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Hi, 

I have some life-changing decisions that I'm about to make from buying a house to buying a car dada dada dada. 

For about a month now, I have been weighing out the decision of using a financial firm to manage investments where I'm charged 1.25% per quarter or something like that also along with a life insurance plan where I have to make contributions towards it in addition to my initial premium of about $12,000 I think. 

I also had an art investment firm that I was curious about but when they kind of rushed me into wanting to put money into it right away, it was a turn-off.

Not only that, I'm interested in using advertising agencies to help me with my Instagram page so that I can promote my work accordingly so that I can have more engagement.

I just want to make sure that I'm on the right track. I know with anything, it takes time and you have to plan accordingly, but I just want general guidance per what I have mentioned so that I can consider all of my options and make the right decision in the long run. 

 

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Just a couple thoughts, not knowing your income. If the investment firm charges you 1.25% per quarter, that would be 5% a year? So you'd have to earn more than that. On top you'd have to outdo inflation. So figure 8% a year to break even. Personally I'd invest my cash with Vanguard. No load funds. Long history. Low costs. In a Roth IRA. //Art investment is really sketchy. Very difficult to anticipate trends and with the economy the way it is, few folks want to buy extras. // Why is your life insurance premium so high? // If you're buying a home, there are calculators to help you determine whether renting is better than purchasing. 

Thank you Olivia. My income is like $37K/yearly. The investment firm claims that they would work to making sure that I earn a lot on the investment since that also means more money for them. If I weren't to earn a lot, then that's less money for them. I'm checking out Vanguard now as far as their Roth IRA. Yes, I believe the art was more sketchy than anything because the person that I spoke with over the phone pushed me into making the investment right away, and I pulled back. That was a turn off for me. My life insurance premium is with the National Life Group - Life Insurance Company of the Southwest. $12700 annually and if I die tomorrow, it would give my beneficiaries $479,144. The projected cumulative income for the policy if I'm 65, it's $218470 | 70 - $436941 | 75 - $655411 | 80 - $873881. At age 61, Terminal Illness benefit is $585323 lump sum | Chronic Illness benefit is $10398 per month | Critical Illness benefit is $566004 lump sum | Critical Injury benefit is $566004 lump sum. I tried copying an image to it to give you more details.

 

It's supposed to be the kind of policy that can be adjusted if it's too much but rewarding as well from what I've learned thus far. I plan to buy a home instead of renting.

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I'm not an investment planner or anything official, but no one can guarantee returns, especially high ones, unless they're loan sharks. My husband got an offer like that from a colleague when he worked for NY state. The guy said, "Just don't ask questions".  // So you're saying your life insurance costs roughly 1/3 of your income? Perhaps you'd be better served to do term insurance and put the rest in something safe. // Does your job offer any matching on a retirement account? That might be a better way to invest. // I hope someone who does this kind of thing can comment on your post as I'm not a professional, but all the stuff you've mentioned seems not the best options. 

 

I definitely am taking heed to everything you're saying to me which is why I wanted to check with the community before moving forward to get more perspectives than what I perceive since this is not my forte. I checked the company with the financial verification websites and it seems legitimate, but I do understand where you're coming from since they could be recommending something to me that might not be worthwhile in the long run. I've been asking questions nonstop and in hindsight, I can see where the firm's employees that have been encouraging me to get on this plan have tried to make me feel good by telling me things that make me think that I'm on the right track when in fact they are the ones who would benefit from it more than me in some ways. I'm going to have to check into term insurance. The main point that the firms tell me that instead of keeping all of the money inside of my bank account where it's not really collecting any interest to put it in one of these accounts instead to make the money work for me. However, I'm perfectly fine leaving it there until the best choice comes along for me. What do you consider something safe? Yes, I'm participating in the retirement account with my job and that account also has a representative of a firm that has offered additional services for a fee. Thank you again for giving me another way of seeing this.

Hi @mememe! I agree 100% with what @Olivia said. I would definitely run from this investment firm. Paying 5% per year will eat up a huge amount of your returns, considering that 8% is a pretty normal target to aim for. No matter what kind of sales pitch the investment firm gives you, keep in mind that the vast majority of active managers fail to beat the S&P 500 in the long run.

Your best bet is to invest in an S&P 500 index fund with the lowest fees possible. That's how Warren Buffett says the vast majority of us should invest our money. Look for an expense ratio of less than 0.1%. Some good options to consider: SPDR S&P 500 ETF Trust (SPY), S&P 500 Index Fund (SWPPX), iShares Core 500 ETF (IVV), Fidelity 500 Index Fund (FXAIX) and Vanguard S&P 500 ETF (VOO).

For life insurance, it sounds like you've been given a quote for permanent life insurance — which doesn't make sense for the vast majority of people. Term life insurance is much cheaper and makes much more sense. No way should you be spending 1/3 of your salary on a life insurance policy. Shop around for several term insurance quotes and look for a policy that has a death benefit of about 10X your salary. Keep in mind that not everyone needs life insurance. If no one depends on your income and you don't have debt that someone else has co-signed for you, you may not need it.

I'm glad you walked away from the art investment. It's a big red flag whenever anyone makes you feel pressured to make an investment. Art is an especially risky investment. It can be hard to find a buyer and its value is subjective. There's also the risk that you lose your investment altogether if it gets destroyed or damaged. Also, the IRS taxes any earnings from investing in art or other collectibles at a much higher rate than it does with earnings from other investments that you hold for at least a year.

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