Everyone has investment goals. Some people opt to invest in a new home or save for their kid’s university studies. Others want to invest in an extended car warranty service to protect them from the potential risk of unforeseen costly car repairs.
For those who manage their own finances, it’s not easy to stay abreast of the best investments. There’s always something of a niggling debate about what’s the best investment. However, from an investment perspective, it’s a question that is not worth sweating about.
Pump your money into a couple of investment assets since no one can authoritatively say how investments will perform. For example, real estate may be booming today, but life insurance or bonds may be the next big thing in a couple of years.
This article looks at five investments that allow you to spread your risk and realize cost savings.
Picture a scenario where you’ve recently moved into your new home. When you switch on the air conditioner, it malfunctions, or worse, your washing machine doesn’t work. Investing in a home warranty can ease the financial obligations new homeowners grapple with when a significant home appliance fails.
A home warranty is a sound investment for people who are purchasing formerly owned homes. Home sellers can also entice potential buyers with the inclusion of a home warranty in the deal.
While you will pay for the coverage upfront, future savings may be worth the additional expense. Do not confuse a home warranty with insurance coverage, though. The warranty covers appliances in satisfactory condition when you move into a new home and then malfunction because of regular wear and tear. Without the warranty, you may end up forking out thousands of dollars to repair or replace major home items or systems.
Extended Car Warranty
Car repairs don’t come cheap. Statistics show that 63 percent of the American population is likely to go into debt when faced with a $1,000 repair bill. That means taking out a loan or using a credit card. This makes an extended car warranty a good investment because it’s intended to cover mechanical breakdowns, so you don’t have to part with your savings to foot the repair bills.
The decision of whether to invest in an extended car warranty should be made depending on how long you intend to keep your car. Because extended warranties become active after your manufacturer’s warranty expires, it will make more sense if you plan to keep the car for a longer duration.
Another aspect to consider is the reliability of the car you’re buying. If the estimated annual repairs average a significant amount, an extended warranty makes perfect financial sense.
Get a policy that offers the following:
- An exclusionary policy that highlights the components not covered
- Choice of mechanic that you do trust
- Full rate coverage
- A good reputation
Health equates to wealth. The hectic schedules, late hours, global warming, among other reasons, put our health at risk. With the high demand for health care, medical costs have shot up the roof. Yes, the overall life expectancy has gone higher, but the number of ailments affecting the population is also on the rise.
Thus, it is common knowledge that health insurance policies are a necessity, notwithstanding your age. With the high cost of treatment, investing in a health insurance policy can help you avoid paying expensive treatment costs that could do away with your entire life savings.
The ideal time to invest in a medical insurance package is as early as possible. Health care costs are not plunging down anytime soon. So a delay in investing in a health policy is a ticking time bomb.
Most health insurers offer clients a cumulative bonus called the “no claims bonus” for every year that goes without filing a claim. When you invest in medical insurance at an early age, you are likely to go through a year without any medical complications. Thus, you can accrue a considerable increase in the maximum policy amount, which will come in handy in old age when you need comprehensive coverage.
Life insurance is a way of investing in your economic future. Because this coverage grows and compounds for life, you can use the money you pay for your life policy as an investment when you finally retire.
Consider it as a car policy, but on steroids. If you’re not involved in any collision, you won’t get any compensation when the year ends. However, if you are still alive until retirement, you recoup all your money back with interest with life insurance.
Some of the main benefits of a life insurance investment include:
- Tax-deferred growth: Your investment money is exempted from taxes on dividends, interest, or capital gains.
- Forced investment: You don’t have the option to pull out your capital until later in life. This forces you to save and allow your investment to compound and grow.
- Creditor proof: Creditors cannot touch the invested money portion of your coverage when you file for bankruptcy.
The cost of nursing home care is approximately $6,500 monthly for a semi-private room. For a private room, the cost increases, averaging more than $7,600 monthly. If you spent a year or two in long-term care, you might end up with a six-figure hole in your pocket, which may take a toll on your assets if you are ill-equipped.
Luckily, you can invest in long-term care insurance. It is designed to protect you from depleting your assets to pay for assisted living, nursing, or home care costs when you’re old. The coverage will cover all your long-term care costs over a determined period.
The Bottom Line
Whichever investment type you select, it’s important you research as much as possible before you start. To choose the best investment vehicle, consider these three main aspects: the level of risk you wish to assume, the amount of flexibility you prefer, and how conscious you are of investing. Developing a good level of information on any investment increases your likelihood of achieving significant future cost savings.
Produced in association with Barda Auto Media