- The Laser Fund eliminates the losses
which outperforms the actual market.
In this video episode, I'm going to address
what if your retirement plan paid you
up to let's say 10% with your money
whatever the market did, but guaranteed you
that you wouldn't lose money when the market went down.
I'll explain, that is not too good to be true.
That's how Indexed Universal Life actually works.
(upbeat music)
So I'm Doug Andrew.
I've been helping people optimize assets
and minimize taxes now for north of 48 and a half years.
My favorite financial vehicle,
without question to help people accumulate access
and transfer their money totally income tax free
is what I call a Laser Fund.
Now I've been very blessed in my life
who have authored a 13 book so far.
My 11th book is still flying off of our warehouse shelves.
We send out about 1000 of these a month.
It's titled "The Laser Fund."
And so what is a Laser Fund?
Well, it's a properly structured
and funded maximum funded indexed,
universal life insurance contract.
I would say that over 99% of IUL policies sold in America
are not structured to do what I'm gonna show you here.
So that's really sad, but I want to gift you a copy
of this 300 page book at the end of this episode.
So stay with me.
And this channel three dimensional wealth is not about me,
this is about you and your brighter future.
I love to teach high concepts
coupled with high touch right brain and left brain.
So let's talk about what I said at the beginning.
What if I agreed or a company agreed to pay you
up to let's say 10% when the market was going up,
but when the market went down, they guaranteed you
you would not lose due to those market downturns.
That is indexing, that's not an index fund.
So let's talk about how this works
because I began in 1974
and I've always said the stock market
is like a person with a yo-yo.
Okay, it goes up and down and up and down.
Hopefully that person with a yo-yo
is gonna walk up some stairs,
meaning that through the decades the S&P 500,
that Dow Jones is gonna keep growing.
Well, there was a period of time
like the year 2000 and 2012,
that person with a yo-yo
was walking across a flat surface, so to speak.
The S&P, the Dow Jones, the stock market
was basically where it was 12 years earlier
and they didn't make any rate of return
during that 12 year period
it went up and then down and up and down.
And so you wanna eliminate that.
I had over 3000 clients in 13 Western states
when I began back in 1974, till 1980
and then EF Hutton introduced universal life.
And then 17 years later,
they introduced Indexed Universal Life, not EF Hutton
but it was actually ING.
And I have never looked back
because this has allowed my clients,
and they've never been happier
than when they got their money out of the market
starting in 1980, but also since 1997
to be able to participate when the market goes up
and not lose when the market goes down.
So how can that work?
Volatility is what causes people the heartburn,
or the fear of loss,
as Will Rogers once said, "People get more concerned
about the return of their money during downturns
rather than the return on their money."
So Crestmont who does a lot of research,
they studied the S&P 500.
That's a very common index or measuring tape.
And they measured it from 1960 to 2010.
That was a 50-year period.
And this is what they found.
If you could eliminate 100% of the loss years.
Now, in a normal decade,
you will have seven gain years compared to three loss years.
2000 to 2010, there were five loss years,
and only five gain years,
people with Indexed Universal Life
actually doubled their money during that time period.
Their average return was 7.23%,
whereas people had their money in the market,
at the end of 2010,
they still only had about 62 or 63%
of what they started with 10 years earlier.
It took two more years until 2012 to get back to break even.
And so they said that
if you eliminated the 100% of the loss years,
how much would you need of the up years
to outperform the market?
And they found that you would only need 25%,
only one fourth of the up years
if you eliminated the loss years to outperform the market.
And I show people this
and still I have advisors out there going,
why would you not want to participate in those upswings?
Why would you wanna be capped?
Well, 'cause I want to not participate
when the market goes down.
I'm gonna show you why, okay?
So here's the myth.
A lot of times Wall Street
and these advisors will say, well, the market's up 50%
and it goes down 50, up 50, down 50.
It's been flat.
That's what they say.
It's a 0% rate of return.
No way it isn't, okay?
If the market goes up, 50, down, 50, up, 50, down, 50,
and they say, that's zero
because you add up two plus 50s
and two negative 50s, That equals zero, that is not correct.
Let's show you what actually would happen
if your money was in the market, in the S&P.
If you had $100,000 and the market went up 50%,
your account value would be 150,000, right?
Now the market loses 50%.
Well, 50% of 150 is what?
75,000.
So if you lose 50%, you're down to 75,000.
You've lost 25% of your original principal.
If the market goes up 50 and then down 50,
it's not zero, you're down 25% from your starting point.
If the market then went up 50%, that 75,000
with a 50% increase is only gonna grow to 112500.
Then if the market goes down 50%,
you're down to 56,250.
Are you getting it?
Yeah.
Your real return was a negative 43.75.
You lost nearly 44% of your original 100 grand.
It's not zero.
And so this is where a lot of people get confused.
$100,000 in the S&P,
day one in the year 2000,
we saw that go down 38% from 2000 to 2003,
mainly as a result of the terrorist attacks.
And then the market rebounded 83%.
Now I remember hearing some of the gurus on NBC
say, oh, well, the market dropped 38%
but it's up 83% and people are going, oh wow
I should be way, way ahead.
And they looked at their statements
and they couldn't believe
that they were just barely above where they started.
The actual return was 1.92%
compounded annually during that time period,
because they didn't understand that if you have a 33% loss,
if 100,000 goes down to 67,000,
67,000 has to have a 50% gain.
If you lose 50%, if 100 grand goes down to 50,000,
50,000 has to have 100% gain to get back to break even.
This is something a lot of advisors don't ever think about.
So the myth is in Wall Street.
Oh, if you just hang in there
during the ups and the downs, you will average 12%.
And yet Crestmont and Dalbar has done studies.
And on 20 year periods,
they said if you had your money in the market
in any 20-year period, you'd probably average around 9.14%
but that's not what's actually happening.
And by the way, that's before tax.
If you had a million dollar nest egg earning 9%
in retirement, theoretically,
you gotta be able to to pull out 90 grand a year
without depleting principal but that's not all your money.
You pull out 90,000, you pay 30,000 in taxes
and a 33% tax bracket between federal and state.
You're only netting 60,000 to buy gas and groceries.
And then they charge you 1% asset management fees
on that million.
So you really only netting, maybe five.
You're earning nine and you're netting five.
In actuality, they said that most retirees
are only earning about 3.8,
sometimes only 3.49
because they're buying and selling at the wrong times.
Most Americans, especially retirees,
when the market starts to drop down 20, 25%,
they go enough already and they sell low,
and they wait, wait, wait, wait, wait
till the market comes back up again and then they buy high.
So the average American
is only really earning about three and a half percent
with their money in the market, which is pretty bad.
That's what precipitated the 4% rule
in the financial services industry.
The broker dealers only want their advisors
to illustrate a 4% payout
which is pretty pathetic.
A million dollar nest egg
only generating 40,000 a year of income.
You have to pay tax on that 40.
You're only netting in a 25% bracket, 30,000 or 3%.
You subtract the 1% asset management fees on the million,
you're only netting 2%.
That's pretty ridiculous.
That's unacceptable to me.
So I like indexing.
So let me explain indexing.
If I have a million dollars of cash value
in my Indexed Universal Life Insurance contract,
it's earning a general account portfolio rate
in the insurance company.
Now, anytime I feel bearish about America
like the economy is going to be going through a recession,
I can just settle for the 4%
which is 40,000 and it's tax free.
You can do that.
And I've done that many times when we've been in recessions
like 2002 and 2003.
I didn't just sit there and earn zero
because if the market goes down,
you don't make anything, but you don't lose anything.
Well, you can settle for that
but anytime you feel bullish about America,
you can link your returns to an index
or indices of your choice.
And so all you're doing,
you're not telling the insurance company
to take one dime of your million dollars
and put it at risk in the market.
That would be a variable life policy
invested in an indexed mutual fund.
You would lose 30 or 40%.
No, I don't wanna lose.
My million has to stay safe in the insurance company
earning in this example four.
What I'm giving up is that 4% interest,
that 40,000 and I'm letting the insurance company
fund an options budget
so they have the wherewithal
to pay me whatever the S&P let's say does
at the end of that year
or whatever the linking period is
when you're a two year, five year.
And so if the market goes up eight,
they'll pay me 80,000 on my million.
If it goes up 12, they'll pay me 120,000.
They may cap me at 10 or 12 or whatever,
but see the trade off is if the market crashes 20, 30, 40%
like 2008, I still have my million.
I didn't lose one dime.
I didn't make anything but I didn't lose.
The options expire worthless.
But because of that, I know that I will come out way better
by not losing when the market goes down,
'cause what did they find out,
that you only need 25% of the up times
to outperform the market if you eliminate the losses.
That's the beauty behind indexing.
So that million earning a general account portfolio rate,
let's say a 4%
allows you to be able to fund an options budget
with the insurance company,
and they'll pay you if the market goes up,
but if the market goes down, you don't lose.
It's incredible.
And the remaining money in your insurance policy
comes back up to the million dollars.
You're just simply allowing them to use the interest
on your million.
Does that make sense?
So when you look
at some of these time periods, like from 2007
before that 2008 crash, sometimes you may not earn anything.
Zero is your hero here and here,
but I would rather go through
and end up with a substantially more money here,
691,000 by the end of 2012,
instead of not even being back to break even.
That's the beauty behind indexing.
So when you look at indexing options,
you can check out on this
at 3 Dimensional Wealth channel,
be sure and subscribe
and check out a lot of the other educational videos.
I'm passionate about providing insights into opportunities
that maybe you didn't know existed before.
Many of our professionals that we point our students to
may diversify our clients into 40% into a one year high cap,
maybe 11% cap.
40% in a two year and 20% in a five year
or 40% of the one year.
Because the average return
over 20 year periods has been 11.3%.
That's pretty incredible.
You earn 11, you're gonna net over 10.
The cost of the insurance
only uses about one percentage point of your rate of return.
I'd rather earn 11 and net 10 tax free cash on cash
than have to earn 15 or 16% in the market after tax
to net nine or 10.
Does that make sense?
So folks, sometimes our advisors will tell their clients,
hey, let's diversify 50% into a two year,
50% into a five year because they're younger people
and they have those types of time periods,
especially when the market is down,
that spills opportunity,
you may wanna lock in
and be able to experience a five year gain.
The average returns have been 14% on those.
You wanna see actual rates of return.
Here are some samples of statements of clients
where they've been diversified in five different indices.
A million dollars allocated maybe 200,000
in each of five different indices.
That's how you diversify into superior strategies, okay?
14.89, 10.25, 15.07, 8, 13.
You average those, it's over 10%.
Same thing with this statement.
We do this all the time
and there are some years and some periods
where you will look over a 12-year period like this client
and the average returns have been 12.88% tax free
because they did not lose when the market went down
and they made money when the market went up
and they were able to capitalize like in March of 2020
when the COVID-19 pandemic caused the market to drop 30%,
they linked to a one year point to point with no cap.
And many people locked in gains that year of 61.33%.
You can do this.
This is how you can learn more
about this incredible strategy.
I wanna gift you a copy of this 300 page book.
It's called "The Laser Fund."
How to diversify and create the foundation
for a tax free retirement.
Eliminate the losses on your retirement account, okay?
Get your money out of the market,
outta those IREs of 401ks.
You're not gonna be the lower tax bracket
when you retire if you're a saver.
So here's how you claim your free copy.
You simply go to laserfund.com
or click on the link below.
L-A-S-E-Rfund.com.
And this is the 300 page book.
You contribute a nominal amount
towards the shipping and handling.
I require some skin in the game.
I will cover the rest of that cost
because that won't cover it all.
And I will pay for the book.
I'll fire out a copy to you.
It has 200 pages of charts and graphs and explanations
in the left brain side.
If you're a right brain learner,
you flip it over to this one
and it has 62 actual client stories
of how the Laser Fund is an incredible instrument,
not just for retirement,
college funding for your kids and grandkids,
working capital for business, emergency funds,
real estate management,
estate planning and on and on and on.
This is about you and your brighter future.
So go to laserfund.com.
Let me fire out a copy to you.
There's options there.
If you like to listen and learn, watch and learn.
There's even master classes and actual educational webinars
that we do on a regular basis.
And you can even schedule an appointment online
to talk to an IUL specialist
to help you see how this can be applied
with your numbers in your particular set of circumstances.
This is about you and your brighter future.
(upbeat music)