4-6% Historical Return with very Limited Risk: The Idea Par Excellence in Alternative Investments

Alternative Investments? You say…hear us out.

I'll admit it, I have a certain penchant for the unusual and I have a huge tendency to buck the trend. According to certain personality tests circulating the internet, I share personality traits with only roughly 5% of the U.S. population. Bad for social gatherings, great for dissecting conventional wisdom and avoiding common pitfalls.

I've been a finance geek for a long time (I like numbers). I was an online investor back when stock quotes were delayed more by my dial-up internet connection then by the speed of the ticker tape. And I've always been amazed at the crazy ideals we dogmatically hold onto in the personal finance world.

So imagine how I attacked the notion of using cash value life insurance as an asset class when the idea was first presented to me.


Staying out of the Mainstream, and Being Rewarded for it


Some people spend all of their life trying to fit in. They mock whatever trend they believe is fashionable and hope that others will accept them socially for their efforts.

For those people, this strategy is probably a bad idea. But let me appeal to your inner greed factor for a minute and ask you if you really want to fight like hell to be entrenched in mediocrity.

A lot of people make excuses for being mediocre. There's a mental twitch that says it's ok to be part of the crowd and when we see examples of those worse off then ourselves, we rationalized our bad behavior as being “at least better than those people.”

Marketers are aware of this fact, and use it to influence behavior by manipulating impressions to leave people with the notion that everyone else is doing it, so you should, too.

Please don't fall for this. You don't become spectacular (at least not in my opinion) until you have the ability to prove that your life isn't influenced by wide sweeping trends. This isn't to advocate for isolationism, it's a call to the importance of hedging.

There are plenty of people who have the decline of the stock market as an excuse for their unfortunate financial situation. I've met plenty of them. I've also had the fortune of meeting people who motored right through 2008 with little trouble at all, and for the most part, I'm one of them.

If having something to complain about is your thing. By all means stop reading and go look for something to complain about.

But if your the type for whom peace of mind is a coveted feature. We have something we'd like to share with you.

Think Different(ly)

Remember the Apple marketing campaign that began in the late 90's?

It was one of Steve Jobs' first initiatives when he returned to head the company he started. He explained the concept behind the campaign as an awakening to the notion that the paradigm a lot of people live under (live your life within the confines of what we accept as “normal”) was useless and that this world and it's structure was created by people no smarter than you and I and that there was definitely something to be had out of poking through the norm.

We've mentioned before that being normal when it comes to financial planning is a frightening notion (at least in our opinion). So, buried in the bag of good tricks, we have the alternative investments play book.

Alternative investments are typically classified as investments that go beyond the norm of investment products the financial industry typically regards as what the general retail public purchases (i.e. stocks, bonds, and mutuals funds–commodites have started to creep into the this definition but only really precious metals).

Alternative investments typically have the following key characteristics:

  • Low or no correlation with major corporate stock markets
  • A somewhat exclusive buy in
  • A less ubiquitous valuation method
  • Lower degree of liquidity
  • A somewhat hide-able asset

These are typical characteristics of “rich people” portfolios.

However, the great thing about cash value life insurance is we get the highly coveted features of low or no stock market correlation and somewhat private or hide-able asset without the draw backs of exclusivity, difficult valuation, and liquidity risk.


I've managed to build a practice that works with a fairly sophisticated clientèle.  My client list includes such professionals as Engineers, Financial Analysts (from all over the financial services industry including some people who do some crazy sophisticated stuff), Medical Specialists, Attorneys, and Accountants.

These people tend to ask a lot of tough questions.  They push hard for answers.  And they love cash value life insurance.

A lot of them are looking for something alternative to bring to their portfolio.  I've been intrigued by how they look at a lot of traditional financial advice (with skepticism).  Some of these people work for companies that manufacture various investment products (mutual funds, managed money products, hedge funds, debt obligations, etc.) and they understand the limits of their companies proprietary products.

Some have done really well with various investments.  Still, they understand the role luck played in their good fortune and realize they need to balance risk.

I don't want to come off as arrogant, but based on the sophistication of the people I've worked with and the success I've witnessed in setting up their plans (as well as my own) I don't feel all that challenged by the non-believers.

Validation Part 2

Why take my word for it.

Dan Solin, a syndicated financial writer best known for his Smartest Series books, wrote an article on this very subject back in 2010.   What's even more interesting is that he pointed out the weakness gold poses with respect to it's extreme risk and poor long term yields the gold bugs simply do not want to address.

I also got a kick out  the comment section where “TorllDiddy” beat the gold war drum and went so far as to make a prediction about the double dip.  January 1st as he put it.  He didn't specify of what year, so I suppose he's still not technically incorrect.

Those in the Know

I've never once had a client who after coming to understand how cash value life insurance worked, decided it wasn't for them.  I've run into a lot of poorly educated people.  Those who have fallen pray to misinformation.  But none who held the same negative opinion after learning how it really worked.

Those with some experience (and especially those with a deep understanding) have always been pleasantly happy with what cash value life insurance has to offer.  Not to be cliché but a lot of them are mad they didn't figure this stuff out earlier.

If you want to get into the know, contact us and we'll be happy to explain how to use cash value life insurance as a strategy for alternative investments.

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