Somehow I got sucked into reading his new 600 page MONEY book at B&N and ended up taking it home. It’s half-filled with useful information albeit with a lump of salt and the remainder is typical Robbins emotions/story-based filler. The advice he provides is not his, but rather is the collected (and sometimes conflicting) byproduct of over 30 interviews with some of the top money managers and investment billionaires. A lot of it is common knowledge if you float around the Boglehead forums so will only highlight a few of the strategies, tools, and products I was either unaware of or want to add to my bag of potential tricks:
- Roth 401k??? – yep look it up. Basically same concept as your tax-deferred 401k but is taxed immediately. I checked my 401k and found the option to contribute to a Roth version. Would make sense to go that route if you feel you will make more money in your retirement and/or you believe taxes in general will go up in the future.
- 401k fee checker – pull up a report of how your company’s 401k expense ratios compare to others. By law companies must reevaluate 401ks yearly so you may be able to convince HR to move to a cheaper 401k solution.
- Fixed Index Annuities – there’s many varieties but main sell is that they offer a market-linked annuity with less downside (part of the theme in the book of asymmetric risk/reward). Here is some info and caveats. Really the most cost-efficient route is to cut out the middlemen and build your own here and here . Although as DIY longevity insurance, will I be coherent enough to rebuild my ladders at the ripe age of 105?
- Structured notes – basically a loan to a bank linked to a stock/bond market. After maturity date the bank pays back most of the upside of the market or if the market is down will pay original principal back (100% downside protection in this case). This could be a very good hedge for someone within 5 years of retiring who needs protection from a devastating situation where a market downturn coincides with beginning of retirement. Here is SEC’s cautionary warning.
- PPLI / private placement life insurance – called the Rich Man’s Roth. You’ll need a substantial initial investment to qualify. It’s basically an insurance wrapper for your investments that will not be taxed when taken out.
As a reminder to myself: always invert! Look for disconfirming evidence critiquing all these products and strategies and weigh your decision only after you can argue the other side just as well as your side.