They don’t seem to do that very well. A recent sign of their failure comes from Morningstar’s John Renkenthaler. He broke retail alternative funds into two types “1) thoroughly useless and 2) mostly useless.” (Source: “Judgement Day”, Morningstar magazine, Summer 2019) The term “mostly useless” was his descriptor of the five best alternative categories of funds over the 10 years from 2009-2018. The funds did poorly not just when stocks did well but in years when stocks did poorly, exactly when alts are supposed to save the day.
I believe that many clients need stocks to have a reasonable chance they will reach their financial goals. I believe many clients need the stability of high-quality fixed income products to have a reasonable chance they will reach their financial goals. There is not one client I have ever worked with that needs an alt product to reach their goals. Further, I do not believe that any client will fail because they omitted alts. The record shows clients are more likely better off without alts than with them.
Sell Your Life Insurance Policy For Cash
In order for the party buying a life insurance policy to receive a return, a death benefit must be collected. The return is function of the difference between what the buyer pays the client, the death benefit the buyer receives and the time until death. Clients with conditions expected to shorten their life spans generally get the better offers with the highest offers going to those with the worst conditions.
I have only once heard of a situation in which the selling a policy became the best choice. The client was terminal and the family had no way to keep the policy in force, so it was sell the policy for something or likely receive nothing. The income of the client was low, so the ordinary income taxes were not as costly. For that family, a sale was a true blessing. Nonetheless, most families with some means will be better off keeping the life policy in force and collecting the tax-free death benefit themselves rather than settling for a smaller often highly taxed amount from a sale.
I have still more to share, but I’ll have to save the other overhyped strategies for another time. In the meantime, if you think of more, email me.
Dan Moisand, CFP, has been featured as one of America’s top independent financial advisors by Financial Planning, Financial Advisor, Investment Advisor, Investment News, Journal of Financial Planning, Accounting Today, Research, Wealth Manager, and Worth magazines. He practices in Melbourne, Fla. You can reach him at [email protected].