42, >600k gross family income, max out 401k and Roth IRAs. No 529 as kids are only 2-6 years away from college and returns so far have been very low. I am in the highest tax bracket and will continue to be there for the next years. I am paying a s**t ton of taxes and I want to reduce that.
I am looking to invest some money (100k now, can add ~100k per year), and I am debating between a low-cost index fund (VOO or similar in my e-trade account), or a Variable Universal Life Insurance for my child (I already have one + lower premiums), and use it as a tax-advantageous investment option for the future.
Low-cost index fund will grow or shrink with S&P500, which is good for long-term growth. Dividends will be taxed as income as earned (at highest tax rate), even if reinvested. If I want to take money out, I will pay taxes on any gains, at highest tax rate. Scenarios would be paying downpayment on a house/condo for kids when they grow up...
With VUL I am thinking about getting the smallest amount of coverage (50-100k), and then invest the difference to ~50k per year. I know there are some fees involved, but the idea of tax-free gains and ability to take loans against the amounts paid without paying any taxes at that time, seems interesting.
Has anyone done the math on this, and if my thinking above has any flaws that I did not account for?
Submitted September 23, 2024 at 12:44AM by HoneyBadger94536 https://ift.tt/ClyYIZP
