Friday Financial Five–October 25th, 2013

Friday, October 25, 2013

Dan Forbes, GoLocalWorcester Financial Expert

JP Morgan gets hit where it hurts

The 2008 financial crisis left the government and taxpayers looking for villains to punish, and JPMorgan Chase becomes the latest to agree to pony up to the tune of $13 billion. That number represents more than half of the company’s profits last year. The irony is that financial institutions, for the most part, were playing by the government’s rules at the time. But someone needs to pay, so it makes sense to target companies that have resources and the desire to stem years of bad press. Government agencies can’t financially penalize themselves for their role in this debacle, at least not until the debt ceiling gets raised again.

An extra few months on the health care mandate

With numerous politicians still pushing to have the individual mandate delayed by a year, it looks like there may at least be a reprieve of a few months. As the law currently stands, coverage needs to be in place by March 31st of next year. Because health insurance typically starts on the first of the month, that effectively means individuals will need coverage in place by March 1st or be subject to a penalty. According to CBS Marketwatch, there is a push to extend these required dates by a few months, especially in the face of numerous technical difficulties.

Investing with a conscience

Certain events, such as the atrocity in Sandy Hook, tend to push socially mindful investing to the forefront of investor consciousness. Many years ago, there was a noticeable tradeoff between market returns on no-limits investments and funds that excluded certain industries involving firearms, tobacco, or a perceived lack of environmental awareness. Now, several socially conscious investments have long term track records that make them suitable solutions for certain asset classes.

SEC to review proposal on “Equity Crowdfunding”

Another financing avenue should eventually open up to startups and small or risky businesses that can’t get approved lending from traditional banks. The Securities and Exchange Commission has a proposal on the table that would finally set guidelines for “Crowdfunding”, the ability of several individuals to invest in companies through various funding portals. Under the current proposal, the maximum individual investment would be $100,000. Companies would be limited to raising a maximum of $1 million per year, and there’s clearly a focus on making sure investors are properly educated on the offering details.

Make sure beneficiaries fully benefit from their benefactor

This is the periodic call to check on beneficiaries for life insurance policies and retirement accounts. There are stories galore of poor souls who suffered untimely demise, only to have this horror compounded in the afterlife because of money left to a reviled ex-spouse. Problems can also arise if there aren’t contingent beneficiaries named or if the named beneficiary is a minor or infant child. A review will help minimize fees and court interference.

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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