No. of Recommendations: 4
Charges fees far lower (.75-1.20%) than mutual funds, 401(k) and IRA (3-4%).

I misspoke. The simple average expense ratio of equity funds (which measures the average expense ratio of all eqity funds offered in the market) was 143 basis points in 2011. The average expense ratio that equity fund shareholders actually paid (the asset-weighted average expense ratio across all equity funds) was considerably lower; just 79 basis points.

You're getting ripped off if you are paying mutual fund fees that high. Both Fidelity and Vanguard (and probably others) offer equity index funds with fees as low as 5 bps. There is no reason to pay more than that for an index fund.

And this by the way, is yet another example of why there is no substitute for doing your own due diligence. You can pay high fees for a mutual fund. But you don't have to. You need to be aware of the fees and check into them before you buy. It is in interesting exercise to see how much that 1% or even 0.5% extra friction will cost you over time. It turns out to be a surprisingly large amount.

While we're on the topic of fees and due diligence, someone previously mentioned the Allianz IUL. It has a 17% cap which certainly helps returns, but there is also a 5% commission. That's before the expenses, which include a month policy charge, monthly expense charge, and monthly insurance cost and except for the monthly policy charge ($7.50) and except for the policy charge they don't really tell how much those are. On top of that, there are surrender charges. Those are enormously high costs.

Ray's spreadsheet is already complicated enough and I think clearly makes the point with no further additions. However, it appears to vastly underestimate the actual fees and costs of IUL. Which is to say, it vastly overestimates the performance.
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