Buck Naked Politics

Protecting Yourself from Investment Fraud

  by Chris |   Recently, residents of Gainesville and St. Augustine were victims of investment fraud.  While neither of these incidents was of the scale and complexity of the Madoff case, with a little homework and some healthy skepticism, they may have been avoided.

How do you protect yourself from investment fraud? 

On Re-Financing Mortgages or Buying A Home – It’s Time to Pull the Trigger

posted by Chris |  If you have a home mortgage, now may be a good time for you to consider refinancing.   If you are looking for a home, now may be a very good time to purchase a home. 

My very best guess regarding both housing prices and interest rates comes from my crystal ball.  While my timing may not be perfect, I am betting that we are near a bottom in both housing prices and mortgage interest rates.  My crystal ball is telling me that while housing may not rebound quickly, mortgage interest rates may start to rise in the summer and into the fall. 

If you have an adjustable rate mortgage...,

U.S. Debt

posted by Chris |  Recently, there has been an increased level of interest and discussion on the ramifications of the US Federal Deficit.    I would ask that you click on the link provided and just absorb the site:  http://www.usdebtclock.org/

In addition, you might check out the U.S. Treasury's official debt-to-the-penny page, on which you can plug in a date and find out what our national debt was on that date.

ROTH Conversion Considerations

posted by Chris |  Over the next few months, you will start to hear and read about ROTH conversions.   I thought we could address the topic with a broad based overview. 

In 2010, Congress has allowed owners of traditional IRA’s to convert them into ROTH IRA’s.  You may recall that a ROTH IRA allows for tax free withdrawals at retirement, no required minimum distributions and they are funded with after tax, (non deductible) contributions.  Obviously if you convert, there is a catch – you either pay the taxes in 2010 or split the tax bill evenly in 2011 and 2012 (at the 2011 & 2012 tax rates). 

One of the considerations to convert is whether you think that your federal income tax bracket will be higher at retirement than it is presently.   A linchpin in the decision making process is the ability to pay the taxes ‘out of pocket’ rather than out of the traditional IRA.  

Direct – Deposit Your Social Security Check

                                                                                                                                                             posted by Chris |   Whether you are a Social Security recipient or a friend / child of a recipient why not take advantage of the ability to have your social security check direct deposited into your account?  Utilizing direct deposit saves you the time and effort of going to the bank to deposit it and relieves  you of the concern of your check sitting in your mailbox while you are traveling, ill, weather events etc.

Having "The Talk" with Your Parents

posted by Chris |  As a member of the ‘sandwich’ generation, I am keenly aware of the pressures of both raising children, while at the same time developing a deeper relationship with aging parents.

While the generational family baton is passed at different times for different families; at some point you will need to have a very serious and personal family meeting that will help smooth the transition as your parent’s age.  Please review the list and show it to your parents.  Their cooperation and input will make things smoother during their transitions.

Chris on Beneficiary Designations

posted by Chris |  As you go through the various stages of life, it is important to periodically update your beneficiaries on your life insurance, annuities, IRA’s and other qualified retirement plans.

We have all heard stories of the ex-spouse receiving the current spouse’s benefits upon the death of person who DID NOT change their beneficiary designation.  Did you know that utilizing your beneficiary provisions for philanthropic donations ( while a great idea ) can cause your other natural person(s) beneficiaries to lose their ability to stretch their payments from an IRA or qualified plan?

Time for a Reverse Mortgage?

posted by Chris |   So many times we have heard the expression “home is where the heart is.”  Lately, television ads have been touting that your home is where some money is.

As retirees start to face a cash crunch during retirement, a creative approach to providing income has surfaced: the reverse mortgage.   A reverse mortgage should be carefully studied, because you are in essence taking an interest-bearing loan that is secured by the equity in your home.   

One knock on reverse mortgages is that they can have a lot of costs associated with the loan.  Be certain to shop around to get the best deal.

I would ask that you check with your CPA, attorney and financial advisor to determine if a reverse mortgage is in your best interest.  And it couldn't hurt to check the links listed after the jump:

Avoiding Senior (or any age) Scams

posted by Chris |  Recently, a client brought to my attention an organization called saveandinvest.org which is sponsored by the  FINRA Investor Education Foundation.  Its website is www.saveandinvest.org

I encourage every reader to review the section titled "Fighting Fraud 101: Smart Tips for Older Investors.  "

 If you have a financial advisor, please take the time to go to FINRA BrokerCheck www.finra.org/brokercheck.   I think that it is important to know if your advisor has any complaints against him or her.

On Re-Financing Mortgages

posted by Chris |  If you have a home mortgage, now may be a good time for you to consider refinancing.   If you have an adjustable rate mortgage or an interest rate that is higher than current rates, refinancing to a lower fixed rate mortgage might save you thousands of dollars in interest payments.

I do not want you to refinance your home so you can take money out and buy a new TV or go on a vacation!  In my opinion, the principal reason to refinance is to reduce the amount of interest that you will pay over the life of the mortgage.

You need to be financially literate and understand the process.  Refinancing a mortgage is easily done but it is a complicated transaction.  Recent history is riddled with people obtaining mortgages without understanding the consequences.

Troubled Times for Consumers

posted by Chris |  We are all aware that times are tough for many Americans.  Naturally, there are companies that are hoping to profit from people’s financial misery. 

I don’t know which of the companies that advertise are legitimate and which are not.  If you know someone who needs help, please direct them to the Federal Trade Commission http://www.ftc.gov/ as their starting point.

No one wants to see someone asking for help, only to get taken advantage of by asking the wrong person.

Market Musings, 3rd Quarter 2008: How We Got Here

posted by Chris |  As the third quarter comes to a close, we find the market bouncing around like Congress voting on a bailout bill.  The year-to-date numbers are sobering as we look squarely at the teeth of a bear market.

The Dow Jones Industrial Average is -16.6 % and the Standard & Poors 500 is down 19.3%.   I have been asked many times about the bailout and the cause(s) of our current situation.

The easiest answer to this problem was for people to pay their mortgages; however, most of the subprime mortgagees should have never received a mortgage.   Let’s start with some background. 

Insurance that People Love to Hate: Long-Term Care Coverage & How to Choose it

posted by Chris |  Perhaps the most perplexing issue I encounter as a financial planner is the response to the question of long term care insurance.  The range of emotion that people express when I question exactly how they will pay for their care as they age, is surprising.  Life, auto, health, and homeowners insurance are all necessary and purchased accordingly.

Long term care is generally defined by an individual’s inability to perform the normal activities of daily living (ADL) such as bathing, dressing, eating, toileting, continence and moving around.  THe need for long term care can result from conditions such as spinal cord or head injuries, stroke, AIDS, mental illness, Alzheimer’s disease or other forms of dementia, or physical frailty due to advancing age. 

Long term care is essentially room and board – not physician, therapy or nursing care.

Thumbnail Primer on “Permanent” Life Insurance

posted by Chris | Contain your joy as I complete the life insurance topic!   I am frequently asked about term insurance vs “permanent” insurance.  Permanent insurance policies can be Variable Universal Life (VUL), Universal Life (UL), and Whole Life.   

As we discussed last week, term insurance is pure insurance.  It is the cheapest type of insurance as it contains no ‘savings’ or ‘cash value’ component.  Many pundits on television are quick to tell their viewers that they should always buy term insurance in lieu of permanent insurance and invest the difference. 

Thumbnail Primer on Term Life Insurance

posted by Chris | Hold back your excitement as you read this missive! 

Seriously.  Most people need life insurance for either protecting their families (or business partners) or for estate planning.  There are several types of life insurance policies including universal life & variable life ( aka, permanent insurance) and term insurance. 

Some policies include a savings component and some do not.  Today we will concentrate on term insurance.

The State of Female Retirement

posted by Chris |  Below are a few statistics about retired women:

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- 20%: the percentage of older women living alone in poverty.

- 6 : the average number of years that women live longer than men.

- 58%: women’s median retirement income as a percentage of men’s

- $800: average monthly Social Security benefit for women ($1,177 for men)

Market Musings

posted by Chris |  The first quarter of 2008 has mercifully come to a close with the S&P 500 posting a 10% loss. Much to our chagrin we have experienced back-to-back negative quarters with the 4^th quarter of 2007 losing approximately 5%. 

Indeed the bull market that we enjoyed didn’t end with the classic large cap stock run up and along with profound investor glee, but rather with multiple shocks coming from the catastrophe that is the credit markets.

A Pot and a Chicken: Spending the Tax Rebate

posted by Chris |  Now that Congress has passed and the President has signed the Economic Stimulus Act of 2008, those who will receive a check can start making a list of how they will spend their newfound wealth.

Our government borrowed from Peter (our children & grandchildren) to pay Paul (us) because our politicians are concerned about the economy ( its an election year ). The checks may have a slight affect on our overall economic conditions. 

Rather than going out to dinner (stimulating our economy) or buying a new gadget (stimulating the Chinese economy), I would argue that you should look closely at your own economic situation and use this gift wisely.

If My Identity Was Stolen, it Can Happen To You!

posted by Chris |  In early November, I received an unusual looking letter from a bank that had been in the news. I opened it,  because I thought it might contain info about the bank's poor subprime loan exposure. 

What did I find?  That I had a credit card with that bank and that I had submitted an address change to Philadelphia.   I can assure you that I do not, nor have I ever, lived in Philly -- and I never had a credit card with that bank.

Shaken, not Stirred: Thoughts on Market Volatility

posted by Chris | I started in this business in 1985, and I have never witnessed the severe volatility that we are enduring now.  Please understand that the stock market is cyclical by nature.  It appears that these cycles are compressed by time and magnitude. 

From the anecdotal information that I have collected, these swings in the market place seem largely driven by the large institutional companies (brokerage firm trading accounts, hedge funds, etc) not by the individual investor. 

Most companies that are falling in value are not going out of business.  Their earnings growth may be slowing (or worse), but how many companies have gone into bankruptcy?  Not many.  Is our economy going into a depression or recession?