What average rates of return have IUL policies historically earned? In this episode and by the
end of this video, you will understand that most 20-year periods IULs have averaged about 9.62%
even during the great recession that was 2000 to 2012.
I'll give you examples of that and you'll also see that in some years like 2017, 2021
some people locked in gains of 16%, 25%, even 61.33% tax-free.
So, I'm Doug Andrew, I've been a financial strategist and retirement planning specialist
now for north of 48 years helping people optimize their assets minimize taxes and empower their
authentic wealth. And so, in this episode, I'm going to actually show you proof uh how max funded IUL
policies can credit phenomenal rates of return. But you don't have to have pie in the sky rates
of return to outperform most IRAs and 401ks that are invested in the market, okay. Why? Because Dalbar
who studies investor behavior says that most people who have money invested in IRAs or 401ks
in the market are only earning an average of three and a half percent. Now, that's pretty
pathetic. Dalbar says, if they would just buy and hold they would earn 9.14% before tax.
After-tax they would net maybe 6%. So, on a million-dollar nest egg if people were retiring
and had a million bucks. That means you pull out 90,000 a year hopefully, without depleting your
principle of a million. But you're only netting 60,000 or 5,000 a month to buy
gas and groceries that's because of the taxes you pay on those. Dalbar says the reason why most
people only average three and a half is because they're buying and selling at the wrong times.
See, most people when they see the market start to go down and it dips 15, 20, 25, 30, they finally
go enough already and they sell. I want out and they sell low. Then they wait until
the market turns around and comes back up up up and then they buy high and so the average
investor in America. The average retiree in particular is only really earning about three
and a half percent and that's why the financial services industry came out with the four
percent rule. They don't want you to pull out more than 4% on a million-dollar nest egg
that's only 40,000 a year because they don't want to be sued for you outliving your money
and so you have to sign a waiver if you're gonna pull out more than 4%. Isn't that pretty
ridiculous? So, I'm going to show you why max funded IUL is my favorite vehicle because
I've earned rates of return averaging 9.6. Some years I may not earn anything but I don't lose.
Other years, I may make 61% or more as I'm going to show you. So, when we talk about it I want to
simplify it at first. If you understand the rule of 72 you take whatever rate of return you're earning
let's say it's 8% and you divide that into the number 72 and 8 into 72 is 9. That means
your money will double every 9 years. Does that make sense? If you're earning just 5%
five into 72 is 14.4. Your money will take 14 years to double. So, if your money's in
a bank right now at one percent it'll take 72 years for your money to double. That's pretty
pathetic. Now, you'll see that indexed universal life during the worst decade since the great
depression what we call the great recession will go from the year 2000 to 2010. Now, in actuality
it took two more years for most Americans to make back the 40% loss they incurred in 2008.
In fact, they lost 40% twice in that decade. The lowest rate of return the average was 7.23%
on all of our thousands of clients that had indexed universal life during that period.
Which means basically this. You could have been rip van winkle and let's say that you
had a million dollars you were about to retire and you had a million dollars in the year 2000.
In the market in IRAs and 401ks. From the year 2000 that million-dollar nest egg
dropped 40 percent from 2001 to 2003 after the 911 terrorist attacks down to 600,000 and it
took four years to make back that 400,000 loss in 2007 and they were barely back to break even
and then in one single year 2008 they saw that million dwindle down to 600,000 again in one
single year and it took four more years till 2012 to get back to the million-dollar level. Now,
in the first 10 of those 12 years universal life our clients averaged 7.23%. You could have
fallen asleep like rip van winkle and woken up at the end of 2010 and said, "Wow, what happened while I
was sleeping?". What? You didn't hear about the 911 terrorist attacks and how the market just went
you know through the floor and you didn't know about 2008 the mortgage meltdown?
It's been horrible", and you run over and you look at your index universal life account
that had a million in it when you went to sleep 10 years earlier and you look at it and it's
worth 2 million. Why? Because you take 7.23 let's just write 7.2 percent you divide that into 72
and it's a nice round number 10. In that decade people that had a million many of them had more
than double that at the end of that decade when most Americans were barely about to break even.
So, at 7.2 percent your money will double every what 10 years. In the first year if you started
out with 125,000 in 10 years you'll have 250,000 if you're just earning 7.2% and by year 20
you'll have 500,000 and then in the 30th year you'll have a million. We've had many people
start out with 125,000 and an IUL policy 30 years ago they have a million bucks today. Now, you could
sock away 500 a month and end up with a million in 30 years too. You don't have to have a lump sum.
But what did I say at the beginning of this episode? The average for me and for our clients
ever since indexed universal life came out and even universal life in 1980 was 9.62. Let's round
it down to 9.6. So, at 9.6 annual return, you divide 9.6 into the number 72 and it's seven and a half.
Your money doubles every seven and a half years. So, if you started out with five hundred thousand
which we've had many clients do this you don't have to start out with that much. Without adding
a dime that five hundred thousand doubles every seven and a half years to a million, two million,
four million, eight million, and thirty years after starting out with a half-billion they
now have eight million but it's tax-free. They don't have to pay tax on that we have a couple
in California that has eight million right now and it's been generating between 8 to 10
percent payout. They pull out you know between 600,000 to 800,000
a year tax-free. We actually took that couple from the highest tax bracket to a zero percent
tax bracket in five years. The point is this, they don't even need 800,000 they only
need 300,000 to live on and so this is actually growing while they're taking out
tax-free income. If they were taking out the amount that most IRAs and 401ks would allow you
they would be depleting it because you have to pay tax on it. You have to pull out 50% more money in
a 33% bracket. If you pull out 100,000 in an IRA 401k you're only netting maybe 67,000
after-tax and a max funded IUL you only have to pull it up pull out 100,000 to net 100,000.
Because it's tax-free. Does that make sense? So, let's look at this actually with some statements.
Historically, there's a lot of naysayers out there that pooh-pooh it, "Well, I've never
seen one of these IUL policies earn those rates of return", oh really? So, that's your reasoning since
you've never seen it you don't think it exists? And I usually go, have you ever seen your brain?
How do you know that exists? You know, that's silly reasoning. So, here's some statements. This
is just an example where many of our clients will diversify and so they'll get an annual statement
and over here one sheet of paper it shows their money and what each of the accounts.
You have a bucket and you have maybe five different places or four different places where
you are linking to different indices. Those are the indexes I talk about in other episodes. By the way,
post a comment here or share this video with somebody that you think would be intrigued
in hearing this. But what these numbers are right here this was an actual annual statement
on a portion of their money they got 15%, they got 8%, on another 13%, 14.89% and 10.25
average that. Pretty incredible and by the way that average is more than 9.6. This is an actual annual
statement very simple. Here's another one, this one shows 14.89 16 and a half 10.25 15.07 and 13%.
This is actual rates of return historically that policies have earned and clients get
these annual statements it's very simple. An IUL professional reviews them with you and they can
reallocate and put a bigger percent over here or there. Watch other episodes about how to rebalance
but let me show you something. If you meet with an IUL professional who understands how to manage
this by gathering once a year minimum. You might get a statement like this and you can't
see these numbers here. But here is where a client was diversified and had six thousand in a one year
index sixty-three hundred dollars in a one year high cap and another one we had another
6,000 in a high par index. Se,e these are different options inside of your IUL policy and
then one year no cap. They allocated 18,000 into that one and one year later this was a march of
2020 to March of 2021 in one year they ended up returning nine percent in this portion 12
in that one seven and a quarter here and 61.33 percent in that one and so they ended up
with the grand total that they had was the 18,000 and this one it ended up growing to $29,000.
These are real statements. Let me give you a glimpse of one other. We had a client of my sons
and what happened in March of 2020 the Covid 19 pandemic and people panicked and the market
dropped 30 percent. Now, when there's anxiety there's opportunity and my sons called their
clients and said here's your opportunity they don't happen very often. Instead of just earning
maybe you know 9, 10, 11, or 12%. You may have an opportunity here to really do well this next
12 months. Why? Because the market went down. Most advisors are going oh you've already lost just
hang in there, hoping to get their money back. No, what our sons told their clients, "Oh no, why don't
you link for one year a one year point to point with no cap?". Now, you can watch other episodes to
understand what that means. But this client started in March of 2020 without adding a dime they
started with 872,000 dollars and because they did that March of 2021 the market was up 66.33%
If you choose that one they subtract five percentage points off the top and they netted
61.33%. We had many clients that earned that but this client made 535,000 over half a million
in one single year and his account was worth a million three hundred and eighty-seven thousand
four hundred and nineteen dollars a year later. But even more important than that if the next year
2022 the market had crashed 40 percent. He would not lose one dime of the 1,387,000.
He wouldn't lose one dime of the half million he made the year before. That's the
beauty, it's called locking in your gains and resetting. So, these are actual statements. I don't
know what your returns will be. I cannot predict the future all I can do is show you historically
what they have done in the past and the key thing is even if you fell asleep you'd probably
come out earning 7, 8, 9, 10, percent based on historical actual rates of return.
But if you rebalance like I'm talking about you can tweak your rate of return from 7.23%
up to 10 or 11 percent like in that worst decade since the great depression. So, that's the beauty
behind it be sure and meet with an IUL specialist that can show you hypothetical illustrations not
just on an average rate of return but test it backtest it based on the actual market
not just hypothetical rates of return. So, you can learn about this in the laser fund if you
have not claimed your free copy be sure and do so by going to laserfund.com and you contribute
a nominal amount towards the shipping and handling. I cover the rest of that but this is 300 pages of
charts graphs explanations and 62 actual client stories. So, here is to your brighter future.