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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 127815  
Subject: Re: Two Unorthodox Ways to Pay Off a Mortgage Ea Date: 8/29/2014 12:45 AM
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Assumedly,
you are allocating enough in the CDs, etc. to account for the risks of
loss you take on the risk/reward leg.


Well, not enough to meet the definition of 'safety' that you insist upon. I think that's a totally ridiculous premise that is only useful when trying to sell IULs. I keep a fully funded e-fund out of the market.

If it's a matter of best return at a defined amount of cash at risk of
loss, there's still nothing brought forward to come close to the
hedged/floored performance of the IUL design.


You are working under the assumption that everyone should see that there is enough worth to the hedged/floored performance that the caps and fess can be tolerated. During the years that one is growing a portfolio to be used for retirement, I see little/no value to the hedge/floor - certainly not enough to decrease my return by the caps and fees. Even CCinOC has admitted that. Yet, you keep insisting that there is enough value there to pay for the significantly lower performance over the long run. First it was because one might need money to buy out their law partner, or to pay for the non-FDA approved surgery, in the exact timeframe where there was a market loss. Lately it's been simply because 'there will be people who won't have enough money if they have a loss when they need the money' - but you fail to acknowledge that for over 90% of the time periods, the person following the naked strategy still has as much or more money when a draw-down occurs than the person following the IUL. So, if it'a all about having more money - the IUL strategy doesn't win. The only thing that the IUL strategy wins for is for losing less money in drawdowns. It still loses money in those years, because of the costs and fees, but it does lose less in those years.

The IUL-type structure simply outperforms everything else of similar
safety


But the level of safety you insist is needed is so much overkill that returns for the account are decimated. Loss of dividends, the insurance costs, the management fees and the caps imposed take so much return out of the account that over the long term, even with a 50% drawdown, the naked strategy ends up with as much or more money 90%+ of the time. So, if the concern is that "some people won't have enough money to make it in retirement" - how is putting them in a product with a lower rate of return going to get them enough money?

That's not religion... just simple math.

Exactly. So quit trying to sell an IUL as a way that everyone will end up with more money - because 90%+ won't.

FUD sells IULs, not math.

AJ
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