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Author: Dwdonhoff Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 78663  
Subject: Re: Strategy comparison S&P500 vs. IUL Date: 4/2/2013 2:56 PM
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I'm not the best person to ask this question of, since I don't really invest that way. I don't have a dog in that fight, so I wouldn't "advise" a person anything. My biggest advice would be to maintain an adequate level of liquidity. That's probably around $25K-$50K for most people.

$25k-$50k reserves in order to put $10,000 at risk? $35k-$60k liquid net worth in order to safely put $10,000 into the S&P?

Isn't that a wee bit overly conservative? That would dramatically dilute the real yield of the $10,000 in play. (Not saying that's particularly bad... financial survival has its costs... it just seems a bit steep at its face, to me.)

But the phrase "going naked in the securities" troubles me. Going naked means something quite different than going long, but the implication here is that they are equivalent. They are not.
How specifically?

Risk is there, regardless of people's desire to be risk-free. At the "non-risked reserves" area there is interest rate risk, inflation risk, buying-power risk, etc. See, for example, "Cyprus, bank depositors of". Ask *them* about their non-risked reserves.
Of course. In our comparison we're talking about market price risk exclusively, right?

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