Lets talk Investment Vehicles

[FLBB89]

Seems like there are a lot of guys who are also into finance and investments here, so I thought it could be interesting to open up a thread about general long, moderate and short term investment vehicles (similar to the thread about day trading).

My goal is to retire at age 40, so all my investment vehicles are on that time frame. Right now I am heavily putting money to the max limit on my life insurance policy for the cash value of it. The main thing that attracts me to the cash value of life insurance is that its post tax money going in so you arent taxed taking it out and that its inaccessible by debtors and creditors (unfortunately the nature of my day job causes a fair amount of law suits).

Besides that, everything else is pretty much in managed money accounts with the exception of what i day trade with.

Anyway, who here does the cash value of life insurance investment? thoughts on it? pros/cons? How did your mutual funds fare last year? Predictions on this coming year? Which industries are you diversifying in? How aggressive are your investments?

I'm thinking about investing in a REIT, as well. I don't like the severe lack of liquidity of the REIT but it seems to be a good 3-5 year position.

 

[monsoon]

Life insurance is not an investment. You would do better putting the money under your mattress. If you need life insurance, eg you have dependents. Get yourself a term policy and invest elsewhere.

 

[FLBB89]

Life insurance is not an investment. You would do better putting the money under your mattress. If you need life insurance, eg you have dependents. Get yourself a term policy and invest elsewhere.

Perhaps "investment" is the wrong word. I have a 2 million dollar whole life insurance policy that I overpay to $3400/month on to dramatically build up the cash value. I prefer that over putting cash under my mattress because I can use it as a collateral for a loan which is a necessity for what I do and its untouchable by debtors and creditors.

I have no dependents but I have to have large life insurance policies anyway because its typically a bank requirement for commercial term loans.

 

[Lizard King]

$3,400 a month, that must be nice, LOL

I have one, a lot smaller than that, opened it over 10 years ago for the same reason as you, cash value and once you start to withdraw the interest can pay for itself after it has built up enough.

 

[FLBB89]

$3,400 a month, that must be nice, LOL

I have one, a lot smaller than that, opened it over 10 years ago for the same reason as you, cash value and once you start to withdraw the interest can pay for itself after it has built up enough.

Have you withdrew any of the money or used it as collateral?

I am most interested in being able to use it as a collateral.

 

[FLBB89]

Also I'd love to hear from someone with experience investing in REITs. I typically stray away from investment vehicles that have very limited liquidity, and a REIT basically ties up your money for 3-5 years to my understanding which makes me nervous.

 

[crowman]

Perhaps "investment" is the wrong word. I have a 2 million dollar whole life insurance policy that I overpay to $3400/month on to dramatically build up the cash value. I prefer that over putting cash under my mattress because I can use it as a collateral for a loan which is a necessity for what I do and its untouchable by debtors and creditors.

I have no dependents but I have to have large life insurance policies anyway because its typically a bank requirement for commercial term loans.

Are you friends with KBD because he has endless cash too in excesses of $5k a mo.

You can retired at 35 if you wanna move to South America and live like a king. Thats not a joke.

 

[Lizard King]

Have you withdrew any of the money or used it as collateral?

I am most interested in being able to use it as a collateral.

I have not had the need to so I just let it build up at this time for future use.

 

[monsoon]

Perhaps "investment" is the wrong word. I have a 2 million dollar whole life insurance policy that I overpay to $3400/month on to dramatically build up the cash value. I prefer that over putting cash under my mattress because I can use it as a collateral for a loan which is a necessity for what I do and its untouchable by debtors and creditors.

I have no dependents but I have to have large life insurance policies anyway because its typically a bank requirement for commercial term loans.

Im sorry, but overpaying for whole life is one of the worst things you can do with your money. You can do so much better in mutual funds or even money market. You have been snowed by a salesman. You are essentially just giving your money to the ins co for free. Please reconsider a term policy and make that extra money work for you.

 

[FLBB89]

Are you friends with KBD because he has endless cash too in excesses of $5k a mo.

You can retired at 35 if you wanna move to South America and live like a king. Thats not a joke.

Whose KBD?

I am not sure if you are being facetious toward me. I am single, live alone and have no dependents and I have a job that pays well so $3400/month is not an excessive expense for me. I am by no means a millionaire (unfortunately).

I do not want to live in South America, lol. I do, however, plan to move out of the country when I "retire" (by retirement i really mean liquidating my non passive investments, i.e. businesses i have controlling equity in). I want to move somewhere with favorable tax rates to expats and laxed drug laws.

 

[FLBB89]

Im sorry, but overpaying for whole life is one of the worst things you can do with your money. You can do so much better in mutual funds or even money market. You have been snowed by a salesman. You are essentially just giving your money to the ins co for free. Please reconsider a term policy and make that extra money work for you.

I also have term life insurance.

I put a decent amount of money in mutual funds every month, as well. I got a 15% return on my mutual funds last year. The cash value of life insurance is not my single investment by any means. I like the fact that its post tax dollars that I can pull out.

 

[JR Ewing]

Life insurance policies other than term can certainly be very useful for wealthy individuals. The tax advantage is the main reason - i.e., "Rich Man's Roth IRA"...

If you make a good living above a certain level you're not Roth-eligible. That means you'll eventually have to pay taxes on your retirement plans. But if you invest at least some $ in appropriate life insurance products, you'll get the tax-free appreciation benefit. And you have annual contribution limits with traditional IRA / 401k / SEP plans. Obama even wants to limit the total accumulation amounts of the investments in tax-advantaged plans.

Another advantage of these products is that they are good ways to transfer wealth to heirs tax-free as well.

If you don't make $200k or more a year, and don't ever see yourself being a multi-millionaire, you can certainly do other things with your money than invest in these products. And if you are or plan to be in the $200k+ a year / multimillionaire club, you probably don't want to have everything in life insurance products, and certainly not all with one company - in the event any company or companies become insolvent.

Disadvantages are that the fees are typically higher than average and that the quality of the investment choices within the products tend to not be so great, much like with variable annuities (another good vehicle for the right person). You are also taking a risk on the insurance company itself anytime you give them $, so it's best to keep these investments with better companies, not put all your eggs in the insurance basket, and spread the insurance $ out among several insurance companies if possible.