Buy or lease decision
Triple Net Lease- generally applies to real estate apartments, automobiles, equipment, etc…
Term: 3-5 years, then option to buy
Rent payment, insurance payment, and taxes
If you buy a car and lease it out, you can use that as a tax deduction
Leasing a car and owning a car being leased are both liabilities.
One problem with leasing is default.
Terms and conditions- t/c, tac…
Should always ask; “what are the terms and conditions of the lease/loan?”
“Residual Value” net difference between market value of asset less any liabilities pending against that asset value in market place after loans and liabilities have been liquidated generally, net worth
Real values do not include inflation, i.e. adjusted for inflation, while nominal does include inflation, i.e. not adjusted for inflation.
Length in time college senior should be planning financial term…. 1,5,10 years
Most people change their jobs 5-7 times in their first 10 years of working.
Insurance is about risk
Insurance is getting some plan for something that might happen
Assurance is something is definitely going to happen.
Life insurance is assurance.
Actuary is somebody that calculates the risk of something that might happen. They are important parts of the insurance world. Very lucrative occupation.
One question all insurance companies ask is “Do you smoke?” if you smoke you will lose at least 5-7 years off your life.
Most injury prone occupation in US is Oil & Gas fuel workers. Even more so than the military.
Military has its own insurance. Pay family $400,000 for death in combat.
Military is not even in the top 10 most risky jobs in US
Protection Policy- if you die you want some capital to take care of loved ones after your death.
Term Life Policy- calculation that if you want protection then you look at protection policy. Same thing as protection policy
Investment Policy- high premiums.
Whole-Life Policy- also an investment policy. Annuities.
Endowment- when you die your money goes straight to a company or charity..
Number 1 country with most citizens having a life insurance policy is Switzerland.
How are insurance policies paid for? By premiums.
$100/month, $20,000 Term life
Life insurance companies collect premiums and invest the premiums. Invested into 1-30 year bonds (both US bonds and corporate bonds), 5-30 year mortgages, real estate, other insurance claims, they buy long term investments and not stocks. It will then pay the maturity of the policy.
Insurer is the insurance company and insured is the policy holder.
Hartford, Connecticut is the life insurance capital of the world.
Insurance policies are not tax deductible. But you don’t have to pay a tax on insurance proceeds.
Pensions- big source of cash insurance companies have to work with.
Best Rated- Best Investment Rating Company. Ratings range from AAA-C. Insurance companies must state what their highest rating is. AAA-C is low risk (A) to high risk(C).
Average funeral cost is $7-11k.
SWAT Analysis (Strengths, Weaknesses, Assets, and Threats)
Uncertainty is not knowing what’s going to happen in the future. Different than risk. In a financial sense, uncertainty is when you’re unable to predict an outcome, as opposed to risk is when you can predict an outcome.
The idea that a war will occur is a risk.
Can always think of risk as probability. Probability is saying something can occur.
Predictable outcome is % likelihood it will occur.
Uncertainty is not the same as unintended consequences.
In LA, TX, Oklahoma- Oil& Gas
IRS will go after you on anything they deem to be a scheme, avoidance, or a fraud
Mitigation- ex: if you live in Texas but do some work in Louisiana, need to mitigate in order to not have to pay income tax for Louisiana.
Deductions- go against gross salary, pretax deductions such as 401k,