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|Subject: Re: 7702 Private Plans (indexed universal life)||Date: 3/27/2013 11:43 PM|
|Author: Rayvt||Number: 71521 of 81353|
So, anyway, here are the stats for VFINX (S&P500 index) for rolling 12-month periods, 1987 to present.
The equity curves chart is here: http://i1131.photobucket.com/albums/m543/rayvt/Equitycurves1...
We were unfortunate enough to start just in time to catch the Black Monday (Oct 1987) crash. But after that, the plain old boring buy-and-hold of VFINX is always solidly ahead of the IUL floored/capped strategy.
The worst 12-month loss was -30%. The best 12-month gain was 46%. The IUL method has a 0% floor (so you are protected from losses) and 12% cap on the returns.
22% of the periods had a loss. 35% of the periods had a gain of more than 12%.
Final values for a $10,000 initial investment: VFINX (incl dividends): $79,908. Floored/capped IUL method: $32,870
Here's the distribution of the rolling 12-month returns.
So that's the data and the analysis I have for the way IUL interacts with the actual historical returns of the S&P500 index for the last 26 years. Hard data, no handwaving.
Maybe I'm wrong. Show me where. Show me what I've missed. Show me data data and analysis that demonstrates that IUL works better.
Yup, I'll grant that the volatility of the S&P is high. I'll grant that some people may not be able to stomach that, and won't be able to sleep. Those people will have to decide if it's worth taking a $37,000 haircut to avoid the pain.
BTW, there are simple methods to tweak the buy-and-hold strategy which dramatically reduces the volatility but lowers the overall gain only a little bit. But that's another topic.
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