Archive - September 2015

1
When Should You Stop Funding Your HSA?
2
Should you invest in stocks?
3
Diversification: I Know I Should, But Why?
4
A Brief Explanation of the Thrift Savings Plan (TSP)
5
Choosing Stocks and Investments: You’re Only Human

When Should You Stop Funding Your HSA?

A Health Savings Account (HSA) is a rare type of account where you can get a tax deduction when you put the money in and then pay no tax when you take the money out for qualified medical expenses.

In 2015, individuals with high deductible health plans can contribute $3,350 and families can contribute $6,650 per year. Those 55 or older can contribute an additional $1,000.

High income earners who are not allowed to contribute to their Roth IRA or deduct contributions traditional IRAs are still allowed to deduct contributions to HSAs.

Before age 65, any money you …

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Should you invest in stocks?

This past weekend I went to an investor fair sponsored by the Chicago North and West Chapters of BetterInvesting. These are the people who used to be known as the National Association of Investment Clubs. I write a quarterly column—Fund in Focus­­—for the magazine, and the occasional cover story. But like so many relationships these days, mine is virtual so it was nice to meet some of my fellow authors (and they are nearly all fellows, which is a bit disappointing).

They tend to be an engaged and savvy group. Maybe this is the product of self …

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Diversification: I Know I Should, But Why?

Any discussion of the tenets of long-term investing includes the recommendation for diversification. This concept is delivered almost without thought – after all, as children we are taught “Don’t put all your eggs in one basket!”. But have you ever stopped to consider just why we should diversify?

Of course, in the example of the saying about the eggs, it’s simple spreading of risk: if you have all your eggs in one basket and you drop that basket… all your eggs have broken! By spreading your eggs into a second basket, if one basket is dropped, only those eggs in …

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A Brief Explanation of the Thrift Savings Plan (TSP)

I love the TSP and the fund options it offers. Participants (generally government employees and military) have access to very low cost index fund options and a handful of target date funds (L Funds) that incorporate different combinations of the individual index fund options depending on what stage you’re at in your retirement savings journey. I wish more employer sponsored plans mirrored the TSP’s simplicity, low costs and efficiency. Employees may or may not have access to a match on deferrals, depending on their employment class.

The TSP has a number of different fund choices available. The G Fund invests …

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Choosing Stocks and Investments: You’re Only Human

How do humans choose stocks and other investments? We often fool ourselves and tend to get stuck.

In writing about behavioral economist Richard Thaler’s theories in The Washington Post, Barry Ritholtz points out that our brains were designed to survive in the wild but that while the stock market may seem wild, picking investments is very different from avoiding predators.

How many times have you heard the line, “There are two kinds of people in this world…?” For Thaler, those two types are “Econs” and “Humans.” Before you decide that you are one or the other, we should …

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