Investing 102

[Vortech404]

Anybody have any thoughts on cutting down on my retirement to fund
a million dollar life insurance policy on one of my parents?

A life insurance policy is tax free? Anybody do this as part of a retirement
investment?

later
John

[GregWeld]

Originally Posted by Vortech404

Anybody have any thoughts on cutting down on my retirement to fund
a million dollar life insurance policy on one of my parents?

A life insurance policy is tax free? Anybody do this as part of a retirement
investment?

later
John

You'd have to do a lot of math and guessing to see if that would pay off. Yes Life Insurance is tax free... But what it costs per month and for how many years etc is the issue.

[Flash68]

Originally Posted by sik68

Anyone down to talk about student loans for a minute? What a crock that government student loans never adjusted with QE and rate-cutting, and banks won't refinance the loans either probably because the Fed won't let them. Fortunately, there are a few private companies popping up that will refinance debts. We are applying to SoFi.com which will cut our average rate from about 7.5% down to hopefully 4%-ish.

I only bring this up because a 4% refi gives us 2 options instead of just 1 at 7.5% (which has been to pay down like banshees):
1) Keep the monthly payments the same to pay down the loan more quickly.
2) Invest the difference in monthly payment into the market.

If you already own a home with equity, I have also read (but have no first hand knowledge) that refinancing your house and using the home equity to pay off BIG student loans (JD, MD, MBA) can also be a smart decision too. Just planting some seeds for the 102'ers to look into.

Been working through this with my wife recently and her law school loans. They vary from 3 to 7.9%. I just closed a bigger/better 2nd on my home and was considering that option of paying down the higher loans, but I think I'd rather employ that money elsewhere.

Just for scorekeeping both student loan interest and primary residence mortgage interest are tax deductible, so even though they are a wash in this instance, it is always something to consider when doing your own analysis.

We will also check out SoFi.com as well -- thanks for the link.

[Flash68]

Originally Posted by Vortech404

Anybody have any thoughts on cutting down on my retirement to fund
a million dollar life insurance policy on one of my parents?

A life insurance policy is tax free? Anybody do this as part of a retirement
investment?

later
John

Just upped my life insurance recently and did look at the cash value vs term option. Ended up just going with term as I felt the restrictions in the investment options/vehicles were just not wide enough for my liking.

[GregWeld]

Originally Posted by Flash68

Just upped my life insurance recently and did look at the cash value vs term option. Ended up just going with term as I felt the restrictions in the investment options/vehicles were just not wide enough for my liking.

Smart.

Your lovely bride has earnings power... so life insurance should be sufficient to pay off the house (people can also buy a MORTGAGE life insurance that pays off the mortgage upon death), bury your sorry butt, set up college fund for children.

Life insurance is a bet - they're betting you'll not collect - and you don't really want to collect. It's not about leaving your spouse rich. It's about taking the heat off should you meet an untimely demise. And number 1 - it's NEVER a good investment. You'll do far better to invest the "premiums" in dividend paying stocks over the long run.

[Payton King]

I think a level term or a return of premium policy is better to cover a mortgage than "motgage life," which is a decreasing term policy.

There are times when a perment life insurance policy (whole life, universal life, etc) makes perfect sense.

John, not to sound morbid, but I would not want to be sitting around waiting for someone to die so I could collect money. Depending on the age and health, a permanent policy can get pretty expensive.

On the other hand, if you are in an inheritance situation where the estate is cash poor (family land or farm) or large estate where estate taxes are going to be a probem (estate over $5 million), then a permanent policy would work. Normally you would set both of those situations up in an irrevocable insurance trust.

For discussion's sake in this thread, I would be more than happy to run some numbers and post them up here so other people might understand how different types of life insurance works, pros and cons of different policies and how they might fit into a person's financial plan.

Not trying to sell anything here, just trying to educate like our Jedi Master.

[GregWeld]

Good info Payton!!


Estate taxes are something we've personally worked very hard on... With trusts etc. There is a pass thru of the first 5 million... and blah blah blah. It gets very complicated once you surpass 5 million. And of course - anyone with that kind of net worth should certainly have professional help long before they got to that point.

And yes -- mortgage insurance doesn't really work if your mortgage is down next to nothing... which is what happened to my Dad. I think this all came about back in the day with special programs the government had for GI's.

We used to have a couple big policies... but then they become rather useless if you don't really need them to pay off anything or to help your family. They were term policies and we dropped them quite awhile ago. For us personally - it's like having an IRA... we don't really need "retirement funds". YIPPPPEEEEEEE HAHAHAHAHAHAHAHA

Originally Posted by Payton King

I think a level term or a return of premium policy is better to cover a mortgage than "motgage life," which is a decreasing term policy.

There are times when a perment life insurance policy (whole life, universal life, etc) makes perfect sense.

John, not to sound morbid, but I would not want to be sitting around waiting for someone to die so I could collect money. Depending on the age and health, a permanent policy can get pretty expensive.

On the other hand, if you are in an inheritance situation where the estate is cash poor (family land or farm) or large estate where estate taxes are going to be a probem (estate over $5 million), then a permanent policy would work. Normally you would set both of those situations up in an irrevocable insurance trust.

For discussion's sake in this thread, I would be more than happy to run some numbers and post them up here so other people might understand how different types of life insurance works, pros and cons of different policies and how they might fit into a person's financial plan.

Not trying to sell anything here, just trying to educate like our Jedi Master.

[chetly]

I've been pretty happy with my investment of GoPro and Tesla. I bought GoPro at 40.55 and it ended today 63.52. Bought Tesla at 252.66 and closed at 282.11. Both have been a pretty fast mover, good investments and I'm hoping Tesla will explode once they break ground on their mega factory.

[GregWeld]

Originally Posted by chetly

I've been pretty happy with my investment of GoPro and Tesla. I bought GoPro at 40.55 and it ended today 63.52. Bought Tesla at 252.66 and closed at 282.11. Both have been a pretty fast mover, good investments and I'm hoping Tesla will explode once they break ground on their mega factory.

Oh hell yeah!



I should have loaded the boat with them... but no dividend... no investment. I have to live off mine.

Great pics and especially for you young guys!!

[captainofiron]

Originally Posted by chetly

I've been pretty happy with my investment of GoPro and Tesla. I bought GoPro at 40.55 and it ended today 63.52. Bought Tesla at 252.66 and closed at 282.11. Both have been a pretty fast mover, good investments and I'm hoping Tesla will explode once they break ground on their mega factory.

NICE

when Tesla first was about to go public, I had about 5k in my savings, I wanted to buy so bad, but my wife correctly reminded me that it was all our savings at the time, and it would be stupid to risk it....

I showed her the other day what it was at, this was pretty much her reaction when I explained how much we would have made,

we need to build 1 of 2 things, a device that lets you see in the future, or a time machine that lets you go back, haha