Four Steps to Debt ReductionEasy access to credit can contribute to a lifestyle thatstarts out with debt and gets worse as spending pressuresincrease. If you’ve accumulated debt, how can you digyourself out?

Calculate Exactly What You Owe: List your debts andminimum monthly payments, due dates and interestrates. Rank debts from highest rate to lowest. Decide ifany debt is worth keeping. Consider mortgages andcollege loans since interest on most mortgages is taxdeductible and many college loan rates are reasonable.

Set Up a Budget and Start Eliminating Your Debt: Abudget helps you decide how much extra cash you candevote to paying debt. It also helps you identify expensesthat you can cut back on, which leads to more cash tofurther reduce your debt.

Lower Your Borrowing Costs: Compare what ratescredit card firms are offering. Then get your current

credit card company to match the attractive rate youdiscover. Or, transfer your current higher interest-ratebalance to a company offering a lower rate. However,make sure you find out how long this lower rate will lastand what the regular ongoing rate will be. Also, be onthe lookout for balance transfer fees.

Cash Is King: Try to stick to cash and/or use a debitcard. Unless you have developed a disciplined approachto pay off the balance, do all you can to avoid using acredit card. Find one card with a low rate for situationsthat may require one, like Internet purchases, but be sureto pay it off every month.

February 2011 Vol. 2 Investment Updates

Advisor Corner

Edward HorwitzPresidented@horwitzco.com(224)632-4600www.Horwitzco.com

We hope you enjoy ournewsletter. Please e mail anytopics you would like us to coverin future newsletters. Feel free tocontact your Horwitz & Assoc.advisor and make sure to visit withthem often. We welcome yourreferrals. Please share ournewsletter with your family &friends.

Market Performance1-1-11 to 2-28-11DJIA ^DJI +5.60%S&P 500 ^GSPC +5.18%NASDAQ ^IXIC +4.88%Russell 2000 ^RUT +5.05%Source: http://finance.yahoo.com

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The Ins and Outs of Long-Term CareInsurance

Points of Interest

Community LivingAssistance Services andSupport Act. (CLASS)Hybrid products combinesingle payment LifeInsurance with Long TermCare benefitsLook to exchange anexisting life insurance policythat is no longer needed fora Life-LTC comboRates are rising due to risingliabilities, insurerswithdrawing from themarket place or proposinghuge rate increases.Guardian Life just left themarket to focus on Life & DI.Genworth Fin'l recentlyannounced an 18% rateincrease. JH life made arequest to regulators inevery state for rateincreases.Ask us about: JohnHancock's Life Care, LincolnNat'l Corp's Money GuardReserve, Geneworth Fin'lInc. Hartford Life Inc.OneAmerica Fin'l Partners,Inc.Before you buy talk to usabout state LTC insurancepartnership programs.For individuals who itemize-premiums may bedeductable subject to upperlimits based on age

When planning for retirement it would be wise toat least consider the purchase of long-term care(LTC) insurance. While not everyone needs LTCinsurance, it is recommended that people educatethemselves about the issues surrounding this typeof coverage. There are a dizzying array of optionsand features you'll need to understand if you arethinking about buying such a policy.

What daily benefit will you need? The higher thedaily benefit, the higher your premium. But you'llneed to find a balance between daily benefit andcost. According to the 2009 MetLife MarketSurvey of Nursing Home, Assisted Living, AdultDay Services, and Home Care Costs, the averageannual cost for a private room at a nursing homein 2009 was $79,935. The national average for asemi-private room was $72,270. The nationalaverage for an individual living in an assisted livingcommunity was $37,572.

How long will benefits last? The typical stay at anursing home is between three and five years, somake sure your coverage lasts for at least that long.Think about your own family's health historywhen choosing benefit periods. Does longevityrun in your family or is there a history of familyillness? Many policies offer unlimited benefits,although that obviously gets quite expensive.

What's the elimination period? The eliminationperiod is comparable to the deductible on yourother insurance policies. Your long-term carepolicy won't begin paying out for a certain numberof days. Most policies start with a 30- to 90-dayelimination period, but you can increase that. Thelonger the elimination period, the cheaper yourpremium. Consider, too, that you may be able topay out of pocket for a limited amount of time.

Is the benefit inflation-protected? Inflation is therate at which the price of goods and services isincreasing. If you are going to need benefits for anumber of years, they need to keep pace withinflation. Most policies offer a guaranteed annualinflation increase (more expensive) or the

opportunity to increase daily benefits down theroad.

What level of care does the policy cover? Thepolicy should cover all levels of care, both skilledand nonskilled. Nurses are generally the onesproviding skilled care. Nonskilled care includesassistance with activities that don't require anurse, such as bathing, walking, and dressing. Youshould be able to use the benefits not only for careat a nursing home but also for home health care,daycare, or assisted living.

Does the policy cover help at home? Some policieswill cover the costs of bringing people into yourhome to help with physical therapy, bathing,dressing, walking, and so on. Make sure the policydoesn't require a prior hospital stay before thisbenefit is available.

How financially stable is the insurer? Research thefinancial rating of the company offering thepolicy. Check out ratings at A.M. Best's Web site.If you have a policy with a company that goesunder, you still have a binding contract with thatcompany.

What are "limited pay” options? A relatively newfeature in long-term care policies is the ability topay the entire cost at once or in a specified numberof payments. This can help ensure that you don'thave price increases in the future. For example,with a "single pay” option, you would pay all costsat once in one premium.

Horwitz & Associates, Inc. Investment Updates February 2011 2

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The Two Rules of OptionsAdditional Points

Hedging programs are notperfect. Adjustments mustbe made in real time.Consider; Trailing VolatilityVIXImplied Volatility on long-dated optionsFeel free to request a copyof the Options DisclosureDocument or download it atoptionsclearing.com/components/docs/riskstoc.pdf

While options can seem incredibly complex atfirst glance, in practice they can be both easy andrewarding to use - helping to reduce the risk in aninvestor's portfolio. That's why at Horwitz &Associates, we like to recommend options as partof a portfolio to help produce attractive rates ofreturn. We insist the before investors enter theoption writting world, they commit the two rulesof option writing to memory. Repeat after me: 1.Never, ever sell a call on a stock that you do notwant to sell. 2. Never, ever sell a put on a stockthat you do not want to buy.

Here's how we can put these rules into practice.Suppose an investor would normally buy 1,000share of ABC stock selling at $30 for a $30,000total position. An alternative strategy that makesuse of options could be: We buy only half theamount: 500 shares of ABC at the $30 marketprice, for an outlay of $15,000. We sell 5 calls,against this purchase, committing to sell our 500shares if the stock rises above a particular strikeprice. Let's say the strike price is $30, for whichthe premium might be $1,500 ($300 x 5 options).We back up the puts by placing another $15,000in Treasuries Bonds or money market/cashaccount.

What happens? It's likely at least one, andpossibly both options will be exercised against us.In essence, we're being "paid" to accept theobligation to double the number of shares weoriginally bought at $30 per share, regardless ofhow low the stock may go.

Right away, we receive two premiums: a premiumon the calls and a premium on the puts - loweringthe cost out of pocket of our inital purchase. Wealso earn income on the money temporarily placedin Treasuries or held in cash, and we have thepossibility of some appreciation on the ABCshares. The net of it all can be a rate of return thatallows investors to sleep well at night - which isthe whole purpose of smart investing.

By Gerald A. Horwitz

Horwitz & Associates, Inc. Investment Updates February 2011 3

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Bittersweet

Continued from page 1

Useful sites:Annualcreditreport.comCreditcardguide.comCardhub.comNerdwallet.comBillshrink.comAskmrcreditcard.comBankrate.com

The Merriam-Webster Dictionary definesbittersweet as something that is pleasant alloyedwith pain. This could also be associated withretirement. The sweet part is that people are livinglonger thanks to innovations in healthcare. Thebitter reality is that when people live longer theyrisk outliving their assets.

Longevity risk is the possibility of outliving one’sretirement savings. While longevity is generally agood thing, the risks associated with it arebecoming a major concern for individuals enteringretirement.

Luckily, longevity risk can be managed throughproper planning and products. To plan properly,consider when you would like to retire, the numberof years you anticipate in retirement, and yourdesired income level.

Horwitz & Associates, Inc. Investment Updates February 2011 4

©2011 Morningstar, Inc. All Rights Reserved. The information contained herein (1) is intended solely for informational purposes; (2) is proprietary to Morningstar and/orthe content providers; (3) is not warranted to be accurate, complete, or timely; and (4) does not constitute investment advice of any kind. Neither Morningstar nor thecontent providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. "Morningstar"and the Morningstar logo are registered trademarks of Morningstar, Inc.

Edward HorwitzPresident

Horwitz & Associates, Inc.2610 Lake Cook RoadSuite 190Riverwoods, Illinois 60015

ed@horwitzco.comwww.Horwitzco.com

Tel:(224)632-4600Fax:(224)632-4591

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