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Author: Rayvt Big gold star, 5000 posts Top Favorite Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75826  
Subject: Re: Hi gang... wow!!! Date: 9/20/2013 12:37 PM
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... I know protocol is to keep a topic in a uniform thread... but this one has gotten so scrolly & unruly I know there are details above I want to revisit, but its just not reasonable to go scrolling in hunt. Next time, let's make reasonable thread restarts by unique twists in the topic, with as descriptive headlines as possible.
Works for me. Super idea, too many issues get lumped into one glob thread.


I assume you're heading off on your cruise soon as well?
A few weeks. But the wife keeps nagging at me to let's go visit the grandkids, so...


[A]Once a person reaches their defined financial point of retirement (which is not an age, but a balance number,) and they sever their dependence on income producing employment, most consider it loathe to fall back underwater and be forced back into the paycheck grind.
[B] I assume that this is to be avoided at all costs. Losing *any* principal to market drawdowns at that point,
[C]when your retirement rests on 100% of your yield and principal, is unacceptable.

[D]The working question becomes; If it is unacceptable to risk falling backwards at that point...
[E]is it really acceptable to risk falling backwards prior to reaching that point?

For A, B, C, and D --- the meta-answer is: "Don't walk on the edge of the cliff. whatareyounuts?" Don't let go of your lifeline the instant you get a fingertip hold on the next step.

This reminds me of a "platelicker" dinner we went to with a FA back in ~2002, as the market was crashing. The FA said that a number of his clients had quit their jobs in 2000-2001 because of all the money they made in the boom. They they had enough money and thought that they'd keep making 20%/yr in the market forever.
Now he had a bunch of clients in their 50's who had been out of the work force for 1-2 years, trying to find a job that would pay $80K like the one they quit.

As for E: it is neccessary to think deeply about risk, and to have more than just a cursory view of risk.
The one risk that lots of people get wrong is that they think a "no loss investment" is low risk. When the truth is that many no-loss vehicles are in fact very HIGH risk by the only meaure that counts: purchasing power.
$1000 in a T-bill is risk=free and 100% safe and will never go down. But in 10 years it will buy 3/4 of what it would buy previously. In 20 years, it'll buy only half as much.

That's all I care to expound on risk. I'll let you or somebody else pick up that baton.

The simple way to determine that is to standardize all options to the exact same levels of risk, to determine which then outperform at that level. Whichever outperforms at the same risk variable could be assumed to continue to outperform as risk is added on.
Heh. You keep trying to tailor the wording so that the only answer is IUL. Not buying it.
Maybe you aren't knowingly doing it on purpose, but I assure you that you are.
Im my (very successful) career as a software engineer, one technique I help teaching the newbies was "Put on your badguy hat. Instead of trying to prove that there is no bug in your code, play Devil's Advocate. Be the bad guy, who put a bug in your code in the place that it'll be hardest for you to spot. Take the viewpoint that there *is* a bug in there, and your job is to find it."

In this case, you need to look at the IUL with a critical eye. Instead of saying "This is all good" -- which is what you've been saying, play devil's advocate and say, "There is a problem in here that I'm just not seeing." and then look for the problem(s).
I assure you this is what I've done on the S&P side. That's why I even added a field for dividend taxex.
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