Recently, I was sitting with a client celebrating the fact that her IRA balance is nearing $1 million dollars. This is always an exciting milestone. I rang the bell for her. In 2023 my client will turn 72 and she will need to take a distribution from her IRA. The distributions are called Required Minimum Distributions. (RMDs) RMDs must also be taken from employer retirement accounts such as 401k/403b plans starting at age 72.* The starting age was recently changed, it used to be 70.5The amount that must be distributed is based on a calculation – more on that below. Why does the government require these distributions? Because in most cases the …
Markets Have the Worst First Half of a Year in Decades – now what?
Do you remember Paul Harvey? If you don’t remember life before the internet skip this paragraph. But those of a certain age may remember his daily radio program – at the end of each broadcast he would say in his distinctive radio voice: “And now you know…the rest of the story”. Earlier this month you likely saw the headlines: The first six months of 2022 saw the S&P 500 decline 21%. The S&P 500 is a group of the 500 largest stocks in the United States. The last time the S&P 500 fell this much in the first half of the year was over 50 years ago, in 1970, shown here: What do you think happened in the second half of …
Have You Ever Really Looked At Your W-2 Form?
Tax season is over and I am grateful my office coffee maker waited until April 20th to stop working. I enjoy coffee year round, but especially during tax season. You may find this strange, but I actually enjoy looking at tax forms so while it’s fresh in my mind I’d like to review one of the most common ones, the W-2.If you are employed, you receive a W-2 each year from your employer. The IRS and, if applicable, your state taxing authority also receive the form. Some taxpayers briefly contemplate their W-2 to prepare their own taxes. For those who outsource their tax prep, it gets thrown onto the pile of forms to give their preparer. Many don’t even take it …
When You Think About Investing, Don’t Think About The News
Today’s newsletter features a great article in the NYT by financial columnist Jeff Sommer. The news and images coming out of Ukraine are horrifying and my heart aches for the millions impacted by Russia’s aggression. It is difficult to imagine what they are going through. The article begins: The worse the news, the less you should think about it. No, that's not a good guide to life. but shutting out the din of current events is a reasonable approach when investing. Sommer speaks with Richard Thaler, a Nobel Prize winning economist who pioneered the study of behavioral economics. Follow the news, of course, and let your emotions flow. But don't let them affect …
A Stock Market Peak is not a Cliff
I ignore a lot of financial journalism. Much of it is noisy clickbait and not relevant to the long-term goal-focused investor. In fact some have dubbed it “financial porn”. But this headline, dated December 10th, 2021 from Marketwatch caught my eye: The S&P 500 is an index (group) of stocks that includes 500 of the most valuable companies in the United States. This index includes companies nearly everyone has heard of such as Amazon, Google, Microsoft, Facebook, Home Depot, and Tesla. Except for Tesla I’ve used each of these company’s products and you probably have too. The index went on to notch a total of 70 record closes in …
