If you're in the right mood, there's something a little bit depressing about the subject of investing: how boring it is. An easy way to think about this is that if you make the maximum contribution to a 401(k) and IRA every year, for 20 years, at the end of that 20 years, you'll be rich. How rich you'll be depends on a lot of factors, but the fact you'll be rich doesn't depend … [Read more...] about Differences between non-retirement investment options
investing
Thinking about Vanguard’s no-transaction-fee ETF announcement
The finance blogosphere has been ablaze the last week with Vanguard's announcement that they'll be eliminating trading fees on an enormous swathe of ETF's that currently cost $7 to buy and sell. Reducing transaction fees is an unalloyed good for investors, but I think there are some interesting additional consequences of the change to think about. What's happening On July 2, … [Read more...] about Thinking about Vanguard’s no-transaction-fee ETF announcement
Cumulative losses as the psychic cost of investing
I was playing around with a pretty cool tool called Portfolio Visualizer and got to thinking about the difference between how finance professionals and ordinary people talk about investing. For finance types, an asset or a portfolio has an expected return, which might be calculated using historical returns or a forward-looking rule like Jack Bogle's "reasonable expectations" … [Read more...] about Cumulative losses as the psychic cost of investing
Wrapping my head around variable annuities
I've written before about indexed annuities, one of the most expensive, abusive, unnecessary financial products known to man, but I've recently had a couple occasions to learn more about variable annuities, the confusingly-similarly-named product offered at lower cost by more reputable firms, like Vanguard and Fidelity. Variable annuities are expensive There are two expenses … [Read more...] about Wrapping my head around variable annuities
The relationship between cost and confidence
A longtime reader asked me the other day, "how do you convince someone that actively managed funds are worse than passive?" I think it's a good question, not because it's possible to convince someone that actively managed funds are worse than passive funds (it's not possible to convince people of anything, in my experience), but because answering the question highlights one of … [Read more...] about The relationship between cost and confidence