Insurance as an Investment.

Article published on 24th June 2008

Many financial advisors maintain that if you are looking to increase your financial security with investments, if you are not actually making money you are, in fact, actively losing it. There is no status quo.

The logic behind this is simple - if you have savings and a job, you live off the money from your job while putting some money aside to increase your savings. If you don't have savings then you are living hand to mouth from your job income, so although you might be able to exist day to day, in the long run you will have nothing to fall back on if you lose your job or if your pay drops (or if there is more pressure on your pay), and you certainly can't save towards anything major (like a new house).

If, on the other hand, you have savings but no job, perhaps because of an inheritance or some such, then every time you use money from those savings faster than they accrue interest, you are also very obviously losing money.

Even if you have so much money in savings that you can live on interest alone, you would not actually be making money, which, to return to the original logic of this article, means you would be losing it.

Please don't misunderstand me here. There is more to life than desperately pursuing money. If you are fortunate enough to have so much money saved that even if you spend like a shopaholic for the rest of your life you would still be comfortable to the day you died, then obviously you needn't worry too much about accruing ever more money. What would be the point?

On the other hand, if (like most of the population) you aren't actually made of money and are saving towards a specific goal, like a dream house in some prime location or a comfortable retirement filled with travel and whimsy, then it is worth taking advice to actively protect your investments.

In our last article we looked at means of doing just this.



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