Why a Health Care Proxy? Part 2

The two most common forms of advance directives are a living will and a durable power of attorney for health care (commonly referred to as a health care proxy). A living will can explain — in writing — the care you wish to receive (or avoid) in the event you are incapacitated by a terminal illness or serious accident. For instance, it can express your wishes for controlling pain, receiving nutrition, or making life-support decisions.
But unlike a living will, a health care proxy allows you to legally designate someone — a proxy — to make medical decisions for you. Keep in mind that in some states you may even be able to combine a health care proxy and living will into a single document.

Hospitals and nursing homes are required to ask about the existence of any advance directive when you are admitted. In most states, a health care proxy does not take effect until you can no longer make medical decisions for yourself; until then, only you can legally consent to any treatment. In addition, you can always change or cancel the document as long as you are mentally alert. If you decide to make changes to any of these documents, be sure to do so in writing.

A comprehensive health care advance directive combines both a health care proxy and living will into one document. Organizations such as AARP, American Bar Association (ABA), and the American Medical Association (AMA) have joined forces to create a simple, yet comprehensive, form.

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Advance Directives: Planning Ahead for Your Own Care – Part 1

You may not want to think about it, but it is vital that you do — you may someday face a sudden health crisis due to an accident or serious illness that leaves you unable to make your own medical decisions. Fortunately, there is a legal means to addressing this potential future concern — it’s called an advance directive.

An advance directive is a written statement that you complete in advance of a serious illness. Generally speaking, this document names someone to act on your behalf or outlines how you want medical decisions to be made when you are no longer able to make decisions for yourself. Some types of advance directives may be able to do more for you than others, so it is important to know the differences.

Keep in mind that advance directives should not be confused with financial directives (such as a durable power of attorney). In addition, advance directives are not financial documents. However, it is possible that during a visit with an attorney to discuss financial and estate planning affairs, advance directives may be discussed and in some cases packaged together with other documents (e.g., wills, trusts, etc.).

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Sizing Up Your Portfolio

If confronted with a market correction or bear market, take time to review your portfolio. Are all your investments in stocks? Have you invested in only a few high-flying stocks?
Remember, all investments involve risk. As a long-term investor, you can afford to ignore short-term price changes. But you can also make the long journey a little more enjoyable by taking a few steps to help protect your portfolio from a drop in stock prices. Here’s a short list of some risks you face as a holder of stocks, and some ideas about how to reduce the chances that your portfolio suffers a big loss.
1. Market Risk – is common to all investments. If stock prices fall by 10%, market risk says your stocks are likely to drop in price as well. You can help manage market risk to stocks by allocating part of your portfolio to other assets, such as bonds or and Treasury bills. When stock prices decline, it’s possible that a rise in non-stock investment may help cushion the fall.
2. Under diversification – if you only own a couple of stocks, your portfolio is extremely vulnerable if one suffers a big decline. Also, it’s important that each stock in your portfolio be in a different industry group. Owning eight computer-related stocks will do you little good if the prospects dim for the computer industry.
3. Volatility – this is less of a concern for the long-term investor. Someone who is investing for retirement in 30 years should not be too concerned if the investment bounces around from one day to the next. What is important is that the investment has the potential to perform up to expectations in the long term. You can help manage volatility risk by investing the money you may need in the next five years in a more conservative investment. You can be more aggressive with the money you earmarked for use in 15 to 20 years, if that would be suitable for you.

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How Credit Reporting Works

Credit reporting agencies, also known as credit bureaus, gather detailed information about how consumers use credit. Businesses that grant credit regularly supply credit information to credit bureaus. Credit bureaus then compile this information into credit reports, which are sold to banks, credit card companies, retailers, and others who grant credit.

Your credit report helps others decide if you are a good credit risk. This information should be supplied only to those parties who have a legitimate interest in your credit affairs, including prospective employers, landlords, or insurance underwriters, as well as others who grant credit. The Fair Credit Reporting Act (FCRA), the federal statute that regulates credit bureaus, requires anyone who acquires your credit report to use it in a confidential manner.

The following information is most likely to appear in your credit report:

• Your name, address, social security number, and marital status. Your employer’s name and address, and an estimate of your income may also be included.
• A list of parties who have requested your credit history in the last six months.
• A list of the charge cards and mortgages you have, how long you’ve had them, and their repayment terms.
• The maximum you’re allowed to charge on each account; what you currently owe and when you last paid; how much is paid by the due date; the latest you’ve ever paid; and how many times you’ve been delinquent.
• Past accounts, paid in full, but are now closed.
• Repossessions, charge-offs for bills never paid, liens, bankruptcies, foreclosures, and court judgments against you for money owed.
• Who owes the debt — you alone, you and a joint borrower, or you as cosigner. (Debts that you co-sign become part of your credit history, the same as debts you incur yourself.)
• Bill disputes.

Negative information can be kept in your file only for a limited time. Under the law, delinquent payments can be reported for no more than 7 years and bankruptcies for no longer than 10 years.

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Securities offered through LPL Financial, Member FINRA/SIPC. Advisory services offered through Wealth Enhancement Advisory Services, a registered investment advisor.

Why Credit Is Important

It is important to establish credit if you plan to buy a home or automobile some day. Credit cards also provide a means of reserving a hotel room or obtaining cash while you’re traveling.

If you are a college student, recent graduate, or a nonworking spouse, you can begin to establish credit by opening a savings or checking account in your own name. You can then apply for a department store and/or oil company credit card. Having someone else co-sign a loan for you will also get you started.

Creating a positive credit history for yourself requires using your credit card intelligently. Following are some dos and don’ts to help you manage credit effectively:

• DO NOT charge more than you can easily pay off in a month or two.
• DO NOT be fooled into paying just the low minimum amount listed on a bill. Credit card issuers make money on interest; there’s nothing they’d like more than to have you stretch out payments.
• DO consistently pay your bills by the due date.
• DO use credit for larger, durable purchases you really need, rather than non-durables, such as restaurant meals that are better paid in cash.

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Securities offered through LPL Financial, Member FINRA/SIPC. Advisory services offered through Wealth Enhancement Advisory Services, a registered investment advisor.

What Is a Financial Advisor?

A qualified financial advisor is trained to analyze your personal financial situation and prepare a program designed to help you meet your financial goals and objectives. It might be helpful to think of your financial advisor as a kind of doctor for your financial health.

Financial advisors (also called financial planners or financial consultants) can earn certifications or designations by completing accredited courses of study. Two of the most common are the Certified Financial Planner (CFP) certification, which is awarded by the Institute of Certified Financial Planners, and the Chartered Financial Consultant (ChFC) designation, which is awarded by the American College of Bryn Mawr. There is also the Registered Financial Planner, which is a designation awarded by the International Association of Registered Financial Planners.

Financial advisors are often trained as accountants, lawyers, insurance agents, or stockbrokers — all professions that have a relationship to different aspects of your financial well-being. Because of this association with another profession, a financial advisor frequently will specialize in a specific type of financial planning, such as retirement planning or estate and trust planning. Financial advisors are usually compensated in one of three ways. They may:

• charge a fee for their time and service, but sell nothing;
• give free advice, but charge a commission on transactions involving investment products such as mutual funds, stocks, bonds, and insurance products; or
• charge both a fee and commission on transactions.

Although all three methods of compensating financial advisors are popular, some people prefer to simply pay a financial advisor for services provided, in much the same way you would pay an accountant or a lawyer for advice.

© LPL Financial, created by Standard & Poors

Securities offered through LPL Financial, Member FINRA/SIPC. Advisory services offered through Wealth Enhancement Advisory Services, a registered investment advisor.

Tax-Smart Idea for Managing Your Portfolio 5:

Keep Good Records

Keep records of purchases, sales, distributions and dividend reinvestments so that you can properly calculate the basis of shares you own and choose the most preferential tax treatment for shares you sell.

Keeping an eye on how taxes can affect your investments is one of the easiest ways to help enhance your returns over time. For more information about the tax aspects of investing, consult a qualified tax advisor.

© LPL Financial, created by Standard & Poors

Securities offered through LPL Financial, Member FINRA/SIPC. Advisory services offered through Wealth Enhancement Advisory Services, a registered investment advisor.