Newsletter For October 13, 2024: Protect Yourself And Your Family

Dear Financial Samurai,

This week’s newsletter focuses on protecting yourself and your family from harm. While researching for my post on government graft, I explored why the mayors of NYC and SF might not be tougher on crime. One possibility? Growing up in an environment where crime is commonplace might make it seem less urgent to address.

In light of this, it's essential to learn how to protect yourself and your loved ones. Just as we can’t rely on the government to safeguard our finances, we shouldn’t expect it to fully protect us from crime.

If you've never been in a dangerous situation where you had to defend yourself, you might freeze during a robbery or carjacking. What would you do in that moment? I share some important insights in my latest post: Effective Ways To Protect Your Family From Harm's Way.

Flood Insurance Is Separate From Home Insurance

With the devastating hurricane in Florida, now’s the time to review what your home insurance covers. A key point: standard home insurance does not cover flood damage caused by external sources like heavy rainfall, overflowing rivers, or storm surges. Flood insurance is a separate policy, usually offered through the National Flood Insurance Program (NFIP) or private insurers. If you live in a flood-prone area or one affected by hurricanes, it's crucial to look into flood insurance.

Also, ask your insurance agent if your policy covers water damage caused by heavy rains leaking through your roof while you're away. A friend of mine experienced this during a week-long ski trip to Lake Tahoe. They returned home to find their kitchen and two bedrooms flooded, but fortunately, their home insurance covered all the damage—plus 18 months of living expenses in a comparable house.

One of the worst things a homeowner can experience is filing a claim only to find it's not covered. After years of paying premiums, the insurance company doesn’t come through when you need them most. That’s why I wrote A Home Insurance Policy Review To Understand What’s Covered. Hopefully, it encourages you to call your insurance agent to clarify your coverage. The more questions you ask, the better prepared you’ll be.

Another Good Severance Package Example

My recent post about why it’s better to retire early than retire rich has sparked a lot of conversation. Check out the comments and see for yourself. If you’re considering early retirement, negotiating a severance package is crucial.

Interestingly, Automattic, the company behind the content management system powering Financial Samurai since 2009, recently offered generous severance packages, and 8.4% of employees took advantage of them. The offer was too good to pass up!

Since 2012, I’ve advised those looking to retire early, switch careers, or become stay-at-home parents to negotiate severance packages. It's a key step in the FIRE journey. Automattic’s offer also shows that patient employees are often rewarded with great exit deals.

So if you're planning early retirement, remember: simply quitting after being at a company for over a year is a missed opportunity. With two ways to achieve a severance package, quitting is a suboptimal move.

Read more in my post: A Severance Package Is the Ultimate Catalyst for Early Retirement

Here's a work from home policy promoted by a fictitious company I thought was funny. It actually reminds me of the first 2 years and 10 months of working on Financial Samurai while working in banking!

Newsletter For October 13, 2024 - Funny Work From Home Chart

Strong Earnings From Financials

Finally, the S&P 500 hit a record high, driven by strong earnings from JPMorgan Chase, Wells Fargo, and BlackRock. When financials perform well, it’s a positive signal for the overall economy, reducing concerns about a potential crash. While these results reflect the past quarter, there were no major warnings or downward guidance from the banks.

Despite a slightly higher-than-expected CPI of +2.4% YoY and +0.2% MoM, traders are still betting on an 88% chance that the Fed will cut rates by 25 basis points in November, according to CME’s FedWatch tool. I’m continuing to buy the dip, though I’m slowing down due to upcoming property taxes in California.

Some of you have asked how I decide when and how much to buy during market dips. There's no exact formula, but I focus on specific target securities and have a desired asset allocation. If you're interested, check out this post on a better dollar-cost averaging strategy—it might give you some helpful insights.

I’m in Tahoe through Monday and have some great topic ideas brewing. In the meantime, check out my latest podcast (available on Apple or Spotify), where I interview a college admissions consultant about her work. Your shares and reviews are always appreciated as it takes hours to record, edit, and produce each podcast episode.

Recommendation

Getting life insurance is one of the most basic steps you can take to protect your family. It not only safeguards your dependents in the event of a premature death, but it also provides peace of mind. For personalized quotes, check out Policygenius. My wife and I both used Policygenius during the pandemic to find 20-year term life insurance policies that suited our needs.

To Your Financial Freedom,

Sam

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