Inflation shot up 8.4% and hit a 41-year high last March. With interest rates rising and the market in flux, identifying the best inflation investment strategies is top of mind for all of us.
I specialize in Premium Financed Life Insurance - an investment strategy that leverages your life insurance as an asset to generate tax-free retirement income.
How does this asset hold up against inflation? It’s simple:
Your life insurance policy accumulates cash value, and the insurance company pays you tax-free interest on that value.
By overfunding (contributing more than the cost of insurance) your life insurance policy, it grows tax-free and the insurance company provides guaranteed downside protection.
Your policy cannot lose value due to negative market performance AND the return improves as the interest rates rise.
If you’ve never heard of overfunding your life insurance, here’s a breakdown from Forbes about it.
Two of the Best Inflation Investments
Rising costs have become an unavoidable fact for most Americans and it’s affecting all of us.
You can hedge against the bear market with inflation-proof investments like I-Bonds and your life insurance, for example.
We know the performance of any asset class depends on different market cycles, which is why it is always recommended to diversify your investment portfolio.
Rather than sticking with the typical 60/40 split - consider a 50/50 split between equities and fixed assets, for a more secure portfolio.
Here are two fixed assets I utilize personally - because being a client first helps me provide the very best service to my clients and partners:
US Treasury bonds are among one of the most leveraged Inflation Investment Strategies used by investors.
They are essentially loans taken by the government, you earn both a fixed rate of interest and a rate that changes with inflation.
Twice a year, the treasury sets the inflation rate for the next 6 months. These investments are sold in $10k increments, and you are allowed to purchase one per year, per person.
That’s better than almost any other investment out there; and it allows you to stack them yearly for a maturing cadence that works nicely in retirement if you hold them that long.
Not surprisingly, my other most-utilized strategy is PFLI (premium financed life insurance).
2. Premium Financed Life Insurance
Buffer assets serve as working capital whether the market is having a good year or not.
For instance, if the markets perform well, you simply let your buffer assets grow, untouched. However:
If the market isn’t doing well, you draw from your buffer assets rather than selling your equities at a loss to meet your living expenses.
This is only possible if you have invested in buffer assets to supplement your income.
Premium Financed Life Insurance is the kind of asset that offers a safety net - and we all need one of those.
Why is it so valuable? PFLI offers:
A historical yearly IRR of 8.5%-15%
Unrestricted access to money invested
Tax-free income (extra valuable during retirement)
Peace of mind during volatile markets
And of course, a valuable death benefit to protect their assets, family, and legacy
By contributing (overfunding) a fixed amount into your life insurance policy, you can build a strong buffer asset that will give you guaranteed retirement income while protecting your loved ones and other assets with a death benefit.
If you have any questions regarding buffer assets and premium financed life insurance, contact us or feel free to email me directly at firstname.lastname@example.org or call 773-318-9608.