How Much Life Insurance Would the McCains’ 35-Year-Old Son Need (If They HAD a 35-Year-Old Son and If He Had One Infant Child and Had Converted His GLDD Warrants Into Stock)?
NEW TOPIC PLEASE
Dennis King: ‘I lived through 2000 and 2004, the other highly ‘political’ years for your site. I can remember having the same reaction then as your Friend yesterday who wants a ‘New Topic Please.’ However, in retrospect maybe you did not go far enough. No matter which side of the debate one is on, most would agree that things would be quite a bit different if the elections had gone the other way. The best way to help people make the upcoming decision is to throw a lot at them so that they can be better informed. Of course you walk a fine line. Throw too much and some will duck or walk away to avoid it. Not good. Give us a few other topics as well and many will stick around sometimes even paying attention to a few of the really important ones. This of course will mean a lot more work for you. No problem . . . just double the subscription price.’
Brian A.: ‘As a Republican (supposedly) from Arizona, I really wanted to vote for McCain, but Sarah Palin was such a poor choice that this will now make it three presidential elections in a row that I vote Democrat. I’d like your opinion on how much life insurance I need: I’m 35, my wife stays home with our one-year-old, I make about $100K/year, and we have about $350K in a combination of 401(k)/IRAs/savings. We rent, with no debt. Does $500K level premium term life insurance for 20 years sound about right?‘
☞ Finally back to insurance. In the first place, it sounds as though you’re doing great. In the second, take a look at intelliquote.com to get an idea of your options. If you’re in good health and have never smoked, the kind of coverage you’re thinking about should cost you around $400 a year. Doubling it to $1 million would cost only about $650.
There’s no magic answer, and lots of subsidiary questions: Do you already have some group coverage at work? Have you considered the Social Security survivors’ benefits your heirs would receive? Are there affluent grandparents in the picture? Is your prospective widow someone who could go out and earn a good living if need be? On the off chance you die within 20 years, will you have the good sense to do it in an accident where some deep-pocketed malfeasor can be proven to have been at fault?
Any of those factors might lessen your need for coverage.
But I plugged your numbers and reasonable assumptions into the ‘insurance needs’ module of my trusty old copy of Managing Your Money (long since orphaned) and it came out with $473,000 – so your $500,000 is a good ballpark.
Thorsten Kril: ‘Anne’s story about Sarah Palin was kind of hard to believe but the WSJ has a story which confirms many points. I.e. as mayor she fired most department heads, not because they were corrupt or anything but because they had different opinions than her. Like the police chief who did not want that people can carry around concealed weapons in town. It also confirms that she approached the librarian about censoring what books would be on the shelf. Imagine having somebody like this as vice president or, should the worst happen, as president.’
Jim Reed: ‘I love ‘The Daily Show.’ If you are in the public spotlight and say one thing today and something exactly opposite later, they will show the videos back to back. Last night they featured Karl Rove, Bill O’Reilly, Dick Morris and Nancy Photenhauer. You can watch it here.’
John Baer: ‘Why don’t you list the debunking websites in your column again? That should be enlightening for all.’
Let me spare you thoughts on Cindy and John McCain’s speeches at least until Monday. Suffice it to say, the McCains mean well, and they care, but they are not the change we need; and voting 95% with Bush is not being a maverick; and misleading people into thinking their taxes will go up when they will go down is not straight talk; and if the Clinton/Gore tax rates were such a drag on the economy, how come 22.8 million new jobs were created? and if cutting taxes for the wealthy stimulates the economy and still allows for a balanced budget, how come the economy is in the crapper and 75% of our $10 trillion National Debt (by the time Bush finally leaves) will have been racked up under just three of our 43 Presidents: Reagan, Bush, and Bush?
Don’t get me started.
THE REAL McCAIN
Buy it for everyone you know – lest we make another colossal error and choose the wrong man.
This is the ‘spaculation’ that began a couple of years ago as Aldabra warrants at about 70 cents each (and then more at 35 cents each) – a SPAC that went on to acquire Great Lakes Dredge & Dock, symbol GLDD, that left us with a choice. Either sell our warrants for $4 and change – but pay short-term capital gains tax. Or pony up $5 in cash to convert at least some of the warrants to stock, start the clock ticking again, wait a year, and perhaps then sell – perhaps at an even greater profit – with less of a tax to pay on the gain.
(For those who’d bought the warrants inside a tax-deferred retirement account, the choice was simple: just sell and take the profit. Likewise, those who’d bought early enough for the warrants already to have gone long-term.)
Now a year has passed, and it turns out that the first choice, despite the higher tax, would have been a lot better: a relatively quick $3.50 profit on each warrant, less ordinary income tax.
Choice #2, ponying up $5 in cash to convert each warrant into a GLDD share meant committing a total of $5.70 or $5.35 to each share (depending on what you paid for the warrants) . . . and with the stock around $7.50 today, more like a $1.80 long-term gain. A smaller gain on a not-so-quick profit.
I did some of each. I sold all the warrants that had already gone long-term and even some of those that were still short-term; but converted many of the warrants to stock, thinking that one day the stock might be $12 or $14.
I still think that; but times are tough, so with GLDD nicely in the black, I lightened up on what was a very heavy holding.
Which probably means the stock is headed straight up.
Quote of the Day
A penny saved may be a penny earned, but it's one boring penny. A penny invested, on the other hand, bounces around. It gets bigger one day, smaller the next. A bit player in the drama of global finance, that penny buys a guy a balcony seat in the theater of macroeconomics.~Susan Stewart
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