Capital gains tax in the U.S. is determined by how long an asset is held before being sold.

• Short-term capital gains (assets held for 1 year or less) are taxed as ordinary income, with rates ranging from 10% to 37%.
• Long-term capital gains (assets held for more than 1 year) are taxed at 0%, 15%, or 20%, depending on the taxpayer’s income.
• For high-income earners (married couples earning over $250,000), an additional 3.8% Net Investment Income Tax (NIIT) applies to both short-term and long-term gains.

If a married couple with an annual income exceeding $250,000 sells stocks with a $200,000 gain, the tax treatment depends on the holding period.

• If the stocks are sold within 1 year, the entire $200,000 is taxed as ordinary income at the top marginal rate of 37%, plus 3.8% NIIT, totaling 40.8%. The tax due would be $81,600.
• However, if the stocks are sold after holding for more than 1 year, the long-term capital gains tax rate of 20% plus 3.8% NIIT applies, resulting in a total tax of $47,600 — saving $34,000 compared to short-term.

To minimize capital gains tax, the best option in this case is to hold the stocks for more than one year before selling. Additionally, strategies like the following can reduce the tax burden:

• tax-loss harvesting (selling underperforming assets to offset gains)
• donating appreciated stocks to charity (avoiding capital gains tax entirely)
• using tax-advantaged accounts (such as IRAs or 401(k)s) for asset allocation can further reduce the tax burden.

Planning sales for years with lower income or utilizing opportunity zone investments can also help optimize tax outcomes. For example, If your income after retirement is $75,000 and your capital gain was $20,000, your total taxable income would be $95,000. This amount is above the $89,250 limit, meaning:

• ​The first $14,250 of your capital gain would be taxed at 0% (to reach the $89,250 limit).
  
• The remaining $5,750 would be taxed at 15%.

Therefore, it might be a good choice to hold the assets till retirement.

​After the new year, we start receiving all the tax-related forms. Tax season is coming. Let's discuss what we need to claim tax in our tax report. 

Do I need to pay taxes for the CD saving interest? Yes, tax needs to be paid yearly and bank will report the interest for tax reports. 

Do I need to pay taxes for the bond interest? It depends on the type of bond. Municipal bonds are generally federal tax-free; if issued by your state, they may also be state and local tax-free (no tax in many cases). U.S. Treasury bonds are federal taxable but state and local tax-free (yes, federal, no state/local). Corporate bonds are fully taxable at federal, state, and local levels (yes federal, yes state/local). Capital gains tax may apply if you sell any bond for a profit. Holding bonds in tax-advantaged accounts like an IRA or 401(k) defers taxes, while a Roth IRA allows for tax-free withdrawals.

Does the children's salary need to pay taxes? Children’s earnings may be subject to taxes based on their income level. In 2024, if a child’s income exceeds $14,600 per year, they will not need to pay taxes. If the employer withheld taxes, the child will need to file a tax return to reclaim that money. However, if their income exceeds this amount, taxes report is required.

Does children's unearned income need to be taxed? The answer is yes, if the earnings exceed $1,250 in 2024, they will have to pay taxes. If the income exceeds $2,500, it may be taxed at the parent's tax rate due to the "kiddie tax" rules. For self-employed income, any amount exceeding $400 is subject to self-employment tax. The best strategy is to set up a Roth IRA account. Check our discussion on ​Why Should We Set Up a Roth IRA Account for Children? for more information. 

To minimize tax liability, consider municipal bonds, holding bonds in a tax-advantaged account like an IRA or 401(k) defers taxes on interest. A Roth IRA allows tax-free growth and withdrawals, making it ideal for long-term bond holdings.

Today, we will learn about the Buy-Borrow-Die strategy used by the ultra-rich to minimize taxes while maximizing investment growth. Here's how it works:

• Buy (Acquire Appreciating Assets) Wealthy individuals invest in assets expected to appreciate over time, such as Stocks, Real estate, Private equity, Fine art, collectibles, or other alternative investments. Unlike earned income (taxed at high rates), appreciation in asset value is not taxed until the asset is sold.
• Borrowing (Accessing Cash Without Selling) Instead of selling assets and incurring capital gains taxes, wealthy individuals often choose to borrow against their assets. This involves taking out loans with their investments, such as stocks or real estate, serving as collateral. The debt proceeds are not taxed because the IRS does not consider borrowed money income. These funds can support their lifestyle, reinvest, or purchase additional assets. Typically, these loans, such as Securities-Backed Lines of Credit (SBLOCs) or home equity loans, come with low interest rates.
• Die (Avoid Capital Gains Taxes) When the investor passes away, their heirs inherit the assets with a stepped-up cost basis. This means The cost basis of the asset is adjusted to its **market value at the time of inheritance. Capital gains taxes are erased as the new cost basis is the current market value, not the original purchase price. Heirs can then keep the asset, sell it tax-free (if they sell immediately), or repeat the cycle.

In summary, this approach benefits the wealthy for several reasons. First, it defers or eliminates capital gains tax. As long as assets are not sold, taxes can be deferred indefinitely. Wealthy individuals can secure loans at low interest rates without liquidating their investments. Additionally, heirs inherit assets on a stepped-up basis, which allows them to avoid capital gains tax altogether. However, the potential risks remain that borrowing costs could become expensive if interest rates rise. If the asset used as collateral loses value, lenders may demand additional funds or liquidation. While capital gains taxes can be avoided, estate taxes (40% on estates above the exemption threshold) could still apply.

Let's examine an example: We own $200,000 in stock and would like to use this to invest in real estate. There are two scenarios: one is to sell the stock to obtain cash, and the other is to borrow money using the stock as collateral. Let's assume the stock increases in value by 5% per year while the loan interest rate is also 5%. The strategy is to repay the loan quickly, utilizing tax savings and rental income.

• Selling the Stock
• Net Cash After Paying Capital Gains Tax: $180,000 
• Total Tax Paid: $20,000 (Capital gains tax on a $100,000 profit)  
• Future Stock Growth: None, as the asset has been sold.
• Borrowing Against the Stock
• Total Interest Paid Over 10 Years: $120,000 (6% annual loan interest)  
• Stock Value After 10 Years (5% Growth Per Year): $325,779  
• Net Profit After Loan Interest: $205,779  
• Total Tax Savings from Not Selling: $20,000  ​

This comparison illustrates how choosing between selling an asset and borrowing against it can have substantial implications for financial growth and tax obligations.

According to ​dqydj.com, the median net worth of a U.S. family in 2022 is $192,000, while the top 10% of families have a net worth of $1.92 million. A report analyzing wealth from 1989 to 2022 shows that the average wealth growth rate is approximately 6%. This means that if your annual wealth growth is less than 6%, your position relative to other U.S. families will likely decline.

​We can open a Roth IRA account after the child is born, and there is no age limit. Roth is a good financial choice, but it needs to meet some specific requirements and has advantages and disadvantages. The following is a summary:

Requirements:

• Children must have a proven source of income, such as work income, part-time work, or small businesses, to meet the conditions for opening a Roth IRA.
• The annual contribution amount cannot exceed the total income of the child or the yearly contribution ceiling of the IRA ($6,500 in 2024), whichever is smaller.
• Although the account is opened in the child's name, minors usually need parents or guardians to act as custodians until the child reaches the legal age of majority.

Benefits:

• Investment income increases tax-free in the account, and eligible withdrawals are tax-exempt at retirement, significantly benefiting the long-term compound interest effect. If a child earns income from a job without exceeding the standard deduction for a single filer. For 2024, the standard deduction for a single filer is $14,600. This means every year the children can earn as much as $14,600 with no tax and can save $6500 into Roth RA for tax free growth!!
• Help children learn about investment and financial management, and cultivate their financial management ability and saving habits.
• The original contribution can be withdrawn at any time without taxes and fines, which provides children with flexible funding options, such as paying college tuition or buying a house.
• The earlier the Roth IRA is opened, the longer the compound interest effect will last, and even a small contribution can accumulate considerable funds in the future.

Disadvantages:

• Children must have verifiable income, which may be unrealistic or difficult for young children.
• Although the stock market usually grows in the long run, investment is still risky, and the value of the account may fall with market fluctuations.
• Although the original contribution can be withdrawn anytime, the investment income must meet the 5-year holding period and other conditions before withdrawal. Otherwise, it will face fines and taxes.
• Roth IRA account funds are not considered assets in federal student grant applications, but withdrawals will be regarded as income, which may affect the eligibility of student loans.

Opening a Roth IRA for children can bring significant long-term financial advantages. Still, it also needs to meet income requirements and consider investment risks and flexibility limitations of funds.

As a parent, if you consider transferring your property to your children, you need to pay attention to one thing: the transfer of property during your lifetime is a gift, which not only has gift restrictions but also has value-added tax. For example, the value of parents' purchase of property is 500,000. After 15 years, the value of the house increases to 1,500,000. If the house is given to the child at this time, the value of the property received by the child is 1,500,000 of which 1,000,000 value-added needs to be taxed.

To solve this problem, the best practice is to use the provisions of the inheritance's "step-up in tax basis", put the property into the Living Trust, and designate the child as the beneficiary of the trust. In this way, when inheriting property, the value of the property will be subject to the value of the child's acquisition, which can avoid the problem of value-added tax. Note that irrevocable trust does not enjoy this benefit.

Are you considering retirement? One of the top priorities should be securing adequate medical insurance. How to purchase medical insurance after retirement varies based on when you retire.

If you retire before age 65, you will need to obtain general insurance before you can apply for Medicare at age 65. A current option for this is to enroll in the Affordable Care Act (commonly referred to as Obama Care), as you are required to have insurance coverage. You may also check your company policy who normally offers you to buy company insurance when retiring after certain age and until 65. 

Retiring after age 65 is generally more economical. At 65, individuals become eligible for Medicare, the government-sponsored medical insurance. Medicare is divided into three parts:

• Part A: Hospitalization – No premium required.
• Part B: Doctor visits – The monthly fee varies based on the insured’s income, currently ranging between $170 and $578 (as of 2024)
• Part D: Prescription drug coverage – The average monthly cost is approximately $33 (as of 2024)

Keep in mind that Medicare patients are responsible for their own medical expenses, and there is no cap on these costs. For this reason, many opt to purchase additional Medicare Supplement Insurance, such as United Healthcare Supplement, to cover serious illnesses. Details should be discussed with the insurance company directly.

In summary, if you calculate the approximate monthly expenditures, you have about $578 (Part B) + $33 (Part D) + around $98.31 for supplementary coverage, totaling approximately $700 per month, which amounts to $8,400 per year per person.

A Roth IRA (Individual Retirement Account) is a retirement savings account that allows your investments to grow tax-free. Unlike traditional IRAs, contributions to a Roth IRA are made with after-tax dollars, meaning you won’t get a tax deduction upfront. However, when you withdraw the money in retirement, both your contributions and investment earnings are tax-free, provided certain conditions are met. 

Key Features of a Roth IRA

• Tax-Free Growth: Your investments grow tax-free, and qualified withdrawals are not subject to taxes. The growth withdraw without penalty has to be after age 59.5 and the Roth IRA account is opened for more than 5 years. 
• Contribution Limits:  In 2025, the annual contribution limit is $6,500 (or $7,500 if you’re aged 50 or older).
• The income Limits: Eligibility phases out for individuals with a Modified Adjusted Gross Income (MAGI) above $153,000 (single) or $228,000(married filing jointly).
• No Required Minimum Distributions (RMDs): Unlike traditional IRAs, you are not required to withdraw funds during your lifetime.
• The backdoor Roth IRA conversion is a legal strategy in U.S. tax law that allows individuals to contribute to a Roth IRA even if their income exceeds the limits for direct contribution. Note: make conversion as quickly as you can to avoid paying growth tax, and avoid preallocating tax during conversion to avoid penalty. 
• Advantages of estate planning: Roth IRA can be passed on to heirs duty-free, which is a valuable tool for wealth transfer.​

How to Invest in a Roth IRA

• Open an Account: Choose a brokerage or financial institution that offers Roth IRAs, such as Vanguard, Fidelity, or Charles Schwab. Complete the application process and designate beneficiaries for your account.
• Choose Your Investments: because there is no further tax nor minimum withdrawal requirement, You can choose more aggressive investments such as stocks or investments with more taxable activities like mutual funds. You can leave the traditional 401K to buy bonds or conservative ETFs. 
• Making regular contributions is an effective strategy.
• Monitor and Adjust: Periodically review your investments and rebalance your portfolio to align with your financial goals and market conditions.

Backdoor Conversion 
It is well-known that there are contribution limits for Roth IRAs, particularly for individuals or families with high incomes. For these high-income earners, the only way to invest in a Roth IRA is through a backdoor conversion. This involves first transferring funds to a Traditional IRA or a company-sponsored Roth 401(k), and then converting that amount to a Roth IRA account. It’s important to ensure that this transfer avoids realizing any capital gains in the Traditional IRA; otherwise, the so-called “pro-rata rule” may be triggered, resulting in additional taxes on the capital gains. 

For example, In 2025, the annual contribution limit for Roth or Traditional IRAs is expected to be $7,000 if you're under 50, $8000 if above 50. For a couple above 50, each can use backdoor conversion to the IRA for $8000. So total is $16,000. 

Please remember that transferring assets is considered a taxable event. This means the transferred amount will be counted as income and will be subject to income tax for that year. To minimize taxes, it's advisable to choose a year when your income is lower to perform the conversion.

Mega Backdoor Conversion 
If your company's benefits include a Roth 401(k), you can perform a Mega Backdoor Conversion by adding post-tax dollars to the Roth 401(k) and then converting it to a Roth IRA tax-free. 

For example, if you have an income of $200,000 in 2025, the combined employer and employee contribution limit is $70,000. If you are above 50, you have additional 7500 catch up. If you are between 60-63, you have additional 11,250  catch up. The individual traditional 401(k) contribution limit is $23,500. If your company contributes $12,000 (which is 6% of your income), the maximum amount you can convert post-tax is calculated as follows: 

• $70,000 (total limit) - $23,500 (traditional 401(k) contribution) - $12,000 (company contribution) = $34,500 (post-tax conversion amount)
• After 50 or older than 64, 34,500+7500 (catch up after 50) =41,000(post-tax conversion amount) 
• Between 60-63:  34,500+11,250=45,750 (post-tax conversion amount) 

Combining both Backdoor and Megaback door, a couple after 50 can maximize the contribution up to: 34,500+7500+8000+8000= 57,000! 

RSU stands for Restricted Stock Unit, which is part of the benefits offered by certain companies. After the vesting period (the point at which you receive ownership of the stock), the company's policies and current market conditions may influence your decision to sell the stock within 60 or 30 days. Below are the common policy preferences, along with the advantages and disadvantages of selling stocks during this period.

• Tax Incentives: When RSUs vest, you typically pay income tax on the market value of the stock. The company may withhold and remit the corresponding tax at that time. Within 60 or 30 days post-vesting, the tax treatment usually remains unchanged, meaning that selling will not incur any additional tax burden.
  
• Trading Window Period: Many companies establish a trading window period following the vesting of RSUs. This allows employees to sell shares freely during a specified timeframe. Companies often avoid trading windows during financial report releases or other significant events to mitigate the risk of insider trading.

Selling stocks shortly after vesting allows you to convert shares into cash immediately, securing your income—especially beneficial when stock prices are rising—thus protecting you from potential losses due to market volatility. If your company's stock price is highly volatile, timely selling can reduce the risk associated with a concentrated stock position and help diversify your portfolio.

Selling shares immediately after vesting may result in short-term capital gains, which are taxed at higher rates. If you hold the stock for over a year, you may qualify for the lower long-term capital gains tax rate. If the company's stock has long-term growth prospects, selling immediately might cause you to miss out on potential future profits.

In summary, the decision to sell stocks within 60 or 30 days after RSUs vest should be based on your risk tolerance, assessment of the company's future prospects, and tax strategy. If your goal is to lock in profits, mitigate risk, or obtain liquidity, selling sooner may be advisable. Conversely, if you believe in the company's long-term potential, consider delaying the sale to take advantage of possible appreciation and lower capital gains tax rates.

"If we can save money, we don't have to work until 65 before retiring. In fact, if you manage your finances correctly, you may only need to work for about 7 years to achieve financial freedom. While this may sound a bit like a fairy tale, it reflects the philosophy in Mr. Money Mustache's blog. Mr. Money Mustache is well-known as one of the most popular personal finance blogs in the United States, so I chose to study his articles over the weekend and summarize what I learned.

Saving money is the cornerstone of wealth and freedom, according to Mr. Money Mustache,  Here are some of his thoughts on reducing living costs:

• Avoid debt.
• Live close to your workplace.
• If you enjoy adventure, consider moving to a different city.
• Don't borrow money to buy a car; avoid purchasing unnecessary vehicles. Always try to ride a bicycle whenever you can.
• Cancel your TV subscription.
• Stop wasting money on groceries.
• Give your children the opportunity to achieve greatness without spoiling them.
• Let go of overpriced mobile phones.

Learn to appreciate the joy of doing things using your body and embrace the humor in everyday inconveniences. 

Another critical theme in Mr. Money Mustache's philosophy is optimism. When we no longer depend on money to find happiness, we can be satisfied with our lives while saving money. This optimism is rooted in several beliefs:

• Inspired by Stoic philosophy, we should focus on being grateful for what we already have and learn to want what we possess instead of longing for more.
• It's essential to control unnecessary desires. Stoics believe that the primary purpose of our efforts should be to fulfill our obligations in life and to support others.

Investing is also key. For example, consider putting your money into a selection of index funds from Vanguard and Betterment, which pay quarterly dividends.

Ultimately, the principles taught by Mr. Money Mustache encourage us to choose a happy, cost-effective lifestyle and to invest wisely to generate passive income. This minimalist approach aligns perfectly with his concepts.

​A bond is a debt security loan from an investor to a borrower, typically a corporation, government, or other entity. In exchange for the funds provided, the borrower agrees to pay the investor regular interest payments, known as the "coupon," over a specified period. At the end of the bond's term, or "maturity," the principal amount is repaid to the investor.

Investment Risk
Bonds are considered a relatively safe investment compared to stocks, offering steady income and less volatility. Investors commonly use bonds to diversify their portfolios and generate fixed income. However, bonds carry certain risks, such as interest rates, credit, and inflation. They can lose significant value during high inflation or if interest rates rise sharply, leading to a decrease in the bond's market value. In extreme cases, the bond can become worthless if the issuer defaults.

To assess the risk of bond investments, it's essential to consider the issuer's qualifications, the bond's term, and the interest rate. The qualifications of the issuer determine the bond's credit rating. Specialized bond rating agencies rank sovereign countries, local governments, and corporations from the highest (AAA) to the lowest (D, or "junk"). Generally, a higher rating indicates a lower risk associated with the bond. For example, the US Treasury bond rating is AAA, the European Union is AA, and Japan and China have ratings of A+.

The bond term refers to the period during which the issuer promises to return the principal. Common terms range from one year to 30 years. Typically, the longer the term, the higher the risk associated with the bond, as investors cannot predict the financial health of bond issuers decades into the future.

The bond issuer and the investor agree upon the interest rate. Generally, higher-risk bonds offer higher interest rates.

​Tax Sensitivity
The interest earned from bonds is subject to income tax, while selling bonds incurs capital gains tax. If you are investing in bonds for long-term growth and want to minimize taxes on interest income and capital gains, retirement accounts, particularly Roth IRAs, are usually the better choice. Personal investment accounts are less tax-efficient.

Trading Basics 
Bond products can also be traded. The price of a bond is usually inversely related to its yield: if the cost of a bond falls, its yield rises. For example, if a bond with a face value of 100 yuan has an annual interest rate of 5%, the holder earns 5 yuan annually. If the bond's price drops to 90 yuan, the yield will increase to 5/90 = 5.5%. Typically, if a company or government faces a crisis, the prices of the bonds they issue will fall sharply, leading to a substantial rise in yield.

There are four main types of bonds: Treasury bonds (41%) , Corporate bonds (25%) , asset-backed bonds (5%), and municipal bonds(10%). Treasury bonds account for 35% of the total US bond market with T-bills (terms of one year or less), T-notes (terms of two to ten years), and T-bonds (terms of 20 or 30 years). 

We can also considering the Vanguard Total Bond Market Index Fund (VBTLX, ETF: BND) may be beneficial for retirement accounts or families with low marginal tax rates.

To clarify the concept of wealth, we can use a simple framework: Wealth is defined as income minus expenditure.  This definition involves two key variables: income and expenses.

The first variable is income. According to National Wealth Theory, individuals can be categorized as workers, investors, or real estate owners in economic activities. Workers earn income through wages, while investors generate income from their investments. Real estowners earn income by buying and selling property and rental income. Additionally, it's important to differentiate between active and passive income. Active income is earned by directly exchanging time for money, which requires ongoing work and effort. In contrast, passive income is generated without continuous active work, including sources like dividends, interest, rent, and royalties. For example, earning from stock investments relies on recognizing opportunities and making informed judgments.

The second variable is expenditure, which encompasses all the money spent on necessities and luxuries such as food, clothing, and hobbies.

From this framework, it becomes clear that to accumulate wealth, one must spend less than their income. This principle reflects what many call open source and thriftiness. Open source refers to increasing revenue, while thriftiness means limiting consumption. Although increasing income can be challenging, reducing consumption can be initiated anytime.

I strongly agree that the basis of wealth thinking actually covers two aspects: one is to know how to make money, and the other is to know how to spend money. Making money allows us to gain wealth and meet the basic needs of survival; while the wisdom of spending money teaches us how to use wealth and get the happiness of life. It takes hard work to make money, and it takes wisdom to spend money. Wealth should be our friends. We need to learn how to make such friends and get along with them, so as to achieve the greatest happiness and joy in life.

In other words, we need to use money to achieve a balance between life and survival. Money can be used for more valuable places - such as learning, traveling, charity, helping others, meeting interesting people, listening to moving stories, pursuing your hobbies, etc. Survival is based on money, but happiness is not; happiness needs us to find, accompanied by growth and giving.

When it comes to making money, we must first understand the true meaning of work. Work is not only to meet our needs to create value, but also to make us continue to grow and create value, not just for retirement. In fact, continuous work can bring us a sense of satisfaction and value, thus prolonging life.

We should do what we are good at and like, which is our talents. These things should also be needed by society, so that we can truly reflect our value. Money itself has no value. How we use it gives it value. Money should bring peace of mind, not additional distress and headache."

We should be clear about how we spend time and money. Using money allows us to spend more time with friends and family, enjoy the sunset, listen to music, hike in the mountains, or read in cafes. These are all real wealth. They come from the bottom of their hearts and can bring continuous and real happiness. Wealth stands for joy that has a focus, and this focus is not money."

The rational use of money is the key to achieving wealth freedom. In the early stage, we need to live a frugal life, learn to improve our personal skills, work hard, and invest wisely. By reducing unnecessary expenses and increasing income, we accumulate funds for future investments and savings. Investment is a way to increase wealth. Reasonable investment can add value to funds and accelerate the realization of financial freedom. In short, using money to save money and invest wisely will ultimately give us the freedom to choose how to live.

Life is not eternal. Each of us comes to this world naked and will leave naked. Therefore, we should have wisdom to know what we should have in the world and what is the purpose of what we have. These purposes are nothing more than to give us a better experience, happiness and help our loved ones. Happiness = Money * Gratitude * Meaning.

The purpose of our coming to the world is to pursue happiness, and we need friends - that is, family affection, to help us pursue this goal. In this process, money is our friend.

In our discussions about the mindset of wealth management, we have mentioned minimalism. Minimalism is often a strategy to save money and simplify life effectively. Today, let's explore what minimalism truly means and how we can understand it better.

Minimalism is a philosophy or an attitude towards life centered around the idea that "less is more." It promotes a simple, elegant lifestyle.

At its core, minimalism encourages us to have fewer possessions, relationships, and commitments. It's important to note that having less doesn't imply poor quality or a life of deprivation. Instead, minimalism advocates for having fewer items of higher quality—focusing on what we truly need and value rather than filling our lives with unnecessary things.

Owning fewer items can significantly reduce the energy and time we spend organizing and maintaining them. For instance, if we accumulate many books, we will need a bigger bookshelf and spend more time tidying them up, which can also create risks, such as fire hazards from improper stacking. Too many possessions can become a burden in our lives. Consequently, as we begin to embrace minimalism, many people find themselves frequently clearing out clutter.

This principle of having less extends beyond physical items to encompass people and activities. We should cultivate a smaller circle of friends. By maintaining fewer friendships, we can invest more energy into nurturing deeper, more meaningful connections while avoiding the potential pitfalls associated with superficial relationships. Focusing on quality over quantity helps us avoid negativity and insincerity.

Additionally, having fewer commitments allows us to concentrate fully on one task at a time, as our energy is limited. By focusing our efforts, we can achieve our goals more effectively. The principles of focus and concentration are essential topics in efficiency management that we can discuss further in the future.

Minimalism can also be interpreted as having fewer thoughts. Simplifying our thinking allows us to be more present, giving our minds a chance to rest and maintain peace. Reducing unnecessary thoughts increases our focus and prevents us from procrastinating or feeling overwhelmed, which can lead to anxiety and tension.

Furthermore, cultivating fewer expectations can enhance our sense of gratitude. This includes reducing expectations for our children, investment returns, wealth, and friendships. For instance, when parents lower their expectations for their children, it can alleviate pressure on them and increase overall satisfaction while also minimizing friction that often arises from high expectations.

Lastly, embracing less desire makes it easier to feel content. This includes our desires for interpersonal relationships, a higher quality of life, and career success. By focusing on diligently doing our work and maximizing our potential, we can learn to go with the flow regarding outcomes.

In summary, minimalism is not merely about eliminating belongings. It encompasses "less is more" regarding our possessions, relationships, thoughts, expectations, and desires.

​Controlling grocery shopping budget starts with effective meal planning and effective meal planning starts with systematic meal preparation. By taking the time to plan meals for the week, we can ensure that we only buy the ingredients necessary for those meals from our shopping list, which reduces the risk of impulse purchases and avoid buying extra items that are not part of your meals, saving money in the long run. Systematic meal preparation, allow us to pre-process the food and arrange them in time to avoid any waste.

A sustainable life style follows the zero waste concept that “reduces, reuses and recycle“ can also save grocery cost. We can grow certain vegetables or we can plant vegetables in the backyard to get fresh vegetables while reduce the cost

Another key to managing grocery budget is setting a realistic spending limit. Begin by reviewing your past grocery bills to understand where your money is going. By tracking your spending habits, you can identify areas where you might be overspending and set a reasonable budget based on your financial situation. This helps prevent overspending and gives you a clear target to stick to when shopping.

​The following is an example monthly budget with categories of spending in 2025.

​Finally, it's important to be mindful of promotions and saving when buying in bulk. While discounts can be tempting, it's essential to consider whether the items are genuinely needed or if they're simply a way to increase your cart's value. For items buy in bulk, we need to store them properly and remember to use glass jars or containers for long-term storage.

By staying disciplined, only buying what we need, and sticking to planned budget, we can keep our grocery expenses under control and avoid unnecessary spending.

Budgeting begins with listing all expenses and then planning based on priorities to achieve financial goals. We provide a sample Excel spreadsheet that includes all major costs, which you can update according to your situation. It's important to identify all expenses and determine if each one is necessary, allowing you to trim down the budget and save money.

Stopping Unnecessary Purchases Items like high end water, extravagant parties or Weddings, overdoing in baby/child clothing or toys, unused subscriptions, can be avoided if we think twice. We can also avoid bank fees, foreign transaction fee, commissions of financial products or services. ​

While it may not be ethical, establishing an irrevocable trust can be a legitimate strategy to qualify for Medicaid. 

How to Become Qualified 
There are specific requirements to be eligible for Medicaid (medicaid.gov) Firstly, applicants can retain certain exempt assets, including one car, their primary residence (up to an equity limit of $730,000), and personal belongings such as clothing and furniture. Beyond these exempt assets, income and asset limits apply. For example, in 2024, the monthly income limit for an individual is $1,500, while for a couple, it is $2,500. Any additional income or assets must be reduced or repositioned to meet Medicaid eligibility criteria. A standard method to achieve this is placing assets into an irrevocable trust.

For instance, if your Social Security income exceeds the income limit set by Medicaid, you may have the option to establish a Qualified Income Trust (QIT), also known as a Miller Trust. This type of trust allows you to place the excess income into it, and the funds can only be used to cover your care or medical expenses. After your death, the state may claim any remaining funds in the trust to recover Medicaid expenses.

In some states, Medicaid offers a "spend-down" program, which allows you to use your excess income on medical bills, long-term care costs, or other qualifying expenses until your income falls below the Medicaid limit. This effectively reduces your countable income for Medicaid eligibility.

Additionally, Medicaid often has provisions for "post-eligibility treatment of income." This means that even if you have excess income, it may be used to pay for nursing home costs. You must pay most of your income to the facility, and Medicaid would cover the remaining costs.

If you are married, your spouse (the "community spouse") may be able to retain a considerable portion of the combined income and assets according to spousal impoverishment rules. For example, the non-applicant spouse can often keep income and assets up to limits specified by the state without affecting the applicant's Medicaid eligibility.

When to Make the Plan
It's also important to note the five-year look-back rule for Medicaid, which means that planning should ideally begin at least five years in advance to set up a trust or other financial arrangements.

​What are the Pro and Cons 
Establishing an irrevocable trust has both advantages and disadvantages. The primary benefit is that it protects assets, allowing them to be preserved for children or other heirs while enabling the applicant to qualify for Medicaid. However, the major drawback is the loss of control over those assets since the trustee manages them. Additionally, family conflicts may arise if the trustee does not act in the beneficiary's best interests or handle the trust appropriately.

The financial impact of Medicaid benefits can be significant, particularly for long-term care. In Texas, the average monthly cost for nursing home care varies depending on the type of room and location.   As of 2023, the median monthly fee for a semi-private room is approximately $5,718, while a private room costs around $6,692 per month. For example, Over five years, this amounts to $300,000, which Medicaid can cover if eligibility requirements are met. This highlights the importance of careful planning and underscores the need to weigh the trade-offs in establishing an irrevocable trust.

However, Medicaid in Texas covers nursing home costs for eligible individuals, but typically only for semi-private rooms.  Medicaid will pay for a private room if it is deemed medically necessary.   This includes situations where isolation is required due to infections, contagious diseases, or behaviors that may harm the resident or others.Note that Texas, compared to other states, has much lower cost long-term care; therefore, it is a good place to have retirement.

In summary , it’s also essential to consult with a Medicaid planning professional or elder law attorney to understand Texas's specific regulations and options.

Some people mistakenly think they should decline a promotion and salary increase because it could push them into a higher tax bracket, resulting in higher taxes. However, this is not the case.

Income tax is structured progressively, meaning different income levels are taxed at different rates, often called "tax brackets." These brackets divide your income into various ranges, each taxed at a specified rate. Here's a clearer breakdown:

As your income increases, the tax rate on each additional dollar earned increases, but only for the income within each specific bracket. For instance, you might pay a lower tax rate on the first portion of your income and a higher rate on the income that exceeds a certain threshold.

These brackets are typically established by the government and are adjusted periodically for inflation. Each bracket corresponds to a particular income range. For example:
- Income up to $10,000 is taxed at 10%.
- Income between $10,001 and $40,000 is taxed at 15%.
- Income above $40,000 is taxed at 25%.

Your marginal tax rate is applied to the last dollar of income you earn, while your effective tax rate is the average rate you pay on all your income. Because only the income within each bracket is taxed at that bracket's rate, most people pay an effective tax rate lower than their marginal tax rate.

In summary, the bracket tax system ensures that higher earners pay more of their income in taxes. It progressively promotes fairness by taxing only the income within each specified range at the designated rate.

​Social Security is a federal program in the United States designed to provide financial assistance to retirees, disabled individuals, and survivors of deceased workers. Funded through payroll taxes collected by the Federal Insurance Contributions Act (FICA), Social Security offers a safety net for those who have worked and paid into the system over their lifetime. It is especially important for retirees, as it serves as a primary source of income when they are no longer working.

The amount you receive from Social Security is based on your earnings history, meaning the more you’ve earned over your working years, the higher your benefits will be. The Social Security Administration (SSA) calculates your benefits based on your average indexed monthly earnings (AIME), which factors in your highest-earning years. The benefit amount is designed to replace a percentage of your pre-retirement income, with a larger percentage replacement for those with lower lifetime earnings.

To maximize Social Security benefits, there are several strategies to consider:

• Delay Claiming Benefits:  The age at which you begin receiving Social Security benefits significantly affects the amount. You can start claiming as early as age 62, but waiting until your full retirement age (FRA), which ranges from 66 to 67 depending on your birth year, allows you to receive full benefits. Delaying benefits past your FRA, up until age 70, increases your benefits by about 8% per year.
• Work for 35 Years: Social Security benefits are calculated based on your highest-earning 35 years up to the wage limit. The wage base limit determines the maximum amount of income that is subject to the Social Security payroll tax.For 2025, the wage base limit is $160,200 (this amount is adjusted annually for inflation).If you have less than 35 years of work history, the SSA will count zero earnings for the missing years, which can reduce your benefit. Working for a full 35 years with higher earnings will maximize your Social Security.
• Coordinate with a Spouse:  Married couples can take advantage of strategies like file and suspend or restricted applications (if born before 1954) to maximize combined benefits. It’s important for both partners to plan and understand how they can coordinate their claims to enhance the overall benefits.

We can access our personalized Social Security statement online by creating a my Social Security account on the SSA website (www.ssa.gov). This statement will show the earnings history and an estimate of the benefits at different ages.

In summary, Social Security provides crucial financial support in retirement, but understanding how to optimize it through delayed claims, maximizing your work history, and coordinating with a spouse can help you get the most out of the system. Planning early can make a significant difference in your retirement income.

Based on historical data, investing in the S&P 500 typically outperforms any management company. No active management has consistently beaten the S&P 500's performance in the market. Therefore, the value of financial service management may be overstated, as the cost-to-expense ratio often ranges from 0.0% to 0.8%. Over time, these fees can impact the investment returns.

​Even when some management companies claim to have outperformed the market, it's essential to consider that their reported returns often don't include substantial dividends. Over the past 10 years, the end index went up 190%; however, the total return for the S&P 500 has been around 250%, with dividends reinvested. In summary, investing directly in the S&P 500 and diversifying by including bonds for added security is advisable.

HSA stands for Health Savings Accounts, a federal program established in 2004 for individuals under the age of 65. People in this age group can contribute pre-tax income to the account for qualifying medical expenses.
​
HSAs are typically paired with high-deductible health insurance plans, meaning the insurance requires you to pay high deductibles, ranging from $2000-$3000 per year, before insurance companies cover your cost. Typically, employers may provide benefits to contribute to HSAs, such as $1500 per year, so review your company’s benefits policy for specific details. It should be noted that the high deductible insurance typically provides 100% preventive medical support, such as annual physical examinations, vaccines, weight loss plans, and examination of high-risk diseases such as cancer.

In short, if you have low medical expenses because of good health or can afford high-deductible medical insurance, investing in an HSA account as soon as possible is a great choice

Next, let’s analyze the pros and cons in detail. First of all, HSA has the following advantages:

• No time limit: Unlike FSA (Flexible Saving Account), there are restrictions on the use of the current year. There is no time limit for using money in the HSA account. The bill also has no time limit — you can reimburse your eligible medical expenses incurred after opening an HSA at any time or even after many years.
• Not affected by job changes: HSA can migrate with users when switching jobs.
• Tax-free: The funds used for medical care in a Health Savings Account (HSA IRS Publication 502) can remain permanently tax-free. However, funds withdrawn for non-medical expenses before retirement are subject to federal income tax and a 10% penalty. Additionally, money in an HSA can be invested, and the interest and dividends earned from these investments can also be used tax-free for qualified medical expenses. After retirement, withdrawals for non-medical expenses will only be subject to federal income tax.
• Inheritable but avoid inheritance outside the husband and wife: HSA holders can leave the money in the account to the heirs by designating beneficiaries. If they are husband and wife, the spouse can transfer HSA to their own account and continue to enjoy the tax incentives of HSA. If they are spouses, the heirs must receive the full amount in the current year and pay annual income tax.

In summary, the HSA account offers a triple tax advantage: contributions are tax-deductible, medical expenses are tax-free, and non-medical expenses can be tax-deferred.

Finally, the best strategy for using HSA is as follows:

• Join HSA as soon as possible and invest the maximum amount in the HSA account every year.
• Set up the investment of the HSA account. This is very important because cash will depreciate due to inflation.
• Choose a broker such as Fidelity HSA that has no or low management fee.
• Keep all eligible medical receipts and postpone the reimbursement of the reporting fee until after age 65. The goal is to allow the tax-free growth of funds in HSA. You can take advantage of investment growth and leverage inflation by reporting expenses later.
• After the age of 55, couples each should open an HSA account to use the additional $1,000 that each person can invest (Catch Up).
• If you continue to work after age 65, you can extend the HSA contribution by delaying enrolling in Medicare. In other words, your HSA contribution will be stopped after you start Medicare.
• After the age of 65, prioritize using HSA (limited to eligible medical expenses after you reach the age of 65) or using the pre-deposited bill to withdraw all the money.
• Organizing medical bills: You can sort out HSA receipts by creating digital and physical folders and marking them by date, record type, doctor’s prescription, store, and purchased items. You can also create spreadsheets to manage.

After having your own medical insurance, create an HSA account, make contributions, set up investments, and keep medical bills for future tax-free withdrawals.

In 1996, Brian Dyson, the former president of a Coca-Cola subsidiary, delivered a speech at the graduation ceremony of the Georgia Institute of Technology ( Brian J. Dyson at Georgia Tech (1996))​. He used an inspiring metaphor to convey his message: 

"Imagine that life is a game of throwing five balls in the air. These five balls represent work, health, family, friends, and spirit. You can't let any of the balls fall. You will soon realize that work is a rubber ball; if it drops, it will bounce back. The other four balls, however, are made of glass. If they fall, they will sustain irreparable damage, and you will never be able to restore them to their original state.

Money is like a rubber ball; it can bounce back. While earning money is important, it is crucial to prioritize and take care of the most significant aspects of life. Striking a balance between financial pursuits and other important elements can lead to a more fulfilling and meaningful life.