Why Keep A VUL Whose CV is More Than The Original Coverage.

[J.R.]

I manage my own. Despite what people will tell you, just some solid research and due diligence is all you need.

Very smart my friend. I agree 100% with you that a bit of education is all that is needed. As a caveat, if an individual wanted additional advice, a fee based financial planner is not a bad idea. Pay 1%-3% to either confirm or denounce my strategy. Sure, I would be happy to pay that if you can guarantee in writing the minimal ROI that I expect.

 

[James]

The number one problem with stock pickers, they do tend to buy right, well any time is right kind of that is. Yet the big problem is people generally don't sell correctly, they seem to wait till the stock is down to sell? I never figure that one out, I guess its easier to smell a loss then it is a gain! Then again the gain is difficult once you take in the fees, taxes and margins when investing in stocks as a active day trader.

 

[Crabcake Johnny]

Very interesting that while people like James bash investing and tout EIAs, the life insurance companies actually invest the money themselves. You just don't share in any of the upsides - they do. So go ahead about buy the EIA tied to the S&P when you're capped at 7% and the S&P returns 12% that year. The life insurance company cleaned up and you just got taken.

And here's an interesting fact: the stock market has never lost money over any 10 year period of time. Meaning that if you're in in the S&P and hold your money for 10 year historically you've never lost a cent.

 

[Crabcake Johnny]

The number one problem with stock pickers, they do tend to buy right, well any time is right kind of that is. Yet the big problem is people generally don't sell correctly, they seem to wait till the stock is down to sell? I never figure that one out, I guess its easier to smell a loss then it is a gain! Then again the gain is difficult once you take in the fees, taxes and margins when investing in stocks as a active day trader.

It's the lemming mentality. Want my big secret invesment stragegy? I buy DRIP stocks in solid companies when the market takes a big dive. Wow, pretty hard huh? You can easily return 20% per year with that strategy but that means buying when the stock's heading downhill and most people won't touch it.

Plus, not only do you make loads of money it's fun as hell. Nothing fun about buying a EIA and watching 5% returns come in knowing inflation is 3% then you pay taxes on it after retirement. You're also paying regular income taxes on it which is most likely higher than the capital gains tax you would have paid.

 

[Crabcake Johnny]

And the dead truth is there are no experts in the financial industry. The best anyone can do is look at past performance. That's a bit like predicting who's gonna win the next World Series based on past results - can't be done.

There was actually a famous experiment done in the 80's - a monkey, class of 1st graders and stock brokers all picked stocks. At years end the monkey won. No kidding.

But to just pack it all in and not even bother is like dating advice being "marry a fat ugly girl - at least she won't cheat on you or leave you."

 

[J.R.]

The number one problem with stock pickers, they do tend to buy right, well any time is right kind of that is. Yet the big problem is people generally don't sell correctly, they seem to wait till the stock is down to sell? I never figure that one out, I guess its easier to smell a loss then it is a gain! Then again the gain is difficult once you take in the fees, taxes and margins when investing in stocks as a active day trader.

You and John both hit on something that I think would benefit the other people in the forum, which is something I always heard from my parents when I was younger , "If 100 people jump off a bridge will you do the same thing." My answer, "No, can I go outside now?"

There is an excellent book entitled, "Extraordinary Popular Delusions and the Madness of Crowds" that explicates the reasons that compels people to follow the pack. Unfortunately, uneducated people look to obtain fast and quick returns, so the media loves to play off this idea and that is one reason why authors like Robert Kiyosaki and Robert Allen to name a few do so well in selling their books.

The real estate crash in the late 80's/early 90's, dot.com period in the late 90's are perfect examples that illustrate the madness of following the herd. Buying low and selling high are just two components of a sound financial plan. People to do not want to hear that a 100% commitment is required for the "long term" to obtain a positive gain.

Read some books on investment strategies/theories, research a stock, fund, etc., buy it, incorporate dollar-cost averaging (DRIP's are awesomes), and then re-evaluate your position every 6 months.

 

[Crabcake Johnny]

People don't understand the time erodes risk. They also don't understand simply math principles. Would you bet $5,000 that a coin would land on heads if I flipped it once? No way. How 'bout if I flipped it twice and it only had to land on heads once? Probably not. How 'bout if I flipped it 100 times and it only had to land on heads once? Now that's a safe bet.

Almost the same with the market. Make money in a year? Maybe, maybe not. Make money in two year? Ummmm, again, maybe and maybe not. Make money over 20 years? Absolutely.

The problem is the negative people will still bring up that you "COULD" still lose on that 1 out of 100 coin flip. Yes, you can flip that coin 100 times and it could never land on heads. Because of that you'd better not play at all.

 

[Crabcake Johnny]

Read some books on investment strategies/theories, research a stock, fund, etc., buy it, incorporate dollar-cost averaging (DRIP's are awesomes), and then re-evaluate your position every 6 months.

Wow, someone who knows that a DRIP is? Lol. I have many and they're insanely fantastic. A perfect way for people who aren't rich to diversify in the stock market and capitalize on dollar cost averaging.

 

[J.R.]

People don't understand the time erodes risk. They also don't understand simply math principles. Would you bet $5,000 that a coin would land on heads if I flipped it once? No way. How 'bout if I flipped it twice and it only had to land on heads once? Probably not. How 'bout if I flipped it 100 times and it only had to land on heads once? Now that's a safe bet.

Almost the same with the market. Make money in a year? Maybe, maybe not. Make money in two year? Ummmm, again, maybe and maybe not. Make money over 20 years? Absolutely.

The problem is the negative people will still bring up that you "COULD" still lose on that 1 out of 100 coin flip. Yes, you can flip that coin 100 times and it could never land on heads. Because of that you'd better not play at all.

I will take that bet

 

[Crabcake Johnny]

Well, we certainly don't want a life with risks. We want guarantees. I do a lot of white water canoeing. Heck, I could die. And I have a family. Better stop doing that. And driving is risky to - could get killed in an accident. I'd better just stay home. Same with investing. I certainly don't want to risk any of my money. Better off with 5% guaranteed returns then after inflation and taxes I'll just work until I'm in my 80's.