08 January 2009

More on money: Look very little to find whatever it is you want to hear

Either I'm beginning to have enough money to start saving for retirement or just old enough start worrying about not having enough money later. But who the hell knows what to do with/for/about a 457, 401(k), 403(b), Roth IRA, variable/fixed annuities, mutual/index funds, Caps of different sizes, fees for just about everything, or whether anyone can/should buy a house (rent-ratios? 80/10/10 loans? what?).

The more I look for some rational way to decide or understand any of this crap, the more I believe that if you think something is true, odd are you'll find plenty of people to agree with you ... regardless of which side of an issue you fall on. It's called cognitive bias.

Should you invest like a Boglehead/diehard or actively manage your accounts?
Buy or rent?
Stock market or annuities? (fixed vs. variable annuities?)
Roth vs. Traditional IRA?

If you think "hey, I've heard that Roth IRAs are better" then you'll find articles that support your belief and you'll discount those that disagree. Think you can beat the indexes? You'll find others who agree (and if you think you're better off just matching the markets gains [my thoughts] then you'll find Bogleheads who agree with you as though no one else could possibly be thinking right). Again, cognitive bias.

So how the hell does anyone figure out what is actually best? Even talking with non-commission fee professionals gives different results for most based on very different assumptions by the financial adviser you happen upon at the time. Besides, they're freaking expensive.

WTF? How does anyone actually retire without their head exploding?

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