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EIUL Update April 11, 2014

Posted by shaferfinancial in Finance, Uncategorized.
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I start out this update with some facts:
From 1990-2009, the average mutual fund outperformed the average mutual fund investor by more than 300%, annually. Since ERISA was passed in the 1974, enabling 401k accounts, the market has returned an average of 11% per year. However, the average investor has gained only 3% per year. [Found on the Big Picture by Barry Ritholtz while trying to convince you to let him manage your money]

With those facts as background, most of my clients are receiving the maximum interest credits [cap rate] on their EIULs this year as they hit their anniversary date. These gains are now locked in and can’t be taken away by a downward swing in the market.

Minnesota Life still is my go-to company for EIULs. They instituted a post 10 year bonus last year, putting it back on top of my list. The product itself has been the best performer of the EIULs over the 10+ years it has been in existence.

Here are the actual interest credits you would have received if you had purchased this when it came out. [assuming a Jan. 1 anniversary date] using the actual cap rates at the time.

2004 9%
2005 3%
2006 13.62%
2007 3.5%
2008 0%
2009 17%
2010 11.48%
2011 2.67%
2012 12.66%
2013 13%

CAGR of 8.48%. Not to shabby for some fairly tough years that caused folks to panic that were invested in mutual funds and underperform by 2/3rds.

The actual index returned a CAGR of 5.1% during the same time period.

Real Returns, not theory on how this product might work.
And now folks will start getting their post 10 year bonus to boost returns even more.

If you have been waiting to get involved with this product, now is the time before the inevitable market down draft gives away your money.

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