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Subject:  Rerun of Dave's IUL scenario Date:  4/9/2013  12:54 PM
Author:  Rayvt Number:  71868 of 79818

Now that the spreadsheet has gotten quite sophisticated, it is worthwhile to revisit Dave's original scenario.
This is a backtest of investing directly in the S&P500 vs. investing in the S&P500 index the way that an IUL (Indexed Universal Life) policy does.

IUL parameters (all annual):
Floor: 0%
Cap: 12%
Fees: 0.75%
Policy loan interest rate: 6.0%
S&P methods pay 15% tax on dividends. No other taxes considered.

Starting dates are beginning of that month.
Ending dates are end of that month.

Accumulate and grow for 28 years, then withdraw for 10 years.
Initial $10,000 deposit. Adding $100/mo
Start Jan-1975
Begin withdrawals Jan-2003
Withdraw $1,500/mo,

Final values (strategy, Net final value, ending date):
B&H w/div	$844,962	Dec 2012
10mSMA $599,997 Dec 2012
IUL (loan) $41,003 Dec 2012
IUL (withdraw) $48,506 Dec 2012

TTL withdraw -$180,000

This run begins withdrawals at about the peak of a boom, so it
has money being withdrawn while the portfolio is being crushed.
You are taking money out of an ever-dwindling portfolio.
Start Mar-1971
Begin withdrawals Mar-1999 (just before the peak before the dot-com boom)
ending Mar-2009 (at the bottom of the financial crash)

Final values (strategy, Net final value, ending date):
B&H w/div	$436,936	Feb 2009
10mSMA $624,4