Received: from ARM.RI.CMU.EDU by K.CS.CMU.EDU; 16 Oct 86 09:57:54 EDT Date: Thu, 16 Oct 86 09:49:27 EDT From: Donald.Schmitz@ARM.RI.CMU.EDU To: bovik@k Subject: Mutual funds and Life Insurance These are responses to a request for information on AL Williams and their scheme of convincing you to dump you whole life insurance, buy their term insurance (which seems expensive), and invest the rest in mutual funds brokered by them. Received: from IUS2.CS.CMU.EDU by ARM.RI.CMU.EDU; 7 Oct 86 14:34:54 EDT Date: 7 Oct 1986 14:33-EDT From: Jon.Webb@ius2.cs.cmu.edu To: Donald.Schmitz@arm.ri.cmu.edu Subject: Re: Mutual Funds Message-Id: <529094007/webb@ius2.cs.cmu.edu> In-Reply-To: Donald.Schmitz's bboard message of 07-Oct-86 13:59 There's an article about A. L. Williams (and life insurance in general) in recent issues of Consumer Reports. Basically, their impression is the same as yours: expensive term insurance is no better a deal than expensive whole life. -- J Received: from C.CS.CMU.EDU by ARM.RI.CMU.EDU; 7 Oct 86 14:47:58 EDT Received: ID ; Tue 7 Oct 86 14:49:46-EDT Date: Tue 7 Oct 86 14:41:20-EDT From: Charles.Huff@C.CS.CMU.EDU Subject: mutual funds To: schmitz@ARM.RI.CMU.EDU Message-ID: <12244950373.16.HUFF@C.CS.CMU.EDU> The editor of MONEY magazine (Arthur Loeb, I think) has written a book on personal finance, in which he discusses this topic. He makes the same recommendation you have heard, but counsels no-load mutual funds (ones you don't give a %age to a broker for). I highly recommend the book. ------- Received: from CAD.CS.CMU.EDU by ARM.RI.CMU.EDU; 7 Oct 86 15:48:07 EDT Date: 7 Oct 1986 15:46-EDT From: Robert.Frederking@cad.cs.cmu.edu To: Donald.Schmitz@arm.ri.cmu.edu Subject: Re: Mutual Funds Message-Id: <529098390/ref@cad.cs.cmu.edu> Well, I may be prejudiced, but I think New York Life is a reputable company to talk to about insurance-related issues (my father works for them in Arizona). Of course, a lot depends on the individual agent. Bob Received: from X.SEI.CMU.EDU by ARM.RI.CMU.EDU; 7 Oct 86 18:08:11 EDT Date: Tuesday, 7 October 1986 18:05:59 EDT From: Patrick.Donohoe@sei.cmu.edu To: Schmitz@arm.ri.cmu.edu Subject: A.L. Williams Message-Id: <1986.10.7.21.48.8.Patrick.Donohoe@sei.cmu.edu> Don, Consumer Reports, June, July, and August 1986 had a special feature on Life Insurance. One of these (sorry, I can't remember which one) had a section on the activities of A.L. Williams. The section basically said that the Williams argument - buy term and invest the difference - was sound, but that the methods used and the prices charged by Williams were suspect. Other refs: There are books on life insurance in Squirrel Hill library with titles like "How Life Insurance Companies Rob You" and "The Life Insurance Game"; they contain interesting info. and figures on the "buy term and invest the difference" approach. One of these - I'm not sure which one - also dislikes A.L. Williams. Honest investment advisers: I think the terms are mutually exclusive. Even the ones who don't lie still don't tell you the full story. Pat D. Received: from K.CS.CMU.EDU by ARM.RI.CMU.EDU; 7 Oct 86 22:38:02 EDT Date: 7 Oct 1986 22:22-EST From: Duane.Williams@k.cs.cmu.edu Subject: Term life insurance To: Donald.Schmitz@arm.ri.cmu.edu Message-Id: <529122173/dtw@k.cs.cmu.edu> While I personally think that many people buy life insurance without any need for it at all, one source of information that you might find useful is Consumer Reports. They ran a series on various kinds of life insurance in recent issues, i.e., within the last six months or so. They published charts comparing the cost of various kinds based on surveys of a large number of well known insurance companies. There was an issue that focussed on term insurance. I'm sure that you can find Consumer Reports in the library. -Duane Received: from G.CS.CMU.EDU by ARM.RI.CMU.EDU; 8 Oct 86 03:34:36 EDT Date: 8 Oct 1986 03:27-EST From: Unilogic@g.cs.cmu.edu Subject: Re: Mutual Funds To: Donald.Schmitz@arm.ri.cmu.edu Message-Id: <529140445/unilog@g.cs.cmu.edu> In-Reply-To: Donald.Schmitz@arm.ri.cmu.edu's bboard message of 07-Oct-86 13:25 Check out "Consumer Reports" issues from June, July, and August '86. They performed an in-depth analysis of whole, term, and universal life insurance policies with detailed ratings of policies from various companies. June covers term life, July whole, and August universal. In particular, there is a special artical devoted to A. L. Williams in the July issue entitled "A. L. Williams: Right Idea, Wrong Execution". Their general concensus is that Williams is correct in pushing term life over whole life (nothing new there though, as Consumer Reports has been recomending the same thing for many years) but that their policy rated as one of the worst available. Hope this helps. Dave Gentzel Unilogic, Ltd. P.S. A subscription to Consumer Reports is one of the best investments I ever made. Received: from THEORY.CS.CMU.EDU by ARM.RI.CMU.EDU; 8 Oct 86 10:45:44 EDT Date: 8 Oct 1986 10:30-EDT From: Rex.Dwyer@theory.cs.cmu.edu To: Donald.Schmitz@arm.ri.cmu.edu Subject: Re: Mutual Funds Message-Id: <529165806/rad@theory.cs.cmu.edu> Don, Term Insurance + Mutual Funds is exactly the scheme recommended in "What's Wrong with Your Life Insurance" by M.Dacey. (He also wrote "How to Avoid Probate".) But I guess if the term insurance is unnecesarily expensive, it's not a great buy. I know this is not exactly what your asking for, but I believe the term life offered by ACM is extremely competitive. After reading Dacey's book, I borrowed the entire cash value of a whole life policy I had and put the loan in my IRA. As long as interest rates stay above 5%, I'm making money -- and I got a nice tax write-off. I think the wisdom of the decision is reflected in the frequency with which the insurance company offers me easy repayment plans. I could lend you the book if you can't find it elsewhere. - Rex Received: from A.CS.CMU.EDU by ARM.RI.CMU.EDU; 8 Oct 86 18:07:54 EDT Date: 8 Oct 86 18:00:40 EDT From: David.Black@A.CS.CMU.EDU Subject: Re: Mutual Funds To: Donald.Schmitz@arm.ri.cmu.edu Get the annual Forbes issue on mutual funds to learn more than you ever wanted to know about this subject. Some initial pearls of wisdom: Invest in a no-load mutual fund. Most funds charge a load or commision of up to 7% on initial investments and/or withdrawls, but there is no consistent return in better performance. Don't evaluate mutual funds based on short-term returns. What counts is consistently beating the averages and market over the long haul. Only Forbes does this type of in depth evaluation; the competing evaluation in Money isn't worth the paper it's printed on. The Forbes issue also has phone numbers to get prospectuses of any mutual funds you may be interested in. --Dave Received: from F.GP.CS.CMU.EDU by ARM.RI.CMU.EDU; 9 Oct 86 17:03:50 EDT Date: 9 Oct 1986 16:59-EDT From: Marc.Ringuette@f.gp.cs.cmu.edu To: Donald.Schmitz@arm.ri.cmu.edu Subject: Re: Mutual Funds Message-Id: <529275566/mnr@f.gp.cs.cmu.edu> I agree that the best plan when dealing with a life insurance agent is to get term insurance, if you need it -- just pay for what you need. Investments should be considered, well, as investments, not something your insurance agent allows to happen to you. And on the subject of investments, the best I've come up with is mutual funds. If one is willing to put in the research to find companies with good growth potential, the stock market is also good, and I expect to be investing in stocks in the fairly near future. ---> Marc Received: from H.CS.CMU.EDU by ARM.RI.CMU.EDU; 10 Oct 86 15:50:57 EDT Date: 10 Oct 1986 15:32-EDT From: Spencer.Star@h.cs.cmu.edu To: Donald.Schmitz@arm.ri.cmu.edu Subject: Re: Mutual Funds Message-Id: <529356772/star@h.cs.cmu.edu> In-Reply-To: Donald.Schmitz's bboard message of 07-Oct-86 13:27 There are lots of mutual funds out there--more than 1500. About two thirds do not do as well as the market average. The moral is to choose your mutual fund carefully. Don't let your insurance agent do it for you. There are a few books out that list no-load funds and their performance in past years. Barrons newspaper is published every Sunday and it gives a report on the performance of almost all the mutual funds four times a year. The third quarterly report probably just came out or will be out in a couple of weeks. Consumer reports had an article on mutual funds about 1-2 years ago. Business Week publishes a very good resume of mutual fund performance a few times a year. Your best bet is to pick the no-load or low-load (0 to 3% commission) funds that have performed best during the last 3 to 5 years and that are still accepting new money. (Many have closed the fund to new clients.) Also, of course, look closely at the fund's objectives, e.g., captial appreciation vs steady income. Do you want to invest in an international fund? To shortcut all the research, invest in Fidelity's Puritan Fund for a relatively conservative investment, Fidelity's Overseas Fund for diversification (and some risk) and Fidelity's Select Precious Metals fund if you think gold will go up and inflation is on the horizon (I don't know, but it might be worthwhile as a small part of your portfolio.) Why Fidelity? They offer the best array of services, and the two funds I mentioned are quite good performers. Good luck. Received: from OHM.ECE.CMU.EDU by ARM.RI.CMU.EDU; 10 Oct 86 17:25:54 EDT Received: by ohm.ECE.CMU.EDU (4.12/4.7) id ; Fri, 10 Oct 86 17:06:57 edt; Date: Friday, 10 October 1986 17:06:55 EDT Sender: Richard.Edahl@ohm.ECE.CMU.EDU From: Richard.Edahl@ohm.ece.cmu.edu To: Schmitz@arm.ri.cmu.edu Subject: Al Williams Message-Id: <1986.10.10.20.49.22.Richard.Edahl@ohm> Don -- First, besides merely selling insurance, Al Williams appears to be involved in a 'pyramid' scheme of agents recruiting other agents and getting a cut of their recruits' commissions, but passing on a portion to the person who recruited him. The whole idea of using term insurance and doing your own investing as opposed to buying whole life insurance is not new. Actually, whole life is not as much as a rip-off as some would make it out to be. (Whole life is really a decreasing face-value term insurance policy plus a tax-sheltered investment. It is decreasing face-value because the whole life policy has a cash value [representing the investment portion] that increases over time. Hence the term only has to cover the whole life insurance face-value minus the cash value.) Whole life (and now universal life) have certain characteristics that makes it appealing. 1) The income is tax sheltered until you begin withdrawing it. 2) It is a 'forced savings' method. (This is not very important.) 3) Unlike a tax-sheltered IRA, you can borrow against it at a low interest rate. 4) Unlike a tax-sheltered IRA, you can cash it in without penalty. (But you must pay taxes on the appreciation.) 5) The insurance company guarantees a certain modest rate of return. All in all, the actual rate of return is roughly comparable to a CD. That is, investment, a whole life policy acts like a CD in an IRA, but with more advantages. It is not an agressive investment, but is certainly to be considered as a part of a portfolio for most people. Rick