It’s true that men have always paid more for life insurance then women based simply on the fact that women statistically live longer.  A similar pricing structure is about to come to the long term care insurance industry, only in favor of men this time around, and for the exact same reason.

Women Live Longer and Will Pay More

On average, women outlive men by five to seven years. The older we become the greater the chance that we will one day be in need of Long Term Care (LTC). Statistics show that currently about 70% of the residents who live in a nursing home are women. Women represent almost 80% of all individuals living in assisted living facilities and two-thirds of those receive home care. According to one LTC insurance executive, $2 out of every $3 paid in long-term care claims are for women.

The long-term care insurance industry was started in the 1980s and many companies rushed to get into what they thought would be a lucrative market. However, based on untested underwriting practices, a low interest rate environment and greater utilization than had been expected, many companies have seen much higher claims than they anticipated.

Many companies, including Prudential, MetLife, Allianz and others, have stopped selling new long-term care policies altogether and those with existing coverage are experiencing hikes in their premiums by as much as 40%.

Genworth is the nation’s largest long-term care insurance provider and is the most experienced, as well. They are, however, making some changes. In order to better underwrite future policies (i.e. maximize their profits), Genworth will soon institute “enhanced underwriting.”

Qualifying for LTC Will Be More Difficult

Leesa Fons, an Insurance broker in the Sacramento area who has been involved with LTC Insurance for 20 years explains that “The new enhanced underwriting means that new LTC insurance applicants will be subject to a full paramedic exam which includes blood pressure readings and lab work. This is similar to the exam used to screen life insurance applicants. A number of health conditions will be tested for; some of these include diabetes, heart disease, and hepatitis. This will make it more difficult to qualify for coverage.”

“Since dementia and mental impairment are a leading cause of Long Term Care claims, insurers will soon require an in-person interview where the examiner will have an opportunity to observe firsthand the proposed insured’s mental acuity and residential surroundings,” Fons said.

Barbara Hanson, an insurance broker in Santa Cruz, California, who has specialized in long-term care since 1995 recently said, “People who are waiting to buy a long-term care policy may be less able to pass underwriting as it is becoming more stringent. I have a client who was able to get covered a year ago, but was declined for an improved policy by the same carrier this year due to health underwriting changes the carrier enacted last spring. When one carrier moves in this direction, others will follow.”

Another change that will impact women is a so-called “gender pricing strategy,” which will raise rates for single women by as much as 40%.

Consider LTC Coverage Now

For individuals considering long term care insurance Fons recommends that they “make it a priority to discuss the issue with your financial advisor in the near future.  If obtaining a policy is appropriate for you; apply before April 1st, 2013.”

Hanson responded, “The younger you are when you apply, the lower the lifetime cost. With the upcoming changes in underwriting and rates, it is paramount to investigate the option now rather than later.”

Hanson went on to say, “To prepare for old age without the protection of LTC insurance, women need to have access to a substantial nest egg or high monthly income. A reverse mortgage may be helpful for those with equity in their home when the nest egg is gone. However this may not be a good idea for others. Relying on family for 24/7 care is usually not possible, or can be seriously draining on those we love.”  The Medicaid system is still available to provide a safety net for those with little assets or income.

Fons pointed out “A major concern for women is not only outliving their wealth… but outliving their health.  There isn’t a more significant drain on assets than having to pay for the cost of an assisted living facility or professional care givers.”

No one wants to be dependent on others for their care in their later years, but the longer we live, the greater the chance of having decreased physical or mental abilities that will require assistance. Long-term care insurance isn’t for everyone but if ever you think you might consider it, do it now rather than later!

What is Socially Responsible Investing?

Individuals everywhere are concerned about our country, the world, its people and the environment. For these and other reasons, more people are investing their money to get back more than just a monetary return on their investment. Many are investing to make a positive impact in our country and around the world as well as to feel that societal concerns should be made an important part of their investment focus.

Socially Responsible Investing (SRI) is sometimes referred to as “sustainable”, “socially conscious”, “mission,” “green” or “ethical” investing. In general, socially responsible investors are looking to promote concepts and ideals that they feel strongly about.  They accomplish this in 3 ways:

1. Investment in companies and governments that the investor believes best hold to values of importance to the investor. These include the environment, consumer protection, religious beliefs, employees’ rights as well as human rights, among others. These areas of concern can be summarized as “Environmental, Social and Governance” and is referred to as ESG investing. In addition, SRI includes shareholder advocacy and community investing.
2. Shareholder advocacy is exactly what it would seem; socially responsible investors proactively influencing corporate decisions that could otherwise have a large detrimental impact on society. The various goals of shareholder advocacy is to pressure those entities into improving practices and policies and acting as a good corporate citizen, while at the same time promoting long-term value and financial performance. The goals are accomplished through various means including dialogue, filing resolutions for shareholders’ vote, educating the public and attracting media attention to the issue, which generally garners support and puts additional pressure on the corporation to do the socially responsible thing
3. Community investing has become the fastest growing segment within SRI, with some $61.4 billion in managed assets. With community investing, investors’ capital is directed to those communities, in the U.S. and abroad, which are underserved by more traditional financial lending institutions and gives recipients of low-interest loans access to not just investment capital and income but provides valuable community services that include healthcare, housing, education and child care.

How is SRI applied to investing?

The SRI approach is to invest in stocks and bonds from those companies and counties or municipalities that promote certain actions or eschew those, which participate in offending actions. It is not unlike the carrot and the stick premise; you reward those that you agree with by investing in their companies (the carrot) and avoid buying shares of those companies that offend your core values (the stick).

There are three general methods of screening an individual company for inclusion into an SRI fund; the Negative Screen, the Positive Screen and the Restricted Screen. A Negative Screen, for example, could be a fund manager’s conscious decision not to invest in a company that has any involvement within a particular sector, such as tobacco. Other SRI investments might seek out and invest only in those companies which are involved in activities that promote say “green living,” such as wind or solar power; those types of investment are then referred to as a “Positive Screen.”

Because many corporations tend to become highly diversified as they grow, SRI fund managers make use of a “Restricted Screen” type of filtration. In that way, though a small part of the corporation’s activities may be in a less than desirable sector because the amount is so small relative to the rest of the company’s holdings the SRI investment in the corporation would be permitted.

SRI is Big Time

Over the last two years, SRI investing has grown by more than 22% to $3.74 trillion in total managed assets, suggesting that investors are investing with their heart, as well as their head. In fact, about $1 of every $9 under professional management in the U.S. can be classified as an SRI investment.

SRI Investment Options

When the time comes to invest you will find that you have several options. Traditionally, mutual funds have been the most common way to invest in SRI. Fund companies such as Parnassus, GuideStone Funds, and Calvert are some of the largest. Exchange Traded Funds or ETF’s have recently come out in the SRI format. Powershares and iShares both have several offerings.

Tom Nowack, CFP^® is the author of the recently published book “Low Fee Socially Responsible Investing” which describes how to buy individual stocks using the SRI approach. For those investors with larger amounts to invest, Separately Managed Accounts may be an option.

How to get started with SRI

If you are interested in ESG or Socially Responsible Investing, take some time to research the concepts online or read some books such as “The Complete Idiot’s Guide to Socially Responsible Investing” “Socially Responsible Investing for Dummies”. If you are looking for professional advice, you may wish to use the services of a fee-only advisor where there are no commissions when you acquire the investments.

To find a fee-only planner near you to help with SRI, go to the NAPFA website or to the Garrett Planning Network.

Figuring out how much help you need with your investments can be difficult but here’s some guidance to get you started.

In the first article we listed the important tasks for successful investing. A check list was provided to help aide you in determining which task you were able to do yourself and identify which areas you might need some help in order to improve your investing outcome.

The 5 different investing choices or methodologies were presented and include:

1. Doing it all on your own.
2. Advisor provides advice to you on an hourly basis or as part of a financial plan.
3. Advisor and you “co-manage” your investments on an ongoing basis.
4. You turn the management of your investments over to a “money manager.”
5. You get “advice” from a salesperson that sells you an investment or other product.

Now, click on the link below to see a chart of which tasks are to be handled by you or others under the 5 investment choices. Keep in mind that an RIA is a Registered Investment Advisor and BD stands for a Broker Dealer representative.

• Investing Options Table

When most people compare their checklist from Part 1 of this article to the chart above, Option 2 or 3 are more often than not the best fit for most people.

• Invest on your own (Option 1) is not usually a good option since few people have the time, tools, knowledge and/or motivation to do it all by themselves.
• 
  As needed assistance (Option 2) is a good choice for those individuals who have the ability to implement the recommended suggestions from the professionals but may not have enough assets to consider a higher level of service as one might obtain under Options 3 or 4. These investors typically need only an annual tune up.
• 
  Collaborative or Co-Management (Option 3) is well suited to those individuals who want professional advice and the benefits derived from having their portfolio monitored on a periodic basis. They are comfortable knowing that the professional will proactively reach out to them if an issue arises. This option is better suited to those investors with a higher asset base and who wish to be part of the “process” (being educated and involved in the decisions).
• 
  Investment Management (Option 4) is best suited to those investors who prefer to sit back and let others do it all and they are more than happy being an observer to the process.
  At first glance, there is little difference between Option 3 and Option 4 but psychologically there is a big difference. Many people believe that no one could possibly care as much about their money as they themselves do, so in that instance they feel better being part of the process and choose Option 3.
• 
  Buy investments from Broker Dealer (Option 5) is the antiquated and duplicitous approach made (in)famous by the big names in the financial services industry whereby the industry representative “pushes” a product and makes suggestions that are often better suited to the sales person and their company rather then you, as the investor. This clearly is not a good option for any investor.

Cost of each option

• Option 1 – (Do it Yourself) Many people would assume that there is no cost to doing it yourself. On the contrary, without even taking into consideration the many man-hours it takes to accomplish all of the required tasks, the costs for the Do-It-Yourself option continue to mount. There is a great deal of evidence, which shows that most investors greatly under perform the markets. Let’s say that an investor had $200,000 of investments and underperformed the market by 2%. In essence, they “lost” or failed to earn $4,000 that year as a result. If they underperformed by just 2% every year, over a lifetime, their assets would be 56% less than what they could have been, i.e. $1,000,000 versus $440,000. That is very costly, indeed.

• Option 2 – (Hourly Advice) You pay by the hour ($150 to $300 per hour based on location and experience) or as a part of an overall financial plan that covers many other financial topics ($1,500 to $3,000 per plan, again depending on location and experience).

• Option 3 – (Co-management) The cost of this option could be based on a retainer, which is a set dollar amount each year. Alternatively, the cost could be based on a percentage of the amount of assets that are being co-managed; typically, that might be between0.8% and 1.5% of the assets under management. In some cases, this could be done on an hourly basis but that seems to be rare.

• Option 4 – (Investment Management) The cost under this option is usually based on a percentage of the assets being managed.  It can also be based on retainer as a set amount each year.  In reviewing the various ADV forms, it would appear that the big brokerage houses such as Merrill Lynch, Morgan Stanley and Edward Jones start their fees at 2%, though 1% is much more common in the industry. The fee usually decreases as the amount of assets go up.

• Option 5 – (Commissions) The percentage paid in commissions varies by the type of investment being sold. Bond funds can generate a commission of between 2.5% and 3.5 % of the sale price while mutual funds that invest in stocks can generate a commission of as much as 5.5%. Some annuity products have the highest commissions, often 7.5% or more. Given those commission rates it’s not hard to understand the high-pressured sales pitch, though that doesn’t excuse them.

So the question is which option is best for you?

Hopefully, you are now better equipped to make a sound decision as to the investment approach that will help you reach your goals.

To talk to a non-commission-based advisor near you or to discuss the best investing approach for you, contact NAPFA or Garrett Planning Network.

The whole purpose of investing is to fund your future goals. If you invest successfully, you will be in a better position to obtain your financial goals and fulfill your life’s dreams.

On the other hand, if you don’t invest successfully, life might not be quite so pleasant. While it’s a bit tedious, the sooner you complete certain prerequisite tasks which are necessary for successful investing, and the better you understand the investment choices that are available to you, the sooner you can select the option that will put you on the path to investing success.

The first step is to identify the tasks that need to be completed for better investment outcomes. These tasks can be categorized as Design, Implementation and Perpetuation.

Though you may be well suited for some of them you may not have the time, tools, motivation or knowledge to complete the other tasks, in which case you should seek professional help.

Use this checklist to help identify those tasks that you have the ability to do for yourself.

Your Investing Options

Based on which investing tasks from the checklist above that you feel you can effectively complete, review the 5 Investing Options and determine which methodology is best suited to you.

1. Doing it all on your own.

   Conducting an analysis of your present portfolio and individual investments, make decisions as to the correct asset classes and the correct allocation of each that will give you the highest return for the appropriate level of risk, specifying which investments to buy and sell, implement the buys and sells, monitoring and rebalancing the portfolio based on a prudent repeatable process that is tax efficient.

2. Advisor provides advice to you on an hourly basis or as part of a financial plan.

   A Fee-Only Registered Investment Advisor (RIA) understands your investing goals, analyzes your current portfolio, provides advice as to the asset allocation and specific investments to be used; you implement the recommended changes by opening accounts,  closing accounts and buying and selling the individual holdings. It is up to you to return for future advice. The Advisor does not monitor or proactively call you when a change occurs.

3. Advisor and you “co-manage” your investments on an ongoing basis.

   The advisor understands your investing goals, does the analysis, provides recommendations, and after your concurrence, completes the investment implementation (except in the case of employer retirement accounts whereby you implement those specific changes). The Advisor monitors the investments and your asset allocation, reports to you periodically as to performance of your portfolio, pro-actively contacts you if a problem arises, discusses suggested tax efficient portfolio re-balances as needed, updates your Investment Policy Statement and recommends changes to your asset allocation as your plan changes. You are part of the process and changes are not made without your approval.

4. You turn your investments over to an Investment Manager.

   The “Money Manager” invests your assets according to a pre-determined plan, monitors and makes changes as needed. There may or may not be the level of planning that is involved in Options 2 or 3 above, so be sure of what you are getting.  In this scenario you are an observer of the results not a part of the process.

5. You get “advice” from a salesperson that sells you an investment or other product.

   This is the original approach “patented” by the financial services industry. This “non-fiduciary” advice is subject to a conflict of interest between what is best for the financial services company and salesperson versus what is best for you as the investor. This type of approach is still commonplace among big-name investment houses such as Edward Jones, Merrill Lynch, Morgan Stanley, Fidelity and others. Once the commission has been earned by the salesperson, the advice is over until they wish to sell you something else.

So, what works best for you? In my next article I’ll expand the chart above to include the services that are usually provided under the 5 different investing options. The costs for the different options or methodologies will also be reviewed.

To talk to a non-commission-based advisor near you or to discuss the best investing approach for you, contact NAPFA or Garrett Planning Network.

Ever since the inception of the Internet, home offices have been growing by leaps and bounds; by one estimate more than three million taxpayers can make that claim. While there are any number of benefits to having a home office, one irksome negative was the burden involved in substantiating the home office deduction and the Internal Revenue Service’s complicated and convoluted process to file that claim.

Well, it seems someone at the IRS has become enlightened and the long awaited simplifications to the various rules which govern home office deductibles have now been released. Like the cumbersome 1040’s simplified counterpart the 1040-EZ – this then could be considered the EZ option for home office deductions.

Under the terms of Rev. Proc 2013-13, which the IRS calls the “safe harbor” method and beginning with this tax year, i.e. as of January 1, 2013, taxpayers will be able to easily calculate their 2013 deduction for their home office; just multiply the square footage of the area of your home that you use strictly for business purposes by the prescribed rate ($5 per square foot) and Voila! You have your tax deduction.

Three Rules for Claiming the Safe Haven Home Office Deduction

According to the IRS Code 280A, home office usage is defined as:

1. A home office is considered the taxpayer’s primary place in which he or she conducts trade or business.
2. The home office may or not be attached to the taxpayer’s residence; it may be a separate structure on the property used exclusively as a home office.
3. A home office is where the taxpayer will meet clients, customers or patients during the normal course of business.

Of course, even under the simplified method it is the taxpayers’ responsibility to ensure that good records which prove the exclusive use of the home office continue to be maintained to substantiate the claim.

One simplification certain to be welcomed by taxpayers is the distinction between expenses, which heretofore had to be allocated between personal use and business use. Provided you itemize your deductions and have opted for the “safe harbor method,” and of course to the extent it is allowed by the IRS’ tax codes and regulations, expenses such as mortgage interest, casualty losses and/or real estate taxes, etc., can be listed as an itemized deduction on Form 1040’s Schedule A.

While the safe harbor method has its benefits, a taxpayer might have to accept sacrifices, too. Specifically, under the “safe harbor method,” depreciation of the space allocated to the qualified home office cannot be deducted. That might make the “safe harbor” option a lot less attractive for some taxpayers as in some instances depreciation is the single largest of all the home office related deductions in which case the regular or convention method might be the better choice.

Taxpayers can opt for the safe harbor method or the regular method on a year to year basis, however once the election is made for any given tax year it is irrevocable. A taxpayer may opt for the safe harbor method and switch back to the conventional method in a subsequent year however there are specific rules in the calculation of depreciation.

Safe Harbor Method Limitations

As can be expected, the IRS has placed a few limitations on the “safe harbor” method deduction:

• • Ÿ—The deduction is limited to $1,500 per year, meaning that your home office space should not exceed 300 square feet; the exception to this, however, is dependent upon how many qualified home offices are under the same roof.

• • The option chosen, whether the “safe harbor” method or the conventional (actual expenses) method must be consistently applied to all the Taxpayers’ qualified businesses.
• • Taxpayers who share a home, regardless of filing status, may each claim the safe harbor deduction provided they have separate and distinct home office areas.

• • Taxpayers who have more than one qualified home office, i.e. in more than one home, may use the safe harbor method for only one home office space.

• • A taxpayer cannot opt for the safe harbor method if he or she derives rental income from the same home as the qualified business use.

• • The safe harbor method is not applicable for those Taxpayers reimbursed by an employer for home office related expenses.

The “safe harbor method” is optional according to the IRS, and taxpayers might want to evaluate now whether they will opt for this method or the conventional one as they begin their tax planning preparations for 2013. While a tedious and mind-numbing exercise, in the end it may be financially beneficial to tally up all of those numerous invoices, expense reports and receipts and go with the conventional method. The criteria necessary to be deemed as a qualified home office must have already been satisfied with the IRS in order to opt for the “safe harbor” method.

Always consult with your tax professional as to specific tax advice for your particular situation.

Investing: Gender-Based Differences

The more you know about yourself, in particular, and investing, in general, the more likely it is that you will obtain a better investing results.

The intent of this article is twofold: primarily, it is to raise your awareness of certain gender-based investing tendencies and secondarily, it is to make you a better investor given what you now know about gender-based tendencies. It is not the intent state that the differences are genetic, cultural, and sociological or some combination of the three that cause these measurable differences.

The following is a summary of data gleaned from numerous articles and papers derived from a variety of independent sources. It is important to remember that the following are merely tendencies and not absolutes. In other words, out of a large sample of both sexes, there are measurable gender-based differences, but by no means should that be construed to suggest that all women do this while all men do that.

Risk

Men tend to be less risk adverse; in other words, men are more comfortable with investing risk. Women, in general, tend to be more risk adverse or less comfortable with investing risk. Men tend to take more risks even when they shouldn’t. Women, on the other hand, take considerably less risks, even when they should.

Investing Knowledge

Men generally describe themselves as being more knowledgeable about investing than women describe themselves. Men also report that they spend more time learning about investing then women report that they do. When it comes to investing, men are more apt to believe that they know more than they really do while women often do know more then they believe they know.

Investing Information Processing

Women tend to rely on others for investing information and once that investing information is in hand, they are better at integrating or processing it. They are also better at deciphering even contradictory information. Men prefer to collect their own investing information and they are more likely to disregard outright any conflicting information.

Investing Confidence

Men tend to be more confident and as a result are far more susceptible to the risks, which come with overconfidence. Women are less confident and thus much less susceptible to the risks, which inherently come with overconfidence. To some extent, this is why women are more likely to use a financial advisor than men.

Investing Patience

Men are less patient for a positive outcome from their investments and more likely to modify their portfolio if they view it is underperforming. Over time, women are more patient with their existing investments, and if they consider a change to their portfolio they are also more likely to consult with a financial advisor first.

Investing Time Frame

Women tend to live longer than men of the same age yet they also tend to have less in their retirement accounts than men. As a result, women need to be certain that they make the best financial decisions. In general, men can tolerate poorer investment decisions since they tend to have more money to begin with and do not need to hold the assets as long.

So what does all of this mean? On the face of it perhaps not much, as it may seem to be little more than an eye-opener. But that was, in fact, the goal of this exercise; to make you, as an investor, aware of possible gender-based traits. And while it is unlikely that any single investor can lay claim to all of the identifiable gender-based traits, it is important that everyone, man or woman, have good “self-awareness” when it comes to investing. To that end, you should:

1. Be aware of the gender-based tendencies in both you and your spouse or partner. When you are aware of your specific tendencies, you can make conscious decisions to offset any negative behavior.
2. Become more aware of your investing goals – write them down
3. Understand your current portfolio, i.e. what is the expected return, what is the level of risk and what is the level of diversification.
4. Have a plan, or what is commonly referred to as an Investment Policy Statement.
5. Get professional advice if needed but be sure that the advice comes from a fee-only advisor. This means that the advisor does not sell you investments and does not make a commission on any sales. You are much more likely to get objective advice from a Register Investment Advisor than a sales person.

For a list of fee only advisors near you go to NAPFA website go to the Garrett Planning Network.

Thanks to the Federal Reserve’s commitment to ultra low interest rates, bond yields are now near historic lows. While some investors might be tempted to consider dividend-paying stocks as a way of generating income, before you decide to jump on that bandwagon there are three key points you need to reason through first:

1. DO THE MATH

When a company pays out a dividend, the stock price decreases on the ex-dividend date by an amount roughly equal to the dividend paid. For example, let’s say you are an investor holding 100 shares of a stock priced at $100 per share with a total account value of $10,000. If the stock pays a dividend of $5 per share, the stock price would generally drop to $95 a share on the ex-dividend date, so the investor’s overall account value doesn’t change despite the dividend payment. If the investor takes the dividend in cash, he would have $9,500 in the stock and $500 in cash. In fact, taking the dividend payment in cash for spending purposes actually reduces the principal value of the account. Fundamentally, it’s no different from selling the stock without waiting for the dividend payment. The same principle applies to distributions in mutual funds.

2. TOTAL RETURN

The total return of a stock is the sum of its dividend payments and price appreciation, and that sum is what should really matter to investors. Until recently, Apple chose to reinvest its profits rather than pay dividends, and over the past decade it has been one of the best-performing stocks in the US market. Should investors have stayed away from Apple just because it wasn’t paying dividends? Many small cap stocks reinvest their earnings and don’t pay dividends, yet as an asset class have higher expected returns than large cap stocks.

3. TAXES

Not too long ago, many investors purposefully avoided dividend-paying stocks because of the high tax rates. Then in 2003, tax rates were lowered to 15% for most qualified dividends and investors weren’t quite so adamant about eschewing dividend-paying stocks. Well, that could change as soon as next year, unless Congress decides to take action. According to a report in the Wall Street Journal the top tax rate for the highest earners is set to jump to 43.4%. That is a maximum income tax rate of 39.6%—since dividends will once again be taxed as regular income—plus a 3.8% tax on investment income as part of the healthcare overhaul bill that was passed in 2009.

While dividend-paying stocks can certainly have a place in a portfolio, an investor should not forsake proper diversification just to include them, and should always be aware of risk and expected return of their portfolio.

Many Medicare beneficiaries are not aware that the open enrollment period for the Medicare Part D Drug plans is happening NOW. You have until December 7^th to determine if it is to your benefit to change plans, which could save you money.

Why shop for a Part D plan?

There are many reasons you cannot assume that the plan you are on now will be the best one for you in 2013 including;

1. Increased monthly premium.
2. Increased deductible amount.
3. Changes in what drugs the plans cover and how well they cover them.
4. Changes in the medications you take.
5. Your plan may no longer be offered. In this case if you do nothing you will be enrolled in another plan that most likely will not be the best suited for you.

In 2013 both Health Net and Community CCRx will no longer offer Part D plans of any type. If you are enrolled in one of their plans you need to comparison shop for a new plan now.

When reviewing plans for clients for 2013, we have found an average savings of $1,100 per year.

Getting Help

If you have Internet access, you can compare Medicare’s drug plans online. Go to Medicare’s “Plan Finder Tool” at www.medicare.gov/find-a-plan, and type in your personal information (from your Medicare Card), the drugs you take and dosages, select the pharmacies you use and you’ll get a cost comparison breakdown (“estimated annual drug cost”) for each plan available in your area.

If you are not able to do a comparison yourself, consider asking someone in your family or a friend to help you, or you can call Medicare at 800-633-4227 and they will do it for you over the phone.

Comparing Plans

When comparing drug plans, don’t choose a plan just based on the monthly premium. Low-premium plans often have higher prescription co-payments and could end up being more expensive. Look at the “estimated annual drug costs” which is how much you can expect to pay for the entire year in total out-of-pocket costs, including; premiums, deductibles and co-pays.

Be certain to verify that the plan you’re considering covers all of the drugs you take with no restrictions. Some plans require you to get prior approval for a particular drug or have “step therapy” where you must try a number of cheaper drugs before they will cover certain prescriptions.

Deadline to change plans December 7

If you currently have a Medicare Part D plan it is critical that you shop for the best plan now.

What is the main reason that most people fail to invest successfully?

Is it a lack of information, too much information, a lack of time to devote to investing, a lack of investing knowledge, lack of tools, or just plain old bad luck?

In most cases, the main cause of poor investment return is the person looking back at you in the mirror. It is our behavioral tendencies that we as humans use when making investment decisions.

The field of behavioral finance attempts to identify what it is that we do in our heads that negatively impacts our investing outcome.

The Academy of Behavioral Finance & Economics website lists over 100 on these tendencies or traits.

Here are just some of the mind games we use or are impacted by when it comes to making investment decisions.

Which ones have impacted you?

1. Fear of change, which results in the status quo
2. Fear of making an incorrect decision
3. Greed or the strong desire to get rich
4. Overconfidence in thinking we know more than we do or more than what other people know
5. Loss aversion, strongly prefer avoiding losses to acquiring gains
6. Herding is the tendency for individuals to mimic the actions of others, which is based on the social pressure of conformity and is supported by the belief that it’s unlikely that such a large group could be wrong
7. Hyperbolic discounting is when people want a “payoff “sooner than waiting for bigger “payoff” later
8. Anchoring on irrelevant data rather than concentrating on more relevant data
9. Overestimating or underestimating possible outcomes based on recent memorable data or experiences
10. Reluctant to admitting mistakes or judgment errors
11. Believing that investment success is due to wisdom when it was most likely due to a rising market
12. Confusing familiarity with knowledge
13. Elective thinking is the process by which one focuses on favorable evidence in order to justify a belief, ignoring unfavorable evidence

What is an investor to do to avoid these types of pitfalls?

The answer is to have a structure or a methodology in place that can prevent a lot of the mind games people otherwise may allow to impact their investing.

1. Know your investing goals
2. Have a written plan that dictates the method of how the investments will be managed. This is often referred to as an Investment Policy Statement (IPS)
3. Design the portfolio using a prudent methodology
4. Monitor the portfolio
5. Rebalance the portfolio based on the IPS guidelines
6. Change your investment allocation over time

The reality is that most people do not have the time, the motivation, the tools or the knowledge to properly invest properly.

The question is, “Are you are hindering your investing success?” If you are or if you do not know, you may well be better off having a professional help you.

To find a “fiduciary” investment advisor (always keeps your interests first, unlike a sales person) go to the websites of the National Association of Personal Financial Advisors or The Garrett Planning Network.

Now that Obama-care has been blessed by the Supreme Court, those couples with incomes over $250,00 a year and singles over $200,000 should be aware that your taxes could well be going up January first!

When Congress passed Obama-care in 2010, it added a new surtax. While we are waiting for conformation from the IRS, it is believed that the new tax applies to

• Ÿ• Dividends
• • Rents
• • Royalties
• • Interest
• • Short and long-term capital gains
• • Taxable portion of annuity payments
• • Income from the sale of a principal home (above the exclusion),
• • Net gains from the sale of a second home
• • Passive income from real estate or investments

The new tax doesn’t apply to income from a regular or Roth IRA, 401(k) plan or pension, Social Security, life-insurance proceeds, municipal-bond interest, Schedule C income from businesses, or earned income on which you are paying self-employment tax.

As of Jan. 1, 2013, the tax rates on dividends for high-income earners will increase from their current historic low of 15% to 18.8% or 23.8% or higher if Congress does not extend the Bush Tax cuts.

What you should do now?

Consult with your tax professional now and verify if you will be impacted by the new tax. I made this recommendation to a client and her tax professional was unaware of the new surtax so ask the specific question. “Will I be impacted by the new Obama-care Tax and what should I do about it?”

The new 3.8% tax could make accelerating income into 2012 worthwhile. This would include those with a large stock concentration and had planned to sell over time and then diversify or anyone planning on selling their expensive home or investment property or even a business.

For those people who would not normally be impacted by the law but are planning to convert an IRA to a Roth IRA, they too should consult their tax professional about doing it in 2012 to avoid being impacted by the new tax later.

If there are assets in a trust with a separate Tax ID number and more than $12,000 of income, the new law applies as well. Therefore if there are assets in the trust with appreciation that you plan to sell in the near future, you may wish to sell in 2012 rather than 2013 since capital gains are not usually distributed as income to the beneficiaries and could be subjected to the added tax with in the trust.

If you are impacted by the new law and hold mutual funds invested in actively managed equities you may wish to liquidate these and reinvest in a passively managed diverse funds such as those offered by Dimensional Fund Advisor (DFA). These funds have below average turnover, which deceases capital gains. At the same time they have below average expense ratios (which is a whole other story).

Some investors may consider selling dividend generating investments and moving to tax-free investments since they will not impacted by the new law.

Starting in 2013, impacted investors will need to manage not only their adjusted gross income but also their investment income in order to avoid or minimize this tax.

THIS ARTICLE IS NOT PROVIDING TAX OR INVESTMENT ADVICE. CONSULT YOUR INVESTMENT PROFESSIONAL BEPOFE MAKING AN INVESTMENT CHANGE