The Motley Fool Discussion Boards

Previous Page

Investing/Strategies / Retirement Investing


Subject:  Strategy comparison S&P500 vs. IUL [rev 1] Date:  4/3/2013  10:57 PM
Author:  Rayvt Number:  71688 of 80909

[Rev 1, updated to use rolling 12-month returns, showing all anniversaries and the average. Using historical S&P500 dividend yields.
All the charts links have changed.]

Executive Summary
The time period under consideration had two bear market crashes, when the market had a 50% loss.
The IUL-type strategy avoided those crashes, but at the cost of delivering substantially less overall gain.
One test was run where the last 10 years had a $1500 monthly withdrawal. By coincidence, the start date for the withdrawals was at the bottom of the first crash. Even so, the IUL-type strategy had a lower return.

An alternative strategy was also tested, which uses a simple timing signal to move in and out of the S&P500. This strategy has less volatility than the S&P, but higher volatility than the IUL strategy.