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Ponderings For the Week of February 11 - 17, 2019

Stocks Hold onto Earlier Gains

U.S. stocks posted tiny gains last week which isn’t so bad given the recent strength in equity prices. Investors are confronted with dueling explanations of the recent rally. Is it a continuation of the almost decade old bull market or is it a brief respite from a bear market that so pained investor pocketbooks in late 2018? No one knows for sure, but opinions abound. If you’re satisfied with how your investments are positioned, you should probably stay put. After all, often the best thing to do with your investments is nothing.   

Last week’s results for foreign stocks were disappointing with losses averaging over 1%. Economic data, especially in Europe, is pointing to slower growth. Domestic investors may start to become concerned that weakness overseas may spread to the U.S.    

19 Financial Resolutions for 2019 (Part VI)

Here is the next to last recitation of my 19 financial resolutions for the New Year. The final iteration will appear next week.

  1. Retire your debt before you retire.  One of your most important financial goals should be to pay off your debt before or soon after you retire. Consider the example of someone who retires with mortgage and other debt requiring monthly payments of $2,500, and it will take ten years to pay off the debt. This person will need an additional $250,000 in retirement savings to be able to enjoy the same income as another retiree who is debt free.
  2. Help your parents cope with later life financial challenges. Resolve to help older generation family members meet later life financial and health challenges. Here are four big ones. First, make sure they get the quality of health care they’re entitled to, including maintaining the right type and right amount of health and drug insurance coverage. Second, help them avoid falling prey to scams by always being available to offer a second opinion on anything that someone is trying to sell them. Third, make sure they are not being exploited by unscrupulous investment advisors, insurance salespeople, or, sadly, family members or caregivers. Ask any and all who handle their investments and bank accounts to send you duplicate monthly statements. Finally, be on the lookout for the time when your older relatives may have difficulty keeping up with day-to-day financial challenges, like paying bills and completing income taxes. You or a sibling may need to step in to help them.



Smart Money Tips


  • Insuring your household possessions. Weather-related events have been brutal in many areas of the country. No one is immune from suffering a loss of their household possessions through theft, fire, or other calamity. So it behooves you to make sure you have adequate insurance coverage against the wide range of perils that confront all of us. The basic homeowners or renters insurance policy provides some protection, but usually not enough. Here are two optional extras to consider: First, replacement cost coverage will reimburse you for losses in an amount that will pay to replace the lost items with new ones. The standard policy usually reimburses only for depreciated value, so even though you have coverage, without optional replacement cost coverage, you could still be out a lot of money when you replace lost property. You’ll probably be pleasantly surprised to find that replacement cost coverage doesn’t cost very much. Second, since the standard policy has very strict limits on how much it will pay for your valuable possessions like jewelry and silverware, you would be wise to obtain full replacement cost coverage for your valuables with a so-called “floater” policy. The cost of this insurance can add up if you have a lot of valuables, but that may be a small price to pay if these expensive possessions are lost or damaged.
  • You never know…  You never know when something may befall you or a loved one that will require someone else to step in to make essential healthcare decisions. These events, while rare, may arise even for younger people. A healthcare proxy is a legal document with which an individual appoints an agent to legally make healthcare decisions on behalf of the patient when he or she is incapable of doing so. Once the healthcare proxy is effective, the individual continues to make healthcare decisions as long as he or she is legally competent to decide. Without a healthcare proxy, suffice to say that a real mess could ensue at a crucial time. A healthcare proxy is usually prepared at the same time a will is drafted. That’s an important first step. Equally important is informing family members or other parties as to where the healthcare proxy is located. Stories abound of people who have prepared this important document, but are unable to locate it when the health care providers need it.


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