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WHAT HAPPENS WHEN you’re hit by the proverbial beer truck? Will it be easy for others to pick up the pieces—the pieces of your financial life, that is?
To my knowledge, my wife isn’t checking the delivery schedule for the Anheuser-Busch brewery here in Columbus, Ohio. Still, she’s worried about the complexities of our finances. I’ve made a concerted effort since I retired to consolidate and close financial accounts, reduce our investments holdings, and streamline where it makes sense.
WHEN I WAS IN COLLEGE, working toward a bachelor’s degree in music education, a friend’s dad told me about Vanguard Group. I’d never heard of Vanguard, and I had no idea what a mutual fund was.
I did some research on the firm and its founder, John Bogle, and read his book Bogle on Mutual Funds. Soon after, at age 19, I opened an IRA at Vanguard and thereafter contributed the maximum allowed every year.
WITH DECEMBER FAST approaching, it’s a good time to think about end-of-the-year financial planning. What steps might you take?
A popular strategy is to make charitable gifts, both to support good causes and reap a tax benefit. But before you start writing checks, take a moment to better understand your tax picture. Because of the complexity of tax forms, that’s often easier said than done. Still, you don’t need to decipher every number. Instead,
I RECENTLY FINISHED reading the second edition of William Bernstein’s The Four Pillars of Investing—twice. This new edition is a significant rewrite of the first edition that was published in 2002. Even if you’ve read the first edition, reading the second edition is worth your time.
Though I’ve read most of the books written by well-known investment luminaries familiar to HumbleDollar readers, there were still pearls of wisdom I gathered from this second edition.
“GOD, GRANT ME THE serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference.”
No matter what our religious beliefs, we’re constantly bombarded with reasons to invoke the serenity prayer. There are so many things we can’t control: what our bosses decide, what acquaintances say behind our back, how stocks and interest rates perform. This lack of control can be a source of endless anxiety,
IT’S TIME TO THROW out our broken retirement system and start over. My first article for HumbleDollar, published more than five years ago, was titled Choosing Badly. It was about the inability of most employees to make good use of their 401(k) plan.
Guess what? Nothing’s changed.
Today, some 401(k) plans still have too few investment choices, while others have too many. There are multiple options that people don’t understand, such as target-date funds compared with index funds,
HEALTH SAVINGS accounts (HSAs) were introduced in 2003, and have since become commonplace in employee benefit plans. My experience with HSAs dates to 2004, when my employer offered $400 in one-time seed money as an incentive to sign up.
HSAs differed from existing health-care flexible spending accounts, and offered some features I preferred. To me, the HSA’s most appealing feature was that I controlled the money. There’s no “use it or lose it” rule,
WHAT’S THE FIRST RULE of personal finance? To answer this question, let’s look at the financial lives of two notable individuals, starting with musician MC Hammer.
When Hammer gained fame in the 1980s, he made millions. But unfortunately, his spending quickly outpaced his income. Hammer bought 19 racehorses, employed a personal staff of 200 and built a $30 million house with a 17-car garage. The result, sadly, was bankruptcy.
If MC Hammer represents one extreme of financial management,
LIKE MANY WHO THINK about where they’d like to retire, we’ve always had a vague list of wants: comfortable climate, walkability, good health care, access to cultural events and outdoor activities, friendly tax regime, reasonable cost of living, that sort of thing.
I wrote previously about feeling stuck for many years in a place where we didn’t want to stay, but also not really having one place where we felt drawn to settle, whether for a few years or permanently.
FROM AN EARLY AGE, whenever I heard the word “stock,” it was said with a derisive tone. My father hadn’t owned any shares, but the 1929 stock market crash and Great Depression still hit him hard. He wasn’t able to find steady work until after the 1941 attack on Pearl Harbor.
Given its effect on our family, my father had a pathological disdain for the market that was, inadvertently, passed on to me. Without being aware of it,
WE ALL LIKE TO THINK we’re consistent in our views. I certainly do. Yet, as I recall how I thought about the financial world two decades ago and how I think about it today, I’m amazed at how much my views have changed.
Here are five pieces of advice that I give now—but which I wouldn’t have given two decades ago:
1. Don’t waste time on investing. In the early 2000s, I thought endlessly about how to structure a portfolio,
I’M NOT SOMEONE WHO enjoys spending money on luxury travel. I’d never pay cash for a business class airline ticket or a hotel suite. Nonetheless, on a recent trip to Spain with my husband, we flew business class and had suites in all four hotels we stayed at.
We also visited lounges in every airport before our flights, had access to executive lounges at two hotels where we could get free meals, snacks and cocktails,
I THOUGHT I HAD a pretty good handle on health savings accounts, or HSAs. My wife and I contributed to HSAs over the decade before we retired. The money we accumulated has come in handy in the early years of retirement. I’ve also written several articles extolling their virtues.
But I recently learned that we missed an opportunity to further fund these accounts, while simultaneously reducing future required minimum distributions. The trick is to do a rollover from an IRA to an HSA.
WHAT’S THE PURPOSE of life? Is it to die with as much money as possible or, as magazine publisher Malcolm Forbes was quoted as saying, “He who dies with the most toys, wins”? An intriguing and provocative book, Die With Zero, says no.
The book’s author is Bill Perkins, a successful energy trader. In it, he argues that the purpose of life is to accumulate as many fulfilling experiences as possible,
THERE ARE ALL KINDS of financial talents that seem desirable. Who wouldn’t want a knack for finding undervalued stocks, identifying star fund managers, and figuring out which way the stock and bond markets are headed? The problem: While some folks may briefly appear to possess these talents, it usually turns out that their apparent prescience was nothing more than dumb luck.
Where does that leave us? Forget the obvious but elusive financial superpowers, and focus on those that—with a little work—are available to all of us.
