Learn this, before it's too late. In this episode,
I'm going to address the question. How to stay ahead of inflation? Get ready, most
Americans do not understand how to do this. In fact, many financial advisors don't get it.
So, my name's Doug Andrew and I've been helping people optimize their financial assets,
minimize taxes and stay ahead of inflation now for more than 47 years. Why is it so important
to outpace inflation? I'm going to show you why in this episode and then how you can actually outpace
inflation so that inflation doesn't hurt you it actually can help you. See, I don't like inflation
anymore than you probably do but it doesn't hinder me. It doesn't hurt me. It actually helps me.
I come along for the ride and for the last 4 and a half decades if inflation went to 5%
I usually earned over 10. If it went to 10 I earned 15. If it went to 15 I earned 20 and on and
on and on. Because I link my returns to the things that inflate. It's actually pretty simple folks
but you wouldn't believe how many advisors do not understand what I'm about to teach you. One of my
favorite vehicles that I have used for 47 years that allows me to accumulate my money tax-free and
then later on be able to access my money tax-free. But I don't have to wait until I'm over age 59 and
a half. I can access money actually within a year or two or even a few months after I put it in. But
most people use my favorite vehicle which I call the laser fund for long-term goals. That would be
financial goals that are five years or longer down the road and of course retirement savings fits
into that category. So that's why most people would come to me close to retirement because I have had
several different educational courses about at retirement planning. Which is totally different
than maybe what you did for retirement planning and I was usually trying to correct
mistakes that people made before it was too late so that they would not outlive their money. So,
let's talk about the negative impact of inflation because there are three big dangers
that cause most retirees to outlive their money. Taxes, because taxes keep going up and most people
are not in lower tax brackets when they retire especially if they accumulated any type of a
respectable retirement nest egg. The second big danger is inflation which is the subject of this
episode and the third danger is market volatility. Now, my favorite vehicle the laser fund eliminates
those three dangers. It makes yourself immune from them but let's focus on number two how does it
combat inflation and let's talk about the negative impact of inflation on people's money especially
during retirement. Now, as of the recording of this episode it's been interesting in the news because
CNBC, Barrons, we have Fox Business, Bloomberg, Forbes, and New York Times and also Market Watch.
That all of a sudden got alarmed because of the inflation rate the consumer price index spiked.
Now, what period of time am I referring to here? This was the March, April, May, and June, period
of the year 2021 when because of Joe Biden being elected he started doing a lot of things that all
of a sudden caused inflation to spike. Gasoline increased by 50 percent in some areas by double.
We saw a lot of goods and services go up in price and it was basically a result
of him not understanding economics. Okay, a lot of politicians don't understand economics
and so by increasing corporate tax rates and so forth a lot of corporations and businesses
they either are forced to lay off people because of increased taxes. A lot of corporations had to
pay 33 percent more in tax. They went from a 21 corporate tax rate to a 28 rate under his proposal
and people say, "Well, that's only 7% more", no, going from paying 210,000 on every million of profit
up to 280,000 is a 33% increase in the amount of tax you're paying. Corporations can afford that.
Even though politicians think they can. The only way they can afford to do that is by either laying
off people which causes unemployment to stay high or they have to raise the prices of goods and
services and so it's counterproductive. Sometimes we raise minimum wage to 15 or more dollars an
hour but that's all gobbled up at the gas pump and at the hamburger stand because businesses had to
increase the prices of goods and services/ This is called inflation. When government spends more than
what they bring in and they've usually always done that but oh my heavens, we're talking about the
government spending triple and even quadruple the amount that they bring in in revenue. Do you know
the internal revenue service at the recording of this episode collects about three and a
half to four trillion in taxes and all of these proposals health care initiatives, student loan,
forgiveness and all of these stimulus packages and on and on and on. It's going to cost about three to
four times what they bring in in revenue. I mean, hello? If you made 100,000 a year and
you kept spending 3 or 400 thousand a year. How long would that last before you'd have
to file bankruptcy? So, what happens is they print money. See, we can't do that but the government can
and if they print money that causes inflation. The value of the American dollar goes down as far as
purchasing power. Here's a few things I want you to understand they were acting like oh 4.2 percent
and a couple of months later they go, "Oh, it went up 5%", do you know that's artificial? Here's why.
Way back and during Jimmy Carter's presidency inflation got to 13% and the government says,
"We can't afford to pay social security recipients", for example. The consumer price index increase every
year. We can't give them 13% raises on social security. We can't afford to do that and so they
decided to change the way they calculate inflation. They used to do it on this basket of goods
apples to apples comparison year to year on the same goods and services. They changed that
back in the 80s and they said, "You know what, we reserve the right to compare year to year apples
to oranges", in other words, the government can choose to compare the price of filet mignon steak
this year to hamburger ground beef next year if it's still beef and people go, "Really", oh yeah.
Do you know that this red line is the rate of inflation since 1981 that they report now
with the consumer price index the cpi. This is the actual increase in average goods and services.
So, when they report 4 it's usually like 9 10 or 11 true rate of inflation. I mean, hello,
look at the gas pumps sometimes the gasoline goes up 50 to 100 percent in a year or two.
From the year 2005-2006 on to 2021 in the red here, this is the reported inflation rate. This is
the actual increase in the cost of living in America. So it's smoke and mirrors folks.
So, what should you be doing? I want you to understand the rule of 72. Now, the rule of 72
can be used in two different ways. If you have an investment and you take the interest rate
you're earning on an investment. Let's say it's five percent you divide that into the number 72
and it tells you your money will double every 14.4 years. If you're earning 7.2 percent
it doubles every 10 years. If you're earning 10% it doubles every 7.2 years. Are you getting it?
You can also reverse that if I have a piece of real estate that I bought for
500,000 and in 10 years it doubles to a million. What was my average appreciation rate? Well, it took
10 years you divide 10 into 72 and that tells me my average appreciation rate on that piece of
real estate was 7.2 percent. Are you getting it? Well, how can you use it to calculate inflation?
If you're earning 7.2 percent your money doubles every 10 years. If I started out with 125,000
and I was earning 7.2 percent it would double to 250 in year 10. It would double again to 500,000
in year 20 and a million in your 30. Now, I've had many clients who have actually done this.
So, let's say you're right here and you have your million dollars and you're retiring. Let's look
what inflation does. If you have a million dollars only 7.2 percent theoretically you could pull
out 72,000 a year without depleting principle. Now, if that's a traditional IRA or 401k you're
gonna have to pay tax usually between federal and state tax most retirees pay about a third
in taxes. That would be 24,000 in tax you're only netting 48,000 to buy gas groceries prescriptions
and golf green fees. Have you got it? So that's about 4,000 a month. What does inflation do to that?
Well, inflation when you adjust it let's say inflation's five percent. Now, it's higher than
that really but at five percent the cost of living will double in 14.4 years. We'll, just round it up
to 15 years here in the yellow. That means the 4,000 a month you used to have or maybe get by
on is now only going to have the same purchasing power as 2,000 a month today and so you're going
to need 8,000 a month to buy the same gallons of gas and loaves of bread that you used to buy for
four thousand. The cost of living doubled in what 15 years. Well, let's go another 15 years down the
road in 30 years because many people live you know 30 years in retirement. Now, you need 16,000
a month to buy the same gallons of gas and loaves of bread that you used to buy for 4,000 because it
doubles again the purchasing power is cut down to 1.4 of what it was. So what does this mean?
Using rule of 72 math inflation at 5% the cost of living doubles what every 15 years like I just
showed you. Well, what if inflation is 7.2%? That means the cost of living doubles every 10 years.
Every 10 years you'll need twice as much as 10 years earlier.
Well, what about inflation at 10 percent? Oh, that's the true rate right now as I speak is
over 10 percent. The cost of living will double every 7.2 years. That means in less than 15 years
you're going to need 400,000 a year to buy what a 100,000 dollars a year buys today.
Can your nest egg handle that? Can you stay ahead of inflation? At 12% which is the real rate it
the cost of living will double every 6 years. So, what's the answer? Now, if this is intriguing you
be sure and subscribe share this video with somebody who really ought to hear this information.
When you do subscribe click the little bell so you'll be notified every time I post
an educational video which I do almost on a daily basis. It's free but I want you to stay to the end
with me because I want to gift you a copy of my most recent 300-page best-selling book that will
show you how to outpace inflation. So, what is the answer? What you want to do is outpace inflation
by linking your returns to the things that inflate. Like I said, in the beginning, I don't like
inflation any more than you do but it doesn't hurt me it helps me. Why? Because my favorite vehicle
I call the laser fund this will show you how to diversify and create the foundation for a tax-free
retirement. So, I eliminate the dangers of taxes going up in the future but as far as inflation
is concerned. If inflation goes to 10 I have generally earned at least 15 percent or higher.
If inflation goes to 15 I've usually earned 20% or higher. Because the money that's in the laser fund
is safe in a triple a rated insurance institution in most cases and anytime I feel bullish about
America I link my returns to the things that inflate. So, if the S&P or the Dow jJnes whatever
index that I link to goes up. This is why in the year 2021 when inflation's going crazy
many of our clients have locked in gains of 16%, 25%, 30%, 61% because their money is linked
to the things that are going up in price. Now, it's actually simpler than most people think.
I know this is probably going over your head but learn about it. If you want to claim your free copy
of this 300 page book go to laserfund.com. Click on the link below.
Contribute a nominal amount towards the shipping and handling. I'll cover the rest of that cost.
I'll fire out a hard copy to you and there's options there to listen and learn watch and learn.
It's actually two books in one. The white side is all the charts and graphs 200 pages
of left-brain type of analysis. If you're a right brain decision-maker you learn by stories you flip
it over and this has actually 62 client stories of how the laser fund is used not only for retirement
but also all kinds of other financial goals to help you outpace inflation. So, claim your free copy
I'll see you on the other side and be sure and subscribe to this channel. I want to empower you.