Every day we all get barraged with cute little characters  telling us how they can save us 15% on our car insurance.  They say millions of people switch to their company every year.  How many millions don't switch???
 
The truth is, last year GEICO alone spend over $550 million to flood the airways with their advertisements. That's more than double what the next highest  advertising budget for insurance was for last year.
 
But is it really true? Can they really automatically save you that much money without a catch? If it was, would they really need to spend a ridiculous amount of money annually on advertising?
 
The reality is, insurance is a very individualized product that varies from person to person and not all policies are alike. Many factors like claims history, tickets or accidents, vehicles, credit and even where you live, can make a big difference in how much your insurance will cost.
 
Sure, any insurance company or agent could save someone additional money on their car insurance by lowering or cutting their coverages, but would that be the prudent thing to do. Until you have a claim, it might sound like a good idea but you usually get what you pay for.
 
Another disadvantage with online only or call center insurance companies is when something goes wrong or you need help resolving an issue, you rarely get to talk to the same person twice - if you even get to talk to a person at all. 

 

What if your rates go up and you're with a "one company" agent, what are your options then? You probably would have to cut your coverage or do all the insurance shopping again and switch to a new company with a new agent.
 
That's why having an agent who doesn't work for the insurance companies but for you, is so beneficial. We represent over 20 different carriers so if we need to switch companies for you, we do all the work for you. Best of all, you won't have to start a new relationship with a new agent.
 
So no matter what those other insurance companies tell you in their commercials, it's not as easy as they make it sound.

 

 
Over the years, the terms "saving" and "investing" have been combined and used together to describe a variety of financial products.

 

Through common and inaccurate usage, these concepts have overlapped and become fused. 

Many media sources, banks and even financial professionals use the terms saving and investing interchangeably, as if they mean the same thing. But they don't. Saving and investing are two very distinct concepts. Not understanding the difference can put your retirement at risk.  Let's take a brief look at what these terms mean.                                                
  
Savings refers to money that you don't want to lose or can't afford to lose. It's kept in a low risk environment where it can grow consistently without being subject to loss. The power of compounding interest creates predictable growth. Your money in savings is always there when you need it.  It may not be earning record returns, but it's also not enduring record losses. 
 
Investments are subject to loss. The higher risk typically correlates with a higher earning potential. Common investment products are stocks, mutual funds, and other securities. Invested money in the stock market usually has the potential for greater growth but also has a greater risk of loss.
 
A solid financial strategy will have its saving and investing components clearly distinguished. A lot of retirement "savings" accounts are really retirement "investment" accounts.  Why does this matter?  Because by confusing the fundamental concepts of saving and investing, and not being clear about whether your money is in a saving or investment product, you can end up believing that your money is less exposed to risk  than it really is.

 

Written by our client: Dwayne Burnell, MBA

 

Dwayne can be reached at 425-286-7298 or via e-mail and DwayneBurnell@FinancialBallGame.com