Archives for May 2023

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Investing Blog Roundup: “The Long View” and “Earn and Invest” Podcast Interviews

Just a quick reminder: if you’re interested in joining us this year for the 2023 Bogleheads Conference, I’d encourage you to register now, as the “early bird” ticket price only lasts through May 31.

I was recently interviewed on Morningstar’s The Long View podcast, as well as Jordan Grumet’s Earn and Invest podcast. In both cases, we were discussing my latest book More Than Enough. The conversations are very different though, with the Morningstar episode focusing more on the technical side of things, and the Earn and Invest episode focusing more on the psychological side of things.

I’d encourage you to give them each a listen. (As with the book itself, the idea is that the topics are relevant even if you don’t yet think of yourself as having “more than enough.”)

Other Recommended Reading

Thanks for reading!

May 29, 2023

Personal Representative vs. Trustee: What’s the Difference?

A reader writes in, asking:

“I’ve read your book twice, and FINALLY got my wife to face the reality that I’m likely to die before her (I’m 82, she’s 76)!

I love the simplicity of the book, however there is one topic I think needs some fleshing out: the text seems to use the terms Personal Representative and Trustee interchangeably. The functional roles seem a bit fuzzy.

Am I correct that the Personal Rep assists the surviving spouse on immediate-death matters (a short-term function), and the Trustee assists the surviving spouse (and beneficiaries) on post-death (trust) asset management (a long-term function)?

Additionally, am I correct that that a spouse, beneficiary, or friend could be qualified to be a personal rep, but a trustee has more responsibility and thus requires higher qualifications? Lawyers and CPA are so qualified, but they are too expensive to use continuously. Do you have any suggestions on this?”

The personal representative (PR) and trustee roles are analogous but they are definitely not interchangeable. (And to be clear, in my writing I do not use the terms interchangeably. If a given sentence refers to a personal representative, it means specifically the personal representative. And ditto for referring to a trustee.)

In short, the PR is in charge of administering the estate, whereas a trustee is in charge of administering a trust (if any). But they both have the job of managing the assets in question for the benefit of the beneficiaries in question.

Either role could be short-term or long-term, because either an estate or a trust could be closed pretty quickly or could remain open for an extended period. It is true though that the role of trustee is more likely to be long-term, because an estate is not generally intended to remain open for many years, whereas that might be the intention for a trust. For example, a person might set up a trust for the benefit of their adult disabled child, and the explicit goal for the trust would be for it to last for that beneficiary’s whole life. In contrast, if an estate is still open after many years, it’s generally not because anybody intended for such but rather because something has stopped the PR from being able to close the estate. (For instance, the estate is supposed to be distributed equally among four beneficiaries, and 90% of the estate consists of a single asset that is both illiquid and indivisible. And none of the beneficiaries wants to kick in the necessary cash to buy out the other beneficiaries’ shares.)

In many cases, one person (often the surviving spouse or an adult child) is named as both PR and trustee. Though it would be important for that person to keep in mind that it is indeed two separate roles that they are fulfilling. (For instance, it’s critical not to intermingle the estate’s assets with a trust’s assets.)

I would not say that a trustee necessarily needs greater skills than a personal representative. In both cases, the person in question owes a fiduciary duty to the beneficiaries and will have to manage the assets in a way that can satisfy that duty. Depending on things like family dynamics and what skill sets are available within the family, that may mean hiring a professional.

Are you (or a loved one) a surviving spouse?

After the Death of Your Spouse: Next Financial Steps for Surviving Spouses

Topics Covered in the Book:
  • The estate administration process
  • Responsibilities as personal representative (executor)
  • Social Security planning
  • Handling inherited retirement accounts
  • Reassessing your own finances
  • Finding professional assistance
  • Click here to see the full list.
May 22, 2023

Investing Blog Roundup: 2023 Bogleheads Conference Registration is Open

Registration is now open for the 2023 Bogleheads Conference, which will be held October 13-15, 2023, at the Bethesda North Marriott Hotel and Conference Center in Rockville, Maryland — just outside of Washington, DC.

The session topic details are still in the works, but the speaker list includes:

  • Dana Anspach
  • Brad Barrett
  • Christine Benz
  • William Bernstein
  • Jonathan Clements
  • Karen Damato
  • Charles Ellis
  • Rick Ferri
  • Mary Beth Franklin
  • Ann Garcia
  • Cody Garrett
  • Clark Howard
  • Jon Luskin
  • Paul Merriman
  • Gerard O’Reilly
  • Wade Pfau
  • Mike Piper
  • Barry Ritholtz
  • Allan Roth
  • Michelle Singletary

You can find more information at the link below. Note that the “early bird” ticket price is still applicable, but only lasts through May 31. We hope you can come join us.

2023 Bogleheads Conference

Other Recommended Reading

Thanks for reading!

May 15, 2023

Asking the Wrong Questions

Is your house an investment?

Does this count as market timing?

Is Social Security a bond?

Questions like the above — questions about how to categorize something (“Does ____ count as ____?”) are frequently a distraction from what really matters. When somebody asks a question like that on the Bogleheads forum or elsewhere, or participates in such a discussion, they’re generally just signing up to be one of several strangers talking past each other on the internet.

If you own a home, that home is an asset on your household balance sheet, and its value will change from one year to the next. And that value will likely go up over an extended period of time. For some people, that’s sufficient reason to call it an investment. For other people, it isn’t. But it affects your household finances just the same regardless of what you call it.

Or consider Bill Bernstein’s “if you’ve won the game, stop playing” concept. Imagine that your portfolio has recently grown to the point where it can satisfy your retirement needs — and it wouldn’t satisfy those needs if it fell significantly. So you consider moving a large chunk of your portfolio into a TIPS ladder. Some people would call that market timing, because it’s based on the market having just gone up and/or interest rates being at a certain level. Some people would say it isn’t market timing. But really, who cares? All that matters is whether this proposed course of action a good idea.

On the topic of whether Social Security should be considered a bond, we again should focus instead on the actual course of action. In many cases, what is really being asked is whether the portfolio should be largely invested in stocks (because Social Security would be considered a very large “bond” holding). And that’s what we should focus on — does it make sense for this household’s portfolio to have a very stock-heavy allocation? Maybe it does. Or maybe it doesn’t. But what we call Social Security doesn’t change their actual finances in any way. And thus it should have no impact. If it does have an impact, something already went wrong at an earlier step in the planning (e.g., they already made an arbitrary decision that their portfolio should be X% in stocks and Y% in bonds).

What’s the financial decision you’re considering making? That is, what action are you considering taking? Is it a good idea? That’s what we want to focus on.

May 8, 2023

Investing Blog Roundup: My Money Journey

A quick note: the 2023 editions of both Taxes Made Simple and Investing Made Simple are now available. If you know anybody who is in the early stages of their personal finance journey who might benefit from the books, I’d encourage you to order a copy for them.

On another book-related note, I recently read Jonathan Clements’ new compilation work, My Money Journey: How 30 people found financial freedom – and you can too. It’s exactly what it sounds like: 30 different people sharing their respective personal finance journeys.

Some of the writers are financial professionals. Some are not. Most have reached financial independence, while some are still on the way there.

The thing that struck me about the book (and likely the thing that makes it most unique and valuable) is that it is messy. To be clear, neither the writing nor editing is messy; they’re both excellent. Rather, I refer to the subject matter itself — because it’s very candid stories from people about their financial journeys. And most people make mistakes along the way.

The authors discuss what they’ve done well and not so well. Interestingly, in several cases, those two things are the same, with the writer’s super high savings rate leading to:

  1. Significant assets and financial freedom, as well as
  2. Doubt as to whether the sacrifices were ultimately worth it or whether a somewhat slower path to financial independence (and spending more along the way) would have been preferable.

If you’re somebody who learns by stories, this is a great book. It likely also makes a good general personal finance-related gift, as it’s very approachable. And if you’re a personal finance hobbyist, as I know many of you are, you’ll probably find it entertaining.

Other Recommended Reading

Thanks for reading!

May 1, 2023
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