Funamentals Flashcards
Life Insurance
benchmark is 10-16x gross income
health insurance
needs 1 million lifetime cap pre-affordable care act. not required anymore
disabiliy
if paying premiums with after-tax dollars, then need 60-70% of gross income
Property (Both Home and Auto)
A policy that covers both home and auto for FMV is appropriate
Long-Term Care
a policy that provides a daily benefit for nursing home care, home health care or help with activities of daily living, with inflation protection
Personal Liability Umbrella Policy (PLUP)
1-3 million liability protection
Emergency Fund
Current Assets / Monthly Non-Discretionary Cash Flows
needs 3-6 months of non-discretionary expenses
Housing Ratio
28%
Mortgage, Principal, interest, taxes, and homeowners insurance should not exceed 28% of gross income
All Debt Ratio
36%
Primary mortgage, PITI, and all other recurring debt payments should not be more than 36% of gross income
Good Debt
Useful life of the asset far exceeds the term of the debt.
Includes 15-year mortgage or 3-year car loan
Reasonable Debt
30-year mortgage or 5-year car loan
Bad Debt
Carrying a credit card debt each month
Education Savings
3K for public state
6K for semi private
9K for competitive private
All for 18 years per year
Retirement Amount
16X amount of income needed annually
Example: Need 100K, need 1.6 million
Savings Rate
10-12% towards retirement per year. education is extra
Return on Investments
expect 8-10% on investments long-term
Risk
Measured by Standard deviation, measures volatility and variability
8-14%
Legacy Big Three
Will
Durable Power of Attorney for Healthcare
Advanced Medical Directive
