I think very similarly to @Dave Van Horn here.
Basically - I plan to invest to generate the best possible combination of long-term wealth and personal freedom/flexibility as possible. This combination should result in a large number of options with which to provide for kids. Thus, I prefer my investments of:
- Stocks (Primarily available after-tax - i.e. outside of, not exclusively in 401ks and retirment vehicles)
- Real Estate
- Private businesses
- Cash and equivalents
As I generate more and more wealth, I should be able to then have options like:
- Picking a great school district or sending children to private school
- Investing in a full-time nanny or Au Pair
- Sending them to the college of their choice
- Traveling to foreign countries and providing a unique experience
- Etc. Etc.
I believe that this flexibility will be more advantageous to future children's well-being than investments that are super specific, like 529 plans.
To answer your questions directly:
- I likely won't save anything in a simple savings account or CD aside from the family's emergency fund that I'd have on hand anyways. Everything else will be invested in long-term assets that I believe are likely to appreciate in value and generate cash flows over the course of my lifetime.
- Between mutual funds and index funds, I'm all in on index funds. Effectively 100% of my stock portfolio is in low-cost index funds (I own a single share of Berkshire B in case I ever want to go to their annual shareholders meeting)
- At this time, I do not plan to get any type of life insurance policy for myself or my kids. Why? Because I am financially free. If I were to pass, my family would have enough assets to sustain their lifestyle indefinitely with reasonable management. If this were to change, and I felt that more money would be wise, I would likely tide things over with a term-life insurance policy, not a whole life policy or an IUL. For example, if I had $500K in assets, and felt that my family needed $1.5M, I would take out a term policy for $1M. Then, in a few years, when my wealth had grown to $1M, I'd take out a $500K policy to bridge the gap between $1M and $1.5M. I'd decrease the policy until my FI number was reached. There is essentially no situation where I can see myself opening a life insurance policy on my future kids. If I want to set them up with assets, I'd rather invest the money according to my strategy outlined above and pass it on to them, or gift it to them, and then invest it on their behalf. I am also not clear yet on whether I want to guarantee my kids any assets, some assets, or a lot of assets. This is a philosophical question I have not grappled with.
- I personally view crypto and gold as part of a cash position. To me they are stores of value or currencies. If I am going to sit on a large pile of cash (maybe $100K) for a long time, because, for example, I wrote a book called Set for Life and would find it particularly embarrassing to go BK after writing such a book, I might hold this larger cash position, and spread the risk across multiple currencies to protect against inflation/deflation. I might spread it across gold, dollars, and a bit of crypto. I currently do this across gold and dollars personally, and own no crypto, although I previously held some bitcoin.
One other note: Saving for college, and especially saving for college with 529 plans is a particularly thorny for me. I wonder if, in 20 years, college education won't be relatively much less expensive than it is today. I wonder if the cost of college is artificially inflated because of cheap debt, debt that is likely to be forgiven to some extent, and then overhauled. I wonder if access to debt for college won't be MUCH harder in a few decades than it is today, and as a result, tuition prices and the attendance rate declines. I wonder if this means that should my children go to college, college won't be way more affordable than it is today. If that were to play out, I'd definitely rather have my money in other places that give me more optionality, and not in a 529 plan. I also wonder if college will become increasingly less relevant for some. I am clear, however, that if my future children would like to go to college, I'd likely pay their tuition.
