Sound Advice

Medicare 101 On July 30, 1965, President Lyndon Johnson signed H.R. 6675, more popularly known as the Medicare law, some 20 years after President Harry Truman called for the creation of a national health insurance fund.   Today, more than 63 million people get health coverage through Medicare, the cost of which runs nearly $1 trillion annually. Medicare coverage consists of two main parts.   Part A covers inpatient hospital insurance, including charges for the room, meals, and nursing services.   It also covers hospice care and home health care. Part B is medical insurance for physician’s services, whether as an inpatient or outpatient at a hospital, other health care facility or in a doctor’s office.   Lab tests, physical therapy, and ambulance services are also covered and Part B covers 100% of the cost of preventative services as well as an annual wellness visit. Part B is optional coverage for which the monthly premium amount ranges from $148.50 to $504.9...

Growth vs. Value One of Wall Street’s ongoing debates is whether to invest in growth stocks or value stocks, which probably makes no sense to most investors.   To be sure, investors favor companies that are growing rapidly and one would think that goes along with the thought that these investments represent good value. But that’s not what it’s about. Growth stocks are those of companies increasing their sales and profits at markedly above average rates.   Well-known examples of growth stocks are the big tech companies such as Apple, Amazon, Facebook, and Google.   Investors making commitments in growth stocks focus almost exclusively on growth based on their expectation that the hefty gains will continue ad infinitum (or at least for the “foreseeable” future) with little or no concern for market valuations, even if they are stratospheric. There is an ongoing risk that an increasing number of prominent growth stocks are priced for perfection.   As long as ever...

The U.S. Stock Market Has Been Doing Better Than Most Stocks   That’s a confusing concept, but it is reality.   Over the latest five years, as measured by the Standard & Poor’s 500 Index, the stock market has gained 106%.   The S&P 500 Index is generally considered to be a good representation of the U.S. stock market as a whole, but it most certainly is not.   Why?   Because five companies (Apple, Amazon, Microsoft, Facebook, and Google) combine to make up nearly a quarter of the index.   As these five go, so goes the index.   If this index is viewed with all companies measured on an equal basis, the net result for the period drops to 87%. The comparison is even more striking when we divide the S&P universe into large cap, midcap, and small cap companies.   (Cap is short for market capitalization, which is the total value of all shares of a company.)   Over the latest five years, the gain in large caps was 171% compared to 8...

Investing in Education? Here’s How Although it’s tempting to think the purchase of a home for your family is the biggest investment you’ll ever make.  In most cases, it’s not.    The Number One investment will be your children’s education.  For a baby born today, four-year tuition at a private college will be more than $500,000.  Multiply that by the number of kids in your family and it will dwarf whatever most homes cost.   The good news is that in many cases financial assistance will be available, especially if the students have good academic records.  In addition, student loans can help fill in the shortfalls. Even so, the parents or grandparents will still have to bear a substantial part of the cost.  That’s where 529 plans come in. A 529 plan is a tax-advantaged plan to encourage savings for future education costs.  There are two types: prepaid tuition plans and education savings plans.  Every state has at least one type o...