All we hear about are stocks and bonds when we read any financial article, or hear from any drunk uncle at a birthday party about “Saving for retirement”. While they are extremely beneficial, and quite frankly, stocks have been, historically speaking, the best hedge against inflation in the history of the US, they are not the only means of saving. See, we can look into Roth IRA and Traditional IRA’s, they too are not the only means of saving.There is an avenue of saving, which for younger individuals (meaning those in their 20s and 30s) that is much more attractive. In fact, not only could you save in all of these accounts, but you can also earn TAX FREE INTEREST. Do I have your attention now? Lets outline some of the best ways to make your money work for you in insurance policies.
We first will begin to examine the very attractive Universal Indexed Life Policy. What's so darn attractive about these policies? Well, for starters, they’re tied to the S&P 500. Now, you might say to yourself, “Shane, what happens if the market tanks?”, I shall tell you what happens. See, the indexed policy is tied to it, but will only increase. If the markets drop, let's say 10% for the year, the policy will not decrease, but the policy will only go up to about 8.5%, even if the market increases 30%. This policy is not meant to be the only sole investment you have in your portfolio, but it is meant to be in there. This policy should serve as a benchmark for your future retirement. What else makes this policy so attractive for investing for the future? It will allow flexible premium payments, thus you can pay, lets say $200 per month in premiums, but what happens after a big promotion and you want to put more in? You can! You can also decrease your payments in the account as well. The policy is also offering investors a nice cash value accumulation, which will accumulate TAX FREE and you can withdraw for any reason at all. Son is going to college? New home purchased? You can withdraw for that exact reason! Perfect policy for anyone, even older individuals.
Secondly, we’ll examine the simple Whole Life Insurance policy. This often gets a bad rep, which I am not sure as to why it would. The premiums are not flexible, yet it does exactly what it’s supposed to do. The policy provides a death benefit for the beneficiaries of the policy, while also building that cash value that you can take out and a loan that you can borrow against at any time. We often ask ourselves, “What are the secrets of the rich?” This is one of them! The wealthy use insurance policies Cash accumulation in order to leverage their policies and use that interest free income for your own benefit.
Now, looking outside of this specific option, how should we be setting up our portfolios? I’d look to get into that indexed Universal Life policy, then we get into about 80% stocks (As current as March 2022) and 20% stocks. Then, obviously we add in other specific accounts like IRAs and more, which we discussed prior.