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josht
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Fees in a whole life policy are towards death benefit. Death benefit is going right back to your heirs, so it's hard to say what the actual fees are. Also you will be receiving a return of premium every year based on actual results for the year.
As far as I understand, you can only draw money out of your IRA at 59 1/2, or for education, your first home, or disability.
I'm not going to argue your rate of return. If you can get a 12 percent rate of return then why wouldn't you want to do that. Dave Ramsey's advice is buy term and invest the difference in a 12 percent rate of return mutual fund. The problem is finding a 12 percent mutual fund.
And most people get a much lower rate of return, pay fees, pay taxes, and in many cases lose money. The S & P has managed a 7 percent average rate of return before taxes and fees in the last 20 years, and most people don't do better that the market they do worse.
Josh Thompson
Infinite Banking
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Mon Apr 04, 2011 9:02 pm |
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littleroc02us
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quote:
Originally posted by josht
And most people get a much lower rate of return, pay fees, pay taxes, and in many cases lose money. The S & P has managed a 7 percent average rate of return before taxes and fees in the last 20 years, and most people don't do better that the market they do worse.
I'm sorry but there are no taxes on Roth IRA's at withdrawl and the fees average .23%, it could be true about the S & P averaging 7% but just go to Vanguards website and look at it's funds like Total Stock Market Fund or Wellington and they have both averaged around 9% since their inception. Imagine having 1.5 million in a Roth and you can make withdrawls tax free with a paid for house. There are funds that do even better.
Romans 13:8 “Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.”
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Mon Apr 04, 2011 9:14 pm |
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josht
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Not at withdrawal, 59 1/2, but anytime before then. And I would take a closer look at your fees, they all have fees.
Josh Thompson
Infinite Banking
You Be the Bank
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Mon Apr 04, 2011 9:22 pm |
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oldguy
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Wow, josh, are you even listening to yourself? You are getting pretty loose with the math. You are comparing the time-value of a $20k loan against a $100k whole life policy. And you are entangling the age 59 1/2 IRA rules to add confusion. And do you know anyone who invests in a 9% product (that doesn't compound) and pays 3% of it in annual taxes - I don't?
I use a taxable account, an index fund. Invest at 12%/yr, it compounds tax deferred, then you pay 15% cap gains tax on profit when'if you sell - if you allow it to be inherited it is never taxed (stepped up basis). Example, if I invest $500/m for 30 yrs, it grows to $1,600,000.
In your 'whole life' example, $500/m probably buys a little $250,000 policy?? And I can borrow $50,000 on it? And if you think I can get only 9% and pay 3% of it in taxes, doesn't that same constraint apply in your scenario?
But the main point is - regardless of assumptions on returns & taxes, you are comparing a $50,000 investment to a $1,600,000 investment for the same amount of contribution. OK, maybe I have to pay $240k in taxes - but it still leaves about $1.4M.
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Tue Apr 05, 2011 1:38 am |
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littleroc02us
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quote:
Originally posted by josht
Not at withdrawal, 59 1/2, but anytime before then. And I would take a closer look at your fees, they all have fees.
Again, when I invest in Roth IRA's, I can take out the principle without taxes to use in case of emergency. As for the fees I stated them in my previous post and they were .23% to manage my Vanguard mutual funds. My point is that when my wife and I retire we won't have life insurance, because by then the house is paid off, we hopefully will have around 2-3 million and none of it will be taxed. My 401k's will be taxed heavily, but I'm not to worried about that. I think I'll be sitting o.k.
Romans 13:8 “Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.”
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Tue Apr 05, 2011 3:54 pm |
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nature
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There are different types of insurance policy but permanent is the best one above all. We must have a permanent life insurance to have a secure life.
online Car Insurance
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Wed Apr 06, 2011 10:25 am |
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littleroc02us
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quote:
Originally posted by nature
There are different types of insurance policy but permanent is the best one above all. We must have a permanent life insurance to have a secure life.
Why would you need life insurance forever?
Romans 13:8 “Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.”
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Wed Apr 06, 2011 1:23 pm |
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josht
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Life Insurance is the best asset to die with, it transfers tax free money to your heirs. This is why banks and corporations have so much money in life insurance. Wells Fargo has 19 billion dollars in cash value life insurance.
What you need to be looking at isn't the past, it's the future. If you have a 12 percent return since 1980, great, and old guy you probably had your money in since the 70's which obviously puts you in good times. The question you need to ask your self is what do you think the future will be like. These last ten years have shown that it is questionable. If you think the market is going to go up, and taxes are going to stay the same, then by all means keep i there. The people I work with have the opinion that the market isn't doing so hot anymore, the future looks dreary, and that taxes have nowhere to go but up.
I don't think you understand that a properly structured whole life insurance policy lets you use 100 percent of the dollars that you put into it and at the same time provides tax free retirement and tax free transfer of wealth to heirs.
I don't know why I even get into this rate of return argument, because this isn't about rate of return. It is about cash flows. I can put 100k or 100 million dollars into my life insurance policy, then take it all out and go invest it in anything I want to, if I really have to have my money in the market. It is only going to compound the situation.
Josh Thompson
Infinite Banking
You Be the Bank
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Wed Apr 06, 2011 3:10 pm |
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littleroc02us
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For my family I don't need life insurance after the kids are out of the house, because it will be paid for and my investments will take care of the rest. IMO, nobody needs insurance after until death, unless they have nothing saved for retirement and are worried about their spouse suriving. As for investments as of late, how is 28.6% return in the last year and a half do for you. Investigate yourself the actual rate of returns, don't just believe what you read in the mainstream media. All of my funds are averaging 9% longterm since the early 90's, I'm not sure where your getting your information? Anybody can get those returns they don't need a whole life insurance policy with cash value to to that.
Romans 13:8 “Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.”
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Wed Apr 06, 2011 3:22 pm |
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josht
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I don't know why I even get into this rate of return argument, because this isn't about rate of return. It is about cash flows. I can put 100k or 100 million dollars into my life insurance policy, then take it all out and go invest it in anything I want to, if I really have to have my money in the market. It is only going to compound the situation.
Josh Thompson
Infinite Banking
You Be the Bank
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Wed Apr 06, 2011 3:26 pm |
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coaster
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In my opinion, you guys are missing the point that investments and life insurance are apples and oranges. Life insurance doesn't do the policy-holder any good. It's just an expense for him. It's only good for the heirs. Investments are a benefit for the owner. Selling an argument that life insurance is a better asset, a better investment, is like arguing which is a better pet: a cat or a dog. It's a bogus argument. Cats are better at being cats and dogs are better at being dogs. And cash flow not included in return? Wha????
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Wed Apr 06, 2011 3:35 pm |
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