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Subject:  Re: Hi gang... wow!!! Date:  9/16/2013  6:54 PM
Author:  aj485 Number:  72893 of 78165

No, if you are investing in an account with the S&P that you are holding untouchable for many years, you must keep an additional safe reserves account sufficient for potential catastrophic expenses (at least to the degree of potential drawdown of the market used for investment.)

But that doesn't mean you need to keep 53% of the entire account balance at all times in safe reserves. Even the worst drawdown recovered in about 5 years. Since retirement investing should be planned to potentially support you for 30 - 40 years (depending on how early you plan to retire), that means that one would only need to hold 53% of up to 5 years in reserves (or 6.6% - 8.8% of the account value for an account that is planned to last 30 - 40 years), not 53% of the total account value. To be extra safe, and account for an even longer recovery timeframe, you could probably make it 10%. That's still a whole lot less than 53%.

And for those of us who actually allocate our money to different accounts for different purposes, and hold the reserves separately from the retirement investments, 100% of the retirement investments can be put toward retirement, with no additional reserves needed.

Prior to reaching the financial point of retirement, you *DO* need every penny of both principal and gain to meet that objective.

Not if you have separate reserves that you don't count as part of your 'retirement' investments (i.e. an emergency fund).

IULs outperform the S&P500 on a buy & hol