Benham and Associates Trusted Insurance Professionals:
Stock
High Risk
Art
Stamps
Gold/Precious Metals
Diamonds/Precious Stones
Uncovered Options/Currency
Hedging
General Partnerships, Penny Stock
Limited Partnerships- Real Estate, Oil,
Equipment Leasing
Non Diversified/Non Monitored Portfolios
of Sector & Junk Bond Mutual Funds
Rental Commercial/Residential Real Estate
Non Diversified Portfolios of Individual Issue-
Stocks and Bonds, Closed End Funds & REIT's
Covered Option Writing
Variable Annuities and Variable Life Insurance
Diversified & Monitored Stock & Bond Portfolios
Conservative & Monitored Portfolio of Mutual Funds
Money Market Savings Accounts and CD's
Home, Fixed Annuities, Whole & Universal Life Insurance
U.S. Government securities
Low Risk
Investment Pyramid
The above is a simple chart of Investment categories by risk and reward. It is in the shape of a pyramid. With Investments at the top of the pyramid an individual can expect the greatest returns but because of the risk associated with these investments an individual can also experience the greatest risk of loss. Volatility is the key. If you knew exactly when to invest in high risk areas and exactly when to sell, then you should experience the highest returns. Consequently, with the investments at the bottom of the pyramid you would expect low returns with little risk of loss of investment. The placement of investment vehicles on the pyramid is subjective and opinions as to their placement could vary.
Overview:
More aggressive portfolios (more stock) are usually recommended for those younger and/or single while more conservative (more bond) investments are generally recommended for retirees. This is not cast in stone and depends on many variables. Before you invest at any level you should first address a budget and your current and future needs.
The essence of this exercise is to emphasize the basic risk/reward parameters. You should not invest in the more risky ventures until/unless you have covered the less risky areas first. It should be clear, therefore, that one does not utilize gold, precious metals, uncovered option writing or the use of single issue securities until the more conservative issues have been addressed- such as having enough insurance for your family.
Fixed Annuities, Whole or Universal life insurance
These policies earn income on a tax deferred basis (possibly tax free with insurance policy loans) and are essentially risk free as regards to the guarantee which is based on claims paying ability of Insurer.
Mutual Funds
By definition, mutual funds are diversified (at least 13 stocks).
Diversified Individual stock and bond portfolios
The use of individual stocks and bonds is more risky if one attempts to do it themselves. These portfolios MUST be actively monitored.
Variable Annuities
Variable annuities are annuity contracts that shift investment risk to the contract holder. The contract owner can select from among a number of separate investment accounts. Variable products are subject to mortality and expense charges and administrative fees not typically found with other investments.
Variable Life Insurance
Variable life insurance is a life insurance policy that has fixed premiums and a minimum guaranteed death benefit. Investment risk is shifted to the policy owner. The policy owner is able to direct funds backing the policy into one or more of a group of segregated investment accounts made available by the life insurance company. Variable products are subject to mortality and expense charges and administrative fees not typically found with other investments.
Covered Option Writing
Security options - puts and calls - are negotiable instruments issued in bearer form that allow the holder to buy or sell a specified amount of a specified security at a specified price within a certain time period. The buyers of puts and calls are willing to invest their capital in return for the right to participate in the future performance of the underlying security, and to do so at low unit cost and limited exposure, however, it is possible to lose one's investment in options in a relatively short period of time. Some conservative investors use options with the objective to increase their income on shares they purchased. It is important to note that options are not suitable for all investors. There is limited upside potential when writing a covered call. For example, if the underlying security's price rises above the exercise price, the buyer will typically exercise the option and the writer will be forced to sell the underlying security.
Non diversified portfolios of stock or bonds
These generate a significant amount of unsystematic risk since the movement of a single stock can seriously erode the entire holdings.
Rental real estate
Singular ownership of real estate has provided many past investors substantial returns. However, investors must recognize the personal management involved in running such operations. Real estate is a non liquid asset and should be held for a long term for investors to achieve their investment goals, even then, there is no guarantee of a profit.
Closed End funds
These are similar to open ended managed mutual funds but are issued with a fixed capitalization. They are bought in the same method as stock. They tend to be sold at a discount to Net Asset Value. Unless their track history is considered, many investors could purchase these funds with incomplete knowledge and could suffer a substantial loss.
Sector mutual funds
These must have at least 25% of their portfolios invested in a particular area- health, communications, etc. And when too much is placed in a risk area, it usually is not ultimately beneficial to the investor who does not understand the risk.
Limited Partnerships
Prior to the tax law change of 1986, many partnerships did very well. The purchase of LIMITED amounts of partnerships was generally considered acceptable for middle income wage earners. However, with the recessionary economy many went into default. Some partnerships do continue to work and are even viable today, but the risk limits their use.
General partnerships, precious metals, etc.
These require a sophistication far in excess of the normal middle income wage earner. Far too much risk and far too much to go wrong. Individuals using such investments must have considerable wealth and a thorough understanding of risk, or be advised by a knowledgeable adviser. Investing in these areas could result in substantial loss.
Thursday, 12 May 2011
Benham and Associates Trusted Insurance Professionals
Benham and Associates Trusted Insurance Professionals
Retirement Planning
When planning for retirement you should fully fund the tax-deductible and tax-deferred savings plans that are available to you as an individual and through your employer. First on the list should be plans where the employer makes contributions and/or matches your contributions. Next should be any IRA’s that you qualify for. As you climb the investment pyramid, it becomes increasingly important to seek help from an expert.
Definitions
* Roth Accounts: Designated Roth contributions are elective contributions that, unlike pre-tax elective contributions, are currently includible in gross income. However, the investments grow tax free and earnings may be withdrawn tax free after age 59 1/2 as long as the account has been open 5 years, or if you are disabled or after death. See IRS Roth Account Brochure PDF.
* Simple Plans (simple IRA, simple 401k): Are plans for the small business owners with 100 or fewer employees with no other retirement plans in place. See Simple IRA or Simple 401(k)
The following is a summary of retirement plans:
* 401(k) - A section 401(k) plan is a type of tax-qualified deferred compensation plan for businesses in which an employee can elect to have the employer contribute a portion of his or her cash wages to the plan on a pre-tax basis. These deferred wages (commonly referred to as elective deferrals) are not subject to income tax withholding at the time of deferral, and they are not reflected on your Form 1040 since they were not included in the taxable wages on your Form W2. However, they are included as wages subject to social security, Medicare, and federal unemployment taxes.See 401(k)
o The maximum employee contribution for 2010 and 2011 is $16,500. The maximum Employee plus Employer contribution is the lesser of 25% of compensation or $49,000 for 2010 and 2011.
o The maximum compensation that can be considered for 2010 and 2011 is $245,000.
o Catch-up - if the employee is aged 50 and older, an additional 'catch-up' contribution is allowed. The additional contribution amount for 2010 and 2011 is $5,500.
o Withdrawals of contributions and earnings are subject to federal and most state income taxes.
* Simple 401(k) - A section Simple 401(k) plan is a type of tax-qualified deferred compensation plan for small businesses with less than 100 employees in which an employee can elect to have the employer contribute a portion of his or her cash wages to the plan on a pre-tax basis. These deferred wages (commonly referred to as elective deferrals) are not subject to income tax withholding at the time of deferral, and they are not reflected on your Form 1040 since they were not included in the taxable wages on your Form W2. However, they are included as wages subject to social security, Medicare, and federal unemployment taxes. Under a SIMPLE 401(k) Plan, an employee can elect to defer some compensation, but unlike a regular 401 (k) plan, the employer must make either a matching contribution up to 3% of each employee's pay, or a non-elective contribution of 2% of each eligible employee's pay. See Simple 401K
o The maximum employee contribution for 2010 and 2011 is $11,500.
o The maximum Employee plus Employer contribution is the lesser of 25% of compensation or $49,000 for 2010 and 2011.
o The maximum compensation that can be considered is $245,000 for 2010 and 2011.
o Catch-up - if the employee is aged 50 and older, an additional 'catch-up' contribution is allowed. The additional contribution amount for 2010 and 2011 is $2,500 (no Increase).
o Withdrawals of contributions and earnings are subject to federal and most state income taxes.
* Roth 401(k) - Business retirement account made with after tax dollars.
o The maximum employee contribution for 2010 and 2011 is $16,500.
o The maximum Employee plus Employer contribution is the lesser of 25% of compensation or $49,000 for 2010 and 2011. The maximum compensation that can be considered is $245,000 for 2010 and 2011.
o Catch-up - if the employee is aged 50 and older, an additional 'catch-up' contribution is allowed. The additional contribution amount for 2010 and 2011 is $5,500.
o The investments grow tax free and earnings may be withdrawn tax free after 59 ½ as long as the account has been open 5 years, or if you are disabled or after death. See IRS Roth Account Brochure PDF.
* 403(b) - is sponsored by tax-exempt institutions such as Public Schools, Colleges or Universities or Charitable entities tax-exempt under section 501(c)(3) of the Code. Basically, 403(b) plans are similar to 401(k) plans. Just as with a 401(k) plan, a 403(b) plan lets employees defer some of their salary. In this case, their deferred money goes to a 403(b) plan sponsored by the employer. This deferred money generally does not get taxed by the federal government or by most state governments until distributed.
o The maximum employee contribution is $16,500 for 2010 and 2011.
o The maximum Employee plus Employer contribution is the lesser of 100% of compensation or $49,000 for 2010 and 2011.
o The maximum compensation that can be considered is $245,000 for 2010 and 2011.
o There is also a 'lifetime catch-up provision' available only to employees with 15 or more years of service with a qualified organization. This provision may allow you to increase your salary deferral contributions above your basic salary deferral limit by up to $3,000 per year, up to a lifetime limit of $15,000. To qualify, you must be a long-term employee who has contributed on average less than $5,000 a year to your 403(b) plan. The 403(b) Lifetime Catch-up is called the '15-year rule' in IRS Publication 571. See IRS Publication 571.
* SEP-IRA - Under a SEP, the employer makes contributions to traditional IRAs (SEP-IRAs) set up for each eligible employee. A SEP is funded solely by employer contributions. Each employee is always 100% vested in (or, has ownership of) all money in his or her SEP-IRA. See IRS Publication.
o To establish a SEP
+ The business can be any size
+ Adopt Form 5305-SEP, a SEP prototype or an individually designed plan document.
+ Cannot have any other retirement plan (except another SEP) if the model Form 5305-SEP is used to establish the SEP.
o Total contributions to each employee's SEP-IRA cannot exceed the lesser of 25% of pay or $49,000 for 2010 and 2011.
* Simple-IRA - is a tax-deferred retirement plan provided by sole proprietors or small businesses (fewer than 100 employees) who do not maintain or contribute to any other retirement plan. See IRS Publication. If a SIMPLE IRA plan is adopted, employees can elect to defer part of their salary.Each employee is immediately 100% vested in (or 'owns') all contributions to his or her SIMPLE IRA. Contribution limits are:
o Employee - $11,500 for 2010 and 2011. If the employee is age 50 or over, a 'catch-up' contribution is also allowed. This additional catch-up contribution amount is: 2010 and 2011 - $2,500.
o Employer - Generally, a dollar-for-dollar match up to 3% of pay or a 2% non-elective contribution for each eligible employee.
* Keogh - A Keogh plan is a tax-deferred retirement plan designed to help self-employed workers or individuals who earn self-employed income establish a retirement savings program. There are two different types of Keogh plans, the Profit Sharing (see IRS Publication) and the Money Purchase plan (see IRS Publication). Under Keogh regulations, the Money Purchase contribution is mandatory; you must make the same percentage contribution each year, whether you have profits or not. The Profit Sharing contribution can change each year. Individuals can contribute to both types of plans in the same year.
o The contribution limits are the lesser of 25% of compensation or $49,000 for 2010 and 2011.
* Traditional IRA - Individual Retirement Account, is a tax-deferred investment and savings account that acts as a personal retirement fund for people with employment income. The maximum contribution is $5000 annually in 2010 and 2011 with an additional $1000 if over 50 years old. There are two primary types of IRAs: Regular and Spousal. Regular IRAs are designed for individuals with earned income, while Spousal IRAs are designed for married couples in which only one of the spouses has earned income. You have the option of investing in a wide variety of investments. (See IRS Publication 590).
For Regular and Spousal IRAs:
Your contribution is fully tax-deductible if:
o Neither you nor your spouse participated in a company-sponsored retirement plan.
o You contributed to a company-sponsored retirement plan: are single and earned less than $55,000 in 2010 and $56,000 in 2011 or married and filing jointly and had a joint income of less than $89,000 in 2010 and 2011.
Your contribution is partially tax-deductible if:
o You contributed to a company-sponsored retirement plan: are single and earned $55,000-$65,000 in 2010 and $56,000-$66,000 in 2011 or married and filing jointly and had a joint income of $89,000-$109,000 in 2010 and 2011.
Your contribution is not tax-deductible if:
o You contributed to a company-sponsored retirement plan: either single and earned more than $65,000 in 2010 and 2011 or married and filing jointly and had a joint income of more than $109,000 in 2010 and 2011.
* Roth IRA - is an individual retirement account with a maximum contribution of:
o For 2008 and beyond the maximum contribution is $5,000 with additional $1,000 contribution.
o Contributions to a Roth IRA are not tax-deductible. However, the investments grow tax free and earnings may be withdrawn tax free after 59 ½ as long as the account has been open 5 years.
o Eligibility for contributions to a Roth IRA is phased out for married couples filing jointly with an AGI between $166,000 and $176,000 for 2010 and $167,000 and $177,000 for 2011 and single individuals with an AGI between $105,000 and $120,000 for 2010 and 2011.
o See IRS Publication 590
To obtain a more detailed explanation of the various retirement plans, you can visit the IRS website at www.irs.gov.
Retirement Planning
When planning for retirement you should fully fund the tax-deductible and tax-deferred savings plans that are available to you as an individual and through your employer. First on the list should be plans where the employer makes contributions and/or matches your contributions. Next should be any IRA’s that you qualify for. As you climb the investment pyramid, it becomes increasingly important to seek help from an expert.
Definitions
* Roth Accounts: Designated Roth contributions are elective contributions that, unlike pre-tax elective contributions, are currently includible in gross income. However, the investments grow tax free and earnings may be withdrawn tax free after age 59 1/2 as long as the account has been open 5 years, or if you are disabled or after death. See IRS Roth Account Brochure PDF.
* Simple Plans (simple IRA, simple 401k): Are plans for the small business owners with 100 or fewer employees with no other retirement plans in place. See Simple IRA or Simple 401(k)
The following is a summary of retirement plans:
* 401(k) - A section 401(k) plan is a type of tax-qualified deferred compensation plan for businesses in which an employee can elect to have the employer contribute a portion of his or her cash wages to the plan on a pre-tax basis. These deferred wages (commonly referred to as elective deferrals) are not subject to income tax withholding at the time of deferral, and they are not reflected on your Form 1040 since they were not included in the taxable wages on your Form W2. However, they are included as wages subject to social security, Medicare, and federal unemployment taxes.See 401(k)
o The maximum employee contribution for 2010 and 2011 is $16,500. The maximum Employee plus Employer contribution is the lesser of 25% of compensation or $49,000 for 2010 and 2011.
o The maximum compensation that can be considered for 2010 and 2011 is $245,000.
o Catch-up - if the employee is aged 50 and older, an additional 'catch-up' contribution is allowed. The additional contribution amount for 2010 and 2011 is $5,500.
o Withdrawals of contributions and earnings are subject to federal and most state income taxes.
* Simple 401(k) - A section Simple 401(k) plan is a type of tax-qualified deferred compensation plan for small businesses with less than 100 employees in which an employee can elect to have the employer contribute a portion of his or her cash wages to the plan on a pre-tax basis. These deferred wages (commonly referred to as elective deferrals) are not subject to income tax withholding at the time of deferral, and they are not reflected on your Form 1040 since they were not included in the taxable wages on your Form W2. However, they are included as wages subject to social security, Medicare, and federal unemployment taxes. Under a SIMPLE 401(k) Plan, an employee can elect to defer some compensation, but unlike a regular 401 (k) plan, the employer must make either a matching contribution up to 3% of each employee's pay, or a non-elective contribution of 2% of each eligible employee's pay. See Simple 401K
o The maximum employee contribution for 2010 and 2011 is $11,500.
o The maximum Employee plus Employer contribution is the lesser of 25% of compensation or $49,000 for 2010 and 2011.
o The maximum compensation that can be considered is $245,000 for 2010 and 2011.
o Catch-up - if the employee is aged 50 and older, an additional 'catch-up' contribution is allowed. The additional contribution amount for 2010 and 2011 is $2,500 (no Increase).
o Withdrawals of contributions and earnings are subject to federal and most state income taxes.
* Roth 401(k) - Business retirement account made with after tax dollars.
o The maximum employee contribution for 2010 and 2011 is $16,500.
o The maximum Employee plus Employer contribution is the lesser of 25% of compensation or $49,000 for 2010 and 2011. The maximum compensation that can be considered is $245,000 for 2010 and 2011.
o Catch-up - if the employee is aged 50 and older, an additional 'catch-up' contribution is allowed. The additional contribution amount for 2010 and 2011 is $5,500.
o The investments grow tax free and earnings may be withdrawn tax free after 59 ½ as long as the account has been open 5 years, or if you are disabled or after death. See IRS Roth Account Brochure PDF.
* 403(b) - is sponsored by tax-exempt institutions such as Public Schools, Colleges or Universities or Charitable entities tax-exempt under section 501(c)(3) of the Code. Basically, 403(b) plans are similar to 401(k) plans. Just as with a 401(k) plan, a 403(b) plan lets employees defer some of their salary. In this case, their deferred money goes to a 403(b) plan sponsored by the employer. This deferred money generally does not get taxed by the federal government or by most state governments until distributed.
o The maximum employee contribution is $16,500 for 2010 and 2011.
o The maximum Employee plus Employer contribution is the lesser of 100% of compensation or $49,000 for 2010 and 2011.
o The maximum compensation that can be considered is $245,000 for 2010 and 2011.
o There is also a 'lifetime catch-up provision' available only to employees with 15 or more years of service with a qualified organization. This provision may allow you to increase your salary deferral contributions above your basic salary deferral limit by up to $3,000 per year, up to a lifetime limit of $15,000. To qualify, you must be a long-term employee who has contributed on average less than $5,000 a year to your 403(b) plan. The 403(b) Lifetime Catch-up is called the '15-year rule' in IRS Publication 571. See IRS Publication 571.
* SEP-IRA - Under a SEP, the employer makes contributions to traditional IRAs (SEP-IRAs) set up for each eligible employee. A SEP is funded solely by employer contributions. Each employee is always 100% vested in (or, has ownership of) all money in his or her SEP-IRA. See IRS Publication.
o To establish a SEP
+ The business can be any size
+ Adopt Form 5305-SEP, a SEP prototype or an individually designed plan document.
+ Cannot have any other retirement plan (except another SEP) if the model Form 5305-SEP is used to establish the SEP.
o Total contributions to each employee's SEP-IRA cannot exceed the lesser of 25% of pay or $49,000 for 2010 and 2011.
* Simple-IRA - is a tax-deferred retirement plan provided by sole proprietors or small businesses (fewer than 100 employees) who do not maintain or contribute to any other retirement plan. See IRS Publication. If a SIMPLE IRA plan is adopted, employees can elect to defer part of their salary.Each employee is immediately 100% vested in (or 'owns') all contributions to his or her SIMPLE IRA. Contribution limits are:
o Employee - $11,500 for 2010 and 2011. If the employee is age 50 or over, a 'catch-up' contribution is also allowed. This additional catch-up contribution amount is: 2010 and 2011 - $2,500.
o Employer - Generally, a dollar-for-dollar match up to 3% of pay or a 2% non-elective contribution for each eligible employee.
* Keogh - A Keogh plan is a tax-deferred retirement plan designed to help self-employed workers or individuals who earn self-employed income establish a retirement savings program. There are two different types of Keogh plans, the Profit Sharing (see IRS Publication) and the Money Purchase plan (see IRS Publication). Under Keogh regulations, the Money Purchase contribution is mandatory; you must make the same percentage contribution each year, whether you have profits or not. The Profit Sharing contribution can change each year. Individuals can contribute to both types of plans in the same year.
o The contribution limits are the lesser of 25% of compensation or $49,000 for 2010 and 2011.
* Traditional IRA - Individual Retirement Account, is a tax-deferred investment and savings account that acts as a personal retirement fund for people with employment income. The maximum contribution is $5000 annually in 2010 and 2011 with an additional $1000 if over 50 years old. There are two primary types of IRAs: Regular and Spousal. Regular IRAs are designed for individuals with earned income, while Spousal IRAs are designed for married couples in which only one of the spouses has earned income. You have the option of investing in a wide variety of investments. (See IRS Publication 590).
For Regular and Spousal IRAs:
Your contribution is fully tax-deductible if:
o Neither you nor your spouse participated in a company-sponsored retirement plan.
o You contributed to a company-sponsored retirement plan: are single and earned less than $55,000 in 2010 and $56,000 in 2011 or married and filing jointly and had a joint income of less than $89,000 in 2010 and 2011.
Your contribution is partially tax-deductible if:
o You contributed to a company-sponsored retirement plan: are single and earned $55,000-$65,000 in 2010 and $56,000-$66,000 in 2011 or married and filing jointly and had a joint income of $89,000-$109,000 in 2010 and 2011.
Your contribution is not tax-deductible if:
o You contributed to a company-sponsored retirement plan: either single and earned more than $65,000 in 2010 and 2011 or married and filing jointly and had a joint income of more than $109,000 in 2010 and 2011.
* Roth IRA - is an individual retirement account with a maximum contribution of:
o For 2008 and beyond the maximum contribution is $5,000 with additional $1,000 contribution.
o Contributions to a Roth IRA are not tax-deductible. However, the investments grow tax free and earnings may be withdrawn tax free after 59 ½ as long as the account has been open 5 years.
o Eligibility for contributions to a Roth IRA is phased out for married couples filing jointly with an AGI between $166,000 and $176,000 for 2010 and $167,000 and $177,000 for 2011 and single individuals with an AGI between $105,000 and $120,000 for 2010 and 2011.
o See IRS Publication 590
To obtain a more detailed explanation of the various retirement plans, you can visit the IRS website at www.irs.gov.
Proper Planning
The foundation for investing starts with proper financial planning; setting goals, establishing a budget, gathering financial records and knowing your net worth. The financial planning process starts with gathering information. For the financial planner to do his or her job, that person must know your present financial structure, your goals and risk tolerance. The more knowledge that can be obtained the better the financial planner can do his or her job. It is suggested you print and complete the client questionnaire then fax or mail it to our office. Your information will be kept confidential and never be given or sold to any other company or individual. The next step involves helping the client answer the following:
- What is the approximate time frame I am willing to keep my funds invested to achieve my investment objectives?
- What current income do I need to obtain from my investments?
- What future cash needs am I likely to have?
- Are there any tax or legal issues that I need to consider for the portfolio's holdings?
- Am I a conservative investor or an aggressive one?
- How much volatility am I willing to accept in my portfolio to try to earn a higher return?
Only after the client has addressed these questions, and has a clear understanding of investment needs and goals can the financial planner begin to determine the appropriate asset mix and identify the right mutual funds, stocks, bonds and money market funds.
Usually a good starting point is to take advantage of any retirement plans that are available to you.
http://www.leebenhamassociates.com/
Sunday, 17 April 2011
Benham and Associates Trusted Insurance Professionals
Benham and Associates Trusted Insurance Professionals
Disability Statistics
Disability can happen to anyone, it's more common than you think.
*
There are over 51 million Americans that are classified as disabled, representing 18 percent of the population.
U.S. Census Bureau, Public Information Office, November 2008
*
A disabling injury occurs every 1 second in the U.S., and a fatal injury occuring every 4 minutes.
National Safety Council, Injury Facts 2008 Ed.
*
Three in 10 workers entering the work force today will become disabled before retiring.
Social Security Administration, Fact Sheet January 31, 2007
*
Over 6.8 million workers are receiving Social Security Disability benefits, almost half are under age 50.
Social Security Administration, Fact Sheet January 31, 2007
*
While many people think that disabilities are typically caused by freak accidents, the majority of long-term absences are due to back injuries and illnesses, such as cancer and heart disease.
Council for Disability Awareness, Long-Term Disability Claims Review, 2007
*
498 Americans became disabled in the last 10 minutes .
National Safety Council, Injury Facts 2008 Ed.
Disability often keeps people out of work:
*
An illness or accident will keep 1 in 5 workers out of work for at least a year before the age of 65.
Life and Health Insurance Foundation for Education, November 2005
*
One in 7 workers can expect to be disabled for five years or more before retirement.
'Commissioners Disability Table, 1998,' Health Insurance Association of America, the New York Times, February 2000
*
The average long-term disability absence lasts 2.5 years.
Commissioner’s Individual Disability Table A
Disability can cause financial hardship:
*
71% of American employees live from paycheck to paycheck.
American Payroll Association, 'Getting Paid in America' Survey, 2008
*
Unexpected illnesses and injuries cause 350,000 personal bankruptcies each year.
'Illness and Injury as Contributors to Bankruptcy,' Health Affairs, February 2, 2005
*
Disability causes nearly 50% of all mortgage foreclosures, 2% are caused by death.
Health Affairs, The Policy Journal of the Health Sphere, 2 February 2005
*
Most American workers can't afford to become disabled:Over 70% of working Americans do not have enough savings to meet short-term emergencies.
National Investment Watch Survey, A.G. Edwards Inc. 2004
*
According to the Federal Reserve, 44% of U.S. families spend more than they earn.
Federal Reserve Board, Survey of Consumer Finances 2004
*
For the average American household, the savings rate is negative, the lowest since 1933, and credit card debt is at an all-time high - $9,300.
Parade Magazine, Is the American Dream Still Possible?, April 23, 2006
*
Over 50% of the workforce has no private pension coverage and a third have no retirement savings.
Social Security Administration, Fact Sheet 2007
Social Security and Workers' Compensation may not be adequate:
*
Close to 90% of disabling accidents and illnesses are not work related.
National Safety Council, Injury Facts 2008 Ed.
*
The average monthly Social Security Disability Insurance (SSDI) benefit is $1,062.
Social Security Administration, Fact Sheet 2009
*
Less than half - 39% - of the 2.1 million workers who applied for SSDI benefits in 2005 were approved.
Social Security Administration, Office of Disability and Income Security Programs
Most American workers are not covered by disability insurance:
*
Over 100 million workers do not have private disability income insurance.
Council for Disability Awareness, Long Term Disability Claims Review, 2005
*
70% of the private sector workforce has no long-term disability insurance.
Social Security Administration, Fact Sheet January 31, 2007
Disability is a real and growing risk and is widespread in the United States. Learn what you can do to reduce your chances of disability.
Disability Statistics
Disability can happen to anyone, it's more common than you think.
*
There are over 51 million Americans that are classified as disabled, representing 18 percent of the population.
U.S. Census Bureau, Public Information Office, November 2008
*
A disabling injury occurs every 1 second in the U.S., and a fatal injury occuring every 4 minutes.
National Safety Council, Injury Facts 2008 Ed.
*
Three in 10 workers entering the work force today will become disabled before retiring.
Social Security Administration, Fact Sheet January 31, 2007
*
Over 6.8 million workers are receiving Social Security Disability benefits, almost half are under age 50.
Social Security Administration, Fact Sheet January 31, 2007
*
While many people think that disabilities are typically caused by freak accidents, the majority of long-term absences are due to back injuries and illnesses, such as cancer and heart disease.
Council for Disability Awareness, Long-Term Disability Claims Review, 2007
*
498 Americans became disabled in the last 10 minutes .
National Safety Council, Injury Facts 2008 Ed.
Disability often keeps people out of work:
*
An illness or accident will keep 1 in 5 workers out of work for at least a year before the age of 65.
Life and Health Insurance Foundation for Education, November 2005
*
One in 7 workers can expect to be disabled for five years or more before retirement.
'Commissioners Disability Table, 1998,' Health Insurance Association of America, the New York Times, February 2000
*
The average long-term disability absence lasts 2.5 years.
Commissioner’s Individual Disability Table A
Disability can cause financial hardship:
*
71% of American employees live from paycheck to paycheck.
American Payroll Association, 'Getting Paid in America' Survey, 2008
*
Unexpected illnesses and injuries cause 350,000 personal bankruptcies each year.
'Illness and Injury as Contributors to Bankruptcy,' Health Affairs, February 2, 2005
*
Disability causes nearly 50% of all mortgage foreclosures, 2% are caused by death.
Health Affairs, The Policy Journal of the Health Sphere, 2 February 2005
*
Most American workers can't afford to become disabled:Over 70% of working Americans do not have enough savings to meet short-term emergencies.
National Investment Watch Survey, A.G. Edwards Inc. 2004
*
According to the Federal Reserve, 44% of U.S. families spend more than they earn.
Federal Reserve Board, Survey of Consumer Finances 2004
*
For the average American household, the savings rate is negative, the lowest since 1933, and credit card debt is at an all-time high - $9,300.
Parade Magazine, Is the American Dream Still Possible?, April 23, 2006
*
Over 50% of the workforce has no private pension coverage and a third have no retirement savings.
Social Security Administration, Fact Sheet 2007
Social Security and Workers' Compensation may not be adequate:
*
Close to 90% of disabling accidents and illnesses are not work related.
National Safety Council, Injury Facts 2008 Ed.
*
The average monthly Social Security Disability Insurance (SSDI) benefit is $1,062.
Social Security Administration, Fact Sheet 2009
*
Less than half - 39% - of the 2.1 million workers who applied for SSDI benefits in 2005 were approved.
Social Security Administration, Office of Disability and Income Security Programs
Most American workers are not covered by disability insurance:
*
Over 100 million workers do not have private disability income insurance.
Council for Disability Awareness, Long Term Disability Claims Review, 2005
*
70% of the private sector workforce has no long-term disability insurance.
Social Security Administration, Fact Sheet January 31, 2007
Disability is a real and growing risk and is widespread in the United States. Learn what you can do to reduce your chances of disability.
Benham and Associates Trusted Insurance Professionals
Benham and Associates Trusted Insurance Professionals
Disability Guides
Disability Insurance Guide
Disability Income Insurance Guide
This guide explains the likelihood of disability, the financial risk it poses, potential sources of disability income,disability income insurance, and what disability income insurance covers. It includes a checklist of policy features you can use to compare disability income insurance policies. This information will help you make an informed decision about whether you need individual disability income insurance and, if so, what features are most important to you.
Although frequently revised, this guide includes information that is subject to changing federal and state law. AHIP provides this booklet for guidance only. It is not a substitute for the advice of licensed insurance professionals or legal counsel.
A Missing Piece in the Financial Security Puzzle
'Disability Insurance: A Missing Piece in the Financial Security Puzzle'
This 38 page chart book research guide is intended to provide general information about your likelihood of disability and what could happen with your personal finances if you become disabled. It was prepared by America?s Health Insurance Plans (AHIP) and The Society of Actuaries.
Disability Guides
Disability Insurance Guide
Disability Income Insurance Guide
This guide explains the likelihood of disability, the financial risk it poses, potential sources of disability income,disability income insurance, and what disability income insurance covers. It includes a checklist of policy features you can use to compare disability income insurance policies. This information will help you make an informed decision about whether you need individual disability income insurance and, if so, what features are most important to you.
Although frequently revised, this guide includes information that is subject to changing federal and state law. AHIP provides this booklet for guidance only. It is not a substitute for the advice of licensed insurance professionals or legal counsel.
A Missing Piece in the Financial Security Puzzle
'Disability Insurance: A Missing Piece in the Financial Security Puzzle'
This 38 page chart book research guide is intended to provide general information about your likelihood of disability and what could happen with your personal finances if you become disabled. It was prepared by America?s Health Insurance Plans (AHIP) and The Society of Actuaries.
Benham and Associates Trusted Insurance Professionals
Benham and Associates Trusted Insurance Professionals
Investing In Stocks
Generally, stocks are divided among various categories. At the top are the stocks issued by large, well-established companies, often called blue chip or large-capitalization (large cap) stocks. Below are stocks issued by smaller companies, often divided by their size or market capitalization into mid-cap and small-cap stocks. Growth stocks are those with the potential to grow quickly in both revenues and profitability, but perhaps without the proven track record more established companies have. Some may be large and even market-leading companies in their industries, but with plans to dramatically expand their businesses. Value stocks are those that analysts feel are selling for less than the company is really worth.
Stocks can also be divided into domestic stocks (those issued by U.S. companies) and international stocks. You can also divide your money among various sectors of the market, such as technology, communication, healthcare, energy, financial services, consumer goods and basic materials, each of which may respond differently to economic changes.
Risk vs. Return for Stocks
Over the short term, investing in the stock market can pose quite a risk. After all, the market's history includes such events as the Crash of 1929 and the Depression that followed, the bear market of 1972 through 1974, and the tumble of October 1987. More recently, we saw steep but mainly temporary declines from July through October 1998, plus the housing crisis and stock market decline in 2008. Individual stocks face risks as well. A company, because of poor business conditions or poor management, could become unable to make dividend payments. Or it could fail, leaving your stock worthless. The stock market can also be volatile, fluctuating because of events happening overseas, rumors of economic changes, or a key investment advisor's pronouncement that the market, some segment of it or a particular stock is overvalued.
Over the long term, however, stocks generally earn higher and more positive returns than other financial investment. These higher returns often help offset the risks of investing in stocks.
Stocks can yield two types of return: capital return and income return. Capital return is when the market price of your investment -- a share of stock -- increases or decreases from your original purchase price. Income return is the payments -- dividends -- a company makes to its shareholders each year. Together, these make up your stock's total return.
Diversification Can Minimize Investment Risk
Among the risks you face in the stock market is the risk that you will have to sell an investment for less than you paid for it. If you buy stock in many different companies, in many different sectors of the market, you can minimize your risk. After all, it is highly unlikely that every company in which you have invested will suffer at the same time.
You can also minimize your risk by investing some money in international stocks. Historically, when the U.S. stock market has dropped, markets in Europe and Asia have dropped less, or even risen in value. Although we live in an increasingly global economy where economic events have an impact everywhere, global diversification should still be a part of your plan.
Diversification does not protect against a loss or ensure a profit.
What Role Should Stocks Play In Your Portfolio?
In general, money you won’t need for at least 10 years would be suitable to be invested primarily in stocks. Certainly younger people investing for their retirement should consider putting a substantial portion of their funds in stocks.
Investing in stocks may also be appropriate for retirees who don’t need all of their money and are trying to maximize what they will pass onto their heirs. You should seek the advice of a qualified financial advisor to determine the optimal amount you should allocate to stocks.
Ticket charges and brokerage account fees may also apply and should be carefully reviewed before any transactions occur.
This article explains some general information about various types of investment products. It is designed to initiate your interest and should not be taken as a recommendation to invest in any specific direction. Complete information about all the details of each type of investment needs to be considered before suitability can be determined.
Investors must carefully consider the investment objectives, risks, liquidity, charges and expenses, and possible surrender fees of any investment before committing to an investment. This and other information can be found in the prospectus for the specific issue involved and should be carefully read before investing. The prospectus can be obtained from the individual company issuing the security, by calling their respective office, or accessing their respective website. Your financial professional can guide you where to find the contact information for each company. A qualified registered securities representative can explain the specific characteristics of each product and guide you in selecting the investments that are most suitable for your specific needs.
Investing In Stocks
Generally, stocks are divided among various categories. At the top are the stocks issued by large, well-established companies, often called blue chip or large-capitalization (large cap) stocks. Below are stocks issued by smaller companies, often divided by their size or market capitalization into mid-cap and small-cap stocks. Growth stocks are those with the potential to grow quickly in both revenues and profitability, but perhaps without the proven track record more established companies have. Some may be large and even market-leading companies in their industries, but with plans to dramatically expand their businesses. Value stocks are those that analysts feel are selling for less than the company is really worth.
Stocks can also be divided into domestic stocks (those issued by U.S. companies) and international stocks. You can also divide your money among various sectors of the market, such as technology, communication, healthcare, energy, financial services, consumer goods and basic materials, each of which may respond differently to economic changes.
Risk vs. Return for Stocks
Over the short term, investing in the stock market can pose quite a risk. After all, the market's history includes such events as the Crash of 1929 and the Depression that followed, the bear market of 1972 through 1974, and the tumble of October 1987. More recently, we saw steep but mainly temporary declines from July through October 1998, plus the housing crisis and stock market decline in 2008. Individual stocks face risks as well. A company, because of poor business conditions or poor management, could become unable to make dividend payments. Or it could fail, leaving your stock worthless. The stock market can also be volatile, fluctuating because of events happening overseas, rumors of economic changes, or a key investment advisor's pronouncement that the market, some segment of it or a particular stock is overvalued.
Over the long term, however, stocks generally earn higher and more positive returns than other financial investment. These higher returns often help offset the risks of investing in stocks.
Stocks can yield two types of return: capital return and income return. Capital return is when the market price of your investment -- a share of stock -- increases or decreases from your original purchase price. Income return is the payments -- dividends -- a company makes to its shareholders each year. Together, these make up your stock's total return.
Diversification Can Minimize Investment Risk
Among the risks you face in the stock market is the risk that you will have to sell an investment for less than you paid for it. If you buy stock in many different companies, in many different sectors of the market, you can minimize your risk. After all, it is highly unlikely that every company in which you have invested will suffer at the same time.
You can also minimize your risk by investing some money in international stocks. Historically, when the U.S. stock market has dropped, markets in Europe and Asia have dropped less, or even risen in value. Although we live in an increasingly global economy where economic events have an impact everywhere, global diversification should still be a part of your plan.
Diversification does not protect against a loss or ensure a profit.
What Role Should Stocks Play In Your Portfolio?
In general, money you won’t need for at least 10 years would be suitable to be invested primarily in stocks. Certainly younger people investing for their retirement should consider putting a substantial portion of their funds in stocks.
Investing in stocks may also be appropriate for retirees who don’t need all of their money and are trying to maximize what they will pass onto their heirs. You should seek the advice of a qualified financial advisor to determine the optimal amount you should allocate to stocks.
Ticket charges and brokerage account fees may also apply and should be carefully reviewed before any transactions occur.
This article explains some general information about various types of investment products. It is designed to initiate your interest and should not be taken as a recommendation to invest in any specific direction. Complete information about all the details of each type of investment needs to be considered before suitability can be determined.
Investors must carefully consider the investment objectives, risks, liquidity, charges and expenses, and possible surrender fees of any investment before committing to an investment. This and other information can be found in the prospectus for the specific issue involved and should be carefully read before investing. The prospectus can be obtained from the individual company issuing the security, by calling their respective office, or accessing their respective website. Your financial professional can guide you where to find the contact information for each company. A qualified registered securities representative can explain the specific characteristics of each product and guide you in selecting the investments that are most suitable for your specific needs.
Finding A Comfortable Level Of Risk
All investments involve a trade-off between risk and return. A certain amount of risk is inevitable if you want the potential for your money to grow. The key is determining how much risk you feel comfortable with.
Know Your Risk Tolerance
Are you uncomfortable with change? Can you stick with your long-term strategy even if you face short-term losses? Will you be overly anxious the first time your investments drop in value? These are all questions to answer before developing your strategy.
Understanding your personal risk tolerance will help you create a plan you can stick with through good times and bad.
Many investors forget the risks involved with buying stocks when the market is soaring. It’s easy to be tempted by the lure of sky-high returns and to forget the possibility of a market downturn, or worse, of a bear market. Likewise, during a bear market or a sharp drop in the market, many investors suddenly become extremely risk averse. But if you create a plan built around your personal risk tolerance and stick with that plan, you will avoid having to make sudden changes in your investment strategy as the market changes.
Factors That May Affect Your Risk Tolerance
Although your personality will affect your underlying risk tolerance, your stage of life also will affect it. Are you just getting started, supporting a growing family or approaching retirement? The amount of risk you feel comfortable taking may be very different at each of these stages in your life.
Most people aren’t prepared for the risk posed by being 100% invested in stocks. But younger investors saving for retirement may be able to afford the risk of placing the bulk of their money in stocks. Why? Because in modern U.S. stock market history, investors have never lost real money investing over a 15-year period. Over a 10-year period, the odds of making money are more than 90%. So stocks have proven to be the best investment over the long term and will likely continue to be unless the U.S. economy crashes to a halt.
On the other hand, as you move closer to retirement, or if you will need a portion of your money in the short term, you may be better off foregoing the highest returns and putting your money in investments that are more secure, such as bonds or money market accounts.
But even investors with similar personalities and in the same stage of life may have different risk tolerances because of such factors as:
- Job security and future employment prospects. If you work in an industry with high turnover, you may be willing to risk less than if you are in a stable position with room for growth.
- The amount of disposable income available for investing. If you are investing millions you may be more comfortable taking risks than if you have only a few thousand dollars to work with.
- The risk of an unexpected financial burden. If you are the sole income provider for your family, your tolerance may be lower than if your spouse also earns a good living.
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