
The Personal Finance Industry Is a Scam - smn1234
https://www.gq.com/story/suze-orman-personal-finance?mbid=synd_digg
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johnwheeler
Can someone elaborate on the Annuity provision in the SECURE act the author is
referencing?

“And Congress is batting around the SECURE Act, a cheekily named effort to
allow the half of all Americans who are eligible for employer-offered 401(k)
plans to potentially lose those retirement funds when their employer, under
this act, becomes legally able to offer sketchy annuities as part of those
plans. “

The way the author writes it is that your employer can essentially confiscate
your 401K and repurpose the funds towards a ‘sketchy annuity’. That obviously
can’t be right, right?

~~~
PopeDotNinja
I used to sell life insurance and annuities. As far as I can tell, the major
concern seems to be about the risk that comes from the downside risk of
annuities, which is that you can lose all your money. A close relative of mine
bought an annuity from someone, that someone spent all the money from the
annuity, and my relative ended up losing everything.

Think of it this way...

A 401k is a piggy bank into which you put your retirement savings. You pay a
pig farmer a small fee every year to invest the retirement funds in various
forms of stocks and bonds. The money is always yours, and you get to keep
whatever is in the piggy bank, plus all of the gains/losses, after the pig
farmer's fee.

An annuity is going to a casino and making a bet. You give the bookie all of
your money, and the bookie agrees to give you your money back in the future in
regular payments over some period of time (e.g. pay in 10x now, and starting
in 20 years, you get X per year until you die). If you live long enough, you
can come out way ahead, but the bookie is really good at spreading the risk
across people who, on average, collect less than they put in. The risk is that
the bookie outright steals your money, or maybe puts the money in a safe, but
someone steals the safe. If the bookie loses your funds, you may very well get
nothing. Think Bitcoin - you give me 100 Bitcoins, I agree to pay you 1
Bitcoin a month until you die, I put the coins in a secure wallet, and forget
the wallet's password.

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canada_dry
Suze Orman is to finance as Dr. Phil is to psychotherapy.

Sadly they are in high demand in this age of quick, easy clickbait solutions
to complicated problems.

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throwawayram5ey
I've recently had a major aha moment with personal finance where I realize
that "simple" maybe better than "correct".

While many (and that maybe an understatement) dislike Dave Ramsey I've been
listening to his podcast for a couple months. I'm pretty good with money (no
debt) and have a good household income ($350k). I assumed I did not need any
tips as I was aggressively saving anyways.

It took a few weeks but Dave Ramsey's principles finally clicked. If you can
get past his brashness and ideologies which you may disagree with his advice
is very sound - even when it's not the most efficient.

Here's an example. Many people keep their mortgage for the full duration
(often 30 years) while maxing out investments because they earn a higher
interest rate then the mortgage charges. Mathematically this makes the most
sense.

However, he always asks people if their house were paid off if they would take
a loan against it to invest in the market. The answer is an obvious no --- but
he equates that to what people routinely choose to do by delaying paying off
their house. It took me many times hearing it before I started thinking he
maybe right. We often don't factor in the risk of paying off a mortgage but
it's still there if you look at it the way he explains.

Anyways...TL;DR is that me and my wife went all in on his approach (basically
never borrow money and get on a budget). Here's what I've noticed.

\- 1) We're spending about 25% less than we were before getting on a budget.

\- 2) It doesn't really feel any different which means we were wasting that
25% anyway.

\- 3) My wife and I's communication improved drastically.

\- 4) I realized we could pay off our home ($1.1M) in about 10 years --- prior
I had always stressed about being able to pay it off before retiring.

\- 5) We're planning a remodel which we likely would have taken a $300k loan
for - but instead we are planning to cashflow it by saving that money and
postponing the acceleration of paying off the house (now 14 years instead of
10 - still better than 30)

\- 6) Meanwhile we're still contributing to retirement (15% of income as
recommended) so by retirement we'll be okay too

All that to say --- I stopped trying to over optimize and this feels so much
better and I've quickly become debt averse (even though the only debt I carry
is the mortgage).

