Hiding in the Long Tail
I wanted to get the new book Free by Chris Anderson, but there’s a long wait at my public library. So I got his previous book The Long Tail.
[Links to Amazon.com are affiliate links. Amazon will pay me 4% to 6.5% of the purchase price if you make a purchase within 24 hours.]
Anderson says with the lower cost of inventory and distribution, businesses can successfully sell a large number of niche products in small quantity and still make a good profit, because the small quantities across so many items add up to a huge volume collectively.
What Is Your Marginal Tax Rate?
If I ask you point-blank "what is your marginal tax rate?" do you know the answer? If you think you know, write it down. If you are not sure, take your best guess. After you finish reading this post, see if you got it right.
The marginal tax rate is the tax you pay on your last dollar earned. It’s an important number to know because at the end of the day, if you earn one extra dollar, what you can put into your own pocket or spend after taxes are paid is what really counts. That number would be 1 – marginal tax rate.
If my marginal tax rate is 95%, I will not bother putting in the effort to earn that one extra dollar because it’s just not worth it for me to net only 5 cents. I’d rather relax and enjoy my leisure.
Treasure Hunting in Secondary CDs
I mentioned in a previous post Short-Term Fixed Income: CDs vs Bond Funds that I would buy CDs as short-term fixed income investment for my solo 401(k) account.
Because Fidelity administers my solo 401(k) plan, I can buy only what’s available through Fidelity. I looked at new-issue brokered CDs. The yields are lower than the best rates available from other banks and credit unions.
Then I looked at secondary CDs. Secondary CDs are like “pre-owned” cars. They are being sold by bond dealers. The dealers bought the CDs from the previous owners, who for one reason or another decided not to hold the CDs to maturity.
It’s Not 529′s (Or 401k’s) Fault
Ever since I switched from reading Financial Times to Wall Street Journal (FT subscription ran out; no option to use airline miles), I started encountering more and more sob stories. If this continues, I’ll be like Frank at Bad Money Advice.
On Tuesday I mentioned the story about laid-off employees burning through their severance and turning down job offers. On Wednesday I read this article about people stopping using 529 plans because of market losses:
Burning Through Severance, Turning Down Job Offers
While on the commute train this morning, I read this article on Wall Street Journal:
* Link goes to Google. WSJ will display full article if you come from a link through Google.
It tells us stories about how some people coped with unemployment while on severance pay. The subjects in the article spent just like before, burning through their severance. They also turned down job offers because they didn’t like the job description.
Marriage Tax Penalty and Unit of Taxation
The marriage tax penalty refers to the fact when two people marry, they pay more taxes than they do when they are single. This happens when the two persons have roughly the same income.
The mirror image of the marriage tax penalty is the marriage tax bonus, that is when two spouses have disparate income or one spouse decides to stay at home, they pay less tax than they do if they don’t marry.
I touched on the topic of marriage tax penalty in two previous posts: » Read more …
It’s a Stock Picker’s Market
If you read or watch financial commentary, I’m sure you’ve encountered this piece of insight:
"It’s a stock picker’s market."
I heard a guest say this in a recent episode of WealthTrack. Is it true?
Absolutely. If someone picks the right stocks, they will have a better performance than the market. There’s no doubt about it. It’s a tautology.
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