How then can Rayvt's calculations [excerpted from his post] be accurate?~ Starting 1/1/1965, accumulate until 1/1/2013 ~ Initial $10,000 and add $1000/mo ~ S&P final balance: $12,003,000~ S&P B&H start $5000/mo withdrawal on 1/1/1970 [just five years later] with a starting balance of $12,003,000.~ Final value 20 years later, 1/1/1990: $95,615,000 Do we even need a spreadsheet to ask, "What's wrong with this picture?" That's where back-of-envelope sanity checks become useful.Not sure what exactly you are questioning.The difference between MSN's $1M and my figure? When you do compounding, the numbers explode rapidly as the rate goes up. The " 1970 [just five years later]" balance of $12M?This was a darn hard thing to try to model reasonably. The explanation is also maybe difficult to get across clearly.It's really two different modelling runs.Run 1) 48 year Accumulation phase from 1/65 to 1/13, starting value $10K and adding $1K/mo. The final value of that: $12,003,000Run 2) 20 year Deccumulation phase, starting value $12,003,000 (the final value of the accum phase), withdrawing $5000/mo.Now, what time period do we use for the deccum phase? Can't use 2013-2033 because that's the unknown future.So pick *any* 20 year time span that we have actual historical data for. I picked 1970 at random, and because that excluded the dot-com boom which would arguably give over-optimistic results.You could reasonably use any 20 year period you want, anywhere from 1950-1970 to 1993-2013.Just change the dates in the spreadsheet. It's a bit of a pain, because I have to reset several parameters and then pick out the ending line from the middle of the spreadsheet, 20 years later.But here goes: for 1960-1980 period:S&P: $40,698,219IUL: $4,922,518 - -$2,310,204 (loan) = $2,612,313They are both lower than 1970-90.-----------Here, for 1980-2000 period:S&P: $297,359,265IUL: $7,867,082 -$2,310,204 (loan) = $5,556,877They are both higher than 1970-90.S&P went from 107.94 to 1469.25 (no dividends). That's 13.6 times.$12M * 13.6 = $163M, so with dividends $297M sounds reasonable.
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