Before addressing specialized areas, I’d like to offer my thoughts on basic financial advice for do-it-yourselfers: Spend less than you earn Be an owner, not a loaner Commit to your service Locate yourself Adopt pay-as-you-go Protect against major threats Focus on relationships 1. Spend less than you earn. You want your life to point up rather Read more »
Lesson 27: Deciding Whether to Get Long-Term-Care Insurance
Ironically, while many people allow their lives to be exposed to the risk of an income-destroying disability, they are far more aware of a far less useful protection, long-term-care (LTC) insurance. It isn’t that the need for LTC is less likely than long-term disability. Almost by definition, the former is much more likely, since anyone Read more »
Lesson 25: How Much Life Insurance?
Once you’ve decided to obtain term life-insurance coverage to protect those dependent on you, you need to determine the amount of coverage needed. There are plenty of calculators online, but my quick-and-dirty approach is as follows: Determine the expected annual spending of those you’ll be leaving behind. A detailed analysis would be nice, but you Read more »
Lesson 24 – Life Insurance
We’ll begin our disaster-of-the-week sessions with the most straightforward: life insurance. A few principles will guide us: The purpose of insurance is to protect against financial losses you cannot afford to suffer. Insurance policies generally make lousy investments. This is as it should be, since we want the insurer to be financially healthy and able Read more »
Lesson 19 – Panic Insurance
The great investor, Warren Buffett, has said, “Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market.” Buffett’s Berkshire Hathaway holding company has endured such declines multiple times during its climb from $15 per share in 1965 when he took over the company to Read more »
Lesson 17 – What Insurance Is and Isn’t
Did you ever hear the story of the man who thought he had enough life insurance but died anyway? Apparently he didn’t quite understand the concept, and neither do most people. I’ve seen people insure packages worth $100 at the post office while not having any disability income protection. This is nuts! The purpose of Read more »