Personal Finance Advice

“Get term life insurance, not cash value insurance.”

“Stay away from annuities.”

“Do not spend a lot of money on a car.”

This is all great advice for the general population.  These - and other - bits of personal finance advice are usually encountered when seeking out personal financial advice that is generic and intended to be read by many different people.  Yes, most people would probably be better off with term life insurance instead of cash-value insurance, most people should stay away from annuities, and not everyone can afford to spend a lot of money on a car.

What about the small portion of the population who actually have quite a bit of money? Whether they inherited a huge bundle of money from a relative or if they worked like mad to build up a fortune, there are indeed people out there for whom the general rules of personal finance do not apply.

Why is that? The reason is because some of the products designed for wealthy people have trickled into the mainstream, panicking personal finance experts because these products simply aren’t suitable for people who don’t have quite a bit of money.  For example, cash-value life insurance is designed for people who need to find a way to build up some money that doesn’t fall under the usual tax rules for savings.  Most people don’t have to worry about this, but nonetheless the product is still offered to people who really shouldn’t have it.  This is why you’ll run into ample warnings to stay away from cash-value life insurance from personal finance experts.  The fact remains, however, that cash-value life insurance can be a good product for people who have a good amount of money and need the tax benefits.  Is cash-value life insurance appropriate for everyday folks who don’t have an abundance of cash? In most cases, the answer is no.

What does this mean for people who have a lot of money? It means that you can’t necessarily follow the advice designed for people who aren’t in similar financial situations as you.  The rules change for you when you have more money to deal with because you have more tax considerations to think about and other factors that may not apply to people who have quite a bit of money.

While everyone can benefit from general personal finance advice, everyone needs to research to find out what’s best for their personal financial situation.  People who have a lot of money should get personalized advice from a fee-based (not commission-based) professional.