Sunday, August 19, 2007

How long can you live? Ask your broker...

Most mutual fund companies and brokerage houses (Fidelity, Schwab, etc) offer their customers a full service review of their portfolio - basically to help them understand their current finances and to suggest changes to help them meet their financial goals. If you can spend the time to outline all your expenses and a few other details, it's a pretty useful service. So, someone I know did this with Fidelity last week and got a full report - most importantly showing her that she can live off her income and assets, given what she told them about her expected future expenses, until the age of 86. Not bad...

But later that same week, she was showing me the report online, which used updated (ahem, lower) stock prices to give a more accurate value of her portfolio...and things, uh, changed...
"Huh, will you look at that.. now I can only live to 84!".

If you think it's stressful watching the value of your portfolio change day-to-day, imagine watching your financial longevity change day-to-day. Maybe this would be an effective method to treat addicted gamblers... "That bet just reduced your lifespan by 3 years"... nah... that wouldn't work... they would just keep trying to bet their way to an eternal existence...

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