No. of Recommendations: 3
infotainme: "Someone was telling us about their new way of investing -- called managed equity."

I doubt that it is new; someone has just fixed fancy new terminology on an old (expensive) concept. I would wager that you heard about from aninsurance salesman.

"Here's the gist of what I understood:
-- you somehow take home equity out (not sure which method) and a planner (who gets paid via commissions from your account) manages the money."


There are only 2 ways to get equity out - sale or loan. Figure loan. And the "planner" is jsut a salesman.

"But the money is not invested in just a plain old way. It somehow goes to something that has to do with your insurance."

Think permanent insurance, probably VUL. Plenty of older discussions about VUL on the Insurance board.

"The whole idea behind it being that you take your equity (thereby taking chances with the bank's money) and work it as your retirement money (which I'm told is tax free at time of withdrawal) but you increase your mortgage payment now (and not invest in IRA's or other retirement vehicles)."

The insurance guy would love to have all your money tied up in permanent insurance.

"They also said if there's an emergency, they can take money out without penalty (you're not actually taking your own money out but a loan against the money you have invested)."

With interest due, too.

"I'm sorry if all this sounds like gibberish but it was all I really understood.

So my foolish antenna went up raising lots of questions. I've tried searching "managed equity" but have not come up with any good explainations of it.

Can anyone here clear it up or at least point me in the right direction?"


Good that you Foolish antenna went up; I have no idea whether researching "managed equity" will discover much, but I seriously doubt that it is a good idea. Most of these "programs" never really discuss the downsides, and almost none disclose for how few people VUL makes sense.

Regards, JAFO
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