Re:Why has regional income convergence in the U.S. declined?...
by SilasX on Wednesday July 26, 2017 @01:49PM
(#14858414)
Well, there are a number of things that complicate the comparison:
1) Mutual funds get hit with a lot more taxable events (any rebalance or dividend), and only a small fraction of that can be shielded.
2) Even if you could borrow to invest, stocks fluctuate a lot more and you would be subject to margin calls.
3) You are implicitly paying maintenance/insurance costs as a renter, true, but only as a renter do you benefit from division of labor and tax-deductibility of such expenses.
4) For the specific time history: It would have been difficult in the 70s to buy something like an S&P index mutual fund; Vanguard started then but you're unlikely to have heard of them. Then again, you wouldn't be borrowing at 5% either!
1) Mutual funds get hit with a lot more taxable events (any rebalance or dividend), and only a small fraction of that can be shielded.
2) Even if you could borrow to invest, stocks fluctuate a lot more and you would be subject to margin calls.
3) You are implicitly paying maintenance/insurance costs as a renter, true, but only as a renter do you benefit from division of labor and tax-deductibility of such expenses.
4) For the specific time history: It would have been difficult in the 70s to buy something like an S&P index mutual fund; Vanguard started then but you're unlikely to have heard of them. Then again, you wouldn't be borrowing at 5% either!