On this episode of The Retirement Huddle podcast, Mark Howard explains whether he agrees or disagrees with these financial strategies.
You should always pay off your house as soon as you can
I disagree. We’re in a very low interest rate environment, and a lot of people have low interest rates on their home mortgages of 2.5% or 3%. We should take money sitting there and put it into investment vehicles that are good and safe and can earn up to 10% return. Do the math.
Individual bonds are better than bond funds
Bonds are not a good place to be right now. Bonds and bond funds are tied to interest rates, and when interest rates start to go up, the bond values go down and the bod payouts go down.
Nobody needs life insurance once they retire
Well, “nobody” is a strong word. Some people do. If a spouse dies, you can lose social security or a pension. Sometimes life insurance is a way to make up that income gap.
Annuities are a rip off
I’m going to disagree. Some are great, but there are bad ones, too. Typically, bad ones fall under the variable annuity. They can go up and down and have high fees, an average of 3.7%.
Listen to the full episode or use the timestamps to jump to a specific section. Thanks for listening! We’ll be back for another show every other Thursday.
[1:12] – Pay off your house
[2:10] – Individual bonds vs. bond funds
[3:37] – Life insurance
[5:15] – Annuities
[6:54] – Deferred taxes
[8:07] – Credit cards
[8:38] – Mutual funds instead of stocks
[9:31] – Social Security