Real Estate Broker · Pueblo, CO · Member since 2013 · 368 posts · 303 votes
Hi all, I inquired about whole life insurance as another means of investment. I'm curious if anyone here can share their personal story about successes or failures with whole life insurance?
Every reputable financial advisor/blogger has recommended term over whole life and described whole life as being a high fee "investment." You're better off putting all your money into Vanguard index funds. Keep your insurance insurance and your investments investments.
As an investment, life insurance is never a good choice. If you want to cash a life policy during your lifetime, the cash-out value of your policy will only give you a miserable return. Instead, I tend to advise (young) people to invest a fixed amount every month in the shares of their choice in the stock market. The chosen shares should be:
(1) Shares with market cap exceeding $10 billion
(2) Steady dividend payment exceeding 2% (on the market price of the share) in the past 5 years
(3) Net income at less >5% of revenue
(4) Yearly growth of at least 5% in revenue and net income
(5) With good management (this may be a bit difficult for some people, but name of the directors will some time give some hints on this)
The investment in the chosen shares should be of fixed amount each month, with more shares to be bought during a bad market and less shares in a good market. In this way and in a long run, the cost of your share investment will be averaged out and avoid making a wrong plunge with one single large investment at wrong time.
Remember, shares of large cap is very liquid. You can sell it anytime in the stock market when you want the cash for other purposes. If you want to leave some thing after you pass away for your loved ones, shares will grow in value during your life and a good gift when you are in heaven.