February 5, 2013 By bnjewell
If you’ve ever had a fender-bender, then you probably know: Even a small amount of auto damage can amount to huge sums of money in repair costs.
Modern automobiles are among the most amazing machines ever built, and the value that they add to our lives is absolutely incredible. In about 100 years’ time, cars have changed the face of modern society. But with these incredible machines come incredible cost and incredible destructive power. If you’re going to drive a car, you need to protect yourself against that risks that come with that power and cost. You need auto insurance.
Insurance can be one of the most misunderstood financial products in the marketplace today, but it is also one of the most necessary to have a peaceful, prosperous financial life. In this series, Understanding Insurance, we’ve talked about philosophical ideas such as the the fundamentals of risk, as well as practical matters like how to approach health insurance. Today we’re taking a look at a topic that is critical for any driver: Auto insurance. [Read more…]
January 27, 2013 By bnjewell
In the blink of an eye, you can end up hundreds of thousands of dollars in debt.
It doesn’t matter how careful you are in your budgeting or how disciplined you are in your spending — without health insurance, you’re always living one disaster away from financial ruin. And even medical treatment that doesn’t seem like a big deal can be very costly. Doctors and hospitals charge some of the highest hourly rates for service of any industry in the country. Without health insurance, even a routine event like a broken bone or childbirth can set you back thousands of dollars.
In this series “Understanding Insurance,” we’ve been working to make sense of the complicated and confusing insurance industry. We’ve talked about how insurance protects us from the fundamental risks of life, and looked at ways to mitigate the risk factors that can cost us money. Last time, we studied some of the important ideas that make a difference in our insurance policies. Today, we’re going to dig a little deeper into the most fundamental type of insurance that everyone should have: health insurance. [Read more…]
January 17, 2013 By bnjewell
When you buy insurance, do you pay attention to words such as “premium,” “deductible” and “term”? You should, because these funny-sounding words are the nuts and bolts of how insurance works, and knowing how to manage them well can save you a lot of money.
Good insurance is an important part of sound financial planning. It removes some of the financial risk that comes from living in an unpredictable world, and it allows us to plan in advance for emergencies that would otherwise be difficult to prepare or account for. But not all insurance is created equal — in fact, no two policies are exactly alike. In order to get the insurance policy that meets your needs and your budget, you need to have a firm understanding of some of the key ingredients of insurance: premiums, deductibles and terms.
Here’s a quick overview of each of these ideas, as well as some tips about how to balance them to create insurance that serves you well. [Read more…]
January 8, 2013 By bnjewell
How risky is your life?
You may not be a skydiver, a super spy or some other kind of daredevil, but you still lead a risky life. We all do. Even the most boring person is at risk of having health problems, a car wreck, home repairs or natural disasters. Those risks bring big financial implications to your life. If you understand and manage your risk factors well, though, you can protect yourself and save a lot of money on insurance.
In this series, Understanding Insurance, we’re teaching some of the fundamental principles that make the insurance industry work, and teaching you how to make the most of insurance without pay too much. Last time, we discussed the principle that when you buy insurance, you’re removing some of the risk from your life and putting it on the insurance company’s shoulders. Today, we’re going to take that concept a step further, and examine how some of the specific risk factors in your life can affect your insurance profile.
[Read more…]
December 21, 2012 By bnjewell
Some people call it a necessary evil, some call lit a racket and others call it institutionalized gambling. Whatever you call it, insurance is a fact of life, and one that you need to understand in order to succeed financially.
If you’re an adult, you’ve likely dealt with some form of insurance already. You can’t legally operate a vehicle without auto insurance. If you own a home, your mortgage company requires you to carry homeowner’s insurance. There’s been an ongoing national dialogue about health insurance for years now. And if you have a family, there’s a good chance that you’ve thought about the need for life insurance as well.
The insurance world can be intimidating — it’s filled with all sorts of jargon, legalese, arcane rules and small print. Insurance can also be painfully expensive, and the difficulties that sometimes arrive when you try to collect on a claim can cause no small amount of frustration. Given all these factors, many people get the wrong idea about insurance, and some people make the dangerous choice to forego it altogether. That’s too bad, because understanding insurance and using it well can be an essential element in your financial success. In these series, Understanding Insurance, we’re going to look at many of the things that you need to know to make insurance work for you. To start, though, we need to get a fundamental understanding of risk. [Read more…]
December 11, 2012 By bnjewell
You’re making big returns on the money that you’ve invested — that’s great! So if you could get your hands on some more cash, you could invest it too and make even more money, right? Maybe not.
We’re big fans of investing — it’s the best way to grow wealth for your future. When done correctly, regular investing can make you a millionaire over the course of your lifetime. And some savvy investors can make big returns quickly by getting involved in the right opportunity at the right time. But just like there are great tactics in the investment world, there are also some bone-headed strategies that can cost you a lot of money in the long run.
In this series, we’re discussing some of the “Do’s and Don’ts” of wise investing. Today’s lesson is an important one for anyone who is doing well, and thinks that they could do even better if they had more cash: Don’t ever borrow money to invest, or invest more money than you can afford to lose. [Read more…]
December 2, 2012 By bnjewell
It doesn’t matter how well you’ve done in the stock market: If you haven’t optimized your investment strategy for tax savings, you’re not as successful as you think.
Nobody likes taxes, but they are an unfortunate necessity of civilized life. In the United States (and most other developed countries), there are tax implications every time you earn money, whether that money comes from a paycheck at work or income off of your investments. But there are also lots of loopholes, exceptions, incentives, deductions and other breaks built into our tax code that can significantly help to lower your tax burden.
In our series on Wise Investing, we’ve been talking about some of the “do’s” and “don’ts” of investment. Today’s advice is pretty practical: When you invest, do work with professionals to get good tax advice and maximize your tax savings. [Read more…]
November 25, 2012 By bnjewell
It’s a classic case of “monkey see, monkey do” — if the people all around you are excited about jumping into or out of a certain investment, you’re going to be tempted to do the same thing. Wisdom, however, will tell you to avoid the bandwagon effect.
Investment is one of the best ways to grow wealth for the future, and as wise investors, we certainly do need to be aware of what’s going on in the market around us. But we also need to remember the fundamentals of investing, and what makes a security a good or bad place to put our money. All too often, investor excitement and market swings are based on hype, fear and speculation, none of which is fundamental to successful investing.
In this series on Wise Investing, we’re covering some important dos and don’ts of how to handle your money in the market. We’ve talked about investing where you see a long track record of success, avoiding the impulse to pull out when the market dives, and diversifying your portfolio. Today’s lesson is just as important: In order to avoid getting crushed by the wild swings of hype and fear, stay away from speculation. [Read more…]
November 13, 2012 By bnjewell
“Diversity” isn’t just a hot word in today’s politically correct environment. Used with some wisdom, diversity can be one of the best principles to guide your investing.
Perhaps you’ve heard people talk before about “diversifying your portfolio” — the idea is not new. The trouble is that unless you’re plugged into the world of finance and investing, it can be difficult to know what this really means. Well, consider this your introduction.
In this series on Wise Investing, we’ve been giving you some quick “do” and “don’t” tips that will help you as you invest for your future. We’ve talked about seeking out investments that have a long track record of success, and warned against pulling your money out just because the market goes down. Today’s lesson is another “do”: Do diversify your investments across a number of industries and approaches. [Read more…]
November 4, 2012 By bnjewell
Roller coasters may be scary. But the only way to really get hurt on one is to try to get off the ride before it stops.
When you open up your web browser or investment account statement and see that your investments have lost value, it’s easy to get that same panicked, sinking feeling that a roller coaster can induce. It can be tempting to pull your investments out of the market to avoid the perceived danger. But that’s exactly the wrong decision to make. Getting scared and pulling your investments too soon locks you into a negative situation. The better idea is to stay in the market and ride out the storms. Because if you play it right, you can make money investing, even when you’re “losing money” on paper.
No, this isn’t snake oil that I’m selling, it’s just math. Today’s nugget of Wise Investing is this: Don’t get scared and pull out too soon. Investing is a long game, and the only way to win is to play the whole way through. [Read more…]