Buy Term and Invest the Difference...NOT!!!

[KRobby]

If I'm including the original principal in the % (which is what I did), 100% on the original balance = the original balance.

So if a 100% return on the principal balance = the original balance, what would a 50% return equal?

 

[DHK]

KRobby,

I updated my post and made 200% into 100%... just for you.

 

[scagnt83]

I'm at 1.25% with my broker of total money managed and my 5 year RoR is over 16%, 10 year is around 12%. I'm 39..25lbs overweight and NO health issues.

Life Insurance is not going to "beat the market" because it is not designed to. It has a much lower risk, which means a lower return.

An appropriate comparison would be AAA Corporate Bond returns, not Equities.

And for a properly designed IUL, the internal cost is often under 1% long-term.

Im not trying to convince you or sell you. But the assumptions used in your argument (on both sides) are incorrect.

----

When comparing investments that have different levels of risk, rate of return means nothing. What you need to look at is the "Risk-Adjusted Rate of Return". This is called the "Sharpe Ratio" in investment terms. Its a measurement of how much return you get for the risk you take.

I always find it funny when people want to "compare returns". When they obviously have no clue about Sharpe Ratios and risk. Wall street traders invest in life insurance all the time... so do fortune 500 CFOs... hedge fund gurus... etc. I have multiple IUL clients in those categories, none of them required "selling", they wanted it because they understand the value in relation to the risk they are taking with it.

------

That being said. If someone wants to but Term and invest the difference. I sell them the longest Term policy they will buy. Then I move on.

If someone wants to be educated and learn about WL or IUL and thinks they might find value in it. Im happy to educate them on it.

But Id honestly rather sell a GUL over an IUL most days! LOL

 

[Gooner]

Life Insurance is not going to "beat the market" because it is not designed to. It has a much lower risk, which means a lower return.

An appropriate comparison would be AAA Corporate Bond returns, not Equities.

And for a properly designed IUL, the internal cost is often under 1% long-term.

Im not trying to convince you or sell you. But the assumptions used in your argument (on both sides) are incorrect.

----

When comparing investments that have different levels of risk, rate of return means nothing. What you need to look at is the "Risk-Adjusted Rate of Return". This is called the "Sharpe Ratio" in investment terms. Its a measurement of how much return you get for the risk you take.

I always find it funny when people want to "compare returns". When they obviously have no clue about Sharpe Ratios and risk. Wall street traders invest in life insurance all the time... so do fortune 500 CFOs... hedge fund gurus... etc. I have multiple IUL clients in those categories, none of them required "selling", they wanted it because they understand the value in relation to the risk they are taking with it.

------

That being said. If someone wants to but Term and invest the difference. I sell them the longest Term policy they will buy. Then I move on.

If someone wants to be educated and learn about WL or IUL and thinks they might find value in it. Im happy to educate them on it.

But Id honestly rather sell a GUL over an IUL most days! LOL

I agree with you. I only brought up beating the market because DHK pointed to it initially with his anti-BTID argument. I didn't add in compounding I retest into my equation either...but there is no need arguing with him.

I'm quite happy with my RoR and I actually don't have a need for life insurance beyond my term policies, but I am disciplined. For the record though..I did know what a Sharpe ratio was ...my portfolio is well segmented based on our risk tolerance

 

[Gooner]

Only long enough until Gooner shows me any evidence of past securities licensing that gives me an inkling of knowing anything about investing for anyone else besides himself.


Maybe he'd rather see FINRA's own Financial Capability Study in 2016. Make sure you pay special attention to page 18 (19 in the PDF file) about people's willingness to take risks.
http://www.usfinancialcapability.org/downloads/NFCS_2015_Report_Natl_Findings.pdf

Look at how in:
2009, 12% were willing to take risks.
2012, 17% were willing to take risks.
2016, 21% were willing to take risks.

Why is that? Because the market was rebounding and they are buying high because they are "comfortable".

Most people don't have a flippin' clue about investments... and YOU are criticizing MY information??? This came from FINRA itself.

"Outpacing the market" is a poor investment strategy and most risk-adverse advisors would tell you that. If you are paying your advisor to "outpace the market"... you should transfer your account out now and save him the grief.

You keep quoting what 'most' people do....most people are broke and live paycheck to paycheck..I am not most peoole...obviously your clients are.

 

[toolbelt]

You keep quoting what 'most' people do....most people are broke and live paycheck to paycheck..I am not most peoole...obviously your clients are.

And because of that, most won't ever become self-insured, forcing them to renew their term policy later on in life, when the premiums can grow to $500/month.

 

[cropduster]

Pretty sure the average in the S&P is over 10% since its inception...at you 3% inflation that makes a 7% RoR...i also put my 10 year up as well my 20 year is closer to 15%....im using averages...and you want to try and get it twisted, but I knew you would..it is your MO.

My point still stands...find me a permanent solution that can outpace 'the market'....

Your assumption is also neglectful of political, economical pressures that may occur...so don't play your fear mongering bullshit games with me...that dog don't hunt here bucko

Real estate alone would outpace it LOL

 

[cropduster]

Only long enough until Gooner shows me any evidence of past securities licensing that gives me an inkling of knowing anything about investing for anyone else besides himself.


Maybe he'd rather see FINRA's own Financial Capability Study in 2016. Make sure you pay special attention to page 18 (19 in the PDF file) about people's willingness to take risks.
http://www.usfinancialcapability.org/downloads/NFCS_2015_Report_Natl_Findings.pdf

Look at how in:
2009, 12% were willing to take risks.
2012, 17% were willing to take risks.
2016, 21% were willing to take risks.

Why is that? Because the market was rebounding and they are buying high because they are "comfortable".

Most people don't have a flippin' clue about investments... and YOU are criticizing MY information??? This came from FINRA itself.

"Outpacing the market" is a poor investment strategy and most risk-adverse advisors would tell you that. If you are paying your advisor to "outpace the market"... you should transfer your account out now and save him the grief.

I think this may be the video you should be looking for:

 

[myinsurebiz]

If someone wants to be educated and learn about WL or IUL and thinks they might find value in it. Im happy to educate them on it.

But Id honestly rather sell a GUL over an IUL most days! LOL

I'd like to know more about IUL and how it works for the everyday person or family. 30's to 45's . . .

 

[myinsurebiz]

Most keep it until the term expires and premiums increase by 500% - 1000%. Then they are screwed because many still need coverage.

If they had bought a smaller WL with an increasing DB, the DB would be decent size by retirement and expiring term wouldnt be a big issue for most.

So - a healthy man @ 30 y/o with 2 kids - makes $150k a year and no wife . . .

$Million$ 30 year Term with a $25k IUL, GUL or WL? Or no?