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URL:  http://boards.fool.com/cc-im-awaiting-the-conclusion-just-like-everyone-30626440.aspx

Subject:  Re: Strategy comparison S&P500 vs. IUL [rev 1] Date:  4/8/2013  12:13 AM
Author:  Rayvt Number:  71790 of 75530

CC: I'm awaiting the conclusion just like everyone else, but I see no one--that's right, no one--providing convincing evidence that investing in the S&P 500 over a sustained period of time will result in a final figure of $92 million.

the "back of the envelope" must be a bazillionair by now.


MurrayS: I'm beginning to think someone does not know how to operate a spreadsheet or even how to calculate time value of money.

::sigh::
Quick & dirty back-of-envelope:

Annual Growth Rate: 10.5%
Col A is the deposit
Col B is the number of years for that deposit to grow
Col C is what that deposit grows to.

The Formula (column C)is =A7 * ((1 + B$4) ^ B7)
Where "7" is the row number of that row.

Cell B4 is the (constant) growth rate.

Deposit # yrs Grows to
$10,000 40 $542,614
$12,000 39 $589,264
$12,000 38 $533,271
$12,000 37 $482,598
$12,000 36 $436,740
$12,000 35 $395,240
$12,000 34 $357,683
$12,000 33 $323,695
$12,000 32 $292,937
$12,000 31 $265,101
$12,000 30 $239,911
$12,000 29 $217,114
$12,000 28 $196,483
$12,000 27 $177,813
$12,000 26 $160,916
$12,000 25 $145,626
$12,000 24 $131,788
$12,000 23 $119,265
$12,000 22 $107,932
$12,000 21 $97,676
$12,000 20 $88,395
$12,000 19 $79,995
$12,000 18 $72,394
$12,000 17 $65,515
$12,000 16 $59,289
$12,000 15 $53,656
$12,000 14 $48,557
$12,000 13 $43,943
$12,000 12 $39,768
$12,000 11 $35,989
$12,000 10 $32,569
$12,000 9 $29,474
$12,000 8 $26,673
$12,000 7 $24,139
$12,000 6 $21,845
$12,000 5 $19,769
$12,000 4 $17,891
$12,000 3 $16,191
$12,000 2 $14,652
$12,000 1 $13,260
Total $6,617,633

$6,617,633 20 $48,747,040


This is getting embarrassing.
Coming up with this spreadsheet took me less than 5 minutes.

*Grow each deposit by the number of years remaining in the 40 year accumulation period, then add them together.

* Grow that amount for the 20 year deccumulation period. Being a quick&dirty calculation, ignore the withdrawals. Withdrawal rate is $60,000/yr from a ~$7 million portfolio, which is negligible.

Is $48 million close enough to "bazillionaire" for you?

It's in the same order-of-magnitude as the more complete calculations, so it lends credibility.

========================
I'd like to see a response to Murray's question: Could you please tell us what data has convinced you that IULs are better investments in the long run?

Do you have any data, or is it just a gut feel and the attractiveness of the story (sales literature)?
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