Ignore the Signs?

Jonathan Clements  |  October 25, 2018

IF THIS IS THE START of a bear market, share prices have a lot further to fall: The S&P 500 is down just 9.4% from its all-time high—and yet one of the most important lessons may have already been learned.
No, I’m not going to mock those who have lately proclaimed that stocks are the only investment worth owning. I don’t intend to belittle those who assume that U.S. shares can defy investment theory,

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As the World Turns

Jonathan Clements  |  October 24, 2018

OVERSEAS STOCK markets have lagged badly over the past five years, climbing just 4.4% a year, while the S&P 500 has soared 14%. Are you questioning why you have money invested abroad? Check out my latest article for Creative Planning, where I sit on the advisory board and investment committee.

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Stepping Up

Julian Block  |  October 24, 2018

LONG EMBEDDED in the federal tax code is a provision that provides important advantages for people who sell inherited stocks, real estate or other investments that have appreciated in value and are held outside retirement accounts.
In tax lingo, the basis (the starting point for measuring gain or loss) of inherited assets “steps up” from their original basis (cost, in most instances) to their date-of-death value. It’s as if the inheritors had bought the assets that day.

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Heading Home (III)

Kristine Hayes  |  October 23, 2018

WHAT SORT of house should I buy? My first consideration was budget. While I’d been preapproved for a $403,000 loan, I knew I wasn’t going to borrow that much. Doing so would mean spending well over half my net income on my mortgage. Instead, I figured out how much cash I had for a down payment—$80,000—and then decided to take out a loan of not more than $300,000. That way, I’d be making a 20% down payment and could avoid buying private mortgage insurance.

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Garbage In

Adam M. Grossman  |  October 21, 2018

IN THE MID-1990s, Federal Express had a problem. Though the company’s safety record was exemplary, regulators had proposed new rules that would have posed an operational nightmare for the giant shipper.
The company flew Boeing 727 air freighters that each accommodated eight containers. Though they had never had a problem, the government’s concern was that if two heavier-than-average containers were loaded next to each other, it could cause the plane to become dangerously unbalanced.

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Newsletter No. 34

Jonathan Clements  |  October 20, 2018

HOW CAN WE GET the most out of our income and savings? Two years ago, in a slim volume called How to Think About Money, I offered my answer. Earlier this month, a new edition of the book came out, geared toward a global audience. To mark the new edition’s publication, I’ve devoted HumbleDollar’s latest newsletter to How to Think About Money’s 12 key recommendations.
The newsletter also includes a promo code that can save you money,

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Slow Going

Ross Menke  |  October 19, 2018

HAS THE PERCENTAGE of individuals across the world living in extreme poverty remained the same, doubled or halved over the past 20 years? If you answered halved, give yourself a pat on the back. According to, you’re among just 9% of respondents who answered the question correctly. Despite what you hear on the news, the world is gradually becoming a better place.
It’s difficult to recognize progress, including our own financial progress, when it happens slowly over long periods of time.

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Won in Translation

Jiab Wasserman  |  October 18, 2018

RETIREMENT IN America can be like plodding through a long, dark tunnel, with seemingly no light at the other end. I found, however, that if one looks sideways, there’s an escape hatch: retiring abroad.
For my husband and me, our search led us to Spain, having heard it had a low cost of living, excellent health care and a good climate. We visited a few times and fell in love, particularly with the city of Granada.

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Reality Check

Richard Quinn  |  October 17, 2018

CAN YOU LIVE on Social Security alone? The answer is a big fat “it depends.”
I was recently taken to task by a reader, who stated he and his wife live just fine on their combined $30,000 in Social Security benefits. I also know of a retiree who says he’s quite happy living in a trailer out west on $1,300 a month. How does that square with the conventional wisdom that, once retired, you need 80% of preretirement income,

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Cutting the Bonds

Dennis E. Quillen  |  October 16, 2018

I DON’T WANT bonds in my portfolio—or, at least, not to the degree traditionally recommended in financial planning guidelines.
For years, I had accepted the premise that bonds should be included in a serious investor’s portfolio. Not that I necessarily followed that dictum. But I accepted the idea that young people should have a low percentage in bonds, and increasingly greater percentages through middle age and retirement.
I kept thinking that someday I’d come around to more bonds,

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All Too Human

Adam M. Grossman  |  October 15, 2018

THE STOCK MARKET this year reminds me of one of those Rorschach inkblot tests. The broad U.S. market has gained more than 4%, including dividends, but it’s difficult to know what to make of it. Bulls point to this year’s tax cuts and believe that the market’s gain makes complete sense. Bears, on the other hand, note that the market has quadrupled in less than 10 years and conclude that it’s at an unsustainably high level.

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Stepping Back

Adam M. Grossman  |  October 14, 2018

AS YOU NO DOUBT noticed, the stock market took investors on a wild ride last week. On Wednesday, the Dow industrials dropped more than 800 points. On Thursday, the Dow lost another 546 points. Friday was better, up 287 points, but there was still plenty of stomach-churning volatility.
At times like this, I’m reminded of Warren Buffett’s motto: “You want to be greedy when others are fearful, and you want to be fearful when others are greedy.” While that certainly sounds logical,

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The Other Half

Jonathan Clements  |  October 13, 2018

THIS WEBSITE is devoted to personal finance—and I try to keep it that way, avoiding partisan political pontificating. Still, as we’ve learned from the 2016 presidential election and its aftermath, the U.S. is a country divided between those prospering in today’s economy and those who feel shortchanged.
In reality, of course, it’s more of a spectrum than a sharp divide: Most folks neither live below the poverty level nor count themselves among the one-percenters.

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403 Beware

Tony Isola  |  October 12, 2018

PUBLIC SCHOOL teachers’ biggest problem isn’t rowdy students. Instead, it’s their retirement plans that should be sent to the dean’s office.
After leaving my job as a foreign currency trader for an international bank, I became a middle school history teacher. My teaching career lasted more than 20 years. One of the worst things I encountered was the state of public school teachers’ non-ERISA 403(b) plans.
Having a front-row seat to the carnage was not pretty.

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Bearing Gifts

John Lim  |  October 11, 2018

AFTER A DECADE of rising stock prices, it’s time to look forward to the next bear market—and the three big benefits it’ll confer.
First, a market decline is a great financial gift, but only if you continue to save and invest. While it certainly won’t feel like a gift, a bear market enables you to invest at lower prices, both by adding new savings and reinvesting dividends.
Imagine you could choose from among three possible stock market scenarios.

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