Business / Real Estate: Will need more expertise, more capital, and more time. Not so liquid.
You can mix and match depending on your investment OHA. The younger you are, or the less immediate needs you have on the money to be invested (long term use), the longer your investment horizon is.
Especially compared to someone who’s about to raise a family or nearing retirement. With this longer horizon, you can afford to be aggressive (but not stupid) in your investments to maximise gains and growth in the long run.
Since I was too eager, there were a number of times when I had to pull out my mutual funds, sell all my stocks and pre-terminate my time deposits just to have liquid cash. Just to meet cash flow requirements. Then back to zero.
The wisdom in setting aside some amount of cash will avoid unnecessary pullouts and sell-offs. The wisdom of setting aside for life insurance is that it makes you (or the ones left behind) a bit more ready for the inevitable death. At least the ending is secured.
And think about this, sum up all the premiums you have to pay for insurance (call this P) and divide this by your insured death benefit amount (call this B). This is your premium-benefit (P-B) ratio.
Do you know of any investment with such a high ROI? If you honestly think you cannot earn the same amount of death benefit amount (B) by investing an amount equal to your premium payments (P) in stocks and funds and bonds etc, then getting the insurance is the way to go.
Nail at least the first two investments first then explore your way forward.
Unlike me, don’t be too eager to join the stock market without securing your immediate and unforeseen needs yet. The stock market will not go anywhere, it will just go up
and down in a vicious cycle.
This article was republished with permission from Investment Juan 01.