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View Diary: Internal Wall Street pitchbook shows that you, the clients, are suckers (107 comments)

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  •  Um fees? (3+ / 0-)
    Recommended by:
    Sparhawk, sewaneepat, JerryNA

    Those life insurance things tend to be high fees with poor returns.  Have you considered etf index funds? From Dictatorship to Democracy, Guide to Non Violent Protests.

    by sdelear on Wed May 22, 2013 at 04:52:25 PM PDT

    [ Parent ]

    •  Whole life policies (2+ / 0-)
      Recommended by:
      shrike, JerryNA


      Index ETFs are much better. You can even get conservative ETFs that make a few percent a year at low risk too.

      Anything better than whole life.

      (-5.50,-6.67): Left Libertarian
      Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

      by Sparhawk on Wed May 22, 2013 at 05:40:28 PM PDT

      [ Parent ]

      •  Yes, conventional whole life sucks... (0+ / 0-)

        But if you buy a policy that's built to maximize the living benefits rather than the death benefits, there are distinct advantages.  I have as little of my premium as possible going towards the death benefit (the base policy) and as much as possible going towards the cash value (via Paid-Up Additions), which makes the cash value accumulate about 3 times as fast as it would in a normal policy.

        This strategy has been around awhile for the wealthy, and has been popularized by R. Nelson Nash.  Look up "Infinite Banking" on Amazon.  Be prepared, though:  Nash and his followers are hardcore libertarians.

        I only offer this as anecdotal testimony of my own way out of the Wall Street casino, and encourage others to do their own investigative research.  This isn't for everybody, and is particularly risky for those who aren't able to commit to accumulating some savings non-stop for at least 5 years or so (that's when whole life really sucks, when you have to cancel the policy prematurely and take a huge bath).

    •  Yep, I won't break even until year 5 or 6... (0+ / 0-)

      And each new PUA deposit has a 6% commission taken out.  But after that, the growth is 4-5%, with most of that guaranteed.  In 25 years, my IRR is 4%, and those gains will be tax free in retirement as I withdraw the cash value through premium surrenders and loans (which don't have to be paid back).  And unlike 401(k)s, all my money is accessible in the form of loans against my cash value at about the same interest rate that I'm earning, with no principal reduction when I access the funds (so it will continue to grow).  If we have a huge market crash in 5 years, I'll be ready to swoop in if the opportunity is there.

      My 401(k) doesn't offer index funds.  I might go a different route if I were to switch employers and roll everything into a self-directed IRA, but working for so long at the same employer actually has some disadvantages.

      Bottom line for me: After looking at where my 401(k) is after 17 years of doing what all the financial experts say I'm supposed to do, I honestly don't see a line of sight to retirement by following the conventional wisdom of trusting in the magic of the stock market...

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