Long-term care insurers running scared

Moody’s Investors Service reported that long-term care insurance faces an uncertain future because firms may find it difficult to profit from the product.

Laura Bazer, a vice president at Moody’s, issued this statement,

“Key credit considerations for the sector are the relative newness of long-term care insurance and the long-tailed and complex product structure, which make it difficult to price the product profitably.”

Genworth Financial Inc. has said it’s raising prices for the coverage, while the largest U.S. life insurers, led by MetLife Inc. and Prudential Financial Inc., are retreating from selling long-term care coverage.

So does this mean you should throw your hands up and forget about protecting your nest egg from soaring long-term care costs?

Heck no!

What it DOES mean is that you have to weigh your options even more closely. And the best place to begin is by picking up your copy of my updated and expanded edition of A Boomer’s Guide to Long-termCare.

Inside, I’ll show you what to look for in long-term care insurance policies and alternatives in case insurance is not for you.

Downloadyour copy here, right now.

Best wishes,

George

4 Reasons I like REITs So Much

San Gerardo de Dota, Costa Rica

I’ve written many times that I like real estate. I like stocks, too. But real estate helps reduce the risk of investing in the volatile stock market because it does not always move in tandem with other equities.  

And when friends or clients ask why I am especially fond of real estate investment trusts (REITs), I sum it up with four reasons: 

#1— Diversification

REITs own a basket of properties. Not just six or seven, often there will be several hundred in their portfolios. These holdings could be concentrated in one or two regions in the U.S., such as the Northeast, or throughout the whole country. 

#2— Income

REITs can generate a regular stream of income from the rent they collect from tenants. Then, by law, they must pay out at least 90% of their taxable income to shareholders. This has historically put REIT dividend yields considerably higher than average yield for the S&P 500 Index.

#3— Protection against Inflation

Real estate values and rents have historically risen along with inflation in our country. In fact, in all but two of the last 20 years, REITs’ dividends have beaten the Consumer Price Index.

#4— Total Return

When you combine strong, consistent dividends along with stock price appreciation, REITs have provided investors with higher returns than most other equities and bonds.

The proof: The FTSE NAREIT All Equity REIT Index has outpaced the S&P 500, the Nasdaq Composite, the Dow, and the Russell 2000 indices over the last 1-, 3-, 5-, 10-, 15-, 20-, 25-, 30-, 35-, and 40-year periods ending June 30, 2012.

That a pretty impressive record, if you ask me.

Best wishes,

George

P.S. I’m on Twitter. Follow me athttp://twitter.com/efinancialwrite for frequent updates, personal insights and observations on how to have a healthy retirement.

If you don’t have a Twitter account, sign up today athttp://www.twitter.com/signup and then click on the ‘Follow’ button from http://twitter.com/efinancialwriteto receive updates on either your cell phone or Twitter page.

REIT portfolio update

The REITs in the e-FinancialWriter portfolio continue performing well: Up 25.37% over the past 12 months and up 35.70% since inception, not including dividends.

REIT	Sector	Blog date	Price	Closing price 09/07/12	Return to date %	Dividend yield %
PSA	Self storage	3/14/2010	90.75	146.82	61.79	2.89
VTR	Health care	12/30/2010	52.87	65.04	23.02	3.74
HCP	Health care		36.81	46.64	26.70	4.25
HCN	Health care		47.53	58.66	23.42	5
IAECREIN:CN	Canada	9/27/2011	19.45cn	25.76cn	32.45	0
ZRE:CN	Canada		16.29cn	20.74cn	27.32	4.83
INVRLPRA:CN	Canada		5.45cn	5.54cn	1.70	1.86
NNN	Retail	1/29/2012	27.18	31.12	14.50	4.98
Index return since inception*					35.70
Avg 12-mo return of REITs in portfolio*					25.37
Avg dividend yield of REITs in portfolio					3.44
12-mo return S&P REIT index as of 08/31/12*					16.6
12-mo return S&P 500*					24.58

Source: Bloomberg

*Does not include dividends paid

If you have trouble seeing the chart, just in zoom in with your web browser.

Enjoy your weekend!

George

P.S. I’m on Twitter. Follow me at http://twitter.com/efinancialwrite for frequent updates, personal insights and observations on how to have a healthy retirement.

If you don’t have a Twitter account, sign up today at http://www.twitter.com/signup and then click on the ‘Follow’ button from http://twitter.com/efinancialwrite to receive updates on either your cell phone or Twitter page.