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Keep Your Umbrella Handy

Have a home-based business? Have a teen driver? Consider umbrella insurance.

In 2017, the U.S. had a record 11.5 million millionaires, up from 10.8 million in the previous year. An increase in personal wealth may bring greater financial flexibility; it may also bring greater liability. Individuals with high net worth, or those who are perceived to have high net worth, may be more likely to be sued. If that’s not concerning enough, personal injury claims can often reach into the millions.1

Umbrella liability insurance is designed to put an extra layer of protection between your assets and a potential lawsuit. It provides coverage over and above existing automobile and homeowners insurance limits.

For example, imagine your teenage child borrows your car and gets in an accident and the other driver is seriously injured. The accident results in a lawsuit and a $1 million judgment against you. If your car insurance policy has a liability limit of $500,000, that much should be covered. If you have additional umbrella liability coverage, your policy can be designed to kick in and cover the rest. Without umbrella coverage, you may be responsible for paying the other $500,000 out of pocket, which could mean liquidating assets, losing the equity in your home, or having your wages garnished.

Umbrella liability insurance is usually sold in increments of $1 million and generally costs just a few hundred dollars a year. It typically covers a broad range of scenarios, including bodily injuries, property damage caused by you or a member of your household, libel, slander, false arrest, and defamation of character.

Deciding whether liability coverage is right for you may be a question of lifestyle. You might want to consider obtaining a policy if you:

* Entertain frequently and serve your guests alcohol

* Operate a business out of your home

* Give interviews that may be published

* Employ uninsured workers on your property

* Drive a large number of miles or have teenage drivers

* Live in a manner that gives the appearance of wealth

* Have a dog, especially if the breed is known to be aggressive

* Own jet skis, a boat, motorcycles, or snowmobiles

Even if you don’t yet have a tent in the millionaire camp, you may want to consider the benefits of liability insurance. After all, you don’t have to be a millionaire to be sued for a million dollars. Anyone who is carefully building a financial portfolio most likely wants to limit their exposure to risk. In these cases, umbrella liability can be a fairly inexpensive way to help shelter current assets and future income from the unexpected.
Debbie Taylor can be reached at 201-891-1130 or dtaylor@taylorfinancialgroup.com.

www.taylorfinancialgroup.com

 

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Why DIY Investment Management Is Such a Risk

If you ever have the inkling to manage your investments on your own, that inkling is worth reconsidering. Do-it-yourself investment management is generally a bad idea for the retail investor for myriad reasons.

Getting caught up in the moment. When you are watching your investments day to day, you can lose a sense of historical perspective. This may be especially true in longstanding bull markets, in which investors are sometimes lulled into assuming that the big indices will move in only one direction.

Listening too closely to talking heads. The noise of Wall Street is never-ending and can breed a kind of shortsightedness that may lead you to focus on the micro rather than the macro. As an example, the hot issue affecting a sector today may pale in comparison to the developments affecting it across the next ten years or the past ten years.

Looking only to make money in the market. Wall Street represents only one avenue for potentially building your retirement savings or wealth. When you are caught up in the excitement of a rally, that truth may be obscured. You can build savings by spending less. You can receive “free money” from an employer willing to match your retirement plan contributions to some degree. You can grow a hobby into a business or even switch jobs or careers.

Saving too little. For a DIY investor, the art of investing equals making money in the markets, not necessarily saving the money you have made. Subscribing to that mentality may dissuade you from saving as much as you should for retirement and other goals.

Paying too little attention to taxes. A 10% return is less sweet if federal and state taxes claim 3% of it. This routinely occurs, however, because just as many DIY investors may play the market in one direction, they also may skimp on playing defense.

Failing to pay attention to your emergency fund. You may need more than six months of cash reserves. Many people may not have anywhere near that, and some DIY investors give scant attention to their cash position.1

Overreacting to a bad year. Sometimes the bears appear. Sometimes stocks do not rise 10% annually. Fortunately, you have more than one year in which to plan for retirement (and other goals). Your long-run retirement saving and investing approach – aided by compounding – matters more than what the market does during a particular 12 months. Dramatically altering your investment strategy in reaction to present conditions can backfire.

Equating the economy with the market. They are not one and the same. Moreover, some investments and market sectors can do well or show promise when the economy goes through a rough stretch.

Focusing more on money than on the overall quality of life. Managing investments – or the entirety of a very complex financial life – on your own takes time. More time than many people want to devote; more time than many people initially assume. That kind of time investment can subtract from your quality of life – another reason to turn to other resources for help and insight.

Debbie Taylor can be reached at 201-891-1130 or dtaylor@taylorfinancialgroup.com.

www.taylorfinancialgroup.com

 

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Starting a Roth IRA for a Child or Grandchild

Do you have a child or grandchild earning some income? Indirectly, that after-school or summer job might present a savings opportunity for that teenager. You could help your child or grandchild save for future goals by assisting them to create and fund a Roth IRA. Read more

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CHECK OUT DEBBIE QUOTED IN THE WALL STREET JOURNAL ABOUT TAX REFUNDS ON APRIL 14, 2019

“Most people were taking a wait-and-see approach, as no one is dying to increase withholdings,” said Debra Taylor, an accountant and financial adviser in Franklin Lakes, N.J. “It was difficult to generalize how the new law would affect taxpayers as everyone’s situation was truly different.”

Read more

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The Week Ahead – April 15, 2019 – Reduce the risk of out living your money and learn about life insurance

“What is your greatest retirement fear?” If you ask any group of retirees and pre-retirees this question, “outliving my money” will likely be one of the top answers. Read more

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The Sequence of Returns

A look at how variable rates of return do (and do not) impact investors over time.

What exactly is the “sequence of returns”? The phrase simply describes the yearly variation in an investment portfolio’s rate of return. Across 20 or 30 years of saving and investing for the future, what kind of impact do these deviations from the average return have on a portfolio’s final value?

The answer: no impact at all. Read more

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Reducing the Risk of Outliving Your Money

What steps might help you sustain and grow your retirement savings?

“What is your greatest retirement fear?” If you ask any group of retirees and pre-retirees this question, “outliving my money” will likely be one of the top answers. In fact, 61% of investors surveyed for a 2018 AIG retirement study ranked outliving their money as their top anxiety.1 Read more

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Life Insurance Explained

A quick look at the different types of policies.

When it comes to life insurance, there are many choices. Whole life. Variable universal life. Term. What do these descriptions really mean? Read more

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The Week Ahead – April 8, 2019 – How Much Do You Really Know About Long-Term Care? Plus Find Out About Earnings Season

How much does eldercare cost, and how do you arrange it when it is needed? The average person might have difficulty answering those two questions, for the answers are not widely known. For clarification, here are some facts to dispel some myths. Read more

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Earnings for All Seasons: What is it and why is it important?

While nature offers four seasons, Wall Street offers only one – four times a year. It’s called “earnings season,” and it can move the markets. So, what is earnings season, and why is it important? Read more