UnThreaded | Threaded | Whole Thread (318) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: CCinOC Big funky green star, 20000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76418  
Subject: Re: Hi gang... wow!!! Date: 9/16/2013 2:04 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
I believe I understand what Dave is trying to do; I'm just not sure that the way he's doing it is correct. He's trying to mathematically quantify the risk of the stock market; more specifically, the S&P 500 B&H strategy. He's handicapping the S&P B&H by 50% (rounded) because historically the worst decline in the S&P 500 has been 53%. There are many scholarly works on the subject of quantifying risk; just google for "mathematically quantifying market risk."

It's true that with an IUL, one's principal is guaranteed through the strict reserves requirement by which the insurance industry is regulated. In other words, all gains will be scraped, added to the account balance (for lack of a better term) and protected. Losses in the S&P don't impact the IUL balance. For very risk averse people, such as myself, this is a good thing.

However, if two people start at (say) age 20 and invest the same monthly amount on through to age 60, the S&P B&H account will have more money in it at retirement. Taking into account the caps on the IUL, this is a mathematical fact.

The reason I took out an IUL policy is that I don't trust my government. Every day I see less and less reason to trust my government. Considering the voting constituency of the U.S., I think the Republican party is pretty much doomed (you can't win against Santa Claus). The dollar is being devalued and the national debt is untenable. When desperado Dems get their backs completely against the wall, I doubt that government sanctioned 401(k) and IRAs will remain beyond their reach.

But to quantify the risk of the volatile S&P 500 and handicap the S&P B&H strategy by 50% just doesn't strike me as certifiably accurate.
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.
Foolanthropy 2014!
By working with young, first-time moms, Nurse-Family Partnership is able to truly change lives – for generations to come.
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.
Post of the Day:
Macro Economics

Looking at Currency Ratios
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
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