This is at least 100% better than an IRA or 401K. In this episode, I'm going
to address the question "What is the best way to save for retirement?"
Hi, I'm Doug Andrew. And if this is your first visit to one of my educational
videos, welcome. If you've watched many others, welcome back. If you don't know my
background, I have been helping people optimize their financial assets, minimize
unnecessary taxes and empower their true wealth for more than 47 years. I've
written several books. 11 to be exact. And my goal is to write a new book every
year the rest of my life. I also have had a national radio show for 12 years. I
love to do TV education, online classes. But my most recent book I titled the
Laser Fund because it is the dream solution for so many goals. In this
particular episode, I'm going to give you an example of why putting money into a
max funded tax advantaged indexed universal life insurance contract that
structured correctly and funded properly will knock the socks off of any IRA or
401K usually by at least double the net spendable retirement income. Now, I
discovered that many people saving for retirement, they go out and they work and
they do what they do best and they get sometimes duped into putting money into
the company's 401K or into IRA's. Being told, "You know what? This is tax-deferred.
You get a tax break. You use pre-tax dollars. That's going to grow your account
to the most. When you take it out in retirement, now you'll have to pay tax.
But you'll probably be in a lower bracket by then. That has not been really
true for over 25 years. People... If they save a lot of money, they're not going to
be in a lower bracket. The only people I see that are in lower brackets are the
ones that didn't save very much. And so, it's really not
the best way to save because let's say you put money into a tax-deferred IRA or
401K let's take a calculation of what most averaged, most are in the market, it's
subject to volatility and I'm going to show you what most people will net out
of a typical IRA or 401K. And then I'm going to compare it to the same exact
amount of money put into a portfolio of Laser Funds and what I've done for years
and what thousands of my students and mentees have done to end up with at
least double the net spendable retirement income. So, let's say you're a
typical American and you sock away money into a tax-deferred IRA or the company's
401K. And of course, you're earning whatever rate of return you hopefully
get by having your money in the market. Now, here's the bare facts because
Dalbar who studies actual investor returns with people who have money in the market
says that if you would buy and hold, okay? That's what Warren Buffett says you
should do is buy and hold. You would probably average about
9.14%. So, let's just round it down about 9%. You know, most
Americans aren't actually realizing a 9% rate of return. Now, I know there
are some periods where you might earn 12 or 20 or 25. I've
been there, okay? But on the average, sometimes I talk about putting money in
a mutual fund because I know I used to have a series one securities license. I
had over 3,000 clients in 13 western states with money in mutual funds. And we
were doing a really good job trying to average 12%. For a while, we
accomplished an average of that. But it was like playing red light, green light,
let's say. And so, some years, we might make 20, 25. We might take 20
steps forward. But then the next year and make crash and we have to take steps
back. Forward and back forward and back. The average person really only might
earn 9% is what Dalbar says if they leave their money in the market
and just write it out. Well that's not all your money.
See, in a tax-deferred IRA or 401K you're going to owe tax on that. So, about a third
for most Americans, we'll go out the window in tax between federal tax and
state income tax. Because 41 out of 50 states has the state income tax. So,
you're not earning 9. On a million dollar nest egg, you're not able to use the
90,000 you earn an interest. You have to pull out the 90, pay tax of the third --30,000 to
net 60. So, if you're earning 9, you're only netting 6. Most of the asset
managers charge at least a 1% asset management fee. So, on a million bucks,
they're charging 1%. That's 10,000. So, you pull out 90. You pay 30,000 in tax.
Another 10,000 and fees and you're netting at best maybe 50,000. That's 5%.
You're netting 5% to buy gas and groceries prescriptions and golf green
fees. If you have your money in the market. You know the sad thing? Most
people aren't averaging 9. They are only averaging 3.49% according
to Dalbar. Why? Because they're buying and selling at the wrong times. Most
people, they have their money in the market when it starts to go down, their
advisor says, "Hang in there. Hang in there. It'll come back. Hang in there." And when
it gets down to a 40% loss like 2001 to 2003. Or 2008, most people say, "Enough
already." And they sell. They get out when it's low. Now, you should be buying low.
Not selling. And then when it turns around, they wait and wait and wait and
wait and they finally buy in high. They're buying high selling low. And this
is why Dalbar says the actual investor return is only 3.5%.
This is why the financial services industry came out with what is
called the 4% rule. If people only really averaged 3 ½, we
don't want them to outlive their money. We don't want to be sued for having them
outlive their money. So, only recommend they take out 4%. If they take
out more than 4%, you got to sign a waiver you won't sue them. So, on a
million dollars, you pull out 4% --40,000. You pay tax. Even in a 25%
bracket, you pay 10,000 of the 40,000. The asset managers
charging another 1% at 10 grand in fees. You're pulling out 40 and only netting
20,000. That's 2%. How pathetic is that? A million-dollar nest egg generating
20,000 a year of nest bendable income? You can do way better, way better than
that. Here's how: By using a maximum-funded-tax-advantaged insurance contract,
I have used this instrument since EF Hutton who is the brainchild of this
came out with it back in 1980. I have actually averaged over 47 years about
8.2% for the last 25 years because indexing came out. Indexing is
where my money's not in the market. But I linked my returns to an index that the
insurance company offers. And it can be the S&P, it can be the Dow Jones, it could
be the Russell 2000, the Barclays U.S. dynamic balance index. There's usually 10
or 15 indices that they allow you to select from. And you can diversify. So, I
have averaged by diversifying my money in various Laser Funds and by
rebalancing based upon what the economy is doing.
I've actually averaged about 11.17 % the last 25 years. One of those
percentage points pays for the insurance. But the IRS says has to be there or it
won't be tax-free. And I've been netting over 10. So, take my word for it. You can
read my book and I'll prove it to you. I've been averaging 10% tax-free cash on
cash. Now, some advisors say, "I've never seen one do that." Well then, you've never
seen it I design correctly. So 10%, every million I accumulate for my retirement
in my Laser Fund portfolio is generating 10% or 100,000 a year of
tax-free cash flow. Now, folks, I pull out 100,000, I net a
100,000 to buy gas, groceries, prescriptions, golf green fees. The
average person in a mutual fund portfolio in tax-deferred IRA's and
401K's. That's earning 9 if they bought and
held. Their only netting 5, remember? Because you have to pay the tax and you
have to pay for the asset management fee of 1% also. How much better is 10% than 5?
It's double. It's 100% more. It's 100 grand of income instead
of fifty thousand net out of an IRA or 401K. Out of the example of the 4%
rule, how much better is 10% or 100 grand than a net of
2% which is only 20 grand. It's 5 times. It's 500%
more. Other than that, I don't have any strong feelings on this subject.
But I would implore you to watch this episode now and you'll understand why
the Laser Fund can qualify and be structured to be the best long-term
vehicle for goals like retirement.