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Presented by MidAmerica Financial Resources. You can reach them at 618.548.4777 or greg.malan@lpl.com or on the web at www.mid-america.us

 

Making Sense of a Home Warranty

Making Sense of a Home Warranty
Are you covered for that?

Provided by MidAmerica Financial Resources

 

As a consumer, when you purchase an expensive item, like a car or refrigerator, you expect to receive a warranty that the manufacturer will repair or replace that product if it breaks down.

A warranty makes sense for big-ticket purchases, but what about for a home?

An Overview of Home Warranties. A home warranty typically covers the repairs on specific items in a home, such as heating and air conditioning systems, plumbing, and built-in appliances.

A home warranty on a newly built home may be offered by the homebuilder and may cover up to 10 years on structural defects: one year on items like walls and paint, and two years, for HVAC, plumbing, and electrical systems. Appliances may only be covered for six months. Typically, the cost of this policy is contained in the price of the home.

A home warranty on an existing home also can be purchased, usually paid for by the seller or real estate agent to facilitate the sale of a house. These policies tend to have coverage not lasting more than one year. Occasionally, a home buyer may choose to purchase a policy, for instance, in the case of buying a foreclosure.

Keep in mind that several factors will affect the cost of a home warranty policy, including the size, location, and contents in the home. Any guarantees associated with a home warranty policy are dependent on the ability of the issuing company to continue making claim payments.

Be Realistic. You should understand the limits to which a home warranty will protect you. A home warranty promises you that certain items will remain functional; it does not promise you a new appliance or furnace.

Though it may be comforting to know repairs are covered, a warranty may restrict the contractors you can use to do the repair work.

A home warranty may be most beneficial to someone who will be purchasing an older home.

If you elect to buy a home warranty, make sure you work with a reputable company with a longstanding record in your local area. And be sure to comparison shop.

MidAmerica Financial Resources may be reached at 618.548.4777 or greg.malan@lpl.com www.mid-america.us

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Securities and advisory services offered through LPL Financial, a Registered Investment Adviser, Member FINRA/SIPC.
MidAmerica Financial Resources and Malan Financial Group are separate and unrelated companies to LPL.

Citations.

1 – startribune.com/one-way-to-cut-the-stress-of-buying-or-owning-a-home/509460172/ [5/5/19]

Saving Early & Letting Time Work for You

Saving Early & Letting Time Work for You

The earlier you start pursuing financial goals, the better your outcome may be.

Provided by MidAmerica Financial Resources

 

As a young investor, you have a powerful ally on your side: time. When you start investing in your twenties or thirties for retirement, you can put it to work for you.

    

The effect of compounding is huge. Many people underestimate it, so it is worth illustrating. Let’s take a look using a hypothetical 7% rate of return.

 

How does it work?  A simplified example goes like this: Let’s take a look using a hypothetical 7% rate of return. After a year, you earn 5% interest, or $5. Another year, another 5%, which adds $5.25 this time. In the third year, your 5% interest earned amounts to $5.51, bringing your balance to $115.76. The more money you deposit, the greater that 5% returns. So, if you were to deposit $100 every month into that same account, you’d make a hypothetical $836.63 in compound interest from $6,100 in deposits over five years. That compounding continues, even if you stop making deposits. All you really need to do is let that money stay put.1

 

The earlier you start, the greater the compounding potential. If you start saving and investing for retirement in your twenties, you may gain an advantage over someone who waits to save and invest until his or her thirties.

 

Even if you start early & then stop, you may out-save those who begin later. What if you contribute $5,000 to a retirement account yearly starting at age 25 and then stop at age 35 – no new money going into the account for the next 30 years. That is hardly ideal. Yet, should it happen, you still might come out ahead of someone who begins saving for retirement later.

 

Are you wary of investing? If you were born in the late eighties to early nineties, you are old enough to remember the market volatility in the early 2000s and the credit crisis of 2007-09. Recent events, in the wake of the coronavirus, might bring back memories of that time. All this may have given you a negative view of equities, shaped during your formative years; these events are clear examples of how risk plays a part in this type of investment.

 

The reality, though, is that many people preparing for retirement need to build wealth in a way that has the potential to outpace inflation. You will retire on the compounded earnings those invested assets are positioned to achieve.

MidAmerica Financial Resources may be reached at 618.548.4777 or greg.malan@lpl.com www.mid-america.us

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 – thebalance.com/compound-interest-4061154 [12/6/19]

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