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Archive for February, 2011

Can disabled people get an early retirement pension? To be healthy and then suffer a disability that keeps you from doing everything you used to can break your heart and break your spirit. But most people to whom this unfortunate thing happens cannot afford to wallow in self-pity – there will be hospital bills to worry about, and then, the question: can disabled people get an early retirement pension?

To answer the question, “Can disabled people get an early retirement pension?” you have to take into account certain factors. The first is how long the person has worked in the organization. This can differ according to the state the person worked in and according to the company. The maximum limit that can be set on this is five hundred hours in the twenty four months prior to the date of disability or one thousand five hundred hours in the sixty months prior to the date of the disability.

There are some other factors that need to be considered while answering the question, “Can disabled people get an early retirement pension?” One is the extent of the disability. A person can only get an early retirement pension if he or she is completely and permanently disabled, with a mental or a physical impairment that keeps him or her from doing any kind of work in any employment. This has to be certified by the Social Security Organization. It must also certify that the person is not expected to recover and become employable.

So can disabled people get an early retirement pension if they can no longer function in the position they used to fill, but they are no eligible for social security disability benefits, because there still are some kinds of work that they can perform? Well, this is a question to which the answer, again, differs from state to state and from organization to organization. Some organizations, if the person fulfills the necessary stipulations, declares the person eligible for early retirement pension. Some others do not.

Once the person is declared eligible for the early retirement pension, he or she will be eligible to be paid the same amount that he or she would have been paid if he or she had retired at the normal retirement age – other early retirement stipulations do not apply.

However, if at any point the person stops being eligible for social security disability benefits, the person will stop receiving the pension.

Money Management is a primary concern for most people as they begin to think about the future. The thought wasn’t always there in the past regarding your retirement or even your next paycheck. With major corporations disappearing not only with your job but also with your pension, more people are concerned and should be.

There are many means of money management available. You can put all your extra cash in your pillow, you can put it in a box under the floorboards, you might even want to put it in a bank. If you put it in a bank, are you going to put it in a savings account, your checking account, a CD (certificate of deposit) or maybe a money market account. You might want to set up a brokerage account and trade stocks or have a managed fund account.

One of the best means of long-term money management is Real Estate investing. With Real Estate on a constant increase in value, a lot of experts agree that this is one of the best investment strategies. Within the Real Estate investment opportunities, there is an assortment of investment strategies. There are short term strategies such as flipping properties and long term strategies such as buying to rent and selling in 20-30 years to fund your retirement. I’ve heard of a couple that had 3 children and they heard that buying investment properties was a good way to be prepared for their children’s college fund. So they purchased 3 properties with nice homes on them. They took care of the properties for years without consideration of occupying them with renters during this time. Their entire intent was to resell at the time their children were going to college and using the proceeds to pay for their college education.

Before you start to invest, educate yourself. Investments in Real Estate can be costly. You do not want to throw your money away because of ignorance of prudent Real Estate investing decisions. Figure out what your investing goals are and what methods of investing will help you achieve these goals. Do you need to create short term income with your investing strategies or can all of your profits be considered long term. Can you put more into your investment or is it a one time lump investment. How much risk can you stand? Do you need strategies that are less risky. Are your funds limited and maybe you might be interested in investing in Real Estate Investment Trusts (REIT) through the stock market instead?

If you want ownership of the property and your funds are limited, you can look for deals with foreclosure properties. Sometimes you would have to put some work into a property so you need to be prepared. Make sure you can do the work yourself or you have someone that you can go to and you have a reasonable idea of the costs involved.

One of the investment strategies you may not hear of much but nevertheless it is a big investment strategy, is Tax Lien Investments. Basically, when taxes are not paid on a property, the county would assess a tax lien on that property. The Tax Lien is then put up for sale by the county. If you bid on the lien and are awarded the lien, then you would pay the county the amount of tax that is due. The property owner would then have to pay the back tax plus a penalty. This entire amount is then paid to you. Each state sets up the what the amount of the penalty is. In some states, it is 14%. In others, it is 25%. This figure varies from state to state. If the property owner doesn’t pay the back taxes and the penalties after 3 years, you can foreclose on the property. Tax Liens take precedence over most other liens.

Not everyone needs life insurance. The first thing to do is make sure you need it.
Life insurance is really meant for your family members or other dependents who rely
on your earnings.

Why You Buy Life Insurance

You buy life insurance so that, if you die, your dependents can live the same kind of
life they live now. Strictly speaking, then, life insurance is only a means of replacing
your earnings in your absence. If you don’t have dependents (say, because you’re
single) or you don’t have earnings (say, because you’re retired), you don’t need life
insurance. Note that children rarely need life insurance because they almost never
have dependents and other people don’t rely on their earnings.

Life Insurance Comes in Two Flavors

If you do need life insurance, you should know that it comes in two basic flavors:
term insurance and cash-value insurance (also called “whole life” insurance).
Ninety-nine times out of 100, what you want is term insurance.

Term Life is Simple to Buy and Understand

Term life insurance is simple, straightforward life insurance. You pay an annual
premium, and if you die, a lump sum is paid to your beneficiaries. Term life
insurance gets its name because you buy the insurance for a specific term, such as
5, 10, or 15 years (and sometimes longer). At the end of the term, you can renew
your policy or get a different one. The big benefits of term insurance are that it’s
cheap and it’s simple.

Cash Value is Trickier

The other flavor of life insurance is cash-value insurance. Many people are attracted
to cash-value insurance because it supposedly lets them keep some of the
premiums they pay over the years. After all, the reasoning goes, you pay for life
insurance for 20, 30, or 40 years, so you might as well get some of the money back.

With cash-value insurance, some of the premium money is kept in an account that
is yours to keep or borrow against. This sounds great. The only problem is that
cash-value insurance usually isn’t a very good investment, even if you hold the
policy for years and years. And it’s a terrible investment if you keep the policy for
only a year or two. What’s more, to really analyze a cash-value insurance policy, you
need to perform a very sophisticated financial analysis. And this is, in fact, the
major problem with cash-value life insurance.

While perhaps a handful of good cash-value insurance policies are available, many–
perhaps most–are terrible investments. And to tell the good from the bad, you
need a computer and the financial skills to perform something called discounted
cash-flow analysis. If you do think you need cash-value insurance, it probably
makes sense to have a financial planner perform this analysis for you. Obviously,
this financial planner should be a different person from the insurance agent selling
you the policy.

What’s the bottom line? Cash-value insurance is much too complex a financial
product for most people to deal with. Note, too, that any investment option that’s
tax-deductible–such as a 401(k), a 401(b), a deductible IRA, a SEP/IRA, or a Keogh
plan–is always a better investment than the investment portion of a cash-value
policy. For these two reasons, I strongly encourage you to simplify your financial
affairs and increase your net worth by sticking with tax-deductible investments.

If you do decide to follow my advice and choose a term life insurance policy, be sure
that your policy is non-cancelable and renewable. You want a policy that cannot be
canceled under any circumstances, including poor health. (You have no way of
knowing what your health will be like ten years from now.) And you want to be able
to renew the policy even if your health deteriorates. (You don’t want to go through a
medical review each time a term is up and you need to renew.)

For the purpose of this article I am defining high yield stocks as equities yielding 6% and above. This is an often shunned group by many advisors based on the concern that any equity paying a dividend or distribution in this range must be extremely risky. This is true in many cases, but often it is not true as certain equities generate this type of yield for a variety of reasons other than simply risk. Specifically, there are three types of high yield equities which are often misunderstood, but if one chooses carefully from the universe of these equities it is quite possible to generate higher yields for years. These equities are: Real Estate Investment Trusts (Including Mortgage Real Estate Investment Trusts), Master Limited Partnerships, and Business Development Companies; REITs, MREITs, MLPs, and BDCs respectively.

REITs & MREITs

REITs are companies that consolidate the capital of their investors to buy and manage income property. They frequently leverage the purchased property to borrow additional funds to purchase more property. MREITs do not buy physical property, rather they use investor funds to buy mortgages and often use the equity in those mortgages to borrow additional funds to purchase more mortgages. Leverage in both cases makes them subject to the vagaries of interest rates. In some cases they hedge against unfavorable movements in the interest rates to protect their positions. There are several advantages to REITS and MREITs over taking possession of real estate. As long as they pass 90% of their income along to shareholders they do not pay any corporate income tax.

The downside of this is that the stockholder is taxed on dividends at their regular tax rate and not at favorable standard dividend tax rates. This makes REITs and MREITs ideal for non-taxable accounts such as IRAs. Unlike traditional real estate investments, REITs and MREITs are very liquid and can be traded at a moment’s notice like any other stock. Additionally there is a wide variety of REITs and MREITs available in industrial, commercial, and residential categories including, but not limited to: apartments, single family homes, nursing homes, malls, hotels, prisons, and other types of properties. Unlike traditional real estate there is no minimum (other than an individual share price) and virtually anyone can buy them.

With the collapse of the Mortgage Market and subsequent rapid decline in the residential real estate market, followed by the drop in the commercial real estate that we saw during 2008 and the early part of 2009, REITs and MREITs of every kind were crushed. During the latter portion of 2009, as it appeared that the FED’s extraordinary action with TARP spending would rejuvenate the economy, both REITs and MREITs in general made a significant come back. Looking forward, as long as the FED extends the historic low interest rates, quality REITs and MREITs should enjoy an excellent environment for their business. However, when the FED indicates that it might start raising interest rates the favorable tide that has been coming in may change. Those who prepared for the FED changing its position will be best prepared to face the new interest rate environment.

MLPs

Master Limited Partnerships, generally referred to as MLPs, are partnerships open to the public where anyone can buy units through their broker exactly the same way that one buys stock. The best known MLPs are involved in natural gas pipelines, but there are a variety of MLPs in other areas including oil, gas, other basic materials and real estate. Like REITs, as long as they pass along most of their income (90% or more) to the unit holders, there is no corporate tax. MLPs make quarterly distributions which generally consist of two parts, a share of the income which is taxed at the unit holder’s regular tax bracket, and a return of investment which is not taxed until you sell the units. When you sell, your unit cost is reduced by the amount of principal that you have received thereby yielding a higher capital gain at the time of the sale.

Often advisors say that MLPs aren’t appropriate for IRAs due to a funky tax rule that treats the portion of the distribution that is considered Unrelated Business Tax Income, or UBTI (if it exceeds $1000), as subject to tax even in an IRA. In most individual accounts UBTI is a relatively small portion of the distribution, but if you have significant funds in an MLP, be sure to discuss the ramifications with your tax accountant. For the vast majority it is a moot point since the $1000 bar isn’t surpassed.

Like REITs, MLPs are very liquid and are traded through any broker just like stocks. This enables an individual investor to have ownership and enjoy distributions from huge operations that otherwise would be out of reach to the average person. Further, as discussed above, they offer significant tax advantages, and due to the tax free corporate status generally offer higher average yields. The disadvantages are the tax complications mentioned above.

This past year has shown substantial increases in share price for many MLPs. Looking forward, barring any unforeseen events, there is no reason to believe that the advantages that MLPs have shown in past won’t continue into the future. Like with REITs, there are all kinds of MLPs ranging in size, quality and value, and it is important to be sure that you find the right one that meets your investment criteria.

BDCs

Business Development Corporations were created as a vehicle for the average investor to invest in start-up and smaller companies similar to the way that partners in Venture Capital Firms invest in start-ups. Funded with investor money, BDCs invest in a wide range of companies making a “portfolio” of firms that are funded in a variety of ways including loans and purchase of equity. BDCs like REITs and MLPs are not taxed at the corporate level as long as they pass along 90% or more of their profits to their stock holders who then pay at their normal tax bracket.

The advantages that BDCs offer to the investor are that they provide an opportunity to invest in start-up and smaller operations that previously were only available to venture capitalists and private venture capital firms. The disadvantage is that their operations may not be as transparent as the investor would like and it is often difficult to tell exactly what is going on. BDCs generally pay higher dividends due to their tax advantaged status and for this reason can be an excellent position in an IRA.

As the economy improves and we move further away from the recession, it would appear that the environment should be good for business development. The markets seem to have anticipated this since spring and generally BDCs have done well. Barring a double dip recession or other unforeseen economic strife, the quality BDCs should continue to do well as we enter 2010.

In summary, the tax advantaged status of REITs, MREITs, MLPs and BDCs provides an opportunity for them to generate a greater than average yield. The improving economic conditions in the US, barring any unforeseen reversal, should be a good environment for these high yield, but often misunderstood entities, as we enter 2010. In each of these categories there is a range of investments from very little risk to very high risk, generally with yields appropriate to the level of risk. Be sure that you do your due diligence, and select equities that meet your own criteria and fit within your tolerance for risk.

Copyright 2009 Boyd Investment Holdings LLC. All rights reserved worldwide.

Small businesses that buy insurance alone pay more. Those they buy as a group pay less.

“Life isn’t fair” is a lesson that many mothers and fathers teach their children at an early age. It begins with the child’s earliest request for an explanation as to why they can’t stay up later or go outside to play with their friends.

As a small business owner you may ask yourself, “why is it fair that companies of my size, who are having the hardest time in this economy paying the highest insurance rates?”

Well, the truth is that life is not fair but that doesn’t mean that you are helpless and without opportunities to leverage are buying power if you are smart about how you go through the insurance quoting process. The key is to look for opportunities to join business insurance buying groups to put your insurance premiums up to a level that is competitive with that of the larger companies.

Insurance companies are no different than any business, yours included. The bigger the customer the more attention they get and the more demanding they can be with service and pricing requests. If a large group of your customers bid together into buying group, you would likely give them the same rates and terms that you had previously reserved for your largest clients.

The good news is that insurance buying groups have existed for a long time and continue to flourish. You can find business insurance buying groups for health insurance, auto insurance, property insurance, workers compensation insurance, liability insurance and just about any other coverage that you may need.

Getting access to insurance buying groups has often started with businesses joining their local Chamber of Commerce or looking into other small business associations in their region or state. This will involve some time searching for the insurance discount buying groups using your phonebook, word-of-mouth and of course, the Internet.

Innovations in insurance buying groups have been slow in coming, but there are new options created seemingly everyday. As you might expect, the Internet is increasingly becoming a valuable resource in locating new and innovative approaches to leveraging your buying power.

The time that you invest in finding and accessing business insurance buying groups can pay off in real dollar savings. Not looking into business insurance buying groups can save you time but may cost you a great deal in the end.

It is a good idea to obtain quotes from at least one business insurance buying group at each of your insurance quoting opportunities. You shouldn’t assume that your insurance agent will do this for you as many of the groups get additional savings by selling insurance directly.

Whether you find options through your trade association, the local Chamber of Commerce or any other resource you’ll be doing yourself, your employees and your customers all a favor by pursuing every option to lower your expenses. Don’t forget that your employees and customers are sharing in the pain of this bad economy.

House fires, burglaries, and damaging storms can occur at any time, and you could lose everything you own if you don’t have insurance. Here’s how to get low cost homeowners insurance coverage in West Virgina with a reliable company.

What does homeowners insurance cover?

A homeowners policy actually gives you four different types of coverage:

1. It pays to rebuild or repair your home after it’s been destroyed by or damaged.

2. It pays to replace your personal property such as furniture, clothing, appliances, and electronics.

3. It pays for court-awarded damages and your legal fees when someone hurts himself on your property and wins a lawsuit against you.

4. It pays for your hotel, motel, and restaurant bills when your house is being repaired and you need temporary living quarters.

How much Homeowners insurance do I need?

You should have enough coverage to rebuild your home if it’s destroyed. To find out how much this would be, ask a local builder or Realtor what the building cost per square foot is in your area, then multiply that figure by your home’s square footage.

How much personal property coverage do I need?

To find out how much personal property coverage you need, take an inventory of all your possessions. The total value of your possessions is the amount of coverage you should have.

Some expensive items like jewelry, works of art, and certain types of collections may not be fully covered. Check your policy to see how much coverage you have, then purchase additional coverage if you need it.

Does homeowners insurance protect me from flood damage?

Standard polices do not provide coverage for floods. If you live in a flood zone you can purchase federal flood insurance through your insurer.

How can I get low cost coverage in West Virginia?

The easiest way to get low cost homeowners insurance in West Virginia is to go to an insurance comparison website where you can get rate quotes from different companies in one place.