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> Also invest in your life insurance; Usually you pay about 20-30 years then you get money just like social security (and some you can cash all with a big bonus

by brazzy 9y ago

> Also invest in your life insurance; Usually you pay about 20-30 years then you get money just like social security (and some you can cash all with a big bonus). Some of your other points I agree with, others are debatable, but this here is just objectively incredibly bad advice. A life insurance is one of the worst investments you can possibly make: You'll pay huge fees (hidden, of course) and get very limited returns (far worse than an average stock) just for the peace of mind of not having to see the value of your investment go down (which should not matter over a 20-30 year timeframe).

yeukhon 9y ago
Isn't everything subjective? If there is an objective way, then we wouldn't be having this conversation. I based on my own experience and my family's experience. My dad can sell his insurance which worth at least half a million after 20 years of investment.
- zrail 9y ago
  Take the annual premium that your dad put into life insurance over those 20 years and plug it into http://www.cfiresim.com http://www.cfiresim.com with these params: Start 2017, end 2037 0 portfolio to start, leave the rest of the defaults. 0 spending on the right hand side. Scroll down and plug the annual premium (not the monthly) in as "other income" from 2017 through 2037. Hit the big green "Run Simulation" button at the top. I'm guessing you'll see a much higher number than $500,000. I ran the simulation with a $12,000 premium and got an average $500k payout, but the premiums are probably quite a bit higher than that if he has a $500k cash value.
  - yeukhon 9y ago
    The premium we paid was $5000 a year.
- sokoloff 9y ago
  In general, if you need life insurance, buy term life insurance, which is a pure play insurance product. Whole life and other investments-mixed-into-insurance frippery are designed to make the insurance companies and salespersons more money. Buying term and investing the difference is almost surely a +EV play.
yarrel 9y ago
Like any insurance, it's a bad investment until it's needed. Unlike some other kinds of insurance, you're not the one that will get the most benefit from it.
- davidgh 9y ago
  Then you should buy term life insurance. It’s dirt cheap to cover you when you need it most (young, raising a family, don’t have much saved, paying off a house and perhaps education) and if prudent eventually the need to insure your life is displaced (your debts have been paid and you’ve accumulated savings and the kids have moved out, etc.)

by brazzy 9y ago

yeukhon 9y ago

Isn't everything subjective? If there is an objective way, then we wouldn't be having this conversation. I based on my own experience and my family's experience. My dad can sell his insurance which worth at least half a million after 20 years of investment.

zrail 9y ago
Take the annual premium that your dad put into life insurance over those 20 years and plug it into http://www.cfiresim.com http://www.cfiresim.com with these params: Start 2017, end 2037 0 portfolio to start, leave the rest of the defaults. 0 spending on the right hand side. Scroll down and plug the annual premium (not the monthly) in as "other income" from 2017 through 2037. Hit the big green "Run Simulation" button at the top. I'm guessing you'll see a much higher number than $500,000. I ran the simulation with a $12,000 premium and got an average $500k payout, but the premiums are probably quite a bit higher than that if he has a $500k cash value.
- yeukhon 9y ago
  The premium we paid was $5000 a year.
sokoloff 9y ago
In general, if you need life insurance, buy term life insurance, which is a pure play insurance product. Whole life and other investments-mixed-into-insurance frippery are designed to make the insurance companies and salespersons more money. Buying term and investing the difference is almost surely a +EV play.

yarrel 9y ago

Like any insurance, it's a bad investment until it's needed. Unlike some other kinds of insurance, you're not the one that will get the most benefit from it.

davidgh 9y ago
Then you should buy term life insurance. It’s dirt cheap to cover you when you need it most (young, raising a family, don’t have much saved, paying off a house and perhaps education) and if prudent eventually the need to insure your life is displaced (your debts have been paid and you’ve accumulated savings and the kids have moved out, etc.)