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
investing
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
Idiosyncratic bets on real estate: homeownership or mutual funds?
I've written before about the ways homeownership in the United States is heavily subsidized by the federal government, at the expense of current and future taxpayers: preferential tax treatment of capital gains on primary residences, with $250,000 or $500,000 (depending on filing status) of a home's appreciated value being completely tax free; the tax deductibility of … [Read more...] about Idiosyncratic bets on real estate: homeownership or mutual funds?
Why do so few people use non-conflicted financial advisors?
I was listening to the latest episode of the "Animal Spirits" podcast with Michael Batnick and Ben Carlson, and they mentioned a statistic in this (paywalled) Wall Street Journal article: just 2% of the 285,000 professionals giving financial advice in the United States are fee-only financial advisors, who are held to a fiduciary standard that requires them to put the interests … [Read more...] about Why do so few people use non-conflicted financial advisors?
Basics of IRA recharacterizations
Like aircraft flying at very low altitudes, the US tax code does strange things when very low incomes are involved. Most people know about, or have at least heard of, the earned income credit, which phases in quickly as "earned income" (which includes wage and self-employment income) rises, then phases out somewhat more slowly. I think that's bad program design, since it … [Read more...] about Basics of IRA recharacterizations