Underrated Or Overrated?

Today’s Prep:

We’re playing a game to determine what’s underrated and overrated when it comes to a few topics in the financial world (and even a few outside of financial planning). Let us know what you think.

(Click the featured times below to jump forward in the episode)

Equipping Points:

[1:06] Variable Annuities

  • Eric says variable annuities are overrated.
  • A lot of the hype surrounding variable annuities centers around the guarantees they provide.
  • You need to be careful and understand the hidden fees involved with variable annuities.
  • Eric gives an example using the duck boats he rode on vacation. These are vehicles designed for both land and water.
  • Annuities are like duck boats; they can operate in two investing worlds. They’re designed to provide growth and safety, but they’re not efficient at providing either.

[4:02] Fireworks

  • Underrated – Eric says these are cool unless you try to operate them yourself.

[4:30] Paying Off Your Mortgage Early

  • A little of both, but more so, overrated.
  • A lot of people might sacrifice to pay off their mortgage early. This could come at the expense of saving for retirement.
  • You can finance anything in life except retirement.

[5:45] Roller Coasters

  • Eric is a big fan of roller coasters, so they are underrated.
  • It’s an impressive engineering feat to be suspended in the air and upside down.

[7:12] Sushi

  • Eric says overrated.
  • You’re paying a lot for something that hasn’t even been cooked.

[7:52] Getting a Big Tax Refund

  • Extremely overrated.
  • It may feel like a forced savings account that allows for a trip.
  • Tax refunds essentially mean you paid the government too much money and received zero interest in return.
  • Try to get your taxes to the point where you pay a little bit, but not enough for a penalty.
  • You could have that money invested toward retirement instead.

[10:11] Roth IRAs

  • Severely underrated.
  • You can invest in an account that allows you to grow your money tax-free.
  • Some may have too much income to contribute.
  • This is the optimal time to shift money from IRAs and 401(k)s to Roth IRAs.

Today’s Takeaway:

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The host: Eric Peterson - Contact - Call: (515) 226-1500

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