When you think of insurance, chances are what first comes to mind is life insurance, which protects against premature death and therefore the loss of a lifetime of income. You might also think of car insurance, which helps pay the costs of an accident, and disability insurance, long-term care insurance and homeowners’ insurance. The underlying mathematics of these contracts, used by actuaries, involves risk pooling, where many people contribute to a large pool of assets, and then the pool of assets will pay out to a relative few people who experience a car accident, or suffer a temporary or permanent disability, or die young. People pay a relatively small amount to be protected from relatively large catastrophes.
Low interest rates and added regulation designed to head off another global financial crisis has made it more expensive and complicated to run a banking operation these days. Gone are the heady days when banks were building 200 new brick and mortar locations a month in the U.S. market, leading up to the market top in 2008, when there were 100,000 bank branches in the U.S.—35 for every 100,000 adults, twice as many, per capita, as Germany.
Probably the most forgotten minority in America is the “elder orphans”—aging retirees who no longer have a spouse (if they ever had one), no kids and no caregiver.
Should today’s 70-year-old American be considered “old?” How do you define that term these days? Statistically, your average 70-year-old has just a 2% chance of dying within a year. The estimated upper limits of average life expectancy is now 97, and a rapidly growing number of 70-year-olds will live past age 100.
Chances are, the market barometer you most often hear about is the Dow Jones Industrial Average. Every evening, the Dow’s ups or downs are soberly reported as if they reflect something important.
If you’re like most people, you carefully put off doing something fun—like taking a trip or treating yourself—until you finished your work. Of course, for most people, the work never ends, and the fun gets put off over and over and over again.
Have you ever wondered what stock market professionals and equity analysts talk about in their spare time? Recently, the Bloomberg website featured a debate about something that is getting a lot of attention recently: the historically high, and still-rising U.S. stock market valuations. People have been willing to pay more, and more, and more for a dollar of corporate earnings. What does that mean about future returns?