Ken Himmler.com » Uncategorized http://kenhimmler.com Wealth Design and Management Thu, 29 Jul 2010 21:06:39 +0000 en hourly 1 http://wordpress.org/?v=3.0 © admin@kenhimmler.com () admin@kenhimmler.com() Retirement Strategies for Conservative Investors admin@kenhimmler.com No no http://kenhimmler.com/wp-content/plugins/podpress/images/powered_by_podpress.jpg Ken Himmler.com http://kenhimmler.com 144 144 Coordination of Long-Term Care with Government Benefits http://kenhimmler.com/2010/07/20/coordination-of-long-term-care-with-government-benefits/ http://kenhimmler.com/2010/07/20/coordination-of-long-term-care-with-government-benefits/#comments Tue, 20 Jul 2010 19:24:45 +0000 Ken Himmler http://kenhimmler.com/?p=729  

What does "coordination with government benefits" mean?

In the context of long-term nursing home care, a number of governmental (and governmentally regulated) programs and tools exist to help you pay for this care. Medicare, Medicaid, Medigap, and long-term care insurance (LTCI) (combined with Medicare) can each assist you to pay for your long-term nursing-home care, assuming you meet their respective qualifications.
 
What is long-term care?
Long-term care refers to a broad range of medical and personal services designed to assist individuals who have lost their ability to function independently. The need for this care often arises when physical or mental impairments prevent you from performing certain basic activities, such as feeding, bathing, dressing, transferring, and toileting.
Long-term care may be divided into three levels:
·         Skilled care–continuous "around-the-clock" care designed to treat a medical condition. This care is ordered by a physician and performed by skilled medical personnel, such as registered nurses or professional therapists. A treatment plan is established, and it is usually contemplated that the patient will recover at some point.
·         Intermediate care–intermittent nursing and rehabilitative care provided by registered nurses, licensed practical nurses, and nurse’s aides under the supervision of a physician.
·         Custodial care–care designed to assist one perform the activities of daily living (such as bathing, eating, and dressing). It can be provided by someone without professional medical skills but is supervised by a physician.
 
What is Medicare and to what extent does it subsidize long-term care?
Medicare is a federal health insurance program for people age 65 and older, certain disabled individuals under age 65, and people of any age with permanent kidney failure. Medicare is divided into two parts: Part A is a hospital insurance program, and Part B is a medical insurance program:
 
·         Part A covers: (1) inpatient hospital care, (2) inpatient care in a skilled nursing facility (SNF), (3) home health care, and (4) hospice care
·         Part B covers: (1) doctors’ services, (2) home health care services (for persons not covered by Part A), and (3) certain other outpatient medical services and supplies not covered by Part A
 
Medicare was not designed to address custodial and intermediate long-term care needs at institutional facilities. Although Medicare will subsidize skilled medical care in nursing facilities, it will pay for only a certain number of days per year and requires a co-payment after a period of time. In addition, numerous rules exist governing when a beneficiary will qualify for benefits. To qualify for Part A’s SNF care benefit, the patient must have been hospitalized for at least three days before entering a Medicare-approved SNF. (The patient has 30 days from his or her hospital discharge date to enter the SNF.) Furthermore, a doctor must certify that the patient needed and received skilled nursing care or skilled rehabilitation on a daily basis at the SNF. Assuming these conditions have been met, Medicare will pay for skilled care in the following manner:
·         Medicare will pay the full cost of SNF care for the first 20 days in each benefit period (year).
·         The patient must pay a daily co-payment for days 21-100. This co-payment figure increases each year and amounts to $133.50 per day in 2009 ($128 in 2008).
·         After the 100th day of SNF care, the patient must pay all costs.
 
 
 What is Medigap insurance and to what extent does it subsidize long-term care?
Medigap is supplemental insurance sold by private insurance companies to fill in some of Medicare’s gaps in coverage. Medigap is an individual health plan that provides benefits for all or part of the deductible and coinsurance amounts not covered by Medicare. Certain benefits not covered by Medicare, such as payment for prescription drugs, may also be covered under particular Medigap plans.
With respect to long-term care, some (but not all) Medigap plans will subsidize the $133.50-per-day co-payment for days 21-100 of skilled nursing home care under Medicare Part A. Thus, your first 100 days in a given year of skilled care provided in an SNF will be free of charge. However, you will still have to pay the full cost out-of-pocket for the rest of the year. And bear in mind that Medigap will not pay for intermediate and custodial care in nursing homes.
 
 What is Medicaid and to what extent does it subsidize long-term care?
Medicaid is a joint federal-state program providing medical assistance to low-income individuals who are aged, disabled, or blind (and to needy, dependent children and their parents), and who cannot otherwise afford the necessary care. Medicaid pays for a number of medical costs, including hospital bills, physician services, and long-term nursing care.
To qualify for Medicaid’s long-term care benefits, you must be financially and medically eligible. Financial eligibility is based on the amount of your income and assets, and although many people are not financially eligible for Medicaid when they first enter a nursing home, many states allow elders to "spend down" their assets to become eligible.
Typically, Medicaid beneficiaries must require some skilled medical care (e.g., intravenous feeding, treatment of dressings), but a medical condition requiring assistance with activities of daily living can also be part of the eligibility requirements. Thus, intermediate care in an institution will be subsidized in most states, as will home health care and personal care services at home.
Medicaid is the largest single payor of nursing-home bills in America and is the last resort for people who have no other way to finance their long-term care. Unfortunately, however, because Medicaid mandates income and asset thresholds, many people are forced to exhaust their lifetime savings to become eligible for Medicaid. For information about Medicaid planning, see Planning Goals and Strategies.
 
What is long-term care insurance (LTCI), and to what extent does it subsidize long-term care?
Long-term care insurance (LTCI) pays a selected dollar amount per day for a set period for skilled, intermediate, or custodial care in nursing homes and other long-term care settings. Because Medicare and other forms of health insurance do not pay for intermediate care in a nursing facility and custodial care in general, many nursing home residents have only three alternatives for paying their nursing home bills: cash, Medicaid, and LTCI.
Most policies will let you select the amount of coverage you want, typically running anywhere from $40 to $150 or more per day. A very comprehensive LTCI policy will cover skilled care, intermediate care, home care, adult day care, hospice care, and assisted living care. 
Most policies provide that benefits will be "triggered" by certain physical and/or mental impairments. The most common method for determining when benefits are payable is based upon your inability to perform activities of daily living (ADLs). The most common ADLs are eating, bathing, dressing, continence, toileting, and transferring. Typically, benefits are payable when you’re unable to perform a certain number of the ADLs, such as two out of the six or three out of the six.

 

 

 

a Coordination of Long-Term Care with Government Benefits]]>  

What does "coordination with government benefits" mean?

In the context of long-term nursing home care, a number of governmental (and governmentally regulated) programs and tools exist to help you pay for this care. Medicare, Medicaid, Medigap, and long-term care insurance (LTCI) (combined with Medicare) can each assist you to pay for your long-term nursing-home care, assuming you meet their respective qualifications.
 
What is long-term care?
Long-term care refers to a broad range of medical and personal services designed to assist individuals who have lost their ability to function independently. The need for this care often arises when physical or mental impairments prevent you from performing certain basic activities, such as feeding, bathing, dressing, transferring, and toileting.
Long-term care may be divided into three levels:
·         Skilled care–continuous "around-the-clock" care designed to treat a medical condition. This care is ordered by a physician and performed by skilled medical personnel, such as registered nurses or professional therapists. A treatment plan is established, and it is usually contemplated that the patient will recover at some point.
·         Intermediate care–intermittent nursing and rehabilitative care provided by registered nurses, licensed practical nurses, and nurse’s aides under the supervision of a physician.
·         Custodial care–care designed to assist one perform the activities of daily living (such as bathing, eating, and dressing). It can be provided by someone without professional medical skills but is supervised by a physician.
 
What is Medicare and to what extent does it subsidize long-term care?
Medicare is a federal health insurance program for people age 65 and older, certain disabled individuals under age 65, and people of any age with permanent kidney failure. Medicare is divided into two parts: Part A is a hospital insurance program, and Part B is a medical insurance program:
 
·         Part A covers: (1) inpatient hospital care, (2) inpatient care in a skilled nursing facility (SNF), (3) home health care, and (4) hospice care
·         Part B covers: (1) doctors’ services, (2) home health care services (for persons not covered by Part A), and (3) certain other outpatient medical services and supplies not covered by Part A
 
Medicare was not designed to address custodial and intermediate long-term care needs at institutional facilities. Although Medicare will subsidize skilled medical care in nursing facilities, it will pay for only a certain number of days per year and requires a co-payment after a period of time. In addition, numerous rules exist governing when a beneficiary will qualify for benefits. To qualify for Part A’s SNF care benefit, the patient must have been hospitalized for at least three days before entering a Medicare-approved SNF. (The patient has 30 days from his or her hospital discharge date to enter the SNF.) Furthermore, a doctor must certify that the patient needed and received skilled nursing care or skilled rehabilitation on a daily basis at the SNF. Assuming these conditions have been met, Medicare will pay for skilled care in the following manner:
·         Medicare will pay the full cost of SNF care for the first 20 days in each benefit period (year).
·         The patient must pay a daily co-payment for days 21-100. This co-payment figure increases each year and amounts to $133.50 per day in 2009 ($128 in 2008).
·         After the 100th day of SNF care, the patient must pay all costs.
 
 
 What is Medigap insurance and to what extent does it subsidize long-term care?
Medigap is supplemental insurance sold by private insurance companies to fill in some of Medicare’s gaps in coverage. Medigap is an individual health plan that provides benefits for all or part of the deductible and coinsurance amounts not covered by Medicare. Certain benefits not covered by Medicare, such as payment for prescription drugs, may also be covered under particular Medigap plans.
With respect to long-term care, some (but not all) Medigap plans will subsidize the $133.50-per-day co-payment for days 21-100 of skilled nursing home care under Medicare Part A. Thus, your first 100 days in a given year of skilled care provided in an SNF will be free of charge. However, you will still have to pay the full cost out-of-pocket for the rest of the year. And bear in mind that Medigap will not pay for intermediate and custodial care in nursing homes.
 
 What is Medicaid and to what extent does it subsidize long-term care?
Medicaid is a joint federal-state program providing medical assistance to low-income individuals who are aged, disabled, or blind (and to needy, dependent children and their parents), and who cannot otherwise afford the necessary care. Medicaid pays for a number of medical costs, including hospital bills, physician services, and long-term nursing care.
To qualify for Medicaid’s long-term care benefits, you must be financially and medically eligible. Financial eligibility is based on the amount of your income and assets, and although many people are not financially eligible for Medicaid when they first enter a nursing home, many states allow elders to "spend down" their assets to become eligible.
Typically, Medicaid beneficiaries must require some skilled medical care (e.g., intravenous feeding, treatment of dressings), but a medical condition requiring assistance with activities of daily living can also be part of the eligibility requirements. Thus, intermediate care in an institution will be subsidized in most states, as will home health care and personal care services at home.
Medicaid is the largest single payor of nursing-home bills in America and is the last resort for people who have no other way to finance their long-term care. Unfortunately, however, because Medicaid mandates income and asset thresholds, many people are forced to exhaust their lifetime savings to become eligible for Medicaid. For information about Medicaid planning, see Planning Goals and Strategies.
 
What is long-term care insurance (LTCI), and to what extent does it subsidize long-term care?
Long-term care insurance (LTCI) pays a selected dollar amount per day for a set period for skilled, intermediate, or custodial care in nursing homes and other long-term care settings. Because Medicare and other forms of health insurance do not pay for intermediate care in a nursing facility and custodial care in general, many nursing home residents have only three alternatives for paying their nursing home bills: cash, Medicaid, and LTCI.
Most policies will let you select the amount of coverage you want, typically running anywhere from $40 to $150 or more per day. A very comprehensive LTCI policy will cover skilled care, intermediate care, home care, adult day care, hospice care, and assisted living care. 
Most policies provide that benefits will be "triggered" by certain physical and/or mental impairments. The most common method for determining when benefits are payable is based upon your inability to perform activities of daily living (ADLs). The most common ADLs are eating, bathing, dressing, continence, toileting, and transferring. Typically, benefits are payable when you’re unable to perform a certain number of the ADLs, such as two out of the six or three out of the six.

 

 

 

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Coordination of Long-Term Care with Government Benefits

]]> http://kenhimmler.com/2010/07/20/coordination-of-long-term-care-with-government-benefits/feed/ 0 Ken Himmler on Best Deals Show http://kenhimmler.com/2009/09/17/ken-himmler-on-best-deals-show/ http://kenhimmler.com/2009/09/17/ken-himmler-on-best-deals-show/#comments Thu, 17 Sep 2009 14:42:54 +0000 Ken Himmler http://kenhimmler.com/2009/09/17/ken-himmler-on-best-deals-show/

a Ken Himmler on Best Deals Show]]>

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Ken Himmler on Best Deals Show

]]> http://kenhimmler.com/2009/09/17/ken-himmler-on-best-deals-show/feed/ 0 Do You Personalize Your Budget? http://kenhimmler.com/2009/05/05/do-you-personalize-your-budget/ http://kenhimmler.com/2009/05/05/do-you-personalize-your-budget/#comments Tue, 05 May 2009 11:08:32 +0000 Ken Himmler http://kenhimmler.com/?p=440 Any good guide to personal financial freedom involves several things.  To make your money grow for you, you need to ensure that you are setting aside money for your personal long-term savings and investments.  This is all well and good in theory, but in practice it can be extremely difficult to make your income work for you in such a way to allow for these long-term savings and investments.  This is one of the reasons why having a budget is essential. 

One of the first things that you do when you set up a budget is divide your income into different categories.  This is where many people who live on a budget run into problems.  There are many budget categories that everybody shares.  Unfortunately, everybody’s needs and the way that they need them can differ vastly from individual to individual.  No one system of budgeting can work for everyone.  For this reason, individuals should never be afraid to create their own budget categories that suit his or her lifestyle.

The key to having a good, balanced budget is to include all of the necessities.  This may sound simple but some of the essentials are easily placed on the back burner in the light of ‘more important things.’ Some of the ‘less important’ necessities include money set aside for recreation and entertainment, clothing, property upkeep, and of course your savings and investments.  No matter what your circumstance is, you should NEVER neglect your retirement savings and investments.

It is your budget and it should work for you.  If you prioritize your money before you get it you will find that it is much easier to take care of the most important things in life.  This is why you should always pay yourself first and dedicate a portion of your money to savings before you do anything else.   Over time the little bit you set aside will add up to true financial freedom and a comfortable retirement. 

Talk to your personal financial retirement planner to find ways to make your budget work for you more effectively.  You’ll be glad you did.
 

a Do You Personalize Your Budget?]]> Any good guide to personal financial freedom involves several things.  To make your money grow for you, you need to ensure that you are setting aside money for your personal long-term savings and investments.  This is all well and good in theory, but in practice it can be extremely difficult to make your income work for you in such a way to allow for these long-term savings and investments.  This is one of the reasons why having a budget is essential. 

One of the first things that you do when you set up a budget is divide your income into different categories.  This is where many people who live on a budget run into problems.  There are many budget categories that everybody shares.  Unfortunately, everybody’s needs and the way that they need them can differ vastly from individual to individual.  No one system of budgeting can work for everyone.  For this reason, individuals should never be afraid to create their own budget categories that suit his or her lifestyle.

The key to having a good, balanced budget is to include all of the necessities.  This may sound simple but some of the essentials are easily placed on the back burner in the light of ‘more important things.’ Some of the ‘less important’ necessities include money set aside for recreation and entertainment, clothing, property upkeep, and of course your savings and investments.  No matter what your circumstance is, you should NEVER neglect your retirement savings and investments.

It is your budget and it should work for you.  If you prioritize your money before you get it you will find that it is much easier to take care of the most important things in life.  This is why you should always pay yourself first and dedicate a portion of your money to savings before you do anything else.   Over time the little bit you set aside will add up to true financial freedom and a comfortable retirement. 

Talk to your personal financial retirement planner to find ways to make your budget work for you more effectively.  You’ll be glad you did.
 

a

Do You Personalize Your Budget?

]]> http://kenhimmler.com/2009/05/05/do-you-personalize-your-budget/feed/ 0 How Much Retirement Income Do You Need? http://kenhimmler.com/2009/04/10/how-much-retirement-income-do-you-need/ http://kenhimmler.com/2009/04/10/how-much-retirement-income-do-you-need/#comments Fri, 10 Apr 2009 01:00:12 +0000 Ken Himmler http://kenhimmler.com/?p=425 As you get closer to retirement age, there are a few details that you need to think about for your post-retirement life.  No doubt there will be various unavoidable expenses in your life that you will need address financially.  You are also likely to have a lifestyle that you would like to continue, and hobbies that you are looking forward to taking up after retirement.  These are the things that you have been saving up for all along.  Now you need to be considering whether or not you are going to have enough money to fulfill your dreams.

The most important thing you need to consider as you get ready to retire is how much post-retirement income you are going to have, and how much you need.  There is no reason you should panic at this point, because if you have been keeping up with your retirement savings and investments you should be right on schedule.  Most people need between 70-80% of their current income to lead a comfortable, healthy retirement that suits their lifestyle.  Your individual needs may demand more or less money depending on a variety of factors in your life.

Because there are several facts that need to be considered, it is often much easier to use a retirement planning calculator to help discern your individual needs and whether or not you will have enough money to retire on time.  One such popular calculator can help, and can helpl provide a rough estimate of your monetary needs post-retirement.

Of course, it should be acknowledged that calculators are always subject to error and cannot account for every situation.  It is always advisable that you address any concerns you have about your retirement situation to your financial advisor or retirement planner.  These highly trained individuals can take into account factors beyond the scope of even the best retirement planning calculator.
 

a How Much Retirement Income Do You Need?]]> As you get closer to retirement age, there are a few details that you need to think about for your post-retirement life.  No doubt there will be various unavoidable expenses in your life that you will need address financially.  You are also likely to have a lifestyle that you would like to continue, and hobbies that you are looking forward to taking up after retirement.  These are the things that you have been saving up for all along.  Now you need to be considering whether or not you are going to have enough money to fulfill your dreams.

The most important thing you need to consider as you get ready to retire is how much post-retirement income you are going to have, and how much you need.  There is no reason you should panic at this point, because if you have been keeping up with your retirement savings and investments you should be right on schedule.  Most people need between 70-80% of their current income to lead a comfortable, healthy retirement that suits their lifestyle.  Your individual needs may demand more or less money depending on a variety of factors in your life.

Because there are several facts that need to be considered, it is often much easier to use a retirement planning calculator to help discern your individual needs and whether or not you will have enough money to retire on time.  One such popular calculator can help, and can helpl provide a rough estimate of your monetary needs post-retirement.

Of course, it should be acknowledged that calculators are always subject to error and cannot account for every situation.  It is always advisable that you address any concerns you have about your retirement situation to your financial advisor or retirement planner.  These highly trained individuals can take into account factors beyond the scope of even the best retirement planning calculator.
 

a

How Much Retirement Income Do You Need?

]]> http://kenhimmler.com/2009/04/10/how-much-retirement-income-do-you-need/feed/ 0 Prepare to Enjoy Retirement http://kenhimmler.com/2009/02/26/prepare-to-enjoy-retirement/ http://kenhimmler.com/2009/02/26/prepare-to-enjoy-retirement/#comments Thu, 26 Feb 2009 03:08:42 +0000 Ken Himmler http://kenhimmler.com/?p=398 Many people have different ideas about what they are going to do when they retire.  Retirement in general can open up many opportunities to live the life you want to live, and it is important that you have an understanding of your newfound potential.  Whether you want to travel or take up a hobby that you never had time for, it is important that you develop an appropriate strategy to turn your retirement dreams into retirement realities.

It is never too early to begin planning for your life after retirement.  The sooner you can start, the better.  While it is common knowledge that retirement takes a bit of planning to pull of successfully, not everyone considers their budget beyond the simple living expenses after they retire.  This can turn into a huge problem if you decide that you want to begin taking expensive trips on a regular basis after you retire, because if you have not allocated the proper funds with a view toward such luxurious activities then they may prove to be impossible.

The earlier you start planning for your post-retirement life, the better you will feel when you get there.  Setting up an alternate retirement savings for recreation is more or less exactly the same thing you are probably already doing to prepare for retirement.  Having an alternate account for recreational savings can also help you to absorb some last minute emergencies without breaking your budget.  It can help you feel more confident about your new life every time you put a little bit away for your personal enjoyment in the future.  It can also help the future feel more real to you as you ponder on how you will enjoy your future activities.  Your post retirement options are virtually unlimited, and a little bit put away now can help you to get the most out of the best years of your life.

 

a Prepare to Enjoy Retirement]]> Many people have different ideas about what they are going to do when they retire.  Retirement in general can open up many opportunities to live the life you want to live, and it is important that you have an understanding of your newfound potential.  Whether you want to travel or take up a hobby that you never had time for, it is important that you develop an appropriate strategy to turn your retirement dreams into retirement realities.

It is never too early to begin planning for your life after retirement.  The sooner you can start, the better.  While it is common knowledge that retirement takes a bit of planning to pull of successfully, not everyone considers their budget beyond the simple living expenses after they retire.  This can turn into a huge problem if you decide that you want to begin taking expensive trips on a regular basis after you retire, because if you have not allocated the proper funds with a view toward such luxurious activities then they may prove to be impossible.

The earlier you start planning for your post-retirement life, the better you will feel when you get there.  Setting up an alternate retirement savings for recreation is more or less exactly the same thing you are probably already doing to prepare for retirement.  Having an alternate account for recreational savings can also help you to absorb some last minute emergencies without breaking your budget.  It can help you feel more confident about your new life every time you put a little bit away for your personal enjoyment in the future.  It can also help the future feel more real to you as you ponder on how you will enjoy your future activities.  Your post retirement options are virtually unlimited, and a little bit put away now can help you to get the most out of the best years of your life.

 

a

Prepare to Enjoy Retirement

]]> http://kenhimmler.com/2009/02/26/prepare-to-enjoy-retirement/feed/ 0 Background Check Your Financial Advisor http://kenhimmler.com/2009/01/26/background-check-your-financial-advisor/ http://kenhimmler.com/2009/01/26/background-check-your-financial-advisor/#comments Mon, 26 Jan 2009 11:33:55 +0000 Ken Himmler http://kenhimmler.com/?p=390 In the wake of the recent 300-million dollar investment scandal in Sarasota, financial advisor Ken Himmler has five questions every investor should ask before selecting a financial representative. View this link to hear Ken’s recent interview on Tampa Bay’s Channel 10.  

http://www.tampabays10.com/news/local/story.aspx?storyid=98649

 

1) Does the advisor have a clean record? Regulatory bodies such as the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC) provide on line resources for investors to research in any complaints have been filed against a financial professional. Third party resources, such as the National Ethics Bureau, allow for consumers to gather the comprehensive background information of a financial professional.

FINRA http://www.finra.org/brokercheck

SEC http://sec.gov/investor/brokers.htm

NEB www.ethicscheck.com

#2 Does your financial representative have custody of your financial accounts? Firms that have full custody of your financial accounts are technically in the position to liquidate those accounts. Advisors with custody do not have strict regulatory channels to go through when making trades on your behalf.

#3 Where is the advisor recommending you put your money? Be involved in your advisors investment strategy and don’t be afraid to check their work and ask questions.

#4 Does your financial representative invest your money in private funds? Hedge funds are private investment vehicles and are only lightly regulated. Often, the person who sells and manages the fund is also the controller of invested monies and is the one responsible for verifying the fund amount to any regulatory party.

#5 Is your financial representative held by fiduciary rules or rules of suitability? Stockbrokers otherwise referred to as registered representatives, are typically only held to the rules of suitability, rather than fiduciary responsibility. Suitability rules mean if the broker or manger loses your entire account value while under his or her management, but can establish you were an accredited investor or could afford the loss; their liability for the loss would be limited. Investment advisors, financial planners, and similar are subject to higher regulatory guidelines meaning they are liable for the overall financial strategy and could be held liable if they were to lose a significant portion of one’s investment portfolio.

 

a Background Check Your Financial Advisor]]> In the wake of the recent 300-million dollar investment scandal in Sarasota, financial advisor Ken Himmler has five questions every investor should ask before selecting a financial representative. View this link to hear Ken’s recent interview on Tampa Bay’s Channel 10.  

http://www.tampabays10.com/news/local/story.aspx?storyid=98649

 

1) Does the advisor have a clean record? Regulatory bodies such as the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC) provide on line resources for investors to research in any complaints have been filed against a financial professional. Third party resources, such as the National Ethics Bureau, allow for consumers to gather the comprehensive background information of a financial professional.

FINRA http://www.finra.org/brokercheck

SEC http://sec.gov/investor/brokers.htm

NEB www.ethicscheck.com

#2 Does your financial representative have custody of your financial accounts? Firms that have full custody of your financial accounts are technically in the position to liquidate those accounts. Advisors with custody do not have strict regulatory channels to go through when making trades on your behalf.

#3 Where is the advisor recommending you put your money? Be involved in your advisors investment strategy and don’t be afraid to check their work and ask questions.

#4 Does your financial representative invest your money in private funds? Hedge funds are private investment vehicles and are only lightly regulated. Often, the person who sells and manages the fund is also the controller of invested monies and is the one responsible for verifying the fund amount to any regulatory party.

#5 Is your financial representative held by fiduciary rules or rules of suitability? Stockbrokers otherwise referred to as registered representatives, are typically only held to the rules of suitability, rather than fiduciary responsibility. Suitability rules mean if the broker or manger loses your entire account value while under his or her management, but can establish you were an accredited investor or could afford the loss; their liability for the loss would be limited. Investment advisors, financial planners, and similar are subject to higher regulatory guidelines meaning they are liable for the overall financial strategy and could be held liable if they were to lose a significant portion of one’s investment portfolio.

 

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Background Check Your Financial Advisor

]]> http://kenhimmler.com/2009/01/26/background-check-your-financial-advisor/feed/ 0 Investment Bonds and the Risk of Early Redemption http://kenhimmler.com/2009/01/20/investment-bonds-and-the-risk-of-early-redemption/ http://kenhimmler.com/2009/01/20/investment-bonds-and-the-risk-of-early-redemption/#comments Tue, 20 Jan 2009 00:16:29 +0000 Ken Himmler http://kenhimmler.com/?p=368 Even if you fully intend to carry a bond through to maturity, the issuer of the bond may have other plans. If interest rates fall heavily and the issuer of your investment bond opts to lower its interest rate expenditures then they may exercise their right to redeem or call in their bonds even before they mature.

If you own a bond that is “callable” then there is some risk of this happening if interest rates drop to attractive levels for the issuer. Should this occur, the issuer will only be required to pay you par value for the bond and this will result in you receiving less than the current market price.

One of the unfortunate aspects of having a bond called is that the market environment that motivates issuers to redeem a bond is the same that often leads to higher bond prices. So not only do you lose the potential of a pre-maturity profit by selling the bond, you’re forced to sell earlier and for less money than you want.

While many callable bonds will have call protection where the bonds can’t be called for a certain period of time, you won’t have any choice but to take par value when and if they do opt to call it in.

It needs to be said that even if interest rates fall, this doesn’t mean your bonds are automatically going to be called in. The issuer will have to see that it can lower its costs by redeeming the bonds at par value and then selling additional bonds with lower yields. Typically, interest rates would have to drop significantly for this to happen.

Because callable bonds carry the risk that you won’t get the return you anticipate, they typically pay a higher rate of interest than non-callable bonds. When considering bond investments, you’ll want to weigh the pros and cons of higher interest/higher risk or lower interest/lower risk depending on your investment goals.

 

a Investment Bonds and the Risk of Early Redemption]]> Even if you fully intend to carry a bond through to maturity, the issuer of the bond may have other plans. If interest rates fall heavily and the issuer of your investment bond opts to lower its interest rate expenditures then they may exercise their right to redeem or call in their bonds even before they mature.

If you own a bond that is “callable” then there is some risk of this happening if interest rates drop to attractive levels for the issuer. Should this occur, the issuer will only be required to pay you par value for the bond and this will result in you receiving less than the current market price.

One of the unfortunate aspects of having a bond called is that the market environment that motivates issuers to redeem a bond is the same that often leads to higher bond prices. So not only do you lose the potential of a pre-maturity profit by selling the bond, you’re forced to sell earlier and for less money than you want.

While many callable bonds will have call protection where the bonds can’t be called for a certain period of time, you won’t have any choice but to take par value when and if they do opt to call it in.

It needs to be said that even if interest rates fall, this doesn’t mean your bonds are automatically going to be called in. The issuer will have to see that it can lower its costs by redeeming the bonds at par value and then selling additional bonds with lower yields. Typically, interest rates would have to drop significantly for this to happen.

Because callable bonds carry the risk that you won’t get the return you anticipate, they typically pay a higher rate of interest than non-callable bonds. When considering bond investments, you’ll want to weigh the pros and cons of higher interest/higher risk or lower interest/lower risk depending on your investment goals.

 

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Investment Bonds and the Risk of Early Redemption

]]> http://kenhimmler.com/2009/01/20/investment-bonds-and-the-risk-of-early-redemption/feed/ 0 Tax Alert: The Worker, Retiree, and Employer Recovery Act of 2008 http://kenhimmler.com/2009/01/10/tax-alert-the-worker-retiree-and-employer-recovery-act-of-2008/ http://kenhimmler.com/2009/01/10/tax-alert-the-worker-retiree-and-employer-recovery-act-of-2008/#comments Sat, 10 Jan 2009 04:04:37 +0000 Ken Himmler http://kenhimmler.com/?p=361 This new law was just signed by President Bush on December 23, 2008 and it includes the suspension of Required Minimum Distributions (RMDs) for 2009. It states that individuals are are not required to take any distribution from their IRA or any other retirement plan for 2009.  This legislation contains numerous pension related provisions; however, a taxpayer who attained age 70 1/2 during 2008 has to receive their initial distribution by April 1, 2009 despite this law change, as that distribution is for 2008.  Taxpayers in this situation may have already received their initial distribution in 2008, and thus no further action is required.

The RMD is calculated based on life expectancy tables that are applied to the fair market value of the retirement account(s) as of the end of the prior calendar year.  Under the Internal Revenue Code, upon reaching the age of 70-1/2, individuals must begin receiving RMDs from their IRAs, 401(k) plans, and other retirement plans.  The initial RMD must be received no later than April 1 of the year following the year the age of 70-1/2.  Thereafter, annual distributions are required.

It should be noted that taxpayers who are required to get RMDs during 2008 have had to receive distributions based on the much higher fair market value of their retirement plan asset portfolios that existed on December 31, 2007, compared with the current values.  The 10% penalty for premature distributions taken from an IRA or other retirement plan prior to age 59-1/2 has not been changed for 2009.

Although this new law has been signed, many people will still choose to  take distributions from IRAs and other retirement plans during 2009 to cover living expenses and provide necessary cash flow in these difficult times .

 

a Tax Alert: The Worker, Retiree, and Employer Recovery Act of 2008]]> This new law was just signed by President Bush on December 23, 2008 and it includes the suspension of Required Minimum Distributions (RMDs) for 2009. It states that individuals are are not required to take any distribution from their IRA or any other retirement plan for 2009.  This legislation contains numerous pension related provisions; however, a taxpayer who attained age 70 1/2 during 2008 has to receive their initial distribution by April 1, 2009 despite this law change, as that distribution is for 2008.  Taxpayers in this situation may have already received their initial distribution in 2008, and thus no further action is required.

The RMD is calculated based on life expectancy tables that are applied to the fair market value of the retirement account(s) as of the end of the prior calendar year.  Under the Internal Revenue Code, upon reaching the age of 70-1/2, individuals must begin receiving RMDs from their IRAs, 401(k) plans, and other retirement plans.  The initial RMD must be received no later than April 1 of the year following the year the age of 70-1/2.  Thereafter, annual distributions are required.

It should be noted that taxpayers who are required to get RMDs during 2008 have had to receive distributions based on the much higher fair market value of their retirement plan asset portfolios that existed on December 31, 2007, compared with the current values.  The 10% penalty for premature distributions taken from an IRA or other retirement plan prior to age 59-1/2 has not been changed for 2009.

Although this new law has been signed, many people will still choose to  take distributions from IRAs and other retirement plans during 2009 to cover living expenses and provide necessary cash flow in these difficult times .

 

a

Tax Alert: The Worker, Retiree, and Employer Recovery Act of 2008

]]> http://kenhimmler.com/2009/01/10/tax-alert-the-worker-retiree-and-employer-recovery-act-of-2008/feed/ 0 What Happens When You Sell Your Investments Now http://kenhimmler.com/2008/10/10/what-happens-when-you-sell-your-investments-now/ http://kenhimmler.com/2008/10/10/what-happens-when-you-sell-your-investments-now/#comments Fri, 10 Oct 2008 00:36:27 +0000 Ken Himmler http://kenhimmler.com/?p=319  

In the last few days we have seen the market drop almost 2000 points off the Dow. Now people from all walks of life are wondering should I just move my money to cash to protect it until the market bottoms out?

I have heard this thinking now for twenty five years and the only thing that changes is the years that it happens. It might make sense to sell out now to be able to hold onto your principal but did those people who sold out in 1987, 1991, 1999, 2001 not learn anything?

Once you sell you lock in your losses and then you are faced with what I call the 50/100 rule. This says that if you lost 50% of your valuation you have to earn 100% to get back to even. Then what should you do during this volatility?

If you are in the accumulation stage (saving for retirement) then you should stay steady as you have a time horizon that will allow the markets to have the opportunity to return. If you are in the distribution phase (retirement) then you should have had an asset allocation strategy that has a good portion of your money in stock and in bonds. Those bonds (Government) have or should have grown in the last few weeks. This means that while you are in your distribution phase then you should be looking to take your cash flow from the bonds and leave the stock alone. If your plan was properly devised you should have at least five years worth of cash flow that can be taken from bonds.

To really help you understand how damaging it is to sell out now you should read the study H. Nejat Seyhun produced from the University of Michigan. He shows how damaging it is to try to time the market by getting out on the way down and then trying to time the best time to get back in. From 1963 to 2004 if you would have stayed in the market you would have received an average rate of return of 10.84% (based on his selection of the domestic stock market). If you would have only missed the 90 biggest gaining days during this entire period, you would have only received 3.2%.

In another study from the Journal of Investing, by only missing the 10 best trading days your return is cut in half. In simple terms – if you try to market time you will potentially lose 50% of your returns.

What do we do right now? If you have an asset allocation plan then it is time to re balance as the allocation is certainly more than 15% out of tolerance. If you don’t have an asset allocation plan then now is the time to put one in place.

 

 

 

a What Happens When You Sell Your Investments Now]]>  

In the last few days we have seen the market drop almost 2000 points off the Dow. Now people from all walks of life are wondering should I just move my money to cash to protect it until the market bottoms out?

I have heard this thinking now for twenty five years and the only thing that changes is the years that it happens. It might make sense to sell out now to be able to hold onto your principal but did those people who sold out in 1987, 1991, 1999, 2001 not learn anything?

Once you sell you lock in your losses and then you are faced with what I call the 50/100 rule. This says that if you lost 50% of your valuation you have to earn 100% to get back to even. Then what should you do during this volatility?

If you are in the accumulation stage (saving for retirement) then you should stay steady as you have a time horizon that will allow the markets to have the opportunity to return. If you are in the distribution phase (retirement) then you should have had an asset allocation strategy that has a good portion of your money in stock and in bonds. Those bonds (Government) have or should have grown in the last few weeks. This means that while you are in your distribution phase then you should be looking to take your cash flow from the bonds and leave the stock alone. If your plan was properly devised you should have at least five years worth of cash flow that can be taken from bonds.

To really help you understand how damaging it is to sell out now you should read the study H. Nejat Seyhun produced from the University of Michigan. He shows how damaging it is to try to time the market by getting out on the way down and then trying to time the best time to get back in. From 1963 to 2004 if you would have stayed in the market you would have received an average rate of return of 10.84% (based on his selection of the domestic stock market). If you would have only missed the 90 biggest gaining days during this entire period, you would have only received 3.2%.

In another study from the Journal of Investing, by only missing the 10 best trading days your return is cut in half. In simple terms – if you try to market time you will potentially lose 50% of your returns.

What do we do right now? If you have an asset allocation plan then it is time to re balance as the allocation is certainly more than 15% out of tolerance. If you don’t have an asset allocation plan then now is the time to put one in place.

 

 

 

a

What Happens When You Sell Your Investments Now

]]> http://kenhimmler.com/2008/10/10/what-happens-when-you-sell-your-investments-now/feed/ 0 Time to Invest Into Stock Market? http://kenhimmler.com/2008/10/08/time-to-invest-into-stock-market/ http://kenhimmler.com/2008/10/08/time-to-invest-into-stock-market/#comments Wed, 08 Oct 2008 02:16:41 +0000 Ken Himmler http://kenhimmler.com/?p=317 Today it seems as though only the strong invest when the market crashes. It is interesting that when the market is up everyone complains that they should not buy in because it is too high and they should have done it when the market was low. When the market is low then everyone says they don’t want to because the market is low. What is wrong with this picture? It shows why most people really don’t make money in the market. It goes with normal human survival instinct and to do otherwise means that we have to overcome habit and emotion with logic and mathematics. What do you think, should you be investing in the stock market now or should you be staying in cash?

 

a Time to Invest Into Stock Market?]]> Today it seems as though only the strong invest when the market crashes. It is interesting that when the market is up everyone complains that they should not buy in because it is too high and they should have done it when the market was low. When the market is low then everyone says they don’t want to because the market is low. What is wrong with this picture? It shows why most people really don’t make money in the market. It goes with normal human survival instinct and to do otherwise means that we have to overcome habit and emotion with logic and mathematics. What do you think, should you be investing in the stock market now or should you be staying in cash?

 

a

Time to Invest Into Stock Market?

]]> http://kenhimmler.com/2008/10/08/time-to-invest-into-stock-market/feed/ 0