An Open Letter to Michael Steele's Spine

Dear Vertebrae,

For many years, you have all worked together to carry the weight around here. But it gives me great pain to note that two of you (and I'm not naming names) have decided to step out of line and do your own thing, paying no heed to the squeeze you're putting on those around you. Your actions have definitely hit a nerve.

I have been forced to bring in an outside chiropractic consultant to get things straightened out again. Going forward, I expect all of you to work with the consultant and align yourselves to support our shared mission. Remember, you are the backbone of this whole organization.

Sincerely,
Mike's Brain

(I wrote this and posted it in a more obscure place last year when I was having serious problems that ended in my having surgery. It's still funny, even though I'm much better now, thanks.)

I came across this financial brain teaser / math problem last week on The Motley Fool's message boards:

Mr. Smith is 30 years old and has $10,000 that he is going to invest for his retirement. Ms. Brown (also 30 years old) is an investment advisor with a decent track record of constantly getting a 10% annual return on her portfolio. She does charge a 2% commission on assets under management as calculated at the end of the year. Mr. Smith thinks that a rough 8% return is still pretty good and feels it fair to Ms. Brown to pay her the commission. Ms. Brown's commission is going to her retirement, so all of the funds are going back into her account where she will earn the full 10% annual return. No taxes on either account.

Who has more money in their account at the end of year 35 when they are both 65?

Think about it for a minute...

Clearly if Mr. Smith comes out way ahead, this wouldn't be much of a puzzle, would it?

The answer?

After 35 years, Mr. Smith has $138,565.98, and Ms. Brown has $142,458.38. The lesson? Percentage-based financial planners benefit themselves more than their clients. You can do this yourself without paying someone else 2% of your money every year to do it. And if you do need a financial planner, there are plenty of flat-fee based planners out there who will work with you without slowly siphoning away all your profits.