Never confuse the appearance of affluence with affluence. One is the mortal enemy of the other.
GIVE AWAY APPRECIATED ASSETS. By donating stocks with unrealized capital gains, you can help a charity, avoid capital gains taxes and get an immediate tax deduction. Looking for more retirement income? Use appreciated assets to buy a charitable gift annuity. Over age 70½? You could save on taxes by donating part of your IRA’s required minimum distribution.
WALL STREET MAY NOT BE PAVED with gold, but sometimes it sure feels that way, thanks to spectacular winners like Amazon’s stock, Apple’s shares and Bitcoin. The reality: Most investments turn out to be mediocre or worse. Want to notch great long-run gains? Forget trying to pick the winners and instead focus on diversifying broadly. I explain why in my latest article for Creative Planning, where I sit on the advisory board and investment committee.
IF YOU’RE WORRIED THAT INDEXING threatens the smooth functioning of the stock market, it’s helpful to spend an hour chatting over coffee with Charles Ellis—which is what I did last week when I was in New Haven, Connecticut. Ellis is one of indexing’s most eloquent advocates, including in his bestselling book Winning the Loser’s Game and in his latest tome, The Index Revolution.
Charley dismisses the idea that index funds are distorting the market—and scoffs at the idea that active management is headed for extinction.
THE TAX LAWS SEVERELY RESTRICT deductions for losses claimed by individuals whose homes, household goods and other properties suffer damage or are destroyed due to events that, in IRS lingo, are “sudden, unexpected, or unusual.”
In many cases, the allowable write-offs turn out to be shockingly smaller than anticipated. Furthermore, those with high incomes and low losses will find they can’t claim any deductions. What follows are answers to some often-asked questions.
What are the usual restrictions on writing off casualty losses?
IMAGINE AN IDEALIZED CHART that summarizes our finances over the course of our lives. What would the chart look like? Picture these five lines:
Our nest egg grows, slowly at first and then ever faster, hitting a peak of around 12 times our final salary when we retire.
Our portfolio in our 20s stands at perhaps 90% or even 100% stocks. We dial down our allocation in the years that follow, especially during our final decade in the workforce,
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.