Financial Decisions You Wish You Made 20 Years Ago
After 22 years in the insurance and investment business, I suppose one could consider me somewhat of a financial “insider”. I’ve been around long enough, professionally, to understand the difference between a good financial decision and a poor one. Notice I am not using the word “bad” to describe the opposite of “good”. I think “poor” more accurately reflects the absence of making a good choice: poor, as in foolish. Poor also reflects the lack of assets and resources from those decisions. We are, after all, foolish and not bad for making unsuitable financial choices that affect us and our family.
So, if I could travel back in time, to my youthful and more foolish self, I would tell him to correct these decisions and wipe out the consequences that affect me today.
Arguably, I needed more money 20 years ago, but the few extra tax dollars that I saved investing in tax deductible retirement accounts didn’t alter my life or my lifestyle in any significant way. But now that I’m 20 or so years away from retirement, I can see how having more tax free assets then will affect my life and lifestyle. A Roth IRA isn’t a one-size-fits-all solution. Feel free to call me for more information.
Cash Value Life Insurance
I purchased my first life insurance policy when I was 22 for $50 a month. I wish I had doubled or tripled the premium amount because my cash value life insurance policy is the best asset I own today. Allow me to illustrate. Three and a half years ago my business had cash flow problems and I didn’t have enough money to meet payroll. So, I borrowed $10,000 from the whole life policy I purchased at 22. At present, I am remitting a check to retire that loan. Do you know what that policy cash value did while I had $10,000 invested into a payroll expense 40 months ago? It increased by about $4,500. You read that correctly. Though I had nearly depleted the cash value from my policy (and kept paying my premium), because I withdrew the money as a loan and not a direct surrender of cash, the values of the policy remained intact and continued to grow. My Roth IRA or 401k can’t do that. And neither can my taxable investments or the equity in my home. Only my cash value life insurance policy. I wish I had purchased more of it when I was 22.
Deferred 1% More Into My Retirement And Borrowed Less
Too many times for my liking have I heard in client meetings and reviews, “You don’t have these problems. You know what you’re doing.” I won’t bore you with details but financial insiders are prone to the same financial mistakes of those outside my profession.
Yes, I do know what I’m doing, but I can be foolish too. Frankly, its mistakes I’ve made and the ones I have witnessed that I believe have shaped me into the advisor I am today.
Ask yourself “What financial decisions will you be glad you made 20 years from now? If you want my opinion, give me a call. I’d be glad to discuss it with you.
*Policy loans and or withdrawals will reduce the cash surrender value and may reduce the policy death benefit. Taking a policy loan could have adverse tax consequences in the policy terminates before the insured’s death