- Wealthy people learn to employ these strategies.
In this episode, I'm going to talk about the three marvels
or miracles of wealth accumulation.
What mega wealthy people have learned and employ.
Get ready. These are simple.
But you can't believe how many people
do not understand these, especially the third marvel.
(bright uplifting music)
So I'm Doug Andrew, and I've been a financial strategist
and retirement planning specialist now
for nearly five decades, helping people optimize assets
minimize taxes, and empower their authentic wealth.
But I've helped many, many people understand
these marvels of wealth accumulation.
Now I'm gonna simplify them and a lot of people think
they understand what I'm talking about and they don't,
even CPAs and tax attorneys.
So the three marvels of wealth accumulation.
Number one is compound interest, okay?
Now, Einstein said that compound interest
was the eighth wonder of the world,
because in looking at nature and science,
you have, you know, a human being,
when a sperm and an egg fertilize, within hours,
there are billions of cells.
They're dividing, doubling, doubling, doubling, okay?
And so sometimes I will ask CPAs and tax attorneys
in an advanced continuing education class,
how many of you think you have a good handle
on compound interest?
And I usually get a reaction like,
"We thought this was advanced continuing education.
We understand compound interest."
And I go, "We'll see."
And then I usually give them all
an 8 1/2 x 11 sheet of paper, a 26 pound copy paper.
If you don't know what that means is,
it's normal copy paper, 26 pounds.
It means it can hold 26 pounds before it rips, okay?
And so that's what normal copy paper is,
is 24 or 26 pound copy paper.
So I hand 'em a sheet of paper and I go,
"Okay, fold that sheet of paper in half.
Now fold it in half again."
And so they do that.
And then I say, "Now you can't physically do this,
but imagine if you could fold this sheet of paper in half
48 more times, a total of 50 times,
I want you to write down on this sheet of paper
how thick you think it would be
if you could fold it over 48 more times."
And in some form of measurements, centimeters,
inches, yards, meters, miles.
And so a room full of 60 or 70 CPAs do that.
And so they write 'em down,
and I go around and I say, "Now what was your answer?
What was your answer?"
And they say 3/4 of an inch, six inches,
you know, two inches.
And then some will say a mile.
Now, you know, when I did this,
I didn't have a calculator, but I answered
in the class that I was in,
"Well, it's at least 2,600 miles,"
and I got laughed outta the room.
Well, after all of these CPAs and tax attorneys
who said they understood compound interest
reveal all their little answers,
I went, "Oh, I thought you understood compound interest."
What is this sheet of paper doing
every time you fold it in half?
It's doubling.
Okay, double, double, double.
Now on the other side of the sheet of paper,
I have actually printed out a chart.
And on that chart it shows that if a dollar doubled
to 2, 4, 8, 16, 32,
if a dollar doubled 20 times,
it would be worth 1,048,000.
So if this sheet of paper were to be folded over 20 times,
it would be
1,048,000 times thicker, okay?
They go, "Oh."
That was only 20 folds.
I told you to fold it over a total of 50 times.
If you folded this sheet of paper over 42 times,
guess how high this would be?
From here to the moon.
And the math is right in front of 'em.
Yeah, because it starts out at 5/1,000 of an inch thick
and then it double, double, doubles,
and it's from here to the moon.
When it is doubled 50 times,
it's from here to the sun, 93 million miles high.
In other words, if you could fold it over one more time,
51 times, it'd be from here to the sun and back.
It doubles every time.
And so I humble these CPAs by doing that exercise.
That's the first marvel or miracle.
And most financial advisors don't even understand it.
The second marvel is the compounding but tax-free.
And so the way I illustrate that is the dollar doubling.
If a dollar doubled 20 times,
and it's tax-free, it will grow to 1,048,000.
Now if it's taxed as earned,
which is the way most Americans save,
when the dollar doubles to $2,
you pay tax on that.
Let's say in a 25% tax bracket,
you pay a tax of 25 cents when the dollar doubles to $2.
So now you only have $1.75 left,
'cause most people pay tax every year
on any interest or dividends.
So now you have a $1.75 that doubles to 3.50,
you pay tax on that.
Guess how much you'll have instead of a million bucks?
You'll only have $72,000 instead of a million.
7.2% of what you could have had
because you had your money in a taxed as earned account.
And that's the way most Americans save.
Now, sometimes people thump themselves on the chest
and they go, "Oh, I'm smarter than that.
I put my money in tax deferred IRAs and 401ks."
Okay, so you have 1,048,000? "Yep."
Okay, well let's look at the backend.
I call it the, the back nine
of an 18 hole golf game of life.
Let's look at taking out money.
So now you have a million dollars,
and let's say it's earning 10%,
and you need a net of 100,000,
and you're in a 33% tax bracket.
Did you know you have to pull out 50% more in a 33% bracket
to net the same amount?
You have to pull out 150,000,
pay tax of 1/3.5 to net 100.
And so I show them the math,
and the million dollar nest egg is gone,
drained dry in 11 years.
Whereas if you were pulling out 100,000 a year
outta that million and it was tax-free,
you don't have to pull out 50% more.
You just pull out 100 to net 100,
you still have the million bucks.
Not only that, but it goes on for the rest of your life.
Let's say you live another 20 years to age 96,
you still have the million.
And it ended up generating another 20 years
of 100,000 of income.
That's 2 million plus you still have your million.
That's a $3 million better retirement strategy
than the same amount of money, a million bucks,
in an IRA or 401k.
And I ask people, "How many of you would like
to have a $3 million better retirement strategy?"
Hello?
So that's just employing the first two miracles
or marvels of wealth accumulation.
The third, a lot of people don't understand.
This is safe positive leverage.
The ability to own and control assets
with very little or none of your money
tied up or at risk in that asset.
Now a lot of people don't understand this.
This is what makes the world go round.
This is where you learn to pay interest.
You view paying interest as your friend, not your foe.
'Cause there's some people
that are very shortsighted, very simple.
There's only two kinds of people in the world,
those that pay interest and those that earn interest.
Oh, how clever.
No, no, the mega wealthy people learn
when it's wise to pay interest to make more interest.
Even in the "Parable of the Talents,"
"Though wicked and slothful servant..."
You should have put your money in a bank with usury.
Now the bank is paying you interest.
Why? 'Cause they're a benevolent institution?
No, they're paying you interest,
because they can make more interest.
They become mega wealthy,
because they pay interest to make more interest.
And so people who learn to pay interest,
2, 3, 4% banks may only pay you 1%.
They turn around and loan the money back out again
or put it into insurance companies,
where I put my serious cash,
and they earn 4 or 5%.
How much more is five than one?
Don't say four, it's 500% more. It's five times.
the way I talk about this, would you hire an employee
and pay them, you know, 100,000,
if that employee made you an extra 500,000?
That's a 500% return on employment cost.
Would you buy a widget machine for 100,000
that made you an extra 500,000?
That's a 500% return on equipment cost.
Business owners understand this.
And so this is the third marvel.
This is where you use safe positive leverage.
The biggest mistake people make
is they leverage without liquidity.
Leverage without liquidity is stupidity.
You must keep your money liquid and safe,
so that when you own and control assets
with very little or none of your money
tied up at risk in the asset,
you want to keep your money liquid and safe.
Because if you tie it up in the piece of real estate,
and that real estate goes down in a recession,
you will lose.
If it's over here and it's liquid and safe
earning a rate of return compounding
at a higher rate by double the net cost,
what am I talking about?
Most of the time on my real estate,
I have borrowed money, let's say at 4 1/2% interest
tax deductible.
In a 33% bracket, every million dollars that I borrow
at 4 1/2%, I pay 45,000 a year in interest.
But I get to deduct it.
So my net out of pocket cost
is only 3%, or 30,000,
because I get to write off the 45,000 off of my taxes.
In a 33% bracket, I actually saved 15,000.
I got 15,000 back that I otherwise would've paid in tax.
So if I borrow at 4 1/2% tax deductible,
it's a net cost of three.
In my max-funded Indexed Universal Life Insurance contracts,
I have averaged over nine.
Let's just round it down to nine.
That's tax-free.
So on every million, I'm making 90,000.
And how much more is 90,000 than 30,000?
Three times 300%.
Would you hire an employee for 30,000
that made you an extra 90?
Would you buy a widget machine for 30 that made you 90?
That's a 300% return.
Well, there have been many times where I have borrowed money
at 3% tax deductible at net cost of two,
and I've earned 11 and netted 10 on my IUL policies.
How much more is 10 than two? 500%.
Banks were borrowing our money
paying us one and making five.
I was borrowing money at a net cost of two and making 10.
I was making 500%. The banks were making 500%.
We were both happy.
And you can't believe how many people do not understand
that third marvel of wealth accumulation.
So I compare it to the laws of aerodynamics.
I used to be a pilot.
I own two aircraft,
a Cessna 152 and a Piper Archer.
And you learn that to overcome
the weight of an aircraft, okay?
This is taxes and inflation
when we're talking financially.
This is what weighs down most people financially.
And so to overcome that weight of taxes and inflation
like an aircraft,
you have to have three opposing forces.
Lift, okay?
Which is like compound interest, okay?
Earning compound interest is the lift financially.
The second is thrust.
You have to have thrust to get off that tarmac.
That's tax-favored accumulation.
This is why Rothschild says, no,
that's the eighth wonder of the world.
Now, you know, tax deferred accumulation of money,
an IRA or 401k is like a propeller engine.
I would rather have a jet engine,
and that's totally tax-free.
And that's accomplished in what I call a laser fund.
And I'll show you how you can read
about this here in just a moment.
So that's thrust.
The third miracle
to get an aircraft off the ground is drag.
And a lot of people don't understand that.
When you lose drag, you'll go into a spin,
you end up in a stall and you will fall out of the sky.
And so a lot of people don't understand
if you don't have friction or resistance,
you will never get off the tarmac.
Well, most people view paying interest as a drag.
No, wealthy people pay interest,
banks, credit unions, insurance companies,
they pay interest to borrow OPM,
other people's money,
because they know if they pay interest
they will make more interest.
And this is what makes the world go round.
And many times these institutions
make 300, 400, 500%.
You can too.
So I teach people how to do this themselves
and how to become their own banker.
If you wanna learn how to do this,
I'll show you what you ought to read and understand.
So here's how you can claim your free copy
of this bestselling book
that's been flying off of our warehouse shelves.
It's called "The LASER Fund."
This is how to accumulate and access your money,
totally tax-free.
How to employ these three marvels of wealth accumulation.
But it's two books in one.
This side is about 200 pages.
This is for the left brain learner.
It has all the charts and graphs and explanations.
If you're a right brain learner, you learn by stories,
you flip it over and read this one.
This is about 100 pages, 12 chapters,
that have 62 actual stories of how to diversify
and create the foundation for a tax-free retirement,
by using these three marvels of wealth accumulation.
And if you wanna use your whole brain,
then read both of these books.
But how do you claim your copy?
You simply go to laser fund,
L-A-S-E-R fund.com,
or click on the link below.
You contribute a nominal amount towards
the shipping and handling,
and I will pay for the book.
I'll fire out a hard copy to you.
But check out if you like to listen and learn
or watch and learn.
There's options there.
If you want to learn from educational webinars,
we teach free ones.
Every few weeks, we teach different educational webinars.
If you wanna talk to a specialist
on how to employ these strategies,
you can even schedule an appointment
to talk to an IUL specialist.
But this is not about me.
This is about you and your brighter future.
So learn how to employ
these three marvels of wealth accumulation,
compound interest, tax-free accumulation,
and safe positive leverage
for your brighter future.
(bright uplifting music)