UnThreaded | Threaded | Whole Thread (318) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: Dwdonhoff Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76237  
Subject: Re: Hi gang... wow!!! Date: 9/15/2013 10:21 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
Hi Ray,

The problem you guys have is that you are thinking that short-term volatility is risk. It isn't. (CC's recent posts show this, and I'm working on a response to that.)
Not as long as you keep sufficient current, and or future reserves its not, I agree.

The IUL can employ and compound those reserves from day one, 100% of them, where the S&P B&H has to account against a potential drop of 53%.

Just eyeballing the 40 year balance on the IUL I ran, versus the 40 year balance on the spreadsheet... looks to me like the IUL finishes with more money... and that's before we distribute with a 2% positive arbitrage in the IUL.

And yet the B&H portfolio ends up at $1,500,000 while the IUL ends up at $586,000 -- when started just before the 1974-75 bear market.
Not quite... the IUL ended year 40 at $769,585, and your spreadsheet shows a final balance on Dec. 3, 2012 of $781,080, and that's with 3% inflating contributions (which the IUL didn't assume.) Drop the assumed contribution inflation and the S&P return will fall to the IUL.

Further, if you back up your start date for a full 40 year run, you're going to take a 46% drawdown at the beginning that you won't recover from for your 1st 5 years, until 1979.


Dave Donhoff
Leverage Planner
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (318) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Post of the Day:
Saul's Investing Discussions

Why Did I Buy a Bunch of PFIE Today?
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
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.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! 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.
Advertisement