Thursday, December 10, 2009
Invest in Several Asset Classes
By: Zachary Pienkowski
One of the top priorities for many young professionals is being able to save enough money in order to retire comfortably. A lot of companies will offer retirement programs like 401k's, but while that is a good start for retirement, in most cases it will fall short of meeting goals. People need to diversify their retirement portfolio not only with different stocks and bonds, but also with different assets. Everyone knows that you shouldn't put all your eggs in one basket, but that doesn't mean they know where to put them either. One important aspect of retirement planning that is greatly overlooked is permanent life insurance. 401k's and many other retirement vehicles are deceiving to the average person because they are not aware of the tax consequences in these accounts. All withdrawals from a 401k are subject to taxation on the way out. Some might say that is not a big deal tho because you are deferring the taxes and not paying them when you put into the account. Now what happens if you enter a much higher tax bracket because you are making more money later in life? That is something that needs to be considered because proper tax planning is just as important as what investments you choose. Permanent Whole Life insurance is an investment that gains cash value and can be taken out of the policy completely tax free. Most insurance professionals advise not to take the entire amount of the cash value out so that the policy does not lapse, but if you feel there is no need for the insurance anymore but there is $2 million in cash value and you want it, then you are entitled to the entire $2 million which is 100% payable to you.