Family is a source of free investment advice that could cost you dearly.

Exposing Yourself

PUT YOURSELF in their shoes. I’ve been doing that in recent weeks, thinking about how I’d design a portfolio if I lived in, say, Australia, Japan or the United Kingdom. What prompted this navel-gazing? I’m in the middle of revising my 2016 book, How to Think About Money, for an international audience.
One conclusion: Here in the U.S., we have it far easier than foreign investors—and a big reason is currency exposure.

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Protect Your Privacy

ERIC SCHMIDT SAID THIS when he was Google’s chief executive: “If you have something that you don’t want anyone to know, maybe you shouldn’t be doing it in the first place.”
In his Congressional testimony last week, Facebook chief executive Mark Zuckerberg didn’t say anything nearly as condescending or abrasive. But his testimony was a good reminder that we’re in a very different world privacy-wise than we were even 10 years ago,

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Teachable Moment

FOR THREE-QUARTERS of students, loans have become a standard part of the college experience. Scholarships, grants and parental funding may be preferable. But the reality is, many families will need student loans to pay college expenses.
Navigating this world can be baffling. There are many different kinds of loans and repayment programs, and choosing the right option is important. After all, you’ll be living with your choices for 10 years or more.
Federal student loans are backed by the federal government and offered through the Department of Education.

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Latest Blogs

Exposing Yourself

PUT YOURSELF in their shoes. I’ve been doing that in recent weeks, thinking about how I’d design a portfolio if I lived in, say, Australia, Japan or the United Kingdom. What prompted this navel-gazing? I’m in the middle of revising my 2016 book, How to Think About Money, for an international audience.
One conclusion: Here in the U.S., we have it far easier than foreign investors—and a big reason is currency exposure.

Read more »

Protect Your Privacy

ERIC SCHMIDT SAID THIS when he was Google’s chief executive: “If you have something that you don’t want anyone to know, maybe you shouldn’t be doing it in the first place.”
In his Congressional testimony last week, Facebook chief executive Mark Zuckerberg didn’t say anything nearly as condescending or abrasive. But his testimony was a good reminder that we’re in a very different world privacy-wise than we were even 10 years ago,

Read more »

Teachable Moment

FOR THREE-QUARTERS of students, loans have become a standard part of the college experience. Scholarships, grants and parental funding may be preferable. But the reality is, many families will need student loans to pay college expenses.
Navigating this world can be baffling. There are many different kinds of loans and repayment programs, and choosing the right option is important. After all, you’ll be living with your choices for 10 years or more.
Federal student loans are backed by the federal government and offered through the Department of Education.

Read more »

Blog archive »

Numbers

WEDDING PARTY MEMBERS spend an average $728 on the wedding, bachelor or bachelorette party, and shower, found Bankrate.com. This includes gifts, travel, attire and more. Guests attending weddings for a close friend or family member spend an average $628.

Act

IMAGINE STOCKS PLUNGED 30%. That’s not a prediction, but it is always a possibility. Think about your portfolio’s loss in dollar terms, so it seems more real. Ponder whether the financial hit would unnerve you—and whether it would imperil any upcoming goals. If the answer is “yes,” you might want to lighten up on stocks.

Think

TAX EFFICIENCY. We should minimize our portfolio’s taxes, so we keep more of what we make. That means making full use of retirement accounts, while thinking carefully about which investments to hold in our taxable account. For instance, we might allocate bonds and restrict trading to our 401(k) and IRA, while using our taxable account to buy and hold stock index funds.

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Unanswered

THERE ARE MANY FINANCIAL DEBATES that shouldn’t be debates at all. Folks strike strident poses, but often their positions don’t reflect a careful weighing of the arguments. Rather, they either have a vested interest or their ego is invested. Think of commission-hungry insurance agents who pound the table for cash-value life insurance, or retirees who took Social Security early and then insist that early is always best.
In most of these cases, if we marshal the facts and apply some reasoning,

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Jonathan Clements

About Jonathan

Jonathan Clements is the founder and editor of HumbleDollar. He spent almost two decades at The Wall Street Journal, where he was the personal finance columnist. His latest book: How to Think About Money.

Money Guide

Everything you need to be smarter about money—all in one place.

Start Here

Staying Organized

WHAT TAX INFORMATION SHOULD you file away—and what other steps should you take to keep your finances from sprawling out of control? Here are six pointers:
  • Keep seven years of tax returns, including supporting materials. The IRS has three years to audit your tax return or six years if it suspects substantial underreporting of income. What if you have been playing fast and loose with your taxes? You probably shouldn’t throw anything away.
  • Keep cost-basis information for assets held in your taxable account. This should include how much you paid for your house, plus the cost of any subsequent home improvements. You may be able to add those improvements to your home’s cost basis when you sell and thereby reduce any taxable gain. You should probably also keep records of how much you paid for individual investments, unless your financial firms provide it. Mutual funds are now required to provide cost-basis information for funds bought in 2012 or later, and many firms provide information for funds purchased prior to that year.
  • Keep a record of all nondeductible IRA contributions—and make sure your heirs know where to find the details. If you bequeath your IRA, your beneficiaries won’t have to pay taxes when they withdraw those nondeductible contributions.
  • Keep the latest insurance policy statements you were sent and throw away old versions, unless you have a claim outstanding that hasn't been settled.
  • Avoid opening an excessive number of financial accounts or buying an excessive number of investments. Many folks engage in "naive diversification," assuming they're safer if they have accounts at multiple brokerage firms, mutual fund companies and banks, and if they use multiple financial advisors. They also feel safer owning multiple mutual funds, even if these funds invest in the same part of the market. While such naive diversification may marginally reduce risk, it's typically counter-productive, resulting in unnecessary duplication, higher investment costs and paperwork hassles, including at tax time.
  • Create a consolidated list of all usernames and passwords, and put it somewhere safe. Make sure trusted family members know where to find it.
Next: Main Menu Previous: Required Minimum Distributions
Read more »

Money Guide

Everything you need to be smarter about money—all in one place.

Start Here

Staying Organized

WHAT TAX INFORMATION SHOULD you file away—and what other steps should you take to keep your finances from sprawling out of control? Here are six pointers:
  • Keep seven years of tax returns, including supporting materials. The IRS has three years to audit your tax return or six years if it suspects substantial underreporting of income. What if you have been playing fast and loose with your taxes? You probably shouldn’t throw anything away.
  • Keep cost-basis information for assets held in your taxable account. This should include how much you paid for your house, plus the cost of any subsequent home improvements. You may be able to add those improvements to your home’s cost basis when you sell and thereby reduce any taxable gain. You should probably also keep records of how much you paid for individual investments, unless your financial firms provide it. Mutual funds are now required to provide cost-basis information for funds bought in 2012 or later, and many firms provide information for funds purchased prior to that year.
  • Keep a record of all nondeductible IRA contributions—and make sure your heirs know where to find the details. If you bequeath your IRA, your beneficiaries won’t have to pay taxes when they withdraw those nondeductible contributions.
  • Keep the latest insurance policy statements you were sent and throw away old versions, unless you have a claim outstanding that hasn't been settled.
  • Avoid opening an excessive number of financial accounts or buying an excessive number of investments. Many folks engage in "naive diversification," assuming they're safer if they have accounts at multiple brokerage firms, mutual fund companies and banks, and if they use multiple financial advisors. They also feel safer owning multiple mutual funds, even if these funds invest in the same part of the market. While such naive diversification may marginally reduce risk, it's typically counter-productive, resulting in unnecessary duplication, higher investment costs and paperwork hassles, including at tax time.
  • Create a consolidated list of all usernames and passwords, and put it somewhere safe. Make sure trusted family members know where to find it.
Next: Main Menu Previous: Required Minimum Distributions
Read more »
Home Call to Action
Jonathan Clements

About Jonathan

Jonathan Clements is the founder and editor of HumbleDollar. He spent almost two decades at The Wall Street Journal, where he was the personal finance columnist. His latest book: How to Think About Money.

Free Newsletter

Unanswered

THERE ARE MANY FINANCIAL DEBATES that shouldn’t be debates at all. Folks strike strident poses, but often their positions don’t reflect a careful weighing of the arguments. Rather, they either have a vested interest or their ego is invested. Think of commission-hungry insurance agents who pound the table for cash-value life insurance, or retirees who took Social Security early and then insist that early is always best.
In most of these cases, if we marshal the facts and apply some reasoning,

Read More »