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Subject:  Re: Strategy comparison S&P500 vs. IUL [rev 1] Date:  4/7/2013  11:41 AM
Author:  Rayvt Number:  71767 of 78166

I am grateful for your efforts, and I realize that every request that I make means significant work for you).

That's how I learn things. On another site several years ago there was a similar debate about "Money Merge" plans to pay off your mortgage in 7-10 years. Full of moving parts and money flying about between accounts. It wasn't until somebody sat down and made a spreadsheet that it became clear what was going on, and that the way it "worked" was by double-counting money. Ever since then, I try to build a spreadsheet to help me understand a strategy.

This spreadsheet started out simple and has gotten quite complicated. But it's been fun developing it.
Once you'd got the basics down, especially if you made things a pluggable parameters, it's not too hard to add another tweak.

Yes E/R = expense ratio.

Same parameters as my last post:
The S&P SMA strategy, $10,000 initial + $100/mo, 1975 to 2013.
Total deposit (basis): $55,600.

IUL with 0.70% fee --> final value $302,000

B&H of S&P500
0.10 E/R, no taxes. ---> final value $1,112,100
0.10 E/R, 20% div tax ---> final value $1,094,100

The amount of dividend available to reinvest is only 80% of the divident received, so you lose the benefit of compounding.

The LTCG is $1,038,500
20% tax on that is $207,700.

So After-tax amount: $904,420

Of course, if it was all in an IRA, no tax on div, so the final value is $1,112,100.
Then you pay ordinary tax rate on withdrawal. Except if it's in a Roth.

Assuming you spread it out over 3 years, call it 33%.
So After-tax value: $734,000.

Re-run with Accumulation ($10K initial + $100/mo) until 1/1/2003, then withdraw
$1500/mo until 1/1/2013. Incre