Thoughts and observations for those investing on their own or contemplating doing it themselves.
If you are seeking investment help, look at the video here on my services. If you are seeking a different approach to managing your assets, you have landed at the right spot. I am a fee-only advisor registered in the State of Maryland, charge less than half the going rate for investment management, and seek to teach individuals how to manage their own assets using low-cost indexed exchange traded funds. Please call or email me if interested in further details. My website is at http://www.rwinvestmentstrategies.com. If you are new to investing, take a look at the "DIY Investor Newbie" posts here by typing "newbie" in the search box above to the left. These take you through the basics of what you need to know in getting started on doing your own investing.
Saturday, January 18, 2014
Avoid Tipping Over the Apple Cart
I'm an investment guy. I can help you think about your asset allocation, the pros and cons of various investment approaches, how to locate your investments to minimize taxes, etc. I can put you on a path that, based on historical data, gives you a high probability of achieving your retirement goals with your investments. I can even direct you to blogs that will inspire you to become more frugal.
Still, EVEN WITH THE BEST LAID PLANS, YOU MAY RUN INTO BAD LUCK. I'm not talking about markets--I'm talking about health, lawsuits, and general emergencies. These will tip over the investment apple cart!
For this reason, I spend considerable time talking with clients about possible events outside the realm of direct investing. Emergency funds, managing debt, term life insurance, etc. are part of this important conversation.
Another huge pothole that can tip over the whole apple cart is a major lawsuit. Life can be going swimmingly, accounts can grow at a surprising pace, you've learned to have a lobster dinner at home along with a nice bottle of wine rather than at a posh restaurant, and a beautiful retirement can be seen on the horizon. And then, out of the clear blue, a major lawsuit pops up. Maybe someone got hurt at your house, or you were involved in a multiple car pile up. It doesn't matter. You could have someone coming after you for all you are worth. Apples start to cascade out.
Some contingencies are not easy to deal with. For example, the whole area of long-term care insurance is difficult to navigate. It is expensive, its premiums change, and it is difficult to determine how much a couple needs. Term insurance, by comparison, is fairly simple. It is inexpensive and easy to ballpark the right amount. Another relatively easy one is the potential life upending major lawsuit. What is needed is umbrella insurance. The good thing is that it is relatively inexpensive to get sufficient coverage. Here is a good article on what it is about:
Do One Thing: Buy an umbrella liability policy by Kate Ashford.
Once these cart-upsetting contingencies are dealt with, you are in a considerably better position for appropriately structured investments to get you a desirable retirement.
Posted by Robert Wasilewski at 6:54 PM
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Insurance coverage can be a confusing topic. The more informed you are, better your chances of making the right decision.ReplyDelete
And sadly it is not easy to get informed in an unbiased way. The best is to get advice from those not selling it.Delete
Insurance is some cases is mandated such as auto, house loans, and workers compensation. Other types are gambles, with life insurance you're betting your going to die, the insurance company is betting you will live, long term care again is you betting your going to live in a nursing home, the insurance company betting you wont or that the rules will change and the coverage you have today will be inadequate in tomorrow's world at best or useless at worst. When was the last time an insurance company declared bankruptcy? Umbrella insurance is also a gamble but in today's world lots of people are looking to sue you for anything and I would not gamble and be without it.ReplyDelete
Whether or not you are going to die is not a gamble...none of us is getting out of this alive. Term insurance can be used in a number of ways. Most of the time families need to figure out how they are going to replace the income of a major income producer in the event they die. Other times term insurance can be worth while because real estate needs to be sold when people die and taxes have to be paid.ReplyDelete
On the long term care insurance, it typically covers nursing expenses for those who live at home. That is, you don't have to go to an assisted living facility. Actually the odds we will need long term care are higher than many of the other things we routinely insure against.
Every day the newspaper carries stories of families whose lives have been wrecked financially simply because they didn't think these contingencies through and take some steps to protect themselves.
I have been pounding my fist on the table on this issue with my parents for the last 2 years. They have done a great job preparing for retirement but insurance is a must and back up plan is a definite. If there is anything I've learned in this life it's that NOTHING goes according to plan.ReplyDelete