The Million-Dollar Matrix

The Matrix isn’t real, but it provides some interesting insights into what it takes to accumulate $1 million.

Buy-and-Hold: Hanging on, or
gone for good?

A popular accumulation strategy is taking a pounding in the financial media. A little bit of insight into why a “logical” theory doesn’t deliver real-life results.

Warren Buffett Remains Optimistic

The nation’s best-known investor tells why he thinks the future looks bright – even if today it seems a little cloudy.

529 Prove Problematic

A brief review of how well-intentioned, state-sponsored college savings plans are encountering some bumps in the road.

Complete PDF HERE.

THE ISSUE IS INCOME
The bottom-line objective of any individual financial program is to provide an ongoing stream of income to meet the necessities and pleasures of life. This issue addresses several topics that emphasize the importance of income planning.

How Long Can Your Human Asset Keep Paying Dividends?
When Time magazine’s cover declares “Jobs are the new assets,” you know there’s been a re-awakening to the value of human capital. A brief overview of why human capital is so important in individual financial programs, and what you can do to enhance and protect what is arguably your most important asset.

The Logic of a Longevity Annuity
Who would buy a financial product that won’t pay penny for 25 years and if the account holders don’t live that long, they lose their entire investment? Sounds like a very bad investment. But it’s also a very interesting insurance idea that allows individuals to spend down their wealth in retirement – and not go broke. (Oh, and there might even be a better way to accomplish the same thing.)

Non-Cancelable and Guaranteed Renewable: Contract Language You Need
When you consider disability insurance, several clauses in the contract determine who really has control over the long-term value of the coverage. Find out why “non-can” can make all the difference.

FINANCIAL LITERACY QUESTION: How much is a TRILLION?
(You’ve got to see it to believe it!)

Complete PDF HERE.

5 Minutes on the Couch + 10 Minutes in the Library = A Plan for the Information Age

A look at how psychological biases sometimes get in the way of preparing for change, and how changes 30 years in the making may shape your financial future. (Comes complete with recommended principles of action!)

The IRA: A Case Study in Present-Event Bias

An example of what happens when economic changes cause a rethinking of government regulations.

Long-Term Care Insurance Continues to Change – 

Is Now the Time to Buy?

As long-term care insurance goes through several changes, what should consumers do about meeting this financial challenge? Some news and views for right now.

FINANCIAL LITERACY QUESTION: How many Americans get to retire on their own terms?2009-mar1

NAHU, (National Association of Health Underwriters) sent a note out today regarding a Washington Post article detailing polls which show that companies are trying to reduce health care costs by a) raising deductibles, and b) increasing the employee’s share of the premium:

On the front page of its Business section, the Washington Post (1/25, F1, Haynes) reported, “A growing number of workers in 2009 will pay more for health benefits — and in some cases receive less coverage — as their employers grapple with the financial fallout of rising medical expenses and diminished revenue and profits, recent surveys of human resource officials show.” According to the Corporate Executive Board, “30 percent of the employers” surveyed “said they expected to raise deductibles an average of 14 percent in 2009,” while “Mercer, a global benefits consulting firm,” discovered that of the “nearly 2,000 large corporations” surveyed, “44 percent planned to increase employee-paid portion of premiums in 2009.” Additionally, in order to “cut costs, employers increasingly are introducing high-deductible health savings accounts (HSA) and focusing on wellness programs,” the Post noted. The article went on to discuss specific examples of employers that are increasing employee premiums or adding the option of HSAs in 2009.

As your friendly neighborhood Health Insurance Professional, I’ll offer my sage advice on this: Raise the deductible first. It makes a lot more sense to shift RISK to the employee (within reason) than it does to shift PREMIUM to the employee, and if the employees are properly educated on their options, then they will prefer to MAYBE spend an extra few hundred or couple of thousand dollars a year, then to DEFINITELY have that much or more additionally taken out of their paycheck.

The Post article, as is common with press regarding the Private Health Care System in the U.S., displays an utterly unrealistic view of that system (I know…really shocking). This, for instance:

Carter, a technical editor for a District consulting firm and mother of twin boys and a girl, is facing steep increases in out-of-pocket expenses for health coverage this year. What she shells out for premiums and co-pays more than offsets any fuel savings. Her employer picks up 50 percent of the coverage for her family, up from 33 percent a few years ago. But because insurance costs have soared, she says she’s actually paying $200 a month more in premiums.

Her co-pays also have risen to $30 from $20. That extra $10 adds up, Carter of Bowie says, with “accident prone” teenagers in and out of the emergency room: Her 19-year-old track star son suffered a lacerated liver, broken rib and concussion when he slipped and fell on wet pavement. Her 16-year-old cheerleader daughter who is asthmatic is in physical therapy three days a week for a dislocated knee. Carter and her other son contribute to the costs with visits to the doctor for serious flare-ups of asthma.

So the companies are paying a higher percentage of the premiums than they were (very rare) but its a “sucker-punch” to expect policy-holders to pay an extra $10/doctor visit.  The truth is, the company is likely not raising copays ENOUGH, which is one of the reasons why costs keep going up.  If Ms. Carter actually had an in-network DEDUCTIBLE (which from this it doesn’t look like she does) the company AND her would fork out a LOT less money monthly for her coverage.

Here Locally in Loudoun County, the School Board has the option (and it looks like it’ll happen) to increase copays on prescriptions from a 5/20/40 to a 5/25/45 tiered system.  How much is that going to save Loudoun Taxpayers (to say nothing about how much it’ll save out of School employees’ checks every month)?  Over $1,000,000.

An extra $5 per prescription MAYBE saves roughly $10/employee/month DEFINITELY.

If your employees (or your employer) are NOT educated on these phenomena, then feel free to shoot me a note at wdporter@gcfin.com, and I’ll be happy to help.

_______
Butch Porter
Goose Creek Financial
Loudoun Health Insurance Professional

A little news I thought might be worth mentioning:

The Loudoun SBDC is putting on an event this coming Tuesday, April 29th, from 6:00 to 8:30pm, titled “Health-Care Options for Small Businesses” (Full info here). There will be various representatives from the health field (yours truly included) talking about how Small Businesses can best contain risks and Health-Care costs for their companies and employees.

SO please:

a) attend (IT’S FREE!), but register ahead of time.
b) forward this along to your respective networking groups, organizations, committees, etc, so that all those seeking an education on this topic will have the opportunity.

Any questions about the event, please direct to the Loudoun SBDC.

OUTRUNNING THE FINANCIAL LIONS–Here’s a new take on a popular fable. Everyday, three financial “lions” come roaring after you. Find out who they are, and what you can do to avoid being caught by them.

BUY-SELL AGREEMENTS–Many profitable businesses are built on the combined efforts of two or more people. But what happens when one of the partners isn’t there anymore? A brief overview of the most effective responses to the departure of an owner.

USING A FALSE IDENTITY TO FILE A TAX RETURN–It’s the latest bit of twisted ingenuity by identity thieves: Stealing your ID to file a false income tax return, either to receive a refund, or to hide other income.

DO YOU HAVE AN “INHERITANCE PORTFOLIO?–If you can’t take anything with you, are there some things you’d like to be sure you leave behind? This article explains why certain types of assets might be better suited to be passed on as an inheritance.

THE SODA GAME–A neat game you could play with your children or grandchildren to teach them the value of money, and the importance of saving. Oh, and there’s a grown-up version as well.

For the full PDF, click here.

The March edition of the Financial Times is out:

READY FOR A PEP TALK?

With all the economic bad news, the natural reaction might be to cut your losses, cut your expenses and retreat. But even in bad times, asking the question “How can I be most productive in this moment?” may yield some surprising alternatives to simply hunkering down.

SOME INTERESTING NOTES ON LIFE INSURANCE

• Why even fee-based financial experts need help from life insurance agents

• Why one of the fastest-growing demographics in life insurance sales are people over 70

• Why a presidential campaign may have been rescued by a life insurance policy
  

AN ALTERNATIVE TO THE DEBT SNOWBALL

What’s the best way to pay off credit card debt? A look at a popular conventional approach, and a thought-provoking alternative.

THE ENROLLED AGENT

Enrolled Agents are tax experts empowered by the licensed by the U.S. Treasury to represent taxpayers before the IRS. With audits of high-earning individuals rising significantly, this article gives several reasons why you might want to know an
Enrolled Agent.

For the full version of the articles in PDF form, click here.

Below are some notes on the February edition of the Financial Times.

IF YOU SAVE TOO MUCH, DOES IT HURT THE ECONOMY?

According to some prominent economic thinkers from the past century, individual saving can actually make bad national financial situations even worse! So right now, with the sub-prime mortgage crisis, high fuel prices and shaky stock markets, should you consider cutting back on your saving?

WHAT DO YOU DO WHEN YOU CAN’T PAY YOUR MORTGAGE, OR YOUR PROPERTY TAXES – OR THE NATIONAL DEBT?

A brief overview of “innovative” ways to solve desperate financial circumstances. But will they really work, or just delay inevitable financial pain?

LARRY KING’S LIFE INSURANCE PROBLEMS

Life settlements can be a legitimate way to immediately leverage the financial value of insurance on your life. But the strategy has consequences, as talk show host Larry King found out. A report on his legal proceedings gives some insight to the unique value of life insurance.

PREDICTING YOUR PERSONAL FINANCIAL FUTURE

Economic forecasters have all sorts of formulas and indicators to predict the future. Similarly, there’s a simple way to gauge your financial future. Read an excerpt from John McCormack, on how he can tell if someone is going be financially successful.

For the full article click here.

The January edition of the Financial Times is linked at the bottom. Here’s my summary:

THE REASONS NOT TO–Sometimes the best way to understand why you should do something is to also understand why not to do it. An article about what you can learn from a good financial professional by asking what not to do – along with some cautions about using the reasons not to as excuses.

THE TAX YOU CAN’T PLAN FOR–The sharp differences of opinion regarding the federal estate tax have made for some unusual legislation – and as we approach 2010, the situation will get even stranger. A quick overview of the issues, and ramifications.

ONE BAD YEAR–In non-guaranteed financial instruments, there’s always the risk of losing money, but there is the expectation that over the long haul, the losses will be overcome by gains. But it’s surprising how much impact even one bad year can have. Check out the math; you’ll be amazed!

HOW LONG IS LONG-TERM?–A companion article to the one about losing money. A new article reveals the best time horizon for profit in the stock market may be a lot longer than you think.

DETAILS, DETAILS–For many, a will doesn’t become a priority until it’s too late. However, doing a few things right on a regular basis could make it easier for everyone.

For a complete PDF of the article, click here.

Finally! The December issue of Financial Times, with the following official comments from your Trusted Financial Advisor:

RIPPLE EFFECTS OF PROSPERITY–When you have your financial stuff together, you make the world a better place. Most of the time, financial decisions are evaluated in terms of their personal impact, but well-managed and prosperous individuals also have a positive impact of society at large. Read about the interesting way in which your prosperity ripples out to others.

OVER-PAY YOUR WHOLE LIFE INSURANCE–Conventional financial wisdom often touts the idea of paying less for insurance of all kinds. But there are some occasions where overpaying might be better long-term strategy. A brief overview of paid-up additions and how using them can provide more long-term flexibility in your life insurance program.

SUB-PRIME SUBPLOTS–The financial fallout from the failure of many sub-prime mortgages is receiving major play in the financial press. But behind the headlines are several other stories, some that might be more interesting and revealing.

SPEND-DOWN MATH–The ultimate purpose of all accumulation is distribution. So after decades of saving, how do you start spending it? A little touch of math to illustrate the fundamental differences in the most prevalent spending strategies.

For the full PDF of the Newsletter, click here.