Blog
High Inflation Leads to Changes in Tax Brackets, the Standard Deduction, and Contribution Limits
There are some significant tax related changes coming into effect which impact tax brackets, the standard deduction, retirement account contribution limits, and estate taxes. Each year, the Internal Revenue Service (IRS) adjusts the...
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Unemployment & Recessions: The Conventional Wisdom is Backwards
Data provided by the Bureau of Labor Statistics (BLS) for August of 2023 showed that the US unemployment rate was 3.80%, one of the lowest in 50 years (July’s number was 3.50%). Meanwhile, Wall Street economists predicted a...
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Stock Pricing and Valuation Basics
Most people are somewhat familiar with how stock prices work. A share of stock represents fractional ownership in a company. Stocks typically trade on an exchange – such as the New York Stock Exchange or NASDAQ – where...
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Bond Valuation and Yield Basics
A Bond is a simple financial instrument. The investor - or lender - loans money to a borrower (typically a company or government) for some specific or general purpose. The borrower is contractually obligated to pay the lender some...
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US Default Averted: One Concern Has Been Resolved
A few weeks ago, we wrote about a story that was dominating the headlines and conversations on Wall Street, Main Street, and Washington: Will the US default on its debt? We wrote: “Congress is debating whether to raise the debt...
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Should Retirement Planning Include Paying Off Your Mortgages Early?
An article in AARP Magazine (Our Big Mortgage Debate) discussed whether to pay off or continue a mortgage during retirement.That is an important financial planning question. One aspect is mentioned in the article: the guaranteed rate...
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Should You Plan for a Default?
Congress is debating whether to raise the debt ceiling, the maximum amount the U.S. Government can borrow by issuing bonds. If the debt ceiling is not raised, the U.S. Treasury Secretary Janet Yellen estimates the Government would have...
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Series I Savings Bonds; What You Need to Know
If you have a large amount of emergency funds in bank accounts, you should consider Series I Savings Bonds (I Bonds) as an alternative for some of the money. Transferring some of your emergency funds to Series I Savings Bonds will...
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How to Add a Beneficiary to Series I Savings Bonds
If you have Series I bonds, you should check to see that you have named a beneficiary. It doesn’t take long to do, and you will immediately get a confirmation of the change. This simple step will ensure the bonds transfer as you...
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Three TSP Trends
A reversal in performance from last year’s negative returns, a change in the most popular fund and disappointing results for the Mutual Fund Window are noticeable TSP trends.ReturnsTSP investment returns can quickly change from...
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Despite Continued Uncertainty, Financial Markets Start 2023 with Gains
Stock and bond markets ended the first quarter of 2023 with solid gains, even though investors remained concerned about inflation, continued interest rate hikes by the Federal reserve, whether Congress will vote to increase the debt...
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Surging Interest Rates and Inflation Result in the Worst Year for Stocks and Bonds in Decades
Stock and bond market returns were strongly negative in 2022. Multi-decade highs in inflation combined with historically aggressive Fed rate hikes and growing concerns about corporate earnings and a possible recession, pressured both...
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The Ups and Downs of Bonds and Interest Rates
Only 28 percent of Americans (Source: FINRA) understand one of the most basic investment relationships: When interest rates increase, bond prices decrease, and when interest rates decrease, bond prices increase. This lack of...
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Mike Causey, 1940-2022
Mike Causey died at his desk September 26th doing what he loved; writing a column. He had just finished recording a show, which would be his last. Mike was not well known to many people in the U.S. but he was a well known and respected...
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Fewer TSP Millionaires as Markets Decline
If you have seen your TSP Balance decline in 2022, you are not alone. According to an August 2022 study of TSP participant balances, the number of “TSP Millionaires” is down 36% from the end of 2021 through August 2022. TSP...
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ESG Ratings Confusion: What Has Changed in 3 Years?
If you are interested in ESG investing, you may be wondering if you are going to pay a performance penalty for doing so. In order to look back and compare the performance of traditional investments versus those that are better in terms...
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Investing and Market Timing (And Covid and Ukraine)
Some investors try to use “market timing” to boost returns. “Market timing” means predicting stock market declines and advances and then transferring funds between the stock and bond investments in advance of...
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Is a Stock Market Correction Coming? No Doubt About It!
"Everything old is new again." Many stock market commentators and investors are upset about recent declines and poor performance this year. For instance, the S&P 500 Index (not including reinvested dividends) is down 8.6% since the...
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ESG Investing: Let’s Talk About Green Washing
It is almost impossible to talk about ESG (‘Environmental, Social, and Governance”) investing without talking about the issue of greenwashing.Greenwashing is giving the appearance (or stating that you have the qualities) of...
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Environmental, Social and Governance (ESG): A Hot Topic for Investors
In 2020 and continuing through today, there has been an explosion both in interest in and offerings of ESG investing.First of all, what is “ESG” investing? ESG investing is defined as making investment decisions considering...
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Which Investment Accounts to Access First When Retired
Once retirees need investment withdrawals to supplement their Social Security and pension payments, they need to decide which type of account to access first. Strategies will vary depending upon the goal. Potential goals include...
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The Thirty-two Year Decline in TSP G Fund Returns
Since its introduction in April 1987, G Fund returns have declined substantially. In 1988 and 1989, the G Fund annual return was 8.8%. In 1990, it was 8.9%. In 2019, the return was 2.2%, a 75% decline from 1988 and 1989.The decline...
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Art Negotiates with His Wife
My wife is an interior designer (www.DanzigerDesign.com) and regularly posts videos to social media. Two weeks ago she posted a video of our discussions about our bathroom renovation. You may find it amusing. Click below for a laugh.
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Will the Election Affect Investment Returns?
The Presidential election is less than two months away. Some investment clients have asked me if we should prepare for a result that causesThe stock market to be usually volatile before the election orA stock market crash because of a...
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Who Is Your Custodian?
Your custodian? No, this is not about the workers who clean and maintain buildings. It is about something much more important: companies that hold and safeguard investments. According to Investopedia,“A custodian is a financial...
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The Illustrated Guide to Bull and Bear Markets
“Bull Market” and “Bear Market” are common financial terms and it’s important for investors to know what they mean. The short definitions:A Bull Market is a 20% or greater gain from a previous stock market...
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Is Your Investment Advisor a Fiduciary?
Choosing an investment advisor (portfolio manager) isn’t easy. There are different designations, compensation methods, business methods and personalities to consider. One way to narrow down the list is to consider only investment...
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Four Ideas for Saving on Taxes While Supporting Your Favorite Charities by Tanya Rapacz, CFP(R)
The introduction of the $24,000 (for couples) standard deduction changed charitable giving for many Americans. Many taxpayers using the higher standard deduction no longer saw their taxes reduced by charitable giving. That may be the...
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Are You Overinvesting in the TSP?
Last year I spent a day on Capitol Hill providing pro bono advice to Senate employees. Many of them were investing as much as they could in the TSP. In some cases, I suggested that they invest less.Why would I do that?Well, investing...
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Retirement Accounts Are Not Investments
Retirement accounts (401k, TSP, 403b) are not investments. Mutual funds are not investments. Neither are IRAs. Now before you start feeling like I just pulled the rug from under you, let me explain. Rather than actual investments,...
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Safety in the TSP– What Does It Cost?
The terms “safe” and “low risk” are often used to describe the TSP bond funds (G and F). When TSP investors hear that the G and F Funds are safer, many take it to mean that investing in those funds minimizes the...
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Bitcoin and the $85,000,000 Pizza
Bitcoin -- a “digital currency” or “digital money” -- is receiving a lot of attention. Not surprising since the Bitcoin price increased 1700% this year, from $952 to $17,371 as of December 12. Definitely...
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Indexes and Index Funds -- So What's the Difference?
S&P 500 Index funds are one of the most common investments for individual investors. But what are “index funds” and how do they compare to “indexes?”Indexes and an index funds are different. Cousins, maybe, but...
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Is the TSP G Fund Safe or Risky?
The G Fund is often described as the safest of the TSP investment funds. Sometimes it is called the “super safe” G Fund that “never has a bad day.” As a result, TSP participants keep a higher portion of their...
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Your Flood Risk May Be Greater than You Think
Your home may be at greater risk of flooding than you think. Storms are not the only cause of floods. And global warming increases flood risks from storms because:-- Flood zones change more rapidly than flood zone maps and global...
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What's the Biggest Financial Risk During Retirement?
Worried about running out of money during retirement? Well, that's a legitimate concern. But "running out of money" isn't a very exact term. Most retirees will never run out of income. They will always have “permanent...
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TSP (for Federal Employees and Retirees): Is there a Problem with the I Fund?
Mike Causey recently interviewed me on Federal News Radio. (You can listen to the interview here). One of the main topics of our discussion was the I Fund, which turns out to have low performance even when compared to many other...
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Hire an Investment Manager or Do It Yourself? The Surprising Answer from Vanguard
Are investment managers cost effective? Vanguard says they are. Vanguard is often associated with DIY (do it yourself) investors. However, Vanguard doesn’t seem to think that DIY is the best solution. Vanguard’s research...
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A “Trump Bump” Instead of a “Trump Slump” Makes Chumps Out of Stock Market Experts
It wasn’t just political experts who looked bad after Donald Trump’s recent victory. Stock market forecasters also looked bad. Most predicted that if Trump won, it would be bad for stock prices. Whoops! Before the election,...
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Stock Market Forecasts That Are Worth Reading
I recently blogged on the unreliability of stock market forecasts (Are Stock Market Forecasts Worth Reading?). Mutual fund firm Dimensional Fund Advisors published a similar article (Jim Parker, 2016: Ten Predictions to Count On) a few...
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Your Anterior Cingulate Cortex and the Stock Market
2015 was a poor year for stocks. The S&P 500 Index (with reinvested dividends) increased only 1.4%. The beginning of 2016 has been worse. The S&P has declined approximately 7.5% year to date. Small cap stocks were worse in both periods...
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Are Stock Market Forecasts Worth Reading?
December and January are popular months for stock market forecasts. But are stock market forecasts reliable? A recent article says they are not. The article (Barry Ritzholtz, Would you let a mystic manage your investment portfolio? The...
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Do stock market fluctuations cause bad decisions?
Do stock market declines get you down? Do you overreact to advances? Join the crowd. The illustration below summarizes the tendencies of many investors. When stocks are high they become enthusiastic and buy. They lose enthusiasm when...
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Tax-Loss Harvesting: You Don’t Need a Plow and It Can Reduce Your Taxes
As December 31 approaches, you – or your investment advisor – should review taxable investment accounts for “tax-loss harvesting” opportunities. Tax-loss harvesting is an important -- but often neglected --...
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Stay With The TSP or Transfer to An IRA -- A Key Retirement Decision for Federal Retirees
The Thrift Savings Plan (TSP) offers many benefits but flexibility of withdrawals is not one of them. Retirees often experience changes in their income needs. Individual Retirement Accounts (IRA) offer more flexibility for withdrawing...
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Are Houses a Good Investment? Part 2.
A recent article in the Washington Post discussed housing as an investment and whether to buy or rent. It was an excellent analysis of a complex situation. The basic answer is no, houses have not been a great investment. Over the...
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Will You Run Out of Money During Retirement?
Imagine: You are 84, living on $2,500 per month in Social Security plus $5,000 per month withdrawn from your investments. One of your checks bounces. You find out it’s because your investments are exhausted. There is nothing left...
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Lifecycle Funds: What’s Good and What Isn’t
I was a featured guest on a Federal News Radio broadcast on March 19. We discussed the advantages and disadvantages of the Lifecycle Funds in the Thrift Savings Plan. The Thrift Savings Plan is the 401k plan for federal employees and...
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How Safe Are Certificates of Deposit?
Certificates of Deposit (CDs) are often considered a “low risk” investment. Depending upon the type of CD, they can offer a guaranteed rate of return, no fluctuation in value and federal deposit insurance up to $250,000,...
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Is Your House a Good Investment?
Is your house a good investment? Economist Robert Shiller, an expert on housing prices, addressed this topic in the April 13 New York Times. Shiller’s research indicates that housing prices, over the long term, typically rise .2%...
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Investing In Gold: Is A Bubble Popping?
The investment website SeekingAlpha.com recently published my article on Investing in Gold: Is a Bubble Popping? You can read it by clicking on the link. In the last two days, over 7700 people viewed the article and over 200 commented....
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Does Your Investment Advisor Have a Conflict?
Which type of investment advisor is best for you: a small, independent financial advisor or the private client group of a large national firm? A recent New York Times article (“Selling the Home Brand”) reveals abuses that...
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Demand for Gold Declines, Will Prices Follow?
Demand for gold has been declining worldwide, but prices haven’t. What does this mean for someone investing in gold? Gold demand declined 11 percent in the third quarter of 2012 compared to the third quarter of 2011, according to...
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Who is better for the Stock Market: Democrats or Republicans?
J.P. Morgan’s June, 2012 Guide to the Markets report detailed the affect on stock market returns of political control of the White House, Senate and House of Representatives from 1940 to 2008. The results are surprising.According...
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Your IRA Is Not An Investment
Your IRA is not an investment. Your mutual funds are not investments. Neither are your 401(k)s or ETFs. Now before you start feeling like I just pulled the rug from under you, let me explain. Rather than actual investments, they...
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Is Your House Underinsured?
If your homeowners insurance is based upon the resale value of your house, you may be underinsured. There are situations where the cost to rebuild may exceed the limits in your policy, forcing you to pay any difference out of pocket...
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Stocks versus Bonds, Part 3
The July 2, 2012 “Ahead of the Tape” article in the Wall Street Journal discusses investor preferences for bonds over stocks.You can read it here According to the article:“Since the start of 2007, a cumulative $350...
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Stocks versus Bonds, Part 2
The May 2012 edition of the Morningstar EFTInvestor newsletter (written by Paul Justice, CFA, Director of North American ETF Research for Morningstar) contained some interesting comments about the percentage of investment assets going...
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Retirement Plan Strategies When you Change Jobs (or Retire)
Leaving a job creates opportunities with qualified retirement plans – 401(k), 403(b), TSP – that can enhance (or harm) your future financial health. The four choices for retirement plans when going to a new employer or...
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"Don't Grow Old Without It"
Should you buy long-term care insurance? An article in the Wall Street Journal summarized the issues in a fair and reasonable manner. I agree with the title of the article: “Don’t Grow Old Without It.” Contact me if...
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Stocks versus Bonds Part 1
Bonds outperformed stocks over the last 10 years, so why invest in stocks?Burton Malkiel, author of one of the best books ever on stock investing (A Random Walk Down Wall Street, now in its 10th edition), explains it well in the...
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