November 9, 2011 by admin · Leave a Comment
Investors spend their lives focused on “Average Annual Returns”. That’s all people hear these days… the index average or a stocks avg. return. Nothing “Average” should ever be included in building your retirement account. EVER! Average returns hide the critical role of portfolio volatility and NEGATIVE RETURNS! Its compound returns without any negative returns are where “Real Returns” are made. You want “REAL RETURNS”! So where does one find these returns?
Follow this example:
Consider two portfolios. One loses 25% the first year, then surges back with a 75% gain the next. The other portfolio gains 20% the first year, and 30% the second. Where would you rather put your money? In terms of average annual returns over two years, both portfolios did equally well. The average of -25 and 75 is 25; so is the average of 20 and 30. But that doesn’t mean their performance was equal.
Suppose each portfolio starts with $100,000. After the first year, having lost 25%, Portfolio 1 is worth $75,000. Then, after the 75% gain, its value rises to $131,250. Meanwhile, Portfolio 2 returns 20% the first year, boosting its value to $120,000. Moving ahead an additional 30% the second year, it’s worth $156,000. Portfolio 1 has a compound return of 31%-no match for the 56% of Portfolio 2.
So… Where did that extra $24,750 come from? It’s the bonus you get for avoiding investment losses. Though this example is an extreme case, it illustrates a basic principle of investing: To progress steadily toward your objectives, you must avoid negative returns. In just 2 years Portfolio 1 is already behind $24,750. How many negative years do you think a traditional “tax deferred qualified plan” will have in 20-30 years? I would say 5-10 easily.
During the technology stock boom of the late 1990s, many investors didn’t care about volatility. They couldn’t resist concentrating their portfolios in the high-risk sectors that had posted several years of phenomenal returns. These investors probably figured that even if returns later tailed off, surely it was better to go for the biggest gains rather than settle for lower returns, even if they were more sustainable.
As it turned out, it wasn’t better. Consider again two hypothetical portfolios worth $100,000. Each one earned an average of 10% a year during the past 10 years. But one was invested aggressively, earning 22% a year during the mid- to late-1990s and then losing 2% a year during the past five years. That makes it worth $244,300 today.
The second portfolio didn’t aim so high. It earned 12% a year for two years, then gained 11% the next two, 10% the two after that, then 9% for two years, and 8% in the final two years. Though averaging 10% gains like the first portfolio, this one is now worth $259,160. That’s a 159.2% compounded return versus 144.3% for the more aggressive portfolio. As so many investors learned during the bear market, slow and steady really does win the race.
What makes losses so bad? A little investment math shows that you need to earn more than you lose on a percentage basis to get back to even. Suppose you have $10k and lose 10%, leaving you with $9k. To get back to where you started, you now need not a 10% gain on the $9k that gives you only $900, for a total of $9,900. It takes an 11% return to restore the original value of your holdings. And the bigger the loss, the harder it is to get your money back. If you lose 40% of your $10,000, taking you to $6,000, you need a return of almost 67% to catch up. If you lose 50% of your investments, you have to double your money-a 100% return-to get back to even.
What’s unnerving about the math behind investment losses is that you may not realize how much risk you’re actually taking when putting your money in volatile investments. Risk is normally worse than is assumed. “You don’t want to take on risk based on false assumptions.” The bottom line is the deeper the holes your portfolio has to crawl out of, the harder it is for you to achieve your financial goals.
So, what’s better than the traditional tax deferred qualified plan?
An Indexed Universal Life policy. These are built custom for the individual, no participation requirements if you’re a business owner and NO ADMINISTRATION FEES like traditional plans. They’re perfect for children savings plans, individuals, companies and entrepreneurs who would eventually sell their company one day. These plans have more living benefits than the death benefit that’s comes included with the investment. Plus, they are TAX-FREE and have 2 unique features: They LOCK-IN your profits each year (Annual Lock-in) and they never go negative and maintain a floor of 0-3% depending on the carrier while being able to achieve unlimited gains. Contact us for more information. We specialize in building these types of retirement plans.
Greg Jones Insurance is a licensed insurance broker and builds retirement accounts for individuals, companies, business owners, families, children and others. We eliminate risk and provide “Real Returns” for our clients. Contact us today for a consultation!
Greg Jones Insurance specializes in building Indexed Universal Life Insurance (IUL) policies for clients. We are a licensed insurance broker specializing in alternative investments to 401k’s and other tax deferred qualified plans. We have built policies for individuals, employees, business owners, children and others. Contact us today! We welcome the opportunity to help you! or Call: 714-884-3577 or 661-703-8848
Article Source: http://EzineArticles.com/5087172
July 20, 2010 by admin · Leave a Comment
Greg Jones Insurance Services is located in Bakersfield, CA. We have been helping clients with their life insurance, health insurance and retirement planning for years now. Our Independent insurance Status benefits our clients because we are able to quote from a multiple insurance companies, shopping the market for the best coverage and carriers for our clients needs. Our clients have always loved that we have been able to do this for them. They know we work hard to give them the best coverage along with the best price.
Many people out their are unaware that a life insurance plan can be used as a effective estate planning tool for their retirement. Our number one goal is to consult our clients in the most beneficial way so they can achieve a tax free retirement. Most clients are not aware of all the benefits of that a life insurance police holds for you and for loved ones. We can map out a plan for you today for tax deferred and tax free assets that can greatly impact your life and your Social Security Benefits. This is what we call the Million Dollar Difference.
Health insurance Bakersfield is also one of our specialty. Greg Jones Insurance Services works with a wide spectrum of Top insurance companies and carriers for individuals, groups, small business, and self employed. Let us answer all of your questions about life insurance, health insurance, retirement planning, or any insurance need you might have.
July 14, 2010 by admin · Leave a Comment
Before buying a life insurance police, you will most likely need to get a physical examination. The exam will be used to assess your risk as a customer. Paramedicals are often the ones who perform a life insurance exam; they are independent contractors hired by certain insurance companies. Some of them will come to your home and others will require you to come to them. It depends on the insurance company you have chosen and what their own unique requirements are.
The first part of this examination is written, and requires you to answer a series of questions about your current and past health. Insurance companies use this form as part of the process which is utilized to come up with a figure for each person. This part asks all medical questions, and the second part is answered by a paramedical or a general physician.
After the paramedical gets all the information on you regarding where you live and the amount you applied for, you will get a visit to complete the second part of the exam. The second part of the exam is purely physical. Most of these examinations involve taking blood pressure down as well as drawing blood for purposes of doing various tests. They will first call you to schedule an appointment time that is convenient for you. With most insurance companies who offer life insurance, this examination is not optional but rather required to process your application in full.
It is important that you know what to expect in a life insurance exam. Your height measurements will be taken, as well as your pulse and weight. Urine samples might be required as well as blood, and anything past this is based on your age. While some of these tests differ in what exactly is done, it’s always a good idea to have a general feel for what they typically consist of. Some insurance companies will send a mobile EKG test for patients applying who are over the age of 50, and applying for large amounts of $1,000,000 or more.
As the amount you are applying for increases, you will have to be ready for even more tests in this part of the life insurance exam. Treadmill tests are sometimes required for those who are applying for amounts well into the millions. This is meant to be a stress test to gauge the state of all your physical faculties. If you are younger and not applying for that much, then you may not have to get any tests done or measurements taken.
These insurance companies simply want to make sure that you are in at least fairly good health before they agree to cover you. This is especially true with older people, who are looked at as more of a risk. If you fail any aspect of the examination, you will not be considered for coverage. You must at least pass the basic tests done if you are applying for a smaller amount. The tests become more strenuous and in-depth as the face amount goes up.
If you have any question please fill out our Contact Form, so we can answer all of your questions or Call Today 661.588.0033
June 23, 2010 by admin · Leave a Comment
What a wonderful day to be alive and know that all my health insurance needs are taken care of . I just wanted to let you know that there is no better felling then knowing that me and my family have health insurance, the peace of mind is unbelievable.
January 23, 2010 by admin · Leave a Comment
Here is a list of the average costs of funeral items and services. The list is taken from the National Funeral Directors Association 2001 General Price List Survey. Please contact your local funeral directors for a General Price List for prices in your area.
These are samples of average costs – if you request more than one of these, pricing obviously increases.
- Professional service charges: $1,213
- Embalming: $420
- Other preparations (cosmetology, hair, etc.): $150
- Visitation/viewing: $275
- Funeral at funeral home: $350
- Transfer of remains to funeral home: $154
- Hearse (local): $185
- Service car/van: $85
- Acknowledgement cards: $18
- Casket: $2,330
- Vault: $950
Total: $6,130
Note – This list of averages doesn’t include cemetery and burial costs.
December 24, 2009 by admin · Leave a Comment
Everybody has to think about the retirement because at one time they have to take retirement from the job. So, once they retired from job the same status or life style they will not be able to maintain until and unless they haven’t taken care of it before hand. Before discussing about this subject further more on how to control the investment option, we should have some information regarding IRA which is “Individual Retirement Accounts”. To invest for retirement for you was first introduced by United States Govt. in 1974. The purpose of this was to allow the individual to invest for retirement of their own not depending on the social security.
Choosing a good range of investment
Now the individual who are hopeful for retirement can invest their IRA’s and 401k’s in different financial product such as mutual funds, stocks, bonds etc. These investments option a good range of investment choices as the risk appetite. But it has the option to diversify the risk. But the question is that how much a person really knows to invest in these securities? Most of the participant has a little knowledge about the securities. It is not an easy task to gain profit from the market because market is very volatile. Most of the investor rely on the fund manager that they will outperform but it is sometime happens that they also failed. It is important that you read the entire offer document when you go for life insurance.
Things to achieve investment success:
It is up to the investor to watch the market. There are things which you have to do to achieve investment success. These are
1. Get help from the expert about the market
2. Choose a plan according to your risk appetite
3. Stick with the Plan
Here are the three things you can do to achieve investment success. In fact, you must do them if you want to hang on to your money and actually make it grow.
The other investment option for retirement may be the real estate. Though this also a risky investment option but still in this option people know about real estate and how it works. So, it is easy to invest in real estate rather than investing in the market. The risk associated with real estate can be controlled by almost everyone. The risk of real estate can be categorized as leverage, renters paying the rent, natural hazards, and maintenance. So you need to think very well in order to set up a better future for your retirement
December 23, 2009 by admin · Leave a Comment
In today’s world we know how the prices are rising. It is not like that price has gone up only for the commodity product but even for other thing also. Imagine, what is the cost of hospital? How much you have to spend for a by-pass surgery? So, we should understand the benefit of health insurance. We can avail the benefit of health insurance from the company where we are working. But once we lose the job we even lose the health insurance too. So I am just going to tell you the 7 tips if you lose your health insurance.
1. COBRA
One of the good options may be COBRA (Consolidated Omnibus Budget Reconciliation Act). If the worker has lost the job from the employer they can purchase a cover of up to 10 lakh by this option. The cost for this option should be incurred by you only. This option allows you the facility that even you can purchase it for anyone in your family who were also covered before you lose your health insurance from the employer. COBRA is not insurance but it is a law which provides you the facility to continue the health insurance provided by your company before you lose your job. Only the workers who had worked in a company that has more than 20 employees and were covered by group health insurance have the eligibility to purchase through COBRA.
2. Short term major medical health insurance
As the term suggest it is a short term health insurance. This is good for you and your family if you are in between a job. This insurance covers you not more than for 12 months. Again this is a low costly health insurance option.
3. Individual major medical health insurance.
This insurance covers you for more than a year and a bit less expensive than COBRA.
4. Indemnity plans
It is a form of insurance that is very low costly but at the same time its benefits are also limited. But still it will help you in something.
5. Discount Plans
These plans are also very low costly and provides you 50% discount on the medical expenses.
6. Search for the low cost hospital:
It is important that you go for searching a low cost hospital where there is a benefit for the person not having health insurance.
7. Search for a new job
You can also go for searching a new job which would provide you with all the health insurance facility
