Real Estate Investors: How EIUL’s May Fit Your Purposeful Plan For Retirement
Posted on May 27, 2008 @ 3:44 pm - Written by BawldGuy
I’m proud to introduce David Shafer, a very smart guy. Today’s topic, EIUL’s have been a subject close to my heart. Though I’ve written about it several times here, and at BloodhoundBlog, I thought it was time to bring in an expert.
NOTE: David used numbers even more conservative than I would, which is just fine by me. For example, even though the performance of the S & P over the last half century is around 8%, David uses 6.5%. Why don’t I care? ‘Cuz I’ve never had a client complain when real life performance exceeds projections. Duh.
When BawldGuy asked me to blog on equity indexed universal life insurance (EIUL), I thought no problem, since I had been blogging on it for a couple of years on both my site and others. Then he asked me to look at the archives from Bloodhound to see his previous blogs and I knew I had to write something a little different. In order to make sense of EIUL contracts you really need to understand the misinformation that underlie the arguments being put out by folks in books, the mass media and blogs on both sides of the issue. You need to be clear on what your wealth creation plan is and what it isn’t. So bear with me for a few paragraphs as I burn down the straw-men arguments before we get into the mechanics of EIUL’s.
Usually these discussions surround a common theme, EIUL’s versus mutual funds inside a tax deferred wrapper (401K, IRA’s). First let’s talk about mutual funds. Mutual funds were designed to reduce risk or as financial experts describe it variance. They were a boom to Wall Street as mutual funds induced many folks to invest in stocks, something they were not inclined to do in the past. They have been around for 2 generations so we have plenty of data to tell us accurately how people do investing in mutual funds. Read the rest of this entry »