Dave Ramsey advice

[FLA]

Goodsteward, you are on a roll!

[Petunia 100]

That's not true.. They are both paid on mostly on the 1st year 's commission. Again my highest WL contract (not the Final expens type) is 80% .. there are other smaller companies that might pay higher and of course I'm sure you can get more if your production warrants it. My highest term is 115% paid first year.

You know full well that 80% of the premium of WL is a far larger number than 115% of the premium of an equal amount of term.

[Captain Save]

You know full well that 80% of the premium of WL is a far larger number than 115% of the premium of an equal amount of term.

You obviously did not read what I said.

[Petunia 100]

You obviously did not read what I said.

But I did. 30 seconds of my life I will never get back.

[GoodSteward]

This right here is the reason you're not grasping how commissions are paid.
If I'm paying $10000 on a WL policy.

If I decide not to pay a year.. I don't owe $10000 .. I just need to pay the base premium (that's what the agent gets the high commisision on.. the rest is between 1-5%). which gets taken out of my cash value.

So is there a premium offset .. yes. but it's not what you think.

The longer the maturity of the policy.. the more the dividends will trump the premium offsets.

the earlier you stop paying the worse it is for you.

So, of course, you should have your emergency fund set before you go this route. You just siphon it in the WL policy to get more return.

You will take a hit in the beginning.

I'm a little lost, are we discussing commission or investments in regards to WL? I thought this part was referencing WL as an investment vs bonds? The value of a WL as an investment had nothing to do with commissions in my reply. I don't feel the need to rehash everything over again, so I'll just reply as follows.

There will be cases where a WL or some PL will make sense (such as real estate or inheritance protection like mentioned above), just like an annuity will make sense in the right situation. However, just because it does fit some cases doesn't mean it fits all cases(or most for that matter). The kind of PL you are talking about with a $833/month premium fits nearly nobody's portfolio outside the 1% that simply has nowhere else to put money(maxed out all other tax-sheltered options) other than a money market or take the tax hit on investment funds, and in that case, an annuity will still possibly be a better option.

All these sources to put money are vehicles. They are designed to carry money from one place (now) to another (future). In the financial world, PL policies are high-end luxury vehicles. They will get you from point A to the point B, but the maintenance is expensive and cost up front is very high. They are typically not very reliable, and in the end rarely ever work out like you hoped, losing value tremendously. They are for people who have enough money to where it is no longer assigned as necessary money. To get into a policy with all the guarantees you speak of, it just isn't going to be affordable for the avg person. If you present it this way, people here are more likely to accept this. However, you and the other fellow are pushing these PL policies like they fit everybody's budget. They do not.

They are not the best option for primary insurance, and they are not the best option for primary investments.

Let's see how the math would work best case for your UL Plan B. Let's say I'm 33 and avg health. What kind of policy could I get for $833/month? How long would it take for me to see a benefit over Term for the same coverage, investing the difference in a Roth with Index at an avg of 5% over the same time period?

[Captain Save]

I'm a little lost, are we discussing commission or investments in regards to WL? I thought this part was referencing WL as an investment vs bonds? The value of a WL as an investment had nothing to do with commissions in my reply. I don't feel the need to rehash everything over again, so I'll just reply as follows.

There will be cases where a WL or some PL will make sense (such as real estate or inheritance protection like mentioned above), just like an annuity will make sense in the right situation. However, just because it does fit some cases doesn't mean it fits all cases(or most for that matter). The kind of PL you are talking about with a $833/month premium fits nearly nobody's portfolio outside the 1% that simply has nowhere else to put money(maxed out all other tax-sheltered options) other than a money market or take the tax hit on investment funds, and in that case, an annuity will still possibly be a better option.

All these sources to put money are vehicles. They are designed to carry money from one place (now) to another (future). In the financial world, PL policies are high-end luxury vehicles. They will get you from point A to the point B, but the maintenance is expensive and cost up front is very high. They are typically not very reliable, and in the end rarely ever work out like you hoped, losing value tremendously. They are for people who have enough money to where it is no longer assigned as necessary money. To get into a policy with all the guarantees you speak of, it just isn't going to be affordable for the avg person. If you present it this way, people here are more likely to accept this. However, you and the other fellow are pushing these PL policies like they fit everybody's budget. They do not.

They are not the best option for primary insurance, and they are not the best option for primary investments.

Let's see how the math would work best case for your UL Plan B. Let's say I'm 33 and avg health. What kind of policy could I get for $833/month? How long would it take for me to see a benefit over Term for the same coverage, investing the difference in a Roth with Index at an avg of 5% over the same time period?

I think you think i'm piggybacking off the original poster. I'm not co-signing anything they said. My original post mentioned specific use cases of Whole life. If you disagree with that, that's fine.. we can discuss, you may be right. i don't think I'm some sort of guru, but I do believe there is a lot of misinformation in this thread.

I never said whole life was the best for investments, I did not even talk about whole life as an "investment" cause that's a broad term that has many different meanings. Some people think whenever someone say it's an investment it has to be stocks and bonds. Others think they made a good investment when they bought a van for a business.

How would I say they fit everybody's budget when I clearly said ..It's better to have money in emergency fund before moving some to WL.

also .Cash value WL is not a substitue for term.. most people who find it beneficial have both. They get a term while waiting for the death benefit of the WL or UL increases.

[GoodSteward]

How would I say they fit everybody's budget when I clearly said ..It's better to have money in emergency fund before moving some to WL.

This thread has derailed quite a lot. Dave bashing was easier. lol

To the above, I believe most would agree that it's better to have exhausted other tax-sheltered options like 401ks and Roths as well before even looking into something like a WL. WL shouldn't be the next step after cash savings. It is much farther down the list, if on the list at all.

[Captain Save]

This thread has derailed quite a lot. Dave bashing was easier. lol

To the above, I believe most would agree that it's better to have exhausted other tax-sheltered options like 401ks and Roths as well before even looking into something like a WL. WL shouldn't be the next step after cash savings. It is much farther down the list, if on the list at all.

It depends on the person and your outlook in life. WL wouldn't be the next step for me but 401ks and Roths would not be either.

[GoodSteward]

It depends on the person and your outlook in life. WL wouldn't be the next step for me but 401ks and Roths would not be either.

Are you against 401ks and Roths? What would be your next move after cash?

[Captain Save]

Are you against 401ks and Roths? What would be your next move after cash?

I'm not against any one financial vehicle.. though I do think 401ks are over utilized... or maybe just overpushed because people really don't save that much. Roths on the other hand are under-utilized. It allows for more flexibility. 401Ks are quite the opposite.

Once you get past the match, a young person in the workforce should probably stay away from the 401k. Most people in that situation are better off paying the taxes.



Personally .. I rather invest in myself, my business once I have enough cash in the bank.


That's definitely not for everybody, but more attainable nowadays because there is less competition in a lot of small businesses.

Also, with me, my health makes me Table rated with WL, so the cash performance would not be as good.

[corn18]

10% of the U.S. workers are self employed. So the other 90% should either all be self employed or find a way to work with what they have. At least you caveat your assertion that self-employment is not for everyone. When Texas weighs in, he'll be sure to back you up. 401k's are stupid. Buy a business, rent some houses, that's the only path to true wealth.

[Captain Save]

10% of the U.S. workers are self employed. So the other 90% should either all be self employed or find a way to work with what they have. At least you caveat your assertion that self-employment is not for everyone. When Texas weighs in, he'll be sure to back you up. 401k's are stupid. Buy a business, rent some houses, that's the only path to true wealth.

Not sure how this is what you have from my post. I was answering the question

What would be YOUR next move after cash?

and I responded by saying Personally, I would ...


With that said, I do believe that more people should be self-employed.

Not because it's the "only" way to go but because there are plenty of opportunities.

I can go on but I don't want to make this too long, but if you're in the service business and good with your hands, at least around here, you have to try really hard to fail.

[disneysteve]

I'm not against any one financial vehicle.. though I do think 401ks are over utilized

Really? Every study I've ever read shows just the opposite, that 401k plans are very under utilized. Only about half the workforce has access to one and about 1/3 of those people don't participate. Of those who do participate, many contribute far too little to really get anywhere. Many don't even get the full company match. Auto-enrollment has aggravated this problem by setting the contribution rate too low, like at 2 or 3%. Inertia results in most people never changing it. If you are only saving 2 or 3% for retirement, forget about ever actually being able to retire.

Roths on the other hand are under-utilized. It allows for more flexibility. 401Ks are quite the opposite.

Once you get past the match, a young person in the workforce should probably stay away from the 401k. Most people in that situation are better off paying the taxes.

I agree with this 100%, as do most financial gurus. The standard advice has always been to contribute to the 401k to get the full match and then fund a Roth. If you can max the Roth as well, then you can go back to the 401K, but since the median income is about 55K, if someone puts 6% into their 401K and $5,500 into their Roth, they've put away 16% of their income which is a great number for that median income earner.

there is less competition in a lot of small businesses.

In what field do you think there is less competition? I think it's harder than ever to succeed in small business because of greatly increased competition all around.

I do believe that more people should be self-employed.

Businesses need employees. If you're self-employed, you might possibly start out as a one man show but if you're successful, you're going to need to hire staff. Everyone can't be self-employed. My small medical practice had 5 full-time employees (I was one of them as I didn't own the practice). There's no way the owner could have run the business alone. My previous practice had 8-10 employees.

TexasHusker owns 3 hair salons. He is self-employed but all of the people who work for him aren't.

My current job is with a hospital system that has over 9,000 employees, and we're constantly searching for more. What would happen if even 5% of those people decided to leave to start their own businesses? We'd have to shut down offices.

I understand some of the appeal of being your own boss, but I don't understand when people come along and suggest that folks who work for someone are somehow doing something wrong.

[Gailete]

And no one is mentioning the problems of being self-employed.

[disneysteve]

And no one is mentioning the problems of being self-employed.

Of course not. We usually only hear the upsides.

It is kind of like the way that gamblers only tell you about their wins.