Jonathan Clements, Wall Street Journal columnist, has written a comprehensive financial guide that will help us make the every-day, financial decisions that we all face during our lifetime.
Jack Bogle wrote: "It's hard to imagine a finer place to begin your search for financial peace of mind than with Jonathan Clements Money Guide 2015".
Author Allan Roth wrote: "I can honestly say this is the best money manual ever written--period!"
Jonathan's 31 Rules of the Road are a small sample of the gems inside:
Thank you Mr. Clements!1.Check your retirement progress by taking your nest egg and applying a 4% annual portfolio withdrawal rate, equal to $4,000 a year for every $100,000 saved. Will you have enough retirement income—or should you be saving more?
2. Don’t automatically claim Social Security at age 62. It often makes sense to delay benefits so you get a larger monthly check.
3. Never buy a home unless you expect to stay put for at least five years or longer. Between mid-2006 and early 2012, the S&P/Case-Shiller U.S. National Home Price Index plunged 27.4%. Enough said.
4. Planning to remodel your home in 2015? If you’ll get a lot of pleasure from the improvements and you can afford the cost, go ahead. But don’t kid yourself that you’re making an investment.
5. Never use a custodial account to save for college costs. Instead, open a 529 college savings plan or a Coverdell education account. Both will give you tax-free growth and shouldn’t badly hurt financial aid eligibility.
6.Don’t let your children take on more student loans than they can reasonably handle, given their expected career and likely earnings.
7.Insure against the big financial risks in your life, while skipping the small stuff. Extended warranties, trip-cancellation insurance and low auto-insurance deductibles? Just say no.
8. If you aren’t rich, buy term life insurance to protect your family. If you’re superrich, consider cash-value life insurance to save on estate taxes.
9. Worried about layoffs? Limit your fixed living costs to 50% or less of your pretax income. Fixed costs include expenses such as mortgage or rent, property taxes, debt payments, groceries, utilities and insurance premiums. At the 50% level, you know that—with money from your emergency fund—you could get by on half your old income if you lose your job.
10.Think about which expenditures gave you a lot of pleasure in 2014 and which were quickly forgotten. Use that to guide your spending in 2015.
11.Always contribute at least enough to your employer’s 401(k) plan to get the full matching contribution.
12.Expect modest returns from stocks and bonds. The worst that will happen is you’ll save too much.
13.Think about your paycheck—and how secure it is—as you decide how much to invest in stocks, how big an emergency fund to hold and how much debt to take on.
14. Avoid investments you don’t understand. Among other financial products, that likely means skipping equity-indexed annuities, leveraged exchange-traded index funds, hedge funds and mutual funds that mimic them, and variable annuities with living benefits.
15. Shun investments with high expenses or whose costs you don’t fully grasp. Examples? See previous point.
16. Never keep 100% in stocks—or 100% in bonds. A well-designed portfolio will always include both investments.
17. Don’t buy individual company stocks, and think hard before purchasing actively managed mutual funds. You’re highly unlikely to beat the market, which is why passively managed, market-tracking index funds make so much sense.
18. Check that you have tax-efficient investments in your taxable account, while using your retirement accounts to hold investments that generate big annual tax bills.
19. When did you last rebalance your portfolio back to your target weights for stocks, bonds and other investments? If it’s been over a year, you likely have too much in stocks.
20. If rich stock valuations and skimpy bond yields make you nervous, you can always pay down debt instead.
21. Never have a year when you pay nothing in income taxes. Take advantage of a low tax bracket by converting part of a traditional IRA to a Roth.
22. Check your credit reports for inaccuracies. You can get free copies through AnnualCreditReport.com.
23. Always pay your bills on time. This is likely the biggest factor affecting your credit score. In particular, late payments on credit-card bills and loan payments are quickly reported to the credit bureaus.
24. Are you on track to pay off your mortgage by retirement? If not, consider making extra principal payments.
25. Never carry a credit-card balance, which might cost you 20% or more in annual interest. You’ll never earn that sort of return in the financial markets over the long haul.
26. If you have more than enough saved for your own retirement, consider taking advantage of 2015’s $14,000 gift-tax exclusion to make gifts to your children and other family members. It’s a great way to brighten their lives—and the cheapest and easiest way to reduce the potential hit from state and federal estate taxes.
27. Get a will. You’ve been promising to do so for years. Make it happen in 2015.
28. Check that you have the right beneficiaries listed on retirement accounts, life insurance and any trust documents. Let’s face it: You probably don’t want your ex-husband inheriting your individual retirement account.
29. Try not to spend money in Roth IRAs. Instead, leave these accounts untouched for your beneficiaries, who could enjoy decades of tax-free withdrawals. They’ll remember you fondly.
30. When giving to charity, consider gifting appreciated investments. You’ll potentially enjoy three tax benefits: an immediate tax deduction, avoiding capital-gains taxes on the investments donated, and a smaller taxable estate.
31. In 2015, keep an eye on the big picture: You want to design a financial life for yourself where money worries are minimal, you have special times with friends and family, and you devote your days to activities that you think are important and you’re passionate about.
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