Friday Financial Five–October 18th, 2013

Friday, October 18, 2013

Dan Forbes, GoLocalWorcester Financial Expert

The ramifications of genetic testing

The advent of $99 genetic testing, as offered by 23andMe, may come with a multitude of financial and privacy implications. Many forms of insurance are based on the insured’s health. Imagine a life insurance company pricing a premium based on the probability that a person has a higher or lower risk of developing certain types of cancer. Long term care coverage might be denied for an individual whose test indicates a higher chance of Alzheimer’s. Eventually, it could influence employment decisions, such as an athlete that tests more susceptible to certain injuries. And then there’s the question of whether insurance companies or employers will have a right to this information at all. For financial planning purposes, individuals might forecast retirement income for a shorter or longer life expectancy. We’re at the very forefront of a revolutionary scientific development that could have financial ramifications for us all.

U.S. is the Pele of kicking the can down the road

The government reopening and the debt ceiling being temporarily raised was received by the markets with a collective yawn. The country faces an amazing amount of debt, and hard decisions still need to be made to get economic mobility jump-started again. Eventually, the financial markets may take control out of political leaders’ hands, and that can lead to drastic repercussions.

We’re #1! (In oil production)

Oil field discoveries and improvements in North Dakota and Texas have helped push the United States to the top of the world in terms of production, according to the Energy Information Agency (EIA). On top of that, the country has increasingly been less oil dependent over the years. This has lessened the urgency for the development of alternate energy sources. Another possible result is that continued increases in energy exports will eventually lead to a positive trade balance and strengthened dollar.

The health insurance penalty

The argument continues about corporations getting a year reprieve from the Obamacare mandate, while individuals will still be penalized if uninsured in 2014. Assuming this remains the case, what percentage of people will voluntarily pay the penalty if given the choice? It appears to be quite a few. The dollar amount of the penalty next year will be $95 per adult or 1% of family income, whichever is higher. If a struggling couple has to pay a onetime $300 penalty, or $400 per month in health premiums, which are they going to choose? It would be interesting to see how the architects of the health plan predicted those decisions would be made next year.

Buying stock in an athlete

A start-up company, Fantex, has developed a unique offering by becoming “the first online platform that lets you invest in stock linked to the value and performance of the brand of a top athlete”. The first offering, Arian Foster (who received $10 million according to the New York Times), is an interesting one, as NFL running backs tend to have truncated careers. It’s an amazingly speculative premise, and it appears to be the hope of the company that Foster sustains the model long enough for other top athletes to follow suit.

Dan Forbes is a regular contributor on financial issues. He is a CFP Board Ambassador. He leads the firm Forbes Financial Planning, Inc in Providence, RI and can be reached at [email protected].

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