October 2024 Best of the Web

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I have an outstanding collection of resources on a variety of topics this month. We’ll explore financial planning concepts including Roth IRA conversions, building bond ladders, and performing 529 to Roth rollovers.

Online retirement resources

A few articles explore the value of simplifying your finances including decluttering an overly complex portfolio, navigating gift tax, and the misnomer applied to “SIMPLE” IRAs.

I close out with news of amazing technological feats, contrast them with timeless wisdom, and share how I’m applying this information to my portfolio and financial planning.

Let’s dive in….

Don’t Get Political

As the election approaches, I want to start with that timely topic. Jeremy Zuke explained why it is unwise to let your politics impact your portfolio decisions on the blog last week.

Supporting Jeremy’s arguments, a reader shared a link in the comments to an article from Josh Brown with an amazing chart. The chart blew me away and so I want to start by highlighting it: Don’t Get Political.

The Value vs. Cost of a Financial Advisor

Derek Tharp wrote Quantifying (More Accurately) The Real Impacts Of A Financial Advisor’s Costs On Their Clients’ Nest Eggs. This is a counter argument to personal finance “guru” Ramit Sethi’s criticism of financial advisors and the impacts of ongoing fees they charge as a percentage of assets managed.

I found this one interesting because I started blogging, like Ramit, as a fierce critic of the financial industry. Ironically, I now practice part-time as an advice-only financial planner with Abundo Wealth as an encore career. 

So I see elements of truth in both sides of this argument. There are two take-home points I hope you get from this piece.

  1. Statistics can be manipulated to tell virtually any story you want them to tell.
  2. ALL financial advice comes with conflicts of interest. Take care to understand what the person giving the advice has to gain.

The Value of Simplifying

Many clients seek financial advisors to help them understand and execute complex strategies. In reality, one area where financial planners can add value is helping people simplify their finances and gain confidence that they’re not missing out by doing so. The next articles can help you simplify.

I recently wrote about 5 reasons WHY you should simplify your investment portfolio. Continuing on that theme, financial planner Meg Bartelt writes HOW we evaluate and (hopefully) improve a client’s existing portfolio.

I’m currently preparing for part one of the IRS Enrolled Agent (EA) exam. As I’ve gained better understanding of federal gift and estate taxes, I’ve concluded people worry way more than necessary about them. David Haughton covers this topic clearly and concisely. He writes Gifting Without the Headache.

Harry Sit writes about a little-known rule you can utilize if you have an expensive SIMPLE IRA. He writes Rolling Over an Unnecessarily Complicated SIMPLE IRA.

Getting Technical

Some topics are inherently complicated. The next two articles are long and technical, but worth your time if you are considering these strategies.

Edward McQuarrie examines Net Present Value Analysis of Roth Conversions.

Karsten Jeske explores the risks of a safety first approach to retirement planning in the latest installment of his Safe Withdrawal Rate series. He writes Safety First.

If after reading Karsten’s article a TIPS ladder makes sense for your situation, Allan Roth makes constructing it easier. Roth writes Four Easy Steps to Build a TIPS Ladder.

Rolling over unused 529 funds to a Roth IRA is new as of this year. Secure Act 2.0 created this provision in 2022. As is often the case with new tax laws, some aspects are still unfolding. Kevin Kantrowitz wrote this helpful guide: 529 Plan to Roth IRA Rollover Rules – What to Know.

An Amazing Technological Breakthrough

This month we’ve witnessed an amazing engineering achievement. Space X launched a rocket into space and then caught the 233-foot-tall booster out of the air in an upright position. If you haven’t taken the time to watch the video and appreciate how amazing this is, you should. Here you go….

We live in a time of amazing technology that is pushing the world forward. Returning to our first resources for the month, we also live in a time of incredibly dark political rhetoric and real global threats.

That takes us to where I’d like to finish this month, learning to stay up on current events while focusing our attention away from the novel and towards the timeless.

Timeless Wisdom

I’m reading Morgan Housel’s book Same as Ever: A Guide to What Never Changes. One particular quote jumped out at me.

“Change captures our attention because it’s surprising and exciting. But the behaviors that never change are history’s most powerful lessons, because they preview what to expect in the future. Your future. Everyone’s future. No matter who you are, where you’re from, how old you are, or how much money you make, there are timeless lessons from human behavior that are some of the most important things you can ever learn.”

Housel is a fabulous writer covering important topics. I highly recommend picking up this book.

I’ll close out by sharing a conversation between Jonathan Clements and Christine Benz on The Longview Podcast. I’ve shared several Clements’ articles recently since he’s received a terminal cancer diagnosis. This conversation is equally thought-provoking and well worth your time.

A few items jumped out at me as particularly thought-provoking:

  • Why Jonathan continues to work and is even remodeling a bathroom when he is expected to have a very short time left to live.
  • Why he still has a hard time spending on luxuries for himself at this stage in his life.
  • How he thinks about legacy and processes adulation and criticism.

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Valuable Resources

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    • Sign up for a free Empower account to gain access to track your asset allocation, investment performance, individual account balances, net worth, cash flow, and investment expenses.
  • Our Books

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[Chris Mamula used principles of traditional retirement planning, combined with creative lifestyle design, to retire from a career as a physical therapist at age 41. After poor experiences with the financial industry early in his professional life, he educated himself on investing and tax planning. After achieving financial independence, Chris began writing about wealth building, DIY investing, financial planning, early retirement, and lifestyle design at Can I Retire Yet? He is also the primary author of the book Choose FI: Your Blueprint to Financial Independence. Chris also does financial planning with individuals and couples at Abundo Wealth, a low-cost, advice-only financial planning firm with the mission of making quality financial advice available to populations for whom it was previously inaccessible. Chris has been featured on MarketWatch, Morningstar, U.S. News & World Report, and Business Insider. He has spoken at events including the Bogleheads and the American Institute of Certified Public Accountants annual conferences. Blog inquiries can be sent to chris@caniretireyet.com. Financial planning inquiries can be sent to chris@abundowealth.com]

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3 Comments

  1. The article on Roth conversion is very timely for me. I’ve been using some software, as well as my own spreadsheet. I included a NPV calculation but none of the softwares do. I couldn’t understand why not, and the McQuarrie article confirms my approach. Thanks for sharing!

  2. The RMD paper ignores two components or factors that influence Roth conversions in a favorable way for some retirees: 1) IRMAA calculations.. and 2) NII tax… and staying under these thresholds.

  3. This weeks post is a who’s who of my trusted sources!
    Been following DT Josh Brown and crew for a decade,was a proof reader on Harry Sit’s last booklet and Prof. Mcquarrie’s 2021 paper provided the confirmation that Roth conversions are a no-go for me. But if I really want to get into the weeds Karsten Big ERN Jeske is da man☺