The Insurance Doctor

Category: Investments

  • Inflation rocks the nation!

    Inflation rocks the nation!

    No matter where you go these days, the bank, supermarket, or daycare to pick up the kids the number one topic of conversation in our nation is rampant inflation!  This is also a major problem across the world.

    As of the writing of this article, the G7 leaders are meeting in Bavaria, Germany to discuss “global inflation” and the war in Ukraine.  The G7 leaders are Joseph Biden (USA), Mario Draghi (Italy), Boris Johnson (United Kingdom), Fumio Kishida (Japan), Emmanuel Macron (France), Olaf Scholz (Germany), and Justin Trudeau (Canada).  They represent 7 of the richest economies in the world, which are all being affected by skyrocketing inflation. 

    As per Wikipedia, “Inflation is a general increase in the prices of goods and services in an economy.  When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reduction in the purchasing power of money.”

    My regular “Financial Wave” readers will remember that 2 weeks ago I covered “Inflation and Shrinkflation.” Shrinkflation is charging the same price for a smaller amount of goods.   A good example of this is Gatorade phasing out their 32-ounce bottles replacing them with a taller and thinner 28-ounce bottle while trying to make it look the same size.

    If you are not a business owner, the odds are good that you are on a fixed income or a fixed salary.  This means that the purchasing power of your money is eroding.  This is not a revelation, as you can see the noticeable difference every time you run errands at the supermarket, convenience store or at the gas pump! 

    The 2021 inflation rate was 7%.  The inflation rate for the 2nd quarter of 2022 is expected to be 8.4%!  The question for advisors is, “Is there anything we can do about this?”

    My answer is, yes, we can suggest investing in I-Bonds, also known as Inflation Bonds, backed by the U. S. Government!  The letter I stands for “Inflation Bonds,” which are specifically designed to fight inflation during these times. 

    You might not hear from your advisors about this because there are no commissions or fees to be made from selling I-bonds!

    My Lucky 7 Features and Benefits of I-Bonds:

    1. Definition: I-Bonds are savings bonds that earn interest based on combining a fixed interest rate and an inflation rate.  They are designed to earn a higher rate than the current inflation rate. 
    2. Security:  These bonds are secured by the U.S. government!
    3. Flexible Deposits:  You can deposit between $25 and $10,000 per year into an online treasury bond account.
    4. Online Accounts Only:  I-Bonds are ONLY purchased from the U.S. Treasury by internet online at www.TreasuryDirect.com
    5. Interest Rates Declared Twice Per Year: Every May 1st and November 1st, interest rates are declared, and your I-Bonds earn that declared and guaranteed interest rate for the next 6 months. 
    6. State Income Tax-Free:  I-Bond interest is protected by N.Y. State or your state of residence; hence, I-Bonds are state tax-free!
    7. Matures in 30 Years:  You can keep your money earning strong interest in your I-Bond account up to its maturity rate in 30 years.

    One of the reasons why I know so much about Inflation Bonds is because I purchased a significant amount of I-Bonds myself from the U.S. Treasury direct internet account this April.  This was after they announced the May 1st rates would be 7.11% from May 1st, 2022 to November 1st, 2022.

    A good advisor will ALWAYS look at the pros and cons when evaluating investment alternatives.  If you are looking to keep your I-Bond for over 5 years, there is NO drawback regarding liquidity.

    To explain, I will compare the withdrawal penalties/liquidity of I-Bonds vs. CDs, also known as Certificates of Deposit or Certificates of Disappointment in some circles.

    Year               I-Bonds                                 Bank 7-Year CD

    1                     Zero withdrawal 1-year interest penalty

    2-5                  3 mth interest penalty 1-year interest penalty

    6-7                  100% with no penalty 1-year interest penalty

    As you can see, as far as liquidity is concerned, I-Bonds compare favorably with bank CDs.  In case you were wondering, the current I-Bond interest rate is 9.62% which is guaranteed until the end of October 2022, before the rate changes again this November 1st!

    It is important to strategize with your advisors during these uncertain times of rampant inflation and a choppy stock market.  There are loopholes to being able to contribute more than that $10,000 per year from the treasury.  If you are interested in learning more, feel free to reach out to me at Rob@InsuranceDoctor.us.

  • 6 Tips to get your 2020 financial house in order

    6 Tips to get your 2020 financial house in order

    Now that we are in the first quarter of 2020 it’s easy to get off track from our goals.  Follow these 6 tips and with a little time and effort your 2020 finances will be more organized and less stressful.

    1. Organize your paperwork: It’s hard to feel in control when you can’t find anything.  Gather all papers, shred duplicates/old statements and put them all in a box or accordion file.
    2. Go Paperless:  I know habits are hard to break.  Wherever possible create electronic files.  See if you can receive e-bills instead of paper.  Use a flash or thumb drive as a back-up and keep it off-premises.
    3. Protect against identity theft: You can request a free copy of your credit report once per year from all 3 credit bureaus.  Go to www.AnnualCreditReport.com
    4. Put your finances on autopilot: Use EFT direct deposit for all checks, pension and social security received.  Set up automatic payments for recurring bills.  It’s easy and will save time going forward.
    5. Create your 2020 tax file: Most people have to scramble to pull together all tax forms etc.  Start now by setting up a 2020 file and stashing forms/receipts etc as needed.
    6. Review your insurance coverage:  Protect your nest egg and your family by regularly reviewing your life, health disability, and long term care insurance.  If this is confusing to you contact us for a 2nd opinion.

    Your financial house needs regular upkeep.  Putting in a little time and organization will decrease clutter and help you focus on your goals and objectives.

  • 6 Tips for your Financial New Year’s Resolution

    6 Tips for your Financial New Year’s Resolution

    Six out of ten American’s will make some type of financial-based new year’s resolution for 2020.  Usually, there’s a triggering event like receiving your December 2020 credit card bill or spousal pressure to name two.  Follow these tips;

    1. Consolidate Financial accounts: Close 1 or 2 existing financial accounts that you are not tracking or have insignificant monies in.  This will save brain space, reduce statement clutter and avoid paying unnecessary fees.
    2. Increase your 401k/employer retirement contributions: Raise your contributions at least another 1% per year minimum.  You won’t feel the difference however over time it can make a major impact when entering retirement.
    3. Develop a budget and/or expense statement: Review credit card, bank, and checkbook statements to get a handle on inflow and outflow of money.  Start using a program like quick books or if old school draft a budget by hand and hang it up where you can see it.  This can cause heavy emotional denial however better now than later.
    4. Set up a system to save systematic money:  Either something informal like putting the $20 you are saving in gas on fill-ups in a jar.  Formal ideas like buying a cash value life insurance policy or setting up an EFT through your bank account.
    5. Protecting your health saves your wealth: We all know about the escalating cost of health insurance and health care in general.  Renew that gym membership, yoga studio or dust off that treadmill in the garage. 
    6. Bring balance to your life: Take that vacation you have been putting off.  The rest and rejuvenation will impact your health.  Statistics show that one who works 46 weeks/year will out produce a 52 week/year worker.

    It will give you something to look forward to and forces one to be very productive before leaving and when returning home.  Use frequent flyer miles if need be.

    You will be amazed by how much better you will feel by following these 6 easy steps!

  • 5 Tips How to Find a Good Insurance Broker

    5 Tips How to Find a Good Insurance Broker

    Insurance brokers and agents are trusted with fitting their clients into suitable life, health, homeowners & business policies to name a few.

    There are numerous insurance providers and they are not all the same.  It’s important that the broker you choose is well-versed in policy differences from company to company and informed of the latest news, trends, and products. He/she also needs to be concerned with your personal planning needs and capable of explaining your options in a way you can understand.

    Follow these tips on what to look for in finding a right insurance broker or agent:

    TIP 1: Knowledge and experience:  There is no substitute for experience! Look for brokers that have been in their field for a minimum of 5 years.  Proficient brokers will usually also have advanced planning designations (insurance degrees) next to their names.  Look for at least one of the following 3 designations: CLU (chartered life underwriter) CFP (certified financial planner) or CSA (certified senior advisor).

    TIP 2: Independent brokers, not agents:  This may be counter-intuitive.  In reality, independent brokers are in a better position to help you than “captive agents”.  The independent broker represents numerous insurance companies and must be well-versed on all their policies in order to find the best one for you.  The captive agent (i.e. Allstate or New York Life) often promote their own company products first in order to qualify for their company-sponsored trips and subsidized health insurance.  Make sure your broker places your needs before their own!

    TIP 3: Fee structure:  Most of the established independent brokers don’t charge a fee for time and/or services.  They receive compensation from whichever insurance company you decide to do business with.  Beware of agents/planners and advisors that charge steep upfront consultation fees.

    TIP 4: Get a second opinion:  Most people are already working with an agent/broker.  Do yourself a favor and get a second opinion using the tips given in this article.  You will be surprised at what you can learn from a free consultation with an independent broker.

    TIP 5:  Due diligence:  Invest the time to call 2 or 3 brokers.  Start a small list and ask around.  Friends, family or colleagues that are satisfied with their broker are a good place to start.  Check for their presence and reviews on the internet and gather as much information as possible.

  • What is the Value of a Yankees Number?

    I was one of the privileged Yankee fans to be at the game last month where Derek Jeter’s #2 jersey was retired meaning no other Yankee will ever wear that number.

    insurance, New York, Queens, Forest Hills, financial planning, insurance doctor, YankeesJeter is the 19th Yankee to have a retired number and it’s the Yankees’ 18th different number retired (both Yogi Berra and Bill Dickey wore #8), the most in   Major League Baseball.  There are no more Yankee numbers available from 1-10.

    Jackie Robinson’s #42 is now retired from all MLB teams and there is lobbying to retire Roberto Clemente’s #21 from all teams as well.

    When Ricky Henderson joined the Toronto Blue Jays in 1993 he gave $25,000 to Turner Ward for his beloved #24.  In fact, I met Ricky in 2004 when he was playing at age 45 for the Newark Bears of the independent league.  His response to a 10 year old boy was “Ricky Henderson don’t sign no autographs”.

    When Brian Jordan joined the Atlanta Braves in 1999 he gave a $40,000 motorcycle to then 3rd base coach Fredi Gonzalez for #33.

    What happens when there’s no numbers left?

    Supply and demand dictate that jersey collectibles will become more rare hence driving prices up for retired jersey collectibles.

    It’s only a matter of time before they become a part of a well-diversified portfolio.

    It’s only a matter of time before they become a part of a well-diversified portfolio. Contact Rob today for your free consultation.