Simple but Not Easy

Anika Hedstrom  |  February 20, 2018

WHEN I FIRST BEGAN INVESTING 16 years ago, I threw a bunch of investments at a wall to see what would stick. Someone I respected encouraged me to invest in master limited partnerships, so I purchased a few companies. I had no real idea what an MLP was or did. Sure, I spent some time surfing the net. But that was about it.
Fast forward one year to tax time. I had lost money and had no idea I had to file with the IRS for an extension,

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Investors Have Spoken

Jonathan Clements  |  February 19, 2018

THE MARKET IS ALWAYS RIGHT. It may have a different opinion tomorrow—perhaps radically different—but that doesn’t mean current prices aren’t the right ones.
Holler all you want that the stock market ought to be far lower. I do a fair amount of that myself (though the shouting is more akin to grumpy mumbling). But whether we like today’s share prices or not, they reflect the collective wisdom of all investors—and, if we want to buy or sell,

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Tales to Be Told

Jonathan Clements  |  February 17, 2018

IF THIS TURNS OUT TO BE a major bear market, there will be a slew of articles to be written. It’s the negative correlation enjoyed by every financial writer: Even as our portfolios shrink, our potential for pontification soars.
But what if the market bounces back? It’s almost too painful to contemplate. Think of all the articles that won’t get written. If the past week’s rally continues, here are 10 stories that will have to wait for the next market downturn:
1.

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Wheeling and Dealing

Nicholas Clements  |  February 15, 2018

CAR BUYING CAN BE OVERWHELMING, which partly explains why we held onto our 2002 Toyota RAV for as long as we did. When the time came to part ways, we needed to decide whether the replacement would be new or used, how much we were prepared to pay, the features we wanted and what vehicle would meet all our criteria.
These were relatively easy tasks. While I realized that purchasing a used vehicle made more sense financially,

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Check Him Out

Julian Block  |  February 14, 2018

AS AN ATTORNEY AND AUTHOR WHO HAS WRITTEN and lectured extensively on the tax aspects of marriage and divorce, I frequently receive questions from couples contemplating marriage. Generally, they come from similar backgrounds: They’re both affluent. They’re both getting married later in life. They’re both aware of trends in divorce rates.
I urge couples considering marriage to ponder the tax consequences beforehand, especially when one or both of them are remarrying.

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Headlines and Head Games

Adam M. Grossman  |  February 12, 2018

WARREN BUFFETT ONCE QUIPPED that, “you only find out who is swimming naked when the tide goes out.”
I’ve been thinking about this idea over the past two weeks, as markets around the world have given up all their year-to-date gains and then some. Since peaking on Jan. 26, the U.S. market, as measured by the S&P 500, has lost 8.8% of its value.
When the tide goes out like this, the emotional impact can be powerful—and the headlines just make it worse.

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Speculating on Speculation

Jonathan Clements  |  February 11, 2018

AFTER THE ROLLERCOASTER RIDE of the past two weeks, stock investors are in search of reassurance. Will this movie have a happy ending?
If we’re venturing into the stock market, we should ideally have at least a 15-year time horizon. That gives us 10 years to make money and another five years to look for the exit. Those final five years may prove crucial if the first 10 years don’t turn out so well.

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Taking Stock

Jonathan Clements  |  February 9, 2018

SO WE’RE ALL POORER, RIGHT? The S&P 500-stock index has fallen 10.2% over the past nine trading days. Yet all we’ve done is give back a sliver of the huge gains notched since 2009. My contention: Not only is much of the handwringing unjustified, but arguably it’s also wrongheaded.

Seasoned investors don’t get nervous when the market declines. Rather, they get excited by the prospect of buying shares at much cheaper prices. So far,

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Five Steps to a Better 401(k)

Adam M. Grossman  |  February 8, 2018

TED BENNA, THE INVENTOR of the 401(k) retirement plan, famously once stated that the system he created should be “blown up.” Why? It isn’t the fundamental structure, which he still believes in. What he doesn’t like is the complexity and costs that characterize today’s typical 401(k).
The original 401(k)s, he likes to point out, had just two fund options. Today, it’s more like 20. Because of that, it’s all too easy for bad investments and high fees to sneak in.

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A Most Morbid Game

Phil Dawson  |  February 7, 2018

THERE ARE MANY WHO CLAIM TO SPEAK with authority on Social Security.  I am not one of them. But I’m nothing if not curious. I recently set about testing some notions I have heard with regard to Social Security retirement benefits. A family member had asked for help understanding her Social Security statement, so I had some real numbers to work with. The statement predicted that her monthly benefits would be as follows, depending on when she begins benefits:

$1,907 at age 62.

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The Morning After

Jonathan Clements  |  February 6, 2018

WHEN MARKETS GO CRAZY, financial writers feel compelled to dust off the keyboard and cook up profound insights. But I am writing this at 5 a.m., while still ingesting my first cup of coffee, so I’m setting the bar a little lower. Here are 13 modest observations following yesterday’s 4.1% plunge by the S&P 500:
1.  I don’t know. You don’t know. Nobody knows. The market turmoil of the past six trading days feels like a sea change after 2017’s remarkable calm.

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February’s Newsletter

Jonathan Clements  |  February 3, 2018

IT’S BEEN A ROUGH WEEK for stocks, but a great 30 years. Result: My generation has earned stock returns that far outstrip the results merited by the economy’s performance. This has been good for us, but not so good for our adult children. To save for their retirement, they’re buying the overvalued stocks that we’re selling to pay for our retirement.
To make matters worse, those in their 20s and 30s are facing a tougher employment market,

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The $121,500 Guestroom

Joel M. Schofer  |  February 1, 2018

I HAVE A WIFE, TWO CHILDREN, TWO DOGS, and the need for three bedrooms and two bathrooms. In March 2015, I purchased a four bedroom, 3½ bath, 3,000-square-foot house in a nice neighborhood with quality public schools.
The fourth bedroom was largely unnecessary but, like many people, we occasionally get visitors and feel it’s nice to have an extra bedroom for them, instead of spending money on a hotel room. This is the story of how that fourth bedroom cost me more than $121,500,

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Five Ways to Diversify

Adam M. Grossman  |  January 30, 2018

IN 1952, A YOUNG GRADUATE STUDENT named Harry Markowitz wrote a paper that sought to prove, mathematically, the old maxim “don’t put all your eggs in one basket.” Through his work, Markowitz taught investors how to diversify their investments effectively, something that was not well understood at the time.
For instance, he explained that the number of stocks you hold is far less important than the number of types of stocks you own.

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Second Childhood

Jonathan Clements  |  January 27, 2018

IN COLLEGE, I WAS THE KID who swore he would never get married and never have children. A year later, I was engaged. Two years later, I was married. Three years later, I had a newborn.
And three decades later, I’m 55 years old, with a daughter who will turn 30 later this year.
I have no regrets about having children so young. Far from it. It does mean I missed out on the romancing,

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