A question out there for anyone who's reading. I've been reluctant to obtain my credit reports in the past because the Web sites always ask for a credit card number. The reports are free, so why do they need this? Anyone had any problems?
I have always kept my cars serviced at the exact same Broadway service location until up to recently. You have to book them weeks in advance because they are just so damn busy.
And in all that frenzy, the service guys just don't take the time and investigate the problems in depth. They always advise to replace the whole subsystem.
One time, I had the entire radiator replaced for 5 billion dollars (it seemed like it at the time). When the problem didn't go away, it was only then they discovered the problem was just a hose to the windshield fluid reservoir (a minor repair). They were apologetic and offered to fix the problem minus the labour cost. But still, I ended up paying for a whole new radiator which was unneeded. And that was not the only time this kinda thing happened to me at the same dealership.
So now, I take my business to independent mechnical shops that specialize in Europian makes. And to this date, I still haven't found one that I feel comfortable with. They are all overpriced for their level of competency, in my opinion.
I too agree that when it comes to choosing any insurance product, it pays to go with large well-established companies with a good payment history. I don't have any desire to pay a fly-by-night company that might close its doors when I need it the most!
Although the S&P 500 looks more diversified than the TSX, I notice that the biggest 50 companies make up 50% of the entire index which leaves the other half of it's capitalization spread across the other 450 companies.
I understand the concept of index funds. However I'm not yet sold on them as the magic bullet many claim they are.
6: Actively Monitor Your Account with the Help of Professional Support
401k accounts are self-managed. You are ultimately responsible for making every decision regarding the welfare, maintenance, and performance of the account.
Although you will be making the final decisions concerning your money, asking for professional guidance is a great way to learn about your options. When you contact your company's administrator be sure you are talking to a fee-based advisor and not a salesperson. Seek out an advisor who:
1. Is a Certified Financial Planner
2. Has been in the industry for 10 years
3. Is available to work with you in the future
4. Will take the time to review your big picture goals and prepare a financial plan that will help you attain them
A couple of things people should look deeply into are the illnesses documents and what binds the insurance policy to follow through with paying out claims.
Most insurance agents would probably gloss over the illnesses and exactly how one is determined. That section is the make or break on something like this. Is it determined by a standard battery of tests? Is it subjectively determined by some claims adjuster? Do they take your doctors word or send you to an independent medical exam for the insurance companies paid doctor to declare you fine? Some illnesses are hard to deny since there are definitive positive or negative tests. Others are more up to the entire body of medical findings and are fodder for a company to deny a claim simply to defend their bottom line.
What binds the insurer to pay your claim? Independently purchased policies are not covered under ERISA. This means you can sue them in court and also sue for damages. Insurance under ERISA takes away many consumer rights.
I would also look at the ratings of the company and statistics of how often they pay out claims. A company should have good record in the insurance industry, few lawsuits and a good record of paying a strong percentage of their claims.
People just assume that there will be a safety net if something bad happens. Many find out there not one the hard way. Employer sponsored disability can delay and deny for years leaving your with nothing. Falling back on social security disability can also take years to process and receive benefits. Having something else to fall back on is a rather good idea.
Do you have the Speech Synthezier or Hunt the Wumpus on your TI994A? How the heck do you use those little batteries to power it? Are you talking about the clock batter?
Bogle talks specifically about the US equities market. He compares the S&P 500 index to a total-market index and concludes that the reduced market coverage is more than made up for by the reduced cost of just dealing with a few hundred highly-liquid stocks. Because most major US companies do substantial business overseas, he doesn't think it's important to add an additional "international" component to the portfolio.
The Canadian investment market is small enough that it probably isn't adequately diversified all by itself. The S&P 500, though, isn't bad: The top five companies (ExxonMobil, General Electric, AT&T, Microsoft, Citigroup) are all in different industries and only add up to a little over 12% of the index. And the concentration tapers off fast--before you're through the top 20, the contribution of each company is under 1%. (See index component weights for details.)
The question of how you can get adequate diversification in a smaller, more concentrated equity market is a tough one. Once you move away from the index concept, you lose the big advantages of an index fund (low cost, guaranteeing your share of the total market return), so just saying, "Oh, it'll be like an index fund, only we'll avoid being overconcentrated in any particular company or industry," is no solution.
Bogle was the guy who founded Vanguard and who more-or-less invented the S&P 500 index fund. I'm not sure what advice he'd give to a Canadian investor, but I wouldn't be surprised if it amounted to, "Buy the S&P 500."
As an insurance agent for over 23 years (not always in sales) I am both a believer in the product and a hater of the industry. Like all industries, insurance companies need to make a profit in order to keep the lights on and pay their employees. Unfortunately this requires decisions that in turn affect people's lives.
This is a good article and well thought out about this type of insurance. CI insurance can often be added to a health insurance plan which is a good way to obtain it since buying a few small specific plans gets expensive since each has minimum fees attached.
In addition to insurance I am a big believer in taking care of your health. While genetics plays a role, it is a lot smaller role than we want to accept - lifestyle is the big contributor to the maladies we will experience in life, and how quickly our body heals and fights off these illnesses.
Who cares if a million dollars isn't what it used to be or whether you can life comfortably off of the 4 - 8% growth it may collect?
The point here is the mindset and behavior of people who successfully resist the deluge of advertising, social comparison, and other facators that drive many people to overextend, overconsume, undersave, and then pretend that everything will work out fine. The credit crunch due to subprime loans -- not all of which were made to lower income buyers -- seems partly to reflect this dynamic. More people I know than I care to count bought bigger places than they could afford (or rebuilt) with <5% down and with crazy ARMs (not to mention 40 year morts!) and then raced out to fill the driveway and such with import cars, flatscreens, and $2k washing machines. These are the same folks drowning in credit cards. Best of all, they then tried to pawn it off as their own acquired assets! Silly rabbits.
TMND is great, if only as validation that living frugally has many, many benefits.
If I may, I would like to play devils advocate. I have been hearing so much talk about index funds and do it yourself type investments.
I have some questions and I would love to hear your opinion.
Index funds are 100% equity, what does one do if they are not aggressive investors?
What if the index is not diversified?
I'm from Canada so I will speak about our major index the S&P TSX. In 2001, Nortel made up 36% of the index and even today, almost 50% of the TSX is made up of natural resources. I find that owning an index fund can give you the perception of diversification, by often that is not the case. Just as I would have had to been out of my mind to have 36% of all my holdings in Nortel in 2001, I would have to be equally insane to have almost half my holdings in natural resources today.
I'm assuming that these types of diversification issues would be likly the same with most indexes as huge conglomerates such as Wal-Mart and GE would make up large portions of any index.
Should I just forego diversification in the hopes for better returns?
One of the reasons I'm asking is because I had a friend back in 2000 that swore by index funds. He lost over 50% of his money within 2 short years.
I believe that the best way to find an advisor is to ask your friends or family who they use and if they would recommend him or her.
Ask them questions what they like or don't like about their advisor and then interview 2 or 3 of them to make sure that you feel comfortable.
Don't feel as if you are wasting their time. After all, you are bringing them business, not the other way around. Most advisors will look at your future potential, not just at your current assets.
What a cool Idea!
You can even set up a website, called puopleonline or something like thta and upload pictures of those people that were on the queue with their friends having fun!
Your profit would come from selling space on your high traffic website and also upselling and crosselling products.
I've been reading over the comments and while I know I'm intelligent enough to figure out basic finance for myself, I'd really rather not have to spend a lot of my free time researching what feels like a million and one different investment strategies out there. However, I really want to follow in the footsteps of those people who left comments saying they retired at the ripe old age of 31!
So this is my situation: I'm 22, just finished my BA and am in the process of starting a career in the non-profit field. I was lucky enough to graduate without any debt from school, but my net worth is pretty low. I've done basic financial planning in the past (paying my tuition, buying short-term CDs) but I still feel fairly intimidated by walking into a bank and trying to discuss finance with someone drastically older than me. Also, I need long term investments I can build on slowly - I don't have much to start out with, and I don't think I can afford to see someone who charges a flat fee.
Anybody got suggestions for us clueless college grads?! Thanks!
When I first moved to Austin, TX 7 years ago and went to transfer my driver's license, I was shocked to find out that thumb prints were required. I complained, but the clerk didn't seem to care.
Interesting. I think that first tip will be the most effective one. Unfortunately, I think we are beginning to get exhausted from merely trying to identify which one of our civil liberties to defend first. Good post.
Guest, you bring up a great point about living off the interest or yield of the million dollars. There are many a lottery winner who think that they can do just that, however very few succeed.
Here's the problem: You now have a million dollars, and decide to quit your job and live off the interest/yield of $80k (let's even use your calculations even though I agree they're a little steep in terms of expectation of return)
......Now you have the income, but nothing to do! So, what are you going to do to fill your time since you don't work 8 hours/day any more? Whatever it is, it will probably cost money, and possibly lots of it. Not only that, but with a million bucks burning a hole in your bank account, you might figure you can make a few extra purchases that you've always wanted to make, because - well -you're a millionaire! You can afford it, right?
(of course I'm not talking about you in particular - I'm using "you" in the larger sense)
And all of a sudden one thing turns to the next and you're running out of money. A million dollars really isn't that much any more. For some, I'm sure it is, but for most, it's a mis-conception that being a millionaire is truly being rich. It goes so much deeper than that!
But it's unlikely. If a candidate is NOT hired because of a federally protected issue or condition (race, Vietnam Veteran Era status), then they can file a complaint. But if they just hired the person they found the most interesting, there's probably not much you can do. Plus, it's really hard to prove.
A question out there for anyone who's reading. I've been reluctant to obtain my credit reports in the past because the Web sites always ask for a credit card number. The reports are free, so why do they need this? Anyone had any problems?
Not unexpected, actually.
It happens more often then you think.
I have always kept my cars serviced at the exact same Broadway service location until up to recently. You have to book them weeks in advance because they are just so damn busy.
And in all that frenzy, the service guys just don't take the time and investigate the problems in depth. They always advise to replace the whole subsystem.
One time, I had the entire radiator replaced for 5 billion dollars (it seemed like it at the time). When the problem didn't go away, it was only then they discovered the problem was just a hose to the windshield fluid reservoir (a minor repair). They were apologetic and offered to fix the problem minus the labour cost. But still, I ended up paying for a whole new radiator which was unneeded. And that was not the only time this kinda thing happened to me at the same dealership.
So now, I take my business to independent mechnical shops that specialize in Europian makes. And to this date, I still haven't found one that I feel comfortable with. They are all overpriced for their level of competency, in my opinion.
Amen, guest!
Great observations Lucille, thank you!
I too agree that when it comes to choosing any insurance product, it pays to go with large well-established companies with a good payment history. I don't have any desire to pay a fly-by-night company that might close its doors when I need it the most!
Honestly, who hasn't heard these tips if you've read more than one personal finance book or blog? The "latte factor" is overhyped.
I do love DDR and I don't want to be right. =)
Although the S&P 500 looks more diversified than the TSX, I notice that the biggest 50 companies make up 50% of the entire index which leaves the other half of it's capitalization spread across the other 450 companies.
I understand the concept of index funds. However I'm not yet sold on them as the magic bullet many claim they are.
Thanks for the response Philip.
Pasted below from nobosh: http://www.nobosh.com/Article/Top-7-Rules-for-401k-Success/698/
6: Actively Monitor Your Account with the Help of Professional Support
401k accounts are self-managed. You are ultimately responsible for making every decision regarding the welfare, maintenance, and performance of the account.
Although you will be making the final decisions concerning your money, asking for professional guidance is a great way to learn about your options. When you contact your company's administrator be sure you are talking to a fee-based advisor and not a salesperson. Seek out an advisor who:
1. Is a Certified Financial Planner
2. Has been in the industry for 10 years
3. Is available to work with you in the future
4. Will take the time to review your big picture goals and prepare a financial plan that will help you attain them
If you have any other questions try: http://answers.nobosh.com
A couple of things people should look deeply into are the illnesses documents and what binds the insurance policy to follow through with paying out claims.
Most insurance agents would probably gloss over the illnesses and exactly how one is determined. That section is the make or break on something like this. Is it determined by a standard battery of tests? Is it subjectively determined by some claims adjuster? Do they take your doctors word or send you to an independent medical exam for the insurance companies paid doctor to declare you fine? Some illnesses are hard to deny since there are definitive positive or negative tests. Others are more up to the entire body of medical findings and are fodder for a company to deny a claim simply to defend their bottom line.
What binds the insurer to pay your claim? Independently purchased policies are not covered under ERISA. This means you can sue them in court and also sue for damages. Insurance under ERISA takes away many consumer rights.
I would also look at the ratings of the company and statistics of how often they pay out claims. A company should have good record in the insurance industry, few lawsuits and a good record of paying a strong percentage of their claims.
People just assume that there will be a safety net if something bad happens. Many find out there not one the hard way. Employer sponsored disability can delay and deny for years leaving your with nothing. Falling back on social security disability can also take years to process and receive benefits. Having something else to fall back on is a rather good idea.
Do you have the Speech Synthezier or Hunt the Wumpus on your TI994A? How the heck do you use those little batteries to power it? Are you talking about the clock batter?
Bogle talks specifically about the US equities market. He compares the S&P 500 index to a total-market index and concludes that the reduced market coverage is more than made up for by the reduced cost of just dealing with a few hundred highly-liquid stocks. Because most major US companies do substantial business overseas, he doesn't think it's important to add an additional "international" component to the portfolio.
The Canadian investment market is small enough that it probably isn't adequately diversified all by itself. The S&P 500, though, isn't bad: The top five companies (ExxonMobil, General Electric, AT&T, Microsoft, Citigroup) are all in different industries and only add up to a little over 12% of the index. And the concentration tapers off fast--before you're through the top 20, the contribution of each company is under 1%. (See index component weights for details.)
The question of how you can get adequate diversification in a smaller, more concentrated equity market is a tough one. Once you move away from the index concept, you lose the big advantages of an index fund (low cost, guaranteeing your share of the total market return), so just saying, "Oh, it'll be like an index fund, only we'll avoid being overconcentrated in any particular company or industry," is no solution.
Bogle was the guy who founded Vanguard and who more-or-less invented the S&P 500 index fund. I'm not sure what advice he'd give to a Canadian investor, but I wouldn't be surprised if it amounted to, "Buy the S&P 500."
As an insurance agent for over 23 years (not always in sales) I am both a believer in the product and a hater of the industry. Like all industries, insurance companies need to make a profit in order to keep the lights on and pay their employees. Unfortunately this requires decisions that in turn affect people's lives.
This is a good article and well thought out about this type of insurance. CI insurance can often be added to a health insurance plan which is a good way to obtain it since buying a few small specific plans gets expensive since each has minimum fees attached.
In addition to insurance I am a big believer in taking care of your health. While genetics plays a role, it is a lot smaller role than we want to accept - lifestyle is the big contributor to the maladies we will experience in life, and how quickly our body heals and fights off these illnesses.
Steve
Life Coach
Insurance and Debt Elimination
www.insuranceisugly.com
www.LivingReal.com
Who cares if a million dollars isn't what it used to be or whether you can life comfortably off of the 4 - 8% growth it may collect?
The point here is the mindset and behavior of people who successfully resist the deluge of advertising, social comparison, and other facators that drive many people to overextend, overconsume, undersave, and then pretend that everything will work out fine. The credit crunch due to subprime loans -- not all of which were made to lower income buyers -- seems partly to reflect this dynamic. More people I know than I care to count bought bigger places than they could afford (or rebuilt) with <5% down and with crazy ARMs (not to mention 40 year morts!) and then raced out to fill the driveway and such with import cars, flatscreens, and $2k washing machines. These are the same folks drowning in credit cards. Best of all, they then tried to pawn it off as their own acquired assets! Silly rabbits.
TMND is great, if only as validation that living frugally has many, many benefits.
Thanks for the article Philip.
If I may, I would like to play devils advocate. I have been hearing so much talk about index funds and do it yourself type investments.
I have some questions and I would love to hear your opinion.
Index funds are 100% equity, what does one do if they are not aggressive investors?
What if the index is not diversified?
I'm from Canada so I will speak about our major index the S&P TSX. In 2001, Nortel made up 36% of the index and even today, almost 50% of the TSX is made up of natural resources. I find that owning an index fund can give you the perception of diversification, by often that is not the case. Just as I would have had to been out of my mind to have 36% of all my holdings in Nortel in 2001, I would have to be equally insane to have almost half my holdings in natural resources today.
I'm assuming that these types of diversification issues would be likly the same with most indexes as huge conglomerates such as Wal-Mart and GE would make up large portions of any index.
Should I just forego diversification in the hopes for better returns?
One of the reasons I'm asking is because I had a friend back in 2000 that swore by index funds. He lost over 50% of his money within 2 short years.
I don't think I've ever heard of this one Nora, and I am an insurance freak. I will definitely check it out.
Another couple of products we carry on ourselves are long term care insurance and hospital income insurance.
Thanks for the article.
I believe that the best way to find an advisor is to ask your friends or family who they use and if they would recommend him or her.
Ask them questions what they like or don't like about their advisor and then interview 2 or 3 of them to make sure that you feel comfortable.
Don't feel as if you are wasting their time. After all, you are bringing them business, not the other way around. Most advisors will look at your future potential, not just at your current assets.
What a cool Idea!
You can even set up a website, called puopleonline or something like thta and upload pictures of those people that were on the queue with their friends having fun!
Your profit would come from selling space on your high traffic website and also upselling and crosselling products.
cheers
Lucio Dias Ribeiro
MarketingEasy
I've been reading over the comments and while I know I'm intelligent enough to figure out basic finance for myself, I'd really rather not have to spend a lot of my free time researching what feels like a million and one different investment strategies out there. However, I really want to follow in the footsteps of those people who left comments saying they retired at the ripe old age of 31!
So this is my situation: I'm 22, just finished my BA and am in the process of starting a career in the non-profit field. I was lucky enough to graduate without any debt from school, but my net worth is pretty low. I've done basic financial planning in the past (paying my tuition, buying short-term CDs) but I still feel fairly intimidated by walking into a bank and trying to discuss finance with someone drastically older than me. Also, I need long term investments I can build on slowly - I don't have much to start out with, and I don't think I can afford to see someone who charges a flat fee.
Anybody got suggestions for us clueless college grads?! Thanks!
When I first moved to Austin, TX 7 years ago and went to transfer my driver's license, I was shocked to find out that thumb prints were required. I complained, but the clerk didn't seem to care.
more important guys.. where are the fish man?!
How fun! I could never do it, though, because I'd spend too much time chatting with the people in line instead of moving along.
Interesting. I think that first tip will be the most effective one. Unfortunately, I think we are beginning to get exhausted from merely trying to identify which one of our civil liberties to defend first. Good post.
Guest, you bring up a great point about living off the interest or yield of the million dollars. There are many a lottery winner who think that they can do just that, however very few succeed.
Here's the problem: You now have a million dollars, and decide to quit your job and live off the interest/yield of $80k (let's even use your calculations even though I agree they're a little steep in terms of expectation of return)
......Now you have the income, but nothing to do! So, what are you going to do to fill your time since you don't work 8 hours/day any more? Whatever it is, it will probably cost money, and possibly lots of it. Not only that, but with a million bucks burning a hole in your bank account, you might figure you can make a few extra purchases that you've always wanted to make, because - well -you're a millionaire! You can afford it, right?
(of course I'm not talking about you in particular - I'm using "you" in the larger sense)
And all of a sudden one thing turns to the next and you're running out of money. A million dollars really isn't that much any more. For some, I'm sure it is, but for most, it's a mis-conception that being a millionaire is truly being rich. It goes so much deeper than that!
Whoever you are, guest, I love you too! Glad you like the advice.
But it's unlikely. If a candidate is NOT hired because of a federally protected issue or condition (race, Vietnam Veteran Era status), then they can file a complaint. But if they just hired the person they found the most interesting, there's probably not much you can do. Plus, it's really hard to prove.