Currently, there are 0 users and 1 guest visiting this topic.
Viewing 37 reply threads

  • Author

    Posts

    • Anonymous

      Inactive
      Post count: 6698

      Getting away from Trump and politics for a bit…

      What is everyone’s experience with and/or opinion of whole life insurance.

      I work in the industry and I’m always curious of public perception.

      Does anyone own it? Love it? Hate it? Dave Ramsey?

    • ISLAND BUCS

      Participant
      Post count: 3168

      Whole Life has an element of investment built into it.

      And the percentage of investment increase  in whole life is low compared with the return from a S&P Index fund.

      So when you are trying to get protection for your family, buy the cheaper term life insurance.

      And when your kids grow up and you have enough for you and your wife (hopefully), you can cancel all life insurance, and with the difference between term and whole life, to invest,  you will have built up a nice nest egg.

      Others may have a different life situation.  The above worked well for me.  I have no life insurance today.

       

      Remain intimately at the heart of experience.

    • Anonymous

      Inactive
      Post count: 21932

      No matter how it’s packaged the cost of insurance is too high to use as an investment vehicle, especially when you could have a UL or something similar.

    • Anonymous

      Inactive
      Post count: 6698

      So where do you store your safe dollars?

    • Anonymous

      Inactive
      Post count: 21932

      Safe long term dollars, in many places.

    • Anonymous

      Inactive
      Post count: 6698

      In my experience here are the safe dollar options to weather down markets in retirement:

      Cash

      Savings acct or money market

      CDs

      Bills/Notes/Bonds

      Fixed annuity

      Whole life

      What am I missing?

    • Anonymous

      Inactive
      Post count: 21932

      In my experience here are the safe dollar options to weather down markets in retirement:

      Cash

      Savings acct or money market

      CDs

      Bills/Notes/Bonds

      Fixed annuity

      Whole life

      What am I missing?

      Real estate, business, balanced portfolio?

    • Anonymous

      Inactive
      Post count: 6698

      Bonds have an inverse relationship to interest rates so not safe – that is where the balanced portfolios put their balance – along with blue chip stocks.

      Real estate is just as “aggressive” as a stock. Rides a market etc.

      Business is a good place to invest.

      I like reading about what people think so I appreciate the feedback. There is a lot of bad whole life out there so much of the criticism is fair. I just find that it is the best place to store medium and long terms assets in a safe, guaranteed environment. Tax free growth and distribution plus 5% growth is nice. It just sucks early in the contract.

      Thanks for the feedback tho! Certainly a lot of fair criticism of it out there.

      ULs are a whole other beast.

    • ISLAND BUCS

      Participant
      Post count: 3168

      Schiano:

      Would you consider a “balanced holding  ie both stocks and bonds

      a concession to not being able to predict in advance when the market takes

      a serious turn to the downside.

      If you had a true understanding of what makes the market go up and down,

      you would own stocks during an upturn and bonds during a downturn.

      If you sell stocks close to the top and the market goes down 50% like 2000 and 2008, and then you buy stocks back close to the bottom,

      when stocks go back to the previous  top, you have come close to doubling  your money.

      Remain intimately at the heart of experience.

    • Anonymous

      Inactive
      Post count: 6698

      Of course. A market dip allows you to buy at a discount. I’m referring to people past the asset accumulation phase… when you’re retired you are realizing your gains and losses… so if you aren’t reinvesting you need to let your aggressive dollars recover

    • Anonymous

      Inactive
      Post count: 6698

      Also IB, as we’ve discussed before most investors are passive investors as opposed to active like you… which means they are doing cheap indexing or they have someone professional manage their holdings.

      So for most people their performance is out of their hands… then it is more of a function of dollar cost averaging and avoiding fear/greed – sell low, buy high

    • Anonymous

      Inactive
      Post count: 21932

      IB, there’s no reason to time the market. In fact, you can make a very good return not timing the market precisely because so many people are trying to time the market

      https://www.fool.com/investing/general/2010/05/11/day-traders-dumber-than-ever.aspx

      Schiano, everything is time horizon. The longer the window, the lower the risk.

      Real estate is hardly “aggressive” if purchased well and if the strategy is to buy and hold. For example, if I buy a $4 million commercial property hoping to flip it a few year down the road, that is risky, but what if I but an undervalued commercial building planning to hold it for 20 year, with tenants paying the mortgage the whole time? Hypothetically, I put $800K down, essentially pay nothing going forward because of rent, sell it in 20 years for $9.5 million. I probably made income along the way because the mortgage was paid down so the rent became income, but even leaving that out, you tell me what the return was? 10-11%? Secured by real estate?

      Most of the best investments are thing that are not sold by people selling investment. Start a small business, have it buy and pay for the real estate. You dont need a stock broker and you dont need to be a day trader to make good returns in the market with only modest risk. You could put money in a low cost fund (Vangaurd etc) or even follow a simple Dogs of the Dow strategy (as one of many) and make 7-9%, with added benefits of low transaction costs and long term cap gains.

      In other words, its not rocket science if your patient and have a long horizon (and you’re not just rationalizing your gamble addiction as “investing” lol). And as my first boss said to me once “you are your best mutual fund,” meaning nothing tops individual earning power so invest in yourself

    • Anonymous

      Inactive
      Post count: 6698

      All good points. And I’m all about real estate and rentals too. Those are tough dollars to replicate. There is still volatility there – that logic would assume that nothing is aggressive if you wait long enough – to your point on time horizon.

      I see whole life as a pocket where you stuff 5-10% of retirement dollars. It helps to make your aggressive assets last longer and allows investors to be aggressive longer – meaning it essentially lengthens your time horizon.

      Plus the added benefits of legacy planning and estate tax offsets.

    • Anonymous

      Inactive
      Post count: 21932

      And doesn’t whole life (or I guess a UL) allow tax free retirement $ by essentially taking a loan? Not sure but I thought that was one benefit

    • Anonymous

      Inactive
      Post count: 6698

      Yes that is how you make it tax free. If you put 100k into it and it grows to 200k, then 100k would ne taxable as ordinary income.

      Instead you loan it to yourself and pay no tax. Then when you die the death benefit offsets any would be tax burden.

      As opposed to the other safe assets that you pay capital gains… CDs, money market, bonds, fixed annuities etc.

      IMO you should do about 5-10% of your total retirement portfolio in safe assets. Some of that needs to be cash but I usually recommend 5% is in whole life.

    • ISLAND BUCS

      Participant
      Post count: 3168

      One can make contributions to a Roth IRA and this grows tax free and is also

      tax free when taken out at 59.5 or later.

      Thing is, the IRA can grow at a much faster rate than a whole life insurance policy.

      Example:

      A 20 year old puts $5000 in a Roth for 10 years and then stops.  Assume 8% interest.

      At age 65 he has about $1,070,944  Tax Free.

      Also, the principal or contributions can be taken out at ANY time, tax free.

      The earnings can be taken out tax free at 59.5 and there is some rule about holding for 5 years that allows withdrawal of earnings tax free, prior to 59.5, for special reasons, buying a house or become disabled, etc.

      Remain intimately at the heart of experience.

    • Anonymous

      Inactive
      Post count: 6698

      Oh yeah for sure. A ROTH is an aggressive asset tho and certainly you’d want to max that out at 6k a year before doing whole life.

      Cant compare aggressive assets to safe assets wwithout talking about risk adjusted return.

    • Anonymous

      Inactive
      Post count: 21932

      Aren’t Roths now income tested?

    • Anonymous

      Inactive
      Post count: 6698

      Whole life typically is meant for folks that have maxed out the ROTH and the 401k and are looking for other avenues.

      Income limits on ROTH too, but you can backdoor

    • ISLAND BUCS

      Participant
      Post count: 3168

      Schiano:

      A Roth can be as aggressive or as conservative as the holder wants.

      You can put AAA Bonds in a Roth with little risk.

      Not sure what you mean by:

      “A Roth is an aggressive asset.”

      Also, what backdoor methods do you know to get around the earned income limit on contributing to  a Roth??

       

       

      Remain intimately at the heart of experience.

    • ISLAND BUCS

      Participant
      Post count: 3168

      Crown:

      By income tested I presume you mean,

      Married: can contribute up to $193,000 Modified Adjusted Gross Income, from $193000 to $203,000, a reduced amount.

      Single $122,000

      Limit on how much you can contribute with a qualifying Modified AGI was $5500 in 2018 (April 15, 2019 was the last day to make a 2018 contribution), which goes up to $6000 in 2019.

       

       

       

       

      Remain intimately at the heart of experience.

    • Anonymous

      Inactive
      Post count: 6698

      You can backdoor a Roth by contributing to traditional IRA as a non-deductible contribution then transfer to the ROTH once a year. We do it all the time for folks above the income restriction.

      https://www.rothira.com/what-is-a-backdoor-roth-ira

    • ISLAND BUCS

      Participant
      Post count: 3168

      Schiano:

      Thanks that link was helpful.

      Sent it on to my CPA.

      Remain intimately at the heart of experience.

    • Anonymous

      Inactive
      Post count: 21932

      IB, yes that is what I meant.

      Schiano, interesting. Thanks

    • Anonymous

      Inactive
      Post count: 6698

      Yeah… it’s too late to do it for 2018 unfortunately but you can obviously do it got 2019.

      Back to safe assets… a ROTH is considered aggressive, even if you use bond funds… bonds are not safe. If interest rates rise (which they will) the value of your bond fund will go down.

      Plus bonds have shitty return… notes and bills are even worse.

      Talk to your CPA about whole life. It gets a bad rap because of so many shitty companies… but if you pick a good one like New York Life, Northewestern Mutual, or Mass Mutual… these companies are AAA rated and the internal rate of return in somewhere between 4 and 6% in the policies. Plus the benefits or the permanent life insurance.

      Seriously, look into it yourself. Universal Life is typically for high income earners with variable income but it can also be a good safe asset.

      Remember, aggressive assets is how your grow your wealth. Diversification is how your preserve and sustain that wealth.

    • ISLAND BUCS

      Participant
      Post count: 3168

      “Talk to your CPA about whole life”

      Schiano, I wouldn’t consider Whole Life.

      I’m up 18.33% thru today (a lousy day) year to date.

      I wouldn’t consider giving my money to someone else, much less someone who paid agents a large commission to get my money and has beautiful office buildings paid for by making money off the premiums paid.

      Insurance companies do have the advantage of their paid out benefits being tax free.

      But the ability to step up your cost basis to current market value at death in a private account does somewhat negate that advantage.

      But the big thing is the comparison of the rate of return.  It just doesn’t compare.

      Regarding my comment of  using bonds for a conservative Roth IRA, I am talking about holding the actual bonds in the account (not a bond fund). There is very little risk.

      You are right about bond funds.  The principal goes down during periods of rising interest rates.

      Remain intimately at the heart of experience.

    • Anonymous

      Inactive
      Post count: 6698

      Hey man, you do you… agree to disagree. I run into a lot of DIY folks and I just tip my hat. That’s a good amount of work.

      So I take it you’re maxing out your 401k and ROTH? Then using a brokerage account or like an e-trade to trade stocks? Or something like a vanguard fund with their low expense MFs?

      When you’re in retirement, you’re going to put your safe money in bonds? Then any gains are cut in half… you think that is more efficient than 5-6% with no tax?

      Just curious… most people I run don’t use bonds if their are properly educated.

       

    • ISLAND BUCS

      Participant
      Post count: 3168

      I retired at the age of 40.

      Can’t make any contributions to an IRA

      Invest significant money for myself and family members rather successfully,  up 48.14%  since the election in 2016 thru 4-17-19.  Capital gain taxes are a problem.

      Rely on my own market understanding—-pay no attention to the financial media.

      Only used the bond example to counter your statement that IRA’s are an aggressive investment.

      IRA’s  are controlled by the owner and can be quite aggressive or quite conservative depending on the owner’s desire.

      Would only use bonds if I foresaw a bear market.  No balanced  investing for me.

       

      Remain intimately at the heart of experience.

    • Anonymous

      Inactive
      Post count: 6698

      Good for you dude! Howd you manage that if you dont mind my asking?

    • ISLAND BUCS

      Participant
      Post count: 3168

      Learning from my errors

      and avoiding balanced investing

      and believing that a businessman could positively influence the economy

      much more than a politician.

      Told Crown back at the time  of the election, more than once,  that a wonderful opportunity was coming and to do what he could to take advantage of the opportunity.

       

      Remain intimately at the heart of experience.

    • Anonymous

      Inactive
      Post count: 21932

      “Told Crown back at the time of the election, more than once, that a wonderful opportunity was coming and to do what he could to take advantage of the opportunity.”

      Lol. Thanks. Politics and finances are different topics. My views on Trump have nothing to do with my own finances

      Somehow I am scraping by ….

      :-)

    • Anonymous

      Inactive
      Post count: 6698

      IB, are you attributing Trump to retiring at 40?

      That’s very uncommon to retire that early. I doubt it came from you investing early and often. What else allowed you to retire that early?

    • ISLAND BUCS

      Participant
      Post count: 3168

      Starting my own business (on a shoe-lace) at the age of 25.

      The” businessman president” comment  was to explain the investment gain since the election. I was certain the economy would boom.

      I have made far more thru investing than being in business.

      Remain intimately at the heart of experience.

    • Anonymous

      Inactive
      Post count: 6698

      Right but you would have made out just as well under Obama.

      Congrats on the business venture. I have a lot of respect for owners. It’s hard and rewarding work

       

    • ISLAND BUCS

      Participant
      Post count: 3168

       

      Following the actions of David Tepper, famous hedge fund operator, now owner of the Carolina Panthers,   I went totally into the market in 2009.

      The S&P had gone to around 1500 in Aug of 2007. From there it dropped to a low close around 678 (today it stands at 2905)  I rode the recovery up.

      In 2015, at about 2050, the S&P plateaued. In fact the S&P lost around about 2%. in 2015.   In 2016, for the first 10 months,  the S&P was up about 2%.

      At that time (2nd half of 2016), two or three times a week, I heard Corporate CEO’s talk about how the many executive orders from Obama was hindering their business. Also because the bull market was then 7 years old, many floor traders were predicting a recession.

      When Trump campaigned on the promise of terminating many of the Obama Executive orders that were curtailing business, it was pretty easy to guess that the market and the economy would pick up from the plateau  of the last 22 months, if Trump won the election.

      Trump kept his promise, in the early days of 2017, Trump terminated more Executive Orders than any other president had ever done, regardless of the length of time a particular president had spent in office,  and the market took off.

      Yes, I certainly made a lot of money as the market recovered from a 50+% drop ending in March, 2009.

      Yes also, I don’t think the market and economy would have done as well, since Nov 2016, as it has,  without Trump.

       

      Remain intimately at the heart of experience.

    • Anonymous

      Inactive
      Post count: 6698

      Even if all of that is true, you didnt retire at 40 from it.

    • ISLAND BUCS

      Participant
      Post count: 3168

      I had invested a lot in real estate before I retired,

      but the stock market gains happened after I retired.

      I never implied that I retired because of stock market gains.

      I said I made far more money investing than I ever did in business.

      Remain intimately at the heart of experience.

    • Tabris

      Participant
      Post count: 2

      I think it’s a good idea if you start it early in your life and you are not overdoing it with the red lines of the insurance companies.I started 10 years ago and I got some good rates or at least that’s what I thought when I was choosing my provider. Unfortunately you need to be more thorough when you choose your plan. Of course it’s a great investment for your future security both in financial and mental relation. I would hate for my family to be left in unknown waters if something happened to me one day. It’s just that I’m regretting that when I chose my plan sources like https://www.lifeinsuranceblog.net/life-insurance-rates-by-age exist in order for me to investigate better all the requirements for my age bracket.

Viewing 37 reply threads
  • You must be logged in to reply to this topic.