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Managing money is not a science, but a social science. People are involved—and that makes matters messy.

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Retirement in America is not a pretty picture…and not getting better.

"I’m Not sure how you put away $$$ that isn’t there."
- Nick Politakis
Read more »

America Doesn’t Just Do Layoffs. It’s Fallen in Love With Them

"Mike, if nothing else you've given me a good laugh! Personal finance really is a case of different strokes for different folks — thanks for indulging my curiosity."
- Mark Crothers
Read more »

Well That’s A Bummer!

"I ran some rebalancing scenarios using AI a few months ago – another rabbit hole! I initially used ChatGPT but this proved to be very frustrating. I switched to Gemini and found this more to my liking. During an episode of one of the podcasts I listen to regularly, the hosts indicated they achieved easier/better results for financial analysis using Gemini, and that inspired that change. I ended up running 20 or more scenarios, changing the prompts and guide rails. I won’t go down that entire rabbit hole here. But here is a summary: I started with a hypothetical $1m 50:50 portfolio, S&P 500 for stocks and 20-year treasuries for bonds as baseline for all scenarios. I have several reasons for picking the 20-year treasury, the main reason being I was going to run a 20 year back test and for academic purposes felt that a constant rate of return would reduce one of the variables. By coincidence the coupon interest rate was also very similar to today 20 years ago. The scenarios I ran assumed the portfolio is within an IRA, do not address taxes, RMD's or other withdrawals. Also note that the duration of any back test and start date can skew results, so take this all with a pinch of salt. Scenario 1: I ran a simple annual rebalance back test through end of 2025 which resulted in growth to $4.24m Scenario 2: I then compared to 100% S&P 500 portfolio, to see what I was “leaving on the table” with a 50:50, which grew to $7.5m The subsequent process of refinements I sought to close the gap between 1 and 2. I had AI advise the number of “trades” required to maintain the strategy as I didn’t want a rebalancing process that required a lot of maintenance………………………….the refinement process took a couple hours, but I can only imagine the months it would have taken an analyst back in the day. Scenario 17 rules for rebalancing / guard rails:
  • Interest from bonds is reinvested into stocks every 6 months, dollar cost averaging while maintaining the $500k in bonds as a “bedrock” for the portfolio.
  • Dividends are reinvested into stocks.
  • The portfolio is allowed to deviate from 50:50 to a maximum of 70:30, to allow the stocks to run during bull markets while maintaining the initial $500k in bonds.
  • The 70:30 tether requires stocks to be sold to buy 20 year US treasuries at prevailing rates (reviewed quarterly).
  • Bonds are capped at $1m.
  • When stocks fall in value 10% from high water mark the lowest yielding bonds are sold to bring stock levels back up. If there is a further 10% drop rinse and repeat for every 10%. This cannot happen if $500k bond threshold is met.
Net result of all these gyrations, portfolio grows to $6.88m in the 20 year back test, with bond portion reaching $1m. This is much closer to Scenario 2 the 100% S&P 500 portfolio. This scenario would have required on average 3.15 trades per year with a peak of 6 in 2014, 2016, 2019. Scenario 18 is the same as 17 except for the stock portion I used a 4 fund portfolio (equally split between large cap blend (S&P 500), large cap value, small cap blend and small cap value, which matches equity positions in my portfolio) and this portfolio grows to $10.96m in the 20 year back test with bond portion reaching $1m. This is significantly larger than Scenario 2 the 100% S&P 500 portfolio. This scenario would have required a lot more maintenance, on average 6.5 trades per year with the peak year in 2022 requiring 20 trades. For scenarios 17 and 18 the increase in frequency of trades happens when the 70:30 tether is met after 7 years or so. The four fund portfolio has more trades because there are 4 funds vs 1 in the S&P 500 version, but in reality the maintenance required is very similar performing trades on a quarterly basis. This version of back testing shows that having a rebalancing strategy could potentially be effective matching or beating 100% S&P 500 performance with a 50:50 portfolio over a 20 year period. The added potential benefit for those who are about to retire or in early retirement and concerned about sequence of return risk, the severity of drawdowns during the first 6-7 years in these back tests were significantly mitigated by the bond holding. For what it's worth! Adding to the conversation."
- Grant Clifford
Read more »

Forget the 4% rule.

"RQ, I think it comes down to people don’t want to hand over a large sum of money to an insurance company even though it makes sense for some folks."
- Andy Morrison
Read more »

What, Me Worry?

"David, Are those references to the state of your portfolio in 2 & 3 nominal or real values? …just curious…thanks."
- Andy Morrison
Read more »

Questions Matter

"Thanks, Ed, I will check out the articles after my AARP Tax Aide gig today. IMO, I think our age 30ish brains are better equipped for life decisions than our younger brains are."
- Dan Smith
Read more »

How to Lose

MY OLD INVESTING self was like the guy in the meme who twists around to ogle a woman in a red dress, while his girlfriend looks ready to break his neck.

Just as jumping from one relationship to another introduces new risks, the same holds true for jumping in and out of different investments. For me—and for most people, I’d wager—investing in individual stocks and narrowly focused funds involves a certain amount of trading, and we know such trading is an exercise in futility. Even the vast majority of professional fund managers can’t consistently beat the market averages. If your reaction to that is, “Yeah, but maybe I can, I’ve got a good handle on the way the world works,” you may need professional help with your portfolio.

Despite ample evidence that most investors trail the market averages, we all tend to “feel lucky,” like the ill-fated villain staring down Clint Eastwood in Dirty Harry. Why? A key reason: Stock market averages get a big boost each year from a minority of stocks that post big gains, and those huge winners make beating the market look easy. So how about buying those big winners? Unfortunately, yesterday’s winners aren’t necessarily tomorrow’s top dogs.

In fact, past performance has no predictive power. It may seem obvious today that we should have bought Facebook, Apple, Netflix, Microsoft, Amazon, Tesla and Google’s parent company Alphabet. But these “obvious” winners only seem that way in hindsight.

On top of our unjustified confidence in our own stock-picking abilities, we have a host of other behavioral faults, including impatience, a desire for quick gratification and the feeling that the grass is always greener somewhere else. Result? In our efforts to beat the market, we flit back and forth among different investments, as our latest stock picks lose their luster.

After taking fliers over the years on gold and energy funds, biotech and telecom stocks, and emerging markets specialty funds that focus on consumer companies, I’ve learned three key lessons:

  • I’m not lucky.
  • I can’t predict world events or the market’s reaction to them.
  • Undiversified investment bets give me a few ways to win big and a lot of ways to lose.

I came by these lessons the hard way. I would make a new investment and be excited, thinking I’d made a good bet. I’d anticipate my potential gains and the validation that I’d outsmarted the market. I would tell myself I understood the potential downside, but really, I was practically counting my winnings.

But the thrill would soon fade, along with my original investment rationale. Perhaps the idea had come from some legendary portfolio manager or from something I read. But when my new holdings struggled, I lacked a frame of reference by which to decide whether to sell or hold.

A star manager might have said a drug company’s clinical trials were going well or that certain companies were going to gain market share. But then these things didn’t happen, and the stocks underperformed. Was this bad news now fully priced in? It’s nobody’s job on Wall Street to answer that, least of all the managers who touted the investments in the first place, and they probably wouldn’t know anyway.

Another example: About six years ago, I read a series of articles that convinced me that the next big trend was emerging markets consumer spending growth. That prompted me to buy some high-cost niche exchange-traded funds. But the two funds I bought consistently underperformed. One has continued to do so since I sold, while the other folded last May. Again, no one can tell you when or if such performance will turn around. Wall Street gets paid to sell you high-expense funds and keep you in them. Those high fees pay for a lot of research, writing and marketing, which in turn filters its way into the financial press, which then encourages you to buy.

There are two sources of investment risk: systematic risk, which is the danger that the broad market will fall, and unsystematic risk, which is the danger that your particular investments will lag behind the market.

Investors in individual stocks and sector funds face both risks. By contrast, owners of broad stock market index funds face only systematic risk. Indexing lacks the allure of sexy strangers and the prospect of quick investment scores, but the strategy’s risks are also far lower.

Success in broad market-cap-weighted index funds hinges on fewer variables. You just need aggregate share prices—driven ultimately by corporate profit and dividend growth—to rise at well above the rate of inflation, as they have for more than a century in the global stock market, despite two world wars, hyperinflation, stagflation, market crashes, panics and depressions. In other words, with broad stock market index funds, you’re making just one bet—and it’s a pretty good one for globally diversified investors with long time horizons.

William Ehart is a journalist in the Washington, D.C., area. In his spare time, he enjoys writing for beginning and intermediate investors on why they should invest and how simple it can be, despite all the financial noise. Follow Bill on Twitter @BillEhart and check out his earlier articles.

[xyz-ihs snippet="Donate"]

Read more »

Is there any point when a child needs financial help that you feel comfortable saying “not my problem?” 

"Thanks, we do enjoy seeing her move forward in life! The Fit is a great little car. I think she'll hang onto it for a long time. We changed the oil last week - an easy job on this car, and only $35 for oil and filter."
- David Mulligan
Read more »

What happens to Medicare Supplement coverage when moving to a different state?

"You asked for personal experiences. I resided in North Carolina when I became eligible for Medicare. At that time Plan F was an option, providing very good coverage, and I went with it, and chose a nationally-known carrier with decades of experience and good reputation. A few years later, we moved to Florida. No underwriting needed. No change in monthly fee. The transition was seamless. My same NC insurance carrier is still my Medigap policy-holder. The company is well-known throughout the US, including Florida. My advice is to choose the carrier that is highly-rated in both states. I am so glad I decided to pay monthly for a Medigap plan when I became eligible for Medicare. The older I get, the less I would have wanted to deal with extra recordkeeping, pre-approvals, co-pays,and so on. I can choose a specialist recommended by other trustworthy doctors and friends, make an appointment, and easily schedule what I need."
- Chris G
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Frugal Fitness

AS A PHYSICAL therapist, I’ve spent a large slice of each work day teaching and encouraging patients as they exercise their way to better health. Along with other elements of treatment, each patient pays for a custom exercise program tailored for their specific problem. These are folks looking for a way past the debilitating effects of injury or disease. Even so, many of them find it hard to follow my plea to “do your exercises”. If they struggle to follow the helpful recommendations of a health professional, what about the rest of us? Over the years, I’ve found that most of us have at least an inkling of the health benefits of exercise. Still, like my patients, we often fail to act on that knowledge. Why? Maybe we can find the answer in the list below. Here are five common barriers that I’ve heard keep people idle: 1. No time. I’m sure it’s true. Long commutes, lengthy work days and activity-packed weekends leave little chance to carve-out a few minutes for our physical health. Even in retirement, time can be siphoned-off by the endless list of errands, obligations and leisure pursuits that keep us running. 2. No knowledge. Strange environment. Strange vocabulary. Strange people who seem at ease and know more than us about everything. That’s the challenge facing the novice exerciser stepping into the gym for the first time. It can lead to fear–fear of embarrassment, fear of injury or just fear of feeling lost. 3. No support. Going against the social flow can be painful for the lone exerciser. Choosing to head into the gym, rather than out for pizza and beer with friends can be hard. Or, maybe our spouse thinks exercise time is selfish time. Like exercise, social connections are important for health as well. Ideally, we shouldn’t have to choose one over the other. 4. No money. Let’s face it, gym admission isn’t free, and a home equipment purchase can quickly run into thousands of dollars. That price is no sweat for a fitness aficionado with extra cash who’s hooked on the exercise habit, but what about the newbie? Few people want a gym membership or treadmill gathering dust, reminding them of the resolution they didn’t keep. 5. No energy or motivation. Hectic schedules leave many of us drained and dreaming of a quiet moment to just be still. Other folks find themselves stuck in a sedentary rut, never straying off the path that leads from one seat to the next. For those in either camp, any thought of pumping iron or pounding pavement holds no appeal. That’s my short, anecdotal list of hurdles hindering folks from launching into a new exercise routine. For an in-depth look at more barriers to physical activity for adults over age 70, check out this systematic review of the research literature. Meanwhile, our bodies are missing the movement that keeps them healthy. What to do? Here are five baby steps to help us past the roadblocks listed above: 1. Minutes matter. It’s easy to get hung up on the notion of needing a set routine of exercises performed within a solid block of time. That may be ideal, but it’s not necessary. We can try weaving convenient exercises into the actual fabric of our lives. By the end of our day, a few, short bouts of five to ten minutes each can add up to meaningful progress toward fitness. 2. Study time. The online world abounds with exercise advice. Experts promise results ranging from building a healthy heart to gaining the perfect glutes. The choices can be overwhelming. I recommend starting tiny. The simple routine I’ve included below can help nearly anyone take the first step. 3. New network. I’m not recommending we dump our motionless friends. Still, our moms warned us about spending too much time with the wrong crowd. Think about who in our circle is already doing a little exercise. Maybe they’d like a partner? Or, maybe there’s someone we could recruit with just a little nudge. 4. Frugal fitness. We don’t have to shell out bucks to a gym to get a workout. Any time we move our body against the force of gravity, we’re exercising. With a little thought, we can round up a robust routine of exercises to perform at home with little or no equipment. Read on to find a starter set of exercises for the true beginners among us. This list costs almost no money and just a little time. 5. Finding a cause. Stuck for a stimulus that rouses us to action? Remember, imagination is often stronger than willpower. Letting our thoughts dwell on the end game can often be helpful. Do we want to cut a fine figure? If so, we don’t have to get swimsuit-svelte to claim success. Even a little slimming and toning from exercise can give our normal clothes a nicer fit. How about feeling better? Researchers from Boston University and the University of Massachusetts found that even a low-intensity exercise program can help older adults improve both physical and psychological fitness. And their study doesn’t stand alone. Reams of other research support their findings, and highlight even more benefits from exercise. Still, on some days, the only force that will get us moving is old-fashioned discipline. It’s the same determination that moves most of us reading this to make better financial choices most of the time. No matter what our motivation, nearly all of us can kick off our trek to better health today with the following routine: 1. Wall push-ups. Stand facing a wall at fingertip distance. With arms held straight at shoulder height, place your palms on the wall a little more than shoulder-width apart. Bend your elbows until your nose almost touches the wall. Push back until your elbows are straight. Repeat until you’ve done 10-20 repetitions. When wall push-ups are too easy, progress to push-ups with your hands against a counter. These exercises strengthen the muscles of your chest, shoulders and arms. 2. Shoulder blade squeeze. Sit or stand and place palms together in front of your chest with elbows bent and pointing down toward your feet. Pull your arms apart while keeping your elbows down until you squeeze your shoulder blades together. Do 10-20 repetitions. To progress, add the resistance of an elastic exercise band. This exercise works the muscles of the upper back. 3. Sit to stand. This is a wonderful exercise for buttock and thigh muscles. To begin, sit at the edge of a firm seat. Lean forward from the hips, then stand up without using hands, if possible. Sit down and repeat for 10 or more repetitions. You should stay balanced, with feet in full contact with the floor, during the entire exercise. 4. Calf raises. Stand with your hands on a counter to maintain balance, Rise up on your toes for 20 repetitions to strengthen the muscles on the back of your lower legs. These muscles are important for walking and balance. 5. Easy crunch. Lie on your back on the floor or bed with your knees bent and feet flat on the supporting surface. Slowly curl your trunk forward as you try to touch your knees with your hands, then slowly return to the starting position. Do 10-20 repetitions to strengthen your abdominal muscles, one important part of your muscular “core”. The last five. This exercise requires a decent set of walking or running shoes. Begin by walking out the front door and up the street for five minutes at a brisk pace. Stop and retrace your steps for the return trip back home, for a total of ten minutes of heart-rejuvenating activity. Will this workout ready us to run a marathon or toned-up to star in the senior sports league? No. Could it be better? Probably. Still, nearly every muscle–including the heart–gets a little work. And it may just draw us into a habit that keeps our bodies sturdy enough to enjoy the years ahead. Ed Marsh is a physical therapist who lives and works in a small community near Atlanta. He likes to spend time with his church, with his family and in his garden thinking about retirement. His favorite question to ask a young person is, “Are you saving for retirement?” Check out Ed’s earlier articles.
Read more »

Retirement in America is not a pretty picture…and not getting better.

"I’m Not sure how you put away $$$ that isn’t there."
- Nick Politakis
Read more »

America Doesn’t Just Do Layoffs. It’s Fallen in Love With Them

"Mike, if nothing else you've given me a good laugh! Personal finance really is a case of different strokes for different folks — thanks for indulging my curiosity."
- Mark Crothers
Read more »

Well That’s A Bummer!

"I ran some rebalancing scenarios using AI a few months ago – another rabbit hole! I initially used ChatGPT but this proved to be very frustrating. I switched to Gemini and found this more to my liking. During an episode of one of the podcasts I listen to regularly, the hosts indicated they achieved easier/better results for financial analysis using Gemini, and that inspired that change. I ended up running 20 or more scenarios, changing the prompts and guide rails. I won’t go down that entire rabbit hole here. But here is a summary: I started with a hypothetical $1m 50:50 portfolio, S&P 500 for stocks and 20-year treasuries for bonds as baseline for all scenarios. I have several reasons for picking the 20-year treasury, the main reason being I was going to run a 20 year back test and for academic purposes felt that a constant rate of return would reduce one of the variables. By coincidence the coupon interest rate was also very similar to today 20 years ago. The scenarios I ran assumed the portfolio is within an IRA, do not address taxes, RMD's or other withdrawals. Also note that the duration of any back test and start date can skew results, so take this all with a pinch of salt. Scenario 1: I ran a simple annual rebalance back test through end of 2025 which resulted in growth to $4.24m Scenario 2: I then compared to 100% S&P 500 portfolio, to see what I was “leaving on the table” with a 50:50, which grew to $7.5m The subsequent process of refinements I sought to close the gap between 1 and 2. I had AI advise the number of “trades” required to maintain the strategy as I didn’t want a rebalancing process that required a lot of maintenance………………………….the refinement process took a couple hours, but I can only imagine the months it would have taken an analyst back in the day. Scenario 17 rules for rebalancing / guard rails:
  • Interest from bonds is reinvested into stocks every 6 months, dollar cost averaging while maintaining the $500k in bonds as a “bedrock” for the portfolio.
  • Dividends are reinvested into stocks.
  • The portfolio is allowed to deviate from 50:50 to a maximum of 70:30, to allow the stocks to run during bull markets while maintaining the initial $500k in bonds.
  • The 70:30 tether requires stocks to be sold to buy 20 year US treasuries at prevailing rates (reviewed quarterly).
  • Bonds are capped at $1m.
  • When stocks fall in value 10% from high water mark the lowest yielding bonds are sold to bring stock levels back up. If there is a further 10% drop rinse and repeat for every 10%. This cannot happen if $500k bond threshold is met.
Net result of all these gyrations, portfolio grows to $6.88m in the 20 year back test, with bond portion reaching $1m. This is much closer to Scenario 2 the 100% S&P 500 portfolio. This scenario would have required on average 3.15 trades per year with a peak of 6 in 2014, 2016, 2019. Scenario 18 is the same as 17 except for the stock portion I used a 4 fund portfolio (equally split between large cap blend (S&P 500), large cap value, small cap blend and small cap value, which matches equity positions in my portfolio) and this portfolio grows to $10.96m in the 20 year back test with bond portion reaching $1m. This is significantly larger than Scenario 2 the 100% S&P 500 portfolio. This scenario would have required a lot more maintenance, on average 6.5 trades per year with the peak year in 2022 requiring 20 trades. For scenarios 17 and 18 the increase in frequency of trades happens when the 70:30 tether is met after 7 years or so. The four fund portfolio has more trades because there are 4 funds vs 1 in the S&P 500 version, but in reality the maintenance required is very similar performing trades on a quarterly basis. This version of back testing shows that having a rebalancing strategy could potentially be effective matching or beating 100% S&P 500 performance with a 50:50 portfolio over a 20 year period. The added potential benefit for those who are about to retire or in early retirement and concerned about sequence of return risk, the severity of drawdowns during the first 6-7 years in these back tests were significantly mitigated by the bond holding. For what it's worth! Adding to the conversation."
- Grant Clifford
Read more »

Forget the 4% rule.

"RQ, I think it comes down to people don’t want to hand over a large sum of money to an insurance company even though it makes sense for some folks."
- Andy Morrison
Read more »

What, Me Worry?

"David, Are those references to the state of your portfolio in 2 & 3 nominal or real values? …just curious…thanks."
- Andy Morrison
Read more »

Questions Matter

"Thanks, Ed, I will check out the articles after my AARP Tax Aide gig today. IMO, I think our age 30ish brains are better equipped for life decisions than our younger brains are."
- Dan Smith
Read more »

How to Lose

MY OLD INVESTING self was like the guy in the meme who twists around to ogle a woman in a red dress, while his girlfriend looks ready to break his neck.

Just as jumping from one relationship to another introduces new risks, the same holds true for jumping in and out of different investments. For me—and for most people, I’d wager—investing in individual stocks and narrowly focused funds involves a certain amount of trading, and we know such trading is an exercise in futility. Even the vast majority of professional fund managers can’t consistently beat the market averages. If your reaction to that is, “Yeah, but maybe I can, I’ve got a good handle on the way the world works,” you may need professional help with your portfolio.

Despite ample evidence that most investors trail the market averages, we all tend to “feel lucky,” like the ill-fated villain staring down Clint Eastwood in Dirty Harry. Why? A key reason: Stock market averages get a big boost each year from a minority of stocks that post big gains, and those huge winners make beating the market look easy. So how about buying those big winners? Unfortunately, yesterday’s winners aren’t necessarily tomorrow’s top dogs.

In fact, past performance has no predictive power. It may seem obvious today that we should have bought Facebook, Apple, Netflix, Microsoft, Amazon, Tesla and Google’s parent company Alphabet. But these “obvious” winners only seem that way in hindsight.

On top of our unjustified confidence in our own stock-picking abilities, we have a host of other behavioral faults, including impatience, a desire for quick gratification and the feeling that the grass is always greener somewhere else. Result? In our efforts to beat the market, we flit back and forth among different investments, as our latest stock picks lose their luster.

After taking fliers over the years on gold and energy funds, biotech and telecom stocks, and emerging markets specialty funds that focus on consumer companies, I’ve learned three key lessons:

  • I’m not lucky.
  • I can’t predict world events or the market’s reaction to them.
  • Undiversified investment bets give me a few ways to win big and a lot of ways to lose.

I came by these lessons the hard way. I would make a new investment and be excited, thinking I’d made a good bet. I’d anticipate my potential gains and the validation that I’d outsmarted the market. I would tell myself I understood the potential downside, but really, I was practically counting my winnings.

But the thrill would soon fade, along with my original investment rationale. Perhaps the idea had come from some legendary portfolio manager or from something I read. But when my new holdings struggled, I lacked a frame of reference by which to decide whether to sell or hold.

A star manager might have said a drug company’s clinical trials were going well or that certain companies were going to gain market share. But then these things didn’t happen, and the stocks underperformed. Was this bad news now fully priced in? It’s nobody’s job on Wall Street to answer that, least of all the managers who touted the investments in the first place, and they probably wouldn’t know anyway.

Another example: About six years ago, I read a series of articles that convinced me that the next big trend was emerging markets consumer spending growth. That prompted me to buy some high-cost niche exchange-traded funds. But the two funds I bought consistently underperformed. One has continued to do so since I sold, while the other folded last May. Again, no one can tell you when or if such performance will turn around. Wall Street gets paid to sell you high-expense funds and keep you in them. Those high fees pay for a lot of research, writing and marketing, which in turn filters its way into the financial press, which then encourages you to buy.

There are two sources of investment risk: systematic risk, which is the danger that the broad market will fall, and unsystematic risk, which is the danger that your particular investments will lag behind the market.

Investors in individual stocks and sector funds face both risks. By contrast, owners of broad stock market index funds face only systematic risk. Indexing lacks the allure of sexy strangers and the prospect of quick investment scores, but the strategy’s risks are also far lower.

Success in broad market-cap-weighted index funds hinges on fewer variables. You just need aggregate share prices—driven ultimately by corporate profit and dividend growth—to rise at well above the rate of inflation, as they have for more than a century in the global stock market, despite two world wars, hyperinflation, stagflation, market crashes, panics and depressions. In other words, with broad stock market index funds, you’re making just one bet—and it’s a pretty good one for globally diversified investors with long time horizons.

William Ehart is a journalist in the Washington, D.C., area. In his spare time, he enjoys writing for beginning and intermediate investors on why they should invest and how simple it can be, despite all the financial noise. Follow Bill on Twitter @BillEhart and check out his earlier articles.

[xyz-ihs snippet="Donate"]

Read more »

Is there any point when a child needs financial help that you feel comfortable saying “not my problem?” 

"Thanks, we do enjoy seeing her move forward in life! The Fit is a great little car. I think she'll hang onto it for a long time. We changed the oil last week - an easy job on this car, and only $35 for oil and filter."
- David Mulligan
Read more »

Free Newsletter

Get Educated

Manifesto

NO. 36: WE SHOULD consider working at least part-time into our late 60s and possibly beyond. That’ll not only help financially, but also it can bring a sense of purpose to our retirement.

act

ROUND UP the mortgage check. If you’re paying $1,512 a month, send the mortgage company $1,600 instead. It’s a painless way to increase savings, the extra $88 a month could allow you to pay off your mortgage years earlier and you’ll earn a pretax return equal to your mortgage’s interest rate. That return could be higher than you can get with high-quality bonds.

humans

NO. 69: WE'RE typically happier when we have regular contact with others. Eating at a restaurant or going to a concert is more fun with a companion. Those who are married tend to say they’re happier, while widowhood can devastate happiness. Indeed, a robust social network is associated not only with greater life satisfaction, but also greater longevity.

Truths

NO. 6: SAVE WHEN you’re young—and you’ll enjoy big cost savings later. If you salt away money in your 20s and quickly amass a modest nest egg, you won’t just clock decades of investment gains. You can also cut your cost of living by, say, raising your insurance deductibles, borrowing less, and avoiding bank fees for low account balances and bouncing checks.

Great debates

Manifesto

NO. 36: WE SHOULD consider working at least part-time into our late 60s and possibly beyond. That’ll not only help financially, but also it can bring a sense of purpose to our retirement.

Spotlight: Insurance

Vet These Policies

YOU LOVE THEM LIKE family. You want them to have the best care possible. You have insurance for yourself, your family, your home, your car and your upcoming vacation. Why not for your pet?
One of our friends recently opted for pet insurance—after multiple trips to the vet, with more than 20 medications prescribed. Intrigued by the idea of pet insurance? Here are eight choices and what they offer:

Pets Best covers everything, including medications,

Read more »

Leaky Insurance

I JUST LEARNED a hard lesson about insurance companies: They have the upper hand.
Water leaked into my ground-floor condo’s bathroom and laundry room from a unit two floors above. The unit owner offered to report the damage to his insurance company, but I decided I should call mine for advice. A rep told me that I could file claims with my insurer and it would then seek compensation from the other unit’s insurance through subrogation,

Read more »

Covering Kids

TERM INSURANCE is typically the best bet for people who need life insurance, while permanent policies are appropriate for relatively few folks. Yet I keep getting the same question from parents: What about children? Does it make sense to purchase a whole-life policy for a young child?
No doubt influenced by Gerber Life Insurance’s relentless marketing, these parents want to know whether it’s worth locking in insurance pricing early on and whether this is a good way to help their children start saving for retirement.

Read more »

Hitting Record

OVER THE PAST TWO years, we’ve seen everything from tornadoes to devastating fires to hurricanes, often at unusual times and in unexpected places. That got my husband and me thinking about how to prepare for what may come our way—and how we could document what we might lose.
We decided to make a home movie. Our new phones are perfect for taking videos. What better proof of what we have? You’ve probably seen the suggestion that you do this,

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The $20 Billion Problem

I am sure that we have all been following the current tragedy going on in Los Angeles with the large fires burning there.  One of my friends in the insurance industry told me that he had heard from someone in the reinsurance business that the total insured losses from these fires will be more than Twenty Billion Dollars.  
So, I have been thinking about how a catastrophe of this magnitude could be financed.  In insurance,

Read more »

Clues Left by a Killer Echo Widespread Anger at Health Insurers

So reads a Wall Street Journal headline.
This begs the question, how do Americans want to pay for their health care?

They don’t want to spend their money- even for relatively minor expenses like a co-pay
They want someone else to take the risk, but not make any money 
They want quality care, but with little idea how to define that other than more of it at high prices
They don’t want high premiums or taxes
They don’t want to wait for care
They don’t want restrictions on accessing care or selecting a provider
They don’t want anyone approving care or denying to pay for it.

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Spotlight: Berard

Truth is Often Stranger Than Fiction

I just received my annual water bill, a tiny 158 dollars. It informed me that I will pay .00375 cents per gallon. When bottled water is even 5 a pint or 40 per gallon, that is roughly 10,000 times higher. It is often at 30,000 times higher.as many venues charge 15 a pint. Even at a buck a pint  , that is still thousands of times more , for exactly the same stuff that falls, every time it rains. I do have a water filter through the fridge, but, the water straight from the faucet is fine. I could see if bottled water was maybe ten cents a pint, for the packaging and the like, but….! For the 40 percent of the population that is good at math, please, check my figures  to ensure accuracy. I am a part of the 80 percent that are not good in math. Please, before we talk stocks and bonds, etc., cease getting ripped off buying water.  And I will not talk about wasting money on green hair, body piercings,  tattoos and the financially challenged buying expensive German brand SUVS , financing them for eight years, etc.
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Conflicting News

I am certainly nearer the end of my life than the beginning. and I thought it wise to ask around, talking with everyday people, trying to get a good, accurate analysis of the overall economic outlook. Some may find this silly, after all, why  not just heed the advice and wisdom of all of the experts, offering their views on market conditions, the direction of interest rates, both short and long term, etc.  But, nothing ventured, nothing gained. My plumber said he was " bursting at the seams with work", alas, the electrician stated, "I'm shocked how much business is down." My cousin, whom works for a railroad, told me, "We are on track for record profits!" The optometrist was convinced that " He sees a lot of great things, economically", and my audiologist was" hearing a lot of great news." My friend is in mining, sadly, his business is " a little rocky". A cousin works at a marina, thankfully," He saw "smooth sailing" ahead. A pilot buddy was thrilled his business was " really taking off", and the elevator people said business was " very volatile", soaring highs to plunging lows. My arborist was thrilled he was " branching out, more and more." The basement waterproofing company was doing well, even as its work was "drying up". My barber was concerned during Covid, it was a "close shave", but he survived. The restaurant people had "a lot on their plate", but the mortician said his business was "dead". The nutritionist weighed in with her opinion, and the fireworks seller's business was booming. The treadmill people were just "running in place", of course the meteorologist was concerned about turbulence, and the ornithologist was worried about his  nest egg. The lady whom makes honey is," busy as a bee". The…
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Conflicting and Confusing Economic Indicators

Although I feel I have at least an average level of intelligence, I truly cannot understand many financial issues, that I read and hear, from everyday people, politicians and more. For example, gasoline prices seem to be a favorite topic, and I wonder why consumers are so concerned as they rise, while the prices of the vehicles have risen so much and why many those same people keep leasing and buying very expensive SUVs, Huge pick up trucks ,etc. I understand that contractors, plumbers, and the like need trucks, and anybody pulling a boat or camper, but, most people do not need them. Any all wheel, or 4 wheel drive vehicle is more expensive to buy, to repair, and they get much worse gas mileage. Often, they also require premium fuel and if you blow a tire, you often need to replace all four. If gasoline was indexed to inflation, it would need to be around ten bucks a gallon, and even in California, it is more like six. Also, I have never heard anybody, except me, carp about the price of bottled water, even though at many places, it is over 100 bucks a gallon. A buddy lives in San Francisco, at a concert he attended, a pint of water was 18 , which is 144 per gallon. Even at a dollar a pint, that is still 8 a gallon. But, gasoline, which has to be removed from the ground or under the ocean , refined , transported, have additives put in, , taxed , etc., is pricey at even 3 a gallon? I do remember gas prices at 29.9 a gallon, but, many brand new cars could be purchased for 2 or 3 grand. Now, 7 and 8 year car loans are common, with the average monthly payment…
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Why, Oh , Why ?

Please, why would anybody buy any actively traded fund, especially in the large market cap category and especially in conventional accounts? As a whole, every investor , large and small, must collectively earn less than the market's return.  For every buyer there is a seller, of course, and once bid-ask spreads, fees, etc., are factored in, there has to be a slight loss. Also,  the active funds, due to the frequent trading , often have returns that are often  30, 40 or 50 percent lower, after taxes and sale of shares.   In  traditional, non tax sheltered venues, the difference between gross and net,  is tremendous.  Even in tax sheltered accounts, you are still paying much higher annual fees. I don't know if it still exists, but a few years ago, there was an S and P 500 fund that charged a 3 % load, and an annual fee of 1.2 percent. Why are there still funds that charge sales loads, period? If no one bought them, would they not go extinct? 2) Why do so many people buy or lease very expensive vehicles, take out, in many cases, 8 year loans, and then complain about the "high" price of the premium fuel it requires?    Why don't they care about the hundreds of bucks in monthly payments, the high insurance costs, the high repair and service costs. And the depreciation of the very fancy, fussy German brands , and Jaguar, Land Rover,etc., is much worse than the much more reliable Japanese car makers, just compare the resale value of a used MB, Audi to virtually any Toyota product. I know why the politicians mention gas prices constantly, they know that is an issue with so many Americans, and they are trying to relate. A lot of consumers  are angry that…
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Things That Make Me Go, HUH?

Popcorn is a food item that in many cases, is marked up in price by an infinite amount. In many restaurants, pubs, etc., popcorn is available for free, yet, movie theaters sell a box for many dollars. Did you know that theaters make most of their money on food and drink, rather than the tickets? I feel that marking up prices to infinity, may be the reason. 2) I see many large pick up trucks, many with dual wheels, being driven with the tailgate open. That is because the owners think it gets them better mileage, alas, it is not true. Tests have been done showing that it matters not at all, whether the tailgate is up or down, the air tends to stay in the bed of the truck, it doesn't push against the closed tailgate. However, with it open, there is a high risk it could fall off, and it poses a danger of someone hitting it,not only another car, but maybe a bicycle rider, crossing behind you. If you have the dough to buy a very expensive truck, and pay high insurance, and those huge tires, and you probably financed the thing for many years, is it worth even trying to save a few pennies, by a failed strategy? The average price for a new vehicle is around 45 grand. Fancy trucks,with four wheel drive, can easily cost over 100 grand , and when it is financed over many years, that goes up quite a bit.  Another big expense with all wheel and four wheel drive is often , if a single tire is damaged and cannot be fixed, you must buy 4 or 6 new tires, otherwise, you will damage the complicated drive systems.  The cost of many things with a large truck , other than…
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Advertisements, Commercials, etc.

As I keep getting older, I strive mightily to at least slow down the process, alas,  all of my heroic efforts are in vain, those darn birthdays just keep on coming, like clockwork, and I have finally thrown in the towel and accept it. However, as I age, I find myself getting increasingly annoyed at things that just waste so much time. Specifically, ads of any type, and at the top of the list are  pop up ads, which do nothing positive for me. Until recently, I would just hit the x, but every day it is worse than a game of whack-a mole. I now write down the name of the sponsor, and vow to never buy or use any of their products, if I have a choice. Second are the truly maddening amount of ads during television sporting events, especially football and baseball. It has gotten so bad, sometimes during pauses, , the ads are on a split screen , sharing space with the game. Are not the ads between every inning in baseball and the tremendous number and length of them during football games sufficient? In boxing, every 3 minutes comes horrible commercials. To make matters worse, sometimes plays are missed, as the commercial is too long and the TV station drops the ball, and doesn't return quickly enough. To all of you advertisers, if I have a choice , I will never buy any of your products, as long as you continue to drive me crazy with your horrible, deceiving and BORING ads. The ads are also way too loud, and many have them people singing, usually, terribly off key, about the virtues of prescription drugs and so forth. I did find out why the ads are so annoyingly loud. The shows, events and ads all…
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