This is the dream financial solution. In this episode, we are going to answer the
question "What is the best long-term strategy for long-term goals?"
I'm Doug Andrew. Get ready to understand some things that most financial advisors
don't even know.
So, I'm Doug Andrew and I want to talk about the best answer for the question
"What is the best way to save for long term goals?" Because I've been a financial
strategist and retirement planning specialist. Which retirement is generally
a long-term goal down the road. For 47 years, I've done this. And I want to share
with you my favorite vehicle and why. Because there are a lot of places where
you can put money to save, accumulate, to be able to use money down the road for
long term goals. In other episodes that if you've happened to watch them, welcome
back. If this is your first one, let me explain that one of the biggest problems
that I've seen people make in America is as they get it mixed up. They choose
short term investments for long range goals. They put money in a bank or a
credit union earning a measly rate of return of 1 or 2% for long term goals.
I'm going, "What are you thinking?" Or they do the opposite. They are using a long
term investment like a mutual fund for a short range goal saving for a piano in
9 months. That's not going to grow too very much. In that time period, that is
designed for long-term growth. So, I would define long-term as any goal where
you're going to need the money 5 years or longer down the road. Does that
sound good? What's the best place to put your money for long-term goals? Now,
there's all kinds of ways to save money. Generally speaking from a tax standpoint.
You can put money in taxed as earned investments which is actually the worst
way to save but the most common way Americans save. Because what
happening is you're putting your money into a typical bank or credit union or a
mutual fund that is not a tax-deferred IRA. And you're paying tax every single
year on any gains any interest any dividends. And so, you have a dollar
doubling, let's say, every period for 20 periods. Now, $1 doubles to $2 and you
have to pay tax on that gain or that increase. And let's say in a 25-percent
tax bracket, you would have to pay tax on that dollar of growth. And so that's
that's 25 cents. So, you don't really have $2 after you've paid tax only
have a buck 75. Now, a buck 75 doubles to 350 and you pay tax on that. Do you know
that million dollar potential you could have had, because a dollar doubling every
period for 20 periods will grow to a million forty eight thousand if it's
tax-free. But if you pay tax every year like I just explained, it's only worth
72,000. Not a million. In a 33-percent bracket, it's only worth
27,000. So, the impact of taxes affects how much money you're
going to end up with down the road for long term goals. So, a lot of people get
convinced to put money into tax-deferred accounts like IRAs and 401Ks.
Well... And that's smarter and it's a little bit better way to go. Your dollar
doubles to 2 to 4, to 8. to 16, to 32, to 64, 128. And after 30 doublings,
it's worth a million bucks. But now you have to pay tax. If you pull out the
million dollars, it's only worth 650 thousand, 700 hundred,
750 thousand in the 25-percent tax bracket. See, that
millions not all your money. You deferred it and you agreed to pay tax on the back
end. So, that's not the best way to go. I would rather have my dollar double every
period for 20 periods to a million bucks and have the million dollars be totally
tax-free. How do you do that? One of my favorite vehicles I call the Laser Fund.
Now, laser is an acronym that I've used for years which stands for Liquid Assets
Safely Earning Returns. The first letter of each of
those words spells LASER. So, I like to be laser-focused on my money that passes
the laser test. Number 1: Whenever I set aside money for a long-term goal, I want
it to be liquid. That's the number 1 thing. I want to be able to access my
money with an electronic funds transfer or a phone call anytime I need it. I
don't want to have to trigger penalties or tax or sit there go I don't dare that
the market is down right now. That is not liquid money under my rules. Liquidity is
number 1. Number 2 is safety. I want to set aside money for long term goals.
And in a year that I make money, I want to keep that money I made. I want to lock
in that gain and reset. I don't want to lose in future years because of a market
downturn money that I've made in previous years. Most advisors don't know
how to do that. This is called lock-in and reset which is another episode that
you could watch. But this is accomplished by using the Laser Fund which is a max
funded indexed universal life insurance contract. When the economy, the market
goes down, I don't lose. I may not make much during a downturn
but I don't lose. And the second the market goes up, I start making money
again. And that knocks the socks off of having money in the market. I can prove
mathematically, you'll outperform the market on the average all the time if
you cut out the losses and take advantage of the gains even if you're
capped on the gains at 12% or 15% if you don't lose. And this is proven through
all kinds of historical reports and back history. So, I want it to be liquid, I want
it to be safe. But I want to earn predictable rates of return that
historically has beaten inflation. So, how do you do that? I learned a long time ago
that if you try to get rich quick in those various schemes that say, "Ooh! You'll
get rich overnight." The higher the risk, the higher the chance... You know, you might
earn a rate of return but the higher return you want, the higher the risk. And
so you don't need to get pie-in-the-sky rates of return. Sometimes I've heard
advisor say, "Well, why would you want to miss out on a 20% or 25% upswing in the
market?" Because I want to miss out on the 40% downturn in the market. I am totally
happy with average rates of return in the 7 to 10 percent range. At 7.2%
which I've averaged in the worst 10 year period since the Great Depression.
2000, 2010; a million doubled to 2 million. Most Americans didn't even have the
money back that they lost twice in that decade. I've actually earned an average
of 10.17% by rebalancing and using indexing. So, 10%
will double your money every 7.2 years. Do you know in the worst 12 year
period since the Great Depression, 2000 and 2012, a million at the turn of
the century without adding a dime was worth three million at the end of 2012
using the laser fund strategies. Most everybody else in America, the million
dropped down to six hundred thousand twice in that 12 year period and barely
came back to break-even at a million. Would you rather have 3 million or a
million? Not lose when the market goes down. You may not make anything but you
don't lose. And make money every time it goes up. How do you do that? Well, I like
the laser fund so much that I've written my 11th book and titled it The Laser
Fund. Because a maximum-funded-tax-advantaged insurance contract as a
financial strategist as a tax strategist for 47 years is the only vehicle in the
Internal Revenue Code that has been grandfathered for over 100 years
since before the code to accumulate your money tax-free. And then be able to
access your money all through retirement or any long-term goal 5 years down
the road tax-free. And when you ultimately pass away, it increases it. It
blossoms in value and transfers tax-free. If I died tomorrow, every million in my
Laser Funds would blossom to about 2½ million.
No other investments do that and it would transfer tax-free to my
children, my wife, our church, the Boy Scouts of America, whoever I leave it to.
A charity or my family. Now, I use it as a dream solution. So, in this episode, I
wanted you to be aware of why I call it the dream solution. It's not where I put
100% of my money but it's where I put 60 to 70 percent of my
serious cash. The laser fund when it's structured
properly funded correctly, it will knock the socks off of money in the market in
an IRA or 401k. It eliminates the dangers of taxes because it's tax-free. Inflation
because you link your returns to the things that inflate and you earn
predictable rates of return that historically has beaten inflation. If
inflation is at 5, I usually earn 10½. If inflation goes to 10,
I earn 15 ½. If it goes to 20, I earn 25 ½ or more. I've
always earned at least 5 ½% greater than the inflation rate
at the time. If you have your money in a bank or credit union at 1 or 2
percent and the current of inflation is coming down at 3 or 4, you're
going backwards. So, the dream solution for long-term goals in my opinion is a
properly structured Laser Fund. And I wrote a book to point out that I have
averaged over 10% the last 25 years in the last 47 years, I've
averaged 8.2% That's not bad especially when the average
person in the market only earns about 3 ½% between the ups
and the downs. So, let me show you how you can get a free copy of this book to
learn more about this dream solution and why the book is so magic and how it
solves problems for so many situations. So, when my 2 sons and I co-authored,
this book they also co-authored another book with me which became a national
bestseller like this one. We wanted to write 2 books in one because in 47
years of working with people, I often found that in a couple for example, one
would make their decisions more left-brain. They like the charts and the
graphs and the numbers. But maybe the other one made their decision
more emotionally. And so, I wanted to teach high concepts coupled with high
touch. And so this is what we did is we actually wrote 2 books in 1 here.
This book is about 200 pages with 14 chapters with all kinds of charts and
graphs of how the Laser Fund must be structured correctly, funded properly in
accordance with the IRS in section 72(E) 7702
and 101(A) of the Internal Revenue Code in compliance with three tax citations
Tefra, Defra and Tamra. When you do that and it takes 4 years and one day
minimum to grandfather yourself by jumping through those tax law hoops, I
call it; your money will be tax-free forever after. And so, this isn't a get-
rich-quick scheme. This is a tried and proven method to be able to pass the
liquidity test, safety, rate of return test and do it tax-free. And I use it as
a dream solution for all kinds of goals. If you're a right brain person, you flip
the book over, you read it this direction, 100 pages, 12 chapters and this
is where I illustrate how the Laser Fund is the dream. Solution for retirement,
planning for college funding, for business planning, for working capital,
for real estate management, for estate planning. There's twelve chapters on this
side that have 4 or 5 or 6 stories in each chapter on how the Laser
Fund is the dream solution for any long-term goal that you may have. If you
go to laserfund.com, I'll send out a free copy of this book. You just pay
5.95 shipping and handling. You'll also have opportunities to see all kinds
of other education. You can watch these episodes of how we actually abuse this
for so many long-term goals for many of our clients for over 45 years.