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FINANCIAL INFORMATION - Archived Below, you will find information on the following topics:
WHY HAVE A FINANCIAL
PLANNER? If doing a better job planning your financial future was one of your New Year’s resolutions, have you been procrastinating? Hey, it’s March already. Don’t worry, we’re going to help you. Today’s guest is Elisabeth Plax, of Plax and Associates Financial Services. She’s here to explain the benefits of financial planning and to tell you how to find that planner who will meet your particular needs.
Question: Can most people do their own
financial planning?
Answer: Some people can. However, most
people may not be experts in all the areas they need planning, the may wish
for a professional review, or they don’t have time to plan, or they don’t
know where to start.
Question: What is a financial planner?
What is a Certified Financial Planner?
Answer: Someone who uses a specific
process to help you toward achieving your goals. They are able to look at
the “big picture” of your financial situation, and can focus on one area in
that larger context.
Question: What regulations exist for
Financial Planners?
Answer: The government doesn’t regulate
financial planners. Instead, they are regulated depending upon the services
they provide. For example, insurance is regulated by the State Bureau of
Insurance, investments by the SEC/NASD, etc.
Answer: Ask their experience and
qualifications, what services they specialize in, their approach to
financial planning, how services will be paid for, business relationships,
disciplinary actions that have been taken against them, and written
recommendations.
It’s time to do your financial planning. Probably past
time! Start by finding the right planner to work with you. And you can begin
that process by getting this free questionnaire. It’s really helpful, to get
you pointed in the right direction. What are your areas of specialization?
How many clients do you have? Who will actually work with me? How are you
paid? ---Elisabeth Plax, CFP For more information: Plax & Associates Financial Planners WHAT SHOULD YOU SAVE AND WHAT SHOULD YOU THROW OUT?
Show 208 Air date: 3/30/03 I keep way too much stuff. If one of my piles ever falls over, I’ll be buried in paper. We’ll need Jim Busch’s help. It’s spring. This is a good time to weed out all those documents you don’t need. Here to help is our master financial gardener, Elisabeth Plax. Elisabeth is founder of Plax and Associates Financial Services.
Answer: First there are deeds, titles, permits,
divorce and death certificates, adoption papers, etc.
Answer: Tax returns should be kept at least ten
years (or forever). Any correspondence with the IRS should be
kept for at least three years after the problem has been resolved. If
there is no fraud, just more taxes due, the IRS can only look back three
years for an audit. If they find a problem, then seven years or more.
Documents to keep three years include: W-2 forms, 1099 forms, statements
from your broker dealer, and proof of deductions (business, charitable,
capital gains and losses, cancelled checks, credit card statements). Don’t
forget the confirmation notices from your broker for cost basis records.
Answer: Mortgages and lease documents. Mortgage
and lease information can be tossed three years after they are paid off.
However, if you use part of your home, your phone, etc. for business
purposes and deduct the expense, then keep your bills for three years, again
for the possibility of an audit. Answer: If you are comfortable with a computer, there are several software programs that can help you keep track of income and expenses. They make it very easy. But you still need some of those papers. And for that a 3-ring binder with dividers, or manila folders or large envelopes will work just fine—as long as you remember to clear old “stuff” out once a year. Don’t get buried beneath years and years of bills and financial statements. Take time to sort through them now, and only keep what you need. If you missed any of Elisabeth’s advice, she’s kindly offered our viewers a sheet that puts those keep or toss tips on paper. This document is a Definite Keeper! Call the number coming up to get one.
For more information: Plax & Associates Financial Planners
Show 210 Air date: 4/6/03 Medicare is a great program. But as anyone who has used it knows, it does not provide 100 percent coverage. Private insurance, called Medigap, was created to fill the coverage gap. Unfortunately these policies can be confusing. Here to close our knowledge gap about Medigap is Elisabeth Plax, founder of Plax and Associates Financial Services.
Question: What are medigap policies and what kind of coverage is available?
Answer: Medigap policies are supplemental
Medicare insurance that “plug” the gap in Medicare coverage. More than a
decade ago, Congress ordered medigap policies to be standardized and
actually made it a crime to sell duplicate policies. Question: If the coverage is identical, searching for the right Medigap policy ought to be simple, right? Just look for the lowest premium.
Answer: It’s not quite that simple. You must
understand the differences between companies because they affect how costs
will change in the future – whether premiums will rise sharply or not.
Question: What types of pricing do we
have to choose between?
Answer: All premiums will increase based on
health care inflation costs, but there are three main pricing choices:
Question: How should you choose a policy?
Answer: Understand the company’s pricing
structure.
Question: How can you lock in premiums?
Answer: It’s not possible to lock in premiums
completely!
Securities offered through LINSCO/Private Ledger (Member NASD, SIPC) For more information: Plax & Associates Financial Planners
Show 212 Air date: 4/27/03 You’ve undoubtedly heard of mutual funds. You may own some. The popular mutual funds are open end funds. But I’ll bet you don’t know that there’s another type of mutual funds, closed end funds, that may be better investments for lots of folks, especially in these difficult economic times. Here to tell us why we should keep an open mind concerning closed end funds is our broad minded financial expert, Elisabeth Plax, founder of Plax and Associates Financial services.
Answer: Both open-end and closed-end funds are pools of investor money that are managed by professionals to maximize diversification. However, they differ in how they are structured in terms of ownership. An Open-end fund issues and redeems shares on demand whenever a shareholder buys or sells shares. There is no limit to the number of shares that can be issued, and the value of each share is determined only by the net asset value of each security owned by the fund, not the size of the fund. A Closed-end fund, on the other hand, has a fixed number of shares outstanding just like a company. Following an initial public offering, shares are traded on an exchange just like a stock. The value of each share is based not only on their Net Asset Value, but also on the supply and demand in the marketplace. Therefore, they can trade at a value above their NAV (premium) or below it (discount). More than 500
different closed-end funds are available today. The vast majority (about
2/3) hold fixed-income securities (especially muni bonds). Question: Today you’ve made a list of some important advantaged of closed-end funds over open-end funds. Let’s take a look at the first advantage you’ve mentioned: they are more tax efficient.
Answer: As we have seen in the past few years,
if many investors redeem their shares at about the same time, this can
create large capital gains, sometimes even when the account balance has
actually gone down. With a closed-end fun, a shareholder is buying or
selling units of the fund with another shareholder. Thus, the manager does
not have to sell highly appreciated stocks inside the fund, where high
levels of capital gains can be generated.
Question: Your second point was that
closed-end funds offer more efficient portfolio management.
Answer: Yes. The manager has a stable pool of
capital to work with, so they don’t need to worry about inflow and outflow
of cash. Investments can be more long-term. There’s no need to sell security
in a down market in order to meet redemption requirements, and in an up
market, there is no flood of cash to deal with.
Question: What are some other important
advantages?
Answer: There is no minimum amount that must be
invested since you are buying individual shares. Expense ratios are
often lower and that can boost performance results. The investor can
place limit orders to meet portfolio requirements, just as you would on
other securities. Answer: Probably not. They are more complicated to evaluate than open-end funds, and if they are leveraged, they can also be riskier. It’s probably more important to work with an advisor when purchasing a closed-end fund. Closed end funds are another option that’s open to you. They have some real nice benefits. If you’d like a free brochure that gives more information about closed end mutual funds, give Plax and Associates a call. The number’s next.
Securities offered through LINSCO/Private Ledger (Member NASD, SIPC)
For more information: Plax & Associates Financial Planners
Show 214 Air date: 5/11/03 FDIC and SIPC don’t get enough R-E-S-P-E-C-T. But these alphabet soup programs can protect your investments. Here to give us the ABC’s of safeguarding your CDS, IRAs and other accounts is Elisabeth Plax, Ph.D. and CFP.
Answer: There are two types of protection. The
first is FDIC, which stands for Federal Deposit Insurance Corporation. It
protects what are known as deposit accounts in most, but not all, banks.
Deposit accounts include checking accounts, savings accounts, CDs and Money
Market Deposit accounts, as well as any IRA account invested in CDs or Money
Market Deposit account.
Question: What if someone has more or less than
$100,000 in his account?
Answer: Each account stands alone. So if I have
$75,000 in one account and $125,000 in another, the first account will be
insured for $75,000 and the second for $100,000, for a total of $175,000,
not $200,000.
Question: What does SIPC mean? How does
that differ?
Answer: SIPC stands for Securities Investor
Protection Corporation and it protects investors against loss from fraud,
bankruptcy or other financial difficulties of a brokerage firm.
Question: What are some other important
features of these 2 insurance coverages?
Answer: Money market mutual funds are
classified as securities, not cash, and, consequently, are insured under
SIPC coverage. Don’t take the FDIC and SIPC coverages for granted. Failing to understand these insurance programs could cost you your life savings. For a free fact sheet about these programs, and how they work, give Plax and Associates a call.
Securities offered through LINSCO/Private Ledger (Member NASD, SIPC)
For more information: Plax & Associates Financial Planners 529 PLANS - SOLO PLANS AND US SAVINGS BONDS
Show 216 Air date: 5/18/03 College costs
are getting so high you almost have to start saving before your child or
grandchild is even born. Lots of folks have wisely started using 529 Plans.
But there’s a valuable new twist that can provide wonderful benefits. Here
to explain how to pay for your little Einstein’s education is our own
financial phenom, Elisabeth Plax, founder of Plax and Associates Financial
Services.
Answer: A solo 529 plan is one in which the
owner of the plan names himself or herself as beneficiary of the plan,
rather than the child or grandchild.
Answer: An existing 529 account decreases in
value such that the donor wishes to liquidate the account to claim the loss
as a deduction. The liquidation of one 529 account, and the re-contribution
to another 529 account for the same beneficiary, could result in two gifts
with essentially the same dollars. Establishing a solo 529 would avoid this
problem.
Question: Now there’s another use for 529 plans
that our viewers will be interested in—they allow you some flexibility with
US Savings bonds? Answer: Yes. If they have US Savings bonds that they want to keep tax-free. The income from EE or I bonds purchased after 1989 can exclude the interest when the bond is redeemed in the same year that college tuition bills are paid. However, to qualify:
A 529 plan is a great way to address these issues:
529 Plans provide a great way to pay for a child’s or grandchild’s education. And the Solo 529 Plan offers a new twist with some special benefits. To find out if a Solo 529 Plan makes sense for you, give Elisabeth a call. She’ll send a free information sheet . My thanks to Elisabeth Plax for educating us on a new education savings plan.
Securities offered through LINSCO/Private Ledger (Member NASD, SIPC)
For more information: Plax & Associates Financial Planners
Show 218 Air date: 6/15/03 It’s not pleasant, but it’s a fact. Half of all marriages end in divorce. While men’s finances often improve after a divorce, the same cannot be said for their counterparts. Women, especially older women, often must struggle just to try to hang on to the same standard of living. Here to explain how to prepare financially for a divorce is Elisabeth Plax, founder of Plax and Associates Financial Services.
Question: Divorce is always such a difficult time for both spouses. Why focus on women?
Answer: Generally, women are more at risk
financially than men. Women, on average, earn about 73 cents for every
dollar earned by men. They have smaller retirement plans and will probably
receive less from Social Security. Today, many marriages are ending not only
after 7-8 years, but also after 20 and 30 years or more.
Question: So how can woman prepare
themselves financially if they are confronting divorce?
Answer: First, take your time! You need to make
decisions that will probably affect the rest of your life. Before you run to
see an attorney, there is much work that needs to be done. Maybe a legal
separation might be useful to give each of you time. Divorcing your spouse doesn’t mean that you have to get divorced from financial security too. Accurate and sensitive advice can help assure a fair result. For more information, including a free form to help you set a realistic budget, call Plax and Associates. The number’s up next.
Securities offered through LINSCO/Private Ledger (Member NASD, SIPC)
For more information: Plax & Associates Financial Planners AFFORDABLE LONG-TERM CARE COVERAGE
Show 220 Air date: 7/13/03 Question: We know that long-term care coverage is worth every penny for those people who need it, but it is costly. How can we reduce the costs of LTC so that more people can afford it?
Answer:
Current statistics tell us that you have almost a 50-50 chance of needing
long-term care at some point in your lifetime. In NE OH that means from
$4,000 to $6,600 per month ($135 - $220/day). Coverage is not cheap, but
there are a variety of ways to make it more affordable. Question: What can we do to reduce costs?
Answer: First,
we know that, typically, the wife takes care of her husband at home as long
as possible, but then she needs help after he is gone and she is alone. Why
not put more coverage on the wife, who is more likely to need it, and less
on the husband. Unless there are specific health issues involved, this can
work very well.
Second, don’t
try to cover the entire cost. Instead, reduce the amount of coverage and
plan to spend savings to cover the remainder. Simply reducing the coverage
from $180/day to $130/day (60%) reduces the premium substantially. You can see that it’s possible to purchase a meaningful amount of LTC coverage at an affordable price. It means looking at a number of different companies and a variety of scenarios.
Securities offered through LINSCO/Private Ledger (Member NASD, SIPC)
Source: BranchLink Research; Reilly and Brown, Investment Analysis and Portfolio Management, 6th edition, 2000.
For more information: Plax & Associates Financial Planners
Show 222 Air date: 7/27/03 Remember how
easy it was to paint by the numbers. If you applied the right paint to each
number, the result would be a beautiful picture. Well, retirement planning
can be just as productive, if you follow the numbers. Here to help us paint
a picture perfect retirement is our Picasso of planning, Elisabeth Plax.
To Age 45 Save, save, save! Start early. Income will double over the next 20 years
(assuming 3.5% inflation) how will you replace it? When changing jobs, be
sure to roll monies from one retirement plan to another or to an IRA. With
compounding and tax deferral, even small amounts can become meaningful. Without proper planning, your retirement may not be a pretty picture. By following Elisabeth’s tips, you can ensure your retirement years will be a work of art. For a free fact sheet on successful retirement “by the numbers,” give Elisabeth Plax a call.
Securities offered through LINSCO/Private Ledger (Member NASD, SIPC)
For more information: Plax & Associates Financial Planners
Show 224 Air date: 8/10/03 Mom always said: “Don’t put all your eggs in one basket.” When it comes to your savings, violating this rule could leave you with egg on your face, and an empty basket. Here to tell us why mom was right is Elisabeth Plax, founder of Plax and Associates Financial Services.
Question: We hear so much about allocation and diversification of a portfolio. Let's clarify just what these terms mean and how to use the concepts to improve portfolio performance.
Answer: Virtually any investment has some risk
associated with it. The stock market rises and falls. An increase in
interest rates can cause a decline in the bond market. The key to successful
investing is to reduce that risk while maintaining an attractive return on
your investments. One of the most effective ways to achieve this goal is
through proper allocation – that is dividing your assets among various
classes of investments. Still, it is essential to keep in mind that neither
allocation nor diversification guarantee against loss; rather, this is a
method used to manage risk. In the Cash
Equivalent class, we find such options as checking and savings, money market
accounts, certificates of deposit, and Treasury bills. This is the group
with which you can safeguard your principal, but without any significant
growth.
Securities offered through LINSCO/Private Ledger (Member NASD, SIPC) For more information: Plax & Associates Financial Planners
Show 225 Air date: 8/17/03 If financial experts had a mantra, it would be “Diversify, Diversify, Diversify”. We’ve heard this message time and time again. But what’s it really mean? Here to help us meditate on the subject and to raise our consciousness is our financial guru, Elisabeth Plax, founder of Plax and Associates Financial Services.
Question: Last week, we discussed allocation of assets to reduce risk. Why is diversifying you investments so important?
Answer: The main philosophy behind diversification is really an extension of the
one about allocation that we discussed last week: “Don’t put all your eggs
in one basket.”
Securities offered through LINSCO/Private Ledger (Member NASD, SIPC)
For more information: Plax & Associates Financial Planners
Show 228 Air date: 9/7/03 As a wise Golden Opportunities viewer, you’ve learned the importance of diversification; not putting all your eggs in one basket. But over time, some investment eggs will grow to outweigh the others, causing a very unbalanced nest-egg basket. Reallocating those eggs is the answer to avoid the same fate as Humpty Dumpty. Here to help us avoid laying an egg with our finances is Elisabeth Plax, who always has her sunny side up. Elisabeth is founder of Plax and Associates Financial Services.
Question: We have already discussed allocation and diversification of assets to reduce risk. Why is rebalancing your portfolio so important?
Answer: First we allocate and diversify assets
to be sure that they are not all “in one basket”. Then, on a regular basis,
we rebalance or reallocate the portfolio to be sure that the allocation and
diversification plan remains correct – that the amount we put in each basket
remains the same percentage as when we started. Question: Why is that so difficult?
Answer: Rebalancing really goes against all our
instincts – that’s why it’s so difficult. Let’s use an example, and for the
sake of simplicity, let’s assume that you decided that 5% Cash, 45% fixed
income and 50% equities was right for you.
Answer: At least once a year, but some investors decide to do it more often, for example each quarter or semi-annually. I also recommend that rebalancing only take place when there is at least a 5% shift in the allocation. You don’t want to be making continuous changes.
Question: Anything else to look out for?
Answer: Yes. First, exchanging one
pharmaceutical stock for another or one bond for another with the same
coupon, maturity and rating is not reallocating. It’s simply improving the
particular positions in your portfolio.
Securities offered through LINSCO/Private Ledger
(Member NASD, SIPC) For more information: Plax & Associates Financial Planners
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