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by mch82
1235 days ago
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Continuing with the car loan analogy, the interest portion of the car loan is similar to the guaranteed rate of return in a pension. If a car company sets up a loan with a bad interest rate the car company will lose money on the sale. The main difference between car loans and pensions is the time horizon. It’s much simpler to manage the risk of a 3-5 year loan than a 30+ year retirement that begins 45 years in the future. |
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