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A 50/50 asset allocation has 50% in the S&P500 and 50% in US Treasuries. That's your "reserves" right there, that 50% in treasuries
OK, what's the worst drawdown on that blend from '73 to present?

I thought I posted that. Well, anyway, here it is:
100/0 MaxDD is -46%
60/40 MaxDD is -30%
50/50 MaxDD is -25%

IUL account: \$586,000
Why do you ignore the actual run numbers?
IUL = \$769,585

What you posted isn't a "run". It's a projection based on getting a constant specific fixed return each and every year. That isn't a run -- that's the output of a math formula. "Xt^n + Y(t^n - 1)/(t-1)"

What my spreadsheet does is compute the returns according to the STATED RULES of how an IUL works. The company doesn't credit the account with ~8.8% every year. They credit the account with the index return of the S&P500 (excluding dividends), constrained by the floor and cap.

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It occurs to me that we are talking about two different things.
You said, "an illustration designed for growth performance over 40 years, using an assumed average rate that hit in 95% of all rolling 25 year periods."

But what the spreadsheet shows is two alternative accounts that are based on the same index (the S&P500), using the actual historical price data, when invested two different ways.
Alt 1: Rules: Buy and hold S&P500, reinvesting dividends.
Alt 2: Rules: Annual growth same as the price-only return of the S&P index, subject to 0% floor and 12% (or 18%) cap.

Then I compare Alt1 to Alt2.

What you've just done is introduce Alt3: Annual growth just like a savings account, using a fixed invariant annual growth rate.

What the spreadhseet does is answer the question: given the historical data, what is the result when two different methods are used.

What your illustration does is answer the question: Show the compound growth at a certain growth rate.
It's rather meaningless to compare Alt1 to Alt3. They have nothing in common.

And then you complain that Alt2 (which is the actual events from real history) doesn't match the output of your formula. Well, duh! Since when does the real world mimic a formula?

I really don't understand what your complaint it. Is or is not the Alt2 in the spredsheet exactly what the company would have down with an IUL account? Let's get that straight, first.

If it is not, then it needs to be corrected, because it is *supposed* to work the same way the IUL would work. That was the whole point of the exercise.

OTOH, if it is, then your complaint is that history didn't do what you wished it had.

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