EIULs and Missed Fortune

[Guest]

Just found this paper, have not had time to read it, so no commentary, just posting the link:

http://www.insmark.com/ConceptLibrary/pdfs/Concept_Center_Article _MA171_.pdf

 

[policy doctor]

Great Find!! I will download that article, as support for funding an EI Life.

Are you selling this product now? I am, but structuring it more for retirement needs. People need to save a lot of money monthly, and let compounding work for them. 15-20 or more years, and they'll have a steady stream of income.

 

[Guest]

Great Find!! I will download that article, as support for funding an EI Life.

Are you selling this product now? I am, but structuring it more for retirement needs. People need to save a lot of money monthly, and let compounding work for them. 15-20 or more years, and they'll have a steady stream of income.

No, not selling it, just trying to learn all I can about LI.

We have been inundated in the media with the importance of investing for our future, but the only aspect covered are mutual funds, stocks, bonds, CD's, IRA's, 401(k)'s.

I wanted to get my children, pre-teens, IRA's. Well, with no earned income, no IRA. So, I settled on a VUL as an alternative.

Once I started reading about LI (in doing research for the VUL - - that is how I found this forum). I discovered the incredible power, flexibility, and attributes of the product. I like to think of LI as a Financial Swiss Army Knife. I have come to the conclusion that it is integral to the foundation of our financial well-being and must be included with the same prominence in our financial profile as IRA's. I think it is a shame the financial media neglects discussing this asset (except to say buy term, invest the difference) and educating the public.

I think it is such a good product that if one were just around 21 - 22 with their first "real job," I am not so sure it would not be worth getting a UL/WL before even getting an IRA. My reason for saying it is that they will never be that age again and COI will never be as cheap.

 

[indaville]

Does anyone know what the limit is on how much equity you can take out of a home and still deduct the interest? In other words if someone has a $1,000,000 home that is paid for, how much money could they pull out of it via a HELOC and still deduct the interest. I thought there was a limit of $250k or something?

Thanks!!

 

[James]

Just found this paper, have not had time to read it, so no commentary, just posting the link:

http://www.insmark.com/ConceptLibrary/pdfs/Concept_Center_Article _MA171_.pdf

Some will have a problem with this, Insmark isn't exactly a Non Bias source of information. While cheaper than Leap I believe Insmark coming in at $799 and $39.99 monthly license fee is cheaper then Leap?

Once again I don't think you'll find the EIUL able to sustain 8% growth over 15 plus years! I'm not saying that you'll find 8% growth in MF's either, one has to be able to use realistic numbers before any claims of solution can be ethically claimed in my book. Take those same concepts and run a more realistic 5% growth and see what happens to the cash side.

 

[James]

I've taken a lot of hits around here by simply stating facts of life that some refuse to acknowledge, yet one study after another shows exactly what I'm saying. One can not expect the last twenty years of equity markets to keep rising, it simply not possible. I understand that people understand "historically" is from their experiences, such as the last twenty years of market returns seems to be the norm, yet they are not and one has to look at historical returns. Yet looking at the historical returns one would assume 10.4% (over 100 years) is the norm, yet if you remove 10 periods (or days of the buy in period) of the market the return is only 3.4%. Obviously the 10.4% that people use is in itself deceptive and clearly not the real norm! Yet another good read for understanding what one can realistically expect from the markets.

http://www.prudentbear.com/Waiting_for_Average.html?content_idx=46829&stage=3

 

[Macdaddy]

I've taken a lot of hits around here by simply stating facts of life that some refuse to acknowledge, yet one study after another shows exactly what I'm saying. One can not expect the last twenty years of equity markets to keep rising, it simply not possible. I understand that people understand "historically" is from their experiences, such as the last twenty years of market returns seems to be the norm, yet they are not and one has to look at historical returns. Yet looking at the historical returns one would assume 10.4% (over 100 years) is the norm, yet if you remove 10 periods (or days of the buy in period) of the market the return is only 3.4%. Obviously the 10.4% that people use is in itself deceptive and clearly not the real norm! Yet another good read for understanding what one can realistically expect from the markets.

http://www.prudentbear.com/Waiting_for_Average.html?content_idx=46829&stage=3

History is all we have, and speculation and sooth telling about "what ifs" for the future is an absolute fools game. A properly allocated mix of passive index fund asset classes is where the pension funds, i.e. smart money now invests billions of dollars.

Lets remember that 90% of active mutual fund managers UNDERPERFORM the market over time, so why try picking the winning 10%? Again, part of the fools game. Buffet, Schwab, and Graham have all come to this conclusion and have recommended index fund investing for the long haul.

After a great deal of research, the conclusion I have come to is there is only one strategy that wins, that is with a tolerable volitilty, and it is not trying to beat the market, but rather BE the market.

Check out this website for the asset class mix that would have fetched you 12.74% over the last 80 years. http://www.ifa.com/portfolios/p100/
This is the most comprehensive website of its kind. Pick your age and risk tolerance and you will have the allocation you need.

Here is a small cap value strategy that I also employ that has fetched 21% for the last 30 years. You can subscribe to the service and implement it yourself. It is only for those with a high tolerance for risk because it is a much more volitile strategy. www.prudentspeculator.com

If you still want returns of 16-17% and have a high tolerance for risk you could just buy a passive index small cap value fund.

These two companies stand head and shoulders above the rest:

www.dfaus.com (only available thru advisors)
www.vanguard.com

 

[James]

I'm just not sure who is discounting history here??? I'm going back 80 years and looking at P/E's at an around 10, today P/E's are running at 20 now it is 2007, where to we go from here? Basically the only thing that this paper and many others are saying is "what is a reasonable expectation for the next 80 years?". Yet the problem here is most people don't have 80 years to invest. So we now have to look at 20-30 year period, so now we are really playing! Can the next 20-30 years match the last 20-30 years? Now remember, most that have invested in the market via multiple ways have expierence 1% give or take a few percentage points. In other words most don't have the midas touch, nor are many HWC that can afford to use a SMA.

 

[Crabcake Johnny]

Listen, tomorrow is promised to no one and I could realistically get in a major car accident tomorrow and be maimed or killed. But I'm not gonna stop driving. All I know is my stock portfolio is up over 30% over the 20 years I've been investing and I ain't budging. Could it all blow up? Sure. I could also be killed by a wild Yak.

 

[Macdaddy]

Listen, tomorrow is promised to no one and I could realistically get in a major car accident tomorrow and be maimed or killed. But I'm not gonna stop driving. All I know is my stock portfolio is up over 30% over the 20 years I've been investing and I ain't budging. Could it all blow up? Sure. I could also be killed by a wild Yak.

DANG YAKS! ought to a law against them!