Resolutions? What will you do?
William Housley | Dec 28, 2024
Time for resolutions: •Logging off social media: No Facebook, no YouTube, no X—basically, no scrolling my life away. •Call the doctor and finally trade in these knees for the deluxe model. That’s it. Let’s not get crazy—baby steps!
Read more » What Kind of Loss Is This?
William Housley | Apr 4, 2025
On Tuesday, I underwent a partial knee replacement on my right knee. It was a necessary step after more than a year—perhaps longer—of persistent pain that disrupted my sleep and made daily walks nearly impossible. But here’s the twist: while the surgery was meant to relieve my suffering, the post-operative pain is even more intense. Even with strong medication, it’s a new level of discomfort. And physical therapy? That promises its own form of agony for the next three months. After that, I’ll go through it all again with my left knee. So, in essence, I traded a long-term, chronic pain for a sharper, more intense—but temporary—one. A lifetime of suffering exchanged for a concentrated period of hardship with the promise of relief. What kind of loss is this? How do we define it? And more importantly—doesn’t this feel familiar? Markets experience pain too. Long-term economic drags, unsustainable trends, and financial misalignments eventually reach a breaking point. Sometimes, the market chooses to rip the Band-Aid off—an intense, painful correction in exchange for future stability. Is that what’s happening now? Are we enduring a necessary, short-term pain that ultimately leads to a stronger foundation? I certainly hope so. Because in both surgery and investing, the goal isn’t just to avoid pain—it’s to ensure a healthier future. WDH
Read more » Average vs. Humble Average
William Housley | Dec 28, 2025
No one describes themselves as average at anything. We’re above-average drivers. Above-average parents. Above-average judges of character.
Statistically, that can’t be true—but it’s how we think.
Investing is no different. The average investor almost always believes they are above average. They read. They pay attention. They try to make smart decisions.
And yet, year after year, investors as a group earn returns that fall short of the market itself.
That raises a simple but uncomfortable question:
What’s the difference between earning the market’s average return and earning the return of the average investor? Two Very Different “Averages” When we talk about average in investing, we usually mean one of two things: The market average
The average investor They sound similar. They are not.
The Market Average
The market average—think of the S&P 500—is “average” only in the sense that it owns everything: Every sector
Every style
Every winner and every loser When you look at long-term sector performance charts, the S&P 500 is never at the top and never at the bottom. Because it owns every sector, it must fall between the extremes. What looks like mediocrity is actually design. The index doesn’t chase leadership or flee weakness. It simply holds everything and lets time do the work.
The market average: Never chases performance
Never panics
Never second-guesses itself
Rebalances automatically Its advantage doesn’t come from prediction or insight, but from limiting mistakes.
The Average Investor
The average investor, by contrast, is very human.
They: Chase recent winners
Sell laggards just before recoveries
Trade too often
React to headlines
Confuse activity with progress Ironically, the average investor rarely earns the market’s average return. Not because they lack intelligence—but because they make predictable behavioral mistakes. The tragedy isn’t that investors get average returns. It’s that most don’t. Sector Chasing in Action Each year, a handful of sectors dominate performance. Technology one year. Energy the next. Financials after that.
The problem is simple: You only know the winners after the fact
By the time leadership is obvious, prices already reflect it
Leadership rotates faster than investor conviction Chasing sectors becomes a dog chasing its tail—busy, exhausting, and ultimately unproductive. The market average doesn’t chase. It waits. Average Isn’t the Problem—Behavior Is We’re taught that average means mediocre. In investing, the opposite is often true. The market’s average return reflects: Broad ownership
Discipline
Patience
Humility The average investor’s return reflects: Overconfidence
Timing errors
Emotional reactions Market average limits mistakes. The average investor multiplies them. The Real Advantage of Indexing Index funds don’t succeed because they’re clever. They succeed because they’re behaviorally superior. They remove the need to predict, eliminate most bad decisions, and protect investors from themselves.
Indexing isn’t about settling for average. It’s about refusing to pretend you’re above average. A Final Thought Everyone wants to be an above-average investor.
Ironically, the most reliable way to get there has been to accept the market’s average—and stop trying to outsmart it.
So the real question isn’t whether you’re above average—it’s whether you’re willing to accept the humble dollar average.
I know how hard that is, because I’m an average investor too—and I still catch myself believing I’m above average more often than I should.
Read more » You DRIP?
William Housley | Dec 8, 2025
I used to think DRIP was something only plumbers worried about. Then I started investing.
Dividend ReInvestment Plans — DRIPs — are a favorite tool among long-term investors. “Always reinvest your dividends,” the logic goes. “Compounding is king.”
For a long time, I agreed completely — and I still do for people who are in the wealth-building stage of life.
But at some point, I stopped using DRIP entirely. Today, every dividend my portfolio generates goes into cash instead of back into the market.
That wasn’t a reaction to fear or market timing. It was a deliberate decision shaped by age, income planning, and risk management. DRIP Works — Until Your Goals Change In the accumulation years — when you’re working, saving, and building — DRIP is hard to beat. Reinvesting dividends means: Your money stays fully invested
Compounding happens automatically
You avoid “cash drag”
Emotion stays out of the process The formula is powerful: Earlier reinvestment = more shares = more growth.
For younger investors, DRIP is usually the cleanest, simplest, and most effective strategy available. But the Question Eventually Changes Eventually, the investing question stops being: “How fast can I grow my portfolio?” and becomes: “How smoothly can I live off this portfolio?”
That shift changes everything. Growth remains important — but stability, cash flow, and control rise to the top. That’s when I turned DRIP off. Why I Route Dividends to Cash Today, my dividends all flow into a cash account. I don’t treat that cash as idle money — I treat it as a working tool. Dividends now serve multiple purposes: 1. Rebalancing Discipline
Rather than automatically reinvesting into whatever stock or ETF paid the dividend, I pool all the cash and periodically invest into whichever part of the portfolio is underweight.
This avoids: Buying high simply because a holding paid a dividend
Allowing asset classes to drift overweight
Emotional portfolio adjustments Dividend cash becomes forced “buy low” capital.
2. Volatility Management
In drawdown years, forced selling hurts.
A cash dividend stream: Reduces the shares I must sell during bear markets
Smooths income flows
Lessens sequence-of-returns risk Having steady dividend cash increases psychological comfort as much as financial stability.
3. RMD Readiness
Once Required Minimum Distributions (RMDs) enter the picture, the portfolio changes roles. Part of your nest egg becomes an income generator rather than a growth engine.
Dividend cash: Helps meet RMD obligations naturally
Reduces the need to pull principal from investments at poor times
Keeps withdrawal management calm and flexible 4. Withdrawal Simplicity
When income is needed — gifts, expenses, taxes, generosity — I use dividend cash first. That avoids untimely sells and makes budgeting simpler: Income comes from income; assets stay invested. But Doesn’t DRIP Earn More? Yes — in pure long-run math, DRIP usually wins. Studies suggest reinvesting dividends may outperform by about 0.1%–0.4% per year.
But for someone in the spending phase, absolute return isn’t the only metric that matters. Risk management matters. - Cash-flow stability matters. - Behavior matters.
Dividend-to-cash produces nearly identical long-term outcomes — while offering much greater control during retirement and withdrawal years. Age Matters Dividend strategy should follow life stage.
Under 45
DRIP is king. Your priority is growth — not cash flow.
45–60
This becomes a gray zone. Some investors still lean fully into DRIP. Others begin collecting income for emerging needs. Both approaches can work.
60+
Now withdrawals become real. Stability matters more than squeezing out the last few basis points of growth. Cash dividends become not a drag — but a feature. Does Account Type Matter? Inside Retirement Accounts
There is no tax cost either way.
Choosing cash over DRIP is purely a decision about: Income management
Volatility control
Emotional comfort In Taxable Accounts
Dividends are taxed whether reinvested or not — so DRIP doesn’t shield you from the IRS.
Collecting dividends as cash can actually be more efficient, allowing you to: Avoid unnecessary selling
Limit capital gains realization
Fund income without portfolio disruption My System Today Right now: All dividends flow into cash.
Cash funds withdrawals, giving, and tactical rebalancing.
Shares remain invested unless there’s a deliberate reason to sell. This setup: Keeps volatility under control
Simplifies income planning
Prevents emotional portfolio tinkering Most importantly: It fits where I am in life. The Real Lesson DRIP isn’t a lifetime commandment. It’s a tool — and tools change with the job at hand.
When you’re building wealth: Reinvest everything.
When you’re living off wealth: Use dividends as income and control capital.
So… You DRIP?
Good — if you’re still building the tower.
But when the time comes to live in it: Turning off DRIP might be the smartest upgrade you’ll ever make.
Read more » Your Portfolio, Your Business
William Housley | Oct 2, 2025
When I first started investing, my father-in-law, a longtime investor, gave me advice that echoes in my mind almost every day: “It is a business.” At first, it sounded simple, maybe even boring. But the truth is, that advice has kept me from making a lot of mistakes. It runs contrary to the old adage, “Set it and forget it.” A business owner doesn’t forget their business. They know their numbers, track results, and adjust when circumstances change. Your portfolio deserves the same attention. After all, no one is more concerned with your financial future than you.
That doesn’t mean you have to do it all yourself. You can hire help—advisors, managers, planners—but remember what Jesus said about the hired hand: “The hired hand is not the shepherd and does not own the sheep. So when he sees the wolf coming, he abandons the sheep and runs away” (John 10:12-13). You can hire help, but you must oversee them.
Thinking of my portfolio as a business has shaped how I handle it:
• Strategy. Set goals, allocations, and a growth plan.
• Numbers. Track returns, dividends, and costs. Profit is what you keep after expenses.
• Risk management. Diversify like a business spreads risk across products.
• Growth. Reinvest dividends, stay educated, and focus on the long term.
Bad management can sink both businesses and portfolios, and I’ve been guilty of all of these mistakes: overtrading, overthinking, chasing fads, ignoring costs, obsessing over short-term swings, and neglecting periodic review. Activity without discipline is just noise.
The lesson is simple: manage your portfolio like the business you own. Show up, know your numbers, review your strategy, and oversee anyone you hire. You are the CEO of your financial future—and the success of your “company” depends on you.
I’m curious—how do you run your portfolio? Have you made any of the mistakes I’ve mentioned, or found strategies that work particularly well? Share your experiences—I’d love to hear what you as CEO of your company are doing with your financial “companies.”
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AI-assisted editing
Read more » Sleeves or Buckets?
William Housley | Feb 3, 2026
Like most investors, I learned early about the elegance of the 60/40 portfolio.
Sixty percent stocks for growth. Forty percent bonds for stability.
I studied why it worked. Stocks historically delivered long-term returns, bonds reduced volatility, and periodic rebalancing enforced discipline. 60/40 has proved itself as a durable framework. It wasn’t exciting, but it was resilient.
I understood its importance. It shaped how I thought about diversification, risk, and balance—and it still does.
For many investors, 60/40 remains a perfectly reasonable default, particularly for those saving steadily, reinvesting dividends, and not yet drawing on their portfolios.
When 60/40 feels incomplete
The issue wasn’t whether 60/40 worked. It clearly had. The issue was what happens when a portfolio shifts from accumulating wealth to supporting spending. When markets fall, the textbook advice is straightforward: rebalance. Sell bonds. Buy stocks.
That’s sound in theory. It’s harder in practice when: Stocks and bonds fall together
Interest rates are rising
Withdrawals are funding real expenses At that point, the central question isn’t about expected returns. It’s more basic: Where does my spending money come from when markets misbehave? That question led me to buckets. Buckets: a spending framework The bucket approach organizes money by time. Short-term bucket: cash for near-term expenses
Intermediate bucket: bonds for the next several years
Long-term bucket: stocks for long-term growth Buckets made immediate sense. By separating spending from growth, they reduce the risk of selling stocks at the wrong time and provide emotional comfort during market declines.
Buckets work—and they work well—especially for managing sequence-of-returns risk early in retirement. But over time, I noticed a limitation.
Buckets answered when money would be spent. They didn’t fully explain why I owned each investment. That realization pushed me toward sleeves. Sleeves: a portfolio framework At first, sleeves sounded like semantics. Aren’t sleeves just buckets with a different name?
In practice, they aren’t. Buckets are time-based. Sleeves are function-based.
Instead of organizing assets by years of spending, I began organizing them by roles: Growth sleeve: assets whose job is long-term compounding
Income sleeve: assets whose job is reliable cash flow
Cash sleeve: assets whose job is flexibility and stability Each sleeve has a purpose. Each earns its place. Most importantly, each sleeve is judged differently. Why sleeves work better for me With sleeves, I stopped asking whether an investment was “good” or “bad.”
Instead, I ask: “Is this investment doing the job I hired it to do?”
Growth assets don’t need to produce income. Income assets don’t need to be exciting. Cash doesn’t need to outperform anything.
This shift changed how I respond to markets. Volatility in one sleeve doesn’t feel like failure—it’s simply that sleeve doing its job. A framework, not a verdict This isn’t an argument against 60/40 or buckets. 60/40 still matters as a foundational lesson in diversification and discipline. Buckets remain a powerful tool for clarifying spending.
Sleeves simply work better for me because they move beyond spending and toward understanding—understanding what each part of the portfolio does, why it’s necessary, and how the pieces work together.
My evolution wasn’t from right to wrong, but from theory to application: 60/40 taught balance
Buckets taught security
Sleeves taught purpose Today, I think less in percentages and more in jobs—and that has made me more disciplined, and more comfortable with uncertainty.
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- The points relate to a mortgage to buy, build or improve your principal residence
- Points were reasonable amount charged in that area
- You provide funds (at or before closing) at least equal to the points charged
- The points clearly show on the settlement statement
In general, points to get a new mortgage or to refinance an existing mortgage are deducted ratably over the term of the loan. Note that the deductible points not included on Form 1098 (the mortgage interest form) should be entered on Schedule A (Form 1040), Itemized Deductions, line 8c “Points not reported to you on Form 1098.” 2. Property taxes Property taxes can be deducted on your tax return if you itemize deductions. The total amount of taxes (including state and local income taxes) is capped at $40,400 for 2026. This cap is temporary and will increase by 1% annually through 2029 before reverting to $10,000 in 2030. If you make between $500k to $600k of modified adjusted gross income, the $40.4k deduction is reduced by 30% for each dollar you make. At $600k MAGI, the deduction drops to $10k, potentially raising marginal tax rates to 45.5% (!) for singles due to “SALT torpedo” if you are in the $500-600k range. If you are at that range, it’s recommended to mitigate this by lowering AGI/MAGI by maximizing pre-tax 401(k)/403(b), HSA, FSA contributions, timing RSU sales, tax loss harvesting, or deferring income/accelerating expenses for business owners. 3. Improvements Improvements are significant enhancements made to your home that increase its value. Many people overpay on taxes when they ultimately sell their house because they don’t keep track of these improvements. Here are some examples provided by the IRS: > Putting an addition on your home > Replacing an entire roof > Paving your driveway > Installing central air conditioning > Rewiring your home > Building a new deck > Kitchen upgrades > Lawn sprinkler system > New siding > Built in appliances > Fireplace Now, these costs aren’t deducted, but they are added to your home’s cost basis. This could lead to lower capital gains taxes when you sell your property (more on this later). Repairs, on the other hand, don’t impact your basis and don’t affect your taxes (e.g. repairing a broken fixture, patching cracks, etc) You will need to document every improvement, as this can help you save money on taxes. Keep your receipts and invoices (upload them to Google Drive) and record the dates and descriptions of the work done. Taxes when selling your house When you sell your house, here’s the formula: Selling price > Selling expenses (like realtor fees) > Adjusted cost basis (how much you purchased it for + all these capital improvements I talked about above + any closing costs you paid when you acquired the home (legal fees, recording, survey, stamp taxed, title insurance) = Gain/Loss You will need to pay capital gains tax if there is a gain, but, luckily there is a gain exclusion (Section 121 exclusion) that can also help you save on taxes: 4. Gain exclusion If you sell your primary residence, you may be able to exclude up to $250,000 ($500,000 for married) of the gain from taxes if you meet some conditions. > Ownership (must have owned the home for at least 24 months within the 5 years prior to sale. For married couples only one spouse needs to meet this requirement) > Residence (you must have used the home as your main residence for at least 24 non-consecutive months during the 5 years before the sale. For married couples both spouses must meet requirements. > Look-back (you must not have claimed the exclusion on another home within the 2 years before this sale) Now, many people don’t know this but there is actually a partial exemption. 1. Work related move (i.e. you started a new job at least 50 miles farther from home) 2. Health related move (you moved to obtain, provide, or facilitate care for yourself or a family member) 3. Unforeseeable events (casualty, divorce, death, financial difficulty) 4. Special circumstances So, instead of claiming the full exclusion, you can exclude a prorated portion of the $250,000/$500,000 limit based on how long you owned and lived in the home. By the way, you can rent out a home for 2 years and still qualify for the exemption, as long as you lived there for the required period before selling (many people do this). 5. Tax example selling a home You bought a home for $200,000 (including all other costs) in 2018. You built a new deck, new roof and siding totaling $50,000. You now sold your home for $500,000. You are single. Selling costs are $20,000 (agent fees, etc) Sale price: $500,000 -$20,000 of selling costs (200,000 + 50,000) = -$250,000 (adjusted basis) Total Gain = 230,000 Exclusion = $250,000. Total taxes paid = $0. But what if you didn’t keep track of all your renovation costs like new siding or a deck? You would’ve had to pay taxes on $20,000 of capital gains! Overall, knowing how these things work can literally save you thousands in taxes. Do you have any tips with homeownership? Share some in the comments!Always an investor?
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