Investment

A good husband.

My default answer to this question has always been to find a spouse who is "financially comfortable" and meets all of the following characteristics:

Any previous marriages were happy Has a good pension and Social Security, Has no debts, Has no children or other dependents, Owns his/her home without a mortgage, Has a minimum of $1 million in income-producing investments (exclusive of real estate) and he/she is not spending all of the income now Is willing to leave the home, real estate and investments to you outright (no percentage and no trust).

I realize this is picky, but you said "lowest amount of risk".

Yahoo finance had an interesting article on how a few states allow cutting off financial responsibility for a spouse who is predictably about to bankrupt you. It said it was little known or used until the long term care homes of NY for instance put a checkbox for it in the checkin forms. It is so popular that it may be withdrawn.

They pointed out how frugal saver couples could end up the same as big spender couples when one spouse went into expensive long term care - all money gone except barely enough to live on for the healthy spouse, then the state takes over payments for the sick one. So I guess by mutual consent a couple that saved a lot could retain a bit more for the healthy spouse.

Of course this can abuse the taxpayers, but on the other hand why make it so savers can't enjoy their money at all while the big spenders were able to? I wonder if the civil union laws thread this needle any differently.

In many or all states, the healthy spouse does not have to live in poverty for the rest of his/her life when the sick spouse's remaining days are to be spent in a nursing home. Significant, legal asset protection exists for those whose spouses have to go into nursing homes. For example, the value of one's home is not counted in considering Medicaid eligibility. These facts are well covered on the internet. No complaining if after both spouses die Medicaid has dibs on the estate for money the state expended on one's loved one. The alternative is to throw the elderly into the streets. People /get/ something when they're on Medicaid. It makes complete sense that where possible their estates have to make payment to the Medicaid program. Some sixty percent of nursing home residents receive Medicaid assistance.

Treasury bonds have the lowest risk, but very low interest rates.

Paying off debt is also a very safe investment and pays high interest rate for credit card debt, and adequate interest rate for auto loans and real estate loans.

Some high dividend stocks have good payouts along with a 15% tax rate. There is some risk that the dividends may stop or that the stock price may decrease. Selling deep in the money calls can eliminate much of the risk of a stock price decline.

I think that some exposure to the stock market is a good idea and the energy sector is more certain to do well.

-- Ron

Very interesting idea with the calls. If they're leaps, that keeps you out of short-term gains should the stock drop low enough to motivate you to buy back the calls and hold the stock. AT&T is paying ~5.8% dividend; the Jan 2013 20 calls are priced 9.15-9.40 (stock at 29.38). An early assignment would chuck the plan. At-the-money leaps usually have the time value to sell, but as the stock rises the possibility of early exercise comes in again - softened by the premium.

XOM looks buy-ey. Also drug companies have a shot at BRIC countries. I'm having trouble figuring out why everyone is nuts about bonds.

The article went thru all that and how little it could help for some. Don't get diverted by my attempt to explain details, because that is all greek to me; the specific issues are utterly alien to my experience and prospects, so I will garble that part. Pay attention to the theme which is etched in my mind - that a national article outlined a new heavy use of previously overlooked state laws for legal protection of assets that was characterized as so stunning and unprecedented that the states may retract them.

Isn't that a valid issue to note here, at least when this thread took a bizarre turn toward the risks of spousal drain on your financial health? Looking at one more level of detail and more risk I will get it wrong, it looked like one possible ray of light for the savers of the world, who seem to be badly treated by US legal system. You are expected to spend and borrow, and only rely on pensions or insurance for safety - your savings are a temporary possesion to be attacked by lawsuits or new taxes. In particular they covered successful Chinese immigrants who lived by the saver principle without alternative assets (pension, owned home, etc) and were rewarded for financial responsiblity by being wiped out by technicalities in not quite satisfying these weird state rules.

I have been unable to recover that article from Yahoo news - it had a legal keyword I forget that meant financial dependancy of a spouse which might find it. I can't debate the details of what the healthy spouse is allowed to keep in NY, but it sounded slim. I don't see the value of retaining a house if it eats you alive with expenses and you can't retain a nest egg that can fund it and your life at 4% yearly withdrawals. It just seemed like a rare exception to the legal deadly embrace of spouses who can financially destroy each other by frivilous cc debt, gambling, intoxicants, or attracting lawsuits. I have heard some people trying civil union law rather than marriage for more financial protection from each other.

This may be grasping for straws, but still more practical than the post I replied to that recommended marrying a super responsible millionaire.

I do not think legal asset protection for spouses (with wives/husbands in nursing homes) is all that new nor heavily overlooked. I would have to see the article to have a meaningful discussion.

I am not sure you have the whole picture when for a second time you overlook what those on nursing home Medicaid receive. You are not even considering the alternative to nursing home Medicaid.

Your experience may be dwarfed by those of us who hold or have held POA for elderly relatives in nursing homes. If they are not on Medicaid, a prudent POA computes how long it takes to spend down the relative's wealth until the relative does have to go on Medicaid and also how much can be gifted or otherwise protected.

Tour a nursing home sometime and think about throwing over half of these folks into the streets.

People here have recommended various books in the past, all dealing with what is referred to as investment and financial planning. It sounds like one with a stress on personal financial planning would be good for you to become familiar with, then you can explore some of the topics in more detail as your interest and needs indicate to you.

IMO, finding a superior company to invest in is the best approach. In my experience it is safer to rely on Americna accounting, than foreign accounting, rules. Many U.S. companies have substantial sales outside the U.S., so your interest in foreign securities sounds very odd to me given your comment about the "stock market yoyo."

But reading is your lowest cost highest return. A website is not sufficient.

Beautiful and the greatest truth for investors of any kind.

My thought as well. In fact, I may steal his comment and use it myself.

And that includes the kind of reading you are doing right now. The internet makes it possible to gain some insights not even the books were able to provide!

Someone might retort that you have to sort out the wheat from the chaff amidst the tons of opposing notions found in internet newsgroups. But that is true of the books on the library and bookstore shelves too! If you read a lot, after a while you will begin to "get a feel" for what is valuable and what is not.

What if the lying, thieving, Congress buying, greedy Wall St. gurus that "schemed" the last burst bubble and are now desperately trying to get around "transparency" are writing the books?

Chip

Treasury bonds and CDs.

snip for brevity

Take a weekend and start becoming familiar with the concepts of diversification and asset allocation using the free online and even fun tools at

Then buy index funds, CDs and treasuries per your desired asset allocation, timeframe, and desired risk exposure. Feel free to ask about what funds would be good to meet a specific requirement, per what the asset allocation tools spew out.

If you are employed and want to discuss tax protected retirement vehicles such as IRAs and 401(k)s, start another thread. Generally speaking, it is financially savvy to have as much of your retirement savings in a tax protected vehicle as possible.

Be careful. Bond dividends are NOT generally "qualified dividends" which get the preferential dividend tax rate. I wouldn't expect JNK's dividends to be qualified dividends at all.

Treasury bonds (particularly longer-maturity ones) have huge risks - inflation and interest-rate risk. What they have very little of is default (credit) risk.

That's not to say that they don't (generally) have a place in a well built diversified portfolio. But don't mistake the lack of credit risk for a lack of risk overall.

True.

[snip[]

The OP is talking about SELLING calls. A short position in any security is always taxed as a short-term gain or loss regardless of how long the short position remains open.

(Though if the option is actually exercised against you the premium you received rolls into the sales proceeds of the stock called away from you and gets the long-term/short-term status of the stock).

-- Rich Carreiro snipped-for-privacy@rlcarr.com

Thank you, thank you for the caveat!. Now I recall being baffled by the scarcity of "qualified" dividends at tax times, but then naively chase after any old dividend the rest of the year. I guess I will have to puzzle over a tutorial on what is "qualified".