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Ponderings For the Week of March 18 to 24, 2019

Stock Market Rebounds

After a troubling prior week, stocks rose smartly in a repeat performance that saw stocks rise despite reports that suggest trouble could be at hand. Overseas data points to a slowdown in economic activity, particularly in China, and U.S. manufacturing production declined for a second straight month. Stock market optimists, however, see this data as evidence that the Federal Reserve Board and other central banks will slow down on their plans to further hike interest rates.

It was an impressive week with the average stock, both here and overseas, rising about 2%. Technology shares led the pack. Despite the weekly doses of disappointing news, the U.S. economy remains relatively strong. Nevertheless, many investors can’t shake off long held concerns that equities are poised for a drubbing, citing numerous reasons for their angst. Our advice to them is to take a longer term view. Rather than worrying about how stocks will fare over the next month or next year, consider how they’ll perform over the next decade. As high as stock prices may be now, there’s nothing to suggest that 10 years hence stocks will have handily outperformed bonds or cash equivalents.   


Four for the (Retirement) Money.

Whether you’re 24 or 64, here are four matters to keep in mind as you plan for retirement, or for that matter, if you’re already retired.

  • 1st – make sure your investments are well-diversified so that you can earn attractive lifelong returns despite the occasional bumps in the road.
  • 2nd – make the most of your home. Paying off the mortgage by the time you retire can be enormously beneficial to your retirement prospects. Also, consider the possibility of eventually downsizing your domicile to free up money for retirement purposes.
  • 3rd – prepare an estimate of your retirement budget. You may be able to retire on a lot less money than you have been led to believe. But don’t forget to include the inevitable “budget busters” in your budget, like car replacement, home maintenance, and the dreaded major dental bills.
  • 4th - decide where and when you want to retire. Retiring to a less    expensive locale can work wonders on your budget. Delaying retirement can have a very positive impact on your retirement lifestyle as well. For example, delaying retirement by just three years can increase your lifetime retirement income by 25%.




Smart Money Tips

  • If you are planning to purchase an LTC policy.  Keep in mind that, unlike other kinds of insurance whose premiums rarely change very much, long-term care (LTC) insurance policies can increase premiums with the approval of the state insurance commission. Neither the company nor the insurance agent is likely to be very clear explaining this, but you should ask whether and by how much the company has raised premiums in the past. Also, be wary of a policy that is considerably cheaper than similar policies. It may be a prime candidate for a big increase. Most importantly, before buying a policy, you need to look well into the future to see if you can afford the possibility – indeed, the probability – that your premiums could rise substantially. I recommend that you consider a worst-case scenario in which your premiums could rise by 50% or even double between the times you sign up for the policy and when you’re likely to receive benefits. In other words, don’t buy a policy that is so expensive in relation to your household budget that you couldn’t afford a big premium increase. It would be unfortunate to have to drop a policy or severely curtail your coverage later on, just before you need the benefits.
  • Store unused valuables in a safe deposit box. If you have some valuable jewelry or other baubles that you don’t use very often, if at all, store them in a safe deposit box. They’re safer there and they’re a lot cheaper to insure. And yes, you should insure any valuables that you keep in a safe deposit box, because the bank doesn’t provide insurance coverage. Don’t forget to prepare a list of what’s held in the safe deposit box. A worthy alternative to a bank safe deposit box is a home safe, but it should be fire resistant and bolted down so that burglars can’t carry it off.




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