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3 Things 4-15-24

Thing One



Are You Getting All The Discounts?



Car insurance rates have gone up significantly in the last 18 months. According to CBS news, “… In 2023, the average U.S. rate for full auto coverage rose to $2,019 per year, up 24% from $1,633 in 2022 and nearly 29% from 1,567 the prior year,…Several factors are driving up the cost of car insurance, including lingering issues from the pandemic. Vehicles are more expensive and costlier to replace, with inflation driving up the cost of computer components and other parts required for repairs.



A shortage of mechanics around the U.S. also means it's taking longer to fix vehicles — that raises how much insurance companies have to spend covering the cost of rental cars for customers while their cars are in the shop. Climate change is playing a role as well, with more vehicles damaged by extreme weather, leading to more claims and, in turn, higher premiums…”



Given the dramatic rise in premiums, it makes sense for auto owners to be constantly on the lookout for discounts offered by insurance carriers. And this applies whether you’re looking to switch or intending to stay with your current carrier. Typically, the discounts are the most advantageous to “good” consumers (low claims profiles) with long histories with a previous carrier.



See below for an example of the discounts offered by one property and casualty insurer in Georgia:



Paid In Full Discount (12%) – Most people are conditioned to pay their insurance monthly so they don't consider this one, but the savings can really add up.



Prior Carrier Tenure Discount (Up to 32%) – If you’ve been with your prior insurer for 72 months or more, and don’t have lots of claims, this insurer will give you a massive discount. But even if you haven’t been there that long, they’ll give you a break in 1-year increments up to the max of 32% off at six years.



Advanced Notice Discount (Up to 18.5%) – If you intend to switch to a new carrier, this insurer will give you a 10% discount for a 1-day notice and an 18.5% discount for 15 or more days of notice.



Taken all together, the savings (from discount stacking) off the list price could be quite significant for a person with a multi-policy, long-tenured, profile in which they provide the insurer with advanced notice of their intent to switch. Again, these numbers apply to a specific insurer, but the marketplace is competitive, so other insurers offer similar discounts. This is just one more reason for the consumer who has gotten comfortable with his current insurance provider to shop around.



Thing Two



IF



“...If you can make one heap of all your winnings And risk it on one turn of pitch-and-toss, And lose, and start again at your beginnings And never breathe a word about your loss...”



That's the fifth stanza (out of eight that all start with the word, “If”) of the famous poem by Rudyard Kipling. It’s not about investing or risk-taking so much as it is about deciding on a course of action for yourself and taking full accountability for the results. What follows are some “ifs” more relevant to this newsletter’s general theme.


If you had put $1,000 in the market (as represented by the S&P 500 index) at the beginning of the trading session on October 15, 2008 (the date of the largest one-day decline of the “financial crisis”, your investment would have been worth $909 at the end of that day. Six months later, it would have been worth $852. But a year later, it would have been worth $1,096. And 16 years later (present-day) it would have been worth $4,440.


If you'd had $1,000 invested in the S&P on March 29, 2022, almost two months later you would have had $870. But today you'd have almost $1200. Because the future is unknowable, we can’t predict with any certainty what you’ll have six months from now, one year from now, or fourteen years from now. But absent that certainty, we do know, because history tells us, that the market goes up over time, sorts out good companies from bad, and rewards patient investors.


Still, that may not provide the clarity you need to be comfortable in the current environment. So here’s one more if:



If you need the money today, tomorrow, six months from now, next year, or even the next couple of years, you probably shouldn’t have it in the stock market. You decide.



Thing Three



Just A Thought



"Winning is not everything, but wanting to win is." --Vince Lombardi

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