Buy a house or buy insurance? Comparison of strategies for investing in the U.S. after the implementation of CRS

(American Life InsuranceGuidance Network) In December 2017, the American Life Insurance Guidance Network was the first to publish "CRS transits, are your assets still safe?"This article comprehensively explains what CRS is from multiple perspectives, and what impact does it have on asset holders? What impact does it have on life insurance customers and other issues.

As the CRS exchanged financial account information for the first time in September 2018, Chinese overseas financial accounts were also exchanged back to China, and the invisible rich became invisible. The Chinese tax authorities can easily understand and exchange information in this way. Grasp information on overseas asset income of Chinese tax residents.From another perspective, following Trump's slogan of "return the center of the world to the United States", the United States did not join the CRS, but instead made the United States a trend toward a new tax haven.

Therefore, many Chinese investors began to focus on the United States, and in the "New Immigrant Investment Collection (Advanced Edition)In the article, the author of the original text also described Chinese investors’ deep-rooted preference for real estate. Coupled with the robustness of the US real estate market, real estate has naturally become the first choice for Chinese investors.

As more and more people have a stronger understanding of American insurance products, insurance policies have become a sought-after item in the financial asset allocation market.

Although the two types of products, real estate and insurance policies, one is brick and cement, and the other is white and black, it sounds very different, but as an asset allocation product, there is not much difference between the two.Most importantly, for most investors, the allocation of real estate and insurance policies does not conflict.But if you have to compare the pros and cons of asset allocation, what will be the result?

The following excerpts are edited from "American Wealth Management Column",On the topic of investing in the United States, the comparison between buying a house and buying insurance.

Editor's note: First of all, for all investment and financial management activities, the five most important indicators are alwaysBenefits, risks, liquidity, tax arrangements, other restrictions.In the US asset allocation, no matter what investment product you choose, you must pay attention to diversify risks, lock in returns, and complete the dynamic balance of returns, risks, and liquidity through long- and short-term control to achieve the purpose of asset appreciation.

Cash expenditure

Buying a house:In California, as a foreign investor, about half a million dollars can buy a single house.Limited by the difficulty of loan approval and the first payment of foreigner status, the more common way is to buy a house in full cash, and we also use this calculation method.

buy insurance:Women in their 40s can purchase a life insurance policy with an insured amount of about US$50 million with an investment of about US$300.For the time being, we will divide the premium into 10 years of payment, with an annual payment of 5 yuan.

in conclusion: Buy a house to pay 50 US dollars, a one-time full payment.Buying insurance pays 5 U.S. dollars per year and pays off in 10 years.In terms of liquidity, policy products won.

Use value

Buy a house: The property of a house is residence.While living, enjoy the expectation of real estate appreciation.In the next section we will discuss comparing investment value.

buy insurance: The attribute of insurance is protection.With this guarantee, life will be at ease.At the same time, this guarantee also brings value returns.

in conclusion:Due to their completely different usage attributes, they lack scientific comparability.From our perspective, real estate is more of a physical value, while the value of an insurance policy focuses more on the psychological level.

transaction cost

Buy a house: The cost of buying a house in full cash is about 1% of the house price. These government fees and documents include but are not limited to:

Escrow fee
House inspection fee
Document preparation fee
Document notarization fee
Brokerage company's legal regulation supervision fee
Transfer fee
Housing insurance premium for the first year

For a property of $50, we calculated the transaction fee to be $5000.

buy insurance: 0.It is only limited by whether the customer has the qualifications to apply for American life insurance, such as age, health, identity permit and other issues.The insurance company will only charge a premium of US$5 for the first year, which already includes the annual management fee, and no other expenses are incurred.In the process of applying for an insurance policy, there is no additional charge for the insurance policy design and consulting services of the practicing broker.When the medical examination is involved, the insurance company arranges or provides on-site service, which is completely free.

in conclusion: Whether buying a house or buying insurance, the transaction cost depends on different factors.

Maintenance cost

Buying a house:For a house with a value of 50, the annual maintenance cost is less than $1, including 1-2% of real estate tax, property fees, house insurance and various house repair costs.

Buy insurance: 0.You only need to pay premiums to the insurance company on time each year.

in conclusion:Because insurance and housing have completely different natural commodity attributes.The maintenance costs of American houses cannot be accurately predicted, and once they occur, the prices are too expensive.There are no additional maintenance costs for insurance.

Value-added income

Buying a house:According to statistics from the Case Schiller National House Price Index at the end of 2016, the average increase in house prices in the top 20 metropolitan areas in the United States was 5.76%.Housing also has rental income. The median rental price in the Los Angeles area is about $1500.

buy insurance:Depends on different types of insurance products.CurrentlyIUL insuranceThe demo rate of return is about 7%. The average rate of return of the S&P 20 in the past 500 years is about 12%. The insurance company that issues IUL policy products will also have a 0% guaranteed rate of return to customers, achieving risk-free Value-added.

in conclusion:Whether buying a house or buying insurance, the income is actually linked to economic trends in the United States and the world.Most people invest in real estate for the purpose of offsetting their annual expenditures with a slight surplus. At the same time, they expect to increase the value of the real estate every year, taking an average of 5.76%.In American life insurance, due to its product specificity, IUL insurance gives customers a 0% underpin rate of return, and also provides a 2% fixed account underpin rate of return. Compared with the average value of house appreciation, the rate of return is more stable.

Exchange cash

Buying a house:For a house, the simplest exchange method is to sell it. The advantage is that it can be cashed in a large amount in a short time, but at the same time, as a foreigner, you have to pay almost 35% of the value-added profit tax and at the same time bear 6% of the intermediary. transaction fee.Of course, you can obtain cash in the form of a mortgaged house, and you will not lose the ownership of the house while paying the interest.

buy insurance:There are various ways to exchange insurance for cash. If you want to cash out a large sum at a time, customers can choose the way of insurance policy pledge.We further recommend that customers use on-demand withdrawals to fund their children’s education funds and their own retirement subsidies. For example, in the example in this article, 45-year-old women can receive retirement subsidies from 65 to 90 years old, and receive a total of 100 million in XNUMX years. US dollars.

in conclusion:Compared with houses, insurance policy products are more stable and flexible in receiving cash, and houses have more advantages in large-amount realization.

Inheritance of wealth

Buying a house:Exemption for foreigners in the U.S.Inheritance taxThe quota is only 6 US dollars, so if the house price exceeds 6 US dollars, if you want to pass on to future generations, you need to pay 40%Inheritance tax.

buy insurance:The money left by life insurance for future generations is completely tax-free. With a reasonable allocation of wealth, profits tax and inheritance tax can be completely exempted.In most cases, the beneficiary can use the money to pay for the inheritance of other properties after receiving the insurance compensation.Inheritance tax.Take the 45-year-old woman in the article as an example, assuming that she dies at the age of 90, she can leave the beneficiary with a total tax-free $400 million.

in conclusion:Life insurance has a greater advantage in wealth inheritance, which is a natural advantage of insurance products.should sayAmerican Life InsuranceIt is the best choice for wealth inheritance.

Final Thoughts

By comparison, we can summarize the planning of these two products into the following two sentences:
Invest in U.S. real estate-It is to use medium liquidity in exchange for expected medium return and low-risk wealth appreciation.
Planning U.S. Life Insurance Products-It is to use low liquidity in exchange for high-yield and risk-free wealth appreciation.

Investing in real estate and planning U.S. insurance policy products requires everyone to make decisions based on their own timing.American Life InsuranceAs a financial instrument product, when planning, it is more necessary to have a professional and in-depth understanding of the operation logic of US insurance policies.Life Insurance Financial Advisor, to carry out the policy design and configuration centered on the actual needs of customers, in order to achieve the best results. (End of full text)

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