A whole life insurance policy guards against a person’s death over the course of that person’s whole life — or entire life — regardless of the person’s age at the time of death.
Did that sound like jargon? Basically, it means that a whole life insurance policy covers you throughout your whole entire life. A “term life” policy, by contrast, only insures against a person’s death if the person dies within a certain term, or limited time period.
Unlike most insurances, whole and term life insurance is not intended for the benefit of the insured (who will be dead at the time of payout), but rather for the benefit of whomever the insured named as his beneficiaries.
If another person tries to sue a beneficiary, all the beneficiary’s assets — including the benefit payout of a whole life insurance policy — are exposed to risk of loss in civil court. However, this risk can be mitigated by forming an LLC.
Step 1: Form an LLC by filing an LLC application with the Secretary of State of your home state. You can find the application form on the Secretary of State website. The form will require you to name the principal in charge of the LLC — yourself — and to register a “fictitious name,” which means the name for your LLC. Most states will also charge a filing fee of approximately $100.
Step 2:Write an operating agreement for the LLC. This is a document that describes who will be in charge, what the person’s duties and responsibilities are, and what the repercussions are for not meeting those duties. If you are the only person in the LLC, your operating agreement should be fairly simple and straightforward, and you may wonder why you need to write one. Yet it is a formality required by most banks in order to open an LLC bank account, and if you should get sued and your whole life insurance benefits get threatened, having an operating agreement will give your LLC more legitimacy.
Step 3:Take your Secretary of State LLC filing confirmation, your LLC operating agreement, and your drivers license or other state-issued photo identification to a bank or credit union, and open a business checking account for your LLC.
Step 4:Name the LLC as the beneficiary for your whole life insurance policy (if you are trying to protect your own policy), or transfer the payout you received from someone else’s whole life policy into your LLC account. This way your assets will be protected under the LLC if someone sues you or tries to come after your assets.
Growing your wealth means making your asset values rise. How can you do that? Follow these rules and you’ll be light-years ahead of the game.
#1: Get the Full Company Match on Your 401k
– Otherwise you’re leaving “free money” on the table.
#2: Max out Your Roth IRA
– You won’t pay any more taxes on that money, NOT EVEN on capital gains or dividend income. Wow!
#3: Refinance Your Mortgage
– If and only if you can shave off 1 percent or more.
#4: Subtract Your Age from 120
– That’s the percentage of your portfolio that should be in stock funds, with the rest in bond funds. Want to be more aggressive? Subtract your age from 130. Want to be more conservative? Subtract your age from 110.
#5: Review Your Fund Expenses
– The highest expense ratio you should ever pay is 1 percent. I aim for 0.35 percent for “specialty” funds like international funds, or 0.10 or lower for domestic large-cap funds.
#6: Multiply Your Expected Retirement Expenses by 25
– That’s how much you need. If you want to live on $40,000 a year, you need $1 million in your retirement portfolio.
#7: Save at Least 10 Percent of Your Salary
– And I mean “save for the long-term,” like retirement, not “save for a trip to France.” That’s just deferred short-term spending.
#8: Don’t Buy Investments That You Don’t Understand
– Enough said.
#9: Save 3 Months of Living Expenses
– At a minimum. Some experts think you should have 6-9 months of living expenses saved in a liquid account that you can easily tap, like a money-market fund or laddered CD’s.
#10: Start Saving for Your Kids’ Education NOW
— Even though Junior is just a toddler.
Since this is a website about how to grow wealth, I think its only appropriate that the first post centers around an important question:
How can an “average person” grow wealth?
If growing wealth were easy, everyone would do it. Wealth generation takes years, it takes patience, it takes diligence, and it takes dedication.
If you’re willing to invest the time & effort required to grow wealth, you can reap great benefits in your golden years.
So what do you need to do? The formula is simple:
Earn more. Spend less. Invest the difference.
That’s it. It sounds so easy, doesn’t it?
Be a valuable employee so that you might get a raise, or if you’re self-employed, find new strategies to grow your revenue.
Some people encourage starting a side business during the weekends or evenings so that you can diversify your income streams. Others encourage double your efforts at your day job so that you’ll get promoted faster. Both of these are valid routes; you need to decide which of the two routes you’ll adopt based on the opportunities available at your job and/or the interests you have for a side gig.
Clip coupons. Wear clothes until they’re worn out. Don’t rush to update your furniture if you can live with what you’ve got. Stay in budget motels while you travel.
Buy used items when it makes sense — like used blenders, exercise equipment and sports and gardening tools.
Eat more meals at home. Refrain from thinking that you “need” to dye your hair or get your nails done. Consider the cost of a dog or cat before you adopt one.
Your age and risk tolerance will govern how you want to invest, but there are many options, including CD’s, money market accounts, bond funds, stock funds, ETFs, index funds, individual stocks, real estate, and investing in small businesses.
Learn about these vehicles before you invest in any of them. The number one rule of successful investing is to understand what you’re investing in. This site will help you learn more about investment opportunities.