Why risk what matters most? In this episode, we're going to talk about what's
the best low-risk investment that you can put your money into? My name is Doug
Andrew and i've been a financial strategist for 46 years. I'm in my studio
right now. I've been blessed to have a national radio show now I'm in my 12th
year. And I love talking to people over the air. Also with TV and video. So,
welcome. In this particular episode, I want to address what I teach a lot of
people in my radio show productions and also on stage as I speak across America
and actually the world. A lot of people ask me, "Doug, what is the best low-risk
investment?" Helping people optimize their financial assets and minimize
unnecessary taxes and empower their true or what I call authentic wealth. Now for
this is my 47th year. I've noticed a lot of people hit retirement and they're
sort of shocked because of the amount of taxes they are going to be paying during
their golden years and they never saw that coming. It's sort of like they
thought they were going to be in a lower tax bracket when they retired and
they're not. And actually, that's a good thing because in reality, most people in
lower tax brackets are because they didn't save very much money. And I don't
want to be in a lower tax bracket because I didn't say very much money. But
there's places where you can reposition money. And the sooner, the better to where
you can have tax-free income. Which is far better than a tax deferred income
that now you have to pay tax on. So, the best low-risk investments, my favorite
vehicle. I've actually nicknamed The Laser Fund. And I'm going to share with you
why I think it's the best low-risk investment but it's tax-free. But we're
going to talk about what I call the LASER test. I've learned from the school of
hard knocks. I've made lots of financial mistakes and
I don't want you to make the same mistakes I made. And that's why I've
authored many many books. 11 books thus far as the shooting of this video. But my
goal now is to write a book every year the rest of my life and I've discovered
and found a formula that helps me to do that. I've always talked about how to
measure a prudent investment in my various financial books. So, my very first
book was called Missed Fortune. Because of the fortunes people miss out on when
they simply don't know what they don't know. And in that book, I reveal in
Chapter 2 a story about how my wife and I clear back in 1982
lost our beautiful 6,400 square foot home in a foreclosure proceedings
because I thought my real estate equity, my home equity was a prudent investment.
Well, I found out that real estate for example and does not pass the liquidity
test. See, the number one key element I want with low risk investments are
places to put my money where I have liquidity.
Now, what's liquidity? It's the ability to access your money when you need it with
maybe an electronic funds transfer or a phone call. Real estate equity, if it's
trapped in the property is not liquid. You can't get to it unless you sell it
or you go borrow on it and so it didn't pass the liquidity test. There's a lot of
other investments people put money into that do not score very high on a scale
of 1 to 10 let's say in the liquidity arena. In fact, I would say most only
score maybe 2 or 3 or 4 or 5. And I'll come back and give some
examples here in just a moment. The second test is safety. I'm not just
talking about the safety of the institution. We want to put our money
into institutions that do have safety. Maybe you know people get lured into
putting money into a bank because of FDIC, the insurance that makes it safe.
But the returns are pretty pathetic there. But that's really number 2. I
define safety as the ability to be able to make money and not lose principal.
When I set aside serious cash, I don't want to jeopardize or lose
the money the principal that I put in there. And here's the most important key:
Any year that I make money, I don't want to lose money in the future that I made
in years past. But I discovered a lot of financial advisors don't know how to do
that. And so, your money is in the market. And sometimes you will have years where
you make money for 2 or 3 years. But in one single year like 2008, people
lost what they had made the previous 4 years. And it took four or 5 more
years just to get back to break-even again. No, I don't want to lose the money
I made in previous year. So, I want safety of principle and I want any gains to
become newly protected principle. Now, the third key element is rate of return. Most
people put that as number one. No, I would rather have liquidity, safety in that
order and then look for rate of return. Now, we all want the highest return with
the lowest risk, don't we. And so, I want a rate of return. That's not pie in the sky
because usually if you try to chase after those get-rich-quick type schemes.
You end up losing money. I have discovered in interviewing many multi
millionaires and billionaires that an average return in the 6 to 7 percent
range is pretty acceptable. But I prefer tax-free. Because a tax-free return of 7%
would be like earning 10% or more in a tax deferred investment like an IRA
or 401K or attacked as earned investment like money in a bank or credit union or
a normal mutual fund. If I'm going to earn 6, 7, 8 % rates of return, I prefer
them to be tax-free. Then I don't have to worry about earning 10, 11 and 12 percent
and pay tax of 1/3 to only net 8. I'd rather earn 9 and net 8 than have
to earn 12 to net even 8 or 7 because of having to pay tax on the
backend. So, I want a rate of return that has at least equaled or surpassed the
inflation rate at any given time. And so you want to link your returns to the
things that inflate. And I educate people on that in other educational videos. But
those are the key elements of a prudent investment. Liquidity, safety and
double rates of return. And I prefer tax-free. That actually spells an acronym.
See, L-S-R liquidity, safety and R rate of return. The Laser. So, I just sort of bring
it together LASER. And that's an acronym. I'm an acronym guy if you get to
know me. Liquid Asset Safely Earning Returns. So, I'm going to show you a
scorecard and why I wrote a book called The Laser Fund that actually can help
you measure any place where you want to put money. Any investment --real estate,
stocks, mutual funds, whatever bonds based upon this LASER test. So, I created this
test or a scorecard so to speak and it's indicated in a book by most recent book
is called The Laser Fund. And you'll notice here on the front cover of the
book, I have these 4 pillars which represent liquidity, safety, rate of
return and then tax benefits are sort of icing on the cake. Inside this book, I
explain the scorecard. And so, with that score based on a scale of 1 to 10, I
look at all kinds of different investments or places where people
typically put money. A lot of Americans put money in the market for example and
tax deferred IRS or 401Ks. And as far as liquidity is concerned, it doesn't pass
the liquidity test very well. Especially if you touch the money before age 59
and a half or there's a 10-percent penalty. If it's in the market, you may
not want to take money out or touch it. If you're on an upswing but when you're
on a down, the advisor goes, "No. Hang in there, hang in there, hang in there." And
then people finally sell low. But the liquidity is not there sometimes because
if you tap into the money, you might trigger tax, you might trigger penalties
by the IRS or by the institution. So, liquidity is number one. A lot of
investments don't pass liquidity. Now, my favorite vehicle I call the Laser
Fund which is actually a maximum funded tax advantaged life insurance contract.
When you structure it correctly, it comes in with a score I fill up at least an
8 on liquidity. I can access my money anytime I need in an emergency. And I
don't trigger a bunch of penalties by the IRS or
even by the institution if you do it the smart way. The next pillar is safety.
I love safety. A lot of investments like in the market are not really safe that
they don't score very high. The Laser Fund I love because I would put that at
a 9 on a scale of one to 10, okay? I don't think there's anything that's just
perfect. But that would be a 9. When we get to rate of return, I have earned
rates of return historically that has beaten inflation. Now, if inflation is
double-digit like the 1980s, I remember when inflation was 10%,
I was earning 15 and a half percent. So, I've always earned a rate of
return of about 5 and a half percent or greater than the inflation rate at
the time. And that's another strategy that I teach in other videos. But see, I
like the laser fund because it scores up here between 6, 7, 8 on the rate
of return because most of my life, I've earned about 8.2%. The last 25
years by using 2 strategies, I've averaged about 10.07%.
And so, rate of return is very good and you're not trying to get rich
quick. I mean, if you're in 10%, you'll double your money every
7.2 years. The final pillar would be the tax benefits. I love the Laser
Fund because it's totally tax-free. It's not just tax deferred. You accumulate
your money tax-free. You can access it and live on it tax-free. And when you die,
it increases. It blossoms in value and transfers tax-free. Now, I know that's a
lot to swallow. But if this is intriguing you, arousing curiosity, I would implore
you to to look into this. I wrote this book with my two sons, The Laser Fund and
it's actually 2 books in 1. I'm going to show you how you can get a free copy. If
you just pay nominal 5.95 shipping and handling. But the Laser Fund is comprised
of about 200 hundred pages that has 14 chapters that talk about the laws behind
it, why it's a sacred cow. It's been around for over 100 years in the
Internal Revenue Code. So, if you like charts and graphs at all the detail,
that's your book. If you learn more by stories, you're more right-brain, you flip
the book over. And you read this one. This is about a 100 pages, 22 chapters
with 62 actual clients stories about
the Laser Fund because it's scores usually up there around 33, 35, 36 out of
a possible 40. Nothing else comes close. I would challenge any financial adviser to
show me a place to put money that scores as high as The Laser Fund. I want you to
understand why I'm so passionate about it. So, you can go to the laserfund.com
website. Laserfund.com and you can get a free copy of the book.
I'll send it out to you. You just pay 5.95 shipping and handling. And
you'll have opportunities to learn all about how you can score different places
you put your serious cash. And why I prefer to put about 60% of my
hard-earned money into the Laser Fund.