- What is the missing structure
between people who don't have money
and those who are wealthy?
In this episode,
I'm going to address what do wealthy people think
and do differently about money?
Get ready.
I'm gonna simplify this
but hopefully you're gonna go, "Oh my hat."
(upbeat music)
So I'm Doug Andrew,
and I've been helping people optimize assets,
and minimize taxes, and empower their authentic wealth now
for nearly five decades,
and I've noticed helping thousands of people,
and I've been very blessed,
honored in my life to have authored, so far, 12 books
that have all become best sellers,
and I've been able to teach
over 90,000 hours in front of audiences
and I teach advanced continuing education to CPA's,
tax attorneys, financial advisors.
This has all been a great blessing in my life and
it's because I see light bulbs go on
when I help people understand how money really works
and help them achieve a life of peace and abundance.
Now, it's not just about the money,
that's why we call this channel "3 Dimensional Wealth"
because there's actually three dimensions,
only one has to do with money or finances,
the other two have to do
with the foundational and intellectual assets.
Foundational assets would include things like your health
and your family, your talents, unique abilities,
and, you know, your faith and your beliefs, and so forth.
The intellectual assets would be your education,
the wisdom that you gain from your knowledge
times your experiences
and also your strategic alliances, and things like that.
A lot of times people don't realize
those dimensions are more important
and that life is like a three-legged stool,
there's too many people that spend a lot of their health
accumulating their wealth,
and then later in life they're spending all their wealth
tryna regain their health,
which is really sort of stupid.
Or they accumulate their financial wealth
at the expense of relationships with their spouse,
their kids, their grandkids, or their God.
And at the end of the day, they're always saying,
"What was all this for?
I have millions of dollars
but I'm bankrupt in these other areas of my life."
But there is a missing structure
between what the world perceives as people that have wealth.
I just defined true or authentic wealth
as being more than the money,
but a lot of times people equate wealth
to the net worth of the individual,
and so I'm going to use that,
but you understand it's a bigger picture
than just the money, right?
And so let's talk about what this missing structure is
between the 95% of Americans
and the other top 5%,
which the other 95% look up and say,
"Those people are rich, they're wealthy."
And there's just a difference in mindset
and how they understand things, okay?
So let me simplify this.
Down on the bottom third of this upright rectangle,
I have captivity
because, unfortunately, 95% of Americans,
I feel, are in captivity,
and it could be even captivity
caused by their choices with their health,
it could be because they don't understand values,
but with money, they're actually in captivity
and their biggest fear is being poor
or outliving their money.
And unfortunately, most Americans will outlive their money
because they've been following the herd,
traditional financial planning, okay?
Oh, put your money into the company's 401(k),
tax defer, defer, defer
'cause you'll likely be in a lower tax bracket
when you retire,
and that has not been really true or axiomatic
for more than three decades.
If you are a saver, you're not in a lower tax bracket,
I address that a lot on this channel.
And so people follow traditional planning
and they have this nest egg,
let's say a million dollars that they've saved up
in traditional IRAs or 401(k)s,
and they think that they can pull out 10%.
Well, most Americans can't stomach a volatile market,
especially during retirement,
and so DALBAR says
most retirees are only actually averaging about 3.49%
with their money in IRAs or 401(k)s in the market
because they have to have predictable income
and they get scared
they're gonna lose their retirement nest egg,
and so when the market starts going down 20, 25, 30%,
they sell low and then they wait, wait, wait, wait, wait,
wait until the market's up here and then they buy high.
So they're only averaging three and a half percent,
and this is why the financial services industry came out
with the 4% rule.
They only want you to pull out 4%
of that million dollar nest egg
'cause they don't want you to sue them
for you outliving your money, okay?
And so they're in captivity,
they've got a million dollar nest egg,
and they have this pathetic 40,000
that their advisor wants them to pull out,
and you pay taxes, even in a 25% bracket of 10,000,
you only have a net of 30,000,
and you can't make ends meet with $30,000.
I mean, do you save a million bucks
to have a measly 30,000 to buy gas and groceries
and prescriptions and golf green fees, 2,500 a month?
And yet that is what most traditional financial planners
tell you to do.
It's called the 4% rule.
So 95% of Americans,
even if they accumulate a half a million,
now, unfortunately,
most retirees only have about a half a million dollars,
some have way less than that.
I remember years ago people would come to me
and they had a hundred thousand dollar balance,
and they said, "Well, we need about 4,000 a month.
How long will this 100,000 last?" (laughing)
And I would say, "Two and a half, three years."
"Only that long?"
I mean, they had never understood
how to calculate stuff like that.
Well, even people of $500,000,
if they need 4,000 a month, 48 grand a year,
pretty soon, because of taxes,
inflation, and market volatility,
they're gonna need way more than that.
The 4% rule's not gonna cut it
but 500,000 is not gonna cut it,
even a million dollars is not going to cut it
for most Americans, okay?
So folks, there's a difference between these
that are in captivity and the top 5% up here at the top.
Now, I call this the land of peace and abundance.
Now, it's because they have tremendous freedom.
They don't have to worry about taxes
even though they don't like paying taxes,
a lot of their income is totally tax-free.
And the people down here say that's no fair.
Well, they have the opportunity to do the same thing
but they understand how money works.
They have tremendous freedom because inflation,
they don't like it, but inflation doesn't hurt them,
it actually helps them because they have their money linked
to the things that inflate,
and they're immune from market volatility
because the savvy ones
don't have their money invested in the market.
And so they have tremendous freedom.
And so the average person up here in America now will have,
you know, 3 million, 5 million, $10 million.
Here is what shocks so many people.
Some of these people up here
made the same amount of money as these people here.
People go, "No way."
Oh no, no, no.
They made this much income
but they only saved 6% into the company's 401(k),
thinking that was a smart thing to do.
They bought jet skis and boats and campers,
and all kinds of things,
and they consumed and consumed.
They didn't understand how money worked.
These people up here
learned how to live on less than what they earned.
They saved 20, 25 and 30% of their income
because they wanted a big enough nest egg
so that when they retired
they can maintain the same lifestyle
and stay ahead of taxes, inflation, and market volatility.
So these people have tremendous financial freedom
'cause they understand three marvels or miracles
of wealth accumulation that these people never learned.
These people down here, okay,
they're strivers,
they will always have too much month left
at the end of their money.
The best advice for a lot of these people is act your wage
and cut up your credit cards,
and that's what a lot of advisors out there
tell these people to do.
That's the masses, okay?
I love to help people from here move up to here,
and there's a missing structure I'm gonna show you,
so stay with me, on how you can move out of here up to here.
But why did they have $5 million
and they were making the same amount of money?
Well, they saved substantially more
but they understood three marvels or miracles.
Number one, compound interest.
Now, some people think they understand compound interest,
and then I say, "Oh, you really think you do?"
These are sometimes CPAs and tax attorneys.
And I'll say, "Take that sheet of paper on your table
and fold it in half."
And it's just copy paper, you know,
and fold it in half one more time.
So they fold it in half twice.
And I say,
"Now imagine if you could fold that sheet of paper in half
48 more times, a total of 50 times.
Write down on that sheet of paper
how thick you think that would be."
And these savvy CPAs and tax attorneys
write down six inches, three quarters of an inch.
Some really smart ones go a mile
and they get laughed outta the room.
And then I say, "I thought you understood compound interest.
What's that sheet of paper doing
every time you fold it in half?
It's doubling.
2, 4, 8,
16, 32, 64.
If you folded it over 20 times,
it would be 1,000,048 times thicker.
If you folded that sheet of paper over 42 times,
it would be from here, to the moon.
If you folded it over 50 times,
it would be 93 million miles thick,
it'd be from here to the sun.
If it could fold it over one more time,
51 times, it would be from here to the sun and back.
Double, double, double, okay?
That's why, you know, Einstein said
that the eighth wonder of the world is compound interest.
Well, it was Rothschild that said, "No, no, no, no.
You know, compounding is okay but it has to be tax-free."
Compound interest tax-free,
that's the second marvel or miracle, are not tax-deferred,
IRAs or 401(k)s, or money in banks, credit unions,
that are regular mutual funds,
that's taxed as earn, it's the worst way to save,
and the most common way people save.
See, a dollar doubling 20 times
will be worth 1,048,000.
But if you pay taxes on it every year that it doubles
in a 25% bracket, you'll only have 72,000, not a million.
If you are in a 33% bracket,
you'll only have 27,000 bucks instead of a million.
That's the people down here.
They only have 27,000 with the same amount of savings
as these people
'cause these people understood compounding tax-free, okay?
Not just tax-deferred,
even tax-deferred, if it grows to a million,
only 650,000 of that is your money.
These people have usually double
because they choose tax-free.
So compound interest, tax-free compounding,
what's the third marvel these people understand?
I'll simplify it.
It's called safe positive leverage.
What's leverage?
It's the ability to own and control assets
with very little or none of your money tied up or at risk
in that asset.
Let me try to simplify this.
These people are usually in debt
but they borrow to consume.
These people, if they had cash,
they would pay cash for the house or the rental property,
or if they had a rental property,
they would take all the positive cash flow
and send it to the mortgage company to get rid of that.
These people up here go, "Wait a minute here."
This is how money works.
How do banks make money?
They borrow OPM, other people's money.
You deposit money into a bank or credit union,
they're gonna pay you what? 1%?
So every million dollars that banks borrow,
they pay 10,000 a year in interest.
Interest is their friend, not their foe.
And so they borrow a million.
If they stop paying that 10,000 of interest,
they wither up and die,
they'd have to give you your money back
and they wouldn't have any money to invest.
They turn around and invest that million that you loan them
and they loan it back out again at, you know, 5%.
In fact, they'll put 30 to 40% of their tier one assets
into insurance companies and earn five.
So on a million,
every million they invest into an insurance company,
they earn 50,000 a year and they only had to pay 10,000.
Are you connecting the dots?
How much more is 50 than 10?
Don't say 40, it's five times.
It's 500% more.
Would you hire an employee for 10 grand
that made you an extra 50 grand?
Would you buy a widget machine for 10 grand
that made you an extra 50 grand?
That's called a 500% return
on employment cost or equipment cost.
These people understand that.
So if they have a million dollar piece of real estate, okay?
If they use OPM and they borrow to own that, okay,
they pay interest at four and a half percent tax deductible.
It's only a net cost of 3% in a 33% tax bracket
on every million of real estate, they pay 30,000 a year.
That's not a cost, that's a benefit,
because on that million
that they didn't pay off the property,
they kept it leveraged with liquidity,
they put it into a portfolio of laser funds,
that is earning 9% or higher.
How much more is nine than three?
Three times as much.
300% more.
They pay 30,000, okay?
They make 90,000, they make 60,000 of profit, okay?
They make three times as much money
by leveraging with liquidity.
Now, leveraging without liquidity is stupidity.
That's why these people end up with 5 million bucks
even though they made the same amount of income
as these people.
That's why they have tremendous freedom.
I wanna help you move from striving to thriving, okay?
The missing structure that I'm talking about here
is disclosed in this book I wanna gift you,
I want you to claim your free copy of this book,
it's called "The LASER Fund: How to Diversify
and Create the Foundation for a Tax-Free Retirement."
You'll read stories in here
of how people have doubled, quadrupled their income
by understanding this concept
versus being trapped down here
'cause we liberated them
by teaching them the missing structure.
And when they understood that,
they wanted to engage with one of our IUL specialists,
and go through what we call
the True Wealth Eight-Step Transformation Process.
And so I don't have time to go into that
except to show you a little picture of it on the screen.
They usually get this enlightenment experience
by reading and studying or watching videos
or listening to the podcast that I've created,
and all of a sudden they get educated
on how money really works.
And then I point them to IUL specialist.
They go through what is called a true wealth discovery.
They have a strategic design created,
and then a success formula that is customized to them.
They end up going through a little bit
of a refinement process with a ton of flexibility.
Then they have a final action blueprint
to move up to that top 5%.
And then they go through the implementation experience.
And within five years, they've moved out of that bottom
up to that top, they moved outta captivity
into tremendous financial freedom,
and it's disclosed in this book.
And then we just meet with them annually
to make sure they're on track, okay?
Folks, if you wanna go through this eight-step process,
I can point you to the relatively small handful
of financial advisors who understand what I'm talking about,
but the key is to get it, okay?
See, 85% of any successful result you want in life
is determined in the first 15% of the process.
It's this enlightenment, it's getting it.
If you don't get it, you're gonna miss the boat.
Once you do that,
then the rest of this process is very predictable,
it's like dominoes, they just fall.
And so 85% of the result will be determined
in the first 15% of the process.
What's the first 15% for you?
It's getting one of these, okay?
Here's how you can claim your free copy.
You simply go to laserfund.com, L-A-S-E-R fund.com
or click on the link below,
and you contribute a nominal amount
towards the shipping and handling,
I'll cover the rest of that cost.
I require a little bit of skin in the game,
it's not just a handout,
I wanna give you a hand up,
and then I'll fire out a book to you.
There's options there to listen and learn, watch and learn.
But then while you're in there,
you might wanna check out
how you can attend one of our educational online webinars,
which we do regularly.
And also you can fill in and talk to an IUL specialist
to see how a laser fund could be designed
to accommodate where you're at to move you from captivity,
where you're gonna outlive your money,
up to tremendous financial freedom,
where you're thriving instead of just getting by striving.
Does that make sense?
So go into laserfund.com, claim your free copy
and here's to your brighter future.
(upbeat music)