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Author: 2old4bs Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75642  
Subject: Re: Whole Life as retirement fund Date: 2/10/2004 7:57 PM
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Hi BigArb,

He claims this is the best way to have millions for retirement Did he mention he was talking about HIS retirement? ;-)

If you need insurance, buy term insurance.

If you're saving for retirement and you've maxed out all retirement vehicle options (401Ks, IRAs, etc.), and you want to defer long-term cap gains taxes (and convert them to ordinary income rates), purchase a low-cost annuity from a company like Vanguard or Fidelity.

I have heard of people who pay $10,000 a year for 10 years for A $50,000 cash value. How can this be a good investment?

Beats me.

Many years ago (1952) an insurance salesman talked my mother into whole life policies for her husband and her kids (me + 2 others). My mother was VERY low income and had to scrimp and save to make the payments on these policies. Mine had a face value of $250. When my mother passed away in 1995, the cash value of my policy was $900. I almost cried when I thought how hard my mother had scrimped to pay for this. Keep in mind that in 1952 you could buy a slice of pizza and a coke for 15 cents, and now it would cost about $3.00. I think even if she had invested in one of the mutual funds that were available at that time she would have done better than this return over 43 years! With so many more investment options today and easier access to information, an interested person has a much better chance of beating this return.

It just seems to me that financial advisors who earn their living through commissions are naturally going to 'push' what earns them the most commission. They really can't claim to have your interest at heart, because they can't be objective--their own interests are at stake. That doesn't make them bad people, just 'double-minded'--your interests vs: their interests. Ask yourself this, if you were in that position, whose interests would win out?

2old

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