I spent a long time at my middle school friend’s new brokerage firm yesterday. She had invested into the firm to become a partner. She talked and taught me a lot about different types of investments and how her company was selling this life insurance/investment bundle called an IUL or something or other. 

Anyways, that kinda just flew over my head because I’ve only really studied 401(k), IRAs, Roths, and Single accounts. I had never heard of life insurance vehicles to investing. After studying about it online, it kinda got more and more sketch. There are a lot of pyramid scheme insurance companies out there to get you when you’re young and naive. They coerce you into buying life insurance when it is absolutely unnecessary for someone young and healthy. And then they try and get you to be an associate, hire your own associates, and perpetuating that pyramid effect that in theory, make some people tons of money. 

I feel a little taken advantaged of, to be honest. But it really was my own ignorance of personal finance. It’s pretty difficult to find a capable financial advisor who has you in their best interests and isn’t selling insurance or investment packages that only benefits them and gives them the highest commission return. I think that’s why companies like Vanguard, that’s owned by its shareholders and not by the providers, are so attractive. I can also see the interest in computer-based investing using programs like Betterment, Wealthfront, or FutureAdvisor. Computer programs follow algorithms and algorithms are very unlikely to have a conflict of interest that most advisors have.

In a list of priorities, I’ve learned through books and personal finance classes that you should: 

1. Maximize employer match to 401(k)
2. Pay off debts and emergency fund for 3-6 months living expenses
3. Maximize tax-deductible contributions to an IRA (Roths, you don’t get taxed when you take out, traditionals you deduct tax when you put in, $5,500 maximum contribution for both annually)
4. Max out tax-deductible 401(k) or 403(b) for nonprofits ($17,500 maximum contribution annually, which can be tax-deducted) 
5. Additional funds go into a single investment account, mutual funds, or other taxable investments packages (I think I might do Betterment or FutureAdvisor if I get to this point)

So where does whole life insurance fit into all this? In reality, it doesn’t really unless you have maxed out every other avenue of your portfolio. If you have a family or people you are supporting, then life insurance would be beneficial to ensure your beneficiaries will be okay financially if something were to happen to you. However, at 24 years old, I am an active, non-smoker, and not a regular drug-user. So my costs of insurances would probably outweigh the capital gains I could get if I simply put it into a mutual fund - or better yet, my 403(b).

The thing about being young is, there is a multitude of people trying to capitalize on your naivete.

Make mistakes and learn from them. 

But don’t be an idiot. 

I need to study up some more on finances.