Whole Life Instead of Bonds?
10-09-2024, 07:14 PM
#1
Line Holder
Thread Starter
Joined APC: Sep 2010
Position: 737 FO
Posts: 30
Whole Life Instead of Bonds?
Apparently some wealthier folks, who already max out 401k's, utilize whole life insurance policies instead of the bond component of their portfolio.
While WL has long been derided as an alternative to stocks, it actually could tend to perform better with more stability than bonds.
So if your low-risk anchor is more stable then bonds the theroy goes that you can accept more risk on stocks than you would otherwise and use WL policy withdrawals to cover market downturns.
Anybody doing this? Anybody look into it and decide not?
TIA
While WL has long been derided as an alternative to stocks, it actually could tend to perform better with more stability than bonds.
So if your low-risk anchor is more stable then bonds the theroy goes that you can accept more risk on stocks than you would otherwise and use WL policy withdrawals to cover market downturns.
Anybody doing this? Anybody look into it and decide not?
TIA
10-10-2024, 03:35 PM
#3
Perennial Reserve
Joined APC: Jan 2018
Posts: 12,172
Buy cheap term insurance to cover your no-$hit family responsibilities and invest the rest where you can get the best returns consistent with safety, which damn sure isn't whole life insurance.
The average annual rate of return on the cash value for whole life insurance is 1% to 3.5%, according to Quotacy. While whole life insurance offers fixed, guaranteed returns on your cash value, you may earn higher returns with other investments, such as stocks, bonds and real estate
As of October 10, 2024, the current yields for some U.S. Treasury bonds are:
- 10-year: 4.035%
- 2-year: 3.95%
- 30-year: 4.30%
10-13-2024, 07:12 PM
#5
New Hire
Joined APC: Oct 2024
Posts: 2
It's an interesting strategy, but whole life insurance tends to have high fees and lower returns than bonds. It might make sense for those in high tax brackets, but for most, bonds or other fixed-income options are probably better. Worth looking into, but not for everyone.
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