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The Perfect Investment
Old 05-01-2018, 06:48 PM   #1
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The Perfect Investment

Just returned from a “free” seminar on how to reduce taxes in retirement. The upshot was an invitation to invest in a fund that had zero loss potential, an average return of 7%, with a top end return capped at 13%. Any money withdrawn from the account would be tax free! Most people were intrigued. When I pursued this further, the slick spokesperson would not name this investment opportunity, would not tell me how he would get paid. When he finally told me that both my wife and I needed to have a physical to invest, I had my answer. Indexed whole life insurance.

We walked out. Beware of the free seminar.
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Old 05-01-2018, 07:03 PM   #2
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Funny. My DW, who wouldn't know a CD ladder from an Ozzie's best hits CD gets regular "free dinner" offers at local high end joints. We throw them in the recycle bin together (I'm training her if I hit room temp first).
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Old 05-01-2018, 07:05 PM   #3
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That's slick, all right. First of all, that average 7% return would have to be on the funds invested after they rake off mortality and expense charges. Even then, that's darn high given that they've guaranteed no negative returns. I can't see where the 13% cap would leave them enough money for bad years.

Second- if you're taking money out tax-free is that limited only to a return of your principal?

But hey, what do I know- I passed the Life Contingencies section of the actuarial exams 40 years ago.

I hope you got a decent meal out of it.
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Old 05-01-2018, 07:06 PM   #4
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No free dinner? - How cheap can the guy be?
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Old 05-01-2018, 07:15 PM   #5
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They claim, in the years where they make 20%, they will make their money. Also, the money withdrawn counts against the purchased death benefit, which doesn’t have to be repaid.

And no, there was no free dinner. Bottled water, and cookies. This was offered through a major university, as a public service offering. Is this a new twist to throw people off?
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Old 05-01-2018, 07:28 PM   #6
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We actually go some of the seminars if we like the restaurant. I feel no pressure whatsoever to take any bait and some of them are not hard sells.
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Old 05-01-2018, 07:33 PM   #7
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We did an investment seminar many years ago that was offered through the city. The guy that did it was an independent advisor and actually did a pretty good job of going through investment options. He offered an evaluation at the end of the class. If you were interested, he would do a detailed investment plan for you for a couple hundred bucks. It was much more worthwhile than the ones with a free dinner. I would have likely complained to the university about your guy not revealing what he was selling or how the product actually worked.
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Old 05-01-2018, 07:59 PM   #8
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I had one "free dinner", a time share offer in Maui.

After I ran the numbers I stopped going to these "free dinners". Nothing is free.
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Old 05-01-2018, 08:06 PM   #9
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Quote:
Originally Posted by athena53 View Post
That's slick, all right. First of all, that average 7% return would have to be on the funds invested after they rake off mortality and expense charges. Even then, that's darn high given that they've guaranteed no negative returns. I can't see where the 13% cap would leave them enough money for bad years.
You also have to read the fine print to see that they likely are just using the NAV prices of the indexes (i.e. when the indexes spit out dividends, you aren't getting the dividends - the insurance company is). You will see that the dividend component of the total return can be quite a big component over many years.

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And no, there was no free dinner. Bottled water, and cookies. This was offered through a major university, as a public service offering. Is this a new twist to throw people off?
Damn - talk about slick marketing. And look at that ROI!!! They could probably pay for dozens of presentations like that with just 1 person falling for it.
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Old 05-01-2018, 08:07 PM   #10
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I went to one out of curiosity, pretty much expecting what others have said here. It was at a local steak place that I like.

Before I went, I brokerchecked the guy. Twenty-one customer disputes, several of which were settled for $100K plus. Amazing. The guy must be a hellova producer to keep from getting fired.

Presentation was a mixture of half-truths and outright lies. At one point he had the marks chanting "The stock market is gambling."
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Old 05-01-2018, 08:23 PM   #11
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Presentation was a mixture of half-truths and outright lies. At one point he had the marks chanting "The stock market is gambling."

That’s pretty much what this guy said. He divided everything into three buckets. The red bucket, all standard investments using the stock market. Money at risk. The yellow bucket, money market, cash, savings acts. Money not growing. And the green bucket, his investment opportunity. No loss, only untaxed growth.
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Old 05-01-2018, 08:39 PM   #12
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Why did you go? I guess to "reduce taxes in retirement" eh?

Well, now you know to not attend future events. Hopefully even with a "free meal"
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Old 05-01-2018, 09:35 PM   #13
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Interesting though is that a regular on PBS, Ed Slott promotes the use of life insurance to reduce taxes. Note that he says that he does not sell any of the products he advises people to use. I've never done more than listen to him on TV, but the concept of reducing taxes on your retirement income seems prudent. Maybe there is a place for life insurance, I just always thought those strategies were for very high net worth individuals. I know in the accounting firm, clients always had large life insurance policies, but that was for paying the taxes that would come due on the family business when the first generation passed it to the next upon death.
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Old 05-01-2018, 09:52 PM   #14
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At 15% ROI on my RE holdings, I’ll gladly pay tax
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Old 05-02-2018, 09:00 AM   #15
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Sounds like the Madoff Memorial Fund.
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Old 05-02-2018, 09:04 AM   #16
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A number of years ago, my Dad (who was in his mid 80s at the time) was solicited by an insurance sales dude touting similar numbers. He wanted to meet my Dad for lunch and even said he would pay! What the guy didn't know, was that I was tagging along. The salesman didn't look very impressed when I walked in. The end result was that he was selling a very costly annuity that would have been funded by a very large amount of cash that would have wiped out most of my Dad's liquid assets, but made the salesman a chuck of change. When all was said and done...the salesman got to write off the lunch for Dad and Me...but that was all he got. Damn shyster!
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Old 05-02-2018, 11:02 AM   #17
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Quote:
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... I know in the accounting firm, clients always had large life insurance policies, but that was for paying the taxes that would come due on the family business when the first generation passed it to the next upon death.
That is a common use for permanent life insurance aka whole life.
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Old 05-02-2018, 06:43 PM   #18
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We can not resist the free dinners.
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