La Prima de Riesgo Implícita - II

Si se asume que éste es un estimado correcto de los flujos de caja y que el índice está correctamente valorizado por el mercado, entonces

Despejando r = 8.60% 4. Una vez obtenido el rendimiento esperado se puede hallar fácilmente la Prima de Mercado sustrayendo la Tasa Libre de Riesgo del rendimiento obtenido. Si la Tasa Libre de Riesgo fuese de 6.5% la Prima de Mercado sería entonces de 2.1%. Como se apreciará es un resultado bastante bajo en comparación con la Prima de Mercado Histórica. En parte, la diferencia se explica por la Tasa Libre de Riesgo utilizada.

La ventaja de este método es que es actual y conducido por el mercado. 1. La Prima de Mercado Implícita rara vez ha sido tan alta como la Prima de Mercado Histórica. Se ha mantenido alrededor del 4% en los últimos 40 años. 2. La Prima de Mercado Implícita se incrementó en década de los setenta cuando la inflación aumentó. 3. La Prima de Mercado Implícita ha estado en descenso desde 1980 y llegó a su punto más bajo en 1999 [Damodaran 2002]. En el siguiente gráfico se aprecia la Prima de Mercado Implícita estimada durante los últimos 40 años, observándose que durante la mayor parte del tiempo se ha mantenido por debajo del 4%:

La Prima de Riesgo Implícita - I

Esta posición es desarrollada por Damodaran [2002] y Ehrhardt [1994:63]. Para hallar la Prima de Mercado Implícita se asume que el mercado, en general, se encuentra en equilibrio y que los inversionistas han valorizado “correctamente” las acciones. Considérese el siguiente modelo de valuación de acciones:

Si se asume que el ROE es equivalente al Ke, se obtiene:

Luego se le resta al Ke la Rf vigente y se obtiene la prima de riesgo. Este método puede generalizarse a modelos basados en los flujos de caja, más que en los dividendos. Graficaremos esto con un ejemplo: A fines de 1999 el índice S&P 500 estaba en 1,469 puntos base y el rendimiento de los dividendos era de 1.68%. El consenso para el crecimiento en las utilidades de las empresas era de 10% para los próximos 5 años. A partir del sexto año se asume que el crecimiento será de 6.5%. Con estos datos se tendría el siguiente cuadro que resume los flujos de caja esperados:

La Prima por Riesgo de Mercado - II

Damodaran [2002:187] agrega que los inversionistas que diversifiquen sus inversiones a escala global, algo que seguramente se da cada vez con mayor frecuencia, podrían utilizar el índice MSCI3. 

“The third estimation issue relates to the choice of a market index to be used in the regression. The standard practice used by most beta estimation services is to estimate the betas of a company relative to the index of the market in which its stock trades. Thus, the betas of German stocks are estimated relative to the Frankfurt DAX, British stock s relative to the FTSE, ]apanese stock s relative to the Nikkei, and U.S. stocks relative to the NYSE Composite or the S&P 500. While this practice may yield an estimate that is a reasonable measure of risk for the domestic investor, it may not be the best appraach for an international or crossborder investor, who would be better served with a beta estimated re la ti ve to an international index. For instance, Boeing's beta between 1996 and 2000 estimated relative to the Morgan Stanley Capital International (MSCI) index that is composed of stock s from different global markets yields a beta of 0.82” [Damodaran, 2002:187]. 

Características 

Ehrhardt [1994:53] señala que el índice que se utilice para aproximarnos al Portafolio de Mercado debe cumplir tres requisitos: 1. Debe incluir tantas acciones como sea posible 2. Debe reflejar el pago por dividendos 3. Debe utilizarse un promedio ponderado en base al valor de mercado 

“The first choice is the index you will use for the return on the market. Theory makes three suggestions: (1) the market portfolio should include as many securities as possible, (2) the returns for the securities should include any dividend payments as well as price changes, and (3) the securities in the market portfolio should not be an equally weighted average, but market value-weighted. An index like the Dow Jones Industrial Average falls short on all three counts: (1) it includes only 30 securities, (2) it doesn't include dividends, and (3) it isn't value-weighted. Most researchers use the Chicago Center for Research in Security Prices (CRSP) value-weighted index, which includes dividends. If you don't have access to such an index, a reasonable alternative would be the NYSE composite index or the Wilshire 5000 Equity Index, although these indexes don't include dividends.” [Ehrhardt, 1994:53]

La Prima por Riesgo de Mercado - I

El Retorno del Mercado 

Algunos autores proponen [Grinblatt 2002; Damodaran 2002; Ross 2002] como una aproximación al Portafolio de Mercado el índice Standard & Poor’s 500, que contiene el listado de las 500 empresas más grandes que cotizan en la NYSE, AMEX y NASDAQ. La ventaja de este índice es que se construye sobre la ponderación de las acciones a partir del valor de mercado de cada empresa. Grinblatt señala que, dado que estos índices no consideran otros mercados, constituyen en verdad una pobre aproximación al verdadero Portafolio de Mercado [2002:152-153]. Más aún, se considera que esta es una de las razones por las que el CAPM no puede ser probado: porque es imposible determinar de manera exacta el Portafolio de Mercado [Roll 1977]. 

  “Since many of these investments are not traded frequently enough to obtain prices for them, one must use a proxy for the market portfolio. A frequently used proxy is the S&P 500, a value-weighted portfolio, meaning that the portfolio weight on each of its 500 typically larger market capitalization stocks-traded on the New York Stock Exchange (NYSE), the American Stock Exchange (AMEX), and the Nasdaq over-the-counter market- is proportional to the market value of that stock. Another commonly used proxy is the value-weighted portfolio of all stocks listed on the NYSE, Nasdaq, and AMEX. Still, these proxies ignore vast markets (for example, V.S. residential and commercial real estate, the Tokyo Stock Exchange, and the Tokyo real estate market), making them poor substitutes for the true market portfolio.” [Grinblatt 2002:152-153]

T-Bonds

Los T-Bonds son los bonos del tesoro americano de mediano y largo plazo de duración. Los más comunes en circulación son los bonos de 5, 10 y 30 años de vencimiento. A diferencia de los T-Bills no existen muchos autores que defiendan fervorosamente el uso de los T-Bonds. Damodaran [2002:155] se inclina por el uso de estos instrumentos. Como se adelantó líneas más arriba, para este autor la tasa libre de riesgo tiene una íntima vinculación con el plazo de duración del proyecto. En este sentido, si se trata de un proyecto de diez años de duración se debería ubicar un bono cuyo plazo de vencimiento sea similar a la duración del proyecto, para así obtener una aproximación de la tasa libre de riesgo. Este autor no descarta por completo el uso de los T-Bills, pero los relega a un segundo plano, señalando que se podrían utilizar los T-Bills cuando se trate de una inversión de corto plazo. Sin embargo, si las diferencias entre el rendimiento de los bonos de corto plazo y de largo plazo son muy pronunciadas, entonces se deberá utilizar una tasa libre de riesgo diferente para cada uno de los períodos del proyecto [Damodaran 2002: 155] 2. Si se quiere profundizar en la teoría que explican porque los inversionistas exigen, normalmente, un rendimiento mayor para los bonos de mayor maduración, se puede acudir a Ross [2002] y Fabozzi [2002]. 

  “[…] Even a five-year Treasury bond is not risk free, since the coupons on the bond will be reinvested at rates that cannot be predicted today. The risk -free rate for a five -year time horizon has to be the expected return on a default free (government) five -year zero coupon bond. This clearly has painful implications for anyone doing corporate finance or valuation, where expected returns often have to be estimated for periods ranging from 1 to 10 years. A purist's view of risk-free rates would then requ ire different risk -free rates for each period, and different expected returns. As a practical compromise, however, it is worth noting that the present value effect of using year-specific risk-free rates tends to be small for most well-behaved term structures. In these cases, we could use a duration matching strategy, where the duration of the default-free security used as the risk-free asset is matched up to the duration of the cash flows in the analysis. If, however, there are very large differences, in either direction, between short-term and long-term rates, it does pay to stick with year-specific risk -free rates in computing expected returns.” [Damodaran 2002: 155]

Selección del instrumento adecuado - III

Van Horne [2000:72-73] se refiere al uso de los T-Bills cuando señala que para algunos autores este es el instrumento más adecuado debido a que el CAPM es un modelo de un solo período (asumiendo implícitamente que éste período es de corto plazo). Agrega el autor que, dado que los rendimientos de los T-Bonds normalmente superan a los rendimientos de los T-Bills (a mayor maduración mayor rendimiento), el uso de los T-Bonds significará un mayor costo de capital cuando se trate de empresas con un Beta menor que 1, lo que se hace más evidente en el caso de las empresas reguladas. La empresa propugnará el uso de los T-Bonds para una obtener una tasa más alta y el organismo supervisor el uso de los T-Bills para calcular una tasa de descuento más baja. En el siguiente cuadro se observa la diferencia que se produce en el cálculo del costo de capital al utilizar los T-Bills y los T-Bonds:

Como se puede apreciar, la diferencia no es altamente significativa.

Selección del instrumento adecuado - II

En consecuencia los T-Bills estarían ubicados en el primer lugar como los instrumentos con menor grado de exposición al riesgo. Este “ranking de riesgo” [Brealey 2000:154] desarrollado intuitivamente se ve fortalecido por la evidencia histórica ya que si se hubiese invertido un dólar en los T-Bills en 1926 y se hubiese reinvertido constantemente el ingreso obtenido, para 1997 se tendrían 14 dólares, un rendimiento apenas superior a la inflación. En este sentido, al comparar el desempeño obtenido por los demás activos financieros se comprueba que existe una relación positiva entre el riesgo asociado a cada instrumento y el rendimiento obtenido, lo que se puede observar en la siguiente figura:

Fuente: Ibbotson & Sinquefield Stocks, Bonds, Bills and Inflation:2000 Yearbook.

Selección del instrumento adecuado - I

T-Bills

Los T-Bills son los bonos del tesoro americano cuyo plazo de vencimiento es de un año o menor [Ross 2002:232]. Existen bonos de 1 mes de vencimiento, de 13 semanas y de seis meses, por mencionar los más difundidos. Son numerosos los autores que proponen el uso de los T-Bills para determinar la Tasa Libre de Riesgo. Ehrhardt [1994:60] plantea la conveniencia de utilizar los T-Bills de un mes de vencimiento, aunque también considera aceptable utilizar los T-Bills de 13 semanas de duración1. Ross [2002:272] se inclina por el uso de los T-Bills de 90 días de duración pero no profundiza en la explicación de porque elige este instrumento. Grinblatt [2002:155] también se inclina por el uso de los T-Bills, aunque no especifica si se trata de T-Bills de 3 meses. Brealey [2000:154] destaca que los T-Bills son la inversión más segura que se puede hacer, ya que además de no tener riesgo de incumplimiento su corto plazo de vencimiento hace que los precios de estos instrumentos sean relativamente estables. Sin embargo, señala este autor, el inversionista no estaría exento del riesgo de inflación sobre la cual existiría aún cierta incertidumbre. 

Decimos que en el caso de los T-Bills existe “cierta” incertidumbre porque los principales adquirentes de este tipo de instrumentos estan, hasta cierto punto, suficientemente capacitados para estimar la inflación de los próximos noventa días. Situación totalmente distinta ocurre cuando se adquieren T-Bonds de 5, 10 ó más años de duración, en donde hasta el más preparado inversionista no podrá efectuar una estimación precisa de la inflación de los años venideros. Si se adquiriesen T-Bonds el inversionista tendría un activo cuya cotización fluctúa constantemente conforme varían las tasas de interés. Un inversionista que adquiere bonos corporativos adquiere un riesgo adicional que es el riesgo de incumplimiento, y uno que adquiere acciones asume un riesgo adicional traducido en una mayor volatilidad.

La Tasa Libre Riesgo - III

Como se verá más adelante, este autor está partiendo desde un supuesto particular: que el inversionista mantiene su inversión a lo largo de la vida del proyecto. Este punto de vista, si bien es respetable, no es compartido por todos los autores, implícita o explícitamente. Por ejemplo, Ehrhardt [1994] sostiene que la tasa libre de riesgo debe ser calculada considerando que el CAPM es un modelo de un solo periodo, y que por lo tanto el problema es determinar cual es la duración de este periodo. Aunque no existe una respuesta definitiva sobre el periodo aplicable al CAPM, se considera razonable asumir que este periodo es de corto plazo y por tanto se debe utilizar una tasa libre de riesgo de corto plazo [Ehrhardt 1994:60]

“There are many different securities that could be candidates for a proxy of the risk-free rate. What characteristics should a "good" candidate have? First, it should have no default risk. For all practical purposes, this limits your choice to U.S. Treasury securities. Which Treasury security should you choose? To answer this question, you need to think about the CAPM. There are many assumptions underlying it, and one of these assumptions states that CAPM is a one-period model. When you choose a risk-free rate, it seems reasonable that the period over which the risk -free rate is measured ought to correspond to the length of the CAPM period. But what is the appropriate CAPM period? Is it a day, a week, a month, a quarter, a year, or some longer period? Unfortunately, the re is no definitive answer to this question. If you use daily or monthly data to estimate CAPM, which is reasonable, you are implicitly assuming that the CAPM period is fairly short. Therefore, it is reasonable to use a shortterm risk-free rate.” [Ehrhardt 1994:60]

La Tasa Libre Riesgo - II

Damodarán [2002:155] agrega que una tasa libre de riesgo debe ser también libre de riesgo de reinversión (reinvestment risk).

“There is a second condition that riskless securities need to fulfill that is often forgotten. For an investment to have an actual return equal to its expected return, there can be no reinvestment risk. To illustrate this point, assume that you are trying to estimate the expected return over a five-year period and that you want a riskfree rate. A six-month Treasury bill rate, while default free, will not be risk free, because there is the reinvestment risk of not knowing what the Treasury bill rate will be in six months. Even a five-year Treasury bond is not risk free, since the coupons on the bond will be reinvested at rates that cannot be predicted today. The risk -free rate for a five-year time horizon has to be the expected return on a default-free (government) five-year zero coupon bond.”[ Damodarán, 2002:155] 

Para comprender la lógica detrás de este concepto baste imaginar un proyecto que tan sólo requiere una inversión en el periodo cero, que reditúa un ingreso en el período 1 y que el horizonte del proyecto es de 24 meses. Si se utiliza como Rf el rendimiento ofrecido por los T-Bills (bonos del tesoro americano) de 1 año de duración y se supone que su rendimiento sea de 3%. El inversionista que adquiera uno de estos bonos puede saber con certeza que obtendrá un rendimiento de 3% luego de un año, pero no sabrá con certeza cual será el rendimiento que obtendrá si es que vuelve a reinvertir lo ganado en un nuevo T-Bill, porque no se conoce cual será el rendimiento que ofrezca este instrumento dentro de un año. 

Para eliminar este riesgo de reinversión se tendría que utilizar un bono del tesoro americano cupón cero y cuyo plazo de vencimiento coincida con el plazo del proyecto (en nuestro ejemplo dos años). Sin embargo, estamos frente al supuesto de un proyecto que no genera ingresos sino hasta el final del período. Por lo común, los proyectos generan flujos con cierta periodicidad. En ese sentido, en el supuesto de un proyecto de 10 años que genere ingresos anualmente, se requeriría 10 tasas libres de riesgo (una para cada periodo) y diferentes retornos esperados [Damodaran 2002:155].

La Tasa Libre Riesgo - I

Los autores concuerdan en que la Tasa Libre de Riesgo (rf por su denominación en inglés: risk free) es, en principio, el rendimiento que se puede obtener libre del riesgo de incumplimiento (default risk). Existe consenso para considerar como tasa libre de riesgo al rendimiento ofrecido por los bonos del tesoro americano, pues en toda su historia esta entidad jamás ha incurrido en falta de pago a los inversionistas, lo que hace suponer a la mayoría de los autores que estos instrumentos están libres de todo riesgo de incumplimiento. Sobre el particular agrega Damodarán [2002:154] que los gobiernos están libres del riesgo de incumplimiento no por ser mejores administradores que las empresas privadas sino porque ellos manejan la emisión de la moneda y Ross [2002:232] que los gobiernos pueden crear más impuestos para cumplir sus obligaciones por lo que sus bonos están virtualmente libres de riesgo.

“The only securities that have a chance of being risk free are government securities, not because governments are better run than corporations, but because they control the printing of currency. At least in nominal terms, they should be able to fulfill their promises.” [Damodarán, 2002:154] “Because the government can raise taxes to pay for the debt it incurs-a trick that many of us would lik e to be able to perform-this debt is virtually free of the risk of default.” [Ross, 2002:232] 

De otro lado, se han dado casos (Argentina, uno de los más recientes) de gobiernos de economías emergentes que han incumplido con el pago de sus obligaciones provenientes de la emisión de sus bonos soberanos, por lo que se descarta, en este caso, el que puedan ser considerados como tasa libre de riesgo. En general, los bonos de los gobiernos de las economías emergentes no son percibidos como libres de riesgo de incumplimiento por los inversionistas. En cuanto a los bonos emitidos por los gobiernos de otros países desarrollados (Japón, Suecia, por citar algunos ejemplos) la ventaja de los bonos del tesoro americano es que tienen mayor liquidez y existe una amplia ga ma de instrumentos de diferente vencimiento actualmente en circulación.

LOS PARÁMETROS DEL CAPITAL ASSET PRICING MODEL Conceptos y Estimación

Introducción Desde que el Capital Asset Pricing Model [CAP M] fuese desarrollado en la década de los sesenta [Sharpe 1965; Treynor 1964; Mossin 1966 y Lintner 1965] se ha convertido, sin duda, en el modelo más difundido en el mundo de las finanzas para la determinación del costo de capital, ya que es utilizado por el 81% de las corporaciones y el 80% de los analistas financieros [Bruner, Eades, Harris & Higgins 1998]. Mientras que la aplicación de este modelo resulta “sencilla” en términos conceptuales, la determinación de sus parámetros deviene en un tema álgido y bastante discutido. Como todos sabemos, bajo este modelo la determinación del costo del accionista [Ke] se puede resumir en la siguiente fórmula:

Los parámetros necesarios para hallar el costo del capital son tres: la Tasa Libre de Riesgo, el Beta y la Prima de Riesgo de Mercado. La mayoría de los autores abordan este tema de manera superficial y pocos son los que se detienen a explicar en profundidad como obtener una cifra exacta que identifique a estos parámetros.

Por ejemplo, cuales son los motivos que los impulsan a considerar a los T-Bills como la tasa libre de riesgo o porque utilizar una data histórica de 5 años para determinar el Beta de una acción. A continuación se hará un estudio de las posiciones existentes para la determinación de cada uno de estos parámetros, se analizarán los argumentos esgrimidos por los distintos autores y se extraerán conclusiones a partir de la revisión de las diferentes posiciones existentes en la doctrina financiera.

Biographies (By Order of Chapter) - II

Beth Kobliner Beth Kobliner has been writing and speaking on personal finance for more than fifteen years. She is the author of Get a Financial Life: Personal Finance in Your Twenties and Thirties (Simon & Schuster), a New York Times and USA Today bestseller and a Business Week bestseller for two years running. As a financial expert, Kobliner regularly appears on television and radio. She has been a regular commentator on MSNBC and has been a repeat guest on CNN, World News This Morning (ABC), Oprah, Today (NBC), This Morning (CBS), CNBC, and public radio's Talk of the Nation and Marketplace. Beth holds a B.A. from Brown University. She lives with her husband and three children in New York City. 

Elizabeth Warren Professor Elizabeth Warren is the Leo Gottlieb Professor of Law at Harvard University. She is the co-author of eight books and more than a hundred scholarly articles. Her latest book with her coauthor daughter Amelia Warren Tyagi is All Your Worth. This book talks with a wide audience in mind about money; it was listed on both the Wall Street Journal business book bestseller list and the New York Times non-fiction bestseller list. Her earlier book, also with Tyagi, The Two-Income Trap: Why Middle-Class Parents Are Going Broke, has been the subject of reviews and new stories from Time and Newsweek to Dr. Phil. Warren has been principal investigator on empirical studies funded by the National Science Foundation and more than a dozen private foundations. She serves on the steering committee of the Tobin Project, the executive committee of the National Bankruptcy Conference, and a committee to Advise the Federal Deposit Insurance Corporation about consumer financial issues. The National Law Journal has repeatedly named Professor Warren as one of the Fifty Most Influential Women Attorneys in America. 

Amelia Warren Tyagi Amelia Warren Tyagi is the co-founder and Chief Operating Officer of the Business Talent Group. She co-authored All Your Worth and The Two-Income Trap: Why Middle-Class Parents Are Going Broke. Previously, Ms. Tyagi co-founded HealthAllies, a venture capital-backed health benefits firm which was later acquired by United Health Group. She began her career as a consultant with McKinsey & Company. She has written for Time, USA Today, The Chicago Tribune, and other publications on a variety of topics including the US economy, health care, and women and work, and she is a regular commentator for the nationally syndicated radio show Marketplace. Ms. Tyagi serves on the board of Demos, a prominent progressive think tank. She holds a B.A. from Brown University, and an M.B.A. from the Wharton School. She is also mother of two daughters, ages 6 and 2. Amelia lives in Los Angeles, California, with her husband and young daughter. Elizabeth and Amelia are mother and daughter.

Biographies (By Order of Chapter) - I

Teresa Heinz Kerry 

Teresa Heinz Kerry is chairman of The Heinz Endowments and the Heinz Family Philanthropies. In her role as Chairman, she has helped educate women on the importance of pensions, savings, and retirement security. She established the Women’s Institute for a Secure Retirement, a Washington-based think tank and underwrote publication of a nationally-acclaimed book, Pensions in Crisis and a magazine supplement, “What Every Woman Needs to Know About Money and Retirement.’’ The supplement was published in Good Housekeeping and US Airway’s Attaché magazine and has been translated into Chinese, Portuguese, and Spanish. Born and raised in Mozambique, she received a Bachelor of Arts degree in romance languages and literature (French, Portuguese and Italian) from the University of the Witwatersrand in Johannesburg, South Africa and graduated from the Interpreters School of the University of Geneva. She speaks five languages. She is married to U.S. Senator John Kerry.

Cindy Hounsell

Cindy Hounsell is the President of WISER, Women’s Institute for a Secure Retirement, a nonprofit organization. An experienced pension attorney, Ms. Hounsell has testified before Congress, served as a delegate for a number of White House Summits and conferences including the last two White House Conferences on Aging, the White House Social Security Conference and each of the National Retirement Saver Summits. She has written several chapters, columns, articles, op-eds, papers and booklets on women and retirement. She has co-authored two booklets, What Every WOMAN Needs to Know About MONEY And RETIREMENT: A Simple Guide and What Everyone Needs to Know About Money and Retirement. The booklets appeared as inserts in Good Housekeeping magazine, to a readership of over 26 million readers and in Attachè, the in-flight magazine of US Airways.

Conclusion

Nothing can prevent the tragedies in life. You can’t cheat death, accidents happen, and not all jobs or marriages will last. But by arming yourself with household financial knowledge, creating a private credit history, purchasing the necessary insurance, and saving, you can make the difference between spending your retirement years in financial hardship and enjoying the best that your later years have to offer. No one can predict the future, but you can plan for the unexpected and help to ensure that you are protected no matter what lies ahead.

Medical Emergencies

Finally, be aware that unexpected illnesses or hospitalizations can easily break a family budget. If you need assistance, hospitals can help people with low incomes pay their hospital bills by processing an application through the state’s charity care program, if one exists. Many states also have created pools of money to cover those without insurance. The Bureau of Primary Health Care sponsored by the U.S. Department of Health and Human Services, will help you find a clinic that will give you care even if you do not have health insurance. To find the clinics available in your city go to http://ask.hrsa.gov/pc/. 

If you have very low or no income, you and your children may be eligible for the governmentsponsored Medicaid and State Children’s Health Insurance Programs (SCHIP). Call your state Medicaid office for more information on eligibility for these programs.

Unemployment

If you lose your job, unemployment insurance is available to you. While the monthly benefits are less than a typical salary, and only temporary (up to 26 weeks), it can make the difference between paying the mortgage or being able to keep that health insurance, and declaring bankruptcy. If you lose your job and do not get another one immediately, take advantage of unemployment insurance. That’s what it is there for. It is important that, from the time you begin collecting unemployment, you start looking for another job. Employment counselors tell many sad stories of individuals who collected unemployment insurance for months, confident of their ability to eventually get work, only to find that their skills were out-of-date and jobs were scarce when the unemployment insurance ran out.

State, local and federal government pensions

have rules that are different from those for private pensions. Government human resource offices can provide all the rules and regulations as they apply to spouses and widows. As a spouse, you should get this information in advance, so you don’t end up unprepared should the unexpected happen. For example, after leaving her job as a nurse to raise her kids, Nikki’s husband, a military contractor who was an Army reservist, was deployed and killed in the line of duty. Left to care for three small children on her own, hundreds of miles from her family, it took her almost a year and intervention from her Member of Congress before Nikki discovered all the veteran’s benefits that were due her and her children. This raises an important point: When it comes to any type of federal benefits, if the system is wearing you down, contact your Member of Congress. However, there is much you can do before that time to prevent these situations from putting a strain on your life and the well-being of your children. Talk to the human resources employees who staff the offices where your spouse worked and read whatever is available. Know what you are entitled to so that if a tragedy happens, you will know what to do.

Divorce - IV

What widowhood can do to personal finances: Take note of the first item on the list: Your expenses as a widow are likely to be 80 percent of what they were prior to your husband’s death, but your income may only be 66 percent of what it was before. And that’s not all. If you are an older widow, the death of a spouse can cut your widow’s pension benefits by 50 percent. You used to receive both his and your Social Security retirement benefits. Now, you receive only the higher of the two, and this can be a cut in total benefits of one-third or more. On the positive side, the Social Security program provides a safety net for widowed women with children. As a young widow, you can collect benefits until your children are age 16 and the children themselves can collect until they are 18. Survivor’s benefits can also go to a widow age 60 or older, children younger than 18, disabled adult children, and dependent parents. Note: An older widow’s benefits continue throughout her life; survivor benefits for young widows with children, and survivor benefits for children, end when the children reach age 16 and 18 respectively.

Widowhood and pensions: Most of us don’t want to talk about death with our spouses, but it’s important that we do, especially when it comes to pension benefits. Be smart. Find out everything you can about your spouse’s pension and survivor’s benefits. Federal law requires company and union pension plans to provide a joint and survivor’s benefit option; as a wife, you should not give up that benefit unless you have your own sources of retirement income. Taking the joint and survivor option means that the pensioner has an option of taking a larger payment during his lifetime, or taking a slightly smaller one, which then provides a survivor annuity for his spouse. If you have no independent source of income, you should never give up your right to a survivor pension even if it means living on slightly less during your husband’s lifetime. (Giving up that right must be done in writing.) If your husband dies, and you have a survivor benefit, you will get a portion of his pension benefit amount. If the two of you did not choose the joint and survivors benefit, his pension stops at his death, and you, the widow, get nothing. The law applies different rules to retirement savings plans such as 401(k)s. Death benefits from the 401(k) are usually paid out in a lump sum. There are tax consequences if you, as a widow, receive a lump sum before you are age 59 ½. Consult with a tax lawyer or accountant and roll the money over into an Individual Retirement Account (IRA), or put money aside for taxes if you need to use some of the money for expenses. A few dollars spent on a good accountant or a lawyer could save you thousands in unnecessary taxes later.

Divorce - III

Widowhood: For millions of women, widowhood comes a lot earlier than they expect. It is not surprising that two-thirds of women over age 85 are widows; but a report by the Women’s Institute for a Secure Retirement (WISER) shows that one-third of all widows lost their husbands before age 60. The following checklist prepared by WISER is something you should read now. It provides information you need to have before you become a widow, so that if and/or when it happens, you will be prepared—no matter how old you are.

** This Checklist is available courtesy of Women’s Institute for a Secure Retirement (WISER), and can be found at

www.wiserwomen.org.

Divorce - II

Health insurance: Don’t fall into the same trap that Mary did. When she divorced her husband, her lawyers got her the house, but didn’t advise her to attach her husband’s health insurance. Mary was left without coverage, and when her young child became ill, she incurred significant medical expenses. Ultimately, she lost the house that she worked so hard to get in the divorce settlement. If your ex-husband is the primary breadwinner and his employer provides the family health insurance, you will most likely be able to continue your health insurance coverage temporarily thanks to legislation passed in 1986 called The Consolidated Omnibus Reconciliation Act of 1986 or COBRA for short. Generally, COBRA allows you to continue with your husband’s group coverage for up to 36 months after your divorce or legal separation—though you will have to pay for this coverage. Note: COBRA coverage will terminate sooner than 36 months if you remarry or obtain coverage under another group health plan. 

Social Security: These benefits are not marital property. If you meet Social Security’s requirements, you can receive benefits based on your former spouse’s work. In general, if you were married at least 10 years and you are unmarried when you make a Social Security claim, you can be eligible as early as age 62 for Social Security benefits as a divorced spouse, or at age 60 if you are a divorced widow. For more information on divorced spouse’s benefits from the Social Security Administration, call (800) 772-1213 or check online at http://www.ssa.gov/gethelp1.htm.

Temas comunes para la Tasa Libre de Riesgo y la Prima de Riesgo de Mercado - II

La Prima de Mercado calculada en base a la diferencia entre el retorno del S&P 500 y los T-Bills, entre 1926 a 1997, asciende a 9.2%. La Prima de Mercado obtenida en base a estos mismos retornos pero correspondientes a los últimos 50 años [1948-1997] asciende a 9%. Como se aprecia, la diferencia es bastante leve. Una Prima de Mercado de entre 8 y 9% parece ser consistente con otro tipo de evidencias [Brealey 2000:159]. Por ejemplo, Harris & Martson [1992] encontraron una Prima de Mercado de alrededor de 8.5% para el periodo comprendido entre 1982 y 1991, hallada en base a los pronósticos de crecimiento y la fórmula del flujo de caja descontado bajo crecimiento constante (constant-growth DCF formula). En opinión de Brealey, esto parecería indicar que nos encontramos cerca de la Prima de Mercado “verdadera”.

Algunos analistas proponen el uso de periodos más breves para el cálculo de la Prima de Mercado. Esta posición se basa en que se observa un descenso en la Prima de Mercado calculada con data a partir de los años sesenta hasta la actualidad. Sin embargo, Brealey [2000:155] afirma que examinar un período más breve de tiempo introduce mayor “ruido” estadístico. Damodarán [2002:161] agrega que períodos más breves de tiempo poseen un mayor error estándar, lo que se aprecia en el siguiente cuadro:

La volatilidad de la Prima de Mercado para el periodo 1928-2002 asciende a 20.53%. En el cuadro se aprecian cual sería el error estándar si se considerasen sólo los últimos 5 años para estimar la Prima de Mercado. Recordemos que el error estándar se calcula mediante la siguiente fórmula:

Para conseguir una Prima de Mercado con un error estándar aceptable se requiere un mayor número de años. El beneficio de obtener una Prima de Mercado más “actualizada” utilizando una data menor acarrea consigo un costo demasiado alto: un error estándar no aceptable. Más aún, este es el error estándar calculado bajo el supuesto de que los retornos son independientes entre sí. Sin embargo, un análisis de la data histórica agrupando los retornos en periodos de 5 años confirma la suposición de que los retornos de mercado presentan una autocorrelación negativa, es decir, que después de un periodo de años “buenos” le sigue un periodo de años “malos” [Damodaran 2002]. La consecuencia de esta autocorrelación es que el error estándar se hace aún más pronunciado cuando se analizan periodos más breves de tiempo. Brealey [2000:160] concluye afirmando que no tiene una posición “oficial” sobre la determinación de la Prima de Mercado, pero que considera que ésta se ubica entre un rango de 6 a 8.5%, sintiéndose más proclive a utilizar una Prima de Mercado ubicada en el límite superior de este rango.

Divorce - I

Almost half of marriages today end in divorce. And because many wives have chosen to stay home and raise their children, to make sacrifices in their careers to be more available to their families, or to give their spouses the opportunity to concentrate more fully on career achievements, the financial burden of divorce usually falls most heavily on the woman

Bank or credit card accounts: If a divorce is necessary, and particularly in the case of a contentious divorce or a divorce from a partner who has financial problems, protect yourself and your credit status first. Close any joint bank or credit card accounts as soon as possible. 

Retirement plan assets: Dividing your plan assets at the time of a divorce can difficult, even if the divorce appears to be amicable and/or there are few assets beyond a house or car. Money can bring out the worst in even the best of people. State laws recognize retirement benefits as a jointly owned asset if the benefits were earned during the marriage. This means that most types of retirement plans—for example, a pension, a 401(k) plan, or an IRA—can be divided between the spouses. However, this is not automatic. To receive a part of your spouse’s retirement benefits, you need to act. As a divorcing spouse, you must get a special court order called a Qualified Domestic Relations Order (QDRO). This document establishes your legal right to receive a portion of your former spouse’s retirement plans. For example, if your ex-husband dies first, you may be eligible to receive his survivor’s benefits, but you need a QDRO to establish that. Unless you have a QDRO stating otherwise, if he remarries, designates someone else as a beneficiary, or dies without specifying you as his beneficiary of survivors’ benefits, you could be the loser. If you are contemplating divorce, visit WISER’s Web site (www.wiserwomen.org) for a list of questions you need to ask in order to assert your right to pension and 401(k) plan assets. Don’t wait until it’s time to retire—that’s too late.

Potentially Disastrous Events

Advanced planning is one thing a woman can do to ensure that she will not slip into poverty in old age. By following the previous six steps, you can help to safeguard yourself from financial ruin in the event of divorce, death of a spouse, job loss, or a health crisis. What follows are some event-specific points that can help you navigate an event so even if it happens it doesn’t become a disaster.

Your First Steps - IV

5. Create and agree on a will for you and your spouse or partner. Insurance is there for the unexpected, but death is a part of life. And as we plan for life, so should we plan for death. Make sure that wills are drawn up and that you have a notarized original copy, a lawyer has a copy, and that there’s a copy in a safe deposit box. (If you don’t have a safe deposit box, consider getting one.) Review and update your will every five years or when you acquire significant new assets.

While state laws vary, surviving wives usually inherit at least half of their husband’s estates. However, given the nature of the modern family, inheritance can be contested bystepchildren, children, siblings and even cousins. While a jointly owned house will automatically go to the partner who survives, no one wants to inherit the house only to find they cannot afford the taxes that go with it. It is very important to state clearly

whom you want to receive your property and possessions. If both parties die at the same time, a will is important to make sure that the surviving children are cared for, and that assets are fairly distributed among survivors.

6. Save, save, save! One reason for the high rate of poverty among older women is the lack of personal savings. According to the National Women’s 2005 Retirement Survey, many women admit to not saving enough for their retirement. When asked the question, “At the present time, do you feel that you are saving enough money for your retirement?” percent of women surveyed answered “No.” Among women of color, the figures are even higher—74 percent for both African American and Hispanic women. Many of these

women are well aware of the importance of retirement saving, but many are unable to save or are simply unaware of the steps to take. Albert Einstein once said, “The most powerful force in the universe is compound interest.” While the great physicist may have said it with a smile, for most of us,  compound interest is the greatest financial gift we will experience. When you sit down to pay the bills, try to pay yourself first. Every week, put something aside and watch your money grow. If you don’t have access to a retirement plan through work, you could put your money in a pre-tax savings account like an IRA. The nice thing about these accounts is that they will lower your overall tax burden.
It is important for you to put money aside on your own even if your husband is saving for his retirement. A recent survey revealed that female workers are more likely than males to say that a spouse is putting money aside in a retirement plan of his own, which indicates that many women intend to rely solely on their husbands to take care of their retirement. While you will most likely have access to your husband’s pension in the
event of his death, or a portion of it in case of divorce, it’s always a good idea to have some money in your own name. This will also help your asset base in the event that you want to buy a house following a divorce or the death of your spouse. A woman needs to have her own money, even a small amount, to cover living expenses if something disastrous should occur that adversely affects the family income.

Your First Steps - III

Even if you maintain a joint checking account, never let the responsibility of making payments on time fall entirely on your spouse. A spouse’s history of late payments or non-payments can destroy his wife’s credit rating. It also takes seven years for poor credit information to fall off an account. By all means, maintain joint credit accounts, but make sure that they’re paid on time—and if they’re not, get your name off the account.

Visit the WISER (Women’s Institute for a Secure Retirement) Web site (www.wiserwomen.org) for more information, including steps you can take to establish and maintain good credit.

4. Assess your insurance needs and buy enough to protect yourself. There are four kinds of insurance every family should have: life insurance, homeowner’s insurance, health insurance and car insurance.

Life Insurance: When it comes to life insurance, it’s essential to buy enough to cover all of your debts, like mortgages and student loans, plus 20 percent if you die. The extra 20 percent is a precautionary measure to protect your spouse in case there isn’t an opportunity for employment, there are no other benefits, or any money on the way gets trapped in red tape. A few dollars more in a monthly premium will buy a lot of breathing room later.

Life insurance may seem like one of those things you are able to do without, but it can protect you from total financial ruin if the primary earner in the family is injured or dies. In addition, if you compare the premium to the benefit, it can be fairly cost-effective. If you’re on a tight budget, avoid whole life policies, which are essentially investment vehicles, and get term life, which will protect you for a specific number of years while
you’re financially more vulnerable, such as when your children are young. It won’t pay out a benefit after the term, but it is significantly less expensive than whole life, and by that time you could be more established financially.
Homeowner’s insurance is another “must have.” Paying the small monthly premium is nothing compared to losing your home and its contents in a fire or other disaster. If government-subsidized insurance is available, avoid the more expensive private coverage like flood insurance in coastal areas or near larger rivers, and earthquake insurance in California.
Health insurance is a problem for many lower-income families. If you cannot afford a comprehensive plan, consider a catastrophic health insurance policy to cover a medical crisis that could ruin a family budget for years to come. For example, having your appendix taken out can cost $15,000—and there’s no scheduling an appendix attack.
Finally, car insurance is mandatory. If you’re going to drive, insure your car. Period. If you have a homeowner’s policy, you may be able to get an umbrella policy covering your car and your house at a cut rate.

Your First Steps - II

3. Establish and maintain good credit. 

Good credit is essential to any sort of financial independence. Get credit in your own name through a personal credit card. Without good credit it will be nearly impossible for you to borrow money to purchase a home or car, or even get a credit card, without assistance. Good credit means more than just paying your bills on time. While that is a critical part of maintaining a good credit rating, you must also check your credit report and credit score every year to make sure that there are no inaccuracies. Credit Reporting Agencies collect information about you and your credit history from public records, your creditors and other reliable sources. These agencies make your credit history available to your current and prospective creditors and employers as allowed by law. Credit scores range from 300 to 850. You’ll need at least a 620 to be considered for any type of mortgage, but in order to get the best rates and most favorable terms, you’ll need a score of over 700. A recent study suggests that over 79 percent of all credit reports have at least one error. The same study showed that over 50 percent have an inaccuracy that drops a credit score by at least 50 points. Three major national agencies keep track of credit, and they often don’t coordinate. Yet, no bank or mortgage company will loan money without checking at least one of them.

The credit reporting agencies are:
Equifax
PO Box 105873
Atlanta, GA 30348
(800) 685-5000
Experian
PO Box 2002
Allen, TX 75013
Consumer Credit Questions
(888) EXPERIAN (888-397-3742)
TransUnion
Post Office Box 2000
Chester, PA 19022
(800) 888-4213

Your First Steps - I

One of the first steps you can take to avoid financial disaster is to establish your financial independence. The idea is not to create a split between you and your spouse or partner, but rather for you to have enough financial self-sufficiency that you can act on your own in an emergency. The following six steps will help you to accomplish that. 

1. Maintain files of basic financial information. Be sure you have copies of all current assets; bank account numbers; safe deposit information; insurance beneficiary information; IRAs and other retirement account records; tax returns going back seven years; mutual fund statements and copies of stocks and bonds; copies of health, homeowners, auto insurance policies; the lease or mortgage information for your home; copies of a prenuptial agreement; wills, trusts and powers of attorney; and copies of birth and marriage certificates. It is also a good idea to have receipts of major appliances in a file as well. 

2. Have your name on the checking account. If your husband dies suddenly, it could be very difficult to resume payment schedules if the checking account and home purchases are listed only in his name. If you are married, you should also open checking and savings accounts in your own name just in case a will is contested or some other complication arises.

Chapter Seven: When the Unthinkable Happens: How to Make Financial Plans for Unexpected Events

By Jeffrey R. Lewis and Maria Cordone

jlewis@heinzoffice.org and mcordone@iamaw.org.

We’ve all heard stories about the elderly widow, alone and confused about taking care of her finances, losing all her savings to the “nice young man” who offered to help her and turned out to be a scam artist. Or the middle-aged woman who divorced her husband when she discovered he had huge gambling debts. While the divorce got her out of a bad situation, it left her with nothing, having to start over at age 45. Or the 30-year-old woman who lost her home and all her possessions because her spouse was severely injured in an automobile accident, and neither she nor he had insurance to cover the cost of his hospital care. Or the 55-year-old woman who had to take minimum wage, unskilled work to pay the bills because she lost her factory job due to downsizing.

The events that create financial disasters for women are generally not the things we want to think about—the death of a spouse, a divorce, a serious illness, a disabling accident, or loss of a job. While it is easier to assume these things only happen to “other people” and could certainly never happen to us, life-altering events can, and do, happen anywhere, anytime. However, just because these events are surprising or upsetting doesn’t mean they have to be financially crippling. Good planning can help to prevent a personal tragedy from becoming a financial disaster. That’s what this chapter is about—preventing a financial disaster by providing you with some basic information to help you make informed choices as you prepare to protect your future. First, there are six steps you can take to become more financially independent. Then, we discuss some potentially disastrous events—divorce, widowhood, unemployment, and medical emergencies—

and “must dos” that can help you to be prepared should an unthinkable event occur in your life.