Season 1 Episode 63
Flight #63 - Dumb Things Smart People Do with Money
Questions from the flight deck:
· Next year all 401k catch up contributions will be Roth. How will this affect your taxes?
· https://www.kiplinger.com/taxes/the-problem-with-401k-catch-up-contributions
o Under SECURE 2.0, if you are at least 50 years old and earned $145,000 or more in the previous year, you can make catch-up contributions to your employer-sponsored 401(k) account.
o But there's a catch. You would have to make those extra contributions on a Roth basis, using after-tax money.
o You wouldn't be able to get tax deductions on those catch-up contributions as you would with typical 401(k) contributions, but you could withdraw the money tax-free when you retire.
Dumb Things Smart People Do with Money
· Vanguard's Advisor's Alpha – They say most value is from behavioral coaching.
o https://advisors.vanguard.com/advisors-alpha#overview
· Buy High – Sell Low – why?
· Example: Value investment premium – Part of premium could be from our human behavior that seems to persist and is not arbitraged away.
o "According to the behavioral school of thought, human tendencies are behind the existence of the value premium. Many investors are lured by the appeal of companies with exciting growth stories and prospect of strong short-term returns, while being deterred by those that receive little fanfare or are unloved by the masses."
§ From article by Investment Firm Robeco.
· "Human instincts drive the Value premium"
· Recency bias – Recency bias is the tendency to put too much emphasis on recent events, such as a stock-market rout, the meteoric rise of bitcoin or a meme stock such as GameStop, for example.
o The "Lost Decade" is mostly ignored due to lack of recency.
o <
Published on 2 years, 4 months ago
If you like Podbriefly.com, please consider donating to support the ongoing development.
Donate