Not a matter of if but when. In this episode, I'm going to address the next market crash
is inevitable. What should you be doing to protect yourself? So,
get ready, I'm going to show you what you can do
to take advantage when the market goes up but not lose a dime when the market goes down.
So, my name's Doug Andrew and I've been a financial strategist and a retirement planning
specialist now for 48 years and I've helped many many people prepare for a comfortable retirement
so that they will not outlive their money. I love to help people make themselves immune
as they approach retirement from the negative impact of taxes, inflation, and market volatility.
Now, I used to say the stock market is like a person with a yo-yo. Hopefully, walking up
some stairs and people go, "What are you talking about up some stairs?", well, because the market
goes up and down almost on a daily basis. But what you want is you want the money in the market
as it goes up and down like you're going up some stairs. The dow jones, I remember back in the 70s
and 80s John Templeton at the head of templeton funds saying, "The dow jones someday will hit
10,000", and everybody went, "No way", and now, what is it at the recording of this episode around
35,000. So what you want is the market, the dow jones, the S&P 500 overtime to be going up.
But it's going to be going up and down plateau out and that's what I mean by a person with a yo-yo.
Hopefully, walking up some stairs. Well, there was a 12 year period 2000 to the year 2012
where that person with a yo-yo was walking across a flat surface. So,
let me show you what I mean by that. This is what we call the great recession. From 2000 to 2012
that person with a yo-yo was walking across a flat surface because the dow jones, the S&P,
whatever index you're looking at as a measurement of the market was basically where it was in 2012.
Where it was clear back in the year 2000. In other words, the person was walking with the yo-yo. The
market went up and down up and down pretty violently. It was basically where it was at
in 2000 12 years later in 2012. Now, many people following the strategies that I'm going to explain
here ended up doubling or tripling their money during that time period instead of just coming
back to break even. So we call this the great recession and many times as I teach I ask my
audiences, are you feeling anxiety? Anxious like the great recession because of market volatility.
Because it's not a matter of if the market's going to crash again it's when and so you don't want to
wait around too late and take a hit. You want to take your money off the table sooner than later.
So, I'm going to share with you how to come through a recession unscathed, a market
crash. How to become recession proof? So, let's explain what happened in that great recession.
We start in November of the year 1999 and here's where the market was and let's say
you had a hundred thousand dollars accumulated but it was in the market diversified in mutual funds,
the S&P 500 let's say. Maybe it was a million dollars. Well, people with a million-dollar
nest egg who were about to retire had to put off retirement seven years and then another 5
to 7 years after that. Here's why? The market in 2001 after 9/11 terrorist attacks. It went
down for three years clear down many people lost 35, 40, 50, percent. A million-dollar nest egg
went down to 600,000 for many Americans. Now, it took four years for that $600,000 to come back
up here to break even. See, when you lose forty percent you have to have a sixty-seven percent
gain to make up for a forty percent loss. 600,000 has to go by 400,000 a 67% increase to make up
for a forty percent loss. It did that but people had to put off retirement seven years they felt
like they had lost their future and finally in 2007 now we can retire and then what happened?
As Warren Buffett put it in 2008 when the tide went out he said,
"It revealed who was swimming naked", is the way he put it.
People were not protected from the market volatility, the crash and so what ended up
happening as people came out of here they were not protected and many of them lost 30, 40, 50%
again for a second time in that decade and it took four years to come back and in 2012, they finally
had a million forty-six thousand eight hundred dollars to show for the million they started with.
They said, wow inflation. He wrote it away most of that forty-six thousand dollar gain. Now, if you
do the math that's only one-third of one percent interest compounded annually during that 12-year
period. That's pretty pathetic having your money in the market. That's not good for retirees and
so instead of having the market go down like this one of my favorite strategies is called indexing.
With indexing, you don't lose when the market goes down because your money is not at risk in
the market. Your money is safely tucked in a large multi-billion dollar insurance institution and
they're paying you 4, 5, 6 percent whatever their general account portfolio rate is. But if you
link to an index they'll take the interest on your money and they'll buy upside options which
basically means they'll have the wherewithal to pay you money when the market goes up. But if
the market goes down your million is still there. You relinquish the interest on your
million but you didn't lose it and so by doing that many people following indexing. One of my
favorite strategies I teach in my various books ended up with 130% at the end of that
12-year period instead of a measly 4.6 percent. Is this interesting you? Now, if this is I would
recommend you subscribe to this three-dimensional wealth Youtube channel. It's free and here's why.
I post an in-depth answer to a financial question like this almost on a daily basis.
I want you to click the bell so you'll be notified when I do. But I have over 500 educational videos
about how to optimize assets and minimize taxes but protect yourself from market volatility and
I don't want you to miss out and stay with me to the end of this episode. Because I'm
going to gift you a free copy of my most recent best-selling book that explains in depth what I'm
talking about indexing and I don't want you to miss out. Let's go back to this. If we were to
retroactively go back to 1975 the year after I started in 1974 and if you had your money in the
market in the S&P. It would be here in the red and you had some great growth periods like the 90s.
But then this is what happened that in that period that I talked about
and during this downturn where the market dove 40% twice in 12 years people using indexing.
Many of our clients they didn't lose the dive. They may not have made very much during those down
years but they didn't lose and at the end, 500,000 invested in 1975 in the market was only worth 5.6
million and people say, "Well, that's not bad", hold on. Using indexing they have 8 million.
So, here's the summary. Would you rather have in a tax-deferred IRA 401k?
A lot of heartburn going up and down up and down and end up with 5.6 million maybe
and then you have to pay tax on that. Most people with that kind of a nest egg you're
going to pay at least one-third in tax that would be 1.7 million. You're going to net 3.8
million out of 5.6. This is where most Americans put their money. The people who used indexing.
When the market went down they may not have made anything but they didn't lose. Will Rogers once
said, "People get more concerned about the return of their money until they return on their money
when things get bad", you would have had 8 million no heartburn when the market went down and that is
tax free if you use my favorite vehicle which is called the laser fund. I'd rather have 8 million
any day than 3.8 million after-tax and not have to go through all those gyrations in the market.
I learned this lesson clear back in 1980. My clients were never happier. I had over 3,000
clients in the market in mutual funds. They were never happier than when I got them out
of the volatile market and into this. So, let me simplify indexing and then if this intrigues you,
you can learn more when I gift you a copy of my book the laser fund at the end of this episode.
As I said, if you had a million dollars of cash value in a laser fund
and the insurance institution is crediting you four percent interest. Anytime you want you can
just accept the four percent that would be forty thousand in a year on a million-dollar nest egg.
But if you want you can tell them to take the forty thousand of interest and instead of paying
you that interest you can let them have that for an options budget. That allows them to buy upside
options in the S&P or the dow jones whatever you choose. You can diversify and they can
credit you 8%, 12% up to a cap. Sometimes there is no cap. Many clients this year. I'm talking
and recording this in 2021 locked in gains of 61.33% tax-free. If the market tanks
the options expire worthless but your million is still there it's safe because it's not in
the market. But the market goes up you're able to participate at whatever the market does. So,
that's called indexing and this is what many clients statements look like. They diversify
in five or ten of them and this is what many of them have been credited in recent years,
pretty good right? Pretty simple, one sheet of paper. Here's another one, 14.8%, 16.50%, 10.25%
15%. These are actual rates of return on their money inside of laser funds. When you use indexing
you can diversify many clients have 40% in a one year and you measure year by year.
Some put 40% in a two year some put twenty percent and they wait 5 years to see what the market does.
You can learn about these in the book. Do you know the average crediting rate has been 11.3 percent
for a 20-year period. When you diversify and put maybe fifty percent in a two year, fifty percent
in a five year. The average crediting rate is around fourteen percent. Many times the advisors I
point my students to will use multipliers and you can actually for a seven and a half percent fee
on a million dollars that would be 75,000. You can then get a multiplier and the company will pay you
2.7 times whatever the S&P does or whatever index you're linked to. This is how many people got over
a hundred and fifty percent return on their money in one year from March of 2020 to March of 2021.
The point is this, if the market goes down the most you would lose with this one would be seven
and a half percent not 40 percent. Is this making sense? So this is my advice to you. If you want to
learn more I would strongly recommend you claim your free copy of this book. It's a 300-page
book the laser fund. The white covered side is 200 pages 14 chapters with all kinds of charts
and graphs and explanations of how the laser fund works. If you learn more by stories and examples,
you flip it over to the orange covered side and this contains 12 chapters about 100 pages
with 62 actual client stories. But simply go to laserfund.com click on the link below.
Contribute a nominal amount towards the shipping and handling and I'll fire out a free copy to you
and there's also options there to watch and learn and listen and learn. But you need to
learn how to protect yourself when the next market crash happens you'll be able to sleep at night.