Previously, I defined investing as purchasing something that increases in value over time. Low risk investments typically have guaranteed returns. Higher risk investments typically don t have a guaranteed return, but do have the potential for much higher returns. Let s take a look at home ownership and whole life insurance and save the other investments for later articles. One of the best ways to put money to work for you is home ownership.
Most people are aware that the interest on a home mortgage is tax deductible.
However, few understand that the capital gain realized from the sale of a home is generally exempt from income tax. Whole life insurance has similarities to home ownership in that it is low-risk with dual benefits. Unlike term life insurance, whole life insurance is something you actually purchase. The dual benefit to this investment is the accumulating cash value of the policy and the fact that if you bite the dust, your beneficiary will receive the death benefit as well as the cash value. This is an investment for you because, if you have the right type of policy, you are allowed to borrow its cash value.