Tuesday, December 12, 2023

Dave Ramsey (again): Some Good, Some Bad


If you have followed my blog for a while, you already know I’m not a fan of Dave Ramsey, the alleged Christian financial advisor and radio personality.  While he may advocate some solid, basic money management principles, I think he goes off the rails with some of his retirement advice (I’ll get to that momentarily) plus I think he is insulting, rude, proud, and just generally not what I would expect a genuine Christian to be.

But that doesn’t mean I won’t defend him when I think he’s right.  And this week he came under attack from another advisor who says that rather than saving money, as Ramsey advises, people should concentrate on creating and maintaining an income flow.  Savings?  That’s for chumps.  Put your money into real estate.  (You get one guess what field of investment this advisor specializes in.)

Whenever someone asks whether real estate is a good investment, I always quote Will Rogers on the topic: “Invest in land; I hear they’re not making any more.”  But I do that in jest, because I’ve known people who pinned their current and future income hopes on investing in rental properties and then lost nearly everything when the real estate market went bust.  Ditto for people who were buying fix-up properties to flip them for a profit.  Dave Ramsey himself fell victim to a real estate crash and went bankrupt.  It’s what launched him on his career advising others on how to avoid his mistakes.  So now he advises people to have at least three months’ income saved for an emergency, eliminate debt, save aggressively, and invest in stock index funds.

Not this most recent real estate-oriented critic of his.  He dismisses the concerns about sudden turns in the real estate market and just says not to get over-leveraged (owe too much money on the properties you’ve bought).  Your savings will lose value, but an income stream—if properly structured—will last as long as you need it.

Forgive me for being a skeptic.  I’m sure some folks have managed to make money in real estate.  But even pros can get it wrong.  Can you think of someone famous who has lost money in real estate?  Hmmm.

One recent criticism of Dave Ramsey does have merit, however.   Against all evidence to the contrary, he still contends that an annual withdrawal rate of 8% from one’s investments during retirement is sustainable.  No reasonable financial model supports this.  Running thousands of scenarios in what are called Monte Carlo simulations (a mathematical technique that predicts possible outcomes of an uncertain event) of the stock market, an 8% withdrawal rate did not work.  The usual 4% recommendation** was even found to fall short sometimes (i.e. the investor ran out of money before he died).  Some financial advisors had started recommending a 3% withdrawal rate but most have reverted to the 4% rule.

It can be hard to sort through all the conflicting advice from the talking heads.  But you can always pick and choose from their advice.  No one advisor is likely to be right 100% of the time.  And you can mix up your own approach.  Invest in the stock market and maybe even put some money in a real estate investment trust (REIT) if you want to venture into real estate without being a landlord.  Just don’t stop saving. 

Until next time,


**The rule works like this: In your first year of retirement, withdraw 4% of your balance for your living expenses.  In the second year, withdraw that same amount of money PLUS an amount to account for inflation.  So if your starting balance was $100,000 then you would withdraw $4000 the first year.  If inflation the second year is 3%, then that year withdraw $4120, etc.


“Be sensible and store up precious treasures—don’t waste them like a fool.”  Proverbs 21:20 CEV

Monday, November 20, 2023

A Spirit of Thanksgivings Past


It can be so disheartening to read the news.  Hate and division smother common decency and consideration for others.  War overtakes peace.  Am I imagining that it is worse than ever right now?

Being in that frame of mind, I thought I would re-post an essay I first put up on my blog November 24, 2018.  It’s one of my favorites, not for what I wrote but for what I quoted in the post.  I pray that it will touch you as well.  RY

  I am not sure I’ve ever had as many people tell me that Thanksgiving is their favorite holiday as I have this year.  I usually don’t ask them why they feel that way.  I guess I like to imagine the reasons.  Or maybe their expressed sentiments just launch me into thinking of my own Thanksgiving experiences and I become too mentally preoccupied to ask. 

As a child Thanksgiving granted me a short week at school.  It meant turkey (I really think that was the only time of the year I ate turkey in any form), cool days to play in the backyard with my brother (when we weren’t fighting), romping in the leaves we had raked, and swinging on the rope swing our dad had hung in the big tree. 

Such simple pleasures.  And they stand in stark contrast to what Christmas has become.  It’s almost trite now to say Christmas has become too commercialized; it’s so obvious.  It’s a mad rush, with so much pressure to finish the shopping, pick the right gift, not forget anyone, write Christmas cards (I don’t think I’m the last one that does that), and bake.  To businesses, Thanksgiving has just become the gateway to Black Friday, the annual Christmas shopping days countdown, and their push to make us spend money we don’t have.  They pretty much ignore Thanksgiving otherwise.

And I’m okay with that.  This holiday is golden to me, and I don’t want them to touch it because they’ll turn it into dross.  Let them go straight from Halloween to Christmas rush.  Leave Thanksgiving to the rest of us.

Joshua Rogers, a writer and attorney who lives in Washington, D.C., wrote a poignant essay about Thanksgiving this week.  He related his own experience growing up without a father and being embarrassed and ashamed by having to get free lunch at school each day because he was poor.  But he ended the essay powerfully as he recalled just what Thanksgiving meant to him and should mean to us:

I wonder who might be sitting around your Thanksgiving table this year being blessed with more than turkey and pecan pie. What kid — young or old — is finding solace in that moment where they finally belong? You never know what’s going on in people’s minds and hearts around the Thanksgiving table, but it can be a sacred space.

Thanksgiving is a holiday where the gift is the presence of people who welcome you, whether you’re related to them or not. There’s no price to be paid, no expectation that gifts must be given. No matter how out-of-place some of us may feel the rest of the year, if we get Thanksgiving right, it’s an invitation to enjoy free lunch, to feel loved without feeling any shame.

Whatever your financial situation, slow down right now.  Don’t let the Christmas rush sweep you up in its tide.  Let the Thanksgiving spirit continue, and savor the often overlooked most valuable things in your life.  Rich or poor, a spirit of thankfulness is a tonic, an antidote to materialism and the temptation to measure all things by money.

Happy Thanksgiving.


“When you become successful, don’t say ‘I’m rich and I’ve earned it myself’.  Instead, remember that the Lord your God gives you the strength to make a living.” Deuteronomy 8:17, 18 CEV

Wednesday, November 15, 2023

"High Deductible": An Example of Bad Branding?

When the Affordable Care Act went into effect over a dozen years ago, my role at a health management firm (okay, let’s be honest: it was basically an insurance company) at the time was to assist hospitals and provider offices in their interactions with the company, from credentialing to getting their claims paid.  I recall that many of the billing managers complained about the new health coverage policies (which my employer did not sell) that people were selecting from the new insurance exchange because they were choosing the cheapest policies, with high deductibles (the amount the patient must pay out of pocket before the insurance pays anything), and those patients were shocked when they had to foot the whole bill for an office visit or simple medical procedure, and of course the office manager or billing department got the brunt of the anger

I think most people now grasp the concept of “high deductible” and steer away from such policies.  But are they smart to do so?

MetLife estimates that 45% of employers in the U.S. offer a high deductible health policy that pairs with a Health Savings Account (HSA).  An HSA is an account into which money may be set aside by the employee (and his employer) tax-free to pay for health-related services, medications, or products.  If the money is withdrawn and used for that purpose it is not taxed—meaning the money going into an HSA is never taxed if used as intended.  The money in the account can even be invested and grow tax-free.  Sounds like a pretty good deal, yes?  Yet, MetLife says only 29% of employees own an HSA through their employer.

I suspect the low utilization rate owes to the fact that to contribute to an HSA one must be enrolled in the accompanying high deductible plan (minimum deductible of $1600 for an individual plan, $3200 for a family plan in 2024, per IRS regulations).  And as someone has said, “’high deductible plan’ is the worst branding.”  Who wants to be stuck with all that out-of-pocket expense?

But maybe we all need to do our math during open enrollment season.  An analysis by Voya Financial showed that 75% of individuals would have paid less with a typical high deductible plan paired with an HSA compared to a standard, lower deductible plan.  My own case is instructive.

When first given a high deductible plan option, I had the same initial reluctance to go that route, but the much lower monthly premium got my attention.  Plus the employer contributed a nice sum to the HSA (because they would save a bunch of money in their share of the premium cost, so they wanted to encourage participation).  These two factors alone nearly covered the higher deductible.  But with the other, low deductible option I always contributed to a medical Flexible Spending Account (FSA) to cover the deductibles and copays, and just a small portion of what I had been putting into the FSA, added to the premium savings and employer contribution would be enough to wipe out the financial risk of the higher deductible.  Plus, unlike an FSA, unused money in an HSA account rolls over year to year and even follows the employee if he leaves the company.

Out of the workplace now and covered under Medicare?  You can still take advantage of this concept.  There is a type of Medicare Advantage plan that offers a Medicare Savings Account that operates much like the private employer arrangement described above.  They are not offered everywhere.  I can’t find one available in my area.  But if you are covered by regular Medicare (as opposed to a Medicare Advantage plan) you can purchase a high deductible supplement plan to cover the 20% coinsurance Medicare doesn’t cover.  I pay one-third the premium for such a plan compared to a lower deductible plan, and with a handful of routine doctor visits and even a trip to the ER, I came out ahead this year (or at least as of this writing).

Math might not have been your favorite subject in school, but do some basic calculations this open enrollment season.  You might be surprised at how much money you’re leaving on the table by not considering a high deductible plan.

Until next time,


“For true wisdom has two sides.” Job 11:6 NIV*

*Scripture quotations taken from the Holy Bible, New International Version® NIV® Copyright © 1973, 1978, 1984, 2011 by Biblica, Inc.™ Used by permission.  All rights reserved worldwide 

Monday, October 30, 2023

Patience is a Virtue


Though I view with suspicion any attempt to add more “required learning” onto the curricula of our schools, I tend to believe more training in personal finance is a good thing.  A semester course might serve well, but incorporating finance into other subjects would also serve the purpose.  For instance, instead of the standard “if two trains left the station ten minutes apart” math problem, how about a word problem that deals with comparing the interest rates at two different banks with two different types of accounts with different terms?  And in senior Economics class, why not work in some material on how macro-economic trends (prime rate, money supply, etc.) affect personal finances?

But financial education can go off the rails, too.  I’ve read too many stories of personal finance classes that amount to a contest to see who ends up with the most money in a stock market investment simulation.  Students are given a certain amount of pretend money that they pretend to invest in real stocks and bonds, and through actively trading in these assets try to beat their peers.

I’m sure the students enjoy the competitive nature of a class that follows that format.  But while that might whet their appetite for investing, it can both fuel greed and diminish what I believe is one of the most important virtues of investing: Patience

I’ve beat that drum before in this blog.  We should not let the near-daily fluctuations of the market and the headline-grabbing scare stories (or unrealistically optimistic ones) about what the stock market is supposedly going to do drive our financial decision-making.  Slow, steady, and patient is the mantra.

This was driven home for me even more dramatically in a recent article by Eventide Asset Management, sent to me by Faith Fi.  It cited a story in the Wall Street Journal from December 31, 2009, that praised that decade’s best-performing U.S. diversified stock mutual fund, the CGM Focus Fund 2.  The fund had returned a remarkable 18% average annually over those ten years.  But astoundingly, the average investor in that fund actually lost 11% over that time period—all because they went in and out of the fund.  It went down in value, they sold their shares.  The fund went back up, they bought back.  In effect, they were selling low, after the fund had lost value (and thus turned a loss on paper into an actual loss) and buying back when the price had gone back up (buying high).  Missing out on just a few of the biggest single-day gains over a year’s time (or several years’ time) is enough to tank one’s net returns.  Buy and hold.  Find a few good mutual funds or electronic traded funds (ETF’s), invest in them regularly, and hold on to them long-term.  A bunch of singles and some smart base-running will get you home as surely (or more so) as swinging for the fences.

Until next time,


“A man’s wisdom yields patience.” Proverbs 19:11 NIV*

*Scripture quotations taken from the Holy Bible, New International Version® NIV® Copyright © 1973, 1978, 1984, 2011 by Biblica, Inc.™ Used by permission.  All rights reserved worldwide.

Wednesday, October 11, 2023

For Better, For Worse, But Maybe for Richer


Still laboring under a gender wealth gap, it seems women will get the last laugh.  Whether through inheritance, divorce, or simply outliving their husbands, it is estimated that single women will control $30 trillion in assets by the end of this decade, according to MarketWatch.  Characterized by MarketWatch as having played “second fiddle” for years to their significant other in financial affairs, these women will essentially triple their net worth between 2020 and 2030 as they take over management of their money that in most cases had been done by their now-absent male partner.

How will they handle all that wealth?  For many it will be intimidating.  My own wife fears taking over managing investments if I die, although I tell her she would do just fine.  She has handled financial matters in our home before and did a fine job.  I know several divorcees and elderly widows who have managed quite well as singles.  But I also know others who have not, who have suffered from poor decisions their husbands made, were left nearly broke from expensive divorce proceedings and a less than just settlement, or who feel completely lost around bank and investment accounts.  (And to be fair, I also know widowers who have struggled with the same.)  Of what pitfalls should these newly single women be aware?

First, they should learn as much as they can about Social Security.  No, that is not a pot of gold they get all at once, but over time Social Security benefits amount to a substantial sum.  Making wise and timely choices about that benefits program can pay huge dividends.  I’ve written before about a good resource for learning more about Social Security.

A divorcee after at least ten years of marriage?  Depending on if and when she remarried, she can claim benefits under the former husband’s earnings, and he doesn’t have to give permission or even know about it.  

Were she and her husband both claiming benefits under their respective earnings record, then the husband died?  Only the higher benefit of the two will continue; she will not collect both.  This can mean a huge cut in monthly income.

A widow can collect survivor benefits from her deceased husband’s earnings record and wait until later to claim her own potentially larger benefits.  (A widow can only collect one or the other; but each year she waits to collect her own benefits the monthly amount she will collect will grow by as much as 8%, until it maxes out at age 70.   If she had spent a good deal of time in the workforce, by that time her own benefit may well exceed the survivor benefit.)

Did the deceased husband have a pension, and did he select dual life annuity or single life annuity?  If the latter, the pension payout ends with his death.  This trips up many couples who opt for the bigger monthly payout of a single life annuity, not realizing it is only bigger because the income is only guaranteed for the pensioner, not his survivor.

There are tax implications, of course.  Filing single instead of married/jointly comes with a different tax rate.  There is a lower threshold for determining when Social Security benefits are taxed (yes, up to 85% of Social Security income can be taxable).  And living alone is more than half expensive as two living together.

Women tend to invest very conservatively, when they invest at all.  This can serve them well in some situations, but it is not a reliable means to preserve or grow wealth.  It is estimated that nearly 70% of women who were in a marriage/relationship in which the male partner hired a financial advisor will NOT use that same advisor after the male’s death.  Hopefully that means they are searching for a more compatible advisor, perhaps a woman, who can better understand her struggles, her worries, her style of dealing with money.  Believe it or not, I read an article that said men were MORE likely than women to seek financial advice.  True or not, financial security can make life simpler and more enjoyable for the single woman.  If she’s comfortable with her situation, has the confidence in her knowledge to handle all things financial, and has a budget that is workable and is working, that woman should do just fine.  Anything less than that might well call for professional advice.  Just find an advisor you are comfortable with.

Until next time,


“She is clothed with strength and dignity; she can laugh at the days to come.  She speaks with wisdom, and faithful instruction is on her tongue.  She watches over the affairs of her household and does not eat the bread of idleness.” Proverbs 31:26, 27 NIV*

*Scripture quotations taken from the Holy Bible, New International Version® NIV® Copyright © 1973, 1978, 1984, 2011 by Biblica, Inc.™ Used by permission.  All rights reserved worldwide.

Wednesday, September 20, 2023

Smart or Happy: Do We Have to Choose?

 With the new school year having just started, I got my usual picture of the granddaughters posing by their front door on the morning of the first day of school holding signs such as one can purchase at the store, with places to fill in the student’s name, the date, what grade she is entering, teacher’s name, etc.  But I was especially amused at this year’s photo showing one of the granddaughter’s chosen future profession: ice cream taster.

Leaving aside for now my disappointment at not having thought of that for my own career choice many years ago, the picture launched me into deeper thought on the subject of education.  But it was not just the picture but the fact that at the time I was reading Susan Engel’s book, The End of the Rainbow: How Educating for Happiness (not money) Would Transform Our Schools.  Ms. Engel’s thesis is that our schools have just become job training institutions, and she argues persuasively that this is not the true and highest purpose of education and does not foster a love for learning in our children.  The rhetoric from the politicians, and even the professional educators, gives her argument some credibility.  How often have you heard them say, “we have to prepare our children for the jobs of the future” or something along those lines?  Even our community colleges trend more towards being job skills enhancement labs.

Engel insists children need more free time, or play opportunities.  She laments the ever-growing list of skills and knowledge sets that must be taught in the schools.  And the list grows ever longer as educators are asked to incorporate curricula on anti-bullying, diversity, inclusion, anti-racism, and a host of other cultural issues into their teaching time.  When I worked in the field of organ donation, there was even a push to have a mandatory lesson in schools promoting organ and tissue donation.  (I wrote to my state senator thanking him for opposing the legislation.  He, too, argued there was already too much on teachers’ plates.) 

What is this push to “educate” our children actually accomplishing?  A headline in the Wall Street Journal last week proclaimed, “Schools spend billions on training so every child can succeed.  They don’t know if it works.”  Maybe what I heard in my car yesterday on the public radio station gives a hint:  in my home state the vast majority of the school districts had LOWER scores this year on the standards of learning tests.

But this blog is about money, so let me come back to the title of Engel’s book; education at its best should not be about money.  Yes, we all need a certain amount of money to survive in this world; living in poverty is not conducive to happiness.  Engel, only half in jest, suggested in her book that we are overwhelming and even boring our kids in school to train them for the overwork and boredom they will experience in the work world.  But what if our children learned to love reading and to love learning?  What if they learned how to learn without an instructor always over their shoulder?  In other words, what if we showed them the path to happiness through their own passion for learning instead of channeling them to a certain career because of how much money they could make at it?  With more and more surveys showing that Americans measure their well-being by other metrics than money, perhaps we need to align our educational efforts accordingly.  If my granddaughter can become an ice cream taster, learns all she can about the frozen dessert, and is still passionate, fulfilled, and happy doing it as an adult, even her Pop Pop will be happier.

Money is not everything.

Until next time,

“There are different kinds of gifts, but the same Spirit distributes them.  There are different kinds of service, but the same Lord.  There are different kinds of working, but in all of them and in everyone it is the same God at work.” I Corinthians 12:4-6 NIV*

*Scripture quotations taken from the Holy Bible, New International Version® NIV® Copyright © 1973, 1978, 1984, 2011 by Biblica, Inc.™ Used by permission.  All rights reserved worldwide.

Monday, August 28, 2023

How the Mighty Have Fallen


While preparing my last post, “Warnings for Index FundHolders”, I came across some interesting facts in my research and thought they would be of interest to you.

But before I go there, let me share something I read last week about the S&P 500 index.  According to this source, some stock market analysts project that the potential for gains over the next year in an index fund that gives equal weight to each of the 500 companies represented in the index is double that of an index fund that invests in the 500 companies in proportion to their capitalization/size.  A relative handful of large, high-tech companies have accounted for most of the recent gains in mutual funds that are indexed to the S&P 500.  Now (at least according to some) it is the turn of the rest of the index to outshine in their performance and reward investors.   Something to consider if you are tweaking your stock portfolio. 

[Reminder: I am not a registered advisor and cannot and do not make stock recommendations.]

Now to those interesting findings.

You’ve probably heard people say—and maybe you’ve even said it yourself—that certain companies or industries are getting too powerful and dominating the market.  Maybe.  But time tends to upend the market and conventional wisdom.  Consider, for example, who were the top 10 companies (by capitalization) in the S&P 500 in June 2000:

General Electric (4.19% of the index)

Intel (3.59%)

Cisco Systems (3.56%)

Microsoft (3.38%)

Pfizer (2.42%)

Exxon Mobil (2.19%)

Walmart (2.06%)

Oracle (1.89%)

AT&T (1.70%)

Nortel (1.62%)


Compare that to the current top 10:

Apple (7.56%)

Microsoft (6.92%)

Amazon (3.17%)

Nvidia (3.05%)

Tesla (2.06%)

Alphabet Class A (Google or GOOGL) (1.90%)

Meta Platforms Class A (1.83%)

Alphabet Class C (Google or GOOG) 1.64%

Berkshire Hathaway (1.60%)

UnitedHealth Group (1.23%)


So twenty-three years later only one of the top 10 still held that spot.  There are no “Big Pharma” companies there.  And no “Big Oil.”  And Nortel?  Bankrupted over fraud and liquidated just seventeen years after being the tenth biggest company in the U.S. by capitalization.


And how about this list of S&P 500 top 10 companies from 1973:


IBM (8.44%)

AT&T (5.19%)

Exxon (4.05%)

Kodak (4.04%)

General Motors (3.49%)

Sears Roebuck (2.73%)

Xerox (2.24%)

General Electric (1.92%)

3M (1.74%

Texaco (1.71%)


Kodak?  Sears Roebuck?  How times have changed.


And that’s my point.  Any number of factors can shuffle the ranking of companies and how much—or how little—they are valued by Americans.  From fraud, to changing technology, to regulation (or deregulation), to changing consumer tastes, to pandemics….it can all rearrange the corporate picture in a relatively short time.  It seems nothing in this world is forever.


Until next time,




“See, I am doing a new thing!  Now it springs up; do you not perceive it?  I am making a way in the wilderness and streams in the wasteland.” Isaiah 43:19 NIV*

*Scripture quotations taken from the Holy Bible, New International Version® NIV® Copyright © 1973, 1978, 1984, 2011 by Biblica, Inc.™ Used by permission.  All rights reserved worldwide.

Wednesday, August 9, 2023

Warnings for Index Fund Investors?

On Point, a broadcast heard on National Public Radio (NPR), had a program this week titled “Are Index Funds Getting Too Powerful?”  The title lured me in to listen because it is a subject to which I’ve given some thought as I contemplate moving some investments around.  But I was a bit careless.  My concern has not been about index funds being too powerful but, rather, too concentrated.  But both might be legitimate worries that affect a great many investors, likely including you.  I enjoyed the broadcast.  So let’s look at both potential dangers.

First, I should give a brief background on index funds.  John Bogle, the founder of Vanguard and considered the father of index funds, launched his enterprise in 1975.  His premise was that mutual fund managers who tried to outperform the general market through savvy selection of stocks were, over time, doomed to fail.  He instead promoted owning the “whole market” by creating mutual funds that held shares of all the companies contained in a certain index.  The S&P 500 (an index that tracks the nation’s largest 500 publicly owned companies) is considered the prime example.  So rather than employ researchers and analysts to select the investments likeliest to increase the most in value, he simply created mutual funds that bought them all, counted on the generally upward movement of the stock market to propel investment returns, and charged a much lower fee to investors since he didn’t have to pay elite stock-pickers—who, again, he believed would fail to outperform the market anyway.

So the low-cost index fund has become a go-to investment for those not wanting to worry about picking the right stocks or paying others to do so.  But my concern is that this is pushing too much money into a smaller group of companies.  For instance, mutual funds tracking the S&P 500 index are typically based on market capitalization.  That means the shares of the most valuable companies (the most “highly capitalized”) dominate the holdings.  (There are mutual funds that buy shares on an equal basis across companies rather than by capitalization.)  In fact, I’ve read statistics that show the five largest companies in the S&P 500 (that’s 1% of the companies in the index) currently represent about 23% of its value.  And as you might guess, these are tech companies (Apple, Microsoft, Google, Amazon, and Nvidia).  And that’s fine….when the tech sector is booming.  And it has been booming, and therefore driving some good returns for investors in S&P 500 index funds.  But what happens when the tech sector goes sour?  The whole idea of a mutual fund is to diversify your portfolio—across companies, across sectors of the market, across industries.  Is that truly happening now with any index funds tracking that index?  And is it good or bad for investors?  I’ve read pros and cons on this.  (It seems the “experts” can never agree on anything!)  But if you are one who is invested in an S&P fund, it might be worth some thought as to whether you should make any changes to your portfolio.

Now as to the other concern, the “too powerful” argument, that was applied by the guest speaker on On Point, John Coates, to the mutual fund companies themselves.  Coates, a professor of law and economics at Harvard University and a former executive in the Securities and Exchange Commission, sees the big fund companies (which he identified as Black Rock, Vanguard, State Street, and Fidelity) holding 20+% of the shares of publicly owned companies and therefore as shareholders able to exert a concentrated, outsized influence on those companies’ decisions relative to selection of board members, deciding company policies, and votes on resolutions coming before shareholders.

Again, this may or may not be a problem.  It depends on whether those funds exert a benign influence.  And that determination tends to be very subjective, even political.  As a former regulator, Professor Coates proposes that these fund companies offer their clients (investors who have entrusted their money to them) an opportunity to express their policy preferences through surveys, offering “families or groups of values” from which clients select.  Of course, it’s an imperfect proposal, and there will not be unanimity among those clients, but it would give the fund companies some indication of their preferences; and since the fund companies can split their vote (i.e. vote a portion of their shares one way and another portion another way) they might actually approach some level of democracy in the voting process on the nearly 3500 proposals voted on by the companies each year.

A lot to chew on, I know.  It gets complicated.  But I thought it worthy of a post here.  Next time you get a notice from your investment firm wanting to know how to “vote your shares” or asking you to “designate X as a proxy for you” in a shareholders’ meeting, think about all this.

Until next time,


“Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land.” Ecclesiastes 11:2 NIV*

*Scripture quotations taken from the Holy Bible, New International Version® NIV® Copyright © 1973, 1978, 1984, 2011 by Biblica, Inc.™ Used by permission.  All rights reserved worldwide. 

Tuesday, July 18, 2023

On Buying an Ice Cream Cone


As my wife and I planned a move from one locale to another, we worked with a real estate agent on finding our next house.  As any good agent would, she asked what we wanted in our new residence.  We enumerated bedrooms, baths, size, and so forth, but I also said it should be within walking distance of an ice cream shop.

When I said that, I had in mind the house in Maryland that had been our home for 13 years and its easy walking proximity to the town park, post office, library, and yes, an ice cream shop.  But the agent took the request quite literally when I had intended it more as a metaphor for “convenience.”  I didn’t want to drive half-an-hour to go to the library or mail a package…or get an ice cream cone.

I suppose I learned that from my parents.  My family didn’t own a car until I was 14, though it was rarely an inconvenience to someone not accustomed to owning one.  We lived in a large city but by no means in the middle of it.  Yet when they bought the house where I would grow up they ensured it was on a bus line (very close to three bus lines, actually), close to a grocery store (three of them to be precise), a dentist, a post office, a bakery, the elementary school, and yes, an ice cream store.  (It was a High’s Ice Cream shop; single-dip cone ten cents, double-dip twenty cents, and triple-scoop thirty cents.  In my mind ice cream remains Exhibit A of inflation.  Of course, it seemed like every time we went to High’s for a cone my dad would tell me how when HE was my age he could buy a gallon of ice cream at the creamery for five cents.) 

Interestingly, Joseph Coughlin, the director of the Massachusetts Institute of Technology’s AgeLab, uses going out for ice cream as a proxy for quality of life.  “You need mobility, freedom, and some cash in your pocket to get an ice cream cone,” he says. 

A small pleasure, yes, but a good way to measure wellbeing, isn’t it?  We’ve probably all read about the findings of recent surveys that show people believe it takes as much as $2 million to be financially secure in retirement.  But digging deeper into those surveys, it appears that is the figure the respondents felt OTHER people needed to feel well off.  Almost half of those same people said THEY were well off, even though their net worth averaged about $550,000.

Wellbeing is obviously much more than dollars and cents.  Health, mobility, strong and healthy family relationships, a circle of friends: these contribute more to the feeling of being “well off.”  But I do believe this assumes some basic level of financial security, because worry about debt collectors and not being able regularly to afford decent food would diminish one’s feeling of wellbeing; thus the “cash in your pocket” component of getting an ice cream cone.

If you are contemplating a move or even retirement, consider all these factors.  What will make YOU happy, not “79% of retirees”.  Surveys and magazine articles that tout “the top 10 places to live/retire” might identify locales that are generally desirable, but tastes and preferences vary.  I don’t especially care if my town has “a vibrant arts scene”.  The real question is “Where can I get some Hershey’s coconut/chocolate/almond ice cream?”

Until next time,


“But my God shall supply all your need according to his riches in glory by Christ Jesus.” Philippians 4:19

Tuesday, June 27, 2023

Social Security Insecurity


Laurence Kotlikoff is perhaps the foremost expert on the Social Security system outside the Social Security Administration (SSA) itself (and likely more knowledgeable than most everybody inside that agency) and certainly the best known.  A Boston University professor of economics, he wrote Get What’s Yours—The Secrets to Maxing Out Your Social Security and for years has co-authored the “Ask Larry” column, answering questions submitted by readers about all things having to do with Social Security rules and benefits.

His book, first published in 2015**, is very entertaining but at the same time eye-opening.  Perhaps the most disturbing finding it revealed was that people at SSA gave the public the wrong answer to their questions about 40% of the time.  That is an abysmal record.  And scary.

In a recent article published by NextAvenue.org and reprinted in MarketWatch, Dr. Kotlikoff cited complaints he has been receiving from Social Security recipients about letters sent by the SSA demanding immediate repayment of thousands of dollars in alleged overpayments.  As he wrote in the article, the letters offer no explanation of how/why the overpayments occurred and offer no apologies.  “Hard as nails and as cold as ice” is how Kotlikoff characterized the SSA correspondence.

Judging from the complaints Kotlikoff receives, the demands for repayment can arrive as much as 20 years after the mistake was first made—meaning an accumulated overpayment could amount to tens of thousands of dollars.  But with no real idea of how their benefits were calculated in the first place and no explanation of the mistake, how does one go about appealing these dun letters?  How does one know the letter itself is not a mistake?

Interestingly, no one reports receiving a notice of underpayment of benefits.  To insist that mistakes run solely toward overpayments stretches believability.  Even past reports by the SSA’s Office of the Inspector General acknowledge at least a modest amount of underpayments.  In my own situation, I delayed receiving Social Security benefits and was thus due more than my “full retirement age” benefit (“delayed retirement credits”).  I am still waiting for that extra money.  I understand that I might still have another six to eight months to wait for that, as well as for repayment of an extra month’s Medicare Part B premium that was deducted from my benefits more than a year ago.  SSA is all in on taking back money that may or may not have been overpaid.  They are away from the desk when money is due the beneficiary.

One circumstance seems to pop up frequently in these cases.  Many complainants are subject to the Windfall Elimination Provision, or WEP, which reduces benefits to individuals with non-covered pensions (usually government employees) but who also qualify for Social Security benefits by virtue of another job that was covered by Social Security.

If you have a particularly complex Social Security benefits situation (e.g. subject to WEP, divorcee/multiple marriages, widow/widower benefits especially if minor or disabled adult children are involved, etc.) I suggest you obtain more than one opinion from SSA when applying for your benefits or even consult an independent specialist on Social Security benefits (or “ask Larry”). Open an account on the SSA website and check your history of earnings.  Ensure SSA has your annual earnings correct; it is the single most important factor impacting your level of benefits.  Document everything you do and what you are told and who you talked with.  And if, even after doing all this, you end up getting a letter trying to claw back some money already paid, call your congressman or U.S. senator.  SSA needs to be accountable.

Until next time,


** If you decide to read his book, be sure to read the revised version.  Just a few months after it was first published in 2015, Congress made some big changes to Social Security benefit rules that made a good portion of Kotlikoff’s advice in it outdated.  The latest edition corrects this.


“Here I am sending you out like sheep with wolves all round you; so be as wise as serpents and harmless as doves.”  Matthew 10:16 Phillips

Saturday, June 10, 2023

Dave Ramsey in Court?


For anyone who has read my blog over the years, my dislike and distrust of Dave Ramsey should come as no surprise.  (See “Dave Ramsey’s Fatal Flaw” part one and part two.)  I now have more affirmation of my disdain.

The Washington Post reported last week that seventeen of Mr. Ramsey’s radio and podcast listeners have filed a $150 million lawsuit against him, “alleging that he played a role in defrauding them of millions of dollars when he promoted a timeshare-exit company that did not get them out of their contracts.”

I wrote in recent posts that celebrities like Tom Brady and Steph Curry stand in legal peril for endorsing the cryptocurrency firm, FTX, and its disgraced founder.  I cautioned against following financial advice given by famous people.  Fame doesn’t bestow competency in financial matters.  In fact, there seems to be an inverse relationship. 

But Dave Ramsey?  Financial guru, professed Christian, champion of the little guy, and debt relief savior for millions? 

I do not dispute Ramsey’s good works through the years.  He truly has helped legions of individuals and families claw their way out of debt and given a lot of good advice.  Not all of it good, mind you, but a substantial portion.  But he comes at it with the wrong attitude.

Alright, I admit that “attitude” is intangible and maybe not always a good measure of someone’s trustworthiness.  But that blustering and (in my opinion) un-Christian approach to his advice-giving emits a suspicious odor to my nose and leaves a clue to his motivation: he is moved by money more than his love for helping people.  In this case, greed may have overridden due diligence in his endorsement of Timeshare Exit Team several years ago. 

I’m not endorsing buying a timeshare.  They do tend to be or become bad deals for people who purchase them.  But that presents an opportunity for unscrupulous people to prey on those purchasers by offering to get them out of their deals, break their contracts.  In this case, Reed Hein & Associates, doing business as Timeshare Exit Team, allegedly paid Ramsey as much as $30 million over six years while receiving over $70 million in fees from Ramsey’s listeners who became clients.  Reed Hein & Associates went out of business after settling with Washington state for $2.6 million over alleged deceptive business practices.

This points to an unfortunate business practice of “endorsements” by trusted individuals or firms, even non-profit firms, given with no due diligence.  They fall victim themselves to firms that approach them waving money in the air and promising great results for clients referred to them by the endorser.  In this case, I can imagine Ramsey—who already railed against timeshares—was targeted by Timeshare Exit Team as a perfect (that is, trusted) spokesman for them, promised him a rich commission, and with little or no investigation on Ramsey’s part was endorsed heartily on his show.

It happens all the time, unfortunately.  A friend recently complained to me that she is dropping her United Healthcare Medicare Advantage plan because it was hardly paying anything on her medical bills.  “But AARP endorses them,” she lamented.  “I expected better.”  Well, I am pretty sure AARP is pleased with the commissions they get for endorsing United Healthcare.  And that AAA is happy with their commissions from Hertz, even though there are probably better and cheaper rent-a-car firms out there, even when compared to the “AAA member discount” from Hertz.

I had a front row seat to this dynamic at one of my past jobs.  Companies would make an appointment with our vice president and tout the benefits they could offer our members, and the VP would sign a contract almost on the spot, little or no research done.  I remember he even inked a deal with some outfit called “Players Club” that promised discounts and specials perks at gambling venues like Las Vegas.  What were we doing endorsing a deal like that when we were ostensibly a “healthcare organization”?  Fittingly, none of our members became clients of Players Club and our company never made a cent on that contract.  I happily exited that company a short time later.

The moral of the stories is this: do your own due diligence.  Follow the money, because if there’s someone somewhere making money on an endorsement, then there is a high probability of tainted motive in the arrangement.

Until next time,


“You can tell them by their fruits.” Matthew 7:15, Phillips

Thursday, May 18, 2023

Be Taylor Swift


Every woman and girl wants to be Taylor Swift.  Every man and boy wants to marry her.

Okay, a bit of an exaggeration there, but you know what I mean.  She is an iconic cultural figure who is talented, beautiful, and rich.  It is said that “as Taylor Swift goes, so goes the music industry.”  She has that much influence and popularity.  Ticket demand for her current tour is double that of the top five tours of last year, plus the Super Bowl…..combined.

She is also devoted to her fans, the “Swifties”, as evidenced by her feud with Live Nation/Ticketmaster over the crash of its overwhelmed online system when tickets went on sale for her Eras Tour a few weeks ago.  It was enough to prompt Congress to investigate.  Yes, Miss Swift has some influence in town.

But she is no stranger to taking on corporate giants.  She’s done the same with Spotify and with Apple Music.  And she opted out of “dynamic pricing” for her tour’s tickets.  (In case you’re not familiar with the term, imagine that Kroger advertises strawberries for $1.99 Wednesday morning, but when demand soars and they start flying off the shelf, they raise the price Wednesday afternoon to $3.99.  That is dynamic pricing.)

But I write here not about her talent, beauty, wealth, or devotion to her fans.  I admire her financial savvy.  You may recall that I posted a few weeks ago about some celebrities that endorsed the now-bankrupt—but still being criminally investigated—FTX after falling for its smooth-talking president, Sam Bankman-Fried.  (Read it here.)  Now those celebrities are named in a $5 billion lawsuit for endorsing an unregistered security and misleading potential clients.

The Financial Times reported that Taylor Swift was also approached by FTX about a $100 million sponsorship deal for her tour.  And why wouldn’t she jump at it?  Big bucks, the trendiest investment scheme going at the time, and joining the ranks of other famous people lined up to sing FTX’s praises must have seemed like a smart PR move.

But according to sources, Taylor Swift asked one question: “Can you tell me that these are not unregistered securities?”  When she learned they were not, she declined the offer.

Smart young woman.  She is a model for all of us.  We should all ask some simple but important questions when contemplating investing our hard-earned money.  According to the Securities and Exchange Commission (SEC) it is unlawful to offer or sell securities not registered with them or for which an exemption has not been granted.  Claims of unusually high returns with little risk, unlicensed investment “specialists”, and sketchy sales documents (poor English, misspellings, or even missing documents) should set off alarm bells in a potential investor’s head.

Around Valentine Day I wrote in my blog about a survey that showed men want their female partner to be financially literate.  (Read it here.)  Well no wonder all these men are chasing Taylor Swift!  I understand that her father is or was employed by JP Morgan Bank, so he might be advising her on financial matters.  But that would be all the more impressive: a star who actually listens to sound advice….from her dad. When I conduct my next seminar I think she’d make a great guest speaker.  I think I’ll invite her.  Can someone give me her cell phone number?

Until next time,


“Listening to good advice is worth much more than jewelry made of gold.” Proverbs 25:12 CEV

Monday, May 8, 2023

Return of the CD's (Part Two)


As with most anything else, it pays to shop around when looking for certificates of deposit (CD’s) paying the highest interest rates.  Banks are offering special deals now for CD’s of varying terms (i.e. required length of deposit).  What I’ve found with these deals, however, is that often they are “one and done”.  They may have a good rate for the initial term, but when they renew the subsequent term features a very average rate.  Some banks, in fact, state upfront that after the initial term, the rate will fall to half—or less—of the initial interest rate.

Banks can be flexible in the length of terms for their CD’s, but the rates can also vary wildly.  A bank may offer a special for a one-year CD, but if you want to construct a CD ladder (see my last post), the rates for a three-month, six-month, or nine-month CD are likely to be much lower.

For these reasons, I would encourage CD shoppers to also keep brokers in mind as an option.  Brokers (such as my retirement account custodian or even a bank with a Certificate of Deposit Account Registry service) can purchase a huge volume of CD’s at a time from banks to negotiate a higher rate, then sell them, with still-high interest rates, to their clients.  I’ve found that brokers have a more consistent range of interest rates across the various CD terms.  In other words, the rate for a three-month CD is likely to be reasonably close to a one-year CD’s term.  This makes construction of a CD ladder easier and more lucrative.

In most cases, CD’s sold by brokers are still FDIC-insured.  Just be certain to deal with a reputable broker and get in writing that the CD is insured and is not a security but is in fact a certificate of deposit.

There are downsides to purchasing CD’s from a broker.  Sometimes these CD’s are callable; that is, the issuing bank can decide they don’t want to continue paying the high interest rate, will pay the purchaser the principal and the interest earned to-date, and just terminate the CD contract.  This is more likely to happen as interest rates generally are falling. 

But there is also a risk when rates are rising.  That is happening to me right now.  I purchased a brokered, nine-month, $10,000 CD that will mature in September.  But rates have risen a bit since I made that purchase, and if I were to cash in that CD now it is worth about $9985.  It has lost value.  That’s because a brokered CD can be resold in the secondary market—the broker can resell that CD after it is cashed in.  But who would want a CD earning 4.85% when they can purchase a new CD with a 5.1% rate?  My CD has to be discounted in order to attract another buyer. 

Nevertheless, this is not a risk if the purchaser of a brokered CD keeps it until maturity.  At that point it will not matter what current rates are.  For this reason, it is best to only invest money in a brokered CD if you are certain the money will not be needed until at least the maturity date of the CD.

[Of course, if rates are falling and the bank has not called your CD, it might be worth more than it would otherwise.  So it works both ways.]

Finally, the interest in a brokered CD does not compound.  If you roll over a maturing CD into a new CD, you will just get a check for the interest earned; only the original principal amount gets re-invested in the new CD.

As an alternative to CD’s, your broker or banker may be able to offer U.S. Treasury Bills.  Right now their rates are running very close to what I see in the brokered CD’s market.  Terms vary from four weeks to fifty-two weeks.

The Federal Reserve last week raised the interest rate again but signaled that it might be pausing the steady pace of increases we have seen over the last couple of years.  For that reason, some market watchers predict we are at or very near the peak for interest rates on savings accounts and CD’s.  This might be a good time to lock in some good rates before they start the inevitable decline.

Until next time,


“You could have at least put my money in the bank so that I could have earned interest on it.”  Matthew 25:27 CEV

Friday, April 21, 2023

Return of the CD's (Part One)


Want to earn 9% on a certificate of deposit (CD)?  Find a time machine and let me take you back about 40 years.  I was working in Washington, D.C., at the time; we were just starting to save for our sons’ college education, and the bank up the street from my office had a 12-month CD paying 9% interest. 

Envious?  Don’t be.  The prime rate then had been hovering in the high teens, and of course took credit card and car loan interest rates along with it.   The interest rate on our FHA home loan was 11%, and we thought it was a bargain.

CD’s go in and out of favor over time.  In the (more distant) past (and perhaps again now) they were a reliable and safe source of regular income for retirees.  They are typically issued by banks and almost always insured by the Federal Deposit Insurance Corporation.  More recently, when the Federal Reserve was holding the prime rate near zero, CD’s were paying next to nothing in interest.  Same for bank accounts.  It was perhaps a year, or just a bit more, ago that the monthly “best bank and CD rates” feature in Kiplinger Personal Finance magazine highlighted “high interest bank accounts” and CD’s that were paying 1% interest.

How things have changed.  If you want an illustration of how decisions by the Federal Reserve Bank affect your everyday life, trace how their steadily increasing the prime rate correlates with the steady rise in bank account and CD rates (and car loan rates, mortgages, credit cards….but let’s keep this positive).  It’s possible to find money market accounts paying over 4%, CD’s paying over 5%, and more and more bank checking and savings accounts upping their meager interest rates to the highest they have been in 15 years.

Is now the time to jump in and buy CD’s?  The correct answer to any personal finance question is almost always, “It depends”.

If you are years away from actually needing the money you have to invest—whether it’s for a child’s education or your own retirement—the stock market still shines as the best long-term prospect for growing your stash; equities have consistently outpaced inflation over time.  Yes, there are dips in the stock market, but carefully investing (and that does NOT include chasing speculative ventures like cryptocurrencies) has proven a winning strategy over time.

But I can see a couple of groups of people for whom CD’s might make an ideal investment.  A sizable group of would-be investors sits on the sidelines of the stock market because they believe stocks are going to fall in value soon.  Short-term certificates of deposit paying stratospheric (by comparison to the recent past) interest rates is a good place to store cash while they await the expected stock crash.  This includes retirement accounts.  IRA and 401(k) account custodians (e.g. Vanguard, Schwab, Fidelity and even banks) can sell you CD’s within your retirement account.  No need to withdraw the money from the retirement account and suffer the accompanying tax hit.  And for those nearing the time when they must access that store of money (e.g. a parent with a junior in high school), this might be a good time to put the money into CD’s to keep it safe and readily accessible while still making a decent return, even if it’s not outpacing inflation at the moment.  For that matter, anyone needing safety for their money could do worse than investing in CD’s.

I fall into the first category.  Oh, I’ve still got the bulk of my savings in stocks and bonds, but I’ve got some cash sitting on the sidelines waiting to be used to purchase stocks when their prices go down.  The money market account where I hold the cash is now paying over 4% interest.  Nevertheless, I decided to tie up a portion of it in a CD ladder.  A ladder is just a method of purchasing timed investments such that their maturity dates are staggered.  I built a CD ladder where I had one-fourth of the invested money maturing every three months.  It earned me an average of about 5%.  There is nothing inherently risky about a ladder.  Retirees have used them for years to guarantee a stream of income.  It is the underlying investment that makes a ladder risky or not risky.  A ladder of bank-issued, FDIC-insured CD’s?  Pretty safe.  A ladder of cryptocurrency futures contracts? Not so much.

In my next post I will write about the pros and cons of buying certificates of deposit from a broker.

Until next time,


“Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land.”  Ecclesiastes 11:2 NIV*

*Scripture quotations taken from the Holy Bible, New International Version® NIV® Copyright © 1973,   1978, 1984, 2011 by Biblica, Inc.™  Used by permission.  All rights reserved worldwide.