Category: Personal Finance

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TreasuryDirect is My Favorite Way to Buy Bonds

A color plate image of Christie's Auction House in London, from 1808.

I love TreasuryDirect! It’s a free site run by the US Government to allow all citizens to buy US Government debt securities. You can buy several types of savings bonds, and more importantly, you can directly participate in treasury bill, note, and bond auctions. This means that individual investors with as little as $100 can invest on perfectly equal footing with huge institutional investors. They all get exactly the same pricing. It’s amazing! I don’t think there’s any other situation in which an individual can buy a security for such a small amount and get exactly the same terms as CALPERS buying hundreds of millions of securities at the same time. It’s a true egalitarian marvel.

It’s actually slightly dumb for me to even write this article because the service is directly competitive with my core service offering as a fee based financial adviser. The more that my clients or potential clients invest with TreasuryDirect, the less they invest with me, and the less money I make. But I don’t care, it’s such a cool system that I want lots of people to know about it anyway. But before we dive into TreasuryDirect, let’s take a look at how US Treasury auctions work…

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Questions You Should Ask Your Financial Adviser

Working with a financial advisor can be one of the most important decisions you make for your financial future. A good advisor acts as a trusted guide, helping you navigate complex financial matters, plan for your goals, and make wise investment decisions with your hard-earned money. But not all financial advisors are created equal. With so many options out there, how can you find an advisor who is truly qualified, has your best interests at heart, and will be a good fit for your needs?

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Do an IRA Rollover After Leaving Your Job

I often encounter questions about the best strategies for managing retirement savings. One common query is whether employees should transfer their 401(k) savings into an Individual Retirement Account (IRA) after retiring or switching jobs. The short answer is yes, and in this article, I will explain why this is generally a smart move for most people. I will also discuss the benefits of an IRA, the process of transferring your 401(k), and some potential pitfalls to avoid.

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Tax Strategy

Tax strategy is one of the three pillars of sound investment strategy, along with minimizing fees, and diversification. In this article, we will explore a wide range of tax-advantaged investment vehicles, including 401(k) and 403(b) plans, IRAs, SEP plans, HSAs, and 529 plans for children. We will also compare and contrast Roth and Traditional tax treatments and discuss advanced strategies such as tax loss harvesting, backdoor Roths, and more. Finally, we will delve into how tax considerations can inform portfolio allocation, including placing higher risk, higher return assets in tax-advantaged accounts and lower returning assets in taxable accounts.

A calculator and some personal finance worksheets
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Is the S&P500 Index Actually Diversified?

The S&P 500 index, a widely followed benchmark of the U.S. stock market, has long been considered a reliable indicator of the overall health of the economy. However, a closer look at the index reveals a surprising concentration in big tech stocks. This phenomenon is not only a reflection of the growing dominance of technology companies in the market, but also a result of the market-weighted structure of the index. Let’s explore the reasons behind this concentration and discuss the potential risks it poses to investors.

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Backdoor Roth IRA Strategies

For many individuals, saving for retirement is a top priority. One popular savings vehicle is the Roth IRA, known for its tax-free growth and withdrawals. However, not everyone is eligible to contribute directly to a Roth IRA due to income limits. Enter the Backdoor Roth IRA and Mega Backdoor Strategies, which provide high-income earners with an alternative path to tax-advantaged retirement savings. In this article, we’ll explore these strategies, their benefits, and potential pitfalls.

A goofy burgler sneaking towards a back door, as a joke about using backdoor Roth IRAs.
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Investment Accounts for Children

I frequently get asked about investment options that parents can establish for their children. It’s an important question, and there are several options available. In this article, I’ll compare and contrast some of the most popular types of investment accounts for children that parents can set up. For this exercise, I’ll focus on 529 plans, UTMA/UGMA accounts, Roth IRAs, and regular taxable brokerage accounts.

A mom and three young children
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Inflation Risk and How to Protect Your Portfolio

The biggest financial headlines in 2022 have been about poor market performance amidst high inflation. This has led many investors to search for ways to protect the value of the savings from eroding under inflation. There are 3 primary ways to guard against rising prices as a US-based investor: 1) Invest in equities or equity-like securities, 2) Invest in I-bonds, or 3) Invest in TIPS. But first, what exactly is inflation?

A raccoon enjoying inflation. Created with DALLE-2.
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Five Reasons to not Panic in a Bear Market

2022 has been an extremely bad year for almost every asset class! Stocks and bonds have suffered large losses. And inflation has been high, further eroding the value of investors’ savings. In a bear market, it is absolutely critical for long term investors to avoid panic selling at all costs.

I generated this text in part with OpenAI’s large-scale language-generation models. Upon generating draft language, I reviewed, edited, and revised the language to my own liking and I take ultimate responsibility for the content of this publication.

raccoon businessmen panicking in dusty city experiencing a bear market
A painting of raccoon stockbrokers panicking during a market crash – StableDiffusion v1-4
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