No. of Recommendations: 0
Hi Ray,

Dave: What would it take to convince you that your opinion of IUL vs. B&H is wrong? Is there *anything* that would cause you to change your mind? Is there any example, any set of numbers or whatever, which if you saw it, you'd say, "Oops, what I thought was incorrect." ?
Shoot, you know there is! I've *NEVER* stuck my foot in concrete on this point, and every observation of superior results has been couched in qualifying language "apples to apples, risk-weighted" etc.

If we can see a passive retirement* strategy that performs better than an IUL, on a risk-adjusted basis, I would personally *LOVE IT*! I've said from the very beginning, and in practically every thread this ever comes up in, I am perpetually on the prowl for such a strategy.

So far though, all that has been offered is full risk exposure, and no apples-to-apples adjustments for it.

(*'retirement' meaning all relevant funding accounted for... none of the idea that prior to reaching retirement 'some' money doesn't actually count, but can be used for risk avoidance reserves anyway. Anything needed as a safety buffer to allow the tolerance of naked S&P risks is directly investible to the safer IUL.)

A from Ray: If I saw a run where the same real-world (or even realistic alternate history) events showed that an IUL has a higher final value, over a long-term period of time. (Since IULs are stated to be a long-term investment.) If I saw that I'd begin to question my opinion that B&H is better than IUL. Then I would want to know the statistic likelihood of these events happening. If it's extremely rare or extremely unlikly, then this counter-example would have a low weight. "Rare" would be something in the 1% range.
I suppose I could take annual loans equal up to the S&P drawdown risks, and annually place additional long index option positions for more than 100% participation, or higher effective caps... and somewhat mimic the risk profile of your naked strategies in that fashion. It wouldn't be a perfect mimic though, I think...

Easier to factor on the long naked position, rather than try to factor by taking more leveraged risks in the IUL position.

Dave Donhoff
Leverage Planner
Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.