The near-universal popularity of tax-deferred retirement plans (free growth for retail investors, less churn for corporations, offloading of social safety net risks for governments) make me suspicious of them the same way I’m suspicious of mortgage interest deductions.
-
-
What if $ is just a really bad medium for societal planning beyond lifespan horizons? Hypothesis: If average lifespan is 75y, economy will allocate towards assets that peak in value in 76y and then crash as deadweight. Real estate, zombie blue chips, cronyist political parties.
Show this thread -
There is small and steeply discounted bias towards 100, 130 year horizons (children, grandchildren) but come on. Who actually has any good investment ideas that far out. So again bias ends up favoring stuff like residential real estate. Which adds inertia to housing stock churn.
Show this thread -
In general, horizon based planning is bad because it creates the illusion of long-term sustainability wisdom. You can’t invest wisely in the long term if you can’t think of anything to invest in that will a) last that long, b) actually be useful past that horizon.
Show this thread -
Even basic infrastructure is of dubious long-term value. The concrete paradise of 70 years ago is today’s emissions nightmare. Glorious highway systems and jazzy malls turn out to be overbuilding when economy dematerializes and localizes.
Show this thread -
Would low-cost index fund passive investing beat active investing so handily if it weren’t for central inertial mass of passivity created by retirement accounts? Are you actually investing in broad confidence in a nation, or in the time arbitrage of its tax laws?
Show this thread -
The leap from basic portfolio theory advantage of bundles of assets over individual assets isn’t sufficient justification for tax-deferred accounts I think. Maybe index funds don’t index to the economy at any given time, but its natural frequency in the frequency domain.
Show this thread
End of conversation
New conversation -
-
-
Well, yeah. But if I didn't have tax deferred retirement I'd do something else What traditional asset is better? Landlord? Food truck?
-
Whatever you do, tax base shifts to shorter term and more volatile which I think is a good signal for driving economy and disturbing the complacency of government spending based on too-predictable revenues.
End of conversation
New conversation -
-
-
Mortgage deduction is over
Thanks. Twitter will use this to make your timeline better. UndoUndo
-
Loading seems to be taking a while.
Twitter may be over capacity or experiencing a momentary hiccup. Try again or visit Twitter Status for more information.