1035 Exchange

  

Categories: Tax, Trading, Insurance

Why don't they give these things a name? Like what pathos is there in a number? It makes your life miserable remembering all of them—and frankly doesn't make our life any easier writing pithy epithets about 'em either. But here we go.

A 1035 exchange is a swap. More specifically, it's a swap relating to life insurance policies or annuities. You have one annuity or life insurance policy and want to exchange it with another one (of similar value), so you use a 1035 exchange to do it.

Why, you ask? Because a 1035 exchange is tax free. Taxxxx freeeee [insert Homer Simpson drool sound].

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Finance: What is a swap, and what is a s...49 Views

00:00

Finance allah shmoop what is a swap And what is

00:05

a swap Shin Um can we just say it's an

00:09

option to swap You know like microsoft is a micro

00:13

computer software thing or like the electrocution is electricity and

00:17

execution or the bromance is you know brother and romance

00:22

which is something totally different when dealing with gerbils Anyway

00:25

one day a guy was holding a swap turned a

00:27

corner wasn't looking where he was going then glam o

00:30

he ran into an option What came of it was

00:32

a super hybrid type of security were in a slop

00:36

like i swap you so many dollars for so many

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euros is tacked onto an option You want the ability

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to pay off your loan either in us dollars or

00:46

in euros assuming they still exist when your loan comes

00:49

due That whole brexit thing that issue have the option

00:53

to swap the flavor of payments you're making for the

00:57

hundred grand You borrowed no it's houses play out well

01:01

When the bond was issued one dollar bought you one

01:03

euro and the interest rate was eight percent So you

01:06

paid eight grand a year to rent that hundred for

01:08

ten years at which point you're going to pay it

01:11

all off simple but after five years the exchange rates

01:14

have drifted massively Magic fairy dust was sprinkled by wizards

01:18

all over europe They beat back the thirty two hour

01:21

work week Corruption unions and economic misery wrought by not

01:25

being able to compete with china russia in africa and

01:28

now amazingly the euro is a much stronger currency than

01:32

the u s dollar that's kind of a fictional story

01:34

here that we'll make enough In fact one euro buys

01:37

you two u s dollars like it when the euro

01:39

was first put out there So if you holding the

01:42

swap shin on the interest payment flavor of the hundred

01:46

grand you borrowed if you so choose you can pay

01:50

that eight grand in euros that is instead of the

01:53

eight thousand dollars a year in interest you can pay

01:56

for thousand euros It's almost a ziff your interest rate

02:00

was cut in half That's not really it's a value

02:03

is the same it's just the number of units were

02:05

cut have theirs You know that works And if you

02:07

live in europe and work in europe and we're paid

02:09

in euros Well it really is like a roman holiday

02:11

of interest rates of just want to focus on the

02:13

numbers But the values of the same there's No free 00:02:15.938 --> [endTime] lunch here even in swap shen lang

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