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Avoid Budget Busters Part 3: Plan on Budgeting Surprises (2010-03-15) Printer friendly version
Many budgets are doomed to failure because of the challenge of planning for unplanned spending. Here are some of the items you either did not put in your budget or they shouldn't be in your spending.
Avoid Budget Busters Part 2 - Curb Your Worst Impulses (2010-03-08) Printer friendly version
Get control of the spending that breaks the bank. Certain purchases that are typically both unnecessary and unplanned are budget busters. Avoiding these financial slips requires hedging some of our worst impulses and constraining our desire for instant gratification.
Avoid Budget Busters Part 1 - Thrift, an Old-Time Virtue Making a Comeback (2010-03-01) Printer friendly version
No matter how rich or poor you are, thrift is an integral part of your budget. Being thrifty is a godly and biblical virtue.
Your Parents' Estate Plan Part 2: What You Need to Know (2010-02-22) Printer friendly version
A thoughtful estate plan can make your heirs' lives easier. But it is your parents' estate planning that will make your life easier.
Your Parents' Estate Plan Part 1: Why You Need to Know (2010-02-15) Printer friendly version
Your estate plan can make your heirs' lives easier. But it is your parents' estate planning that will make your life easier.
America, Land of the Mostly Free (2010-02-08) Printer friendly version
America is officially no longer free. According to the Heritage Foundation Index of Economic Freedom, we have dropped out of the top seven countries and into the second tier of "mostly free" countries.
The TANSTAAFL Principle (2010-02-01) Printer friendly version
"There ain't no such thing as a free lunch." As early as 1938, this phrase was touted as "economics in nine words."
Start Saving for College the Day They Are Born (2010-01-25) Printer friendly version
My youngest is a first-year student at the University of Virginia. My coauthor Matthew's youngest child was born only a month ago. There is no such thing as saving too early.
Reflecting on 2009 Returns Provides Lessons Going Forward (2010-01-18) Printer friendly version
Review your investment returns in light of what occurred in the broader asset classes.
Last Chance for a Segregated Roth Conversion (2010-01-11) Printer friendly version
A tax tsunami is coming at the end of this year. The higher your adjusted gross income (AGI), the closer you live to the coast where the tsunami will hit. This is the last chance you will have to put your assets in a lifeboat and avoid getting swamped with taxes.
Compute Your Net Worth Once a Year (2010-01-04) Printer friendly version
Since the end of last year the markets are up about 25%. You may not have been on track at the beginning of last year, but now you should reevaluate again. The wave has propelled you miles toward your goal, and at least once a year you should measure your progress.
Seven Financial Resolutions for the New Year (2009-12-28) Printer friendly version
We can only develop financial character one action at a time. Here are seven practices that will take you from pauper to prince or princess if you add one each year.
There's Still Time for Charitable Giving (2009-12-21) Printer friendly version
The markets are up, and yet most nonprofits are still struggling financially. If you are charitably inclined, there's still time for end-of-year giving.
Going John Galt (2009-12-14) Printer friendly version
If you're not an economist, you may vastly underestimate the negative impact of taxes on the U.S. economy.
Marley's Ghost Was Haunted by Regret (2009-12-07) Printer friendly version
Although the way Ebenezer Scrooge and Jacob Marley approached their finances may seem identical, when we take a closer look, subtle but important distinctions emerge.
Best Christmas Presents (2009-11-30) Printer friendly version
Understanding the economics of gift giving may help you decide when and what to buy for Christmas.
Fourteen Tax Management Techniques (2009-11-23) Printer friendly version
No one approaches financial planning with the goal of paying more taxes. Tax management, like all financial planning, is based on the premise that small changes made over time can achieve big goals.
Mindless Spending 2: You'll Get By with a Little Help from Your Friends (2009-11-16) Printer friendly version
Both mindless eating and mindless spending rely on our subconscious need to follow scripts to pace our consumption. Community plays a huge role in regulating our financial destiny--either a path of savings that builds real wealth or a path of spending that leads to impoverishment.
Mindless Spending 1: Frequency Matters More Than Height (2009-11-09) Printer friendly version
We all think we can't be fooled by something as obvious as the the difference between height and width. But our brains are wired that way, without exception.
Women Have Unique Financial Needs (2009-11-02) Printer friendly version
Retirement planning is even more crucial for women than for men.
Portfolio Recommendation Beats S&P 500 by 9.4% (2009-10-26) Printer friendly version
Exactly a year ago I encouraged you to avoid another lost decade in the markets. I recommended a specific balanced portfolio that today is beating the S&P 500 by 9.4%.
Credit Card Karate: The Moves to Block Spending (2009-10-19) Printer friendly version
The availability of easy credit does not encourage financial virtue. Five minutes of credit card indiscretion literally can undo a life of financial responsibility, just like flirting at a bar with an available stranger can threaten marital fidelity.
Using a Credit Card Properly (2009-10-12) Printer friendly version
Getting the right credit card for the right reasons is half the battle. Using it correctly is the other half.
Make Sure Your Credit Card Has Smart Features (2009-10-05) Printer friendly version
Rather than rejecting credit cards altogether, choose the right card for the right reasons.
The Whip Cracks Both Ways (2009-09-28) Printer friendly version
Volatility, therefore, is a matter of perspective. Like the crack of a whip.
Time to Rebalance Your Portfolio Again (2009-09-21) Printer friendly version
You have had smooth sailing and are beginning to feel comfortable again. Don't. Given everything that has occurred in the markets, now is a good time to rebalance your portfolio.
The Case Against Centralized Health Care (2009-09-14) Printer friendly version
Many Americans think centralized planning could fix U.S. health care. They believe industry greed and profits are at the root of the problems. And they believe that altruistic commonsense reforms would result in lower costs, better management, less waste and universal coverage. They are dangerously wrong.
A Compromise to Achieve Universal Coverage (2009-09-07) Printer friendly version
Many people support the ideal of universal health care insurance coverage. The utopian heart beats strong and steady. But once the incision is made, there is no turning back. And without a clear understanding of economics, our experimental treatment may kill Uncle Sam.
More Profitable Health Care Is the Solution (2009-08-31) Printer friendly version
The high cost of medical care is part of the reason why we offer the best. It may sound strange to people not versed in economics, but the best way to reduce the cost of something is to find ways of making it more profitable.
Avoiding a Civil War over Health Care (2009-08-24) Printer friendly version
Our American family is more polarized than ever. But we are still a family. The current anger from advocates of small government stems from an overreaching on the part of Utopian liberals. Public policy ought to wait for a consensus.
Cash for Clunkers: The economy and the environment suffer (2009-08-17) Printer friendly version
The president describes the program as a "proven success" because it is stimulating the economy and will reduce carbon emissions. You should examine such economic claims carefully regardless of your politics.
Investment Strategies Part 5: In Defense of Diversification (2009-08-10) Printer friendly version
Diversifying your asset allocation among investments with a low correlation can and should reduce your portfolio's volatility and boost your returns. But critics are claiming this strategy is no longer valid. That's because they don't understand the nature of what happened in 2008.
The False Lure of Multi-Level Marketing (2009-08-03) Printer friendly version
Multi-level marketing (MLM), or network marketing, is a nonsustainable business model because it does not provide a valuable service but simply a product that has been marked up in price.
Seven Termites That Eat Your 401(k) (2009-07-27) Printer friendly version
We call the difference between the market return and typical investor returns the "termite gap."
Now's the Time to Buy a House (2009-07-20) Printer friendly version
The bottom is forming, although it may continue to do so through early 2011.
A Full Credit Lockdown (2009-07-13) Printer friendly version
Identity theft is becoming distressingly common as personal information becomes easier to swipe.
Last-Minute Tax Savings for College Expenses (2009-07-06) Printer friendly version
Even if you haven't saved much for college beforehand, simply passing college expenses through a 529 plan can save you $200 to $2,000.
Safeguard 8: Avoid an Advisor with a Lavish Lifestyle (2009-06-29) Printer friendly version
There will always be swindlers masquerading as investment advisors. You can learn to recognize such people by their over-the-top lifestyle.
Safeguard 7: Avoid Investment Advisors Who Sugarcoat Reality (2009-06-22) Printer friendly version
Excellent advisors communicate clearly exactly how bad the markets have been and can be.
Investment Strategies Part 4: Don't Rebalance at the Sector Level (2009-06-15) Printer friendly version
Rebalancing between asset classes boosts returns and decreases volatility. But setting your asset classes based on sectors of the economy is not an effective strategy.
Investment Strategies Part 3: Rebalance Regularly Between Asset Classes and Subcategories (2009-06-08) Printer friendly version
In this formula is deep wisdom, both for portfolio construction and for determining which categories are worth regular rebalancing.
Investment Strategies Part 2: Use Correlation to Define Asset Classes (2009-06-01) Printer friendly version
Generally, a correlation that can drop below 0.6 with other asset classes is a good candidate to become its own asset class.
Investment Strategies Part 1: Rebalance into Stable Investments in an Appreciating Market (2009-05-25) Printer friendly version
Diversifying your portfolio means finding assets that have value on their own merits but do not move exactly alike. A critical investment metric called "correlation" is used to construct a portfolio most likely to meet your personal financial goals.
Achieving Family Harmony in Estate Planning Part 2: Make Sure Your Plan Fits Your Unique Needs (2009-05-18) Printer friendly version
Estate planning must begin with family harmony as the goal. Thus personal dynamics are more important than avoiding probate and estate taxes.
American Mercantilism Descends into Fascism (2009-05-11) Printer friendly version
Fascism is socialism hiding beneath a capitalistic facade and it is on the rise in America.
Achieving Family Harmony in Estate Planning Part 1: Leave Your Estate in the Right Hands (2009-05-04) Printer friendly version
The most important product of estate planning is achieving family harmony. Think carefully when you choose your executor or trustee.
Roth Segregation Accounts (2009-04-27) Printer friendly version
A complex technique called "Roth segregation accounts" could earn your investments an extra 30% over the next two years.
Getting Started With Investing (2009-04-20) Printer friendly version
There isn't a better time to invest than today. Getting started can be intimidating, but these simple steps will help you through your first few years of investing.
It's Time for a Tea Party (2009-04-13) Printer friendly version
Some people try to defend the practice of earmarks, but the harm done by earmarks is much worse than the average citizen believes.
Social Security 6: The 70-66 Strategy (2009-04-06) Printer friendly version
Every retiree has significant choices to make regarding Social Security benefit options. Joint lifetime benefits for couples suggests the higher wage earner should often delay filing to receive a maximum benefit at age 70.
Social Security 5: File and Suspend for Soon-to-Be Widowed Homemakers (2009-03-30) Printer friendly version
Our own death or the death of a loved one can be difficult to face. But mortality is one of the most critical factors to consider when making decisions about your Social Security.
Social Security 4: File, Repay and Refile to Get an Interest-Free Loan (2009-03-23) Printer friendly version
Retirees who delay filing for Social Security until age 70 receive annual payments equal to 132% of full retirement benefits. If you don't mind some added risk, you can combine the file-early and file-late strategies by filing, repaying and then refiling to boost your benefit by an additional 3%.
Social Security 3: Delay Filing for Younger Wives and Homemakers (2009-03-16) Printer friendly version
If you are married, look at joint mortality. With a little planning, you can boost your benefits significantly.
Social Security 2: File Early If You Plan to Die Young (2009-03-09) Printer friendly version
About half of all Americans file early for Social Security at age 62. Getting this decision right could be worth a quarter of a million dollars.
Social Security 1: Planning Is Crucial (2009-03-02) Printer friendly version
Social Security benefits can represent a big stack of cash. A typical monthly benefit of $2,200 has a present value well over $500,000. Consider all your Social Security options carefully to avoid making a costly mistake.
Government-Provided Economic Security Is an Illusion (2009-02-23) Printer friendly version
The various congressional bailouts have been touted as essential to the nation's economic security. So long as the notion of economic security remains vague and abstract, it has wide support. But anyone who examines the details should realize this so-called security threatens our freedom and stability.
Safeguard #6: Recognize And Avoid Financial Hooks (2009-02-16) Printer friendly version
To safeguard your money, you must be able to extricate yourself from any bad investment quickly. Of course, the companies that sell mistakes don't want you to be able to do that, so they use financial hooks to hold your money captive.
Safeguard #5: Understand Your Investment Strategy (2009-02-09) Printer friendly version
You have a critical part to play in financial planning. Certain responsibilities cannot be delegated to others.
Safeguard #4: Buy Investments That Trend Upward (2009-02-02) Printer friendly version
Crazy volatile markets push people toward irrational investment schemes. Know how to avoid them in order to safeguard your money.
Safeguard #3: Insist on Publicly Priced and Traded Investments (2009-01-26) Printer friendly version
One important safeguards is to insist on investing only in liquid assets. Investors undervalue liquidity 99.9% of the time. You need to be in the other 0.1%.
Safeguard #2: Walk Away from "Too Good to Be True" (2009-01-19) Printer friendly version
There are several investment safeguards you should insist on. One is to avoid any investment opportunity that sounds too good to be true.
Safeguard #1: Do Not Allow Your Advisor to Have Custody of Your Investments (2009-01-12) Printer friendly version
I was recently asked if investors should trust their financial advisors. And my short answer, you may be surprised to hear, was no. Your financial advisor should not also have custody of your investments.
Compute Your Net Worth Once a Year (2009-01-05) Printer friendly version
Last year's storm has blown you miles off course, and not making any adjustments is destined to end in a shipwreck. Computing your net worth annually is like taking a sextant reading to chart your course toward financial security.
Financial Resolutions for the New Year (2008-12-29) Printer friendly version
Financial planning concerns very likely threaten to consume your life and ruin all your other New Year's resolutions. Few of us are disciplined enough to accomplish what we need to do without help.
A Christmas Sermon (2008-12-22) Printer friendly version
Christians celebrate the birth of Jesus on Christmas Day. But for too many of us, it's the season that unravels the careful financial planning of the previous 11 months. So this year, instead of trading your financial goals for a mountain of gifts and debt, take a moment to contemplate how a spiritual perspective can help you put your wealth in perspective.
Financial Time Perspective (2008-12-15) Printer friendly version
Philip Zimbardo's latest book, "The Time Paradox" suggests that understanding your own time perspective may help you unlock the secrets of financial freedom. In other words, how we think determines who we are and what we do.
Owners of Second Homes: Beware of New Tax Laws (2008-12-08) Printer friendly version
If you own two homes, sell the one you are living in and move into your second home as soon as possible. Tax changes taking effect on January 1 will make owning a second home much less attractive in 2009. As a result, the already depressed market for vacation homes will deflate even more.
When Will the Markets Stop Dropping? (2008-12-01) Printer friendly version
For the many investors glued to the news, the markets doesn't appear rational, and they worry it could go to zero. From high to low, losses have halved account values. Waiting appears foolish, and selling seems cowardly.
Dropping the Baton in Estate Titling (2008-11-24) Printer friendly version
How you "title" the property you own is a lot more important than you might think. Failure to title your assets properly could undo the best will and trust planning that money can buy.
Marotta Advisors join NAPFA Bus in Richmond, Virginia (2008-11-20) Printer friendly version
NAPFA members from across the state of Virginia met in Richmond on Thursday, November 20th, 2008, to conduct free advice events and symposiums to help consumers get their financial life back in order.
Keep Christmas Your Own Way (2008-11-17) Printer friendly version
In Charles Dickens's "A Christmas Carol," Ebenezer Scrooge asks his nephew, "What's Christmas time to you but a time for paying bills without money?" Sadly, that sounds like Christmas for many American families binging on expensive gifts.
Give Generously During Hard Times (2008-11-10) Printer friendly version
As a response to the recent market correction, consider giving more generously to charities.
The Assault on Free Markets (2008-11-03) Printer friendly version
Free markets are under assault in America. We have seen much hyperbole and slander in these past two years of political polarization. But the idea of capitalism and free markets has received more negative campaigning and vicious attack than both candidates combined.
Avoiding Another Lost Decade (2008-10-27) Printer friendly version
Don't wait for an undiversified portfolio to recover. You can't afford to miss another decade.
Part 2: Privatization Could Fix Social Security (2008-10-20) Printer friendly version
Privatizing the system could break the political deadlock between cutting future benefits and raising payroll taxes. We can have both our benefits and lower taxes if we finally admit that socializing retirement was a mistake and once again trust in the power of free markets.
Part 1: Social Security Is Still Broken (2008-10-13) Printer friendly version
If you think the $700 billion bailout of the mortgage crisis was expensive, wait until we need to bail out Social Security. Between 2037 and 2075 the Social Security program is projected to run deficits totaling $30 trillion. And annual shortfalls are projected to start as soon as 2017.
The Seven Steps of Financial Preparedness (2008-10-06) Printer friendly version
When a hurricane threatens, making a plan and gearing up for emergencies is imperative. Economic emergencies happen too, but it may be less obvious how to prepare. Here are seven steps you should take to weather any financial storm.
Our Financial Crisis: The Result of Centralized Planning (2008-09-29) Printer friendly version
Regulation and centralized planning have caused financial instability and failing institutions. If this is the root cause, then many of the proposed solutions will only make matters worse.
Eastern Europe and Turkey: BRIC Wannabes (2008-09-22) Printer friendly version
The BRIC acronym made four emerging market countries sound like more attractive investment opportunities than the other two dozen. BRICET is the term used to add Eastern Europe and Turkey to the in-crowd.
BRIC Countries: China (2008-09-15) Printer friendly version
In recent years the Chinese economy has been waxing toward ascendance. It passed Japan in November 2007 and began to rival the brightness of America.
BRIC Countries: A Passage to Indian Freedom (2008-09-08) Printer friendly version
India dDuring the cold war was highly socialistic with the government exercising control over every aspect of the economy. These restrictive policies caused extremely low growth rates, derisively dubbed the "Hindu rate of growth."
BRIC Countries: Russia (2008-09-01) Printer friendly version
Since the fall of the Soviet Union in 1991, Russia has been trying to remake itself and regain its former glory and respect. But a lack of glasnost ("tell the truth") and perestroika ("decentralize power") still plagues the country.
BRIC Countries: Brazil (2008-08-25) Printer friendly version
In 2003, the Goldman Sachs Global Economics Department predicted the economic and geopolitical influence of Brazil, Russia, India and China (the BRIC countries) would become increasingly visible in the developed world and even dominate it by 2050.
Behavioral Finance: Patience Is Its Own Reward (2008-08-18) Printer friendly version
To process financial information, our minds often attempt unwise shortcuts. By understanding behavioral finance, we can limit the information we use and keep our decisions balanced and on track.
Behavioral Finance: Herd Mentality (2008-08-11) Printer friendly version
One of the early studies on herd mentality was the Solomon Asch experiments in the 1950s. The setup was a mock vision test. In reality, all but one of the participants were actors, who after a few correct answers started agreeing unanimously on a wrong choice.
Behavioral Finance: Overconfidence (2008-08-04) Printer friendly version
Think of confidence as a continuum: Lack of confidence is paralyzing, self-confidence is good, but overconfidence is deadly. Successful investors seek to find a balance between rashness and timidity. Understanding the psychology that causes us to act overconfidently will help you avoid it.
Behavioral Finance: Mental Accounting (2008-07-28) Printer friendly version
The essence of successful financial planning is using your money to meet your life's goals. Curiously our minds tend to fall prey to the fallacy that behavioral finance calls mental accounting.
Behavioral Finance: Anchoring (2008-07-21) Printer friendly version
Our first reaction to a complicated situation, usually instinctive, often does not serve our best interests. One heuristic that the brain uses to solve complex evaluations is to make an initial guess and then adjust from that point. This mental process is called "anchoring."
Foreign Freedom Investing 2008 (2008-07-14) Printer friendly version
You can both diversify for safety and boost your returns by adding international investments to your portfolio. In the past year, international stocks performed 2.5% better than U.S. stocks. And developed countries with the most economic freedom returned an additional 4.4% more than the international index.
Rebalance Accounts Regularly (2008-07-07) Printer friendly version
A year ago when the markets were all setting new highs, people were asking what they should do with their retirement portfolio. I answered, "Rebalance." Now that the market is setting new lows, I get the same question, and my response hasn't changed.
Inflation Part 3: Protecting Yourself Against Inflation (2008-06-30) Printer friendly version
Officially, inflation today is calculated about 4%. Unofficially, it is over 7%. You can hedge your assets against underreported inflation and protect your retirement goals.
Inflation Part 2: The Results of Underreporting Inflation (2008-06-23) Printer friendly version
Officially, inflation today is about 4%. Unofficially, it is over 7%. Inflation at this rate causes serious harm to our nation's economy and its citizens.
Inflation Part 1: How the Government Lies About Inflation (2008-06-16) Printer friendly version
Officially, inflation today is calculated about 4%. Unofficially, it is over 7%. Since 1997 the government Consumer Price Index (CPI) has manipulated the raw data and significantly underreported inflation.
Maximum Safe Withdrawal Rates in Retirement (2008-06-09) Printer friendly version
Certain assumptions such as maximum safe withdrawal rate are critical in order not to compromise a long and successful retirement.
Retirement Assumptions Are Critical (2008-06-02) Printer friendly version
If you put the same assumptions into 10 different retirement calculators, you will most likely get 10 different results. The largest number may be more than twice as much as the smallest. Retirement doesn't give you a second chance. Measure twice and retire once.
Taking Early Retirement Withdrawals (2008-05-26) Printer friendly version
Many academics are 403(b) rich. But they are poor in terms of their spendable assets, which limits estate planning and tax management options. It also makes retiring early difficult. Fortunately, an IRS 72(t) exception can help with early retirement.
That Rebate Check Could Ruin Your Retirement Part 2 (2008-05-19) Printer friendly version
Anyone who spends more than 4% of their rebate will actually lose ground saving toward their retirement.
Tax Rebates Are a Losing Proposition Part 1 (2008-05-12) Printer friendly version
Beginning this month until July, the government will issue over $100 billion in tax-stimulus checks, the equivalent of about 1% of annual consumer spending and some 70% of the country's $14 trillion gross domestic product (GDP). The assumption is that we can spend our way out of a recession by boosting third-quarter GDP growth over 4%.
Subprime Lending (2008-05-05) Printer friendly version
The subprime mortgage meltdown has cost the world 15% of its market capitalization, about $9 trillion. The primary culprit who caused all of this financial loss, pain and suffering is not the mortgage companies. Neither is it the overextended borrowers. It is our own federal regulations interfering with the free market.
First Quarter Review 2008 (2008-04-28) Printer friendly version
The first quarter of 2008 made the difference between well-designed portfolios and poorly designed portfolios obvious. Check your quarterly statement to see which category describes your portfolio.
Tax Freedom Day 2008 (2008-04-21) Printer friendly version
This year we celebrate Tax Freedom Day on Wednesday, April 23. That's the day we stop working for the government and start working for ourselves. For average workers, all of our earnings for the first 113 days of the year go to pay federal, state and local taxes. Starting April 24, we are free--at last--to take care of our own family's needs.
529 Plans Help with Estate Planning (2008-04-14) Printer friendly version
While many parents are struggling, some grandparent have large estates. One effective estate-planning technique is using a 529 account both to fund their grandchildren's college and also help them avoid significant tax liabilities.
Decide to Be Rich (2008-04-07) Printer friendly version
It used to be that becoming a millionaire was regarded as a huge achievement. In today's dollars, however, it is fairly trivial. The new rich is over $5 million.
Ignore Daily Financial Noise (2008-03-31) Printer friendly version
Investors are fickle. Investing should not be. When your investments go down, even slightly, you may be tempted to make poor choices.
Gold Mining Companies Glitter More Than Bullion (2008-03-24) Printer friendly version
Last week gold broke $1,000 an ounce. Gold advertisers and gold investment newsletters are touting their wares as though gold only goes up in value. Nothing could be further from the truth. Gold may glitter, but it is still better to own the mine.
Life Insurance: Determining Your Need (2008-03-17) Printer friendly version
You may have heard that "Life insurance is a gift of love." But if you bought a $100,000 whole-life policy because you wanted to build some cash value when you should have bought a million dollars of low-cost term insurance to meet the survival needs of your family, your well-intentioned effort was not an act of love.
Remember to Fund Your Roth IRA (2008-03-10) Printer friendly version
If you are eligible, make sure you fund your Roth IRA or your Roth 401(k) this year with the maximum contribution possible. It may be your last chance to pay a reasonable tax rate before the prevailing winds of class envy swamp your retirement sailboat.
Loss Aversion (2008-03-03) Printer friendly version
Psychologists suggest we feel a loss about 2.5 times as much as an equivalent gain. Even with a brilliant investment plan, it takes diligence to overcome our emotional biases and avoid making investing mistakes.
Eliminate the Capital Gains Tax (2008-02-25) Printer friendly version
I've decided to run a mock campaign for president again as a forum to talk about public policy. Every four years I look for a candidate who understands economics, only to find politicians instead. If elected, I promise to do less harm.
Learning to Live on Your Own, Part 2 (2008-02-18) Printer friendly version
Here we offer some sound advice on how to put the money you've saved to work for you.
Learning to Live on Your Own, Part 1 (2008-02-11) Printer friendly version
If you're like most of today's college graduates, you may find yourself ill prepared for the real world of financial responsibility. You never saw how your parents lived when they were first married and struggling. Consequently, you may be basing your after-school expectations on an upper-middle-class lifestyle. Here is my financial advice for those of you learning to live on your own.
For Now, Avoid Real Estate Investment Trusts (2008-02-04) Printer friendly version
I received my county real estate tax bill recently, and for the first time in several years, my property tax assessment went down by about 2.8%. The drop is very small, but the trend is significant. Commercial real estate investments fell sharply during 2007 and may underperform other investment choices during 2008.
Market Volatility Is Back (2008-01-28) Printer friendly version
Normal market volatility has returned, and with it investors are tempted once again to jump in and out of the markets.
Invest in Women (2008-01-21) Printer friendly version
Those countries with the greatest economic freedom and the highest level of gender equality also tend to exhibit superior performance in the stock market.
2007 in Review (2008-01-14) Printer friendly version
A valuable exercise this time of year is to review your investment returns to analyze what occurred in the broader asset classes. First, check to see if your specific investments are capturing a majority of the potential market return of their asset class. Second, evaluate whether your asset allocation is optimized to balance risk and return.
How safe is your money market? (2008-01-07) Printer friendly version
Money market funds are a type of mutual fund that usually sells and redeems their shares for $1. The value to the consumer is the interest earnings plus the stability of getting their principal back.
Invest in Women (2008-01-01) Printer friendly version
Ever since communism collapsed in the early 1990s, stock markets around the world have been booming. This is especially true in the former communist states of Russia and China, but also in countries that had been following the socialist model such as India, and in former high-tariff countries as Brazil.
Financial Help for the New Year (2007-12-31) Printer friendly version
We all want to be slim, eat healthy and get our financial house in order, but few of us are disciplined enough to accomplish all that without help. After the indulgences of the holidays, both gustatory and financial, inevitably you'll probably resolve once again to make some changes in all these areas. You owe it to yourself and your family to make certain you keep your financial New Year's resolutions this year.
Scrooge's Former Boss Fezziwig Is a Nester (2007-12-24) Printer friendly version
My favorite character from Dicken's "A Christmas Carol" is Fezziwig. Fezziwig is what Bert Whitehead would describe as a "nester".
Scrooge's Nephew Fred Is a Traveler (2007-12-17) Printer friendly version
Every December I reread "A Christmas Carol" by Charles Dickens. Ebenezer Scrooge's nephew Fred is the character young people most easily relate to. He is young himself, carefree, in love and enjoying life with his friends. He has a "traveler" personality.
How Shrewd Investors Save on Taxes (2007-12-10) Printer friendly version
When you're building wealth, saving a penny on your taxes is just as important as earning a penny in the markets. You can use both investment losses and investment gains to good tax advantage.
Cash Has Been the Riskiest Investment (2007-12-03) Printer friendly version
If you think hiding money under your mattress is a risk-free way of building wealth, think again. Cash, it turns out, has been the riskiest investment since 2002. Many investors try to avoid risk by putting their money in a bank account or investing in CDs. But like any other investment, cash is subject to its own set of risks.
Medicare Medical Savings Account Plans (2007-11-26) Printer friendly version
Medicare Medical Savings Account (MSA) Plans are one of the newest Medicare Advantage Plan options. Private companies began offering these accounts in 2007. Like Health Savings Accounts, a Medical Savings Account puts you in control of your own health care dollars. If you are in good health and want to limit the maximum you would need to pay in a medical emergency, you may want to consider a Medicare Medical Savings Account plan during your retirement years.
How Medicare Works (2007-11-19) Printer friendly version
Many seniors look forward to saving on medical insurance costs by enrolling in Medicare at age sixty-five. However, navigating the Medicare system is not for the faint of heart. Medicare is an alphabet soup of plan choices. Currently Medicare is organized as parts A through D.
Fund Your HSA to Cover Retirement Healthcare Costs (2007-11-12) Printer friendly version
Even if you do not need to, we recommend funding your account with the maximum allowed. If your HSA builds up it may help you cover any extra medical expenses during retirement.
Roth Conversions Can Help Build Wealth (2007-11-05) Printer friendly version
If you don't have retirement savings in Roth IRAs, it's time you considered the benefit of these tax-savings accounts. These so called "Roth conversions" can be performed on traditional IRAs. And, beginning in 2008, it will be easier to roll money from an employer plan into a Roth IRA.
Kiddie Tax Loophole Soon to Disappear (2007-10-29) Printer friendly version
This year, Congress has made income-shifting a dream of the past, trapping more kids in the dreaded "kiddie tax." Beginning January 1, 2008, children under 24 will owe taxes on unearned income at their parents' higher tax rates.
IRAs Offer Big Tax Savings for Charitable Gifts (2007-10-22) Printer friendly version
For a few more days this year, the tax law will allow you to give to charity directly from your IRA and count that gift toward your required minimum distribution. Giving to charity from your IRA will also provide you with additional tax savings. But, to qualify, you must make your donations before 2008.
Employee Retirement Options - Part 2 (2007-10-15) Printer friendly version
Most employees have all their retirement eggs in one basket --their employer's retirement plan. The plans usually offer less than two dozen fund choices to cover all your hopes of maintaining your lifestyle, independence, and dignity in your later years. If most of your retirement assets are with your employer, here's how to make the most of what you've got.
Employee Retirement Options - Part 1 (2007-10-08) Printer friendly version
Most workers are putting all their retirement assets in the basket of their employer's retirement plan. They are depending on one employer and two dozen eggs (funds) to hatch and maintain their lifestyle, independence and dignity in their later years.
Dorothy in Taxland: Below the Line Deductions (2007-10-01) Printer friendly version
Below the line deductions are uncertain. Like many items in the tax code the correct answer to "Will they reduce my taxes?" is: "It depends." They are like Dorothy's first encounter with the Wizard. He promises to grant her requests if she would only bring him the witch's broomstick.
Dorothy in Taxland - Tax on Marriage (2007-09-17) Printer friendly version
As Glinda advises us, "It's always best to start at the beginning," and at the beginning of the tax return is determining your filing status. Two different people can end up with very different amounts of tax owed, simply because of their filing status.
Dorothy in Taxland: Above the Line Deductions (2007-09-10) Printer friendly version
Those with wealth look ahead and adjust their affairs according to the tax code. But, most Americans look backward and only hope that Uncle Sam will return some of what they have already paid. Living in the moment and only looking backward is a recipe for paying the most tax at the worst time.
University Students: Getting Sucked Dry by Credit Cards (2007-09-03) Printer friendly version
Last week we listed the ways university student are enticed into using credit cards. This week we will examine the economical impact of those initially small and convenient monthly payments.
University Students: Getting Suckered in with Credit Cards (2007-08-27) Printer friendly version
Every University student knows they should have a credit card. You have to have a second form of ID on many financial transactions. You have to have one to establish good credit. And, the more you use them, the more you will accrue bonus points toward cash, mileage credits and various "free gifts". P.T. Barnum said, "There's a sucker born every minute." But it doesn't have to be you.
The Business of Being an Artist - Part 2 (2007-08-20) Printer friendly version
For those working in the arts, financial planning is artistic freedom. You can be an artist and also eat well if you don't avoid the subject of financial planning all together. After you have your cash flow and career planning in place, you also need to address your insurance and legal concerns.
The Business of Being an Artist - Part 1 (2007-08-13) Printer friendly version
The image of the starving artist has prevailed too long. Here are the financial essentials that artists avoid at their peril.
With Great Characters Come Great Stock Returns (2007-08-06) Printer friendly version
Last week I attended the San Diego International Comic-Con. The four day event has grown from covering comic books to all things associated with popular culture. But comic books are still at the heart of the convention, and Marvel Comics is still the industry leader.
Keeping Expenses Low While Building Your Portfolio (2007-07-30) Printer friendly version
Q: I enjoyed reading about your "Rocks and Sand" technique to keep expense ratios low. I own iShares EAFE (EFA) for my foreign rock. What no-transaction fee foreign mutual fund that tracks the EAFE index do you recommend for monthly deposits until I purchase another "rock?" - Steve
Blending Index Funds to Achieve Higher Returns (2007-07-23) Printer friendly version
If you have been following my investment advice closely, you can probably guess that I don't favor stock-picking as the best way to meet your financial goals. But even if you favor index funds, as I do, that doesn't mean you have to use them exclusively.
Managing Your Biggest Asset: Your Career (2007-07-16) Printer friendly version
Your career is your biggest financial asset. Most people determine the value of their work by the dollar amount on their paycheck. However, judging your career based solely on your take-home pay is a short sighted evaluation. Learning to manage the full value of your career will translate into a higher quality of life and a higher net worth.
Foreign Freedom Investing 2007 (2007-07-09) Printer friendly version
Adding international investments to your portfolio is a good way to diversify for safety while boosting returns. On average, international stocks appreciate more than US stocks. What's more, companies located in countries with the most economic freedom typically appreciate more than the broader international average. Over the past year, countries with the most economic freedom appreciated 7% more than the international index.
You too can become a billionaire 2007 (2007-07-02) Printer friendly version
There are 946 billionaires in the world according to a recent survey. Half are in one country, the United States of America! The others are scattered throughout 53 other countries. Because of the surging world economy, 195 newcomers were added to the list last year and only 32 dropped out. Learning how billionaires amass their wealth may expand your financial horizons and possibly stimulate some ideas that could lead to your name being added in the future.
Bankruptcy Is Sometimes the Best Option (2007-06-25) Printer friendly version
Most people want to honor their debt. But many families have allowed their debt to spiral out of control, and they feel helpless, ashamed, and at a loss to know what to do. While bankruptcy isn't anyone's first choice, sometimes it is an important choice to consider.
Evan Almighty: Financing a Block Buster (2007-06-18) Printer friendly version
This Friday, June 22, 2007, the movie Evan Almighty opens in theaters. Filmed in and around Crozet, I had the opportunity, like many in Charlottesville, to be an extra in the movie. Watching the movie being made from the inside only increased my respect for the business of movie making. Last week I had a chance to see Evan Almighty at the Charlottesville Premier. The wait was worth it.
Consider Delaying Social Security Benefits (2007-06-11) Printer friendly version
Over seven out of every ten Americans opt to receive their Social Security checks as soon as possible. This is usually a mistake. By delaying when you start receiving your benefits, you may receive more money and ensure you have a better retirement in the long run.
Hedge Inflation Risk with Hard Assets (2007-06-04) Printer friendly version
One of the asset classes that we use to build diversified portfolios consists of hard asset stocks. These hard asset investments include companies that own and produce an underlying natural resource such as oil, natural gas, precious metals (particularly gold and silver), base metals such as copper and nickel, and other resources such as diamonds, coal, lumber, and even water.
Portfolio Rebalancing Boosts Returns (2007-05-28) Printer friendly version
Rebalancing your investments can help boost your returns and minimize risk. This simple contrarian move can help you compound your investment gains over time. With the markets at an all-time high, this may be a good time to rebalance your portfolio.
Financial Harmony in Marriage (2007-05-21) Printer friendly version
Money problems can ruin the love affair with your spouse. The work of blending two lives in harmony requires certain basic commitments. Even a financial planner can't help unless the couple is willing to make five simple commitments.
A Short History of Wall Street (2007-05-14) Printer friendly version
Last month I was in New York City for the weekend. Although our hotel was in Times Square, we had a chance to visit Wall Street while we were there. Wall Street is a testament of the spirit and vitality of free markets.
How to Pay Off Student Loans While Building Wealth (2007-05-07) Printer friendly version
The average college student graduates with almost $20,000 in student loans. But, some students may be better off not taking their parents' advice on how to get out of debt. Unlike most types of debt, student loans are usually best when paid as slowly as possible.
Tax Freedom Day Arrives on April 30, 2007 (2007-04-30) Printer friendly version
Tax Freedom Day arrives on Monday, April 30th this year. That's when we stop working for the government and start working for ourselves. For the average worker, all of the earnings of the first 119 days go to pay taxes to the federal, state, and local governments. Starting May 1st, we are free -- at last -- to take care of our own family's needs.
Buying a Car Without Breaking the Bank (2007-04-23) Printer friendly version
Purchasing a car is the second biggest spending decision we face as consumers next to buying a home. Unlike real estate or an investment portfolio which appreciates, cars are rapidly depreciating assets. In addition to the car's sticker price, operating expenses can drive the unsuspecting consumer into the poorhouse. And, if you choose to finance your car purchase, your losses will be compounded.
Familiarity Breeds Concentration (2007-04-16) Printer friendly version
Investors have been told, "Invest in what you know." While this may have been a good adage for avoiding investing in companies with no business models, it is a poor rule of thumb to use when building diversified portfolios.
Breaking Spaghetti: A Seven-Year Financial History (2007-04-09) Printer friendly version
For the past seven years US markets have experienced the ripple effects of the tech sector's correction in 2000. The latest waves have been in the slow decline of the housing market and, now, in the weakening of the commercial real estate market. While economists can't always explain the timing of these ripple effects, the corrections in the market are much like the physics of spaghetti.
Financial Planning for the Second Half of Marriage (2007-04-02) Printer friendly version
My wife and I are celebrating our twenty-fifth wedding anniversary this month. Our oldest child is now a freshman in college and our youngest is a sophomore in high school. The financial planning issues that were important during the first half of our marriage become critical as a couple enters the second half.
Portfolio Allocation: Risk - Return Mix (2007-03-26) Printer friendly version
Portfolio construction begins with the most basic allocation between investments that offer a greater chance of appreciation (stocks) and those that provide portfolio stability (bonds). Decisions made at this level are the most important in determining how well-behaved your portfolio returns will be.
Raising Money Savvy Kids - Teen Budgeting (2007-03-19) Printer friendly version
Many parents are concerned about raising their children to be financially savvy. If you want to raise kids who can create and manage wealth, there are a handful of key life skills every child should practice. Every kid should practice living within a budget before leaving home, not after. One way to provide opportunities for real world lessons at home is to give your children some oversight of the family budget.
The Celtic Tiger: The Greening of Ireland (2007-03-12) Printer friendly version
The Republic of Ireland and its economic boom period knows as the "Celtic Tiger" is another textbook case study in economic freedom. Ireland's strong economic performance is a direct result of its increased economic freedom and reduced government regulation.
Start Your Own Dynasty Trust (2007-03-05) Printer friendly version
Dynasty trusts, also known as generation-skipping trusts, aren't just for the Rockefellers and the Morgans anymore. In recent years, a few states, including Virginia, have altered their "rules against perpetuities," allowing trusts to span multiple generations. All of this is good news for those interested in keeping wealth in the family. By allowing such dynasty trusts, a handful of states are making it easier to preserve and build family wealth for years to come. Unlike the trusts which helped John D. Rockefeller and J.P. Morgan keep their wealth in the family, this new breed of dynasty trust is not just for the mega-wealthy.
Be Choosey When Giving to Charity (2007-02-26) Printer friendly version
Do you ever wonder if your gifts to charity are being used as well as they could be? If so, you're not alone. A 2002 study by the Brookings Institution found four out of five Americans doubt that charities are stewarding donations well. And although 83% of U.S. adults report giving to charity in 2006, according to a Wall Street Journal/Harris Interactive poll, the charitably inclined are doing more homework before opening their wallets. Maybe it is time you checked up on your favorite charities before making your next gift.
Raising Money Savvy Kids - Postpone Spending (2007-02-19) Printer friendly version
One of the critical concerns of generational wealth management is raising young people to be financially savvy. Many have written to say that they read and discuss this column at the dinner table with their children. If you want to raise kids who can create and manage wealth, there are a handful of critical rules that are foundational. Here's the main one: Postpone spending.
Donor Advised Funds (2007-02-12) Printer friendly version
Donor Advised Funds offer the charitably inclined new flexibility for managing gifts to charity. By funding an account, donors receive an immediate tax deduction for their contribution and gain the flexibility to direct payouts to charity on their own timetable. However, donor advised accounts are not for everyone. Before funding an account of your own, consider the cost. Using a donor advised fund to manage your charitable donations may actually diminish the tax benefits of giving.
IPS: Build Your Financial Dream Home with a Good Blueprint (2007-02-05) Printer friendly version
Without a financial plan, your investments are controlling your dreams, not the other way around. You need a blueprint for your financial dreams to come true. That blueprint in sound financial planning is called an Investment Policy Statement (IPS).
Be Smart When You Rollover Your 401(k) (2007-01-29) Printer friendly version
There are few better investment returns than an employer's matching contribution made to your 401(k). But after you retire or leave that company's employment, you should almost always roll your 401(k) into an IRA for better investment choices. Being smart by rolling over your 401(k) can pay dividends for decades.
Australia: Investing Down Under (2007-01-22) Printer friendly version
On January 26, Australians celebrate their annual Australia Day to commemorate the founding of the Colony of New South Wales in 1788 and their proud national history. This year investors down under have even more reason to celebrate.
What the Rich Know and the Poor Do Not (2007-01-15) Printer friendly version
This new year, resolve to get your financial house in order so that you can enjoy peace of mind. Financial planning is important, but it is never urgent. Most people fail to establish a financial plan because they fail to start planning. Some resolutions can be postponed, but for every six years that you delay saving and investing, you cut your retirement lifestyle in half. So, act on your resolution today.
Minimum Wage Helps the Rich (2007-01-08) Printer friendly version
For the millions of workers who struggle to make ends meet, legislation to raise minimum wage cannot come soon enough. A December poll conducted by The Wall Street Journal/NBC News shows 77% of Americans support increasing the minimum wage. Ironically though, minimum wage does more to benefit rich suburban young people than it does for the poorest members of our society. At its worst, minimum wage paves the way for employers to discriminate against our nation's minorities.
Minimum Wage Hurts the Poor (2007-01-01) Printer friendly version
Americans are very much in favor of raising the minimum wage. This fall, five states saw legislation to raise the minimum wage pass, in some cases by wide margins. However, American compassion can at times be misguided. Economist Robert Whaples, of Wake Forest University, found in a random polling of American economists, that 62% believed the minimum wage should remain unchanged, if not lowered or abolished altogether.
Financial Planning Begins with Spiritual Values (2006-12-25) Printer friendly version
Many people assume that financial planning primarily deals with cold hard cash. Most financial planners would disagree. Financial planning is the process of aligning your financial choices with your life passions. And although financial planning can tell you how to accomplish your goals, it cannot tell you what your goals should be. Values transcend the cash and the numbers.
Planning for a Funeral (2006-12-19) Printer friendly version
Funeral expenses are often a family's fourth largest expense after paying for a house, college expenses, and a car. Last-minute planning often leaves family members feeling pressured to spend more than they should in order to demonstrate their love for the departed.
Belle Didn't Really Love Scrooge (2006-12-11) Printer friendly version
About this time each year I re-read "A Christmas Carol," by Charles Dickens. By far, the saddest portion of the book is the scene where the ghost of Christmas past forces Ebenezer to relive the day his fiancé breaks their engagement and his heart. While we often assume that Ebenezer did not love Belle, the sad truth is that Belle never really loved Scrooge.
Tax planning tips for 2006 (2006-12-04) Printer friendly version
Making time for year-end tax planning during the busy holiday season may sound like bad timing, but it may save you bundles of cash come April 15th. However, in order to make full use of these tax-saving tips, be sure to visit your tax professional before year's end. Once January 1st rolls around, there's little else you can do but pay-up.
Cyber Monday (2006-11-27) Printer friendly version
Today has been tagged 'Cyber Monday' by the retail industry. Like the term 'Black Friday' which refers to the Friday after Thanksgiving, Cyber Monday refers to the Monday three days later. Just as Black Friday is considered the biggest traditional shopping day, Cyber Monday is supposed to see a significant spike in online sales.
Tax Planning for Small Business Owners (2006-11-20) Printer friendly version
Small business owners enjoy more flexibility when it comes to tax maneuvering. That's why tax planning is especially important for small businesses. Whether your business employs one employee or one hundred employees, last-minute tax moves can save you money, if you act before the end of the year.
How much do you need to save this month? (2006-11-13) Printer friendly version
There are only a few critical financial planning questions you need to be able to answer. Probably the most important is, "How much money do I need to save this month to meet my goals?" Many people don't know the answer to this question and avoid it to the detriment of their long-term financial well-being.
Conservation Easements (2006-11-06) Printer friendly version
Recent amendments to our tax laws provide conservationists with additional incentives to protect the natural beauty of their land. Landowners who relinquish their land development rights by donating a conservation easement can ensure that the natural beauty of their land is preserved in perpetuity. Currently, donors also receive tax breaks at the federal and state levels. For those who have already achieved their financial goals, donating their land development rights can bring additional the tax benefits.
Narrowly Framed Questions Fail to Meet Life Goals (2006-10-30) Printer friendly version
The marketing of financial products has caused investors to focus too narrowly on the details of specific investments. As a result, most investors fixate on asking the wrong questions and fail to ask the strategic questions necessary to tailor their investments to best reach their life goals.
Bond Basics (2006-10-23) Printer friendly version
Bonds are boring. But smart investors use them for diversification. Understanding some basics will help you evaluate the risks and rewards of owning bonds in your portfolio.
NAPFA Consumer Education Foundation (2006-10-16) Printer friendly version
The non-profit NAPFA Consumer Education Foundation is offering a series of monthly presentations in Charlottesville, beginning this Saturday. The Foundation is dedicated to bringing consumer financial education to communities across America.
The Dow Jones Industrial Average (2006-10-09) Printer friendly version
The Dow set a new all-time high last Tuesday. While most investors follow the numbers from the Dow Jones Industrial Average index, they are most likely invested in funds that mimic the S&P 500. However, neither index represents a diversified portfolio. Understanding just how the Dow works allows savvy investors to see past this index when evaluating the performance of their investments.
P/E Ratio (2006-10-02) Printer friendly version
Stock brokers and investors often look at certain fundamental information about a stock when determining if that stock is a good stock to purchase. One of those fundamental indicators is the "P/E ratio" of a stock. While we favor low P/E stocks, often called value stocks, buying a stock simply because it has a low P/E is like assuming a car is fast because it has racing stripes and a number on the side.
Roth IRAs Make Great Estate Planning Tools (2006-09-25) Printer friendly version
If the tax-free growth of a Roth IRA wasn't enough to wet your appetite, the estate planning benefits it offers should seal the deal. Bequeathing a Roth is much the same as setting up a life-time tax-free stream of income for your heirs. Because Uncle Sam has already taken his cut of the principal when you put the money in, withdrawals from a Roth can be made tax-free, either by you or by your beneficiaries. All this happens simply by naming the appropriate beneficiaries for your Roth.
Roth IRA Conversion Makes Cents (2006-09-18) Printer friendly version
There are years and situations when a Roth conversion is not appropriate, but they are often surrounded by years when it should be considered.
Roth IRA vs. the Traditional IRA (2006-09-11) Printer friendly version
Individual Retirement Accounts were created to give Americans an incentive to save for retirement by combining the benefits of compounding interest with a favorable tax status.
Virginia is for Business Lovers (2006-09-04) Printer friendly version
The nation's first Labor Day celebrations were held by the Central Labor Union in New York City in 1882. By 1894 every state was celebrating the accomplishments of American workers. While all states claim to be pro-labor, some have proven more effective at creating jobs for their labor force than others. Jobs follow economic freedom, not economic regulation. A recent article published by Forbes names Virginia the best place in America to do business... and where there is business there are jobs.
Qualified 529 Spending (2006-08-28) Printer friendly version
While most of the bills can be paid from a 529 college savings account, a couple thousand dollars in expenses will not qualify.
Reverse Mortgages Are A Last Resort (2006-08-21) Printer friendly version
A reverse mortgage should be considered only as a last resort. With early retirement planning, such 'last resort' options can be easily avoided.
David John Marotta: What Is A Contrarian? (2006-08-14) Printer friendly version
Much of my financial instincts were developed watching my parents manage money on a daily basis. Even now, one of the highest compliments that I can be paid is for someone to say, "The apple didn't fall far from the tree." Last week my father authored specific examples of contrarian investing. This week I'd like to show how contrarian investing is at work when you regularly rebalance your portfolio.
George Marotta: What Is A Contrarian? (2006-08-07) Printer friendly version
A contrarian is one who takes a side different from the masses. When everyone is going in one direction, a contrarian chooses to go in the other direction. I confess. I am a contrarian. In investment terms, it is difficult to be a contrarian.
ARM Yourself for Mortgage Rate Increases (2006-07-31) Printer friendly version
The party is over for home owners with adjustable rate mortgages (ARMS). Lured by tantalizing rates as low as 3.5 percent in the early 2000s, home buyers jumped at the chance to buy bigger and better. However, in today's environment, borrowers may not be prepared for their inevitable rate adjustment. The bad news is rates are being readjusted in one direction: up.
Foreign Freedom Investing 2006 (2006-07-24) Printer friendly version
On average, international stocks appreciate more than US stocks, and stocks in countries with the most economic freedom appreciate more than the international average.
Socially Responsible Investing (2006-07-17) Printer friendly version
Seeking to use your investment selection in order to be socially responsible is misguided. Though it may assuage a guilty conscience, it is an ineffective tool for corporate change. If you put so many constraints on your portfolio that you cannot meet your financial responsibilities, then you have taken the speck out of your brother's eye but failed to notice the log in your own eye.
Avoid Capital Gains Tax on the Sale of Your Home (2006-07-10) Printer friendly version
If you own a home you are likely aware of the tax benefits such as deducting your mortgage interest and property taxes. However, you may not be aware of the tax-free earnings you can take after you sell your home. Under the Taxpayers Relief Act of 1997, capital gains generated from the sale of a primary residence are tax-free. Individuals pay no taxes on profits up to $250,000. And, couples are allowed to combine their tax credit and exclude up to twice the amount from a home sale.
The United States - Land of the Free (2006-07-03) Printer friendly version
This year, the US reclaimed its spot among the top ten countries in the world with the most economic freedom according to The Wall Street Journal/Heritage Foundation 2006 Index of Economic Freedom. But for a nation which considers itself a paragon of liberty, watching other countries enjoy more economic freedom than we Americans comes as an affront to our self image.
O Canada, The True North Strong and Free! (2006-06-26) Printer friendly version
July 1st is Canada Day, the day our northern neighbors celebrate their union as the North American colonies of Great Britain. We should celebrate too. Not only are they good neighbors but a good investment.
Health Savings Accounts (2006-06-19) Printer friendly version
Employers and employees alike are feeling the squeeze of swelling health care costs. According to the Kaiser Family Foundation, health insurance premiums have risen at an average rate of 12 percent per year since 2000. Unable to keep up with rising premiums, employers are forced to pass on costs to employees, to trim benefits, or worse, yet, to dump the coverage all together.
Seven Financial Rules for Marital Bliss (2006-06-12) Printer friendly version
An overwhelming number of failed marriages cite financial troubles as a major factor in their breakup. This is no surprise because the way we use our time and money reflects our values. Without a strong set of shared values, marriages drift apart. But, dealing with finances together can bring a couple closer. Here are seven principles of how you can build wealth and your marriage.
Foundation Series - 5 Mistakes (2006-06-05) Printer friendly version
When endowment funds fall victim to poor management, the results are as bad as they are far reaching. Whether an endowment serves to prop up operating budgets or grow company retirement investments, falling market values trigger a host of undesirable outcomes. In the face of dwindling endowment assets, non-profit organizations are left with little alternative but to cut grants and programs. However, the most egregious failures are those involving retirement funds, bankrupted by poor management.
Foundation Series - 4 Asset Allocation (2006-05-29) Printer friendly version
When it comes to predicting your investment returns, nothing influences returns more than your portfolio's asset allocation mix. It will determine most of your investment outcome. Endowment funds are no exception to this rule. For board members and trustees, choosing an appropriate asset mix is part of fulfilling fiduciary responsibility.
Foundation Series - 3 Endowment Spending (2006-05-22) Printer friendly version
Non-profits seeking to establish endowment spending rates may find the task as difficult as the fundraising itself. Setting spending policy remains a balancing act between protecting purchasing power and providing for the spending needs of the institution. Ultimately, the tightrope act becomes a question of inter-generational equity. In other words, "Do we sacrifice the needs of the current generation to that of future generations, or visa versa?"
Foundation Series - 2 Best Practices (2006-05-15) Printer friendly version
Perhaps you have been asked to serve as a board member or trustee for a non-profit organization. Your role as committee member, board member or trustee will likely designate you as a 'fiduciary,' a role with specific legal responsibilities. Certain responsibilities are common to all fiduciaries.
Outlook May 2006 (2006-05-08) Printer friendly version
Recently, I received a letter asking for advice on whether an investor should sell a particular bond fund and reinvest the money in an appreciating stock fund. Questions like that are unanswerable without comprehensive financial planning, but I suspect the answer should be to keep the bond fund.
Foundation Series - 1 Fulfilling Your Fiduciary Duty (2006-05-01) Printer friendly version
If you serve as a trustee, committee or board member for a non-profit organization, you may bear more responsibility than you bargained for. Legally, you could be defined as a 'fiduciary' and held to the highest legal and ethical standards for the property entrusted to your care. In fact, you could be held personally liable for your decisions.
Community College Can Provide the Best Education (2006-04-24) Printer friendly version
So what if you didn't get into the college or university at the top of your list. If you still want to go, consider entering through the back door. If you are a Virginia resident, the options are more attractive than ever - options which guarantee you entrance to some of the top-ranked colleges and universities at a price you can afford.
Tax Freedom Day Arrives on April 26th, 2006 (2006-04-17) Printer friendly version
Tax Freedom Day arrives on Wednesday, April 26th this year. That's when we stop working for the government and start working for ourselves. For the average worker, all of the earnings of the first 116 days go to pay taxes to the federal, state and local governments. Starting April 27th, we are free -- at last -- to take care of our own family's needs.
Donald Mortlock - Making a Free Market (2006-04-10) Printer friendly version
Most investors in the stock market know what a stock is but don't understand how the "market" itself works. Understanding how a market works is helpful to appreciate both how and why prices fluctuate.
Florence Mortlock - Dignity is a Happy Ending (2006-03-27) Printer friendly version
Many of our attitudes are learned from the family stories we grow up with. How we handle our finances will influence generations. The life of my grandmother, Florence Mortlock, provided me with many life lessons on finance and financial planning.
VRS: A bird in hand or two in the bush? (2006-03-20) Printer friendly version
Dear Marotta Asset Management,
I'm retiring this summer with over 30 years' contributions in my Virginia Retirement System (VRS) account. Because I've worked past the full retirement age of 65, I can participate in Partial Lump-Sum Option Payment (PLOP) plan. If I participate in PLOP, I will receive a $29,588 lump sum rolled into a retirement account. If I choose to do that, my monthly VRS income will be reduced by $216. Is this a good choice?
--Decided to Retire
Eighty - Twenty Rule of Asset Allocation (2006-03-13) Printer friendly version
In 1906, Italian economist Vilfredo Pareto created a mathematical formula to describe the unequal distribution of wealth in his country, observing that twenty percent of the people owned eighty percent of the wealth. The 80/20 rule has been recognized by many as a universal principle of life. Its application even wins a place in the logic of asset allocation.
Dear Ready to Retire (2006-03-06) Printer friendly version
Dear Marotta Asset Management,
My wife and I are hoping to retire soon. What percentage of our investments can we withdraw each year? And, do you recommend a high-yield investment portfolio to create the necessary cash flow during retirement?
--Ready to Retire
The French Kiss of Death (2006-02-27) Printer friendly version
Over the past decade, the French economy has been given the kiss of death by the burden of socialist "feel-good" labor laws. The French government's intentions were good, but cumulatively they have poisoned French entrepreneurial competitiveness and paralyzed their economic growth.
How Your Children Can Win the Stock Market Game (2006-02-20) Printer friendly version
Good things do come from France. Frenchman Antoine Deneriaz captured Olympic gold in the men's downhill skiing event beating out favorites Austria's Michael Walchhofer and America's Bode Miller. His win meant flying madly off jumps and being determined to finish first or break every bone in his body. Your investments shouldn't be like that.
The Guillotine of French Economic Freedom (2006-02-13) Printer friendly version
The financial outlook for France is not promising. We can learn from their decline. The Heritage Foundation's survey last year of 155 countries ranked France among the top-ten countries to lose the most economic freedom. The French people are paying the price. According to a study by T. Waning, economic freedom is to blame for France's nightmarish unemployment rates brought into the public eye by angry youths protesting the lack of liberte, egalite, fraternite.
Compute Your Net Worth Once A Year (2006-02-06) Printer friendly version
Belated Happy New Year! Now that the confetti has been swept up and your head is a little clearer, how do things look? Specifically, now that you are a year closer to retirement, are you on track to meet your goals? Have you measured? What gets measured is more likely to be accomplished. Computing your net worth once a year is the first and most important step toward financial security.
2005 in Review (2006-01-30) Printer friendly version
If your returns were poor last year, you were in good company. The S&P 500 gained only 4.9% and the Dow was down 1.4%. Indexes, however, are poor indicators of what wisely invested balanced portfolios should return. A better diversified portfolio would have earned over 10% in 2005.
Eight Steps to Fix Your Broken Credit (2006-01-23) Printer friendly version
Debt problems destroy your credit history and isolate you from a host of economic privileges and opportunities. If your credit report was a wake up call to get out of debt, you may be wondering what to do next. The first step to stop the hemorrhaging is simply to not borrow another penny until you are completely out of debt. The rest of this article will only benefit those in debt willing to make this commitment.
Creating A Ladder for Retirement Income (2006-01-16) Printer friendly version
Laddered bonds are an effective means of finishing that climb to financial success. For the 75 million baby boomers who begin turning 60 this year, this simple investment tool can help America's soon-to-be retirees maintain financial health in the years to come. If you are retired or planning on retiring soon, a tailor-made laddered bond portfolio can provide a dependable income stream without compromising your growth investments - even during your retirement years!
Sifting Through Your Own Credit Dirt (2006-01-09) Printer friendly version
Credit bureaus track your financial moves closely. They are in business to find the financial dirt many living on the edge of credit worthiness would rather keep buried. Better credit has a financial value and companies are not likely to take your word for it. But since mistakes are made, you have a stake in reviewing your credit report for inaccuracies or strange activities that could mean you have been the victim of identity theft.
Learn What Credit Stalkers Know About You (2006-01-02) Printer friendly version
With Christmas come and gone, you may be dreading the sight of credit card bills. Regardless of your credit card debt, the new year is a good time to check your credit history. What you don't know about your own credit history may kill your opportunities for future borrowing.
How to Double Your Retirement (2005-12-26) Printer friendly version
Every six years you delay saving and investing you cut in half the lifestyle you will have in retirement. You owe it to yourself and your family to make certain that your financial New Year's Resolution are kept this year. Here are ways to save and to invest that are simple and specific enough to keep.
Timing the Market Isn't All Fun and Games (2005-12-19) Printer friendly version
Market timing is the attempt to switch a significant portion of your assets between different types of investments in an effort to maximize profits. If this is your investment strategy, good luck, because you'll need it.
Why is Bob Cratchit So Poor? (2005-12-12) Printer friendly version
Christmas is a time for oft told tales like Charles Dickens's "A Christmas Carol." At first glance, this story fills us with pity for the Cratchit family, always struggling to make ends meet. Poor Bob Cratchit is forced to work for Ebenezer Scrooge, whose personality makes an easy target for the cause of Bob's financial troubles. But, the true source of the Cratchits' poverty is not Scrooge but Bob's own impulse to live a lifestyle worthy of the Lord Mayor himself.
Should You Worry About Year-End Tax Planning? (2005-12-05) Printer friendly version
Even if you didn't make a penny more next year, how can you have more dollars for next year's holiday season? Reduce your taxes. Between now and the end of the year there are several last-minute tax moves that may save you significant amounts of money. After January 1st, there's little to do but pay-up.
Are You Paying For Your Fund's Advertising? (2005-11-28) Printer friendly version
If you own some mutual funds, chances are you are paying a hefty marketing price. This marketing expense is called the 12b-1 fee. The annual fee not only reduces your earnings, but it may also jeopardizes whether or not your investment advice is unbiased or self serving.
Government Controls Endanger Homeland Security (2005-11-21) Printer friendly version
The threat of a bird flu pandemic and the shortages of ordinary flu vaccine reveal the failing health of the vaccine market. Some blame the pharmaceutical companies and demand tougher government controls, but it is this kind of misconception which landed us with the flu vaccine shortages in the first place.
Medicare Part D deserves an F (2005-11-14) Printer friendly version
Medicare's prescription drug program debuts January 1, 2006, marking the largest government entitlement program since Johnson's Great Society. Known as 'Medicare Part D,' the plan subsidizes prescription coverage for millionaire and destitute seniors alike. But, the pork spending and boondoggle regulations aren't even half the problem. Part D may bring some prescription benefits to low-income seniors in the short-term, but the unintended consequences are guaranteed to make us all sick in the long run.
Seniors Face Six Month Deadline for Drug Coverage (2005-11-07) Printer friendly version
Medicare launches its prescription drug program on January 1, 2006. The plan offers subsidies to seniors who sign up for Medicare's prescription drug insurance. Although enrollment begins November 15th, many seniors are still confused about the program.
Tackling College Costs at the Eleventh Hour (2005-10-31) Printer friendly version
We've been asked, "My daughter is going to college next year, and I haven't saved a dime. What can I do?" I know that story is not funny, but it is sadly close to the truth for many. The best way to climb the mountain of college costs is gradually, but if you need to make some last minute leaps, our government has a few tax-related strategies.
Prepaid Tuition Programs May Be Fool's Gold (2005-10-24) Printer friendly version
A lot of money has been pouring into 529 college savings plans since their inception in 1994. Like the Gold Rush the benefits seem too good to pass up. As of 2004 over $54 billion has been invested. We've surveyed your options and can steer you clear of the fool's gold of 529 plans.
529 Plans: What's Important? (2005-10-17) Printer friendly version
529 plans are the best vehicle to save for college. But which one? Nationwide there are hundreds. In Virginia there are two: VEST (Virginia Education Savings Trust) and CollegeAmerica. There are several questions to address before the investor can make a wise choice.
Joshua and the Wall of College Savings (2005-10-10) Printer friendly version
Four-years of college currently cost $60,000 at a public university. In eighteen years, it may cost more than $145,000. To stay ahead of rising tuition costs, you should plan ahead and save early. Tax-favored 529 accounts can help you provide an excellent college education for your children and grandchildren.
Start College Savings the Day They Are Born (2005-10-03) Printer friendly version
College graduates gross $1 million more in earnings over their lifetime. Education helps you gain and keep wealth. But paying for it is a daunting prospect - especially paying for it all at once. For some families the price tag exceeds the cost of their home. For those who will not qualify for financial aid, starting a savings plan early is critical. Compounded savings eases the financial burden.
A College Degree is Worth a Million Bucks (2005-09-26) Printer friendly version
A college degree is worth more than its weight in gold. In fact, the value of a college education is worth about $1 million, according to a 2002 study conducted by the US Census Bureau. In the face of rising college tuition costs, education may seem like an impossible dream, but education is a key part to your financial well-being. As with any big investment, diligent planning and saving is required.
What Your Advisor Doesn't Want You To Ask (2005-09-19) Printer friendly version
Simply put, the term "fiduciary" applies to the more than five million individuals who have the legal responsibility for managing someone else's money. A fiduciary is required by law to always act in the best interests of their client, beneficiary, or retirement plan participant. Yet, many fiduciaries are not even aware of their legal responsibilities.
Squirrel Away Money While You Can (2005-09-12) Printer friendly version
In 1985, an MIT professor won the Nobel Prize for a simple technique that squirrels have known intuitively from birth -- you have to "squirrel" away some nuts during times of plenty so you can survive during times of scarcity.
Build with Bricks, not Straw or Sticks (2005-09-05) Printer friendly version
We usually recommend only putting money in investments where there is a public market for pricing and trading. Requiring public pricing and trading for your investments will help you avoid some of the financial mistakes that can leave your financial house in ruins. The exceptions to this rule are few.
Germany: Worst Economic Weakness May Be Over (2005-08-29) Printer friendly version
Germany's economy is one of the weakest in the EU. Over the past three year Germany has shown little growth. Their stock market returns have been poor. IShares German (EWG) has a one, three, and five year annualized return of 12%, 8.5%, and -3% respectively. These returns are all two to three percent under the International Index.
Salzburg: Seasoned with White Gold (2005-08-22) Printer friendly version
In Austria our soccer team visited the Hallein Salt Mine about 30 miles south of Salzburg. Lessons about the white gold from ancient salt mines are just as applicable today to the black gold of oil reserves.
Austria and the Road back from Serfdom (2005-08-15) Printer friendly version
Austria is the 19th freest economy in the world. Much of Austria's economic freedom is the direct result of the most famous Austrian economists, Friedrich August von Hayek, who won the Nobel Prize in 1974. Hayek is best known for writing "The Road to Serfdom" - his steadfast defense of liberal democracy and free-market capitalism against a rising tide of socialist and collectivist thought in the mid-20th century.
Italian Mafia Coming to America Soon (2005-08-08) Printer friendly version
Last month I had the pleasure of traveling with SOCA's U-14 Girls Express team throughout Europe. We have chronicled the high regulatory burden that Italy puts on its citizens and the way that regulation stifles growth. The other major problem within Italy is the corruption and organized crime throughout the country.
Italian Communists and Beautiful Girls (2005-08-01) Printer friendly version
Last month, The Soccer Organization of Charlottesville Albemarle (SOCA) sent its Girls fourteen and under (U-14) team on a three country tour of Europe. As a parent and assistant coach I had the pleasure of seeing first hand three of the twenty six freest economies in the world. Italy is a beautiful country and this was my fourth visit in thirty years.
Country Specific Investing Pays Dividends (2005-07-25) Printer friendly version
The iShares MSCI EAFE fund (EFA) based on the International Index lost 1.92 percent during the first half of 2005. For larger accounts, we recommend a strategy designed to enhance the international index with a diversified collection of countries that on average should do better than this International index.
Hedge Funds Aren't Worth The Risk Part 5 - What Hedge Funds Do Right (2005-07-18) Printer friendly version
Hedge funds are encumbered by high fees, limited transparency, inaccurate returns, poor liquidity, and practically no regulatory control. But they do incorporate some investments strategies that you can emulate.
Hedge Funds Aren't Worth The Risk Part 4 - High Fees and Poor Regulatory Control (2005-07-11) Printer friendly version
We've criticized hedge funds for their closures, compensation scheme, poor performance, illiquidity and tax inefficient. As if these hadn't upset our friends in the hedge fund world enough, we have two more concerns: their high fees and lack of regulation.
Hedge Funds Aren't Worth The Risk Part 3 - Poor Compensation Structure (2005-07-04) Printer friendly version
Though no accurate reporting exists, studies suggest that Hedge funds often under-perform traditional mutual funds. Part of the drag on their returns is a result of their structure compensating hedge fund managers better than hedge fund investors.
Hedge Funds Aren't Worth The Risk Part 2 - Poor Performance (2005-06-27) Printer friendly version
Hedge funds may seem attractive to the casual observer, but the naïve investor who is duped by their deceptive marketing may experience several years of dismal returns, excessive fees and irreconcilable conflicts of interest. If you own or are considering investing in a hedge fund, make certain you've done due diligence on the conditions, performance and compensation.
Hedge Funds Aren't Worth The Risk Part 1 - What Are Hedge Funds? (2005-06-20) Printer friendly version
Hedge funds use a variety of non-traditional strategies in an attempt to minimize downside risk, a technique called hedging, hence their name. Greed is the flaw with Hedge funds. Hedge funds don't invest in growth, they speculate on change. And they have a dark side.
Rocks and Sand - Keeping Expense Ratios Low (2005-06-13) Printer friendly version
Rocks and sand are the composites of a good portfolio. Good portfolios have low expense ratios and minimal trading costs. Trading costs are the costs of buying a security. Depending on the brokerage house, the cost of a trade averages between $10 and $20. Expense ratios are the percentage of assets used to run a mutual fund, the overhead. We use a technique that keeps each of them as low as possible.
Ruling Allows Broker Conflict of Interest (2005-06-06) Printer friendly version
Currently, stockbrokers can offer the same services as Fee-Only financial planners without being accountable to the same fiduciary standards. This exemption to the Investment Advisers Act of 1940 has been called the "Merrill Lynch rule."
50+ Retirement Investing - Part 3 (2005-05-30) Printer friendly version
Fifty-something just beginning the second half of life, and members of the Red Hat Society understand that the fun is just beginning. You need to have an investment plan that can last the second half century as well as you will.
50+ Retirement Products - Part 2 (2005-05-23) Printer friendly version
To insure retirement success, everyone agrees, the decade before retirement is the time to make sure that everything is in place for retirement. Mistakes made during this period, if not corrected early enough, can devastate the chances of a long and prosperous retirement.
50+ Retirement Planning - Part 1 (2005-05-08) Printer friendly version
The latest time to plan for retirement is when you are fifty-something. Five years is not enough time to prepare for retirement. Here are the issues you should be worried about when you are within ten to fifteen years of retirement.
Look Over Your Tax Return (2005-05-02) Printer friendly version
Unless it was your birthday, most of us are glad we have almost a year before we have to get our tax information together again. Before you store this past year's return in the basement, take fifteen minutes, put your 1040 on the table beside this article, and gain some valuable wisdom on your finances.
Taxes are NOT Funny (2005-04-25) Printer friendly version
It's that time of the year again. "April is the month," one wit noted, "when the green returns to the lawn, the trees and the Internal Revenue Service."
Tax Freedom Day Arrives on April 17th, 2005 (2005-04-18) Printer friendly version
Tax Freedom Day arrives on Sunday, April 17th this year. That's when we stop working for government and start working for ourselves. For the average worker, all of the earnings of the first 107 days pay taxes to the federal, state and local governments. Starting April 18th, we are free -- at last -- to take care of our own family's needs.
You too can become a billionaire 2005 (2005-04-11) Printer friendly version
There are 691 billionaires in the world according to a recent survey. Most are in the United States, and the others are scattered throughout 46 other countries. Because of the surging world economy, 104 newcomers were added to the list last year. Learning how billionaires amassed their wealth may expand your financial horizons and possibly seed you with an idea that will lead to the inclusion of your name on the list.
Budgeting Part 3: Reduce Your Spending (2005-04-04) Printer friendly version
If you need more money to makes ends meet, you can earn more or spend less. Both take work, but making a game out of the latter can reap more rewards than Monopoly. Let's roll the dice and get started. You'll be amazed at how much money you can save.
Budgeting Part 2: Living on a family budget (2005-03-28) Printer friendly version
Dieting is difficult when the rest of the family is still feasting. Living on a budget without the help of your family is impossible.
Budgeting Part 1: Creating a family budget (2005-03-21) Printer friendly version
Spending less than you earn is the essential foundation that creates the capital for investing and wealth building. Following the simple advice in this series of articles on budgeting will help you create the wealth necessary to benefit from professional fee-only asset management.
Why We Need to Fix the Social Security Program Now (2005-03-21) Printer friendly version
Speech delivered at the Carmel Valley (CA) Manor, Issues Meeting, March 21, 2005 about (a) the looming financial crisis facing the Social Security Program, (b) the mistakes that got us into our present condition, and (c) outline some of the alternative choices for solving our present predicament.
Investments in China (2005-03-14) Printer friendly version
In a recent survey of leading executives, China is currently the most attractive destination for foreign investment. While we recommend that investors have significant stock investments in foreign countries, we have serious qualms about China.
The Alternatives to Privatizing Social Security Are Worse - Part 2 (2005-03-07) Printer friendly version
Those critical to privatizing social security rarely ever focus on the cost of the alternatives. That's because the alternatives to privatization all have dire consequences. Last week we saw that neither raising taxes nor lowering benefits will solve the financial burden of fewer younger workers and longer living boomers. This week we will dispel the myth that allowing the government to invest in the markets would be anything but a disaster.
The Alternatives to Privatizing Social Security Are Worse - Part 1 (2005-02-28) Printer friendly version
My column on privatizing social security generated a great deal of outrage and name calling, but no real alternate proposal. That isn't surprising since the alternatives to privatization all have dire unintended consequences.
The Value of Emphasizing Value Stocks (2005-02-21) Printer friendly version
Value stocks should be over emphasized in your holdings of US stocks both because of their historical averages and the current economic climate. Value stocks are those that have a lower-than-average price as measured by such metrics as price-to-earnings or price-to-book ratios.
Social Security Is Hopelessly Broken (2005-02-14) Printer friendly version
Social Security is neither a pension plan, nor a genuine trust fund. It has no assets, and it has always been a redistribution system from those who are working to the elderly. It is hopelessly broken and no small fix will solve the fundamental flaw.
How to Get Free-only Financial Advice (2005-02-07) Printer friendly version
Got some questions? Good news: Kiplinger's Personal Finance magazine is partnering with the National Association of Personal Financial Advisors (NAPFA) to sponsor Kiplinger's Jump-Start your Retirement Plan Days - a chance to get free financial advice by telephone from the nation's premier financial advisors.
Exchange Traded Funds (2005-01-31) Printer friendly version
There has been nothing new in finance in the last fifty years - except exchange-traded funds. Exchange Traded Funds, or ETFs, combine many of the best characteristics of stocks and mutual funds.
We Could be in a Real Estate Bubble (2005-01-24) Printer friendly version
Real estate prices, especially residential, have been increasing for almost a decade. Real home prices have increased nearly 60% since 1996 - roughly triple that of previous housing booms in the late 1970s and 1980s. Home values may be peaking and ready to correct.
Choose the Appropriate Investment Vehicle - Part 3 (2005-01-17) Printer friendly version
There is an art to selecting the right investment vehicles for individual portfolios. Different types of advisors are prone to recommend different financial vehicles. You need to make certain that your best interests are used to best reach your financial objectives.
Choose the Appropriate Investment Vehicle - Part 2 (2005-01-10) Printer friendly version
There is an art to selecting the right investment vehicles for individual portfolios. A good investment advisor will tailor the investments to the specific characteristics of the investor's situation.
Why We Need to Fix the Social Security Program Now (2005-01-09) Printer friendly version
Every four years, the soundness of the Social Security program is reviewed. The group's report goes to the President and the Congress. The conclusions reached are always the same: the program is broken and needs to be fixed.
Choose the Appropriate Investment Vehicle - Part 1 (2005-01-03) Printer friendly version
Different products have strengths and weaknesses. Each investor's situation is unique. There are significant advantages to using different investment vehicles in different types of accounts.
Personal Debt - The Borrower Becomes The Lender's Slave (2004-12-27) Printer friendly version
They say that as long as Americans keep spending, the economy will be strong and unemployment will remain low. "Spend now and pay later" is poor personal policy.
How to Monitor Your Financial Advisor (2004-12-20) Printer friendly version
The National Association of Personal Financial Advisors (NAPFA) offers the following advice about how to protect yourself as you work with a financial advisor.
Retirement Wisdom Part 7 - Start Early (2004-12-13) Printer friendly version
There is an urgency to planning for your retirement. Some choices can be postponed, while others will severely impact your financial freedom later in life.
Retirement Wisdom Part 6 - Have a concrete plan (2004-12-06) Printer friendly version
Saving something toward retirement and hoping for the best does not constitute an adequate plan. Because retirement is years - even decades - away, planning is more critical, not less. The more detailed the retirement plan, the greater the likelihood of success.
Letter to the Wall Street Journal 12/3/2004 (2004-12-03) Printer friendly version
Tom Lauricella's article on 401(k)s in the Dec.1 Wall Street Journal was an excellent recital of how workers might make some mistakes if they were given the opportunity to invest part of their payroll taxes in a partially-privatized Social Security program. While admitting that there is that danger, just consider the massive mistakes made by the government in the overall design and of Social Security in the mid-1930s.
Retirement Wisdom Part 5 - Value Objective Advice (2004-11-22) Printer friendly version
Would you complain if your $100,000 investment grew to $5.2 million dollars over 50 years? Probably not, but how would you feel if you found out it would have grown to $16.7 million had you not lost $11.5 million to unnecessary fees, expenses and commissions?
Retirement Wisdom Part 4 - Adjust Risk Appropriately (2004-11-15) Printer friendly version
In both good times and bad times, investing is really about managing your emotions. If you want to be an investor, you have to grow to understand not only the relationship between risk and return, but also your own reaction to it.
Retirement Wisdom Part 3 - Review Annually (2004-11-08) Printer friendly version
Whatever financial changes come your way, an annual reviews guarantees that the changes in your lifestyle are minimized and the chances of meeting your retirement goal are maximized.
Retirement Wisdom Part 2 - Automate Your Saving (2004-11-01) Printer friendly version
The most successful way to save it is to automate your saving plan. Saved money makes money. And saved money making more money can make the differece between upper middle class and struggling middle class. Automate your savings, and you will automate growing richer.
Will Iraq Be Another Vietnam for the US? (2004-10-27) Printer friendly version
I served in South Vietnam as a civilian foreign aid worker. While I was there, on January 30, 1968, North Vietnam and the Viet Cong launched a simultaneous attack on all the major cities in South Vietnam. The attack was a psychological victory for North Vietnam in the eyes of a war-weary and divided American public.
Retirement Wisdom Part 1 - Plan Ahead (2004-10-25) Printer friendly version
Most families have not planned for their retirement. They may save toward their retirement, but without a plan their saving is random and haphazard. Retirement decisions today can only be made in the context of accurate math projections that span decades. Saving what you can and hoping for the best is an expensive and dangerous approach.
Using S&P 500 Index Funds Contains Hidden Risks (2004-10-18) Printer friendly version
Many investors tend to make the S&P 500 Index the backbone of their investment portfolio. Others use the S&P 500 as a benchmark to measure the health of the market or their own portfolio. Doing so is a very risky strategy that greatly increases the danger of failing to meet your financial goals.
The Benefits of Canadian Drugs are a Pack of Lies (2004-10-11) Printer friendly version
Pressure is mounting on US lawmakers to allow the reimportation of prescription drugs sold to Canada. A recent study by Illinois officials claimed that the state could save more than $90 million dollars by buying prescription drugs for state workers and retirees from Canada. Nothing could be further from the truth.
Wisdom to be Learned from the Vice Presidential Nominees (2004-10-04) Printer friendly version
Amidst the economic uncertainties of our times, we hope you have learned the lessons of these wise advisors, and will start taking control of your financial future today.
Estate Planning for a Family Business Balances Three Roles (2004-09-27) Printer friendly version
Wise estate planning for the family businesses accepts, mentors and integrates others (family role); makes a profit and demonstrates objective professionalism in its decisions (business role); and plans for the inevitable - a successful transfer of ownership to the next generation (ownership role).
Twenty Stock Market Tips (2004-09-27) Printer friendly version
Twenty simple rules for investing.
Estate Planning Often Includes A Living Trust (2004-09-20) Printer friendly version
Having a living trust, although complex, is too important to ignore.
Bush policy taxes wealth by devaluing the dollar (2004-09-06) Printer friendly version
"The art of taxation," said the French finance minister Jean Baptist Colbert, "consists in so plucking the goose as to get the most feathers with the least hissing." The Republicans have proven themselves the better pluckers.
Free Estate Planning Luncheon (2004-09-01) Printer friendly version
We are offering a free luncheon seminar on Estate Planning at noon on Wednesday, October 6th at our offices at the Boar's Head. Please call Bob Arms at 434-973-0988 for directions and to reserve a seat. Our guest speaker will be G. Raye Jones, J.D., LL.M. with Martin & Raynor, P.C.
The Growing Federal Deficit is Bush's Fault (2004-08-30) Printer friendly version
In his first term Bush has increased spending more than the first terms of Carter, Clinton, and his father combined. Under his leadership, Republicans have lost the high moral ground of fiscal responsibility and rightfully endangered their control of congress.
Taxes Matter 5 - The Economics and Mindset of the Rich (2004-08-23) Printer friendly version
Being rich often stems from finding your personal area of genius. Being rich involves finding the vocation where your productivity is most valued by society.
Taxes Matter 4 - Private Charity vs. Government Entitlement Programs (2004-08-16) Printer friendly version
Government entitlement programs lack several important characteristics that make charity a virtue.
Op Ed: High Oil Prices are Good (2004-08-14) Printer friendly version
The good news is that high oil prices are good in the long term. Without any coercion, high prices set energy policy more effectively than any government action could.
Taxes Matter 3 - Taxes reduce the opportunities for economy efficiencies (2004-08-09) Printer friendly version
Small business owners make the majority of the decisions about economic expansion and job growth when they decide if the expertise their company has to offer is efficient enough to justify the burden of taxes.
Taxes Matter 2 - The Democratic Party Has Changed (2004-08-02) Printer friendly version
Historically, it used to be the liberal party that favored tax cuts. Not any more.
Taxes Matter 1 - The Laffer Curve (2004-07-26) Printer friendly version
The Laffer Curve works. Give the wealthy a tax break and they end up shouldering an even greater share of the tax burden.
Immediate Fixed Annuities Part 3 - Additional Questions (2004-07-19) Printer friendly version
Living below your means is the best financial security. With 30 or more years to live, retirees should invest for growth and diversify for stability.
Immediate Fixed Annuities Part 2 - Immediate Fixed Annuities - The Hidden Risks (2004-07-12) Printer friendly version
Because you can't change your mind, and you can't spend your money ahead of time, the best use of an immediate fixed annuity is to protect you from yourself. Call me wild and crazy, but this is not the risk I am worried about.
Immediate Fixed Annuities Part 1 -Immediate Fixed Annuities Aren't Really "Fixed" (2004-07-05) Printer friendly version
The returns offered by immediate fixed annuities aren't as good as they sound. The slight of hand in this case is the immediate loss of 100% of your principal. They are "fixed" for you to lose and the insurance company to win.
Atkins Investing Part 2: Low-Carb Investing Has Resulted in Healthy Profits (2004-06-28) Printer friendly version
Ever since the term "Atkins" first appeared on the Lycos 50 at the end of 2002 those companies (see http://50.lycos.com) that catered to the Atkins diet outperformed the S&P 500, which earned 25%.
Atkins Investing Part 1: Low-Carb Trend Has Caused Some Companies to Lose Weight (2004-06-21) Printer friendly version
About one in five Americans are practicing some version of a low-carb diet. Investors in food companies would have done much better had they foreseen this trend.
Gas Prices Part 2: Remove Taxes and Price Controls on Gasoline (2004-06-14) Printer friendly version
High prices are good when caused by increased demand or a shortage of supply, but artificially high prices are not.
Gas Prices Part 1: High Gasoline Prices Are The Best Energy Policy (2004-06-07) Printer friendly version
High oil and gasoline prices are good. Without any coercion high prices set energy policy more effectively than any government program could.
How to Live on 24 Hours a Day (2004-05-24) Printer friendly version
Time is so much more than money. If you have time, you can acquire more money. But money can't buy you more time. Time is a great equalizer. You can't go into time debt. Every day the rich and the poor alike are given twenty-four hours to spend.
Maintain financial balance when in business (2004-05-17) Printer friendly version
Running a small business requires financial balance. Here are ten rules.
Business Planning Must Balance Dreams With Reality (2004-05-10) Printer friendly version
Life is all about balance. In business you need to balance dreams and reality, passion and planning.
Economic Hypocrisy Plagues Public Sector (2004-05-03) Printer friendly version
We act as if being a business owner is trivial enough to burden them with the responsibility of funding, implementing, and enforcing whatever social programs are in vogue. Then we exempt ourselves from taking the risk.
You're Fired! Now Get to Work! (2004-04-26) Printer friendly version
"You're fired!" can be an opportunity to work for yourself. But the best two words you might hear are yourself saying, "I quit." Working for yourself is risky and frightening, but the financial freedom and opportunities you gain are significant.
Economic Freedom Part 2: Let Freedom Ka-Ching (2004-04-19) Printer friendly version
Freedom matters. Those countries with the most economic freedom provide the best place for your foreign investments.
Economic Freedom Part 1: Invest in Countries with Economic Freedom (2004-04-12) Printer friendly version
Protectionism doesn't work. Trade, not aid makes countries better off. And countries with economic freedom will experience the most lucrative trade.
Foreign Trade Not Aid Encourages Freedom Abroad (2004-04-05) Printer friendly version
Foreign aid is like a parent playing for their child's soccer team. The parent may score some goals in that game, but you will have a weaker team as soon as the parent steps off the field.
Health Savings Accounts (2004-03-29) Printer friendly version
Insurance is best used to limit catastrophic risk, not pool everyday expenses. Therefore affordable medical insurance will have a high deductible. Out of pocket expenses below the deductible will provide sufficient negative feedback to prevent skyrocketing insurance costs.
Ignore the Politicians and Take Control of Your Financial Freedom (2004-03-22) Printer friendly version
During elections the political dialog assumes that the wellbeing of your future is out of your control and in the hands of politicians. This is simply not true. You have the freedom to take control of your finances and your life.
The High Cost of Medical Benefits (2004-03-15) Printer friendly version
There are many ways to address the problem, but all of the solutions that will work involve negative feedback, and the best solutions unify payment, empowerment and benefit in the same individual.
Everyone needs some frivolous purchases (2004-03-08) Printer friendly version
Everyone needs some fun in their life, and sometimes fun costs a little money. But frivolous purchases can also rob a family of the savings they need to reach their goals.
Ten Principles for Teaching Children about Money (2004-03-01) Printer friendly version
Every purchase, investment, or donation can be a time to teach your children something about your values.
Long-term care insurance is too risky and too expensive (2004-02-23) Printer friendly version
Usually it is not having insurance that is considered risky, but there are safer ways of protecting you and your family than insurance.
Careful records can result in capital gains (2004-02-16) Printer friendly version
Keeping a careful accounting of your investment's cost basis isn't glamorous, but it can help you save time and money when it comes time to sell.
Wealth is what you save, not what you spend (2004-02-02) Printer friendly version
Many people mistakenly believe that their financial well-being is outside of their control. It isn't. Repair, make do or do without! Your financial future is made is every day's decisions to spend money or save and invest.
Speed is not critical when investing (2004-01-26) Printer friendly version
An investor is like an orchard farmer who goes to the store to buy some peach trees. A speculator buys some peach trees because he sees that the store is running out, and then stands in the parking lot hoping to resell at a profit.
Fund a teenager's retirement as a multi-millionaire for only $18,000! (2004-01-19) Printer friendly version
We teach teenagers ten times more about sexuality than money. Many get the wrong message about what we expect them to be engaged in. Give this article to a teenager and encourage them to start a Roth IRA.
Social Security Can Be Saved (2004-01-12) Printer friendly version
Social Security can be saved. The solution actually costs less while preserving benefits. It is nothing short of miraculous.
Compute Your Net Worth Once A Year (2004-01-05) Printer friendly version
The yearly cycle of financial planning begins with computing your net worth at the start of each New Year.
Financial Resolutions for the New Year (2003-12-29) Printer friendly version
Here are ways to spend less money that are simple, specific, and concrete enough to keep.
Money can't buy you happiness (2003-12-22) Printer friendly version
Financial planning is primarily about living life and using money to further values that transcend the things that money can buy. Reviewing your values may not result in a dramatic career change, but it will help you to see ways to align your actions to your goals.
Using a mortgage wisely (2003-12-15) Printer friendly version
While most debt is bad, a home mortgage can be used to your advantage if you follow all seven of these rules when financing or refinancing your home.
Holiday Joy Doesn't Cost A Fortune (2003-12-08) Printer friendly version
Scrooge's riches did not make him happy. Fezziwig's celebration did not make him poor.
How to get out of debt (Part 5) (2003-12-01) Printer friendly version
Reconstructive surgery
How to get out of debt (Part 4) (2003-11-24) Printer friendly version
Emergency medicine
How to get out of debt (Part 3) (2003-11-17) Printer friendly version
Stop the bleeding
How to get out of debt (Part 2) (2003-11-10) Printer friendly version
Stop the worst bleeding
How to get out of debt (Part 1) (2003-11-03) Printer friendly version
Triage
Don't eat yourself out of financial security (2003-10-27) Printer friendly version
The worst financial problems stem from trying to live a champagne and caviar lifestyle on a beer and chips budget.
Managing cash is key to meeting goals (2003-10-20) Printer friendly version
Managing your family's cash is key to meeting your financial goals.
Gifting Your Gains Can Save You Money (2003-10-06) Printer friendly version
Americans are a generous people, and this is the time of year when most people do their charitable giving.
Investment Losses Can Save You Money (2003-09-29) Printer friendly version
In the process of building wealth, saving a penny on your taxes is just as important as earning a penny in the markets.
California's Recall is a warning to us all (2003-09-29) Printer friendly version
Forget the fact it is a political battle, we can still learn from the California recall fiasco.
Slow and Steady Wins The Race (2003-09-22) Printer friendly version
Financial lessons from a snapping turtle.
How Risky Do You Want To Be? (2003-09-15) Printer friendly version
Greed and fear give way to doing what it takes to have the best chance reach your financial goals. Renamed: "Investment plans require clear goals."
The Implications of A Sharply Rising Money Supply (2003-09-08) Printer friendly version
A policy of accelerated money growth by the Fed will have some significant consequences. Renamed: "Gauge economy by keeping track of money supply."
The Use of Covered Call Options (2003-09-01) Printer friendly version
This week we will explain one of the safe forms of options: "Selling covered call options." Renamed: "Best to buy when exercising options."
Five Reasons to Invest Outside the US (2003-08-25) Printer friendly version
Here are five reasons why you need to continue to have a significant foreign stock investment.
Am I Diversified? (2003-08-18) Printer friendly version
While everyone agrees that you should be diversified, it is important to know what your manager means by the term "diversified."
Family Budgeting (2003-08-04) Printer friendly version
Squirrel away money when you can during the financial lifecycle.
June: The Month of Wedding Financial Planning (2003-06-15) Printer friendly version
Couples getting married in June usually don't take the time for pre-marital financial counseling. Yet much of the friction in marriage stems from different financial perspectives, and how money is handled is often a factor in divorce.
Tax Cuts For Those Who Pay (2003-06-04) Printer friendly version
The recent tax cuts signed by President Bush are continuing to be attacked by Democratic Presidential hopefuls who say it is comprised largely of costly and unjustified tax breaks for the wealthy. Let's put tax cuts in terms everyone can understand: paying for lunch.
Tax Freedom Day 2003 Arrives in Virginia on April 15th (2003-04-12) Printer friendly version
Tax Freedom Day arrives in Virginia on Tuesday, April 15th this year. That's when we stop working for government and start working for ourselves.
The History of Mutual Funds (2003-03-10) Printer friendly version
The purpose was to pool money in order to obtain professional management to attain an investment objective and diversification at a reasonable cost.
Don't Tax Dividends Twice (2003-01-11) Printer friendly version
The proposal to eliminate the double taxation of dividends is a good one for many reasons.
Will the U.S. go the way of Japan? (2002-11-18) Printer friendly version
The Japanese economy has suffered a 12-year decline. Are we in the US likely to follow the Japanese pattern of economic and stock market decline?
The Democratization of Wealth (2002-10-01) Printer friendly version
Corporate executives today are held in very low esteem. Many believe that executive pay is excessive and something must be done to bring it down to more justifiable levels. Actually, each of us strives to do the best we can, and that effort automatically serves the larger common good. Although the average annual income for Americans is $26,000, a few earn megabucks as entertainers, athletes, corporate executives and business owners.
Strategies for Today's (Fall, 2002) Stock Market Investing: Why your portfolio many not be ready for (2002-09-11) Printer friendly version
A great many investment portfolio's are broken and need fixing. Investors have mistakenly assumed that they should continue doing the same things that worked during the past bull market. The times and circumstances have changed, and a prudent investment strategy should adjust accordingly.
The United States: Capitalist Model to the World (2002-09-11) Printer friendly version
A year ago this morning, Osama bin Laden and the terrorist network al Qaeda attacked the United States. They hate us and have given many reasons why. However, I believe the unstated reason is that they envy our economic power and strength -- in comparison to their relative poverty and backwardness. In effect, they were attacking the heart of our capitalistic system.
The Five Most Important Documents to Have (2002-09-06) Printer friendly version
Communicating honestly about your finances with your family and putting your estate in order passes on a legacy of foresight and financial wisdom that will help generations to come.
How to Avoid Higher Cost Mutual Funds (2002-09-05) Printer friendly version
Investing in some mutual funds is like buying a $3 candy bar and paying $5 shipping and handling. All mutual funds are not created equal, and you can boost your returns by doing a little homework before writing a check.
How to Avoid Another Stock Market Bubble (2002-09-02) Printer friendly version
We suggest that Congress look at the incentives they themselves have created in our so-called "system" of taxation.
The New World Order (2002-06-20) Printer friendly version
On September 11, 2001, two hijacked airliners crashed into the twin towers of the World Trade Center. Soon thereafter, a third hijacked plane struck the Pentagon. A fourth plane, bound for a high-profile target in Washington, D. C., crashed into a field in southern Pennsylvania. In total, more than 4,000 were killed as a result of these terrorists' acts. Usmana bin Laden is the prime suspect and the U. S. is in a state of war against him and international terrorism in general. Everything has changed since September 11, 2001.
Family Budgeting (2002-05-29) Printer friendly version
Spending less than you earn is the foundation that creates the capital for investing and wealth building.
Tax Freedom Day Arrives in Virginia on April 24th, 2002! (2002-04-24) Printer friendly version
Tax Freedom Day arrives in Virginia on April 24th this year, according to the Tax Foundation. That's when we stop working for government and start working for ourselves. For the average worker, all of the earnings of the first 113 days pay taxes to the federal, state and local governments. Starting April 24th, we Virginians are free -- at last -- to take care of our own family's needs.
Tax Freedom Day 2002 Arrives in Virginia on April 30th (2002-04-12) Printer friendly version
Tax Freedom Day arrives in Virginia on Wednesday, April 24th this year. That's when we stop working for government and start working for ourselves.
High Prices for Energy are Good! (2001-05-01) Printer friendly version
Most look at high energy prices as a bad thing. I will concede that high prices will hurt some in the short run, but over time, higher oil prices will be very good for our economy, for our society and for the world.
One day to take stock of our giant tax burden (2001-04-26) Printer friendly version
May 3 is Tax Freedom Day for the nation as a whole, according to a new report from the Washington-based Tax Foundation. That's when we stop working to pay local, state, and federal government and start working for ourselves.
Tax Freedom Day 2001 Arrives in Virginia on April 30th (2001-04-25) Printer friendly version
Tax Freedom Day arrives in Virginia on Monday, April 30th this year. That's when we stop working for government and start working for ourselves.
Unfortunately, The Stock Market IS a Leading Indicator (2001-04-01) Printer friendly version
The dreaded "r" word (recession) is becoming more and more possible as company after company announces that their sales are rapidly dropping. Economists are divided almost evenly as to whether we are already in a recession. The official definition is two quarters or six months of decline in our national output, the Gross Domestic Product.
We Need a Better Income Tax System (2000-03-31) Printer friendly version
As we come to the end of filing our annual income tax returns, it's a good time to reflect on the tremendous waste of time and the damage we are inflicting upon ourselves, especially here in Silicon Valley.
DOW 36,000 OR 6,000??? (2000-03-02) Printer friendly version
The Dow Jones Industrial Average is now trading at a level of 10,000. Some believe that it is hugely over-valued, that we are in a bubble, and that a big correction is overdue. Others believe the contrary that it is actually undervalued and should continue to go higher. Which school is correct? Let's examine the arguments and then you can be the judge.
The Wealth Effect (1999-03-01) Printer friendly version
We live in very prosperous times. The economy has been expanding at a very steady rate over the past eight years. More people, 138 million, are employed than ever before. The unemployment rate is at a 29-year low of only 4.5 percent. Inflation is under 2 percent. As a consequence, standards of living are improving for most people, and the times, they are good.
Privatize Social Security
(January 1999 NAPFA Journal) (1999-01-01) Printer friendly version
Social Security is a very poor investment for workers to fund their retirement. Workers should be allowed to invest into their own personal savings account at least part of the 12.4 percent that they (and their employers) now pay in taxes to Social Security.
Is the Era of Big Government Really Over? (1998-12-29) Printer friendly version
In 1996, President Clinton said that "the era of big government is over?" At first blush, that good news might appear to be true because we are very, very close to getting rid of the budget deficit and balancing the federal budget for the first time since 1969. On the other hand, in the State of the Union message earlier this week, the President talked about more than a dozen programs that he wanted to start or expand.
Global Financial Crisis
(November 1998 Newsletter) (1998-11-01) Printer friendly version
We are probably at the beginning of a prolonged bear (down) stock market. the market is still very high compared to average valuations. For the past seven decades the market had an average P/E ratio of 14 and an average dividend yield of about 4.5 percent.
Tax Freedom Day is May 10th for 1998 (1998-04-10) Printer friendly version
The average American will work 129 days from the beginning of this year through May 9th to pay for taxes at all levels of government. On May 10th, the worker will be free -- at last -- to take care of his or her own needs. The burden of government has expanded by one day from last year and now stands at the highest level since World War II!
It is Time to "Scrap the Tax Code" (1998-04-08) Printer friendly version
As a Enrolled Agent and a professional tax preparer, I think the current tax code "stinks" and should be completely scraped. The time has come adopt a tax code that looks like someone designed it on purpose.

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Avoid Budget Busters Part 2 - Curb Your Worst Impulses (2010-03-08)

Get control of the spending that breaks the bank. Certain purchases that are typically both unnecessary and unplanned are budget busters. Avoiding these financial slips requires hedging some of our worst impulses and constraining our desire for instant gratification.

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