• Home
  • About
  • Advertise
  • Contact
  • Policy
  • Guest Post
  • Archive

One Cent At A Time

A Personal finance blog to get rich

  • Email
  • Facebook
  • Pinterest
  • RSS
  • Twitter
  • Beautiful Life
  • Becoming Rich
  • Beginners Guide
  • Extra Income
  • Productivity
  • Saving Money

Investing as a Form of Insurance

October 24, 2020 Leave a Comment

Share this:

  • Tweet
  • Email

The two most popular tips that are given to people who are trying to be more fiscally responsible are to buy a life insurance policy and to have various streams of income. Though these are great tips that I actually recommend, there are other assurances that can be put into place so one can be fiscally responsible.

Investing as a Form of Insurance

If you’ve done a comparison of life insurance policies, including term life vs. accidental death, you may have found that depending on whether or not your life insurance provider includes a stipulation in your life insurance policy, your family may not be able to receive a full pay-out based on how you died.  

This reason, among others, is why being fiscally responsible involves more than depending on a single insurance policy to protect your family after your earthly departure. 

The most promising way to ensure financial security for yourself and your family (even after you pass) is not only by having multiple streams of income but also having various sources of life insurance. 

Alternatively, those “insurances” do not have to be an actual policy with an insurance provider. Investing can actually be used as a form of life insurance.

How to Start Investing

The ultimate goal for investing is to increase your money by buying investments (stocks, bonds, mutual funds, and annuities) and selling them at a higher price. You can purchase stocks, bonds, mutual funds, and annuities through an investment account. 

The type of investment account you open depends solely on what your goals are. Some accounts are taxable, and others are not. Some types of accounts may have taxes taken out of the income it earns, while others will not. 

Investment books and blogs for beginners can better explain investment accounts, but here is a brief explanation of the general types of investment accounts:

  • Employer-Sponsored Retirement Account (401(k), 403(b), or 457 plan) – This is the most common investment account. It allows you to make ongoing payments and invest your savings for potential growth over time. Automatic payroll deductions and tax-deferred savings are usually an option with this type of account.
  • Individual Retirement Account (IRA) – This account helps you save for retirement and is not tied to an employer. A traditional IRA offers tax-deferred savings. When you open a Roth IRA, you give using after-tax money.
  • Brokerage Account – You can open this account with a stock brokerage or investment firm. People flock to these accounts because you can buy and sell many investment products, which allows for flexibility. However, you will need your broker, or firm, to carry out orders on your behalf despite owning the assets. 
  • Managed Account – A professional money manager administers these accounts. This allows for a more “hands-off” experience with investing. Your money manager will make decisions about your investment account for you for a fee (usually a percentage of earnings). Their role is to consider your financial needs, goals, risk tolerance, and investable assets to make the best investment decisions.

How to Form a Solid Investment Plan

Depending on which route you took to open an investment account, you may or may not have anyone available to walk you through to arrive at a better understanding of your actual personal finances and how they correlate with your financial goals and needs. 

If you do have someone, that is great, but if you do not, you can always better understand how to monitor your personal finances by reading some of the most popular finance books. 

Understanding your personal finances is crucial to investing because you need to grasp how much money you have to invest and how much of that money you can risk. There is a vast difference between having extra money and having money that you can risk losing. 

If the extra money you have in savings is designated for an emergency, vacation, car, or any other significant family expense, then you do not have money to risk. If you use the 50/30/20 model of financial management, you can see where your money is allocated to. 

This model means you will use 50 percent of your funds for necessities, 30 percent for spending money, and 20 percent for savings and investing. Once you have a better idea of what your money is actually like, you can start buying stocks, shares, forex, annuities, etc. without taking from your current savings.

A great place to begin is starting small and finding cheap but good stocks to invest in. If you are unsure how to find affordable and promising stocks to invest in, take a look at Good Stocks Cheap by Kenneth Jeffrey Marshall. This book is “one of the best modern books on investing,” so it is definitely worth the read. 

Outside of that, there are three things to keep in mind about investing to start as soon as you can, invest as long as you can, and spread out your investments to diminish the risk of losing money.

Turning Your Investments into Life Insurance

Now that you have a firm comprehension of investing, you can turn your name into a business and leave that business to your surviving family members in your will. 

If a small business is incorporated as an S corporation, it can purchase stocks like an individual because there are no legal restrictions. This is similar to an LLC as well. An LLC can buy stocks like an individual because once organized under state law, it can do just as much as a person. 

To register as a business (you can use your full name, initials, abbreviation, or a nickname), you will need to reach out to your state to find out what the specific process is. After you register, you should then get federal and state tax IDs. The United States Small Business Administration (SBA) provides step by step instructions on starting a business. 

You can follow these steps to create a will:

  • Create the initial document. Start by titling the document “Last Will and Testament” and including your full legal name and address.
  • Designate an executor
  • Appoint a guardian (if needed)
  • Name the beneficiaries
  • Designate the assets
  • Ask witnesses to sign your will (preferably one who is a notary) 
  • Store your will in a safe place

Once you have created a legal will, you can better rest assured that your family will be taken care of once you pass away. The thought of what happens after you die may seem scary, but using investing as insurance can help take away some of the fear for the future of your loved ones.

LIKE THIS POST?
I agree to have my personal information transfered to MailChimp ( more information )
Join our community of 8000+ subscribers to increase your net worth and build wealth
We hate spam. Your email address will not be sold or shared with anyone else.

Share this:

  • Tweet
  • Email
The tool that changed the way I manage my personal finance - Personal Capital, The Best Free Personal Finance Tool

Want to start a WordPress blog now? The onecentatatime.com blog is hosted by Siteground Web Hosting. For only $3.95 a month, Siteground can help you set up and host your website/blog quickly and easily.

About the Blogger Hi I am SB, a personal finance enthusiast with a career in software development. I am an immigrant to the USA since 2005, after being born and brought up in India. This 40 something technocrat lives and breathes personal finance whenever he gets time from the day job, job as a husband and a dad

Some links on this page may be affiliate links, if you make a purchase following the links, I may earn a commission. Read affiliate disclosure here
« Stress-Busting Tips for Buying a New Home
Retirement Saving 101 »

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.



Create your own blog in 20 minutes and $20

Personal Capital, a free tool to change your financial health today

I use and suggest Upstart, for your personal loan need

CreditKarma, a free tool to check your credit scorey

I use Coinbase, for my crypto investments

101 Cents at a Time

101 Ways to Earn Extra Money on the Side
201 Frugal and Perfect Birthday Gifts
101 Ways to Save Money Everyday
101 Ways to be Better and Successful at Work
101 Ways to Save Environment and Energy
101 Frugal and Romantic Anniversary Ideas
101 Low-Cost Men's Fashion Ideas
101 Personal Finance Tips
101 Ways to Reuse Household Stuff
101 Things to Do, When Nothing to Do
101 College Graduation Gift Ideas
100 Tips for Ecommerce Startup
101 Ways to Enjoy Indoor During Winter
101 Ways to Beat Procrastination

Popular Posts

Quick Cash - How to make $100 legally, in a day
Living well on less than $15,000 a Year
Top survey sites for side income
What to do when auto repair goes wrong
Where should I invest my money now?
20 Ways to be productive and happy at work
51 Ways to get out of debt
Be a better person in 15 days, 15 ways
Income ideas for retirees and senior citizens
51 side jobs for college students
Urgently need a large amount of money?
Should I buy or should I rent?
Best Personal loan providers
25 Ways to save environment
25 DIY car repairs to save money
How to decorate office cubicle
How to show your wife you care
50 Financial Rules for Success
51 Frugal weekend family activity ideas
Become Rich By Saving 1 Hour Of Daily Wage
How much do I need to save for retirement?
How to negotiate your salary

Follow us on FaceBook

About Author

SB

Blogger by choice and IT manager by profession. Finance is my passion and gardening is my greatest satisfaction. Born in India, settled in US, Husband and a father. I created this blog in 2011 with a vision to help others. Thanks for your patronage. More info on my "about" page.

View all posts


Subscribe

Join our community of 5000+ subscribers to increase net worth and build wealth

Advertisements

Personal Stories

How I got a new HP computer replaced
Was COVID circulating in USA in fall of 2019?
How my credit score went up 800+
Why I didn’t invest in Bitcoins
How I controlled impulses to buy things
Why this blog is named One Cent at a Time

Subscribe via Email

Site Disclaimer

Disclosure of Material Connection: Some of the links in this web site are “affiliate links.” This means if you click on the link and purchase the item, I will receive an affiliate commission. Regardless, I only recommend products or services I use personally and believe will add value to my readers. I am disclosing this in accordance with the Federal Trade Commission’s 16 CFR, Part 255: “Guides Concerning the Use of Endorsements and Testimonials in Advertising.”
Read full Affiliate disclosure


One Cent at a Time is published by SB. The opinions expressed herein by him are his own and not those of his employer or anyone else. All content on One Cent at a Time is for entertainment purposes only. By reading this blog, you agree that SB and/or One Cent at a Time is not responsible for any actions taken after reading this blog. For the full disclaimer, click here .

Major Media Mention

One Cent at a Time Media Appearances

Copyright © 2023 One Cent At A Time · Designed by Nuts and Bolts Media