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Financial Advisory Briefs May, 2008 Presented by Legend Financial
Advisors, Inc.® |
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“BRIEFS” identifies a number of current
financial planning and investment market issues. For more information, you are invited to
contact our Director of Marketing Christopher J. Kail at (412) 635-9210,
Extension 230, to schedule a conference call with the advisor listed at the
bottom of each brief. You may also
reach us via E-mail at legend@legend-financial.com.
For more information on Legend
Financial Advisors, Inc.’s ® (Legend’s) award-winning financial
advisory team, please view their Professional Biographies by going to http://www.legend-financial.com/f_biographies.htm. |
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TABLE
OF CONTENTS 1.
Growing Older And Managed Care 3. Shopping
Around For Low Credit Card Interest 4. Just
The Facts Please: Life Insurance |
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GROWING OLDER AND MANAGED CARE It used to be that when a person qualified for Medicare they could forget about HMOs and PPOs that restricted a patient’s access to a doctor. Now the government is beginning to integrate managed care into their Medicare plans in order to control spiraling health costs. It is offered as a cheaper way to fill the gaps in government coverage. Before joining any managed care plan, it is necessary to compare coverages, costs and procedures because once a person joins, if they are unhappy their only option is to drop out of the plan. For more information, contact Legend’s Diane Pearson, CFP™, PPC™, CDFA™ at (412) 635-9210, ext. 120. Briefs: 05/08 – 1 |
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USING A 401(K) FOR A LOAN When
borrowing money, a person has several options. Often, there is a temptation to take money
out of a 401(k) to finance a vacation, car or house. However, it is best to adhere to a strict
hands-off policy when it comes to retirement money. Money taken out of a 401(k) only earns the
lending rate. It is unlikely that what the borrower receives on the loan will
make up for the return lost by not having the money invested as it normally
would be. There is also the chance of
a job change, which will result in the IRS asking for a quick repayment on
the loan. The safest bet is usually a
bank loan because a worse case scenario involves repossession, not losing a house
or retirement money. For more information, contact Legend’s Jim Holtzman, CFP™, CPA at (412) 635-9210, ext. 119. Briefs: 05/08 – 2 |
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SHOPPING AROUND FOR LOW CREDIT CARD INTEREST Lower
interest rates are good news for those people with credit card debt. Now it is possible in some cases to lower
interest rates by transferring a balance to a card with a lower rate. Many credit cards have variable-rates,
which means that it depends on the prime rate, but fixed-rate customers are
not as fortunate. The interest rate
they are charged is less responsive to the market and the average charge is
just over 14%. Before transferring a
balance, however, it is important to check how long the initial rate will
last, how much it can increase in the future, and if there is a large fee for
transferring a balance. For more information, contact
Legend’s Jim Holtzman, CFP™,
CPA at (412) 635-9210, ext. 119. Briefs: 05/08 – 3 |
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JUST THE
FACTS PLEASE: LIFE INSURANCE Contrary to
what may be expected, death isn’t what we fear most. It’s barely a respectable fourth, after
public speaking, divorce and torture.
Contemplating our ultimate demise is not a particularly pleasant
topic, although the complex process of life insurance must be completed. There are many different types of policies,
therefore it can be hard to choose which one is appropriate for each
circumstance. The ultimate decision usually
depends on how much coverage is needed, the associated cost, whether the
coverage period will be long or short term, what the insured’s income tax bracket is and what rate of
return to expect on other investments with a comparable level of risk. For more information, contact Legend’s Diane Pearson, CFP™, PPC™, CDFA™ at (412) 635-9210, ext. 120. Briefs: 05/08 – 4 |
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BETA
TESTING AN INVESTMENT PORTFOLIO If
investors follow the stock market, sooner or later, they will stumble across
modern portfolio theory (MPT).
Developed several decades ago, MPT transformed stock picking from an
art into something similar to a science. One virtue of MPT is that it quantifies how
securities behave in relation to each other and to the overall market. Why is beta important? And why does volatility matter? The matter has to do with risk and how much
one can tolerate. For more information, contact Legend’s Lou Stanasolovich, CFP™ at (412) 635-9210, ext. 221. Briefs: 05/08 – 5 |
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ANOTHER
SHOCK TO THE SYSTEM For
consumers already struggling from a declining economy, an over-priced stock
market, and falling interest rates on the bank deposits and money markets,
sharp health insurance hikes may have seemed almost anticlimactic. Yet the increases are so steep that almost
everyone feels the pain. Even worse,
for employers who pick up that tab for most of the nation’s health benefits,
it could be the push that shoves more of them toward radical solutions. To make health costs more predictable, many
large companies are considering a switch to “defined-contribution” plans,
such as HSAs and HRAs. There are benefits and disadvantages, so it
is important to be as educated as possible. For more information, contact
Legend’s Jim Holtzman,
CFP™, CPA at (412) 635-9210,
ext. 119. Briefs: 05/08 – 6 |
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The housing bubble market is
continually in the news. Homeowners
are trying to sell, and home prices in many parts of the country are
falling. This creates quite an
opportunity for buyers. Of course, in
a recession or at least during an economic slowdown, purchasing a new home
could be a bit dicey. Several factors
should be considered before deciding how much to spend on a home. Aside from the price, the age of the home,
the cost of fix-up and/or improvements, the size of the down payment,
interest rates, the length of the mortgage, and the cost of private mortgage
insurance ultimately affects one’s purchasing decision. For more information, contact
Legend’s Diane Pearson,
CFP™, PPC™, CDFA™ at (412) 635-9210, ext. 120. Briefs: 05/08 – 7 |
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During a bear market, it is wise to
invest assertively rather than aggressively.
Although a more aggressive portfolio may provide average annual return
relatively equal to that of a portfolio with slow, steady earnings over the
long run, the portfolio with less losses will provide a more consistent
performance as well as peace of mind. A
truly diversified portfolio is the key to lowering volatility, cutting losses
and steadying growth. Choosing a
variety of assets in which to broaden your investments can be the first step
to smoothing the path to every investor’s primary goal: making money consistently
over the long run. For more information, contact
Legend’s Lou Stanasolovich, CFP™ at (412)
635-9210, ext. 221. Briefs: 05/08 – 8 |
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NOT A
SURPRISE, PLANNING AHEAD CAN SAVE THOUSANDS One of the
largest breaks that taxpayers get is one that is often overlooked. The federal estate tax exemption of $2.0
million can be wasted if assets are not titled correctly. Also, if assets exceed the $2.0 million
amount set forth, they can be heavily taxed.
These problems can be bypassed through the use of trusts, joint
titling and a variety of other avenues.
However, careful planning is needed to optimize the results. For more
information, contact Legend’s Diane Pearson, CFP™, PPC™, CDFA™ at
(412) 635-9210, ext. 120. Briefs: 05/08 – 9 |
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