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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 127777  
Subject: Re: Q about closing date & owner moving out Date: 6/10/2013 1:47 AM
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I don't know about any otehr IUL proponents, but Ray's already conceded he can't outperform an IUL with the same safety and liquidity parameters, and I've already conceded that there are *lots* of ways to outperform an IUL when risk of loss is no question.

Okay, let me try to put it simply......

Liquidity: For retirement funds (which is what the 'Retirement Investing' board is about), liquidity prior to retirement should not be an issue, because they are RETIREMENT funds. Not to be used for things like paying for college, new cars or vacation homes. So the 'liquidity' that you keep touting as a 'benefit' is really a downfall, because it allows people to draw down savings that are supposed to support them in retirement for other things, and may leave them without enough funds to actually retire on. And if something really bad, like a permanent disability, occurs, retirement funds can be pulled out of tax-deferred accounts without penalty.

Safety: The 'naked' S&P 500 strategy does have more volatility, with some pretty substantial losses probably 2 or 3 times during any particular 20 year timeframe. (And because we are talking RETIREMENT investing, the timeframes are long - generally at least a 20 - 30 year build-up period, and planning should be for at least a 20 - 30 year withdrawal period, so a 20 year period is actually on the shorter end.) But, as long as one stays the course, after any given 20+ year period, the pot of money from the 'naked' strategy will be more than twice as large as the pot of money from the IUL strategy, so even if there is a 50% loss in year 21, the 'naked' strategy still provides the retiree with more money for their retirement. And as the build-up timeframes get longer, the performance advantage for the 'naked' strategy increases. So, for the benefit of 'safety', one is giving up a substantial total return advantage.

Right... and after the 1st time I answered several questions... and faced insulting personal attacks that were apparently highly popular among the board participants.

But you keep saying you will provide data, and all you (and CC) ever provided were words. Again, that smacks of religion - believe what I say, you don't need to see numbers that prove it.

If there is ever an environment where a statutory reserve IUL company goes belly up, *AND* the participating competitor companies if that state's guarantee associations are unable to pick up the existing client contract... the naked S&P account will have long prior been decimated.

Tell that to the people whose annuities with Executive Life were cut by 50%, even after the state insurance funds and other insurance companies 'stepped in'. http://www.post-gazette.com/stories/business/news/broken-pro... And if AIG hadn't been bailed out during the financial crisis, I doubt that either the state insurance funds or other insurance companies would have been able to make AIG's IUL and annuity holders completely whole. And yet, a few short years after the financial crisis, the S&P has been hitting new record highs, so anyone who stayed the course has a bigger pot of money than they would have had if they put everything in an IUL.

Just as with hiking in bear country, there is no absolute safety... but there are ways to make sure you are safer than the hiker next to you (who ends up as the bear bait.)

But you were the one who kept trying to say that IULs would have 'no' losses. Then, when the possibility of a loss is pointed out, you backpedal and say 'there is no absolute safety'?

AJ
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