Questions and Answers for General Financial Questions by Korving & Co.

Korving & Co. authors of Before I Go and Before I Go Workbook answer reader questions on general finances for Helen’s Page:


Will the stock market crash due to stupid government policies or will it soar due to runaway inflation?


We don’t expect either a market crash or runaway inflation. That being said, we know that market declines (i.e. “Bear Markets”) will occur over a market cycle. Some are cause by bad government policies. So will wars, natural disasters and – as we have just seen – pandemics. It’s the unexpected that causes market drops. Problems that everyone sees coming are discounted ahead of time and rarely have much impact when they arrive.

Since we can’t predict the unexpected, we believe that investment portfolios should be constructed in a way that when the unexpected occurs, losses are minimized. We remind our clients that a 50% drop in the value of a portfolio requires it to double just to get even. An appropriately diversified portfolio is designed to cushion the decline and reduce losses. In that way when the market recovers it’s much easier to regain lost ground.


Next to bank CDs which offer nearly zero interest, what’s the safest way to get at least a couple percent interest on savings?


It’s a question that lots of people are asking right now. Searching for yield in a low-rate environment often results in people to making costly mistakes. The benchmark 1 year US Government bond yields 0.13%, the 10 year pays 1.4% and the 30 year pays about 2%. The risk people run when they search for higher yields is that they may be attracted to things with risks they are not aware of. Things like high yield “junk” bonds that pay more because there is a higher risk of default. They may be attracted to bond funds that have hidden “surprises.” Or they may buy long-term bonds that will go down in value when interest rates rise.

Some people who have been cautious savers put some of their money in the stock market, hoping that they can get a higher total return from dividends and capital appreciation. Since that exposes them to market risk it should be done cautiously and with an appropriate cash cushion. I wish there were an easy answer to this question, but until bank rates return to levels that we saw in the 1980s low rates and low risk go hand-in-hand.


I resent greatly how the geniuses in DC created a set of incentives that virtually eliminated private pensions. I am a highly technical information worker but have no interest whatsoever in learning how to safely invest given all the different options I have for my 401(k). I want someone with the interest and ability to manage my retirement fund, but again I resent that I must do it myself or find and pay someone to do it versus the tradition of having a company sponsored pension. Is it possible for you to suggest a plan of action for me that doesn’t involve telling me to personally take an interest in investing and learn how to make wise investment choices? I love my field of study dammit, I don’t want to learn a new one or risk having nothing when I retire if I don’t.


Pensions have been around since Roman times when soldiers were given a guaranteed income if they survived long enough to retire. After the American Revolution soldiers were also rewarded with a pension for their service. In the 19th Century most companies were small or family-run businesses, lifespan was short, and extended families took care of their elderly. At the turn of the 20th Century several very large companies began offering pensions to their long-term employees. In the 1940s, labor unions became interested in pension plans and pushed to increase the benefits offered.

After some private pensions begin to fail, Congress passed ERISA to increase accountability and the Pension Benefit Guarantee Corporation to insure pensions.

Many large companies found that the promises they made to their employees for health and pension benefits were simply unsustainable as health care costs rose and retirees lived much longer than expected. Retirement benefits were one of the factors that bankrupted General Motors. Many companies that once offered pensions have terminated them.

These pensions, known as “Defined Benefit Plans,” (DBP) made employers responsible for ensuring there was enough money in their plans to pay for those guaranteed pensions. In the 1980s the “Defined Contribution Plan” (DCP) emerged which allowed employees to put retirement money in tax sheltered accounts like 401k, 403b, 457 or Thrift Savings Plans. This became the plan of choice for large private sector companies because it shifted the responsibility for retirement income from the company to the employee.

There are pluses and minuses to DCPs. First, the employee often confused by the number of investment choices and does not get any guidance from his employer. Second, these plans do not guarantee a predictable annual income. On the plus side, these plans allow people to build up a large retirement nest egg which can be passed along to spouses or other heirs. Traditional pensions have no cash value and end with the death of the pensioner.

Workers with 401k plans will find that their employers will not give investment guidance because if the advice is wrong or the employee is unhappy with the result, the company can be held legally liable. Registered Investment Advisors (RIAs) will offer investment guidance, for a fee, to employees who want professional guidance. Many DCPs offer Target Date Funds for the unsophisticated employees who do not want to pay for professional investment advice. My recommendation is to find a fiduciary RIA who will spend time with you to explain your investment options and ask him to review your 401k portfolio on a regular basis. Shop around and find someone with experience and who will charge a reasonable fee.



I was married,  not currently.   Net worth $1.2 million.  My estate lawyer proposed the trust, all 30 pages.  Now wondering if this is too much.  Simple question is how to pass along most value with minimal taxation.

Have read some of Biden’s proposals,  but haven’t read the dumbed down version.  Double taxation is troubling,  but my estate is likely to be 95% IRA or 401K, no family business. etc.



I assume that you want to leave your estate to your children rather than your former wife.

Trusts are useful under certain circumstances.  For example, if your children are minors and you die before they become adults, trusts are used to appointing guardians for minor children.  If you have a special needs child,  trusts can be useful.  However, they can become a problem if you remarry, and you inadvertently disinherit your new spouse.

The assets in your IRA and 401K go to your named beneficiaries.  If your children are minors or have special needs you could name a trust as the beneficiary.  If not, simply name them as your beneficiaries.

Estates of your size should not be subject to estate taxes under any taxation proposal I am aware of.  There is talk about doing away with the step-up-in-cost-basis regarding inherited taxable accounts.  However, the step-up rule never applied to tax deferred accounts like IRAs and 401k so that should not affect you.

I generally avoid creating trusts unless there is a specific need for them.  They are often sold as a way of avoiding probate, but there are easier and simpler ways of doing that.


Thanks to everyone who sent in questions.


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