THE NEW RULES OF RETIREMENT SAVING • 77
The top line of the chart represents the concept of indexing in-side an IUL policy. ¹⁴ Look at the difference in growth. You can see that by eliminating the down years of the market, your account never loses value, and, therefore, can grow money much more efficiently. As you can see, when the market is crashing from 2000 to 2003, the IUL policy is credited zero percent. Those are some of the hap- piest years because everything else is losing money while you’re holding your own. In 2003, when the market turns around, the in- dexed policy begins net-positive growth immediately. It doesn’t have to dig out of the hole from where the market dropped. Again in 2008, the policy is credited zero percent, and the next year im- mediately beings net-positive growth again. So at the end of eighteen years, the $100,000 inside the index has grown to $338,772. That means the total average amount of interest credited to your account is 6.29 percent a year. Let’s look at an even scarier market. Some call the first decade of this century — from 2000 to 2009 — “the lost decade” as far as net growth in the American stock market is concerned. To say it was a very poor market is an understatement. It encompasses the market crashes of 2000 and 2008, as well as some of the market recovery. Remember, during this decade, the S&P 500® (including divi- dends) returned an average of -1 percent a year. That’s right. Money invested in the market LOST 1 percent a year. No wonder 2000 to 2009 has earned the title of worst decade in the history of the S&P 500®.
¹⁴ The indexed example utilizes a hypothetical index with a cap of 11 percent and a floor of zero percent.
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