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| © 2001, 2002 Strictly Business Magazine All Rights Reserved. A division of S&S Enterprises, a Floyd Snyder Production. Santa Maria, California, 93454 Feedback. |
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| Senior Finances Specializing in Investment Management and Asset Preservation For Mature Investors Published by: |
| Trent J. Benedetti, C.P.A., C.F.P. |
| Benedetti & Associates Certified Public Accountant,Inc. 2151 S. College Drive, Suite 101 P.O.Box 5958 Santa Maria Ca. 93456 Tele: (805) 922-4881 Fax: (805) 922-7953 Email Mr. Benedetti |
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| Three articles this page: Long Term Care Insurance - Even For Those With Illness Dealing With a Prolonged Bear Market Investors -- Their Own Worst Enemy |
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| Long Term Care Insurance - Even For Those With Illness Don’t assume you can’t get insurance even if you have an illness. Companies vary tremendously in the way they look at common illnesses like diabetes, arthritis, heart attack, cancer, stroke, etc. There are different long term care insurance companies that will accept people with the above conditions. The trick is to find the company that accepts your condition. Each company has a list of “underwriting guidelines” that spell out which illnesses can qualify for coverage under what conditions. Generally, these are only distributed to insurance agents and not the public. Note also that these are "guidelines” and not “rules" and that can be important. When an insurance company reviews your medical files, they make a subjective decision whether to accept or reject the application. Because these decisions are subjective, different companies will have different decisions. Moreover, the data your agent can provide on the application that can positively influence the underwriter can help in your favor. For example, a statement that you volunteer everyday, have never had a traffic ticket and are a master bridge player can indicate to the underwriter at the insurance company that your illness does not stop you from your activities and may not be an important factor in the risk of providing you coverage. How do you know which company looks more favorably at various illnesses? You must consult with an experienced independent agent who is familiar with many companies' policies. If you have a condition on which you would like some feedback about your insurability, mark it on the enclosed coupon and send it back. --------------------------------------------------------------------------- Dealing With a Prolonged Bear Market There have been 10 bear markets since World War II. The average bear market lasts 15 months, according to the Leuthold Group, Minneapolis. They were as short as three months in 1990. But they lasted slightly over three years from 1946 through 1949. The average loss in a bear market was -28.7 percent. The range was as little as -20 percent in 1990 to -48 percent in 1973 and 1974. The average time it took investors to recover from a bear market was almost 18 months. That range was six months in 1990 to 70 months following the 1973 and 1974 bear market. Here are the rules for dealing with a bear market: If you have investments that make you uncomfortable, get out. Investments that make you uncomfortable are bad choices to begin with because whenever you make an investment, you must consider the worst case. And if the performance is worse than your worst case, get out of a bad situation. Do not worry about taking a loss. You will reinvest in a more suitable choice and when the market rises, your new choice could have an equal chance of rising in value (besides, the IRS will share your loss with you). Get real. If some advisor told you to expect 14% annually or if you thought that’s what investments paid, it’s time to get the facts. Plan on 10% as a conservative long term return (a conservative estimate that’s based on performance of the S&P 500 index since 1926 but remember that past performance does not guarantee future results). Get your investment risk aligned with what’s comfortable for you. Do not invest for high returns as it’s an opportunity for disaster. Select investments that meet your risk tolerance and let the market take care of the returns. Bear markets have always come and gone. If your portfolio is not designed to handle them, it’s a bad portfolio. If your portfolio has caused you concern, it was probably ill-designed to begin with. You can have it realigned to better meet your profile by checking off on the enclosed coupon using risk as the guide. -------------------------------------------------------------------------- Investors -- Their Own Worst Enemy Excerpted from “Investors Who Jump Ship Too Early” 4/27/01 Alan Lavine and Gail Liberman A disturbing study by the Financial Research Corp., Boston, found that mutual fund investors experience 20 percent lower returns than their investments provide. The study looked at rolling three-year returns. The results show that from January 1990 through March 2000, the average mutual fund's three-year return was 10.92 percent, while the average investor gained 8.7 percent. That’s because investors jumped around rather than stayed put. Using the above findings, a $10,000 investment would have grown to $28,930 over the period in the average mutual fund if you had stayed put, but the investor who jumped from fund to fund based on performance did not do so well. His or her investment grew to just $23,515. That is a difference of $5,415. The investor would have been better off paying an advisor a 1 percent annual fee to make sure he or she didn't move. The total cost for the adviser over the 10-year period would have been about $2,564. The investor would have also been ahead even paying an advisor a 2 percent fee. So it cost you more to jump in and out of stock funds due to fear and greed that to just hang tight. The study looks at industry statistics on investor trading activity. It concluded that many investors chase after hot performing funds instead of investing regularly in their existing stock funds. Investors are not totally at fault for jumping ship. Mutual funds hype their performance in advertisements and investment articles. So it's a two-way street. They entice people to buy on performance. When the funds don't deliver the goods, people sell. If you think you have sometimes caused your own lack of investment returns or been mislead by mutual fund ads, it may be time to get an advisor and get a plan. |
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