Co-founder of Affari Miei
2 Maggio 2024
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According to the annual Consob report on the investment habits of Italians, 70% of those interviewed have capital safety as a priority, even if this entails a lower return.
The large financial industry knows this need well and over the years has designed apparently safe financial products: insurance policies on separate accounts. If you have been offered a product of this type, today I will explain to you in a simple way what they are, how they work and the hidden truths that insurance companies often do not reveal.
#1 – The security lie
They make you believe that your capital is guaranteed, but in reality there is no such thing as a risk-free investment. The contracts themselves make it clear that the capital is not guaranteed. The most powerful lever used with fearful investors is the promise of safety, even when it doesn’t exist.
#2 – Separate management and the stock market
They tell you that it is safe because it doesn’t invest in the stock market, but that’s not true. Separate management is an insurance fund that collects customers’ money and invests it in financial instruments that are supposed to preserve capital, but these instruments are mainly bonds that are bought on the stock exchange, the very market that is feared.
#3 – Separation of assets
The companies tell you that separate management is safe because the investors’ money is separated from the assets of the insurance company. However, this separation is not an exclusive prerogative of separate management. Many funds and ETFs also have a separate legal structure.
#4 – Costs
Insurance policies are among the most expensive financial products for private investors. The costs affect the return, and the money leaves your wallet and goes to the bank’s. In the first years, costs can even reach 6.81%.
#5 – Death guarantee
They told you that the policy covers the event of death, but the capital you receive back is what you invested. These products mix the insurance and investment parts, and specific products exist to guarantee capital in the event of death. Many policies invest the capital so poorly that the contractual conditions make you understand that it is difficult to make a profit.
Companies sell these products because they answer the wrong question: that of having risk-free investments. If you accept reality and take care of your assets, you can avoid squandering your resources. The only person who can best manage your assets is yourself.
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Good continuation.
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