Question: Should you invest money without life insurance or is it good to invest even without knowing and preparing the things to consider before investing.
Is it good to invest money without life insurance? Should you start investing your hard-earned money without first buying a life insurance? This is one of the most questions asked by the readers of InvestmentTotal.com. Today, let us give our opinion about this question and provide some useful and meaningful information about investing without life insurance.
Investing is very interesting especially when you knew someone who is already getting rich in the stock market, mutual funds or trust accounts in the banks. Investing is risky, that’s what we always hear in the books, forums, blogs, or to many people who are afraid in investing.
The truth is investing is risky and it is much more risky if you don’t know what you are doing. That’s why I always mentioned in my articles that you should attend financial literacy seminars and hire your personal financial planner. Why makes an investments riskier to an investor?
The answer is if you don’t have any life and health insurance. What will be your basis and guarantee that your money will gain profits after a year? No guarantees, right? That’s why it is important that you have a life and health insurance before you invest.
Some people when they are new to investment world, they are excited to open an investment account whether it is on stocks or mutual funds. They are excited because they are motivated enough and believe that investments can help them to achieve financial freedom. It is true that investing can help you to prosper in life and help you achieve financial freedom. However, there are certain things you must know before you invest your money and what are these things to consider before investing?
Things to Consider Before Investing
1. Learn and grow. You must learn personal finance and investing. Attend seminars and be equipped with knowledge, skills and complete information about investing. You can increase your knowledge by consulting to a certified financial planner. A certified financial planner will tell you everything you need to know about personal finance, and he can help you to set your financial goal.
2. Emergency funds. Have a cash reserve before investing. The ideal emergency funds can be equal to the 6 months of your income. If your monthly income is $5,000, then, you must have $30,000 as your emergency funds. This fund should only be use during emergency cases.
3. Insurance such as health and life insurance. This is our topic. For me insurance is also an investment. You are taking risk everyday. Insurance will only be used for unexpected events such as accidents and disabilities or even death. Insurance can help you to recover from financial losses, and can help you to minimize the cost of hospitalization bills just in case you met an accident. The face amount you can give to your family when you died should be worth (compute the years X annual income) years of recovery you want to help your family from financial losses especially if you are the bread winner. Example; 5 year recovery X $20,000 annual income. Your beneficiaries should get $100,000 from your insurance when you died.
4. Get out of debt. Stay out of debt. Some experts say you can still invest when you are at debt, but you are very much prone to risk. If you think you can make a lot of profits from your investments to cover and pay your debt, then, try it. Who knows, investing is your solution to pay all your debts.
5. Investment plan, purpose and goal. In investing, you must know your purpose, make a plan and have a financial goal. Example of financial goal is; to acquire retirement target earning asset, for your child education, for a business capital or for another passive income. Be specific when making a financial investment goal, mention the years, the amount and what strategies you will use to achieve your goal.
Should You Invest Without Life Insurance or Health Insurance?
Insurances are very important. They play a good role to achieve your financial goal. You don’t want to pull out your investments when unexpected events occur. Example situation, you plan to invest $1,000 in 20 years, but after 5 months you met a car accident. You have to pay a hospital bill around $3,000. Where should you get the funds to pay the hospital bills? Will you pull out or redeem your investments even if they are in losses or will you use your health insurance and emergency funds?
That’s what I mean. I don’t want to emphasize the life insurance here because I know you knew already what life insurance is all about and the benefits of having it as I have mentioned awhile ago; for your family’s protection from financial losses. Now, let us answer the question of the reader, is it advisable to invest without life insurance? A big NO! I hope this article will be useful to answer that particular question. Thank you for spending your precious time reading this article.