Archive Page 2

26
Apr
12

Protecting Income – Disability Insurance

  1. Life Insurance
  2. Disability Insurance
  3. Shopping for Life & Disability Insurance
  4. Social Security Survivor & Disability Benefits
  5. Will Life insurance benefits be taxed?
  6. Emergency Fund
  7. Umbrella Insurance

Did you know you are more likely to become disabled than you are to die?  We don’t know if that is true, but you hear it a lot and there are some old statistics sited on the interwebz from agencies we have never heard of.  Not to say they are invalid, just that we can’t vouch for them.  The Social Security Administration claims you have 30% chance of becoming disabled before you reach retirement age.  Either way, you still need disability insurance.

Disability insurance is tricky.  Life insurance will seem simple after going through all this mainly because when you are dead, you are dead.

Whoo-hoo-hoo, look who knows so much. It just so happens that your friend here is only MOSTLY dead. There’s a big difference between mostly dead and all dead. Mostly dead is slightly alive. With all dead, well, with all dead there’s usually only one thing you can do.

-Miracle Max, The Princess Bride

Ok, aside from what we all learned in The Princess Bride, being dead is cut & dry.  Being disabled, now that is interesting.  It is similar to being sick, it means different things to different people.  Someone can have a headache and be sick.  Or they can have a cold.  Or pneumonia.  And being disabled, means different things to different insurance companies.

Continue reading ‘Protecting Income – Disability Insurance’

Advertisements
23
Apr
12

Protecting Income – Life Insurance

We have come to realize that the Personal Finance blügs are stuffed full of, “Yea! Roth IRA!,” “Debt is evil,” “Earn more with a blüg,” “Landlord = Passive Income” etc.  The same themes seem to be recycled and regurgitated in different size chunks and a different color.  But, one topic is rarely covered, investing.  Actual, investing advice.  While we don’t pretend to be experts, we are going to start series for putting people on the path to retirement and achieving their goals.  Perhaps this is not as interesting as how much we spent on clothes last week.  But, actual investing articles aren’t regularly covered in hot & heavy detail in the personal finance blüg-o-sphere.  We choose not to disclose our portfolio size and age because we believe our ideas should stand on their own.  That is to say, it doesn’t matter if we are 25 year old millionaires or 50 year old wannabe retirees with $10k to our name, because our ideas are valid regardless.  Well, maybe it would give us some street cred if we did unveil our portfolio, but our ideas should stand without the backing of (or lack there of) our personal portfolio.  And perhaps this will bring the readership down from 1 person to 0 people.

We still plan to post twice a week, and we may jump around from series to series or whatever we think is important.  But, you’ll know what is coming down the pipeline.  And if you want to see something or see something sooner, let us know.  We are thinking of adding a “carnival” type post on Fridays, but focusing more on those who ignore us or offer up misleading information.  But right now, we’re still at 2 posts per week, Monday & Thursday.  Without further adieu…

  1. Life Insurance
  2. Disability Insurance
  3. Shopping for Life & Disability Insurance
  4. Social Security Survivor & Disability Benefits
  5. Will Life insurance benefits be taxed?
  6. Emergency Fund
  7. Umbrella Insurance

Ok, so after our diatribe above about blügs not talking about investing, we start out talking about a non-investing topic.  But, protecting your income is SOOOOOOOO important, that we will kick off with this series.  Your ship can be sunk if you aren’t protected.

At one point or another, we will all think about the need for life insurance.  And while this topic is covered ad nauseous in the personal finance blüg-o-sphere, we have some additional points to offer.  First, only consider life insurance if someone depends on you.  If you vanish like a fart in the wind, will the loss of your income result in others eating cat food?  If not, you don’t need life insurance.  That funeral thing is a crappy sole reason to take out a life insurance policy.  If no one depends on your income, you should be debt free (see entire personal finance blüg-o-sphere on why it is a bad idea to be in debt – “bad” debt as it is coined – and how you can escape its grasp) and have an emergency fund in cash (or CD’s) that should cover those expenses.

Continue reading ‘Protecting Income – Life Insurance’

19
Apr
12

IRA to IRA to IRA Rollover in one year?

Why surfing the interwebz, we’ve run into some potentially misleading information.  Well, it most definitely can be interpreted as being misleading, but the intent of the individuals is unknown.  Of course, the point of this blüg is to make sure people don’t use this misleading information.  So, regardless of what someone’s intention is, we hope people walk away with more knowledge than they did before they invested a few minutes in what we have written.

Over at Retire by 40’s blüg, “Ray” gave some advice in the comments that certainly deserves an asterisk.  And, we put that asterisk in the comment section.  But, here is what “Ray” said which could be misleading.

What people don’t understand is you can roll it over to say Vanguard and if you don’t like them, then roll it over to Etrade and if you don’t like them, roll it over to Schwab etc.

Usually from start to finish it’s no more than 7-10 business days if you do it right…

The implication here is that you can just rollover whenever you please.  Which is true, but not without consequences.

Continue reading ‘IRA to IRA to IRA Rollover in one year?’

16
Apr
12

Why we want the standard tax deduction

Welcome again from our advanced tax study center.  It’s Tax Day!  One of the greatest days of the year, second to Columbus Day.  No other day offers 15% off at PF Chang’s without a coupon!  And while tallying up the total amount paid to Uncle Sam is pseudo-fun, the most important thing is saving that 15% at PF Chang’s.  We bring about 798 collective dog years of tax experience and we thought we would offer some sage advice-Strive to take the standard deduction.

Continue reading ‘Why we want the standard tax deduction’

12
Apr
12

Why you should use 5 year CD’s for your emergency fund

We have advised not to reach for yield by doing things like investing in P2P lending or beyond your risk profile.  This is especially true for one’s emergency fund, where it should be desired to have the money liquid with no risk of loosing principal.  These two characteristics of an emergency fund leave us with a few, unexciting options.  Unfortunately, today’s options don’t provide much inflation protection. Continue reading ‘Why you should use 5 year CD’s for your emergency fund’

09
Apr
12

Gratitude for being able to care about minutiae

While this blüg is mainly about investing for retirement and we promised ourselves we would leave lifestyle topics out, we can’t help but reflect on how grateful we are to live a very comfortable life.

With one of us being of Korean heritage, an article was sent to us about a North Korean woman’s escape from the awful conditions and tyranny.  If you don’t want to read the whole article (and you should), we will summarize what was endured.  A woman and her family lived off of grass as their main source of nutrition.  Continue reading ‘Gratitude for being able to care about minutiae’

05
Apr
12

You are not Buffet

What’s interesting around the interwebz and personal finance blüg-o-sphere are the individuals who think they can beat the market.  While not impossible to do so, we can’t help but ask ourselves, is this from luck? or is this because of skill?

Many point to the “Oracle of Omaha” as the poster child of being able to analyze a company, pick the winners and reap the benefits with your feet kicked up as the cabana girl/pool boy bring you fruity drinks with those little umbrellas.  But another question we would like to delve into is, “Is how Warren Buffet invests the same way we invest?”

We (the working stiffs of the world) are retail investors.  We pay a premium to invest.  And when we do invest, we are given the scraps and leftovers that those higher in the pecking order have left us.  No one calls us about investing in oil wells in North Dakota, no one calls us with great business deals needing capital without the opportunities first being picked over.

When we buy a security, we don’t get invited to the board meetings.  We don’t get a say in what the company does, when it does something or how it does something.  We pay a premium for the privilege of investing in a company and we are asked to stand on the street with all the other working stiffs.

When debt becomes due, we may be the first to line up to get paid.  But we are quickly shuffled to the back of the line.

When Warren Buffet invests in a company, he is usually issued preferred shares of a company, often times reaping unheard of dividends.  He is invited to the board meetings and very much has a say in how business is conducted.  This contrasts from how we working stiffs get to invest.  So, on that level, it’s not fair to think Warren Buffet is the poster child of all retail investors.

This is not to say where Buffet is today wasn’t from the bottom and without hard work.  He certainly wasn’t fed with a silver spoon and truly started by delivering newspapers.  And maybe that is why so many people aspire to be like him, where he came from is the same as the majority of us and we desire to be known as an Oracle.  And surely, someone will eventually rise to his level if they haven’t already.  And some will pick some winners and profit handsomely.  But, we shouldn’t be fooled into thinking we can follow in their footsteps.  More than likely, a stock picker’s success is in luck, although they may think it is skill.  And if it truly is skill, why would you tell everyone about it, as that will most likely ruin your success?

In conclusion, we’ll leave you with Warren Buffet’s own advice to the working stiff, retail investor like ourselves.  In Berkshire Hathaway’s 1996 annual report, the following was said in the Chairman’s Letter:

Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees. Those following this path are sure to beat the net results (after fees and expenses) delivered by the great majority of investment professionals.