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What is Buy Term and Invest the Difference (BTID) Strategy, and what are the advantages and disadvantages?
Are you following, or should you follow, the BTID strategy?
"Buy Term and Invest the Difference" refers to buying term life insurance as opposed to whole life insurance or variable (VUL) and investing the difference in any type of investment vehicle, including mutual funds, stocks, unit investment trust funds (UITF), reits, etfs, MP2 (of the Home Development Mutual Fund or Pag-IBIG Fund), businesses, and real estate, among others.
For example, if you have a monthly budget of Php 10,000 for investments and insurance, designate Php 2,000 to Php 4,000 to your insurance, and the remaining money goes to investments or your business.
What are the Advantages and Disadvantages of BTID?
When deciding if BTID is right for you, be sure to consider the following:
If you have no insurance at all and are a beginner, you can still use the BTID method as long as you are disciplined enough to resist the urge to spend the difference and keep yourself informed about the investment vehicles you want to use. Prior to implementing the approach, be informed and aware of the effects.
Do you think the Buy Term and Invest the Difference (BTID) approach is more appropriate for you? If not, you may consider VUL and whole life insurance plans.
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ABOUT THE BLOGGER
Hi, I'm Ralph Gregore Masalihit!
An RFP Graduate (Registered Financial Planner Institute - Philippines).
A Personal Finance Advocate. An I.T. by Profession. An Investor. Business Minded. An Introvert. A Photography Enthusiast. A Travel and Personal Finance Blogger (Lakbay Diwa and Kuripot Pinoy).
Currently, I'm working my way toward time and financial freedom.