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It's funny how some people continue to attack a product or strategy without fully realizing how it works in the first place.
So, you fall into the camp of "I'm not going to pay to borrow my own money?"
You don't know how wrong and inaccurate your question is.
You don't understand the power of collateralization.
And you also don't understand that the money in a life insurance policy is NOT "your money". You simply have power and control on how you use it - whether to secure your death benefit, or borrow/withdraw it for other purposes.
You also don't understand taxation of social security benefits in retirement.
You don't understand that we finance everything we buy - either by paying interest or giving up interest.
There's a lot you don't understand... and it's not my job to educate you.
You just made the point, its not your money!!!!!! Period!!!!!
Why in the he$$ would you do buy it as a savings, most middle america would be better off with a term and a roth.
Every point you made a Roth can do better and you really need to educate yourself of various retirement techniques,.
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Welcome!
I think your thoughts are spot on. You are exactly right about needing the money and if the markets take a down-turn (50% in October 2008)... then not only have you lost the value.. but you'd have to gain 100% in order to return back to where you were. It would certainly take a while to do exactly that.
It's funny, but people talk about "investment averages" or "market averages" all the time. Well, I can guarantee you a 25% average return over 4 years. Watch this:
Start with $100,000 and it grows by 100% to $200,000 in 1 year.
The next year, that $200,000 loses 50% and is now $100,000.
The next year, that $100,000 is back up 100% to $200,000.
The next year, that $200,000 loses 50% and is now $100,000.
How much do you have after 4 years? The same, original $100,000.
What was the average rate of return? 100% - 50% + 100% - 50% = 100% / 4 years = 25% average rate of return per year... even though you didn't gain anything.
Is this kind of volatility really far-fetched? Well, not the downside. The upside? Definitely not to be expected over a year period of time.
Most investors, let alone financial entertainers, don't often think about the sequence of returns and the impact they have when you need to take income at the same time. They often tout the virtues of dollar-cost-averaging... but don't think about REVERSE dollar-cost-averaging when taking income during down years.
It looks like this investment management firm understands it: Sequence of Returns & Reverse Dollar Cost Averaging
That is an idiotic example. I have be doing this 28 yrs and never experienced anything close to that. You call people in a down market and try to preserve money, if you can't do it get a tactical manager for the money.