
Intrigued? Let’s recap a European style call option. It’s a discretionary contract that allows someone to buy an underlying asset at a set strike price at a future date. Let’s say the buyer of the call, Bob, has an option on a stock with a strike price of $100.

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My Preference

Sanjib Saha  |  Jun 16, 2022

I WAS PLEASANTLY surprised recently when a lump-sum dividend payment showed up in my brokerage account. It was from a preferred stock I bought a few years ago to boost my investment income. The windfall reminded me of the three criteria I’d used to screen preferred shares:

Taxation. Unlike bond payments, which are taxed as ordinary income, the income payments from most—but not all—preferred stocks enjoy the favorable tax treatment given to qualified dividends.

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Tax Bites

Sanjib Saha  |  May 10, 2022

MY TAXES ROSE 50% in 2021. I’ve never paid so much before, not even during my peak earning years. I’m not upset about having to pay my fair share, but the extent of the increase puzzled me. After examining my tax return, I came away with a handful of insights.
To be sure, I wasn’t expecting a large refund. The reason: I suspected that a onetime employment windfall would cause me to owe money,

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A Matter of Timing

Sanjib Saha  |  Mar 4, 2022

I RECENTLY WROTE about missing the chance to harvest tax losses. A reader decried this as market timing, which I found surprising. But on second thought, I can see where the reader was coming from.
Suppose we define market timing as any buy or sell decision that’s taken only when the time is right. Using this definition, I’m guilty as charged.
But if that’s the case, is all market timing bad? I’d argue it depends on the intent behind the action.

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Missing the Boat

Sanjib Saha  |  Feb 5, 2022

I’VE BEEN WAITING since late last year for a stock market correction. No, I’m not sitting on a pile of cash and looking to time the market. Instead, I’m simply hoping to trim my tax bill.
Last October, I sold the recently vested shares of my company stock and used the proceeds to buy Vanguard Total Stock Market ETF (symbol: VTI). This sell-high-buy-high exchange was meant for diversification, but I also hoped that the market would drop later.

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Goodbye DIY

Sanjib Saha  |  Feb 3, 2022

I GREW UP IN INDIA. There, it’s quite common to have outside help for household chores. Most middle-class families hire someone to help with washing, dishes and cleaning. Affluent households typically have a cook, driver and housekeeper.
After coming to the U.S., I noticed that most households weren’t dependent on domestic help, thanks to appliances like a dishwasher, vacuum cleaner and washer-dryer. A few coworkers went as far as building their own cabinets and decks,

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Resolved: Learn Again

Sanjib Saha  |  Jan 13, 2022

I DEVOTE A GOOD amount of time to learning, not because I worry about cognitive decline—though that’s a worthy reason—but because I enjoy sampling a host of subjects, everything from meditation to music theories.
Before online courses became popular, my self-directed learning involved watching lecture DVDs. I later discovered many free online offerings from reputed universities, including Stanford, Harvard, Yale, MIT and Princeton.
When the pandemic forced me to spend more time at home,

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Taking Shelter

Sanjib Saha  |  Dec 20, 2021

EARLIER THIS YEAR, I swapped the Vanguard Short-Term Bond Index Fund (symbol: VBIPX) in my 401(k) for an inflation-indexed Treasury ETF (VTIP). The trade worked out well: The replacement fund has since fared better, thanks to this year’s accelerating inflation.
To buy the inflation-indexed ETF, I had to open a brokerage subaccount within my company’s retirement plan—a feature some 401(k)s offer, though these “brokerage windows” typically aren’t heavily promoted for fear employees will end up trading too much.

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Less Funds More Gain

Sanjib Saha  |  Dec 11, 2021

READERS MAY RECALL Laura, my acquaintance who didn’t need life insurance but was sold a policy anyway. Alarmed by her ignorance, she vowed to manage her own money. As a first step, she parted ways with her financial advisor.
The advisor had her invested in 35 funds. She never fully understood what these funds owned or why she needed them. She had previously thought that investing had to be complicated and was best left to the professionals.

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Inflation Bites

Sanjib Saha  |  Dec 4, 2021

FINANCIAL PLANNERS often ask new clients about their first money memory. Mine was about an early encounter with inflation. It involved a favorite childhood snack named fuchka, a popular street food in Kolkata, where I grew up.
The snack is a ball-shaped flatbread, filled with spicy potato mash and topped with tamarind water. As you crunch its crispy shell, the magical flavors burst in your mouth and take your tastebuds on a rollercoaster ride.

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My Favorite Store

Sanjib Saha  |  Dec 2, 2021

WHEN I MOVED to the U.S. for work, a friend graciously helped me settle in. He shared many useful tips, one of which was to become a Costco member. I’m glad I heeded my friend’s advice. I’ve saved thousands of dollars over the years and found the store’s service to be exceptional.
In recent years, my Costco shopping has expanded to include not just everyday purchases, but also luxury items, gas, tires, electronics and vacations.

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Four or Less

Sanjib Saha  |  Nov 21, 2021

A RECENT ARTICLE from Morningstar suggested that the 4% rule for sustainable retirement withdrawals should be revised downward to 3.3%. This lower rate, the researchers argued, is safer given today’s rich stock market valuations and low bond yields.
The article also recommended being flexible with withdrawals, by taking larger amounts in good markets and smaller withdrawals during down periods. This strategy could provide more lifetime income than fixing a withdrawal amount in the first year and then automatically increasing that sum each year with inflation.

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Simply Works

Sanjib Saha  |  Oct 25, 2021

I THANK MURTHY, a friend at college, for teaching me guitar. Instead of theories, he taught me five easy chords. I could soon play a few songs and that fueled my motivation to learn more.
The same strategy can help beginner investors. Novices often find the stock market intimidating and mysterious. Result? Inaction and opportunity cost. Solution? Simple steps.
A former coworker comes to my mind. He was uninterested in stocks, including the company shares he received as part of his pay.

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Six Seasons

Sanjib Saha  |  Sep 28, 2021

AS A CHILD GROWING up in India, I was taught about the six seasons of Bengal: summer, monsoons, autumn, late autumn, winter and spring. From my recollection, some seasons felt distinct, while others were subtle and transitory. Still, each season had unique characteristics, making it different from the others.
A HumbleDollar Voices question—if you could live your financial life again, what would you do differently?—reminded me of the six seasons. How so?

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Diminished Value

Sanjib Saha  |  Sep 18, 2021

A CRUCIAL STEP WHEN buying a preowned car is to scrutinize its Carfax report. A single-owner car with a regular maintenance history and which was driven solely for personal use should be a safe bet, while an accident record gives most people pause. All things being equal, a car that was in an accident, however minor, ought to cost less than a similar one with a clean history.
Some bargain hunters don’t mind taking a chance on a car with an accident history as long as it drives well.

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