First, I am a huge believer in having whole life insurance. Term insurance is great too, but whole life insurance is better because the primary advantages of whole life insurance are: Protection for life – It will not expire or go down in value. Level Premiums – The rate you pay for your policy will not ever increase. Cash Value – A portion of your premium builds cash value which can be borrowed against. So essentially, you are earning a lot of money for yourself which the longer you wait to cash it out, the better advantages (assuming you get a insurance plan at 18, highly recommended). The biggest downfall is it is pricey.
Rodney and I both decided to get it almost 7 years ago. And getting it locked into a price is dependant on your age. My goal is to have it for Sunny when she turns 18. Her monthly payment will be much cheaper because of her age and the rate will be locked in. I realize the last thing an 18 year old wants to do is pay for something like this, so Rodney and I feel the importance of offering this to her on her 18th birthday and paying for it until she can afford to on her own. She will be earning money for her future one day, and is something I wish I could of taken opportunity of.
Another word of advice for Sunny is to buy a home when she or her husband are ready and have a stable income. Purchasing a first home should not be taken lightly. Rodney and I bought are first home after we were married and we rushed it because we were under pressure. Huge mistake. I was never happy with the choice and regretted it later. Buying a home when the market is good and interest is low is the best time, and possibly being able to flip or flop a house for equity is always smart. I love older homes personally because they seem better built and have custom features that modern homes often lack. Buying a home and being able to build equity is crucial for home investing and making money.
Another smart investment choice is choosing between a money market or CD. But each are different with how they earn interest. A money market account usually earns a variable interest rate and a CD comes with an interest rate that often does not vary over a term. So if earning a great annual percentage is your only concern, a CD might make more sense because in a money market vs. CD comparison, an individual will find long-term CDs give you the best APY. However, the drawback is there is a penalty for taking money from a CD if it hasn't reached it's life span, and there is no penalty for investing in a money market. And of course investing in a 401K which is offered with most jobs. When I was a teacher, I was able to have money put away for my retirement one day, however, since I have stopped teaching and don't know when I will return, I am not earning any points toward future retirement at this time. Last, having a rental property or more. Renting has it's benefits and disadvantages. But it's a great way to invest. Depending on how long you want to rent your home out for depends a lot on how much you are willing to invest in wear and tear on the property that comes from occupants.
There are many books out there on how to invest in your future. Suzzie Orman (Financial Planner) and Donald Trump have some great tips in their books and offer suggestions as to where to start. The main purpose of this post is to one day guide Sunny to one day make proper financial decisions and learn how to budget her money wisely. There are so many other financial investment paths out there, and I don't plan to talk about anymore. My hope is to just emphasize how important it is to invest our money wisely and teach our children about the value of money. I plan to do a second post on how we budget in the next week or so.
*Fsy.ny.gov, money.CNN.com were sites that I got legitimate info from.
