these threads always draw tons of responses from the mini-Warren Buffets we have running around the BBS, which of course begs the question....
If you're just getting started with investing, this is very good advice. Get an account somewhere that offers free trades for a month or something like that, and start with basic ETFs. Two good sites: ishares.com and proshares.com - lots of funds to choose from covering all sorts of different indexes. If you want to keep it simple, go with those S&P or Dow or Nasdaq index funds - you'll basically track the market. If you want more risk and reward, proshares has a series of funds that doubles the index. If the S&P goes up 2%, it goes up about 4% (and vice-versa). Once you're comfortable with that, you can move on to particular sectors (tech, energy, agriculture, etc) or regions (europe, emerging markets, etc) and things like that. The nice thing with the free trades & ETFs is that it will allow you to learn. ETFs are traded just like a stock, so you can just buy and sell them at will. Try something and if you realize you didn't like it, you can sell it with no penalty w/ the free trades. If you go with mutual funds, you're locked in for a while or pay a penalty to get out. Once you're more familiar with the market and feel more comfortable, you can branch out more into individual stocks or mutual funds if you really want. ETFs are great for getting started. Much of the advice people posted here is useful if you're experienced with the market, but a lot of it seems to be posted just to make people look smart and is worthless for starting to get involved because you're not going to understand half of it. Keep it simple for now. Get some experience and get used to being in the market - then branch out from there.
fwiw wells fargo has 100 free trades for the first year you sign up. that amounts to significant savings.
That's great for starting out. But the bottom line is ETF's can be an expensive proposition if your trade amounts are small. Free Trades are a promotion. I suppose if your strategy is to use it as a learning tool, that's fine. Most mutual funds do not have a surrender charge (unless they are B share or a C share 1st year) so there is no cost to getting in or out like ETFs. Obviously the advantages of ETFs are the intra-day trading ability and the ongoing fees. But once again, if you are dollar cost averaging with small amounts, the transactions can be costly. $100 dca with a round trade of $8 in and $8 out. The least expensive option (with no advice) for small transactions is a Vanguard-esque type Index fund, not ETF's, which can accomplish almost the same thing with a little less flexibility.
i only write legal stuff not financial stuff, really it's not that hard to guess given that there's like two major financial news co's in the US now...
Am I missing something? (I'm actually curious) How does a 10 year term that has a guaranteed R&C not do this? I'm not a fan of Universals or whole life due to the investment strategy you can do with the difference in cost, otherwise. The only time I suggest these policies is when I can tell people are just too damn stupid to know what to do with their money. I've dealt with viaticals and life settlements, and the reason people do these is because the cash value is r****dedly low. I'm sorry, but I don't see these being good contracts. If you do, please explain why.
I always like this line of thinking. "I made 5% on my assets this year, but look at the money I saved!" As I've stated before, most good financial advisors keep their own assets with another one. Why? Because people tend to be extremely stupid with their own money.
Not all contracts do this. Also, many people who buy term tend to give it up before their 10/15/20/30 years are over because they haven't died (hilarious) and once their initial term expires, the premiums skyrocket (another reason people give it up). Having some cash value allows them skip some payments and still keep the policy in force for an extended period of time beyond. Target/Overfunding is not a good "investment". Cash Value does offer the tax free withdrawals which are nice but the IRR will never compete against a pure investment vehicle. It's meant to hedge risk. There's a huge difference.
I'm a beginner, so I don't understand if that's a good or bad thing. I have a whole life insurance policy that's has enough cash value to pay dividends that match its annual payments. So are you saying that the premium can increase to the point where I have to pay again? Is it a good thing to continue monthly payments (income willing) to increase the cash value? Should I convert it's value into a larger life insurance policy? I'm in my mid 20s, and was fortunate enough to have a father to plan ahead. I'm not really sure what to do with it besides letting it sit there and me plunking money into it. I'm also totally ignorant on tax issues for this policy. BTW, are there any good sites for beginners on helpful tax rules? It's another language with a sea of words.
There is never a cash value large enough to pay for the full value of a life insurance policy. You could stop payments and go to a "paid up" policy, but that will significantly decrease the insurance settlement amount. All insurance policies pay out tax-free to your beneficiaries when you die. As far as building up cash value? Laughable. As I stated, there is a reason why viaticals are still flourishing.
Fixed what? You paid all the premiums in advance? You can't do that in a life insurance policy, by definition. Sorry, you can do that, in a "paid up" policy. Or even in a single premium policy. Typically, every one dollar gets you five dollars that way. Regardless, it is a stupid way to invest money.
It's a whole life policy that gives dividends. Lol, I'm ignorant of the different life insurance policies out there. Haven't bothered to research.
Here's the deal. If you have a paid up policy and you are happy with it, by all means keep it. It does have value, just not to you, personally. Don't shove more money into the thing. You wanted advice, right? The best bet is to max out an IRA plan, either trad. or Roth, depending on how you'd like to be taxed. I believe it is up to $4,000 this year. Am I right, RIET?
