I FREQUENTLY FIELD INQUIRIES from people who know they ought to get a will. Others have wills, but may need to revise them because they’ve moved to a new state, entered into a marriage or ended one. But either way, most folks—in my experience—never get beyond that simple first step.
And those who do often overlook an additional step that’s almost as necessary: drawing up a “letter of final instructions” that provides their heirs with an informal personal financial inventory.
A FEW YEARS BACK, a fellow named Wylie Tollette faced uncomfortable questions as he sat before the public oversight committee of the California Public Employees Retirement System (CalPERS). Tollette, the pension fund’s Chief Operating Investment Officer, was responsible for updating the committee on the status of its massive $350 billion portfolio.
But when a committee member asked about the fees CalPERS was paying to a particular group of investment managers, Tollette did not have a ready answer.
I SPENT THE FIRST THREE YEARS of my college career pursuing a degree in journalism. Any time I submitted an assignment that had even a hint of my own opinion inserted into it, my advisor would sternly remind me to report “just the facts and only the facts.”
These days, it’s increasingly difficult to find a piece of journalism that doesn’t have a personal edge to it. Between fake news and political propaganda,
I LOVE THE PRICE-CUTTING WAR among index-fund providers, because it puts pressure on all money managers to lower fees. But I don’t think investors should pay much heed to differences in annual expenses that amount to just 0.01% or 0.02% a year, equal to 1 or 2 cents for every $100 invested—and they certainly shouldn’t switch funds for those potential cost savings.
To check I wasn’t missing something, I set out to do apples-to-apples comparisons among index funds in four highly competitively segments of the indexing market: large-cap U.S.
EACH SPRING, I WATCH a fresh crop of college graduates transition from the world of fulltime academics to the world of fulltime employment. Eager to begin “adulting,” many of them focus on the salaries offered by their employer-of-choice and give little consideration to the various benefits that supplement that salary.
That’s a mistake. As someone who’s been employed fulltime for the last 26 years, I’ve learned the importance of performing a cost-benefit analysis on the perks offered by various employers.
THE STOCK MARKET HAD A GREAT 2017, gaining more than 20%. But was that kind of gain justified—or should it worry us, especially after the market had already tripled in recent years? I think it’s useful to understand the range of viewpoints, so we’re better prepared for 2018 and beyond. Here are the bull and bear cases:
Bull Case. As measured by the S&P 500 index, the U.S. market gained nearly 22% last year.
MY FIRST ENCOUNTER WITH DAVE RAMSEY was in 2010, when I stumbled across a radio broadcast featuring one of his recorded presentations. His style was funny and engaging, and I thought he might be helpful in teaching my kids about money.
I bought each of them his book The Total Money Makeover and gave them reading assignments, which were followed by group discussions in the weeks that followed. Later, I also attended his local Financial Peace University (FPU) classes with daughter Karah.
WE CAN THINK OF INVESTING as an argument between two competing opinions: What we think an investment ought to be worth—and what the market currently says. It’s an argument the market usually wins.
While we can be highly confident what, say, a certificate of deposit or a Treasury note is worth, it’s much harder to put a value on stocks, gold, high-yield junk bonds and other riskier investments (and, I’d argue, all but impossible with bitcoin).
AT SEVEN O’CLOCK THIS MORNING, as my wife and I tried in vain to wake our children for school, we heard a similar response as we went from room to room: “My head hurts.” Nobody wanted to get up.
I have to say, I don’t blame them. It’s the middle of winter here in Boston. The sky is gray and the thermometer seems stuck below zero. It can be hard for anyone to feel motivated,
JUST BEFORE SANTA ARRIVED in 2017, President Trump signed legislation officially titled the Tax Cuts and Jobs Act, which was described by both supporters and opponents as the most comprehensive overhaul of the Internal Revenue Code since the Tax Reform Act of 1986.
The many new rules that are now on the books are mostly prospective, meaning they apply to returns to be filed for calendar years 2018 through 2025. They aren’t retroactive to calendar year 2017.
WE’RE AN IMPATIENT LOT—and increasingly so. Who has time to read long articles, let alone entire books? Much of the time, all we want is the one- or two-line summary. Faced with that challenge, I’ve taken to boiling down my financial ideas to 140 characters or less.
HumbleDollar’s latest newsletter includes 41 of those ideas, which I hope will inspire, amuse and guide you as we sally forth into 2018. January’s newsletter also offers three financial steps to take in response to the new tax law,
MRS. J. LIVED IN SOUTHEAST VIRGINIA and had purchased an eight-year-old truck at auction for her college-bound child. It turns out that the truck had spent its entire life in and around Rochester, New York, in the heart of the Rust Belt. Mrs. J. had been advised by her local garage that many of the exposed chassis components on her truck were covered in rust. Her neighbors’ cars did not exhibit this condition. She felt the truck was unsafe and that the vehicle’s manufacturer—my employer—owed her a solution.
WHERE DO WE STAND? That question is tackled at the beginning of almost every chapter of HumbleDollar’s online money guide—and I spent much of the past week updating the various statistics involved.
Check out the latest numbers from the worlds of borrowing, real estate and investing, including stock and bond market valuations. I’ve also updated the money guide’s sections on taxes and giving—the latter covers estate planning and charitable gifts—to reflect the new tax law.
AS WE LOOK FORWARD to the year ahead, here’s a chance to look back. Below are HumbleDollar’s 10 most popular blogs from the past three months:
Number One Number
We Know Jack
Ten Financial Principles
All the Right Reasons
Worse Than Marxism?
Three Keys to Happiness
Giving: 10 Questions to Ask
Life After Amazon
Courtside Seat (Part II)
The above list includes four blogs written by other contributors, which I’m thrilled about.
THE ABOVE HEADLINE OVERPROMISES, I readily admit. Still, three considerations—taxes, risk and the economic cycle—point to one conclusion: Paying down debt in 2018 looks like an awfully smart move.
Debtors’ prison. Ridding yourself of debt, even mortgage debt, has long been a savvy alternative to buying bonds and certificates of deposit. But thanks to the new tax law, it looks especially savvy right now—and especially if you’re married.
How come? The new tax law took away personal exemptions but compensated by roughly doubling the size of the standard deduction.