Differences Between Securities and Insurance

A lot of individuals look at the securities market and the policy market with either equal suspicion or equal enthusiasm. However, it takes the expert advice of a financial expert like Eric James Viveros to explain what would be the appropriate option for someone. It is not easy after all to understand what policy providers are up to. The stock market offers a different investment option as opposed to the insurance option. There is a difference in the very basics of each of these financial instruments, apart from others like mutual funds, bonds and commodities. Who should invest in each of these and when is something that needs good understanding of the markets.

Financial services consultants can advise individuals on where to invest and how much. For example, it would be a bad idea to put all your eggs in one basket. In other words, if you have allocated 25% of your income for savings and investments, it wouldn’t be wise to use all that to pay premiums for insurance. There are policies that promise assured amounts after maturity and those that only offer coverage during the specified term after which the policy expires and you don’t get anything back.

There are policies that offer returns based on how the investment component performed in the market and how much the fund managers were able to make out of it. Each of these depends on market conditions as well as how the policy provider makes use of your money. The fine print of the policy often has pointers that are ignored by policy owners. The promised returns are obviously misleading too, unless they are from reputed companies.

Investment in stock comes with its own risks.  A good financial adviser can help you pick the right time, right stock and right markets to invest. Whether you invest in the commodities market or the Forex market, you have to make sure you understand their workings, patterns, trends and probable direction of movement. Some invest in stock while some invest on riskier options. However, how you invest and how much you invest is in your hands and the returns solely depend on your reading of the market.

While insurance offers the benefit of risk coverage, stock investment could yield high returns in a very short time. Income planning needs you to consider both short term and long term effects of your investment and plan accordingly. While short term gains are important, covering risk is equally important. Allocating a part of your money to stock will let you make the most of positive market movements.

Consultants can also help you pick a couple of good policies that offer life and health coverage. That will ensure your finances will not be thrown off the track due to unforeseen events. In other words, the balance between insurance policies and securities investments should be maintained based on how your liabilities are changing along with your responsibilities and at what stage of your life and career you’d need to take these decisions.