Kevin Kroskey's Money & Mind

Disciplined diversification works when you do and even when you don't want it to. Diversification in effect forces you to sell the thing that has been doing so well in your portfolio and to buy the thing that hasn't. While this makes rational sense, it is emotionally difficult to execute. Think back to the tail end of 2008--were you selling bonds and cash to buy stocks? Most likely you weren't unless your advisor or some sort of automatic trigger did it for you. Carl Richards of www.behaviorgap.com provided a good reminder of how diversification works in a recent NY Times blog post. The diversification he discusses here is more so related to equity asset-class diversification but also touches on the three basic building blocks--equities, bonds, and cash. He doesn't discuss alternative asset classes -- an asset class that doesn't fit neatly into the three basic categories -- being used to further diversification, but that's a detailed topic for another day. ...

The info below provides a good summary from the Kiplinger Tax Letter on who pays taxes in the US and to what extent. --- (From Kiplinger Tax Letter) Do the rich pay taxes?  New IRS statistics show the burden on taxpayers. The top 1% of all filers paid 37.4% of all federal income taxes in 2010, the most recent year IRS has analyzed.  That's up from 36.3% the previous year. They reported 18.9% of total adjusted gross income, also higher than the year before.  However, the average tax rate paid by the top 1% fell slightly to 23.4% of their AGI.  Filers needed to have AGI of at least $369,691 to qualify for the top 1% of earners. The highest 5% paid 59.1% of total income tax and accounted for 33.8% of all adjusted gross income.  They each had AGI of at least $161,579.  The top 10% of filers, those with AGIs of $116,623 or more, bore 70.6% of the total tax burden while bringing in slightly more than 45% of the total adjusted gross income. The bottom 5...

What can married couples do to increase joint lifetime benefits? What is your “magic number”? Roughly half of retirees claim Social Security benefits at age 62, as soon as they become eligible. Some people delay benefits and postpone using their retirement savings as an income source. Others apply out of necessity; their financial situation leaves them little choice. 1 These factors aside, what if you have a choice? If you wait a few years to apply for Social Security, how much more income might you realize? Could you wait until age 66? The Social Security Administration has made 66 the “full” retirement age for people born during 1943-1954. If you were born in this period and you apply for Social Security at age 62, you will reduce your retirement benefit by 25% and your spouse’s by 30%. 2,3 That alone might convince you to wait. In addition, there are claiming strategies that may bring spouses much greater cumulative lifetime Social Security income, and they depend on ...

Many people are very passionate about politics and are extrapolating what will happen economically if their candidate or the other side gets elected. These extrapolations often run to ruin if the other side gets in and can cause great fear and emotion in the mind of the investor and lead to poor decision making. I like to adhere to the old adage that, "You do not talk about politics or religion." However, I'd just like to say that whatever 'side' you may be on, I'm sure an informed observer can look back through history and see presidents or policies they do not like. Yet, our country and economic system still persist today. I would observe that it is in fact quite resilient and supposing 'this time is different' rarely works well for those making predictions. Jason Zweig of the Wall Street Journal ran a good article in the October 19, 2012 Wall Street Journal, entitled "The Winner for Investors Is...," and  empirically (not pejoratively...

Most retirement planning literature portrays a retirement transition in the context of a couple or a family – but what about those who retire alone? What particular challenges do they face, and how must their preparation for retirement differ?   Retiring alone presents unique challenges. Singles who retire may lack a spousal and familial support network other retirees count on. If a lone retiree faces sizable medical bills, he or she can’t draw on the financial resources of a spouse. Unmarried, childless retirees also lack adult sons and daughters who might be able to offer them financial help or serve as executors of their estates one day. Singles must plan ahead for them. The earlier, the better: A basic financial truth can’t be dismissed: single retirees will need to amass savings comparable to those of a retired couple. Why? It is because many retirement costs are fixed. Hospitals, universities, banks, pharmacies, mechanics and home improvement specialists do no...

Why are they made again and again ? There are some classic financial missteps that plague retirees. Calling them “mistakes” may be a bit harsh, as not all of them represent errors in judgment. Yet whether they result from ignorance or fate, we need to be aware of them as we plan for and enter retirement.           Not maximizing Social Security. The full retirement age for many baby boomers is 66. As Social Security benefits rise about 8% for every year you delay receiving them, waiting a few years to apply for benefits can position you for greater retirement income. Married couples have even more options. 1 Roughly 40% of us retire earlier than we want to; about half of us apply for Social Security before full retirement age. Still, any way that you can postpone applying for benefits will leave you with more SSI. 1        Underestimating medical expenses. Fidelity Investments says that the typical couple ...

By now, you've seen the final medal count at the London Olympics, and no doubt felt a stirring of national pride.   American athletes took home 104 total gold, silver and bronze medals, comfortably ahead of China (87), Russia (82), Great Britain (65), Germany (44), Japan (38), Australia (35), France (34), South Korea (28) and Italy (28).   Does that mean that we Americans--so often accused of being a nation of couch potatoes--are the most athletic people in the world?   Total medal count is one way to measure, but it may not be the best.   Another measurement would take into account the relative number of medals compared to a country's total population: Olympic medals per capita, or (to avoid many decimal places) the number of medals each nation took home per million people in its population. Medals per million gives us a very different ranking.   By this measure, citizens of the Caribbean island of Granada are by far the most athletic, with 9.5 Ol...