Using insurance companies to grow wealth has been a strategy used by the likes of Warren Buffet and others to great success. So, taking a look at insurance companies and how they can grow capital may be a good way to learn and understand this effective financial strategy.
There are several areas to cover. We’ll first take a look at getting reliable information. Then, let’s peer into the insurance companies themselves. And, finally, how and why to invest in insurance companies.
Where Can You Get Reliable Information?
Whenever you’re trying to make an investment, whether it be to buy a cup of coffee or to buy shares on the S&P 500, you want a trustworthy source of information. You need a credible source in order to weigh your options and make a decision.
So, who is Stansberry Research? And, why should you listen to them?
Stansberry Research was founded in 1999 by Porter Stansberry. The company publishes a monthly financial advice newsletter. Those newsletter contributions come from a field of financial experts based on the principle of only giving advice they themselves would want to receive. And, because of its focus on quality, Stansberry Research has grown to over 500,000 global subscribers.
Now, it’s not always easy to get access to all of the information on public corporations. So, after some digging, Stansberry Research has drawn the following conclusions about investing in insurance companies.
The key to choosing the right company to invest in is to make sure the company’s business model doesn’t put the float in short-term investments.
Here, the float refers to the money the insurance company collects for its policies. If the company can preserve some of the float, it can steadily grow the pool of capital with long-term investments.
But, in the newsletter, Stansberry Research, also, warns there’s a difference between investing in an insurance company and operating one. And, it cautions it’s readers against trying to operate an insurance company because of those who have tried and lost 34 percent of their company’s value in the process.
It might be worth listening to Stansberry Research’s advice since the company has an impressive companies. Over the last six years, the insurance stocks recommended by Stansberry Research have produced an average annual return of 20 percent.