X-Message-Number: 6137
From: 
Date: Sat, 4 May 1996 22:28:30 -0400
Subject: SCI. CRYONICS costs, investments

Trying to catch up on Cryonet postings, among other things, I find #6055 from
Brian Wowk on cryostasis costs and investments. I'm not quite sure why it's
on SCI. CRYONICS, but since it was I'll respond the same way.

Brian says thinks the Cryonics Institute's low minimum assumes a 7% annual
return on investment. This is not the case, and needs some additional comment
in any case.

CI's original assumption, in 1976, was that liquid nitrogen cost for whole
body storage could be covered by a 5% return on an investment of $20,000, or
$1,000 per year. This has held up very well, in spite of inflation, but there
are several other points that need to be mentioned.

First, the CI minimum total funding of $28,000 is not the average. Many
members voluntarily fund above the minimum, and some bequeath CI the bulk of
their estates, as my wife and I will. This obviously gives us a considerable
cushion.

As to demanding enough capital to get by on a 2% "real return," which some
other organizations think is commendably conservative, this is highly
debatable. 

First, the accuracy and relevance of this notion--that 2% real return is an
historical average--is highly questionable, and I think demonstrably wrong,
although I won't go into detail about this just now. 

Second, inflation doesn't have much relevance to CI, because we own our
properties free and clear, never borrow money, and can get by with very
little or no paid help if necessary. Inflation in fact is good for us,
because it increases interest and dividends that we collect much more than it
increases our costs. 

Third, the "conservative" policy of making extremely pessimistic investment
assumptions can cut both ways--it might be good if the pessimism some day
soon proves justified, but meanwhile it restrains growth with all the
attendant sacrifices. 

Dan Howe (#6054) also had some comments on funding and dues policies. I think
he had some mistakes in arithmetic, but his basic complaint was that young,
dues-paying members in his organization ($360/year) will effectively pay much
more than those who die relatively soon after joining; he says this
encourages people to defer joining until they feel imminently endangered.

The Cryonics Institute does not charge dues, except for those who want voting
rights, and then it is currently only $100/year ($150 for a couple). 

I would not argue that one set of policies is necessarily better overall than
another; there are too many variables and imponderables. But I do want
potential members to know that  the Cryonics Institute (the second largest
cryonics organization, and first in number of whole-body patients) has its
own distinct approach, which you should investigate.

Robert Ettinger
Cryonics Institute
Immortalist Society


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