- What's more important, the swing or the clubs?
In this educational episode, I'm going to talk about
the difference between financial strategies,
which could be compared to the swing,
versus financial products,
which is the clubs, the commodity.
There's a huge difference
and I'm going to explain why you should be focusing more
on the swing instead of the clubs.
Get ready. (bright upbeat music)
So I'm Doug Andrew.
I've been a financial strategist
and retirement planning specialist now
for nearly five decades,
helping people optimize assets, minimize taxes
and empower what I call their authentic wealth.
Well, I've noticed that a lot of people,
when they would come to me through the financial dimension,
is what we call it, trying to understand
how to best save for retirement, not outlive their money.
And many times, they never came to me
until just a few years before retirement, thank goodness,
because at retirement planning
is something totally different
than maybe what you should have done, you know, all along.
But it's different than what you did for retirement.
So at retirement planning is very critical.
And often times it requires that people learn
how to get money out of those IRAs or 401ks
with the least tax impact,
and reposition it to vehicles that are gonna be tax free
from now on and so forth.
And so these are called strategic roll outs,
which is a topic that I explain on this very channel.
But in this particular episode,
I wanna differentiate between, you know,
a swing and the clubs.
Because if you were gonna be playing in a golf tournament,
let's say, and you had the choice
of using a professional golfer, like Phil Mickelson's swing,
or you could use his clubs, what would you choose?
Well, I'd rather have his swing, not his clubs.
I've noticed that most financial advisors
seem to focus on the clubs or the commodity.
Buy this mutual fund or the stock or bond or gold or silver.
It's not in the commodity, it's not in the clubs,
it's in the strategy or the swing.
And so this is why it's so critical to understand
the difference between strategy versus a commodity.
So I'm gonna give you an example right now.
See, a lot of advisors,
they simply don't know what they don't know.
And so when they hear me talking
about one of my favorite financial vehicles
that allows you to accumulate your money tax free
and then be able to access that money tax free,
and then when you ultimately die, it blossoms,
increases in value and transfers income tax free.
And by the way, nothing else in the Internal Revenue Code
that I'm aware of does that.
And the only vehicle that does that
in the Internal Revenue Code Sections 72E, 7702 and 101a
is a properly structured, max-funded,
indexed universal life insurance contract.
And if it's structured correctly and funded properly,
I deem it a LASER fund.
"LASER" is actually the title of my 11th bestselling book
that's been flying off of our warehouse shelf.
And I want to gift you a copy of this
at the end of this episode.
So stay with me here.
Now, LASER means liquid assets safely earning returns.
It's an acronym.
Now, it's tax free and it's really the best vehicle
to participate when the economy, the market is doing well,
going up, but not lose when the market goes down.
So let's just dive in on that particular aspect
of indexed universal life.
It was introduced in 1997.
And so this allows you to be able to participate
when the market goes up.
Let's use the S&P 500, Standard and Poor's 500.
It doesn't matter if it's the Dow Jones,
or the Barclays, whatever index you're looking at,
you can use several of them.
But let's use the worst decade or actually 12-year period,
the Great Recession since the Great Depression.
We're talking about the turn of the century, 2000 to 2012.
Now, people who had their money in the market,
so let's say you had your money in an indexed fund,
the S&P 500, an indexed mutual fund,
your money is still at risk in the market.
Why am I telling you this?
Because a lot of advisors make the mistake
of thinking indexed universal life
is just a life insurance policy that is investing your money
in an index mutual fund.
No, okay, an index fund is the commodity, a commodity.
Indexing is a strategy. It's a swing, not a club, okay?
So the S&P 500, if you had a million dollars
that you had saved in tax-deferred IRAs and 401ks,
in the market, by the year 2000,
you were preparing to retire and you thought
that that million dollar nest egg could generate, you know,
60, 70, 80, 100 thousand a year of after tax income.
Think again, especially if it was in the market.
What happened in 2001?
September 11th, 9/11, the terrorist attacks.
Well, from 2001 to 2003, the S&P 500,
the economy dropped about 40%.
That million dollar nest egg,
for most Americans, dropped down to about $600,000.
Now some people say, "Well, mine was worth more than that."
Well that's because you added money.
If you didn't add any money,
the million dollars went down to about 600,000
and people felt like they had lost their future.
They had to put off retirement seven years.
And finally, four years later in 2007,
it came back to break even.
They finally had a million dollars again.
And so a lot of people sighed and said,
"Okay, now I can retire seven years later than I thought."
And then what happened in 2008?
(chuckling) As Warren Buffet put it,
he said, "When the tide went out in 2008,
it revealed who was swimming naked," is the way he put it.
Yeah, people weren't protected from market volatility
and they lost 40% again in one single year.
And it took four more years until 2012
for that million that dropped down to 600,000 again
to come back to a million again.
Now during that 12 year period,
people who used indexing, indexed universal life,
many of them, that million in 2000
had doubled and even tripled to 2 and 3 million
at the end of 2012.
I had many clients that the million was worth
2 1/2 million, even 3 million
by using indexing, the swing, a strategy,
and by rebalancing, which is another strategy,
that's not a commodity.
And so there's a huge difference
between the swing and the clubs.
People who simply use the clubs, an index mutual fund,
they had to put off retirement 12 years.
They were subject to the market volatility
because they were in an indexed fund.
A lot of advisors don't understand that
when I talk about indexed universal life.
No, when your money is in
an indexed universal life insurance contract,
it is not invested in the market.
Your money is safe in the insurance company.
And that million dollars, during that 12 year period,
the general account portfolio rate
of most of these insurance companies was around 5%,
some of them 6%.
So during that decade, if the insurance company
was earning on your money,
just like any financial institution, 6%,
they need about one of those percentage points for them,
for their profits, they're in business to make money,
and they would net you 5%.
So really, indexed universal life is a strategy
where anytime you feel, you know, bearish about America,
you can just settle for the 5%.
Your million dollars, they'll pay you 5% or 50,000
that year in tax free interest, it's tax free.
But any year you feel bullish about America,
which after the 9/11 terrorist attacks,
the market went down for three years,
I told my clients to link to an index, okay?
And even when it started down,
I had them just settle for the 5%.
But then I said, "Link to an index."
And so they linked.
And what you're doing is telling the insurance company,
"Don't invest my million in the the market,
keep it safe in the company earning five,
but I am relinquishing the 5%, the 50,000.
You can do whatever you need to with that money
to have the wherewithal to pay me whatever the market does."
And so the insurance company uses that 50,000
to buy upside options, in this example, in the S&P 500.
So if the S&P goes up 12, they'll pay you 120,000.
If it goes up, you know, 16, they'll pay you 160,000,
which they did.
In 2009, most of our clients got 16% returns that year.
But see, if you guess wrong
and the market goes down or crashes,
you don't lose your million, your principal is safe.
The options expire worthless,
you don't make anything, but you don't lose.
And so during that period, when the market went down in 2008
our clients may not have made anything much that year,
but they didn't lose.
And the first 90 days of 2009, many of them locked in gains
of 16% after not losing a dime in 2008.
This is how many of them,
they made money when the market went up,
but they did not lose when the market went down.
They just stayed at breakeven,
whatever they started with when the market headed down.
That's called indexing, which is a strategy.
Is this making sense?
So if you wanna learn more
about how to employ strategies
instead of buying commodities, this mutual fund,
or that investment or gold or silver,
folks, it's not in the commodity, it's in the strategy.
So I wanna gift you a copy of this book, "The LASER Fund."
Simply go to laserfund, L-A-S-E-Rfund.com
or click on the link below.
And this retails for 20 bucks on Amazon.
You're welcome to buy it there, but I'll pay for the book.
You contribute a nominal amount
towards the shipping and handling
when you go to that website,
and I'll cover the rest of that cost
and I'll pay for the book.
I will fire out a hard copy to you.
But when you're in there claiming your free copy,
check out if you like to listen and learn, watch and learn.
There are educational webinars that are free
that we teach on a regular basis.
You can even schedule an appointment
to talk to an IUL specialist to see how to properly
structure a LASER fund,
an indexed universal life to perform the right way
so that you're learning the swing,
and they'll show you how to structure the clubs.
But it's not really the clubs that matter,
it is the strategy.
So this is about you and your serious cash
for your retirement.
So go in, claim your free copy of "The LASER Fund"
and I'll see you on the brighter side
of your financial future.
(bright upbeat music)