“DOG DAYS OF SUMMER”
Over time, our understanding can change about how things work and what things mean.
For instance, the month of August is often referred to as the “Dog Days of Summer”. The popular meaning of this phrase is associated with August being the hottest month in the northern hemisphere. This summer, in particular, has presented record-breaking heat throughout the country.
The term “Dog Days of Summer” actually came about during ancient Roman times because August was when the star Sirius, also known as the dog star, rose to visibility. Sirius is the brightest and nearest star which can be seen with the naked eye. It is comprised of Sirius A and a companion star Sirius B which encircles Sirus A. Sirius is in the constellation Canis Major, The Dog.
Sometimes it is important to question what we “know” to be true, especially when it comes to how we handle money. It might help to keep financial heat at bay!
Below are some “cool” money tips.
OUT-OF-THE-BOX THINKING ON A VERY POPULAR SUBJECT—MONEY
1. The financial world is filled with people and institutions touting that their product is superior to their competitors. There are many good financial institutions and financial products. Financial success is determined by developing strategies that focus on a process, not a product. Strategies need to be developed to handle both expected and unexpected events. They must work in all conditions, regardless of economic or political conditions. Once the strategies are in place then the products can be chosen that align with the course of action.
2. Financial instruments, or products, are tools that support your strategies. You must understand your specific situation. Mortgages, life insurance, stocks, bonds, annuities, etc. are tools that can help secure your financial future. It is important to know how these instruments work, how they work together, and how they fit into your overall plan. There is no one strategy that works for everyone, and no perfect product.
3. Are you familiar with the “Mode of Settlement” options with a Life Insurance Policy? The Owner has the right to decide how the proceeds will be disbursed to the beneficiaries. There are several options, including the most popular “Lump Sum Payment.” The settlement options can be changed by the Owner prior to an insured’s death. Settlement options are particularly important if the Owner is concerned about how the funds should be handled.
4. Settlement Options continued….. Listed are the settlement options available.
- Lump-Sum Payment
- Interest Only Payment—Beneficiary receives interest annually. Beneficiary can elect to take all or a portion of the principal unless the policy owner places restrictions on the disbursement.
- Fixed Amount Payments
- Fixed Period Payments
- Life Income Payments
5. Don’t overlook an important living benefit in life insurance. Many policies offer “accelerated death benefits.” This allows the policyholder of a life insurance policy that has been diagnosed with a terminal illness to access a portion of the death benefit while they are still alive. The amount withdrawn is subtracted from the death benefit your beneficiaries will receive at death. Details vary by company, type of policy, and state. These monies can be used for any purpose, including nursing home care and loss of income for a spouse who takes a leave of absence from work to attend to the needs of the patient.
6. Fixed Annuities are insurance products. They are sold by licensed insurance agents, and provide significant contractual guarantees for the annuity owner. Fixed annuities do not decline in value, and are not subject to market fluctuations. These annuities can be a valuable tool when planning for your essential income at retirement.
There are two types of fixed annuities.
- Deferred—They are designed to store and build retirement savings. You have access to your money in a variety of ways in the future. They offer guaranteed lifetime income throughout your life.
- Immediate—They offer guaranteed lifetime income usually within one year of the purchase.
7. Check your medical network before having any procedures done! It is important to verify all physicians and facilities prior to any planned procedures. Surprise bills can pop-up when you have services rendered by an in-network hospital but are being treated by emergency physicians, anesthesiologists, or other specialty providers who are independent contractors and are not part of the network. Patients are typically responsible for the difference between the out-of-network physician charges and the in-network negotiated rate, or the entire bill. The Affordable Care Act has created a more favorable environment for treatment in smaller facilities.
8. Low fixed interest rates continue to surprise everyone. The 30-year fixed rate is about 3.6%. This is approximately a half percentage point less than 90 days ago. Are you considering a mortgage? There are some reasons not to have a mortgage but there are also some reasons to have a mortgage. Listed are a few reasons.
- You can’t afford to pay cash for the real estate.
- Tax deductions are available if you qualify.
- The spread between the cost to borrow and what you could earn with the cash if you were to keep it. Keep in mind, the earning potential occurs over the life of the 15-year or 30-year mortgage.
- Access and control of cash outside the house.
9. Accountants understand the importance of both assets and liabilities when determining net worth of individuals. The same is true of your money. It is important not to only focus on rate of return without giving consideration to real and potential wealth transfers. Wealth transfers occur in the form of taxes, lack of adequate protection of your life and assets, and expenses.
10. Is your income uncommon and are you concerned about your money lasting as long as you do? It might make sense to heed the words of Mark Twain. “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” Work with an adviser who understands that uncommon income requires uncommon thinking and strategies. Request they verify their recommendations and do not accept “this is the way we have always done it” as a solution for your unique situation.
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