When the U.S. Congress recently passed the healthcare reform bill, it made a lot of Americans either a) excited about the coverage they would now have that they didn't before; or, b) filled with trepidation about how they would navigate these new healthcare and health insurance waters. Though many previously uninsured people will now have insurance, the primary debate against reform was that without making drastic changes to the proximate causes of high insurance costs the difference would have to be made up by taxpayers. Since the majority of people who did not have insurance but who will now be receiving it consists in large part of people who either don't pay taxes or who are in a lower tax bracket, this has many wealthier people beginning to get nervous about the higher taxes will mean to their net worths.
In response to this uncertainty, savvy investors are looking for new, better, and more stable investment vehicles with which they can either shield their money or increase returns. Obviously blue chip stops and growth stocks will always be staples of a diversified portfolio, but whereas REITs used to be a popular mode of diversification when real estate was booming, other similar types of specialized financial instruments are now coming into vogue.
Take the master limited partnership, for example. One industry that always seems to consistently perform well, in large part because of its inelastic demand, is the energy sector. Companies like this MLP mutual fund firm put together funds based on these master limited partnerships that can then be used as part of a well-rounded portfolio.
Now, obviously one may reasonably wonder if MLPs will someday go like REITs – from in vogue to out of vogue – especially with the current environmental tragecy in the Gulf threatening one of the energy sector’s major players in BP. So far though, MLPs have proven to be a sound investment choice that many people are finding is worthy of investment. And this brings us back to the original point. Insurance is meant to be a shield from uncertainty, an umbrella against catastrophe. Right now, what we don’t know is how the new healthcare system will affect insurance in the United States. Will costs go up? If so, by how much? Will care differ greatly from what we have now? Will the long-term effects of universal health care have a long-term impact on taxes increasing?
In the face of all of these questions it is important to be prepared. Savvy people are out there being proactive about finding ways to grow the nest egg they currently have and how to prevent losing it in the future. Renegotiating insurance premiums now, before the purported rate hikes, is another idea that many people are taking advantage of.
What we can all hope is that the changes to the healthcare and insurance sectors will bring more positive than negative. But in the case of the latter, everyone must be prepared.