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  1. #281
    Join Date
    Nov 2007
    Location
    Vermont
    Market could be in for some rocky times given what just happened in Iraq today...

  2. #282
    Quote Originally Posted by budwom View Post
    Market could be in for some rocky times given what just happened in Iraq today...
    To that end, if anyone has suggestions on good capital preservation strategies, Iím listening.

  3. #283
    Gold, as represented by the GLD etf, has had a decent move since the early part of December.

    I'm probably being petty in another thread.

  4. #284
    Starting to feel like a full-scale melt up.

    I'm probably being petty in another thread.

  5. #285
    Quote Originally Posted by fuse View Post
    To that end, if anyone has suggestions on good capital preservation strategies, Iím listening.
    Market pretty much shrugged off the whole thing. I did mention GLD, the gold etf, which has about round tripped from where it was before the rocket attack. The other option is to increase your cash allocation.

    I'm probably being petty in another thread.

  6. #286
    Join Date
    Nov 2007
    Location
    Vermont
    With all the gains of the last decade, might just as well let your money ride. What you don't want to do is get into some crazy stuff chasing yield (which many people are doing), which is hard to find.
    Got some money in bank CDs which allow me to sleep at night...

  7. #287
    Quote Originally Posted by fuse View Post
    To that end, if anyone has suggestions on good capital preservation strategies, Iím listening.
    Cash (savings accounts, money market accounts, etc) is always king IF you think there is a good chance that economy (and the stock market) will tank. As Winston Churchill once said: "Whether you're rich or poor, it's always nice to have money"!

  8. #288
    CDs, MMAs, etc are really money losers thanks to inflation.
    Maybe thatís not meaningful, and even a ďsafeĒ 3-4% gain is better than nothing.

  9. #289
    Join Date
    Nov 2007
    Location
    Vermont
    Quote Originally Posted by fuse View Post
    CDs, MMAs, etc are really money losers thanks to inflation.
    Maybe thatís not meaningful, and even a ďsafeĒ 3-4% gain is better than nothing.
    If you're careful you can find yields higher than the inflation rate (2.1%). Little beyond that, but the safety element is where I need to be.

  10. #290
    Join Date
    Feb 2010
    Location
    Colorado

    Indexed Universal Life products

    Any thoughts on these as an investment?

    I have an acquaintance who sells these. He's giving me a hard sell.

  11. #291
    Quote Originally Posted by MartyClark View Post
    Any thoughts on these as an investment?

    I have an acquaintance who sells these. He's giving me a hard sell.
    Beyond what I just read here:
    https://www.investopedia.com/ask/answers/09/indexed-universal-life-insurance.asp

    Iím afraid I canít help. I had never even heard of this product before you posted about it.

    Without further research, my initial reaction to that combination of words was, feels scammy.
    That said, Iím not a financial or insurance expert, and donít play one on TV. I also didnít stay at a Holiday Inn Express last night. 🙄

  12. #292
    Join Date
    May 2007
    Location
    Tennessee
    Quote Originally Posted by MartyClark View Post
    Any thoughts on these as an investment?

    I have an acquaintance who sells these. He's giving me a hard sell.
    IF you need insurance (i.e., do you have financial dependents?), buy term and invest the difference.

    If you want an investment, invest in securities*.

    Indexed UL is just a complicated, indirect, constrictive, and expensive way to do both at the same time.

    The urging from your acquaintance might be a function of his commission and how it's protected via the surrender charge scale. Just a wild guess.


    *If you want downside protection, buy options - or enter swaps, etc.

  13. #293
    Quote Originally Posted by MartyClark View Post
    Any thoughts on these as an investment?

    I have an acquaintance who sells these. He's giving me a hard sell.
    Here's another place to take a look (and read the comments for some back and forth):
    https://www.whitecoatinvestor.com/5-reasons-not-to-buy-indexed-universal-life-insurance/

    I personally don't like investments that "lock you in" and have high upfront fees or surrender charges. If you change your mind, you get fleeced. That, on top of the major complexities that make it hard to understand make it usually a pass. Although I could see in very unique circumstances how it might be a good fit for a particular profile but unless I was sure I fit that profile, I would be wary personally.

  14. #294
    Quote Originally Posted by MartyClark View Post
    I have an acquaintance who sells these. He's giving me a hard sell.
    Well, I think you might want to evaluate the future of the acquaintanceship.

    As cspan noted, (I think) the first question to ask is how is he compensated? And how much is he compensated? And for how long is he compensated?

    Long story short, they are lousy investments. They are good compensation schemes for insurance agents.

    I'm probably being petty in another thread.

  15. #295
    Quote Originally Posted by MartyClark View Post
    Any thoughts on these as an investment?

    I have an acquaintance who sells these. He's giving me a hard sell.
    If you're familiar w/ Universal Life or Variable Universal Life... Indexed Universal Life is just another take on that. The differences are in how your account value grows.

    Universal Life - the company declares a rate. Subject to a minimum (often like 2%) and they attempt to keep it somewhat competitive.
    Variable Universal Life - you have the same option as universal life (keep your money in the general account) but you also have a bunch of equity growth options (S&P, etc.). There's no guarantees here (you can lose principal) and there is some fee taken off the top.
    Indexed Universal Life - again you have the general account option. The other options are investing in indexes w/ some downside protection (or full downside protection) and what you give up is that your return is capped. There's no explicit fee built into this investment but the fee would be baked into the cap (some products the fee is actually negative).

    For all of these the key thing to take into consideration is the fees. I'd encourage you to get the prospectus and do a search for the word "fee" and see how many times it comes up. There will be an administrative fee (a fixed dollar amount taken out of the account value every month... $10-15 usually). There's an upfront premium load where they take a percentage of every dollar you put in before it even hits your account value (sometimes 5%). Some will have a per $1000 charge of account value (might be $1 per $1000... might be more). All of them will have a Cost of Insurance charge (money they deduct from your account value to cover the cost them paying out your death benefit if you should pass). As previously mentioned there is a surrender charge for all of these which means you can't access your full account value until many years down the line. This is to prevent the insurer from losing money since they already paid your acquaintance a hefty commission.

    I'm not going to say these products are never right for someone but you'd have to really know what you are doing to figure out if it was a good deal for you. I'd say most people it is not. If you really wanted to invest in an indexed type product an indexed annuity would be less costly (in terms of fees). Most people would probably just be better off investing in low cost indexed funds but financial advisors really can't sell those cause anyone can just go buy them.

  16. #296
    Join Date
    Nov 2007
    Location
    Vermont
    Quote Originally Posted by YmoBeThere View Post
    Well, I think you might want to evaluate the future of the acquaintanceship.

    As cspan noted, (I think) the first question to ask is how is he compensated? And how much is he compensated? And for how long is he compensated?

    Long story short, they are lousy investments. They are good compensation schemes for insurance agents.
    yup, it's a national scandal that so very many financial advisors are clearly acting in their own self interest, and not yours.

  17. #297
    Quote Originally Posted by budwom View Post
    yup, it's a national scandal that so very many financial advisors are clearly acting in their own self interest, and not yours.
    Yeah, Iím not bad with money compared to the average American but would undoubtedly benefit from a well-trained professional. However, it would take a lot to convince me that someone managing my money was acting only on my behalf with nary a thought to their own self-interest. Iím sure there are some good ones out there but feel pretty confident those on the selfish to predatory spectrum far outnumber them.

  18. #298
    Join Date
    Nov 2007
    Location
    Vermont
    Quote Originally Posted by bundabergdevil View Post
    Yeah, Iím not bad with money compared to the average American but would undoubtedly benefit from a well-trained professional. However, it would take a lot to convince me that someone managing my money was acting only on my behalf with nary a thought to their own self-interest. Iím sure there are some good ones out there but feel pretty confident those on the selfish to predatory spectrum far outnumber them.
    You can find a fiduciary who is required to act in your interest...ask around. There are also quite a few reputable (do your homework) advisors who are fee only (e.g. you pay them maybe a few thousand bucks to come up with an investment plan), so they aren't motivated by sales commissions.

    Like I probably mentioned earlier in the thread, a friend asked me to look at his 401(k) which had $500k+ in it. An investment guy working for a brokerage firm gave him the hard sell on "managing" his money, which would consist of a 1% fee on his assets managed per year ($5k in this case) and would put him in a managed (ack) mutual fund for which the fee is 1.5% per year (and from which the investment guy would reap a nice commission), or another $7.5k. So the proposition
    involved paying $12,500 per year...and then I looked at his 401(k) account, and noted it was in a very suitable, ultra low cost Vanguard Index Fund, one which would, in most year (70% on average?) outperform the managed fund.

    Stuff like this just drives me nuts. (Which is not to say that there aren't some great advisors out there, but so very many are motivated by interests other than yours.

  19. #299
    Quote Originally Posted by budwom View Post
    You can find a fiduciary who is required to act in your interest...ask around. There are also quite a few reputable (do your homework) advisors who are fee only (e.g. you pay them maybe a few thousand bucks to come up with an investment plan), so they aren't motivated by sales commissions.

    Like I probably mentioned earlier in the thread, a friend asked me to look at his 401(k) which had $500k+ in it. An investment guy working for a brokerage firm gave him the hard sell on "managing" his money, which would consist of a 1% fee on his assets managed per year ($5k in this case) and would put him in a managed (ack) mutual fund for which the fee is 1.5% per year (and from which the investment guy would reap a nice commission), or another $7.5k. So the proposition
    involved paying $12,500 per year...and then I looked at his 401(k) account, and noted it was in a very suitable, ultra low cost Vanguard Index Fund, one which would, in most year (70% on average?) outperform the managed fund.

    Stuff like this just drives me nuts. (Which is not to say that there aren't some great advisors out there, but so very many are motivated by interests other than yours.
    So much this. I manage my own assets, and accept that there are inherent risks.

    Iíd happily consider an alternative if there werenít so much information out there suggesting that the cost/benefit is not there.

  20. #300
    Join Date
    May 2007
    Location
    Tennessee
    One big factor that is underappreciated in complicated insurance/investment schemes is how tax laws can change. Whole life products made a whole lot more sense when inheritance taxes were steep and applied rather quickly, because insurance proceeds could bypass that and go right to your beneficiary. Such proceeds are still usually nontaxable, but the estate tax doesn't hit nearly as soon. There's just not as much of a need now to commit to something so long term and financially ouchy to untangle.

    There's a heck of a lot more to it all than that, but basically, the KISS principle works well for most people, most of the time.

    Just watch out for sales illustrations and keep in mind the famous dictum regarding statistics, lampposts, and drunks.

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