All Forum Posts by: Dmitriy Fomichenko

@Ratho R.

let me disagree with you about using Index Universal Life to invest for retirement. While your number look good on paper, what are the hidden costs and fees of those types of policies?

I just don't like the idea of giving control of my retirement dollars that I work very hard for to institutions to manage. No one will care more about my retirement than me. That is why I use self-directed retirement account where I am the only one who controls my investments. While I have small portion of my portfolio in the traditional stock market for better diversification, investing through IUL is bad idea.

I know that you have been trained differently and will disagree with my opinion, but over the last 14 years of financial planning and investment experience, I learned a few things. And I am doing the same thing that I recommend to my clients.

@Rob Shah

cash value life insurance policy is NOT a good option for most people. Why did you get the life insurance in the first place? Probably to protect (financially) your wife and children should you die prematurely. Next question is: how long do you need life insurance for? While you have people depending on you financially. So this need is temporary. Therefore you will be much better off by buying the cheapest term life insurance policy and investing the difference in income producing assets such as real estate that has tendency of going up in value over time. By doing so you will save a lot of $$ on junk fees and commissions to the life insurance guy who sold you cash value life insurance policy.

Now, if you have no discipline of saving and investing, and the only way you can do it through cash value life insurance policy where you have 'forced" savings component, then this type of policy might be OK for you (but then you would not be hear on the forum talking about investing).

So do you research, don't just blindly believe what insurance salesman tells you, you will find that most consumer advocates will agree that term policy will be the best way to protect your family financially.

Let me also add, there might be some other estate planning benefits of the cash value policy, that this would apply once you have a net worth of $3MM or more. Be wise with your money and don't waste it.

Hope this helps.

@Faith Chesney welcome to the BP community!

@Alan Vincent Seno welcome to the BP community!

@Luke M. welcome to the BP community!

@Mike Robison welcome to the BP community!

@Christopher Gardino welcome to the BP community!

Jared, let me make a little correction: the lender in a case of a default can not go after what is in the retirement plan, the underlying property is the only security for the loan. Here is the definition of the non-recourse loan:

A Non-Recourse loan is one in which the IRA/401(k) account holder is not personally liable for repayment of the loan. The security instruments allow no recourse against the individual account holders or the balances of your IRA/401(k) funds. In the event of default/foreclosure the lender can only look to the property as the sole source of repayment. The non-recourse lender cannot pursue other assets owned by the account holder or the IRA.

@Tom Waddell brings a good point about using self directed Solo 401k! I would like to add and piggy back on comment by @Jean Bolger that if @Account Closed is looking to create income stream that she could use now, they Participant Loan options of the Solo 401(k) need to be investigated.

Amanda, since you own a small business, you could qualify for the Solo K and then take personal loan from it, the funds then can be used for a down-payment on the property that you would personally own. You would have to pay back the loan to your Solo 401k, but you can personally use the income from the property now.

@Terri Snider welcome to the BP community!