Any financial advisors on here? (401k specifically)

[JD D05]

https://www.whitecoatinvestor.com/a-serious-reply-more-arguing-about-iul/

I will send that article to the Hedge fund client I have that just wrote a check for 2.7 M into his IUL. Just kidding I won't. I scanned the article and it was chuck full of opinion with all kinds of bad data. The guy knows very little about the product. I have been doing this for 16 years I am aware of hundreds of articles like this one. I could also post up all kinds of favorable articles. I also own an IUL and know exactly what it has done for me.

But I will say these products are designed incorrectly all the time.

 

[clarence]

Buyer beware.

 

[RiverDave]

Buyer beware.

??

 

[JD D05]

??

Prob a shot at me. But hey he did google an article so he knows. This is why I HATE to get into this stuff online. Truth is pretty much all of the strategies mentioned work well in a good economy. It is when the economy tanks where the separation occurs.

 

[bowtiejunkie]

Prob a shot at me. But hey he did google an article so he knows. This is why I HATE to get into this stuff online. Truth is pretty much all of the strategies mentioned work well in a good economy. It is when the economy tanks where the separation occurs.

I think it's that for the vast majority of people, insurance products as an investment vehicle are complicated. The commissioned agent rarely discusses the downsides. Term Life is very easy to understand. Many of the others, no so much. The only ones who really understand it are the insurance company and the agent selling it (hopefully). It's too complicated for me, honestly. It's not something the average investor can calculate at home, since the investor is not privy to the underlying data/calculations. But, I recognize, it's another tool in the toolbox to make or protect ones financial life.

When I first met my now father in law, we were talking investments and the like. He used to sell life insurance. He was very one sided; all his suggestions were a life insurance product of one or another. All my strategies weren't worth a pop to piss in in his opinion. Thirteen years later, nothing has changed. So we just talk about the Grateful Dead instead. He doesn't even own a car or his own place. My wife says "he better not leave me a mountain of life insurance policies, as I'm going to be pissed he lived his latter years with very little!" lmao. I guess only time will tell. And maybe I'll have to eat crow.

 

[JD D05]

I think it's that for the vast majority of people, insurance products as an investment vehicle are complicated. The commissioned agent rarely discusses the downsides. Term Life is very easy to understand. Many of the others, no so much. The only ones who really understand it are the insurance company and the agent selling it (hopefully). It's too complicated for me, honestly. It's not something the average investor can calculate at home, since the investor is not privy to the underlying data/calculations. But, I recognize, it's another tool in the toolbox to make or protect ones financial life.

When I first met my now father in law, we were talking investments and the like. He used to sell life insurance. He was very one sided; all his suggestions were a life insurance product of one or another. All my strategies weren't worth a pop to piss in in his opinion. Thirteen years later, nothing has changed. So we just talk about the Grateful Dead instead. He doesn't even own a car or his own place. My wife says "he better not leave me a mountain of life insurance policies, as I'm going to be pissed he lived his latter years with very little!" lmao. I guess only time will tell. And maybe I'll have to eat crow.

Well most investments have some degree of complication. But yes they are complicated some more than other's, and most agents have no clue how they actually work. Here is how they should be setup and why they can fail. You have 3 "bucket's", you have your coi charges (cost of insurance), fees, and the cash value. Commission is based on how big the death benefit is, to set up the IUL right you have to over fund it and suppress the death benefit as low as possible. Some agent's don't due that because they want to boost the comp and increase the death benefit. When the DB is low and over funded it maximizes the cash value growth and they work really well. Allianz has a new product that allow's you to lock in your return at any point in the year...So if it hits 11% you can lock that in until policy anniversary. Most the time these products use the S&P annual point to point. They are a long term strategy, but they have some cool features. For example on mine let's say I have 50K in CV but need to take out 25K for whatever reason. You take out a loan and pay 3% on the 25K annually so really a small amount. But you still get the growth on the entire 50K even though you loaned 25.

 

[LargeOrangeFont]

Yes I do suggest it because it is an asset. Only 1% of term policies pay out so it has zero return on investment. But term policies with living benefits are awesome. That means if you have a critical or chronic illness you can access monies to pay for anything. But when we do IUL's we usually do it on the person with the cheapest cost of insurance. So for us my wife has the IUL and I have some GUL and term.

I feel anyone that has debts, kids, wife etc should have some form of life insurance. Permenant products always have a return on investment. The younger people do it the cheaper it is. I own a GUL on both my parents and as weird as it sounds it is part of my retirement....

I suppose people that don't have any debts or obligations in life don't need anything.

A GUL is a form of permenant life insurance that has zero accessible cash value. It is just a guaranteed death benefit.

Putting an IUL on a newborn for 100 a month can set the child up for life.

We may need to have a chat.

 

[JD D05]

We may need to have a chat.

YES! First victim I can rip off.

 

[RiverDave]

YES! First victim I can rip off.

I wanna be the second! Lol

 

[JD D05]

I wanna be the second! Lol

Deal! Shit I will be picking out a new DCB by week end.

 

[rivermobster]

Lucky I'm on the distribution side of the coin now. It's a good place to be.

But the options are unlimited it seems for knowing what do to at this point. Fortunately, I have a good tax guy. The rest, eventually, I hope to get figured out.

 

[JD D05]

Something you all might find interesting. Between 1928 & 2018 the S&P 500 only produced annual returns between 0% and 10% 16 times. That is some degree for the argument that zero can be hero.

If you invest 100K and have a 10% loss in year one and a 10% gain in year 2 without a 0% guaranteed floor your balance is 90K. That is simple math with other factors but you get the idea.

 

[Danger Dave]

If you invest 100K and have a 10% loss in year one and a 10% gain in year 2 without a 0% guaranteed floor your balance is 90K. That is simple math with other factors but you get the idea.

I came up with $99K, what did I do wrong?

 

[JD D05]

I came up with $99K, what did I do wrong?

Ya my bad I did the math wrong. BUT if you have that zero floor and that gain is 10% in the second year the gain is 110 compared to 99...

 

[ChumpChange]

Ya my bad I did the math wrong. BUT if you have that zero floor and that gain is 10% in the second year the gain is 110 compared to 99...

Actually the gain would be 10 compared to 9.

What company? WFG?

 

[JD D05]

Actually the gain would be 10 compared to 9.

What company? WFG?

What do you mean 10 instead of 9?

 

[DaveC]

What was the question again? With all this spam in here I forgot

 

[ChumpChange]

What do you mean 10 instead of 9?

Well you said the "gain" is 110 and what I am saying is that the gain would be 10,000. Just picking on your details as you should have used "balance" instead of "gain".

So WFG? Generally WFG people don't say Yes when asked if they are WFG.

 

[JD D05]

Well you said the "gain" is 110 and what I am saying is that the gain would be 10,000. Just picking on your details as you should have used "balance" instead of "gain".

So WFG? Generally WFG people don't say Yes when asked if they are WFG.

Ok ya you knew what I meant. No WFG is a joke.

 

[78Southwind]

Well you said the "gain" is 110 and what I am saying is that the gain would be 10,000. Just picking on your details as you should have used "balance" instead of "gain".

So WFG? Generally WFG people don't say Yes when asked if they are WFG.

I am pretty sure Ed Mylett would say Hell Yes. lol This guy grew up in the city next to us. His Brother-In-Law was my neighbor for 15 years and also works for WFG.

 

[clarence]

Prob a shot at me. But hey he did google an article so he knows.

Well, that and a charter.

But good luck.

 

[ChumpChange]

I am pretty sure Ed Mylett would say Hell Yes. lol This guy grew up in the city next to us. His Brother-In-Law was my neighbor for 15 years and also works for WFG.

Yeah I’ve been on his Falcon.

 

[Xtrmwakeboarder]

I love these discussions. We should have a Personal Finance sub-forum. There seem to be a lot of successful and smart people on this board to learn from.

 

[ChumpChange]

I love these discussions. We should have a Personal Finance sub-forum. There seem to be a lot of successful and smart people on this board to learn from.

I think that sub-forum would be more judgmental than the P&G! Cash is king!