Hello all, got kind of a weird question. I am self-employed. I'm 34 years old and last oct, I opened a Roth IRA (im in a high risk fund) and contribute $150 a month into it.I also put the 5k in for the previous years catch-up contribution. I also opened up a term life and whole life policy on myself, a term life policy on my wife and a term policy for my newborn daughter that includes a retirement supplement for her (she is10 months old). I am paying about $550 a month for everything, and my life insurance is the most expensive since I am a smoker. Now my question is, my whole life policy is worth about 250k but it appreciates in guaranteed cash value over the years as I get older. I was thinking about using this as a retirement also if need be. I only have a Roth IRA and don't think it will amount to much by the time I hopefully retire even though I don't believe anyone in my age group will be able to. Now I am paying about $250 for my whole life insurance. Do you think if I take that 250 and just put it into my Roth IRA, and make my contrib 400 a month, do you think the Roth IRA will out-preform the whole life? My father in law told me he believes that you buy life ins for exactly that and nothing more and using life ins as a supplement is stupid. I do not want to open a 401k because that means I need to have it available to all my employees if they choose to accept it. Thnx for everyone's help
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Hello all, got kind of a weird question. I am self-employed. I'm 34 years old and last oct, I opened a Roth IRA (im in a high risk fund) and contribute $150 a month into it.I also put the 5k in for the previous years catch-up contribution. I also opened up a term life and whole life policy on myself, a term life policy on my wife and a term policy for my newborn daughter that includes a retirement supplement for her (she is10 months old). I am paying about $550 a month for everything, and my life insurance is the most expensive since I am a smoker. Now my question is, my whole life policy is worth about 250k but it appreciates in guaranteed cash value over the years as I get older. I was thinking about using this as a retirement also if need be. I only have a Roth IRA and don't think it will amount to much by the time I hopefully retire even though I don't believe anyone in my age group will be able to. Now I am paying about $250 for my whole life insurance. Do you think if I take that 250 and just put it into my Roth IRA, and make my contrib 400 a month, do you think the Roth IRA will out-preform the whole life? My father in law told me he believes that you buy life ins for exactly that and nothing more and using life ins as a supplement is stupid. I do not want to open a 401k because that means I need to have it available to all my employees if they choose to accept it. Thnx for everyone's help
First, I dont like insurance on kids as a means of investment. Instead just put aside some money earmarked in an account, or look into Educational IRA accounts..I think whole life insurance on a kiddo is a terrible idea and you should consider undoing that policy.
I also dont like whole life policies or Annuities in general but specifically in this market environment..most Annuities are made to guarantee a rate of return from a fixed income perspective or have market clauses which are meant to sort of participate in the S&P or the DOW, whatever and have an insurance benefit too. If you were to buy term insurance and use the difference of premiums towards the index it is aiming to mirror then you should be able to easily beat the returns they are promising. The only redeeming benefit to annuities are if they have a no-loss provision where you cant lose the cash value ammt irregardless if the market tanks or not.
At 34 I would rather max the SEP account, max any Roth or IRA option, set aside regular investments earmarked for the kiddo and avoid the packaged garbage you get sold by likely your insurance agent..
The most important thing you can do is max out your SEP IRA..that is the first priority.
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A few comments..
First, I dont like insurance on kids as a means of investment. Instead just put aside some money earmarked in an account, or look into Educational IRA accounts..I think whole life insurance on a kiddo is a terrible idea and you should consider undoing that policy.
I also dont like whole life policies or Annuities in general but specifically in this market environment..most Annuities are made to guarantee a rate of return from a fixed income perspective or have market clauses which are meant to sort of participate in the S&P or the DOW, whatever and have an insurance benefit too. If you were to buy term insurance and use the difference of premiums towards the index it is aiming to mirror then you should be able to easily beat the returns they are promising. The only redeeming benefit to annuities are if they have a no-loss provision where you cant lose the cash value ammt irregardless if the market tanks or not.
At 34 I would rather max the SEP account, max any Roth or IRA option, set aside regular investments earmarked for the kiddo and avoid the packaged garbage you get sold by likely your insurance agent..
The most important thing you can do is max out your SEP IRA..that is the first priority.
thnx wall, but the whole life ins i opened on my daughter is not considered an investment for me. im looking at it as something for her for when she gets older. it really isnt costing me much per month anyways and she can choose what to do with it down the road when she gets older. my wife and i already opened her up a savings acct that we contribute to every two weeks and opened her one of those college tax deferred accts. my question is, will the roth ira have a better roi then a whole life policy? my dividends in my whole life policy are being rolled back in so that i make more money and will not have to make payments latrr on down the line if i choose. also, forgot to mention, besides my roth, whole, and term life ins, i also opened a term 80 life ins on myself. i basically pay this until im 80 years old and the premium goes up basically every year. but the good thing about it is that i can convert it into whole life over time for whatever amount i choose from what i am insured. ive done calculations and see what the guaranteed roi is for my life ins is. but im just wondering which acct ( roth ira or whole life ins) will have a better roi for about 250 a month. i know u are not guaranteedbanything with roth, but i am guaranteed with the whole life. sorry for being long winded but i just do not know much about these kind of things. and i was also thinking to myself, say something does happen to me, my familybwill be taken care of regardless. does anyone have any insight on what the best roth ira funds are best to invest in? like i said, im currently 100% in a high risk fund. and i know theyre not great, but im currently with state farm for my roth ira and with northwestern mutual for my wife and i's life ins. my daughters ins is through mass mutual.
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thnx wall, but the whole life ins i opened on my daughter is not considered an investment for me. im looking at it as something for her for when she gets older. it really isnt costing me much per month anyways and she can choose what to do with it down the road when she gets older. my wife and i already opened her up a savings acct that we contribute to every two weeks and opened her one of those college tax deferred accts. my question is, will the roth ira have a better roi then a whole life policy? my dividends in my whole life policy are being rolled back in so that i make more money and will not have to make payments latrr on down the line if i choose. also, forgot to mention, besides my roth, whole, and term life ins, i also opened a term 80 life ins on myself. i basically pay this until im 80 years old and the premium goes up basically every year. but the good thing about it is that i can convert it into whole life over time for whatever amount i choose from what i am insured. ive done calculations and see what the guaranteed roi is for my life ins is. but im just wondering which acct ( roth ira or whole life ins) will have a better roi for about 250 a month. i know u are not guaranteedbanything with roth, but i am guaranteed with the whole life. sorry for being long winded but i just do not know much about these kind of things. and i was also thinking to myself, say something does happen to me, my familybwill be taken care of regardless. does anyone have any insight on what the best roth ira funds are best to invest in? like i said, im currently 100% in a high risk fund. and i know theyre not great, but im currently with state farm for my roth ira and with northwestern mutual for my wife and i's life ins. my daughters ins is through mass mutual.
I would not hold kiddo life insurance policies or whole life, I would drop both of those, stick to term life for you and none for the kiddo.
What kind of funds are you holding in your Roth? At your age having reasonable high risk funds is ok, but with the market up here I would be worried.
I also would not have an insurance company responsible for your investment decisions..have your investments at a self adminstered place like Scottrade, have term life policies outside your insurance agent..only purchase auto/home from an insurance agent as you are being charged a service fee and usually higher rates going the full service route.
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Here is how I see it..
Priorities in order-
SEP IRA (you are self employed, max it out)
Roth/Traditional IRA
General Savings
Term Life Insurance
I would not hold kiddo life insurance policies or whole life, I would drop both of those, stick to term life for you and none for the kiddo.
What kind of funds are you holding in your Roth? At your age having reasonable high risk funds is ok, but with the market up here I would be worried.
I also would not have an insurance company responsible for your investment decisions..have your investments at a self adminstered place like Scottrade, have term life policies outside your insurance agent..only purchase auto/home from an insurance agent as you are being charged a service fee and usually higher rates going the full service route.
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