You don't have to be rich to have this. In this episode, I'm going to address the question
what is the rich person's Roth? It's maybe not what you think. Get ready, you're going to be
blown away. My favorite vehicle knocks the socks off of any IRA or 401k traditional or a Roth.
So, my name's Doug Andrew and I've helped people prepare for long-term goals like retirement
for more than four and a half decades and so when people have come to me off times after
saving for 10, 20, 30, 40, years. Most people would come into my office they would be
way too top-heavy in yet to be taxed IRAs and 401ks and I would often go, "What are you thinking?",
because they would be invested in the market. If you want to create predictable retirement
income you should not have your money in the market. I would recommend no more than 30 percent
of your retirement resources be invested in yet to be taxed IRA's and 401ks in the market.
I usually recommend it that people start at least five years before retiring to get the money out
of those iras of 401k, sooner than later get the taxes over and done with. Even if you don't need
the money, that's not the point. You want to get the taxes over and done with sooner than later in
today's lower tax rates because most people agree that tax rates in the future will likely be higher.
Because of irresponsible government spending and the printing of money. Folks, this is just reality.
Most people who put money in tax-deferred IRAs and 401ks did it because I think they were almost
duped into being told they would be in a lower tax bracket when they retired and most people
who accumulate a respectable retirement nest egg are not in lower tax brackets when they retire.
Only people who didn't save very much are in lower tax brackets. So why? When I ask people
how many of you think that taxes in the future will likely be lower? I get nothing but crickets.
How many think they're going to be the same? One or two hands. But when I ask an audience of 2,000
people at a hotel ballroo. How many think that in the future in the long run taxes will likely be
higher and a sea of hands goes up and then I ask, "So why are you postponing tax to some
future perceived unknown advantage and then you're growing this nest egg and you're going
to take out your money down the road at higher tax rates? That doesn't make sense." Yet, ninety-one
percent of Americans are still duped into putting money into tax-deferred IRA's and 401ks.
Roths came out in 1997 senator Roth. Now, if you don't know the history the government was hard
up for tax revenue and he basically said, "Hey, I got an idea here", smart Americans realize that they
will likely not be in a lower tax bracket when they retire. It would be far better to pay tax on
the contribution phase. Now for years, I've used this metaphor. If you were a farmer and you have
the choice of buying your seed in the springtime that you're going to plant and you didn't have to
pay tax on the price of the seed when you bought it. But you plant it you cultivate you irrigate
you work hard and in the fall of life you're ready to harvest your crop and now you agree to pay tax
on what you sell your harvest for. That's a traditional IRA 401k. If you think taxes are
going to be higher in the future it would be far better to pay tax on the price of the seed
and accumulate your money tax-free and then sell your harvest tax-free. Because if taxes go up
the rate that the general accountability office estimates I can prove to you a Roth IRA or 401k
will end up generating 50 percent more in net spendable income or else you'll be able to go a
lot longer before you run out of money compared to the same amount of money in a traditional IRA 401k.
Senator Roth said, "Yeah, I got an idea. Put a carrot out there and dangle it in front of people to
convert to roll over out of traditional IRAs or 401ks into Roths and that will trigger tax.
That means that they will have a huge windfall and it was enough to be able to get the tax revenue."
The government did it for their benefit not your benefit. But it was a step in the right direction.
Now, I've never owned an IRA 401k, I never will. I've never owned a Roth IRA or 401k, I never will. Why?
I'll explain next but before I do if this is intriguing you share, post a comment, click like,
subscribe to this three-dimensional wealth channel. Because I post an in-depth answer to a financial
question almost on a daily basis and stay with me to the end because you'll be able to click on
the link below and get a free copy of our most recent 300-page bestselling book The Laser Fund.
Which teaches you how to diversify and create the foundation for a tax-free retirement and
you'll learn why it knocks the socks off of IRA's and 401ks and even roth IRA's and 401ks. So back
in 1997 it was called the taxpayer relief act. The government was hard up for money. So, Senator
Roth said, "I have an idea. You can name it after me", hence the Roth IRA and then later the Roth 401k,
it flipped. It meant that you paid tax on the contributions on the seed money. It accumulated
tax-free and when you went to retire you could then access the money tax-free. If you
believe taxes will likely be higher in the future that can be 50% percent better than the same amount
of money in a traditional IRA 401k. So what are the two benefits of a Roth? You fund it with after-tax
dollars it accumulates tax-free and you can access your money tax-free. Now, that's okay but I've never
owned one, I never will. Why? Because Roth started in 1997. My favorite vehicle is called the laser fund.
Laser is an acronym that stands for liquid asset safely earning returns and it has been a sacred
tax-free cash cow in the internal revenue code for over a hundred and eight years. A lot longer than
Roths have been around. It allows me to accumulate my money tax-free and I can access my money tax
free, the two benefits of a Roth. But the laser fund has four additional benefits the Roths will never
have. Let me outline them briefly for you. So with the laser fund the third benefit Roths do not have
is that during banner years. If I'm a business owner or I earn more money, I get a bonus. I can put
in larger sums into the laser fund. See, if you make too much money you don't even qualify for a Roth.
So, many savvy CPAs and tax attorneys refer to the laser fund as the rich person's Roth
and ice nicker because you don't have to be rich to have one but the rich can't own a Roth
they make too much money. So what does this mean? If I wanted to put in thirty thousand
a year, I could. I could put in a hundred thousand. I could design it to hold three hundred thousand.
Do I have to put that much in? No. I could put in 30,000 and the other 270,000 I could have put in
I can put in any time down the road. I can make up for years that I didn't use the room that I had.
With the Roth you can't do that. You're restricted to a certain dollar amount or a certain percent
of your income and if the tax year passes you can never make up for room. If you don't use the room
you lose it with a Roth. With a laser fund, I can put in large amounts small amounts make up for the
years I didn't put in the maximum amount it's very flexible okay. The fourth benefit to the laser fund
is if I need to access money for any reason anytime I can. There is not a 10% penalty imposed
by the IRS. If you touch money in a Roth IRA or 401k within the first five years or before age
59 and a half those are the strings attached that I don't like with the Roth, there are penalties.
I don't want those penalties I want flexibility to be able to access my money. The fifth benefit of
the laser fund that Roths do not have is indexing. I can use indexing so that when the market goes up
when the economy is strong I get to benefit and there are many people that gain 12%, 25% even 61%
from February of 2020 to February of 2021 because of the Covid pandemic. You can take advantage of
those upturns in the market when the market tanked and then you can link that's explained in my book
that I want to gift you. So I get to use indexing for safety and I'm preventing myself from losing
due to market volatility. The last benefit when I die and none of us are getting out of here
alive. I mean, we're going to die someday. The laser fund blossoms and transfers tax-free. So I'll just
summarize it this way, right now I'm a month away from turning 69 years old. If I died in an accident.
Every million I would have in a portfolio of laser funds would blossom to about two and a half
million and transfer tax-free to my wife to my children to a church a charity whoever I want
to leave it to. There's not a Roth around that will do that and people say, "Well, how much does
that cost?", well nothing's free but it doesn't cost me anything. It's coming along for the ride so to
speak being paid for with a minuscule portion of money that would otherwise go out the window in
unnecessary tax. Meaning, I would have to earn 15% in an IRA 401k so that after-tax I net 9 or 10.
I only have to earn 11 to net 10 out of a laser fund. That one percent is money that
would otherwise go out the window in taxes. Does that make sense? So I would rather have the six
benefits of a laser fund which totally dwarfs the two benefits that Roths have.
So why would I ever want a Roth? When I can have the two benefits of a Roth and four additional
benefits that Roths will never have. If you want to learn more about this. I would strongly recommend
that you read and study this book I will gift it to you free. It's 300 pages it retails for 20
dollars you contribute a nominal amount towards the shipping and handling by clicking below and
I'll fire out a copy to you of this book. It's actually two books in one this white
covered site is about 200 pages 14 chapters with all the charts and graphs and explanations.
If you learn more by stories and examples you can flip the book over read this one 12 chapters 100
pages with 62 chicken soup for the financial soul stories of how many many clients of ours have used
the laser fund not only for retirement that knocks the socks off of Roth IRAs of 401ks and why this
is called the rich persons Roth. But also you can use it for college funding real estate management,
business working capital, emergency funds, estate planning. It's like a financial swiss army knife.
So to diversify and create the foundation for a tax-free retirement claim your free copy
and here is to your brighter future as you read. There's options also at laserfund.com to listen
and learn and watch and learn. I want you to be empowered to be able to do something far better
than following the herd in traditional IRA's of 401ks and even better than the Roth IRAs and 401ks.