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Month: March 2019

7 Rules of Investing

from one of the greatest investors of all time

Over the past century, many of the world’s leading economists have studied the art – or science – of investing. Dozens of investing theories, models, and systems have been created, most of them requiring a PhD to understand. But when it comes to learning how to invest, sometimes it’s best to turn to the people who do it for a living. 

Case in point, take Peter Lynch. 

From 1977 through 1990, Lynch ran one of the most successful mutual funds ever, posting an average annual return of 29%. Over his career, Lynch espoused many investing principles, but there are seven in particular that we think all investors should keep in mind.1 So without further ado, here are:

Peter Lynch’s 7 Rules of Investing

  1. KNOW WHAT YOU OWN. Invest in companies, industries, and funds you understand well. What do they do? Who uses their goods or services? Is it a company you would want to do business with yourself?
  2. PREDICTION IS FUTILE. No one can predict where the markets will go or what the economy will do, so don’t even try. Instead, focus on what you can control, like the types of companies or funds you invest in, how much you save, etc. 
  3. TAKE YOUR TIME. Investing isn’t a race. You have plenty of time to do your research and find outstanding companies to invest in. Follow the tortoise’s example, not the hare’s.
  4. AVOID LONG SHOTS. Investing isn’t gambling, either. While we have no control over the markets, we do have control over how much risk we take on. Your portfolio isn’t the place for speculation or bets. For that, head to Vegas. 
  5. BUY GOOD COMPANIES. Invest in companies that have proven management, a strong business model, and that sell things people actually use. Otherwise, you’re investing in companies you guess might prove popular…and that’s just another form of gambling. 
  6. LEARN FROM YOUR MISTAKES.  Even the greatest investors sometimes get things wrong. When that happens, accept it humbly and try to determine how you can improve.
  7. BEFORE YOU BUY, BE ABLE TO EXPLAIN. Before investing, can you explain to a family member what you’re buying and why? Can you describe how that company or fund works? If not, take your time and do more research.

Ultimately, all investing comes with risk, and there is no strategy or rule that guarantees success. But there are solid “rules of thumb” you can follow to make smart, simple investment decisions. 

And best of all, you don’t need a PhD to understand them! 

1 “The Greatest Investors: Peter Lynch”

Medicare – Insurance for Retirement #3

We have come to the final lap with Medicare.  The three articles that have made up this series are in no way a complete analysis on Medicare, but hopefully this information will provide you with a good understanding of the basics of Medicare planning.

Medigap Plans (also known as Medicare Supplement)

Medigap is extra health insurance that is purchased from an insurance company to help control the costs of healthcare expenses. For a monthly premium, a Medigap policy can help pay for things such as deductibles, co-pays, and/or co-insurance of your Basic Medicare (Part A and B).  Medigap can also be used for health care expenses if you travel outside the U.S.  Medigap policies will not cover things like long term care, dental care, vision care, eye glasses, hearing aids, and private nursing.  Medigap can be used to put a maximum cap on your annual medical expenses. This is very useful because Medicare Part A and B do not have a maximum out-of-pocket expense limit. It should be noted, that many Part C plans include some maximum out-of-pocket limit.

Medigap comes in many distinct “Parts” (Medigap Part A through N) and they are standardized. This means that the benefits of each Medigap Plan are the same regardless of the insurance provider.   It is important to note that Minnesota, Wisconsin and Massachusetts have different Medigap policies. 

Medigap can deny you for a pre-existing condition if you apply for a Medigap policy more than 6 months after you apply for Part B – no matter if you are still working or not. For example, you turn 65 and apply for Part B, but because you are still working you decide to not apply for Part C or Medigap. At age 68, you incur a preexisting condition and so you retire. At that point, you try to sign up for Medigap, but because of your pre-existing condition, the insurance company may deny you. Furthermore, a preexisting condition may not be covered within the first 6 months of signing up for Medigap. Note, that Part C cannot exclude you from coverage because of a preexisting condition, so it ends up being the back-up plan for many savvy people in this position.

Depending on the amount of insurance coverage you are looking to obtain, most iterations of how people get Medicare coverage is as follows:

  • Medicare Part A, B, and Part D (least amount of coverage)
  • Medicare Part A, B, and Part C (average amount of coverage)
  • Medicare Part A, B, D, and Medigap (most amount of coverage)

In the above, Option 2 or 3 are usually the most recommended strategies because of how inexpensive a Part C (Medicare Advantage Plan) can be in comparison to a standalone Part D. To go from Option 2 to Option 3, expect much higher monthly premiums. Those who expect to need that much insurance may benefit from Medigap policy, but because of the higher premiums ($51/month to $568/month, depending on the Plan) it is not for everyone.

Now that we have gone over the basics of Medicare, what are the next steps? If you are looking to get advice or find the strategies that are specific to you, please call our office to schedule an appointment.  We have been able to assist a good number of people in making well informed decisions when it comes to Medicare and their individual needs. 

It is also important to note that many states offer health insurance advisors and Medicare consultants whose sole objective is helping people evaluate health plans.  If you would like to discuss specific Medicare health care plans with your local Medicare office, visit to find a counselor in your area.