When I began my career as a life insurance agent, the insurance policies provided a cash savings component as well as a death benefit. They were a popular financial instrument to grow a long-term savings plan. As a strong believer in the products, I “sold” my children on becoming insurance policyholders shortly after their birth. Over time, I explained the value of their policies and the importance of disciplined saving. Proudly, I can state that they all still hold and pay the premiums for their policies, knowing that the cash values are there to borrow from or use if needed.
Because it was such a clever idea for our children, Jill and I decided to do the same for each of our grandkids. We were able to cover the first five with cash value insurance policies, but around 2005, insurance companies ceased offering these plans. So, for numbers 6 to 13, we initiated an investment savings plan with what we would have been paying in premiums each year.
Compound interest works wonders, and the regular investment of contributions from Grandma and Grandpa will amount to a healthy financial benefit at some future occasion, such as marriage, home purchase, or continued investing for the future.
We haven’t told the grandkids about this (their parents are aware), so it will be a delightful surprise for them when it happens and a heartwarming feeling for Jill and me.
If you are a parent or grandparent, I wholeheartedly recommend opening your heart and passing on a small portion of your family’s future inheritance now.
The magic of compound interest is truly amazing. If you set aside just $100 a month starting today and earn an average of 5% per annum, then the investment would grow to:
In 10 years $ 15,472
In 20 years $ 40,674
In 30 years $ 81,724
In 40 years $ 148,591
In 50 years $ 257,510
What a great gift of love.
Bob Fowler
