To call the finance industry a "mixed bag" would be a gross understatement. There are a few functions essential to industrial capitalism that banks, bill brokers, and financiers mastered centuries ago, like moving funds from savers to borrowers, a process described marvelously by Walter Bagehot in 1873. Then there's the constant stream of financial "innovations," as bankers … [Read more...] about Indexed annuities are bad
investing
The low-hanging fruit of personal finance
On Friday I wrote about how people making payments in excess of the minimum to student loans need to make sure their student loan servicers have instructions to credit the excess payments to their highest-interest-rate loans first. It's the kind of simple measure you can take to save money on student loan interest, and all it takes is a single letter to put the appropriate … [Read more...] about The low-hanging fruit of personal finance
On compound interest (and peeking)
There's no subject personal finance bloggers love gushing over more than compound interest. Conjure up a conveniently "assumed" rate of return, give it a few decades or a few centuries, and presto, you're worth more than Warren Buffett. The thing about compound interest, though, is that it doesn't work over long time periods, it works over many time periods. I was riffing on … [Read more...] about On compound interest (and peeking)
401(k)’s are a bad idea, poorly implemented, that doesn’t and can’t work
Status quo bias is one of the most powerful forces in American political life, and to overcome it a party or faction usually requires some combination of internal unity, lobbyist and interest group solidarity, and, if push comes to shove, popular support among the voters they're ostensibly in Washington to represent. The current Republican push for "tax reform" does not … [Read more...] about 401(k)’s are a bad idea, poorly implemented, that doesn’t and can’t work
On the dryness of powder
I sometimes come across a moderately sophisticated intuition, and find that while I don't strictly speaking agree or disagree with it, I do find it basically meaningless without additional context. This intuition says, "anything that can be done in an urgent situation can and should be done before the situation becomes urgent." So, for example, if you would need to tap your … [Read more...] about On the dryness of powder