Inflation is affecting all of us. Now more than ever, it’s essential to understand buffer assets and how they help protect you from financial losses during unpredictable periods.
A “buffer asset” is something (mostly) unaffected by bear markets and, in some instances, improved by inflation.
Buffer assets can be anything from:
passive income streams like rental properties - which become more valuable during inflationary periods
tax-free income like interest earned on your permanent life insurance - which grows at a higher rate during inflation
or even luxury goods - because during inflation periods means they’re worth more right now
In short, these assets are designed to be a source of income to hold you over while your other assets recover.
When the market is unpredictable, you don’t want to draw from your savings accounts. Their earning power is not as strong.
By generating income from a buffer asset, you can leave those accounts alone and give them the best chance to grow over time.
At Enhanced Funding Solutions, we specialize in buffer assets. Our expertise is in Premium Financed Life Insurance policies, an especially valuable asset during retirement.
These policies have gained more and more attention from investors seeking to mitigate their exposure during the market swings we’ve been seeing over the last few years.
Premium Finance Life Insurance = Inflation Proof Investing
Premium Financed Life Insurance presents a dual benefit of wealth creation and safeguarding your financial future.
This type of policy generates tax-free growth as the cash value of the policy grows.
Put simply, the insurance company pays the policyholder interest on any additional cash value.
How does that work?
If your policy requires $10k in premium a year, and you contribute $20k, the insurance company will pay you guaranteed interest on the overfunded $10k.
You can imagine how this, compounded over time, can grow significantly and work as a guaranteed buffer asset during retirement.
The policy holder can utilize that interest at any time, without penalty and without affecting the policy value as a whole.
Anyone seeking inflation-resistant investment options should research how PFLI fits into their portfolio and consider its guaranteed downside protection.
When utilized as a protective asset to diversify your investment portfolio, specifically to generate additional income independent of your main savings, you can confidently tap into these funds during periods of market downturns without jeopardizing your overall financial stability.
If you’d like to learn more about PFLI, feel free to contact us. You can always email me directly at jeff@enhancedfunding.com or call 773-318-9608.