Paul B. Brown

In investing, a return that sounds big is nice, but it’s what you get to keep after taxes that counts. That’s a fact that even sophisticated investors can forget.

To make it easier to remember, we have created the following table. It shows at a glance the yield you would need to earn from a taxable investment to equal what you could get from one that is tax-free.

Now, one quick caveat about the table. As you know, everyone’s tax rate is different. It not only depends on how much you make, but where you live, because some states and even some municipalities (hello, New York City) imposed their own income taxes. Read more…

I have absolutely no reason to hate the people at Aon, which describes itself as "the leading global provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting."

I am sure they are nice folks who don't kick puppies and are good and upright citizens who help little old ladies across the street and pitch in during the annual bake sale.

But when it comes to retirement planning, the statement they sent out a couple of days ago aon.mediaroom.com shows they don't have much of a clue. Read more…

Maybe the Social Security benefits you are going to get in retirement are being unfairly maligned. They could be more valuable than you think.

Let me explain.

Invariably (and correctly) the traditional advice when it comes to thinking about how you are going to fund your retirement is “don’t plan on relying on Social Security.” Read more…

Back when dinosaurs ruled the earth—well, in the early 1990s—I had a nationally syndicated radio talk show heard on 168 stations on The Business Radio Network. (I was extremely big in Buffalo, for some reason.)
For three hours a night I answered questions from people about what they should do with their money. (How much would they need for retirement, what should they be saving for junior’s college education, what kind of mortgage would be best for them and the like.)
And back then, I was getting a lot of calls about huge moves in the market.
In the early ’90s, the Dow was in the 3,000s, and a big move was something like 50 points. If the market “plummeted” 45 points, people were extremely depressed. Read more…

Why is it you know all about your best friend’s sex life, but nothing about her salary? Why will your brother reveal intimate details about the house he’s building—complete with the cost of every last fixture—but not tell you his income or the size of his last bonus? And why are your parents hiding their money secrets along with the other skeletons in that closet?
The answer in each case is simple: “Because money is the final taboo.”
A quick survey of the morning talk shows—everything from Ellen to Jerry Springer—reveals that money may be the only thing people today are reluctant to talk about.
That makes it that much more important to discuss the issue with your partner in, well, intimate detail. Read more…

One of the advantages of being a bit older is you (hopefully) gain perspective.

All the Sturm und Drang in the stock market gives you a good opportunity to put that perspective to work by talking to your kids, younger siblings and friends about the importance of savings and investing. And the most intriguing way to begin the conversation might be to ask them, “would you like to be a millionaire?”

The fact is, everyone can become one. Read more…

Of every dollar going into mutual funds today, how much is going into Index Funds?

A) 80 cents
B) 60 cents
C) 40 cents
D) 20 cents

See next page for answer.

Answer: D. And quite frankly we don’t understand why that is the case, since most actively managed funds fail to outperform the market average.

  Read more…

If you put money into a tax-advantage retirement account, and then withdraw it before you are age 59 ½,

A. You will always be hit with a 10% penalty
B. You will always be hit with a 10% penalty, plus whatever money you take out will be added to your ordinary income for that year.
C. You will be subjected to a 10% penalty, but the money you withdraw will be treated as capital gains or loses.
D. You may not have to pay any taxes or penalties.

See the correct answer on the next page.

Answer D. Normally if you withdraw retirement money early you will pay 10% of what you withdraw as a penalty, and the money you withdraw will be treated as ordinary income, increasing what you owe in taxes. Read more…

Once the market turns around, expect the stock market to increase in 1,000 points increments:

a) Faster than ever before
b) At the same rate as it has through history
c) Slower than it has over the last 70 years
d) Slightly faster than the historical rate.

See next page for the correct answer. Read more…