Financial 411 answers
Our Certified Financial Planners are happy to de-mystify their terms.
Our panel, on April 23, 2012:
Dennis Hebert, Strategic Wealth Advisors, 234-7526
Grace Ghezzi, Benefit Consulting Group, 474-1707 ext 460
Richard Jenkins, Diversified Capital Management, 472-6221
Among our 'terms':|
~Reverse mortgage. This is a financial product only available if everyone involved is over 62. It basically is a loan, based on the value of your home. You can take the amount as a lump sum, a line of credit or as a monthly payment. The money cannot run out. When you die, you sell the house and the loan has to be paid. If the house sells for more than the loan balance, your beneficiaries get the 'profit.' If there's not enough money from the sale, no one has to pay back the balance.
~Fee versus fee based: A fee-only advisor will be compensated by charging an annual fee, a flat fee, or a percentage for assets under management. A fee-only advisor cannot receive commisions or service fees.
By contrast, a fee-based advisor can be compensated as above, AND/OR can also receive commissions.
~Universal versus Variable Life Insurance: Both will have coverage continuouosly (the policy won't expire before it pays out)--however what is earned is different. In Universal, there may be a minimum on what's earned but no ceiling. Variable life is more risky, but its up to the policy holder to decide where to invest the money in the policy.
~Target Date Funds. You invest, and the risk of the investment is figured, by the company, based on when the funds are due: as you get closer to the target date, the risks decrease. This is a good choice if you're hesitant about managing your risks, however if the 'one size fits all' does not allow for risk takers, and definitions of risk can vary from company to company--you need to check out the terms.
Next week, understanding what you're buying into: you can email us questions in advance at money@cnycentral.com
