Monday’s need-to-know money news

Today’s top story: 3 reasons to choose a college based on price. Also in the news: 3 times you can pay taxes with plastic and come out ahead, 7 tax changes investors should watch for when they file, and why you should check your hospital bill against your explanation of benefits.

3 Reasons to Choose a College Based on Price
Avoiding high debt.

3 Times You Can Pay Taxes With Plastic and Come Out Ahead
Building card perks.

7 Tax Changes Investors Should Watch For As They File
Investors face several new changes.

Check Your Hospital Bill Against Your Explanation of Benefits
Billing mistakes are rampant.

Q&A: When is it time to take the money and run to a new investment advisor?

Dear Liz: My wife and I are in our early 30s. She has a stock portfolio that has positions in 20 blue chip stocks purchased primarily in the last 20 years. It was set up by her family and managed by a family friend at a large brokerage. Recently, the family friend retired and transitioned the portfolio to a new team at this brokerage. They basically told us that our portfolio underperformed and only saw an average of 3% growth per year over the last 20 years.

The new brokerage team is recommending we gradually transition our 20 positions into a portfolio of 300 stocks that will mirror an index. They would harvest any tax losses to offset the capital gains tax that would otherwise be due. They will charge a 1% fee, and after several years, we will probably have a portfolio that is entirely small positions in a huge number of companies.

My gut reaction was that if they want to mirror an index, why not just buy an index fund with cash freed up from tax-loss harvesting? My wife really feels most comfortable doing whatever her parents recommend and is overwhelmed by what I call advanced investing but wants us to make this decision together.

Answer: If your wife is being charged a 1% annual fee, she should be getting a heck of a lot more than investment management. One percent is the typical fee charged by comprehensive financial planners who offer a wide array of services including retirement, tax, investment, insurance and estate planning. If her portfolio is more than $1 million, the fee probably would be even lower.

Another, larger problem is that the new team of stockbrokers probably does not have a fiduciary duty to your wife. In other words, they’re allowed to recommend a course of action that is more profitable for them, even if there are better-performing and less-expensive options available. That, more than anything else, should be motivating her to find a new advisor who is willing to be a fiduciary.

You can help in a number of ways, starting with the advisor search. The National Assn. of Personal Financial Advisors, the XY Planning Network and the Garrett Planning Network all represent fee-only planners and can offer referrals.

You also can encourage your wife to educate herself about investing, since (as you know) it’s not rocket science and she needs to know the basics to responsibly handle her money. Relying on her family’s influence has left her with an undiversified, underperforming portfolio — and delivered her into the hands of people who probably don’t have her best interests at heart. It’s time to grow up and take charge.

Finally, you can stop referring to it as “our” portfolio. It’s lovely that she wants to share it with you, but the money is hers and she needs to take ownership.

Q&A: Fear of a market meltdown has frozen this retiree’s money decisions

Dear Liz: I sold my home two years ago and still have not done anything with my gain of $200,000. It’s in a one-year certificate of deposit so at least it’s earning something while I try to figure out what to do with it. I’m 66, retired and have an IRA of $500,000 that’s invested in the market. I get $1,450 from that plus a monthly Social Security check of $1,750.

I know that my hesitation has to do with the crash of 2008. I know that things have recovered nicely but I just don’t want to feel like I did then, watching my money disappear. I don’t know if I’m the only older person who has this fear of riding it out again.

Answer: Few who watched their portfolios plunge in 2008-09 look forward to experiencing that again. But risk is inextricably tied to reward. If you want the reward of inflation-beating returns that stocks offer, you must accept the risk that your portfolio can go down as well as up.

And you probably do want that reward for a big chunk of your investments. Retirees typically need about half of their portfolio in stocks to generate the kinds of returns that will preserve their buying power and help insulate them against running short of money.

That doesn’t mean all your money has to be at risk. You still need to have a good stash of savings sitting in safe, liquid accounts to help you ride out any market downturns or emergencies. Financial planners often recommend that their retired clients keep six months’ worth of expenses in an emergency fund, and some like to see 12 months’ worth. Beyond that, though, your money probably should be working for you, not simply dwindling away to taxes and inflation.

If you find yourself unable to move forward with a plan for this money, consider hiring a fee-only financial planner who can help you review your options.

Tuesday’s need-to-know money news

Today’s top story: Think twice before paying for accident forgiveness. Also in the news: What to do when a fund in your portfolio closes, 5 Black Friday credit card strategies to add to your list, and how to get your finances in order.

Think Twice Before Paying for Accident Forgiveness
How much to pay for a mistake you might never make?

What to Do When a Fund in Your Portfolio Closes
ETFs are dying off.

5 Black Friday Credit Card Strategies to Add to Your List
Using your cards smartly this season.

How to Get Your Finances in Order
Prioritizing is key.

Friday’s need-to-know money news

Today’s top story: How to keep investing when the stock market trembles. Also in the news: What to buy (and skip) on Black Friday, financial companies are hiding complaints, and how age affects your credit score.

When the Stock Market Trembles, Fight Your Fear and Keep Investing
Keep calm and invest on.

What to Buy (and Skip) on Black Friday 2018
Putting your Black Friday gameplan together.

Financial Companies Rack Up Complaints, but Good Luck Finding Them
Companies are hiding their complaints.

What does age have to do with credit scores? Plenty
A lot more than you’d think.

Wednesday’s need-to-know money news

Today’s top story: What to buy and skip in September. Also in the news: 5 times to stash your cash and pay with plastic, what college freshman need to know about their student loans, and how to choose the best approach to managing your investments.

What to Buy (and Skip) in September

5 Times to Stash Your Cash and Pay With Plastic
Protecting your purchases.

What College Freshmen Need to Know About Their Student Loans
A whole new world of financial obligation.

How to choose the best approach to managing your investments


It’s all about streamlining.

Friday’s need-to-know money news

Today’s top story: Amazon Prime hits $119. You’ll probably pay it. Also in the news: Understanding a bear market, 5 money mistakes 20-somethings make, and the 3 best reasons to rent your home instead of buying.

Amazon Prime Hits $119. You’ll Probably Pay It.
It’s about more than just free shipping.

What Is a Bear Market?
Investment prices are dropping.

Ask Brianna: 5 Money Mistakes 20-Somethings Make
How to side step them.

The 3 best reasons to rent your home instead of buying
Not every reason is financial.

Friday’s need-to-know money news

Today’s top story: If you sold fearing a market crash, here’s what to do now. Also in the news: Why you should look under the hood of your target-date fund, a home buyer’s guide to motivated sellers, and is Amazon Prime worth its new price?

If You Sold Fearing a Market Crash, Here’s What to Do Now
Getting back in the game.

It’s Time to Look Under the Hood of Your Target-Date Fund
Taking a closer look.

A Home Buyer’s Guide to Motivated Sellers
Making the right match.

Is Amazon Prime worth its new $119 price tag?
The online giant is raising Prime prices.

Tuesday’s need-to-know money news

Today’s top story: The most and least affordable places to buy a home. Also in the news: 3 investments that aren’t actually investments, why credit card rewards may lose their sparkle, and how to ask for a raise.

The Most and Least Affordable Places to Buy a Home
Some of these may surprise you.

3 Investments That Aren’t Actually Investments
The true definition of investment.

Credit Card Rewards May Lose Sparkle, but Not Value
Rewards could get a lot more personal.

Use This Formula to Ask for a Raise
Getting what you’re worth.

Monday’s need-to-know money news

Today’s top story: 3 ways to invest in your career this week. Also in the news: How to pick stock investments, checking accounts for seniors, and using your emergency savings to pay off credit card debt.

3 Ways to Invest in Your Career This Week
Give your career a boost.

How to Pick Stock Investments
Choosing wisely.

Checking Accounts for Seniors
Know the perks.

Should You Pay Off Your Credit Card Debt With Your Emergency Savings?
Start making short-term sacrifices.