Welcome back. In this episode, we're going to talk about how the rich get richer
and the poor get poorer. I have a sneaky hunch which category you would like to
be in. You know, as a financial strategist for more than 45 years, I often tell the
story that when I first started, I would send out a letter with a cartoon like
this. Now, when I explained this to 3,000 financial advisers at a very advanced
training, one of them hired a cartoonist in the UK to reenact the cartoon that I
used to use with my caricature on it. So, what does this mean? This is a guy who is
so busy. He won't pay attention to this salesmen that's got all this weaponry
and this ammunition. He's got his sword and his shield he says, "I can't be
bothered by any crazy salesmen. I've got to battle to fight." How many times do we
go out in life and try to fight the financial battles and and try to make
our money grow greater than the inflation rate or and not be subject to
so much in tax and market volatility? And I'm sitting there every time that people
lose. "Hello! Hey, I've got the solution over here." Oh, I'm too busy.
I'm making money. I can't be bothered by you. And I have a solution for them. I
call it the laser fund. So, stay with me in this episode and you're going to see the
difference why the rich get richer and the poor get poorer. Because they never
do take the time to get it.
I'm Doug Andrew and as a financial strategist for more than 45 years, I've
learned some basic things. And if you aren't aware, there's really 3
sources of income --mankind at work, money at work and charity. Now, out of the 3,
most people only learn about how to go out and earn money a mankind at work. But
there's some dangers there. Because you may get in an accident. You may have a
health setback. And I've seen people lose assets like their home or money in their
savings because it is exposed to risk. And all of a sudden, the market goes down
and they lose. Or when they have a health setback or they get in an accident and
they can't earn the money, there is sort of up the creek. Well, I've learned that
money at work works 24/7. It keeps working while you recuperate from an
accident. Or if you get laid off or you're waiting to find a new job. You
know, I helped my two sons Amber and Erin author a best-selling book called
Millionaire by 30. How to have your money earning more than you do by age 32? And
my publisher Warner business books realized that most college graduates by
the time they had graduated from college 10 years later only had a net worth of
15,000 bucks at the time. That was back in 2007. That's pretty pathetic. And so, we
wrote this book to show how a young college graduate, 10 years after
graduation can very easily have their money earning more than they do by at
least age 32 if they graduated from college, let's say at age 22. They should
have at least a million-dollar nest egg generating 80 to 100 thousand
a year of tax-free cash flow in case they got laid off or they had a job
change. What's interesting is that when my father grew up, he was born in 1917.
Most of the time in his age group, many people had the same
profession for 40/45/50 years. I came along in the next generation and most of
my peers had maybe 6 or 7 major career changes in their lifetime.
Now younger people, they will have sometimes 20, 25 or 30
career changes. And so, you want a vehicle that's flexible that you can take with
you. And frankly, you ought to have your money earning more than you do by age 32.
So, you're working because you enjoy it not because you have to. So, I'm going to
show you that there's some key strategies to learn. First of all, very
simply. We need to discipline ourselves to live on less than what we make.
Sometimes, it takes people 2 or 3 decades to realize, "Oh, I need to save."
Because we all want what took our parents decades to acquire. We want the
jet skis and the four wheelers in the side-by-sides right off the bat and so
we go out and we consume, consume, consume. And we think retirement is so far off
that we will start that later. Well, I would recommend you start setting aside
money sooner than later because of compound interest and the marvels or
miracles of wealth accumulation. So, I'm going to show you sort of a bell curve
that explains the difference why the rich get richer and the poor get poorer
and what you can do differently than what a lot of the masses do in this
country, America. And actually throughout the world. So, I often think of humanity,
the population. Let's say of the world or the United States in the form of a bell
curve. And this here in the middle is the masses, right? And we have a long tail out
this way. And we have a long tail out this way. Now, this was actually in the
preface of my third book called last chance millionaire which we were very
honored and blessed it became a New York Times and Wall Street Journal number one
bestseller the second week it was released in 2007. And this was in the
preface or the foreword of that book. What we find
is that many people are here we call them strivers. They are striving to make
ends meet. They go out and they learn. They'll get their education. And they
learn how to go out and make money. But unfortunately, we didn't teach them what
to do with that money. Hello! And so, they're always striving.
Sometimes people will always have too much month left at the end of their
money. They borrow to consume instead of conserve. And so, they're always striving
and as soon as they get a raise, they go out and get a bigger house. And get a
newer car. And they always just seem to spend or whatever their increase is. And
so they're always striving and they never will achieve financial
independence. These are the ones that the government was forced to provide Social
Security benefits because they would run out of money in retirement. And frankly,
Social Security... You know, the FICA that they withheld
from our paychecks, the government owes about 130 trillion in a
future Social Security and Medicare benefits to the people they withheld it
from their paychecks. But do you know that if they stopped withholding FICA
and Medicare from current workers paychecks, they would be out of money in
less than a year. And so, that is totally contingent upon the upcoming workforce
paying for the people they would do it from before.
Sounds like the definition of a Ponzi scheme, right? But the government gets
away with that. Sometimes people begin to arrive at financial discipline. So these
are the arrivers. Now, from a financial standpoint, arrivers
learns 3 marvels or miracles of wealth accumulation. Compound interest,
the difference between that and simple interest. Tax-free accumulation of their
money. And third safe positive leverage. Now, leverage isn't bad. Leverage without
liquidity is stupidity. But leverage is the ability to own or 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 that's why I write books to help them
understand these three marvels or miracles of wealth accumulation. But when
they begin to learn that, they arrive at financial independence. They're living on
less than what they earn. Then we have the thrivers. Now, the thrivers, they
differentiate themselves from the arrivers simply by repeating the process.
This isn't a one-off. If this works on one investment home or property or this
strategy, it'll work on this one and this one in this one. You repeat the process
and the thrivers create mega wealth. Now, unfortunately, a lot of people hit a
certain point in their life. It's usually retirement. And if you've heard me very
much or watched episodes, I don't like that word. Retire means put out of use. It
was created in the Industrial Revolution when they retired worn out equipment,
they put it out of use. They decided to start putting worn out people out of use
and when they did that, the life expectancy for the average American was
only 7 years. A government worker retiring was 6 years. A military
retiree only lived 5 years. And so, that's when the Social Security system
was designed to only have to pay out benefits an average of 7 years. Well,
people are living now with a baby boomer couple. One of you will make it to age 95
and we run up health care costs and that's why the Social Security system
that was designed to only have to pay out benefits 7 years is now
basically heading for bankruptcy because it can't sustain people who live 20 or
25 years. Well, what happens when all of a sudden you hunker down into a survival
mode? You stop doing what you did to thrive. And so, you get into the survival
mentality and your wealth dives, your health dives. And people pretty much
become self-fulfilling prophecies. They die when they run out of money and out
of health. So, in this bell curve, you have strivers, arrivers, thrivers, survivors and
divers. For 45 years, my passion and purpose has been to help people like
you and those you care about --your children,
grandchildren to continue to thrive from one generation to the next to the next. I
have all kinds of stories of people who just dumped their wealth on their
kids. They had an entitlement mindset. And I wrote a book called Entitlement
Abolition. And the wealth dissipated and disappeared and by the fourth generation,
they were back striving again. It doesn't matter if this is intergenerational or
in one lifetime, you want to be in a proactive zone. Because most people just
sit there in a reactive method and it's just hope and despair, they're going to
outlive their money. I hope I don't outlive my money. And
and it's miserable. And they become a self-fulfilling prophecy. Over here this
is the pro active zone of predictable results. So my goal for all of the
students and mentees that I have in my life is to help them become a thriver
and continue to repeat the process. And transfer that down to their children and
grandchildren into future generations. So, what are the 3 marvels or miracles
of wealth accumulation? Number 1, compound interest. Now, I like to use the
metaphor of an airplane. I used to have a private pilot's license. Just like in
order to get airborne, to soar, to fly, (financially speaking)you need to
overcome the forces of gravity. And so in order to do that, you have to have 3
opposing forces. So, the first is you have to have lift. Lift is like compound
interest. You also have to have thrust. Now, I prefer instead of a propeller
engine. That would be like a tax-deferred IRA or a 401k.
I would like a jet engine. So, I don't want tax deferred. I want tax-free
accumulation of my money. And so, that's the thrust. But the third force is drag.
And a lot of pilots don't understand that. If you don't have friction or
resistance or drag, you'll never get off the tarmac. If you're in the air and you
lose drag, you stall out and you will crash and burn. So, what is that? Some
people view pain interest as a drag. Now it's what makes the world go round.
See, it's a win-win situation. I pay interest like on a home mortgage in
order to earn higher interest in order to own a home. That's called safe
positive leverage. You pay interest sometimes in order to earn higher
interest or accumulate wealth. Many, many wealthy people that I have helped, they
borrow hundreds of millions of dollars at 3 and 4 percent tax deductible
interest. It's a net cost of 2. And they put it in a laser fund and earn 10. How
much more is 10 than 2? Don't say 8. On a million bucks, they make
100,000 while they're paying 20,000 to borrow the money. They're
making 5 times. If you want to know how to become your own banker and do
this, this is how the rich get richer and the poor get poorer. What I do is I
explain in my various books the Laser Fund is my most recent one. It has 2
books in one. One is 14 chapters about 200 pages with all kinds of charts and
graphs of and explanations about what I'm talking about. Whatever depth you
want. You flip the book over and this has about 100 pages. 12 chapters
with 62 actual clients stories of how the laser fund has helped people
accumulate and access their money tax-free and allowed it to transfer
tax-free. You can get a free copy you go to laserfund.com. and you just cover a
nominal shipping and handling fee. And you can do a deep dive by reading or
there's an 18 hour master class that you could take where we go very deep into
every chapter if you would like. But I am most interested in you getting educated
so that you can take ownership and you can be among the thrivers and you will
get richer instead of horror.