How to make 100 more than cost? In this episode, I'm going to answer
the question, "Where can I borrow money at the lowest possible cost?"
It's probably not where you think. But I'm going to show you how you can borrow at very low rates
and earn much higher rates on that money. You can become your own banker
So, what do I know? My name is Doug Andrew. I've been around the block for a few years.
I have actually been a financial strategist and a retirement planning specialist for more than
4 and a half decades. I've written 11 books so far. My 12th one is about to be released here in
a few months. In most of my books, I talk about this concept about how you can become your own
banker. And so, I'm going to teach you in this episode as you stay with me and then I'm going
to gift you a copy of my book at the end of this. I'll show you how to claim your free copy.
How money really works. A lot of times people will quip, "Well, there's two kinds of people
in the world those who pay interest and those who earn interest". And I go, "Oh,
that's cute. No, you don't get it. There's actually 3 kinds of people in the world.
Those who pay interest those who earn interest and those who pay interest in order to earn
more interest." Those are the mega wealthy thrivers, okay? When we talk about banks,
credit unions, insurance institutions, they actually have your money on deposit. There's
only 4 things you can do with your money, folks. You can spend it. You can lend it, you can own
with it or give it away. Most people think, "Well, I want to own with it." True. But I double dip.
Okay? I own and loan on the same assets and I make tons more money. Whenever you put your money in
a bank credit union or an insurance institution, it's in a lended position. Do you understand that.
Are they just a benevolent institution paying you interest and they take your money and put it
in some vault? No. They loan it back out again at higher rates they invest it. And they earn
rates of return. Sometimes 5 times greater than what they're paying you to borrow your money.
For example, a lot of times banks pay a pathetic 1%. Every million that we deposit in the bank,
they pay us 10 grand a year and they turn around and make 50,000. If they loan it back at 5% or
many of them for liquidity and safety will put their tier one assets into insurance institutions
because insurance companies, the legal reserve insurance industry is the backbone of America.
And they have reserve requirements that are far more stringent than banks. And they have
higher safety ratings. They're often rated triple A instead of triple B like most banks.
So, banks are increasing the safety and the rate of return when they do this.
But see, when you talk about borrowing money at the lowest cost, whenever I borrow from a bank,
they're going to charge me interest. Now, if I have good credit, if it's for a long-term loan
like a mortgage, I might be able to borrow money at 6% for a house. Right now at the recording
of this episode, people are borrowing money at less than 3%. I remember back in the 1980s, home
mortgages were at 18 to 21 percent. Yep. But see, interest rates are relative. When interest rates
are high for borrowing, they're high for earning. CDs at banks in 1980 were paying over 10%.
When interest rates are low for borrowing, they're low for earning. Interest rates are interest
rates whether you're on the uh paying end or the receiving end. So, I can borrow money let's say at
3%. If it's for like a house or for a business, I can tax deduct it if I do it the right way the way
the IRS says. So, between federal and state tax, if I'm in a 33% bracket, if I borrow money at 3%,
every million I borrow, I'm paying 30,000 a year in interest but I can deduct that. And if i'm in a
33% bracket, I save 10,000 of tax. I got that back in a credit or a tax refund. So, the net cost of
a 3% deductible interest rate is really 2. If I'm borrowing at 6, it's a net cost of 4. You got it?
Well, you want to make a ton of money if you borrow at 6 a net cost of 4 and you took
that money that you borrowed and you earned 8, how much more is 8 than 4? Don't say
4. It's 100% more. It's double. You borrow a million at 40,000 a year cost and you make 80,000.
Let me put it this way. Would you hire an employee for 40 grand that made you an extra 80 grand?
Would you buy a widget machine for 40,000 that made you an extra 80,000?
Yeah, I'll do that all day long. That's what I'm talking about. Do you know for over 45 years,
I have borrowed money at 6% a net cost of 4 and I've made 8, 10, 12, even higher? But right now,
I can borrow money at 3% a net cost of 2. And by using indexing and rebalancing (which I explain
in the book I'm going to gift you so stay with me here), I've been making 10. I borrow at a
net cost of 2. A million I pay 20,000 a year for and I turn around and make 100,000. How much more
is 100 than 20? 5 times. 500%. I don't care if it's 100%, 300 or 500 percent. This is how money
works. So, let me explain how you can borrow money at the lowest possible cost and then
earn rates of return double, triple, quadruple, maybe 5 times the cost of borrowing the money.
This is what savvy multi-millionaires do to grow their wealth. My favorite vehicle where I park my
serious cash for this concept is in the max-funded indexed universal life insurance contract
where I take the least amount of insurance that the IRS will let me get away with
and I put in the most money. I self-insure. And so, I will have a million dollars of cash value
there. And historically, if I wanted to, I can just leave the million in there and it's earning
7.2 - 3 percent in the worst decade since the Great Depression. If you earn 7.2%, it will double
every 10 years. The million doubles to 2 million. In 10 years, 2 million doubles to 4 million. And
another 10 years it's going to do that. While it's doing that, I can be my own banker. So, while it's
earning that rate of return, I can borrow that money. iIcould withdraw it but then it wouldn't be
doing what I just said. So, if I need money, I can actually borrow money out of my insurance
contract and I can borrow it 2% and they'll credit me 2%. But it's just called a zero-wash loan. They
don't charge me anything. But I know how money works. And so, I check the box 'I'm going to
borrow a million" because the insurance company will loan you the equivalent of the money you have
on deposit with them in the insurance policy. So, if you borrow a million, they may charge you 4%,
4.5, 5%. They usually guarantee that rate in the contract. But they'll keep crediting you whatever
the insurance policy is earning based upon the index that you're linked to. Most of the time,
I've earned 8%, 10%. Some years, I don't make anything. But other years, I've made 16, 25,
55. In 2017 (not just me), many people who learned this (business owners for example) borrowed money
out of their insurance policies at 5%. And they were credited that year 16 to 25 percent. So,
the cheapest place to borrow your money in my opinion is at no cost. You actually make
100; 200; 300 percent more by borrowing it. So, the net cost isn't anything. You're making
money by borrowing that when you have your own bank. But if you wanted to borrow from the bank,
secure it with real estate; you can borrow money at 3% if it's for a personal residence. I've
always been able to do that. I keep that money and I borrow at 3 which is a net cost of 2. Where
do I put it? I put it into the laser fund when I ever need to access that money. I can borrow at 5
and keep earning 10, 15, 25. Are you beginning to get it? See, a lot of people don't understand the
dynamics of money and how money really works. So, when people ask me, "Where can I borrow money at
the lowest possible cost?" They don't understand when I say, "Well, lowest possible cost or gain?"
-"What do you mean? I want to borrow money at the cheapest interest rate?" -"Well, how would you
like to be earning uh 10 or 15 or 20 percent more than the cost of borrowing the money?" They go,
"Huh?" And I know I need to educate them. That's why I'm passionate about providing
educational videos like this to help you understand how money really works.
So, let's connect all the dots here. Now, if this is intriguing you, subscribe. Search some of the
other uh episodes that give you education on this 3-Dimensional Wealth Channel. Click like. Share it
with your friends. And stay with me another couple of minutes. I'm going to gift you a copy of my
most recent best-selling book. It's called The Laser Fund, okay? Let's connect the dots here.
Business owners can use this concept with their working capital for business so, that their money
is earning rates of return of 6, 8, 10 percent higher let's just say an average of 8 percent.
And anytime they need to access that for their business, they can borrow it at 4 and keep earning
8. They're making 100% more than the cost of the funds and their working capital account.
Let's talk about real estate. Whenever I borrow on real estate, even if I had the cash to pay
cash for it, that would cost me money because it's an opportunity cost. I'm giving up the opportunity
to earn a rate of return. So, I never pay cash. I've never paid a down payment out of my pocket.
I keep all my money liquid and safe in my insurance contracts, in the Laser Fund. And so,
then I borrow... I take out a mortgage. I can borrow money at 6% and that cost of 4.
I can borrow right now at 3 and that cost of 2. Why? Because the money that I could have paid
cash for it, I would earn nothing if it's sitting in a paid-off property.
This way I'm able to earn money on my money here and just a small portion of the interest on this
meets the mortgage payment and the rest is profit. If I'm earning 8 or 9 or 10 percent
and the mortgage is costing me 2, I'm making 500% sometimes by not paying off the house or paying
cash for the house. My house is paid off anytime I want with an electronic transfer phone call.
I can transfer the money from this pocket in my insurance policy over here and pay off the house.
But if you understand what I'm saying, I can use it for my real estate investment portfolio by
borrowing money at the lowest possible cost and continuing to make more money. So,
when you do this, whether it's for real estate whether it's for business, or any other endeavor,
I would strongly recommend that you borrow at the lowest possible cost from an institution. But if
you start to have your own bank in your own Laser Bank as I call it with an insurance contract, the
cheapest place to borrow money is from yourself. And then you keep earning double, sometimes 5
times what you're paying to borrow money on your money while you're using it for whatever else you
need it for. We actually have a video series that my son recorded his name's Emron Andrew and it's
called The Laser Bank and in order to understand that video series if this is arousing curiosity
for you and you want to understand this better. The first thing I would do is read and study this
book. This is my 11th book. It's called The Laser Fund. Simply go to laserfund.com. Study, learn,
engage, and we can help you achieve opportunities that you probably never knew existed before.