Retirement Savings Help for Young Couple
Question: For my two cents, I don’t think you need a larger life insurance policy until you have children and if your wife quits working. As I see it, financially both of you a capable of supporting yourself should something happen to the other. If I were you I’d by a smaller term insurance policy and put the money saved towards your debt or towards your house purchase.
Answer: Life insurance is a very bad investment for anything except insuring your life.
Decreasing term life insurance is the best value for you. Invest all the money you would have paid for life insurance.
What do you think the insurance companies do with your money? Which may be another way of saying: throw away your actual life scurrying after investment processes, involving comparatively small amounts of actual money, which scurrying may be entirely unsuitable for the human life you had planned for yourself, inevitably involves having to deal with charlatans and frauds in quantity, and guarantees nothing whatever in the way of returns on investment nor even safety of principal, all in the (probably) vain hope of doing better than on a contract with an adequately rated insurance company. Disclosure: yes, I do own shares in several life insurors, most improbably the ones that you are considering purchasing contracts from. “We have been told, life insurance can be used as a very good investiment tool for retirement and other long term expenses.”
In a word NO!
Life insurance barely covers inflation (sometimes it doesn’t even do that) and if you decide to get out early you’ll lose – actually, you’ll lose either way.
Do not invest in rented properties unless you intend to manage them yourself and have a very strong constitution. They won’t return the same as blue chip shares and/or managed funds anyway.
The best advice is invest in a well recognised institution’s managed fund that includes a wide portfolio of shares, property, bonds, etc. Decide on whether you need a growth or income fund – not hard to decide on once you understand these simple concepts and your needs. Talk to several financial advisors if you are unsure of which fund to invest in. Remember these advisors work for investment companies so they will push their own companies fund – just be aware of this but don’t be put off by it. Make sure the commissions are well within accepted norms (check around for this – a few phone calls to the industry regulators will assist here). I give this advice because most people don’t know how to manage shares properly and it would be too hard here to teach you if you don’t know how. Leave your money in these funds and add to them if you can save more – monitor the performance against other funds with similar risk factors – don’t sell or jump to another fund without taking further advice.
I retired at 49 years of age – in very comfortable circumstances – it can be done with wise investments and self discipline. If other people give you financial advice ask them what their circumstances are and assess their advice based on those circumstances.
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