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Unless you are proposing that risk (or whatever you want to call it these days) simply doesn't matter.

Risk matters. Volatility doesn't. You are still making the error of thinking volatility is risk. It isn't.

Both start from the exact same balance, and if there is a 50% drawdown hiding in time, it can occur on day #2, just as easily as year 12.
Indeed.
But the total that has been deposited on day #2 is $15,000. The IUL example shows expenses of $1,691, so it already has a loss of 11%, to $13,300.

If the index had a 50% loss, its value would be $7,500. It gets dividends ~3%, so final value is $8,000. (But, the large drawdowns of ~50% were not daily or monthly, but yearly or longer. The largest month-to-month drawdowns are in the 5% range. Which is, um, half the IUL first-year expenses.)

Recall that the goal is to grow the account for 30 years, to something like $300,000 to be used for retirement income. With respect to that goal, the initial amount of $15K is minuscule, and half of a minuscule amount is still minuscule. The initial balance is so small in relation to the final goal, a 50% loss is immaterial.

On day #2,
IUL: $286,700 short of the goal.
S&P: $292,000 short of the goal.


In the early year the balance is so small that even a large percentage loss is not very many dollars.

Show us how anything can outperform while never having any less cash value than the IUL
Never? Who cares? What I care about is having the most money in 30 years when I retire. That's the stated purpose of Retirement Account.
When you buy a house, your net worth takes an immediate hit. You can't turn around and sell it an get much more than 90% of the house's value. But nobody cares, because they don't plan to sell it the next day or month or year.

If you want to simply go long a B&H on the S&P500, I'd just fund an IUL, then pull out a policy loan to a safe, non-lapse level, and then go long the same S&P500...
I'm glad you wouldn't do anything fancy. ::rolls eyes::

I would be very surprised if that worked out. For one thing, you have to pay interest (6%?) on the loan balance. This offsets the index gain, so you'd be getting, say, 8% on the index and paying 6% interest for a net 2%. And if the index gain was less than 6% the interest would be more than the gain. In effect, for the amount of the loan your floor/ceiling is shifted from 0%/12% to -6%/6%. In a down year you'd get the 0% floor, pay 6% interest, and your (borrowed) money in the S&P would get hammered. Ugh.

But...that's why spreadsheets were invented. It should be possible to tweak my spreadsheet to model this, or re-do it in a simpler spreadsheet, like the one CC recently posted.

Me, when/if I wanted to borrow money to buy stocks, I'd use InteractiveBrokers and pay their 1.59% margin rate. Just gotta make sure you don't risk getting a margin call.

Sounds like you're finding ways to back away from that though... which is fine.
You keep hoping against hope. ;-) Nope, I stand my ground.

vacation!
Not really.[*]
Thanks, though.

It is de rigueur, on the first night, for the Cruise Director to fire up the audience by saying something like "Relax--for the next 7 days you are on vaacccaaaation!" [Audience goes wild, cheering and clapping.]
On our first transatlantic cruise, he was met by dead silence. "Hello? Is my microphone on? VACATION!!" Dead silence. "Is anybody out there?" YES!! "Aren't you on vacation?" NO!! "Don't you have jobs?" NO!! WE ARE RETIRED!!
We don't meet many people on the 14 day or longer cruises that have regular jobs. Hard to get away that long if you have a job.

Fedex just came to pick up our suitcases. Got our China & Cambodia & Australia visas all set, another few days and we are GONE.

-------------------------------------------------------------
All us early retirees like to complain that we don't get weekends or holidays or vacations anymore. Oddly enough, the girl at the laundry didn't have much sympathy.
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