When I was a child, I had the blessing of intimately knowing both my grandmothers and two of my great-grandmothers. However by the time I turned 12, my mother was my only living maternal ancestor.

At any age, it is easy to feel invincible, but life flies by. When I started this article in 2022, I had two living grandfathers. But as of 2025, I only have one.

When I started this series in 2021, I was just entering my thirties. The energy of my twenties was around me and old age was far on the horizon. Now, I’m 35. I have Reed-Richards-style grey patches in my hair, and I am significantly more familiar with my doctor.

Your great-grandparents, grandparents, parents, aunts, uncles, siblings, cousins, spouse, children, or friends might not be with you in a decade. Or they might not be as healthy as they are now. Or you might not be as healthy as you are right now. Or you might not be here in a decade.

This life lesson is a reminder to draw near and draw close to those who love you and love them back just as fiercely.

Be quick to forgive. Most offensive comments or thoughtless behavior you won’t remember in a decade, but your own bad behavior during a fight can haunt you for years. Be a peacemaker. Diffuse arguments. Love those who you disagree with. Love even those whose actions you disapprove of.

Take pictures and videos of your loved ones whenever you are with them. Write down your favorite stories of theirs. Invest in their health and life. Invite them to have a place in your birthday parties, celebrations, and day-to-day. Listen to their stories. Ask about their experiences. Eat meals with them.

The time you spend with your loved ones compounds in value. Just like investing, the earlier you start the more wealth you can have later.

I’m reminded of a wonderful quote from the fictional book “To All the Boys I’ve Loved Before” by Jenny Han. Near the end of the book (Paperback pg. 294), the main character, Laura Jean, muses:

When someone’s been gone a long time, at first you save up all the things you want to tell them. You try to keep track of everything in your head. But it’s like trying to hold on to a fistful of sand: all the little bits slip out of your hands, and then you’re clutching air and grit. That’s why you can’t save it all up like that. Because by the time you finally see each other, you’re catching up only on the big things, because it’s too much bother to tell about the little things. But the little things are what make up life. … Now everything feels like you had to be there and oh never mind, I guess it’s not that funny.

I shared this quote with a college friend of mine who travels a lot with the military. He said that to help collect the sand better, he writes down the funny stories as he experiences them. Then, before he reconnects with someone, he rereads the stories to remind himself of life’s little moments to share.

While this strategy does create a sense of closeness, the easiest way to enjoy life’s little things with one another is to spend time together. The easiest way to spend time together is to have a regular day of the week when you connect with one another, a project that you are working on together, or houses that are in close proximity to one another.

If you are starting from scratch in this area, perhaps, as the writer Kat Vellos challenges, you should simply take each social interaction you have one step beyond the minimum. You can do this with anyone from the grocer to your sister. You start by simply saying something. If that goes well, share something or have curiosity. If that goes well, be vulnerable or make space for vulnerability. And so on. Take another step beyond the minimum to build relationships with the people you actually see.

These small changes make a big impact over time, and your investments in relationships will compound to create more good things in your life.

Photo by author. This is part of Life Lessons (the series).

At its core, comma-delineated string is a simple database table row.

We use strings like these to save the tax plans we discover for a specific client as a part of our Tax Planning service. We can save what Roth conversion targets we are using in that plan for each year across all 100 years of the client’s lifetime. Then, when it comes time to run the plan in the new year, we can simply load and parse our old strings.

Create the Comma-Delineated String

You can create a comma-delineated string easily by using the TEXTJOIN function . When you are saving data, that formula might look like:

=TEXTJOIN(“,”,FALSE,A1:A4)

The comma is our delimiter. The FALSE means that empty variables will be included. A1:A4 is an example of a range which could be joined.

Locate the Nth Variable

The formula to return (the number stored in $B$1)th variable in your comma-delineated string (stored in A5) is:

=MID(A5,FIND(CHAR(134),SUBSTITUTE(A5,”,”,CHAR(134),$B$1))+1,FIND(CHAR(134),SUBSTITUTE(A5,”,”,CHAR(134),$B$1+1))-1-FIND(CHAR(134),SUBSTITUTE(A5,”,”,CHAR(134),$B$1)))

You’ll see that there are three separate instances of nestled SUBSTITUTE FIND functions. The SUBSTITUTE function replaces the Nth instance of the old text (a comma) with the very unique character of a sword † . Then, the FIND function locates the sword character.

We do this three times. Twice to find the comma before the selected variable and once to find the comma after the variable. Then, we use the MID function to return the text after the before-comma sword and for the length of the difference between the after-comma and the before-comma swords. Meanwhile, the plus one and minus one in those two bits removes the commas themselves.

Hopefully, our articles on interesting Excel formulas empower your own Excel efforts. If you enjoy running investment analysis in Microsoft Excel, you may want to consider applying for a job at Marotta Wealth Management!

We are an independent, fee-only, comprehensive wealth management firm offering a complete range of investment management and financial planning services. The work we do for clients is valuable, fun, and fulfilling. As fee-only fiduciaries, our only concern is to help clients meet their goals. And as comprehensive wealth managers, we are always seeking to advance the financial planning profession.

You can read more about the benefits of working for us here.

Photo by Mimi Thian on Unsplash. Image has been cropped.

Cash Has Been the Riskiest Investment

For those who would like assistance with investing, rebalancing, and managing their portfolio, our Do-It-Yourself service level may be a better fit.

For people with more invested assets or who are in or near retirement, we recommend professional management and financial planning. For that reason, our calculators do not make recommendations beyond age 70.

Our standard gone-fishing portfolio can be used at any custodian. It is best at custodians where there are no transactions fees for Exchange-Traded Funds (ETFs). We also have a Vanguard-specific portfolio due to the Vanguard brand loyalty of some of our readership.

If you are just getting started with investing and have not yet selected a custodian, we recommend opening accounts with Charles Schwab. Charles Schwab and many other custodians have no transaction fees for U.S. security trades and have no minimum account requirements. For these and many other reasons, we recommend selecting Charles Schwab as your custodian and using the Default Gone-Fishing Portfolio.

Here are all of our gone-fishing portfolios for 2026:

Marotta’s 2026 Gone-Fishing Portfolio Calculator

by David John Marotta on May 14, 2026 with No Comments

This gone-fishing portfolio is our default portfolio which can be used at any custodian.

Marotta’s 2026 Vanguard Gone-Fishing Portfolio Calculator

by David John Marotta on May 14, 2026 with No Comments

We recommend this gone-fishing portfolio for investors with brand loyalty to Vanguard.

This year, we made only minor changes to the Vanguard-specific gone-fishing portfolio and to our standard gone-fishing portfolio.

Exposure to China Lingers

As we mentioned in the past two years, the potential threat of a war with China over Taiwan lingers. China may try to seize Taiwan or may not. The United States may go to war with China or may not. It may be a big deal or it might be nothing.

During the war on Ukraine, the United States banned Americans from buying Russian stocks and bonds. If a conflict with China escalates, one of our main concerns is that the U.S. might put similar investment controls on Chinese investments. To offset this risk, we added an ex-China fund to our main Emerging Market strategy in 2023, and increased our allocations in March of 2024.

We have maintained both allocations under the wisdom of making half a mistake.

That has proved a good decision. In 1-year returns ending December 31, 2024, Emerging Markets outperformed Emerging Markets ex-China by 10.1%. Then, in 1-year returns ending December 31, 2025, Emerging Markets ex-China outperformed Emerging Markets by 8.4%.

This year, we have a new recommended Emerging Markets excluding China fund to recommend for both gone-fishing portfolios: Vanguard Emerging Markets ex-China ETF (VEXC). VEXC has a lower expense ratio (0.07% vs. XCEM’s 0.16%) and uses our preferred definition of emerging markets (FTSE vs. XCEM’s use of MSCI).

For investors who don’t mind complexity, you could use a 50-50 allocation between these two funds. For investors who would prefer simplicity, you can select one or the other depending on your feelings about the threat of China. You can read more about this topic in “Executive Summary of the Possible Taiwan Conflict (June 2023).”

In the past two years, if we had to pick, our recommendation was choosing Emerging Markets excluding China (now VEXC). We suspect that you can capture roughly the same return with less geopolitical risk. To stay abreast of our latest thinking, be sure to subscribe to our newsletter and watch for articles about Emerging Markets.

Freedom Stays the Same

There is always a bit of tension in the foreign allocation of our gone-fishing portfolio. Our complete freedom investing strategy involves twelve different countries in a roughly equal weight. Obviously, using twelve ETFs to represent foreign stocks is too many for a simple portfolio. However, investing in just four of the countries produces a wilder return.

Previously, we decided to invest in the four countries with the highest four-year average composite freedom scores. This year, we have continued that decision.

During the 2025 Index of Economic Freedom Update, the four countries with the highest four-year average composite freedom scores changed slightly. They are now: Denmark, Sweden, Norway, and Switzerland.

Singapore dropped to 6th and outside of the gone-fishing portfolio while Sweden and Norway both saw an increase in their composite freedom scores.

Reminder: Stay the Course

We have a saying, “It is always a good time to have a balanced portfolio.” While the worries of the world can make investing a terrible spectator sport, you can choose not to watch. You don’t have to watch the news or your portfolio’s reaction to the news. Seven out of ten years are up.

We strive to utilize a portfolio strategy that does not require market timing to be successful. We think the contrarian effect of rebalancing on a historically justifiable portfolio gives the best chance of weathering the market ups and downs.

For this reason, our advice is to stay the course. It is always a good time to have a balanced portfolio.

Photo by Carmel Arquelau on Unsplash. Image has been cropped.

For those who would like assistance with investing, rebalancing, and managing their portfolio, our Do-It-Yourself service level may be a better fit.

For people with more invested assets or are in or near retirement, we recommend professional management and financial planning. For that reason, our calculators do not make recommendations beyond age 70.

Below is our standard gone-fishing portfolio which can be used at any custodian. It is the best for custodians who have no transactions fees for all Exchange-Traded Funds (ETFs). Charles Schwab, Fidelity, and eTrade all have no ETF transaction fees and can use our default portfolio.

If you are just getting started with investing and have not yet selected a custodian, we recommend opening accounts with Charles Schwab. Charles Schwab and many other custodians have no transaction fees for U.S. security trades and have no minimum account requirements. For these and many other reasons, we recommend selecting Charles Schwab as your custodian and using the Default Gone-Fishing Portfolio.

You can read about the changes from last year in our article “An Overview of Marotta’s 2026 Gone-Fishing Portfolios.”

Regarding Emerging Markets: For investors who don’t mind complexity, you could use a 50-50 allocation between VEXC and VWO. For investors who would prefer simplicity, you can select one or the other depending on your feelings about the threat of China. You can read more about this topic in “Executive Summary of the Possible Taiwan Conflict (June 2023).” As of now by default if we had to pick, our recommendation is to allocate to the Emerging Markets excluding China fund (VEXC).

Photo by Zdeněk Macháček on Unsplash. Image has been cropped.

With recent changes, many custodians (Charles Schwab, TD Ameritrade, Fidelity, eTrade, and more) now have no transaction fees for buying exchange-traded funds (ETFs). This makes our default gone-fishing portfolio our best recommendation at many different custodians. Additionally, it eliminates the need for the many custodian-specific portfolios we have crafted in the past.

Vanguard has no transaction fees for ETFs purchased online. As a result, we believe our default portfolio would be the best choice even for those who are investing at Vanguard. However, we are continuing to offer this Vanguard-specific Marotta’s Gone-Fishing Portfolio Calculator for investors who have brand loyalty to Vanguard.

This portfolio uses only Vanguard ETFs or mutual funds, and all Vanguard investments have no transaction fee when purchased or sold in a Vanguard account. If you are investing in Vanguard funds at a different custodian, the mutual funds will commonly have a transaction cost to trade.

For each holding, we have included the ticker symbol for the exchange-traded fund (ETF), Admiral Share (Adm), and Investor Share (Inv) classes. The ETF has no minimum investment. Both the mutual funds have a minimum investment, but the Admiral shares often have a lower expense ratio with a higher minimum investment while the Investor Shares have a higher expense ratio with a lower minimum investment.

You can read about the changes from last year in our article “An Overview of Marotta’s 2026 Gone-Fishing Portfolios.”

Regarding Emerging Markets: For investors who don’t mind complexity, you could use a 50-50 allocation between VEXC and VWO. For investors who would prefer simplicity, you can select one or the other depending on your feelings about the threat of China. You can read more about this topic in “Executive Summary of the Possible Taiwan Conflict (June 2023).” As of now by default if we had to pick, our recommendation is to allocate to the Emerging Markets excluding China fund (VEXC).

Photo by Zdeněk Macháček on Unsplash. Image has been cropped.

Life Lesson #1: You Shouldn’t Need Saving

We have been offering the Marotta’s Gone-Fishing Portfolio since 2012 as a free portfolio recommendation intended for people who are just getting started with investing. This portfolio has a limited number of investments with a balanced asset allocation that should do well with dampened volatility. Its primary appeal is simplicity, but a secondary virtue is that it avoids the worst mistakes of the financial services industry.

Last year, our 2025 Marotta’s Gone-Fishing Portfolio was a recommendation of 12 stock investments. It is a paired down version of our actual managed investing strategy, which has over 40 low-cost ETFs to target over 30 sectors.

This article is to report on the 2025 performance of those twelve stocks.

In this analysis, we have used returns ending December 31, 2025 as reported by Morningstar. For the portfolio, we have used the 100% Stock allocation invested at the start of the relevant period and then permitted the portfolio to drift throughout the period.

Overall Returns

Without rebalancing, the all-stock Marotta 2025 Gone-Fishing Portfolio had a 1-year return of 20.19% and the all-stock Marotta 2025 Vanguard Gone-Fishing Portfolio had a 1-year return of 20.74%.

For comparison, iShares MSCI ACWI ETF (ACWI) saw a 2025 return of 22.41%. MSCI ACWI All Cap represents every stock in the world at exactly its cap weight. Any deviation from this index is a choice of investment strategies. Sometimes those choices will increase or reduce risk. They may also increase or reduce returns.

This past year, our choices decreased returns for both our default and Vanguard portfolios.

U.S. Stock Returns

Note: We have included Vanguard Real Estate in our U.S. Stock reporting here for our Gone-Fishing portfolios. In our full Asset Allocation Design though, we typically section real estate ETFs into a separate asset class of Resource Stocks and report on it separately. That being said, this U.S. Stock portfolio is fairly compared to Vanguard Total Stock Market (VTI) because VTI includes U.S. REITs.

Without rebalancing, the U.S. Stock portion of the Marotta 2025 Gone-Fishing Portfolio had a 1-year return of 12.50% and the U.S. Stock portion of the Marotta 2025 Vanguard Gone-Fishing Portfolio had a 1-year return of 12.66%.

This can be compared to Vanguard Total Stock Market ETF (VTI), every stock in the U.S. exactly at its cap weight, which saw a 1-year return of 17.10%.

In our 2022 update, we discussed how those who concentrated their 2021 allocations in large-cap growth saw the best returns, but that for 2022 we thought investors may be glad to diversify elsewhere. In 2022, that turned out to be true, but that has not held true for 2023, 2024, or 2025.

In 2025, large-cap growth fund Vanguard S&P 500 (VOO) saw a one-year return of 17.82% compared to the value-tilt funds of Vanguard Value (VTV) which posted a 15.26% return and SPDR® MSCI USA StrategicFactors (QUS) which posted a 14.12% return. Again, most of the large-cap growth return was driven by Vanguard Information Technology, which posted a return of 21.78% for the one year.

In our default 2022 and 2023 Marotta’s Gone-Fishing Portfolio and in our managed portfolios, we showed preference to QUS over VTV so as to make only half a mistake. In 2022, VTV would have been the better choice. In 2023 and 2024, QUS was the better choice. In 2025, VTV was the better choice again. This flip flopping makes us thankful we made only half a mistake.

Foreign Returns

Without rebalancing, the Foreign Stock portion of the Marotta 2025 Gone-Fishing Portfolio had a return of 30.29% and the Marotta 2025 Vanguard Gone-Fishing Portfolio had a return of 31.37%.

These returns can be compared to iShares MSCI ACWI ex US ETF (ACWX), every stock in the foreign world exactly at its cap weight, which saw a 1-year return of 32.59%.

It can also be compared to our full Freedom Investing strategy (a different model portfolio which represents our static targets), which would have had a 1-year return of 33.89%. In 2024, our Freedom Investing Strategy underperformed the Default Gone-Fishing Portfolio due primarily to the inclusion of South Korea. This year, our Freedom Investing outperformed the Default Gone-Fishing Portfolio primary due to the inclusion of South Korea which posted a return of 91.81% for the year.

Reminder: Stay the Course

South Korea (FLKR +91.81%), Spain (EWP +78.01%), and Italy (EWI +55.68%) were especially profound performers for 2025. However, the worst reason to buy more of something is because it has done well recently.

Instead, we strive to utilize a portfolio strategy that does not require market timing to be successful. We think the contrarian effect of rebalancing on a historically justifiable portfolio gives the best chance of weathering the market ups and downs.

For this reason, our advice is to stay the course. It is always a good time to have a balanced portfolio.

Photo by Jorge C on Unsplash. Image has been cropped. Returns data gathered from Morningstar Advisor Workstation.

Give Generously During Hard Times

This article is part of my series where I review how Freedom Investing performs for the quarter.

About Return Data

In this analysis, I have used the actual products we are investing in rebalanced monthly to our static asset allocation targets with returns ending December 31, 2025. This analysis does not reflect our dynamic tilt or our individual stock foreign health care strategy, both of which we implement in client portfolios.

In 2024, we recategorized South Korea as a developed market (as FTSE does) rather than as an emerging market (as MSCI does). Then, in January 2026, we changed our Emerging Market ex-China allocation from Columbia EM Core ex-China ETF (XCEM), which uses MSCI’s definition and contains some of our South Korea allocation, to the new Vanguard Emerging Markets ex-China ETF (VEXC), which uses FTSE’s definition and does not have South Korea. This did not change our allocation to South Korea, as we were previously adjusting our country-specific target to account for XCEM’s exposure. However, because VEXC does not have return data until October 2025, we have reported on interlaced returns of XCEM prior to January 2026 and VEXC after January 2026.

For comparison, I included the actual products of VEA, VWO, and ACWX. These ETFs represent a simple baseline for the relevant category. The Vanguard FTSE Developed Markets (VEA) can be compared to Developed Freedom Investing, Emerging Market (VWO) can be compared to Emerging Market Freedom Investing, and the All World ex-US (ACWX) can be compared to the Overall Freedom Investing.

I have also included some indexes. These indexes represent theoretical returns of a particular strategy. While they are unburdened by fees, I have selected the Net Return (NR) reporting for the index. The Net Return indicates that Morningstar has approximated the minimum possible dividend reinvestment, after deduction of some tax withholding. For those, MSCI EAFE Equal Country Weighted NR USD can be compared to Developed Freedom Investing, and MSCI EM Equal Country Weighted NR USD can be compared to Emerging Market Freedom Investing. Note that neither South Korea nor Canada are included in MSCI EAFE.

Lastly, I have also included the performance of the developed countries currently excluded from our Freedom Investing strategy to provide additional context.

Overview

Last quarter, we saw that in 1-year returns ending December 31, 2025, Developed Freedom Investing had a -0.84% disadvantage, Emerging Market Freedom Investing had a +7.05% advantage, and Overall Freedom Investing had a +1.29% advantage.

This quarter, we saw that in 1-year returns ending March 31, 2026, Developed Freedom Investing had a -3.2% disadvantage, Emerging Market Freedom Investing had a +10.93% advantage, and Overall Freedom Investing had a +2.04% advantage.

In 1-year returns ending March 31, 2026, Emerging Markets ex-China outperformed Emerging Markets by 15.06%.

You can find our articles reviewing the performance of Freedom Investing here.

For more information about Freedom Investing, you may enjoy reading “A 25-Year Review of Freedom Investing” or “Risk-Return Analysis of Freedom Investing.”

Photo of Norway by Artem Shuba on Unsplash. Image has been cropped. Returns data gathered from Morningstar Advisor Workstation.

Getting The Most From Your 401(k) Or 403(b)

This article contains some of the most relevant 2026 federal income tax bracket figures.

If you are looking for contribution limits, those are in our article, “2026 Contribution Limits.”

This information has been gathered from the IRS website into a consolidated location as a convenience. Before making any tax decisions, it may be in your best interest to review the primary sources here:

• Tax Brackets: IRS releases tax inflation adjustments for tax year 2026, including amendments from the One, Big, Beautiful Bill
• Overview of Changes: One, Big, Beautiful Bill provisions – Individuals and workers
• Senior Deduction Information: 2026 filing season updates and resources for seniors
• Medicare IRMAA Premiums: Rules for Higher-Income Beneficiaries

Photo of Dorothy in Tax Land by Megan Russell

During the first quarter of 2026, the market’s maximum drop from a prior high was down -9.10%, and at quarter end, the market was down -4.63%.

Historically, on average the market sits down -9.49% from a prior high, and the average intra-year drop is -14.20%. The average quarterly return is 2.09%, and the standard deviation of quarterly market movements is 7.20%. This means, a quarterly movement between -5.11% and 9.29% is still within one standard deviation of normal. Even a move between -12.30% and 16.49% remains within two standard deviations.

In other words, a down quarter is not evidence that markets are broken. It is historically just evidence that markets are markets.

A dramatic response, such as adjusting your strategy to chase returns or selling to cash, almost always does more harm than good. The correct response to nearly all market movements is just rebalancing.

Rebalancing means trimming a portion of what has done well and adding to what has not. That process feels uncomfortable in the moment, but it is often exactly the right response. As we suggested in “Your Asset Allocation Should Be Priceless,” the value of a well designed asset allocation is often clearest when markets are disappointing.

While large technology declined this past quarter, other parts of the market appreciated. While Vanguard Information Technology ETF (VGT) lost -7.34%*, Vanguard Mid-Cap Value ETF (VOE) gained 4.46%* and Vanguard Small-Cap Value ETF (VBR) gained 3.17%*.

That divergence is important.

It means the quarter was not a story about “the stock market” broadly declining. It was, to the extent that a story could be told, a story about one sector finding resistance and cooling off while others did better. Investors who had expected large-cap growth technology to correct after years of dominance were not surprised. If anything, the surprise is how moderate the correction has been so far.

We have written about this before in “Factor Investing: Small and Value Factors.” Value stocks do not outperform every quarter or every year, but diversification across market segments helps a portfolio avoid being held hostage by whichever part of the market is currently making headlines.

International diversification also mattered.

Vanguard FTSE Developed Markets ETF (VEA) gained 2.76%* representing meaningful positive returns for most foreign stocks.

Some countries such as Denmark (EDEN) were down -8.54%* for the quarter. While other countries were up for the quarter, such as Taiwan (FLTW) up 11.95%*, South Korea (FLKR) up 24.40%*, and Norway (NORW) up 27.20%*.

Country specific returns are a useful reminder that international diversification is not one monolithic bet. Different countries, sectors, and valuations can produce very different results during a quarter. And the rebalancing bonus between different countries is as important as the diversification itself.

A well-designed portfolio should expect disappointing quarters. It should also be designed such that not every investment will move in sync with one another. That is the point of diversification. Something in the portfolio should always be disappointing, and something else should usually be holding up better.

It is always a good time to have a balanced portfolio.

*All the quarterly returns of ETFs listed in this article are calculated by taking the 3/31/2026 Adjusted Closing Price of actual investments on Yahoo! Finance and dividing by the Adjusted Closing Price on 12/31/2025. This adjusts for dividend payments but does not reinvest them.

Photo by Mattia Poli on Unsplash. Image has been cropped.

How to Claim Your Virginia State Tax 529 Contribution Deduction

One of the compelling reasons to include private market assets in client portfolios is as a potential hedge against volatility. Unlike public equities, which are updated daily and can swing due to headlines, technical factors or investor sentiment, private investments are typically revalued only during significant events like a capital raise or a sale. This means they’re less correlated with matters that affect public markets, which can help smooth out portfolio performance during turbulent times. As public markets grow more unpredictable, private assets may offer a powerful tool for diversification.

Here at Marotta we do not recommend investments that are not publicly priced and traded like hedge funds, private offerings, or nonpublic limited partnerships. The value of these assets is often assumed to be their purchase price until the management company provides a new value. However, their liquidation value might be only a fraction of the investment’s presumed value. Furthermore, investments that are not publicly priced and traded cause many conflicts of interest when it comes to reporting and billing. If new clients of our firm own such investments when they come onboard, we will help them determine if they should continue to hold them, but we do not normally recommend purchasing them because of their inherent difficulties.

In fact, we have nine rules which, when followed, better safeguard your money. Private equity like Novak describes goes against Safeguard #3: “Insist on Publicly Priced and Traded Investments.”

I have seen private equity that was priced at $250,000 for many years only to have the equity priced at zero in a single day. Was that equity volatile? Of course it was. Was it stable? Of course not. Did it lack technical correlation to other investments? Well, technically yes, but only because it lacked any accurate pricing at all. Private equity’s smoothed prices are not the same as stability.

As an analogy, a thermometer that is only checked once a year does not create a steadier temperature throughout the year.

When someone says that a private holding is less volatile, they may only mean that no one knows what price you could sell it for.

In the markets, you have both a bid (the highest price a buyer will pay) and an ask (the lowest price a seller will accept). This bid-ask spread is how much it costs to buy and sell the asset. One way of describing private equity is that the bid-ask spread is often too large, and therefore you should neither buy nor sell the asset.

The problem is exacerbated in retirement. A retirement portfolio is not just a collection of holdings intended to look good on a statement. It exists to fund spending. Retirees need assets that can be sold to generate cash for living expenses, rebalancing, charitable giving, taxes, and eventually required minimum distributions from traditional retirement accounts. Illiquid assets make that more difficult.

Without publicly priced securities, you do not have an accurate paper valuation, and you cannot spend what you do have until there is a market where you can sell the investment.

A retirement portfolio should hold investments you can price, sell, and spend. If an asset lacks a real bid and ask price, if you cannot be confident of its fair value, and if selling it is difficult when cash is needed, then its place in a retirement portfolio is highly questionable. That is why Marotta’s safeguard still holds up well today: insist on publicly priced and traded investments.

Whenever I see financial advice against what we would recommend I look to the source of that financial advice. Ken Novak is the Director of the Private Institutional Client group at Raymond James, so his advice to purchase his own product is not surprising. And this is one of the many reasons why you should also insist on having an independent fee-only financial advisor.

If you like the life experience of only sort of knowing what your investments are truly worth, you can achieve the same benefit by investing in publicly priced and traded investments and then taking Bogle’s best advice: Don’t peek!

Photo by Tim ten Cate on Unsplash. Image has been cropped.

Do Children Need To File A Tax Return To Fund Their Roth IRA? (2020)

A Pledged Asset Line of Credit (PAL) is a line of credit that allows you to borrow against the non-retirement assets in your portfolio without having to liquidate your investments. Initial loans must be at least $70,000. Retirement assets are not eligible. Most securities are eligible, including most mutual funds, exchange-traded funds (ETFs), CDs, cash; corporate, Treasury, municipal, and government agency bonds, as well as marginable equity securities valued at or above $3 per share.

A loan can be used for many purposes, but one very common use is to provide a short-term loan to purchasing property after which your original property will be sold and the loan paid off. Loans may not be used to purchase securities, pay down margin loans, or be deposited into any brokerage account.

Your line of credit is determined by the amount of assets you put into the account. The line of credit is determined by the size of the account divided by 1.43. Alternately, the value of the account must be at least 1.43 times the line of credit you want.

There are several restrictions on PAL accounts. When an account is turned into a PAL account, all non-repeating MoneyLinks are taken off of the account, check writing is cancelled, bill pay is removed, and debit cards are cancelled. All margin capability is removed from the account. The only way to get money out of a PAL account is either to wire transfer out of the account or journal the money to another Schwab taxable account. For this reason, we recommend opening a second taxable account to be made into a PAL account rather than converting an existing taxable account into a PAL account.

The interest rate for a PAL account is computed as The Secured Overnight Financing Rate (SOFR) plus the line of credit rate minus the Interest rate discount.

The SOFR is a variable rate, as of 3/16/2026 at 3.65%. According the Federal Reserve Bank of New York , “The Secured Overnight Financing Rate (SOFR) is a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities.”

Onto the SOFR rate Schwab adds an annual percentage rate depending on the line of credit available, starting at 4.40% for a line of credit over $100,000 and going down to an added rate of 2.40% for a line of credit over $2,500,000.

And Schwab also offers a discount which is dependent on the amount of qualifying assets put into the PAL account, starting at a discount of 0.25% for assets over $250,000 and going up to a discount of 1.00% for assets of at least $10,000,000.

All told, rates will currently vary between 8.05% and 5.05% based on qualifying assets put into the PAL account which then determines the line of credit available. A loan may be adjusted as the value of the pledged assets goes up or down, and a loan repayment may be demanded by Schwab Bank at any time. If a demand is not addressed, the pledged securities may be immediately liquidated without further notice to you, which may result in tax consequences. There are no fees to apply for the line of credit, and there are no account opening or maintenance fees on the Pledged account. Entering into a Pledged Asset Line and pledging securities as collateral involves a high degree of risk. These and other warnings appear on the Schwab PAL website.

Here is a chart showing how those rate can vary.

Before setting up a PAL account, we recommend that you consult with a fee-only fiduciary CERTIFIED FINANCIAL PLANNER that engages in comprehensive financial planning in order to receive more objective advice. Finding such advisors can be difficult, but all National Association of Personal Financial Advisors (NAPFA) qualify. If you have any doubt about your financial advisor, we recommend that you ask them these ten questions.

If you have questions about Schwab Bank’s Pledged Asset Line, Schwab recommends calling 888-725-3630 to speak with a Regional Banking Manager about a Pledged Asset Line.

Photo by www.kaboompics.com on Pexels. Image has been cropped.

Revisiting 2008 When The Markets Were Dropping

Investors mistakenly believe that dividend paying stocks make better investments. A company paying dividends is thought to have a more concrete valuation and the dividends are beloved by retirees who can visually see the dividends supporting their withdrawals. In other words, dividends are loved because you can take your dividends to the bank and spend them.

In reality, maximizing dividends merely serves to minimize appreciation. While appreciation is taxable only when gains are realized, dividends are taxable each year. This means that dividend paying stocks may amplify The Costly Effect Of Saving In A Taxable Account.

Five years ago, a March 2021 AAII article entitled “Dividend Aristocrats With Longest Streak of Dividend Increases” highlighted a group of such companies, and I saved the article anticipating that these 20 stocks would not out perform the value stock index they came from.

Now that it has been five years, we can return to that article and do the analysis of how the dividend aristocrats performed compared with value stocks generally. Here is the table from the 2021 article:

For this analysis, I used total returns from March 1, 2021 through March 1, 2026.

Of these twenty individual stocks, the one with the highest return was GWW, up +211.18%. The one with the lowest return was LEG, down -67.43%. The volatility between these two is part of the dangers of individual stock investing.

As a whole, the twenty stocks were up +34.51% over the five years or 6.11% annually. Had you failed to include GWW, you would have only received a return of 25.21% or 4.60% annually, under performing by -9.30% or -1.51% annually. Often missing out on the best stock significantly hurts returns.

Individual stock selection increases your standard deviation and therefore the risk of not meeting your financial goals. A wider scatter plot of potential returns causes some of those potential returns to fall below the minimum return necessary to meet your goals. It requires a large number of individual stocks before individual stock risk is diversified out of a portfolio.

This is why we favor exchange traded funds such as Vanguard Value (VTV) with over 300 individual stocks. It not only provides a smoother return than individual stocks but it can also provide superior returns.

VTV was up +84.56% over the same five year period or 13.04% annually. Investing in VTV rather than these twenty stocks produced 50% more money, lower volatility, and less complexity.

Valuation can be more significant for future return than dividend yield. Dividend investing asks, “Which companies are paying out cash?” Value investing asks, “Which companies are priced cheaply relative to fundamentals?” Those are not the same question.

Dividends are also a less tax-efficient way to compound wealth. Even when dividends are qualified and taxed at a lower tax rate, they are still taxed, and that tax payment cannot be reinvested to receive compounding.

Dividend aristocrats may be admirable companies, but admirable companies are not always the best investments. For long-term portfolio design, valuation matters more than yield, and broad value exposure is often better than a narrow preference for dividend payers.

Photo by Geoffrey Noake on Unsplash. Image has been cropped.

High Prices For Energy Are Good!

Financial shocks are not rare events. In fact, according to The Financial Advisor Magazine’s article “Unexpected Expenses Are The Rule In Retirement, Not The Exception,” 83% of households experience at least one financial shock annually.

What is more: financial shocks are experienced throughout life. They do not end when one retires. Sudden, unexpected, large expenses are a part of life and should be taken into account during retirement planning.

As article author Jennifer Lea Reed explains:

When a shock does come, lower-income retirees are typically far more devastated. The annual expense, on average, represents 13% of their retirement income, while their well-heeled counterparts would see the greater expense representing just 7% of their retirement income.

Unexpected expenses ironically tend to increase with income (since those with higher income can afford them). However, “the share of these expenses relative to income tends to decrease for those with higher income,” the brief said, adding that the average works out to 10% of annual income per household.

This study agrees with our lived wisdom.

None of us can anticipate all of our expenses. Every stage of life brings a whole new set of unanticipated needs. Even after identifying every outflow you think you might have, there will still be significant unexpected costs.

For these reasons and more, we recommend constantly budgeting for surprises by setting aside at least 10% of your budget each month into an “Unknown Budget.” We call this budget the Unknown Budget because the question everyone asks is, “Like what?” and that is the point. You do not know how you will spend this budget.

Such unknown expenses may include any of the shocks in our “How to Budget for Emergencies” series, including major car repair, major home repair, trip to hospital, pay cut, divorce, separation, widowing, or another large expense. Even if you can anticipate that you will experience one of these expenses, often their timing can’t be anticipated. It may be years until you need a new roof or a new heat pump, but when that time comes there is little to do except pay the expense.

Other expenses may be completely unanticipated such as a child’s wedding, a death in the family that causes you to travel unexpectedly, or perhaps even being the one who can write a check that will save a Christmas Lodge.

If you are using the Automatic Millionaire technique, we recommend only taking 90% of your standard of living as regular monthly payment. Reserve that last 10% for unknown unknowns and keep those funds in your long-term savings. Then, when you encounter a financial shock or emergency which cannot be paid for out of your regular living expenses, you can transfer funds from this unknown budget without exceeding your target standard of living or annual safe withdrawal rate.

If you are using a Schwab Bank Account to stay more fully invested, the full 100% of your standard of living can be maintained in the same location with the excess which you are not spending seamlessly invested according to your asset allocation. Then, you or your financial advisor can simply monitor the outflows to make sure that the total — both unknown budget expenses and regular expenses — stay below your annual safe withdrawal rate.

Whatever implementation you choose, reduce your lifestyle expenses and set aside 10% of your budgeted standard of living for unknown expenses even in retirement.

Photo by Manu Mateo on Unsplash. Image has been cropped.