Being wealthy doesn't mean having all the money in the world, just not having to worry about it.

Taxes on Trust Accounts

Question: A friend has trust funds for each of her children’s college education. Each trust is currently about $200k. The elder child is a high school sophomore and the trust is currently 70% equities. Should that number be reduced even though the capital-gains taxes may be quite high? Answer: The taxation of income retained by trusts is Read more »

The Ride Is the Reason for the Return

I despise market commentary, both for the presumption that anyone really knows the reason for short-term movements and because it distracts people from the fact that investing in equities is a matter of long-term ownership in the businesses that provide the world’s goods and services. Fluctuations in human emotions explain more of the short-term movement Read more »

Hedging Against Volatility

Question: 1) Does it make sense to split the global equities allocation between the Minimum Volatility Fund and whole-world allocation (e.g., Vanguard’s Total World Fund [VTWSX]) to increase long-term return in exchange for a little more volatility? 2) Can your current recommendation for 10% in cash equivalents serve as your previous 2-3 years’ reserve against Read more »

Converting a Traditional IRA to a Roth IRA

Question: I am 68, average health, with a 63-year-old wife, healthy. Is there any wisdom to converting a current IRA to Roth? Answer: Traditional IRAs give a tax deduction up front, but distributions are fully taxable. Roth IRAs provide no tax benefit up front, but distributions are tax-free (so long as they aren’t premature). In theory Read more »