My parents moved their money to a financial guy they know from church back in 2019. In 2022, he put around half of their net worth in bond funds (BND and BNDX), but that didn’t go well, and they’re also in VOO, VTI, and smaller stocks like VBR and some international stuff. There’s even a random mutual fund with a high 1% fee. This guy is taking 1%, but I’m not sure what he’s really doing for them. They’re anxious about losing money, and they want to play it safe, but these funds seem risky to me. Maybe at least dump that expensive mutual fund?
Starting to wonder if financial advisors hang around church groups just to pick up clients like my parents…
Dru said:
Starting to wonder if financial advisors hang around church groups just to pick up clients like my parents…
We had a ‘family friend’ from church who sold my parents whole life insurance for me and my sibling when we were kids. I can’t stand that guy to this day.
@Kit
Why’s whole life insurance bad?
Cameron said:
@Kit
Why’s whole life insurance bad?
Whole life tries to be both an investment and insurance, but it doesn’t do either of them well unless it’s a super niche case. You’re usually better off with term life and just investing the rest somewhere else.
@Kit
Yeah, unless you’re really wealthy or it’s a policy from birth, it’s often a bad deal.
@Kit
I actually disagree. You can borrow against a whole life policy and write off the interest as an investment loan. That gives you life insurance and some investment benefits.
@Kit
You’re thinking of universal life insurance. Whole life is actually okay for what it is, but universal is the type that can go bust.
Gracen said:
@Kit
You’re thinking of universal life insurance. Whole life is actually okay for what it is, but universal is the type that can go bust.
Universal is just more flexible. If you fund a universal life policy like a whole life one, they perform similarly, but if you underfund it, it risks failing. If you overfund it, it can grow faster.
Cameron said:
@Kit
Why’s whole life insurance bad?
Whole life insurance agents often make 20% commission upfront.
Cameron said:
@Kit
Why’s whole life insurance bad?
Whole life insurance agents often make 20% commission upfront.
More like 80%!
Cameron said:
@Kit
Why’s whole life insurance bad?
Insurance for kids doesn’t make sense. Life insurance is meant to replace income if the insured dies, but kids aren’t income earners.
@Shane
Wow, I didn’t realize that’s how life insurance was supposed to work.
Dakota said:
@Shane
Wow, I didn’t realize that’s how life insurance was supposed to work.
That’s exactly it. I don’t have any insurance because no one relies on my income. If I pass, no one will be left with the bill.
@Luca
Yep. I do have insurance since my wife and I bought a house together, so it’s necessary.
Dakota said:
@Shane
Wow, I didn’t realize that’s how life insurance was supposed to work.
Curious… what did you think life insurance was for?
@Shane
Until you lose a child…
Cameron said:
@Kit
Why’s whole life insurance bad?
Whole life is pricey as insurance and weak as an investment. Usually better off with term life for income replacement and saving elsewhere, like a Roth IRA or even a taxable account for flexibility.
@Kit
Sorry you didn’t see any value in it. My brothers can’t buy life insurance now due to health issues, but whole life has guaranteed them coverage. Just because it doesn’t fit everyone doesn’t mean it’s bad.
@Teal
30 years ago, my parents paid $15K for policies that would be worth far more today in a simple index fund. Whole life just wasn’t a smart move.