What are the key items to consider when reviewing your insurance needs?

What are the key items to consider when reviewing your insurance needs?

Excerpts from the Book - Preserving Wealth - written by Jack Lumsden, MBA, CFP® As we clattered around in the kitchen, we sum­marized the major points from our discussion about insurance: 1. Many people underestimate the amount of insurance they need and/or buy the wrong kind.  For short-term needs (less than twenty years), buy term insurance. For needs that last a lifetime, consider permanent life insurance. 2.   Families with young children should insure both spouses. 3. You are not really insuring a life but rather the income that the life could produce. In the case of spouses who stay at home to care for children, you are insuring the cost of replacing that care. 4. The insurance policy should provide enough money to:  pay all debts;cover the cost of university for the children; pay final taxes, including those on capital gains; replace a person’s income and/or provide for daycare or a nanny in the case of spouses who provide childcare in the home; andprovide for a legacy if desired. 5....
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What are the Two Main Types of Risks when Investing?

What are the Two Main Types of Risks when Investing?

Excerpts from the Book - Preserving Wealth - written by Jack Lumsden, MBA, CFP® “There are basically two main types of risk: capital preservation risk and inflation risk. “Capital preservation risk is the risk that your capital is not there when you need it. Let’s say you were going to buy a new boat in a year, and the cost was $25,000. To make sure you had the $25,000 in a year, you would have to invest in conservative investments, such as a high interest savings account, so you’d have the $25,000. If you invested in equities/stocks, in a year you could have more than $25,000 or a lot less. “Inflation risk is basically making sure that your money grows over time as items get more expensive each year. Even inflation of 2% over twenty years, as in the prior example, can lead to costs increasing dramatically. “Even if you’re close to retirement, you still need some growth in your portfolio, because peo­ple today...
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What are the Risks to Retirement Income Planning?

What are the Risks to Retirement Income Planning?

Excerpts from the Book - Preserving Wealth - written by Jack Lumsden, MBA, CFP® The following is an excerpt that describes some of the risks to retirement income planning. “That’s a great analogy, Uncle Wayne. I can see how it’s important to make sure you have a great plan as you transition to retirement, but what are some of the key risks to retirement income planning that are different than saving for retirement?” Mark asked.       RISKS TO RETIREMENT INCOME PLANNING “Good question, Mark. A key risk is that you really don’t know how long you must plan for, which is called longevity risk. People are living longer today and don’t want to out-live their investments.” Uncle Wayne explained. “I was reading some stats the other day, and for a couple today who at age sixty-five, there’s a 50% chance one will live to ninety, and a 25% chance that one will live to ninety-five,” I added. “Wow,” Sally said. “Mark, if you ever get a new...
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