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Archive for September, 2010

With all the investment opportunities available in the market, it is important to know what you’re getting into. Each type of investment has a number of risks and advantages.

There are several advantages to investing through an Investment Trust as opposed to investing directly into individual companies. Some of the main advantages are:

You are leveraging the expertise of professional investors that have specific knowledge in the companies, markets and sectors considered for investment You can invest a small or large amount of money in the one investment (the investment trust itself), and you’ll immediately get a diversified portfolio since the trust will put your money into a variety of companies It makes it easy for you to build a monthly savings plan, since you can set aside a regular amount of money on a monthly basis for making payments into your Investment Trust. Investment Trusts are closed end funds, meaning that there are a fixed number of shares in circulation. The benefit of this is that the underlying price of these shares is driven by supply and demand, and it is not uncommon for Investment Trusts to trade at a discount to their net asset value. Investors that do not have the time to actively manage their investments can get the benefits of a management team to do this work for them. It is important to carefully evaluate any Investment Trust. Contact experienced Investment Trusts, ask the right questions and be confident that you are investing your money through expert investors.

Planning for one’s financial well being is often thought to involve solely one’s investment portfolios. An investment portfolio for a “rainy day,” an investment portfolio for retirement (and then of course you may have a portfolio through your employer, one on your own, one from a previous employer, etc.) as well as your everyday emergency savings plan. However, there are other aspects to financial planning that are often overlooked, such as the matter of taxation, insurance, borrowing (credit) and estate planning. In many cases, we can overlook these other aspects because they often require “expert” advice from a tax accountant, an insurance broker, a bank or other lender, and an estate planner.

The area we want to look at today is life insurance. Specifically the two basic, different types of insurance that a regular individual and family should consider and why. This does not mean that other types of insurance, such as car insurance, house insurance, liability insurance, etc. are not important — often they are required by law — but life insurance is often seen as a discretionary type of protection, when in reality it is quite like the most important type of insurance of all.

Life Insurance exists as a way to protect your loved ones in the event that you should pass away. If you have balance insurance on your credit borrowings (like mortgage balance insurance or credit insurance on a line of credit, loan or credit card), life insurance serves just one purpose — to replace lost income.

In the event that you are looking to replace an individual’s financial contribution to the household, the general rule of thumb is to obtain insurance in the amount of seven to ten times that person’s annual income. For families with children, the greater amount should be chosen; families without children and much expenses can settle for the lower factor.

The seven to ten factor applies to both the primary and non-primary earners. It becomes a little complicated when the non-primary earner does is a homemaker because expenses will vary from one household to another. In such instances, obtaining quotes or guestimating costs on what it will cost to replace those efforts is mandatory and then adding a gross-up value to account for a pre-tax earnings value is important.

For families without creditor insurance, it becomes important to explore such options. In some cases, it could be cheaper to obtain creditor insurance, or it could work out better to add it to an existing life insurance policy.

A common question is whether or not creditor insurance combined with life insurance creates an instance of over-insurance which is essentially wasted money. In most cases, there is not an instance of over insurance, unless then seven to ten factor is not adhered to because credit insurance will pay out the balance only, not provide a net benefit.

If you are in the process of looking at starting or updating your financial plan, remember to consider your insurance needs. As an often-overlooked financial essential, this is one area where most people are most vulnerable financially and the people who suffer as a consequence are those that the individual loved the most to begin with.

Like all precious metals, silver is no different and can easily be used as an investment. For many centuries now, silver has been used as a common form of trading, and to store value. However, since silver has been taken off the silver standards, silver has lost its role as legal tender in the US, but continues to be traded as precious metal. Most investors only think about gold when discussing the topic of investing in precious metal, overlooking silver’s cornerstone position in our industrial sectors.

For those who have been following the precious metal trade, you will see that silver is notoriously volatile and can swing wildly between industrial and store of value demands. This causes wide ranging valuations in the markets, and thus creating volatility. Perhaps this serves as one of the reasons why investors stay away from this trade? However, let us look beyond the vitality and seek the main component that makes silver so attractive.

The main demand of silver lies in the industrial sector and caters mostly to the production of electronic goods such as household electrical appliances and medical products. Silver has also found its way into new applications such as batteries, superconductors and micro circuits, which may further drive the up the demand.

We cannot argue that the demand for silver will continue to rise in the industrial sector due to the fact that silver is heavily used in the production of electronic goods. More and more people worldwide are buying electronic goods at record speed, which far outpace the actual production and mining of this precious metal. Silver, like gold, is limited in supply, and so far, there is no close substitute to silver in the industrial sector. Silver is the most efficient metal used for conductivity, after gold.

The recent economic slowdown has caused drastic reduction in mining base metal, or which, silver is a bi-product. However, when inflation sets in, silver will be in a position where demand far exceeds supply. I think that investing in silver presents a long term arbitrage play against gold, and thus should be one of the major holding in any investor’s assets. Silver has become highly attractive in the last decade or so, and will continue to climb in prices as demand for the industrial sector grows. The fact that silver is still relatively lower priced than gold adds to another reason to buy.

Over the years, as technology has advanced, so has the cost of veterinary care. Vets today offer treatments such as MRIs, ultrasounds and CAT scans (no pun intended) that were unheard of just a few years ago. Heart surgery, kidney transplants, laser surgery and even chemotherapy are among the many viable options available to treat ill or injured pets. A veterinary bill can now run you thousands and thousands of dollars, making pet insurance more important than ever for US pet owners.

Pets also need more attention these days simply because they are living longer, a result of better preventative care, medicine, vitamins and food. In 1987, about 32 percent of the nation’s dogs were over the age of 6. Now, 44 percent have passed that threshold. As is the case with humans, pets’ bodies wear out the older they get, and they’re not just experiencing the typical aches and pains of old age. They are also developing chronic diseases, such as cancer and diabetes that require costly medical treatments.

Pet Insurance is not for everyone

Not all pet owners would benefit from pet insurance. One type of pet owner that would not benefit is someone who would put their pet to sleep instead of spending large amounts of money to save it.

Sometimes pet owners with pet insurance will end up paying more out of pocket than they would have had they just put those premiums into a savings account, but this is assuming your pet stays healthy for a long period of time. Pet owners that have the financial resources and discipline can insure their own pets by making monthly deposits into a savings account for future veterinary costs. This allows the owner to save money if their pet does not incur expensive medical bills during its lifetime, but is not recommended for most people.

Choosing the right pet insurance company

For most pet owners, pet insurance is the best way to protect themselves from financial hardship caused by a pet’s injury or sickness. The increased popularity in pet insurance has caused a surge in companies to enter the US market in recent years and each pet insurance company offers slightly different plans, making it difficult for pet owners to choose among the different plans.

In July 2008, Illinois Health Agents, an independent insurance agency, reviewed the most popular U.S. pet insurance plans from 12 different companies and ranked them on price, benefit schedule, network availability, and overall value. Surprisingly, the plan from Embrace Pet Insurance was best or tied for best in all five categories based on the following advantages:
1. Claims are based on the usual, customary and reasonable (UCR) method of reimbursement – not a benefit schedule. Most pet insurers pay claims based on a benefit schedule, which are determined by the insurance company and limit the amount of payout. UCR policies tend to deliver more generous payments since UCR takes into account variables such as increased pricing for emergency care and regional price differences. With Embrace the customer – not the insurer – chooses the annual maximum payout. This guarantees fewer surprises when seeking reimbursement. 2. They cover congenital and hereditary conditions. These can cost a lot to treat, and almost all companies exclude them. 3. They cover a chronic and recurring condition, which determines whether the plan will continue paying for treatment of a single illness over several years. Many companies will limit treatment of a single illness (like cancer) to a single year or per-incident claim limit, but Embrace will cover them for the duration of the illness and without a per-incident claim limit. 4. They have received excellent customer feedback. The popular, independent website petinsurancereview.com rated Embrace Pet Insurance the “Best U.S. Pet Insurance Company” for 2008.

Planning For The Cost of Funerals and Other Final Expenses

Most of us do not like to talk about this at all. But somewhere we may have experienced having to pay for a burial, funeral, and other final expenses. It is hard to get exact numbers, but it seems like the average US funeral can cost $8,000 or more today. That number will probably, like everything else, only get more expensive in the future. So how can families plan for this expense so that they do not have to add concerns over money to a sad time in their lives?

Savings - In an ideal world, everybody will just have cash to cover everything in an account. But many seniors, today, live on small incomes. They need their small income today to pay for a home, groceries, and some enjoyment. It would be very difficult, if not impossible, for them to try to save for a funeral.

The family may try to save the money, but again, they may have a hard time putting this money aside too. Grown children or grandchildren may not be in an economic position to be able to set aside the extra funds. Or if they do, it may be a hardship.

Credit – Lots of credit cards have very high interest rates. It is not unheard of for a family to put a funeral on a credit card. But by doing this, they often leave themselves with a bill they will be paying off for years. This is not an idea solution either.

Pre-Need Plans At Funeral Homes – Some funeral homes have plans that people can take out so they can pre-pay for the burial. These plans will cover expenses at the funeral home, but will not cover anything else. This may be one way to plan.

Final Expense or Burial Policies - These are smaller cash value life insurance policies that are marketed to people over 50. The prime intent of this coverage is to provide the cash to pay for final expenses. These expenses may be the cost of a burial, funeral, and other things that tend to crop up when a loved one passes away.

Many insurers market policies like these. You have probably seen ads for senior life insurance on TV, in a magazine, or on the web. They are designed to be affordable for many families, and they are also designed to be simple for older people to apply for.

How does this work? Well, it is a type of life insurance policy. Premiums are paid, and when the insured person passes away, the beneficiaries can collect a death benefit. The money can be used to pay for a burial, funeral, or other expenses. If there is any money left over, the beneficiary can use it in any way they want to use it. So the policy can provide some or all of the money to pay for final expenses. There can even be money left over. This is a flexible option, and that is why they are popular today.

When I managed national real estate and construction for the then ‘Tiffany’ of investment firms I learned from the CEO that should the 1932 Glass Steagall Banking Act ever be rescinded-it was certain that speculators would game the system and cause another Great Depression.

Wanting to know more I became licensed on all exchanges-and started paying close attention when derivatives were de-regulated in 1992. Gold at the time was $300. Today it’s over $1,000 with China, Russia, France and the UN calling for the USD to be removed as the reserve currency, a status that has long shored up our economy.

In 2003, Warren Buffet termed derivatives ‘financial weapons of mass destruction created by mad men’. At that time their ‘value’ stood at $9 trillion. Today, that number has reached $1.4 quadrillion and continues to expand geometrically.

Can you picture even $3 trillion? In stacked-up dollar bills it would reach from Earth to the Moon 238K miles away. If you’d spent a million dollars each day for 2,000 years ago–even that would ‘only’ amount to three-quarters of a trillion dollars!

A quadrillion is a thousand trillion. A trillion is a thousand billion. A billion is a thousand million. The relative scale of the world’s financial engines in relation to those $1.4 quadrillion derivatives follows in U.S. dollars:

1. The U.S. GDP is $14 trillion.
2. The Global GDP is $45 trillion.
3.Global real estate value is $65 trillion.
4. Global stock and bond markets are $74 trillion.
5. Global derivatives exceed all combined global wealth by 31 times.
6. The global population is 6.8 billion people. The derivatives market is equal to $206,000 USD per every person on the planet.

‘When I Ruled the World’:

The public is right to be angry at the US Big Banks that caused the meltdown: Citi, BofA, JP Morgan, Chase, Wells Fargo–and both sides of Congress that are in their pockets. The banks are still using customer deposits protected by FDIC insurance to speculate in derivatives, instead of lending to small business. They’ve not paid back taxpayer bailouts, and have rewarded themselves with billions in bonuses while raising customer fees.

It’s up to the people to stop feeding the monster banks. Check out the ‘Move Your Money’ online movement. Find out how to determine which local banks and credit unions are well managed, and stop supporting the big banks that are endangering us all, and are turning America into the Coldplay lyric ‘When I Ruled the World.’