Thanks for the post! Other ways to reduce sequence of return risk is though Whole Life Insurance or Annuity type of products. These are complex products, so you will need someone who can help you go thru different situations/scenarios and design it in an optimal way.
My day job is heavy on life insurance and annuities.
It is on my short list of next subjects, mostly becasue I see so many low IQ takes about both in the personal finance space.
But in short, they are good vehicles to pass some/all of the investment risk to the insurance company, for a fee. You get guaranteed performance or value floors which is truly hedging when market goes down.
Oh good to know. Please pass on to me your day job info and I will keep you in mind for referrals.
There is a lot of dislike for permanent life insurance to a point where it's labeled as scam - personally I think that label is a bit far-fetched and unfair. It may not be for everyone and I do understand where the hatred stems from. From my experience, I think a lot of people don't comprehend the product well because it's complex. There are a lot of moving parts to it and it's hard to keep it together when they are analyzing it. On top of that, the industry does have some bad actors (agents) that take advantage of the people since it's a highly commissioned product. It also gets unfairly compared with other financial products like mutual funds/etf and I dont think it's an apples-to-apples comparison. One is an investment tool and the other is a savings tool with added benefits of guaranteed cash value, guaranteed death benefit and other riders. There are both different products serving different needs, each with its own merit, one is not superior than the other.
Thanks for the post! Other ways to reduce sequence of return risk is though Whole Life Insurance or Annuity type of products. These are complex products, so you will need someone who can help you go thru different situations/scenarios and design it in an optimal way.
Great thought.
My day job is heavy on life insurance and annuities.
It is on my short list of next subjects, mostly becasue I see so many low IQ takes about both in the personal finance space.
But in short, they are good vehicles to pass some/all of the investment risk to the insurance company, for a fee. You get guaranteed performance or value floors which is truly hedging when market goes down.
Oh good to know. Please pass on to me your day job info and I will keep you in mind for referrals.
There is a lot of dislike for permanent life insurance to a point where it's labeled as scam - personally I think that label is a bit far-fetched and unfair. It may not be for everyone and I do understand where the hatred stems from. From my experience, I think a lot of people don't comprehend the product well because it's complex. There are a lot of moving parts to it and it's hard to keep it together when they are analyzing it. On top of that, the industry does have some bad actors (agents) that take advantage of the people since it's a highly commissioned product. It also gets unfairly compared with other financial products like mutual funds/etf and I dont think it's an apples-to-apples comparison. One is an investment tool and the other is a savings tool with added benefits of guaranteed cash value, guaranteed death benefit and other riders. There are both different products serving different needs, each with its own merit, one is not superior than the other.
Looking forward to your post on it.
Well stated.
I have my full actuarial credential and have spent a bunch of my career doing pricing for life & annuity products.