Insurance Tips to Get Lower Rates

Are you searching for cheap insurance? Why not? In any economic downturn, saving our money should be a top priority. And with the rates pushing up and car insurance becoming such a major expense (hundreds of dollars per month, per car, in some cases), we need to be more thrifty. Are we at the mercy of car insurance companies or can we do something to lower our rates? We can certainly give these tips a try. What do we have to lose?

1. Avoid Getting Traffic Tickets - First off, and probably most importantly, avoid getting tickets. Even a single speeding ticket reported to your insurance company can increase your insurance rate dramatically. Next time you get behind that wheel, just try to imagine your mother or your first grade teacher sitting in the passenger seat. That should help keep you out of trouble. If not, consider traffic school in lieu of having your ticket reported to your insurance company. As a responsible, low-risk driver you can enjoy large discounts if you manage to keep your record perfect for 3 to 5 years.

2. Maintain Good Credit - If you are currently shopping for car insurance and you have bad credit, consider cleaning it up a bit before you have insurers run your credit reports. Why is this important? According to scientific studies, good credit correlates with the lower likelihood of filing a claim. And if you have had high, out of the ordinary credit activity, postpone your insurance shopping for 4 to 6 weeks until everything returns to normal.

3. Increase Your Deductible - Did you know that by increasing your share of any incident payment, you will lower your premium? By scaling back and taking a higher risk, you can decrease your insurance rate by an astonishing 30 to 40 percent. The trick is to safely set aside some of your premium savings in case some day you do get in an accident and you need to pay that deductible.

4. Get Car Insurance Discounts - Next, let's explore some of the other ways to discount your car insurance:

• Take a defensive driving course and you might become eligible for a discount.


• Some insurers also discount teenage drivers with good academic records (you need to provide proof) for up to 15%.


• If you carpool or use public transportation to get to work, you may qualify for a low mileage discount (again you need to show proof). The insurance agent will ask you to report your vehicle's usage and estimate the annual mileage. If you own a car that you drive on the weekend only, you may classify it as recreational use.


• Another category of discounts includes low-risk occupation discounts. These discounts apply to certain professions like teachers, doctors and engineers. Based on statistical analysis of driving records for a wide range of occupations, including information on average time spent on the road, auto insurance companies have set some criteria for low and high risk drivers. A stay-at-home mom is also considered low risk because she is likely to have children in the car while driving and will therefore exercise caution. Conversely, night-time drivers are considered high risk. It is your responsibility to provide this information to the insurance and ask specifically if they can offer you this discount.


• Did I mention AAA? Well, belonging to certain professional organization might qualify you for lower rates. And everyone should take advantage of that. Also your employer might be able to offer a group rate, so don't hesitate to ask about it.

5. Use One Insurance Company - Consider insuring your cars with the same company that insures your home. This can be a considerable saving, it can lower both your car insurance and your home insurance rate.

6. Stick With the Same Company - Make sure you get that "renewal" discount for staying with the same company year after year. Most insurers offer this discount because they like low risk drivers, and they want to keep them. They like getting those checks from you, especially if they didn't have to give you anything yet. It's a win-win.

7. Cancel Unnecessary Collision Coverage - If you drive an older car, you may consider canceling the collision coverage. It is not required by law, and if you have finished paying off the loan, not required by the lien holder either. Are you spending more on insuring your car than it is actually worth? By taking this cut you will be assuming more risk, but it may be worth it.

8. Choose a Better Car - Finally, if you are out shopping for a different car, do consider getting a low profile car, a model that either doesn't get stolen frequently or that is less expensive to fix. The savings you get on your insurance premiums will most certainly please you, even if the way your car looks doesn't.

To Buy Stocks, or Not To Buy Stocks?

The question on many people's minds today is whether or not now is the right time to jump back into the market to buy stocks. I admit that I have been thinking about this question for the last few weeks as I watched with disbelief as the stock market rallied about 36% from the bottom formed on March 9th, 2009. Three weeks prior to this bottom, I sent an email to my readers and told them to get out of the stock market because all hell was going to break loose. Turns out that I was right for about three weeks, then the markets defied all odds and went the other way. I guess that's what the market is supposed to do. In this article, I will give you my analysis of what happened and I will tell you about what investments I like at this time.

The Unbelievable Rally

Many well respected market analysts have expressed surprise with the Spring 2009 stock market rally. All the economic indicators were very negative and there was no fundamental reason for the markets to go up. It was supposed to be a bear market rally, or a short squeeze. I was waiting patiently for the market to turn back down before I entered additional short positions. That never happened.

What I believe happened is that our government began a coordinated effort to turn our stock market around. I never thought this would be possible, but this administration has shown that they will boldly go where no government should go. I remember clearly the day that all the financial news turned on a dime and started issuing positive spin on all the economic data. This coincided with bullish statements from Obama, Geitner, and Bernanke. All of a sudden, we were going to see the worst of the recession in the middle of 2009, and we may even see positive GDP growth by the fourth quarter of this year. On top of that, Obama became a financial advisor to the American people, and told everyone to buy stocks. At the time, I thought Obama was being a rash fool. Now I understand why I should never bet against the government.

The government has intervened in the market in ways that make most investors uncomfortable. Who wants to put their money into the market when the rules keep changing. They changed accounting rules and accounting periods, all of a sudden the banks are reporting earning gains instead of losses. How could this be possible? Then there were the stress tests. All the market and bank pros were saying how inadequate and flawed the stress tests were, yet somehow the bank stocks kept rising, even as they were told by the government that they would need to raise more capital. I guess most people thought the results were going to be worse then they ended up being, and they decided that the government really meant what they said about not letting any of the big banks fail.

The Moose Market (or The Sideways Market)

So now that the party is over, and the banks were able to issue more stocks at inflated prices, what are we in for next. Many people are forecasting a sideways market. I guess a moose attacks in a sideways manner, instead of upwards or downwards as the bull and bear do. This is the most probable event, in my opinion. We had a nice rally already, the bad news is not getting any worse, it seems that the credit markets have thawed, and the fiscal stimulus is starting to kick in. The only thing left to do is for the economy and the markets to recover.

The problem is this, where are all the jobs going to come from? We have lost over 5 million jobs so far, and the weekly unemployment numbers are still very bad. Housing prices are expected to continue their descent as a new wave of foreclosures is expected and current inventory levels are still very high. How are all of our favorite companies going to make money in this type of environment? I don't know the answer to these questions, but I believe it will take a year or two for things to get back to positive growth. Even then, we have the real risk that Obama will increase taxes in one way or another to pay for his budget and his welfare programs, precisely when our economy will be hurt by such action. Add to this the fact that Americans are saving more and being more stingy with their money, and you get a fairly glum outlook for the foreseeable future.

One bright spot I see is that most investors have recently shown an increased appetite for risk. There have been enormous amounts of money on the sidelines, and some of it is starting to move back into the markets after seeing the recent rally. An interesting fact is that over 50% of the stock market is owned by people with over $5 million net worth, and 80% of the market is held by people with over $1 million. These people don't really need the money to feed their family today, and they can afford to take some risk. I believe these people are who will decide the fate of the market in the near term.

The Answer to the Question

The short answer is "Yes, you should buy stocks." The long answer is, "You should do your homework and buy stocks with a long term horizon." The following paragraphs discuss various investment classes that I feel would be prudent buys at this time. Disclaimer: I don't purport to give investment advice, and all of my picks should be considered as educational and informative of my thought processes. I have holdings in some of the mentioned investments and I may change my holdings at any time without notice.

Like most great investors, I am constantly striving for the highest return with the least amount of risk. With recent market uncertainty, I started looking into high dividend strategies that would take advantage of today's relatively low market prices, yet would provide some level of positive return in case the markets went back down. I plan on writing articles covering these investments in more detail, but for now I'll briefly mention them here for your benefit.

I have been looking into well diversified funds that hold high yield bonds, convertible bonds, and investment grade bonds. I have also been looking at royalty trusts, real estate investment trusts, and private equity funds. All these investments offer dividend yields ranging from 8% to 25%. Some of these returns are very high because the stock prices have come down so low. They are not without risk, but through careful research I have identified some that are less risky and more likely to continue paying out those high dividends.

Another area that I like right now are commodities and commodity related stocks. The previously mentioned royalty trusts usually are based on commodities and their prices and dividends are correlated to the prices of commodities. I have already bought some securities related to natural gas prices and oil prices, and I plan on buying more when the time is right. I feel that commodity prices are at or near their lows, and with emerging market growth seeming to lead the world out of the global recession, I think now is a good time to buy.

As far as emerging markets go, I currently like China and Brazil. China has spent 12 times as much to stimulate their economy as the United States have, and they appear to be stockpiling iron, copper, and oil at today's low prices. China has been able to respond more strongly to the economic crisis due to their state run government.

Brazil is an amazing economy that has a lot of natural resources that China and the rest of the world need. From this point of view, Brazil's market should do well as the world comes out of recession and demands more commodities to fuel growth. Also, Brazil itself is a growing nation with a lot of demand for housing and computers and all the other "necessities" of a developed country.

Another way to play the commodity card, and to position yourself for the inevitable decline of the US dollar, is to buy the currency of strong commodity nations. My top picks would be Australia and Canada. Australia was actually able to muster positive employment numbers recently, suggesting that it is coming out of the global recession ahead of its English-speaking peers. You don't necessarily need to open a forex account to take advantage of this. I believe there are currency ETFs that could be used to place these bets, or you could do some homework and pick some Australian, Brazilian, and Canadian stocks that trade on our stock exchanges.

Last, but not least, I believe this would be a good time to buy some of the best stocks at a discount. The next few months will probably be one of the best times to buy the stocks of great companies at low prices. I know that many of them already rallied, and that there still may be another pull back in the near future, but for long term investors, there are some great values out there waiting for your money. We may not see positive earnings growth for another two or three quarters, but the stock market is a forward looking mechanism and many savvy investors have already placed their bets with this knowledge. This is the age of the stock picker.

What do You Think?

I am always interested in what people think about the markets and I encourage you to post your questions and comments right here on this website. Just type something in the comment box. There is no need to register or sign up for anything.

Car Insurance Basics

Understanding the basics of car insurance coverage will help you get the lowest car insurance policy possible. The specific type of car insurance you need is determined by your state law and by what your lender, or lien holder, requires of you. This article covers the three basic types of auto insurance coverage available.

Liability- This is the minimum type of coverage required by most states. It will cover you for the damage you cause to others, including physical bodily damage as well as property damage. What it doesn’t cover is the damage to your person or your vehicle. The insurance policy will list three numbers. For example, 30/40/10 will insure in $30,000 bodily damage for one person, $40,000 total for bodily damage per accident for more than one person, and $10,000 for property damage for one accident. This is just an example, and different states have different minimum amounts required.

Collision- This type of coverage will pay to repair or replace your own vehicle. In case of an accident, the car insurance company will have to determine the cost of repairing your vehicle versus the cost of replacing it. If your vehicle has been heavily damaged or deemed totaled, the insurers will pay out a check in the amount of the ACV (meaning actual cash value), which is supposed to replace your vehicle. This amount is close to the trade-in value of the vehicle, but it may not be. It is usually calculated by using comparisons of other vehicles in similar condition, taking into consideration additional factors like mileage and equipment. Most insurance companies use third party software containing database information from dealers and auto repair shops to assist them in determining the value. If you disagree with this value, there are some things you can do. Read more about it in the article titled "Calculationg the Actual Cash Value of a Car." This coverage is not required by law, but it is required by lien holders in most cases.

Comprehensive- This type of coverage will pay for damages other than the ones related to a collision, including nature caused damages due to fire and flood, damages caused by animals, and losses due to theft. The coverage is dictated by individual policies. Most insurers will pay out up to the value of the car before the incident, minus your deductible. Although it is not required by state to carry a comprehensive policy, if you have a loan or a lease, the lien holder will require you to carry comprehensive insurance.

We hope that you found this article useful and we encourage you to leave your questions and comments below.

Trade Forex Like a Pro

Trading in the forex markets has its own set of advantages and disadvantages. You can make (or lose) a lot of money in the forex market because of the high leverage available. However, with prudent risk management and a disciplined approach, this should not become a problem. The big advantage to FX is that the markets trend better because they are so large and liquid, they are virtually impossible to manipulate. Even large governments can't defy the global forces of supply and demand for long. Another plus to currency markets is that they are usually uncorrelated to stock markets.

You may want to be weary of ads claiming to teach you how to "trade forex like a pro." The forex market is not regulated like the stock market, and there have been stories about forex "bucket" shops that take the other side of your every trade and make money by increasing the spread, invalidating your really good trades, or making it difficult to get out of positions when the market is moving really fast. If you really want to trade forex directly, I recommend you go with a direct access broker that has no dealing desk, such as Interactive Brokers or MB Trading.

The other, more easy way to trade forex is to use some of the new forex ETFs that are now available on the major stock markets. You can't get as high leverage with these, and they charge a small management fee, but it is simpler and easier for the average investor to get into. One disadvantage is that these ETFs are not very liquid and therefore you may lose some money due to slippage. However, this would only be a real issue if you are trying to day trade these ETFs. If you are taking a long-term investment approach, using forex ETFs should be sufficient.

What do you think about trading forex?