Everyone knows that the fundamental principle in successful investing is diversification. Does your portfolio include a mutual insurance investment? Your stock broker will advise you in setting up your portfolio. He will advise you to purchase Fortune 500 company stocks, global stocks, government bonds and so on. The broker will then execute the transaction and help you maintain your portfolio. Depending on your contract, you will periodically sit down and discuss new developments and next steps.
Your contract should also include safeguards for sudden market shifts. This means that if one of your major stocks should take a plunge, your broker will act on your behalf to sell this stock. This way your portfolio is protected against major setbacks.
Investing in Mutual Funds
The concept of mutual funds is that people purchase a share of a mutual fund in the form of a stock. Your money is then managed by the mutual fund, which invests your money in various investment instruments just like a broker would invest your money. This way you avoid dealing directly with a broker in each transaction. You only own a share of a money pool. These funds have to be registered with the US Securities and Exchange Commission and must comply with many regulations.
Vanguard Wellington Fund (VWELX)
Speaking of mutual funds, let’s now take a look at one of the oldest. Let’s take a look at the Vanguard Wellington fund. It was founded in 1929 and if you want to invest in it, you must deal directly with Vanguard. The minimum investment is $3,000. Price of individual stock when you google VWELX is under a hundred dollars. However, the fund is currently closed to new investors. This is why the only way to invest into this fund is to deal directly with Vanguard. Once you make your investment, that’s the money you will have available and your yields will be based on this sum alone. What you put in, is what you can get out or capitalize. You can’t take out a loan, and there is no additional money available under any circumstances.
Purchase a Mutual Insurance Investment
Whether you use a broker or a mutual fund, your money is always invested on the stock market and its returns are never guaranteed. This is because they depend strictly on the performance of other entities and the market. Another aspect of this form of investing is that in both cases your yields are always based on the money you put in. Both methods of investing also have another shortfall. This is the fact that their investment options are only limited to publicly traded stocks or instruments.
Mutual Insurance companies also rank among the Fortune 500 companies. Problem for brokers and mutual funds is that they cannot purchase these shares. Simply because they are not publicly available. The only way you can purchase a share in a mutual insurance company is by purchasing a policy. And unless your broker also holds a life insurance salesperson licence, then he or she cannot sell you a policy. So, unless you’ve dealt with a licensed salesperson before, your portfolio does not include a mutual insurance investment. Mistake.
Mutual Insurance Performance
Life insurance industry is one of the most regulated industries. When you take out a policy, this must be already approved by a regulatory body. A life insurance salesperson gives you an illustration, which provides guarantees on performance, and also makes some non-guaranteed projections based on past performance. As company stocks pay out dividends on their performance, mutual life insurance companies do the same thing. If you chose not to receive these in the form of a check every year, then you can grow these tax deferred until the end of your policy. These so called paid-up additions will significantly improve the performance of your investment.
Take Advantage of Mutual Insurance Investment
When it comes to financial strength and long term stability, mutual funds are no contest compared to mutual insurance companies. When structuring your portfolio, you can’t only look at top yielding investments, but also safest. Balance risk and security in combination with high yields. And several mutual life insurance companies have been paying out dividends in consecutive years sice the 1800s! Now, that’s stability and profitability. How can mutual funds even compare? The oldest mutual fund available was established in 1924. No contest!
Investment into a life insurance policy also brings along a benefit called an instant estate, which we already discussed on this web. Mutual fund and mutual insurance are two different types of investments and that’s why a direct comparison is impossible. You need to have them both!