- Too many Americans are storing cash
in a non-prudent investment.
In this educational episode, I'm going to address,
this is not a prudent investment, but chances are
you are making the investment that I'm talking about.
Get ready.
(upbeat music)
So I'm Doug Andrew, and I've been helping
thousands of Americans optimize assets, minimize taxes,
and empower what I call their authentic wealth
now for just about five decades.
So I've been around the block.
I started in 1974.
I'm 70 years old right now
and I love writing and speaking and teaching.
Thank you for viewing this channel.
There's a lot of educational episodes on this channel,
so consider subscribing or posting a comment.
But in this episode, I want to address
what a lot of people when I share the slides
I'm gonna go through in just a moment, they just get this,
the blood drains out of their face sometimes.
So are you ready?
How much would you invest in this following investment
that I'm going to describe the features?
You determine the amount and length of time
for monthly contributions to continue into this investment.
So far so good.
Well, you can pay more than the minimum monthly contribution
but you can't pay less.
You have to pay at least the minimum amount.
Is that still okay?
Well, if you attempt to pay less, the financial institution
keeps all of your previous contributions.
I don't like that.
Do you?
The money deposited in the account is not safe
from loss of principal, meaning if I put in money into there
whether it's 100,000, 10,000, or 1,000 a month,
I can lose the principal, what I put in there.
It's not safe from loss of principal.
And so that is not very attractive to me.
But some people say, "Well, money in the stock market
is like that, but the market always comes back."
Okay.
Well, each contribution you make to this investment
actually results in less safety.
The more you put into this investment,
the less safe it becomes.
What?
I don't like this.
The money in the account is not liquid.
In other words, I can't get it just any time I want.
I can't just go grab the money.
I have to wait for the perfect conditions
and hope I qualify, or that I can sell the asset
for what we thought it was worth a year before, whatever.
So it's not liquid.
It would take sometimes days, months,
or years, or maybe it's gone
because you don't have safety of the principal.
This isn't looking good.
Are you beginning to figure out
the investment I'm talking about?
Stay with me.
The money in the account earns a 0% rate of return.
0%?
What kind of an investment is this?
Yeah, it earns a 0% rate of return.
Why would you invest in something that earns 0%?
Your income tax liability increases
every time you make a contribution.
You're raising the tax liability every time
you make a contribution into this investment.
This is horrible.
But when the plan is fully funded
and you've got all the money in it,
there's no income paid out to you.
Do you think that's a prudent investment?
Now, whenever I ask audiences this, they go, "No."
Now most of the audience has gotten it.
Those who don't, and if you haven't, what is this?
I just described your home, your house,
your real estate, the mortgage on that.
See, a lot of people don't understand
that every time that you are making a contribution
against a mortgage on your property,
you're increasing your tax liability.
You're killing your tax deduction in the process
because you can tax deduct that interest.
And every time you put it in there,
it becomes less liquid and safe
because the only way you can get it back
is to sell your property or to refinance it
if you get into trouble because you give it to them.
And if you paid 100,000 bucks against your house
in a windfall because you got a windfall,
and the next day you lost your job and got disabled,
the next mortgage payment is still due.
You can't call up the mortgage company and say,
"Hey, I think I'm five years ahead.
I gave you $100,000 against my mortgage."
They'll go, "Fat chance, your next mortgage is due.
And if you go three months in a row
without a mortgage payment,
we're gonna foreclose on this trustee."
It doesn't matter how much equity
or how much extra you've paid.
So think about it.
Now let me ask you another question here
that I asked audiences for many, many years.
I usually carry $100 bill here
in my little notebook or money clip.
So let's say I take out this $100 bill
and I bury it in a tin can in my backyard.
Is this $100 bill buried in a tin can in my backyard liquid?
Can I get it when I need it?
Well, yeah, as long as I can remember where I buried it.
Is it safe?
Is this $100 bill buried in the tin can safe?
And a lot of people will say, "As long as my wife
doesn't know where I buried it."
So we all agree that it's probably liquid
and it's probably safe.
The third question is, is this $100 bill buried
in a tin can in my backyard earning a rate of return?
This should be a no-brainer.
No.
In fact, it's probably doing what?
It's losing value because of inflation.
So my next question is this.
What is the difference between $100 bill
buried in a tin can in my backyard
and the hundreds and thousands of dollars
that we tie up in the bricks, mortar, wooden foundation
of our houses when we have all this equity,
we put in these huge down payments,
we send extra principle payments?
What's the difference?
Do you understand what I'm talking about?
Real estate equity is not liquid.
It does not pass the liquidity test.
It is not safe.
That can go down in value and it is not earning
a rate of return because the house
or the real estate property is gonna go up in value,
appreciate or depreciate, go down in value, regardless
of whether it is mortgaged to the hilt or free and clear.
But if I keep my equity separated,
then I have liquidity and safety
and I can earn a predictable rate of return.
How?
Hey, I would love for you to learn
how to do that because for years,
by keeping my real estate equity separated,
I've usually borrowed at an average
of about 4.5% tax deductible interest
on rental properties in a 33% bracket.
That's a net cost of three.
I save 15,000 in tax and a 33% bracket on every 45,000
of interest I pay on a million-dollar mortgage.
So it's a net cost of three, so it's costing me 30,000.
Now, that's not a cost to me.
I understand how money works.
It's a benefit.
And so the 30,000 that I'm paying net on a million,
but I keep the million dollars over in a laser fund.
The laser fund is where I keep my money for liquidity,
safety, and earning predictable rates of return.
And I've averaged over, actually over 10%,
10.07, I was gonna say, to be exact,
compounded in net internal rates of return tax free.
Just rounded down to nine.
So on every million dollars, I'm making 90,000
compound interest tax free.
And that's even before it starts compounding.
The net cost is 30,000.
Would you hire an employee for 30 grand
that made you an extra 90 grand?
Would you buy a widget machine
for 30,000 that made you an extra 90,000?
I'll do that all day long.
That's called a 300% return
on equipment cost or employment cost.
So if you want to learn about this laser fund
that I've been talking about, I can show you
where you can claim a free copy.
This is my 11th book.
It's been flying off of my warehouse shelves.
It's co-authored by my two sons, and they are specialists
in tax minimization and asset optimization.
And this is actually two books in one
and it's been extremely popular
because this side is about 200 pages, 14 chapters
with all kinds of charts and graphs and explanations
if you're a left brained learner.
If you're a right brained learner, you learn more
by stories and examples, you flip it over to this one.
This is about 100 pages, 12 chapters
with 62 actual client stories.
If you want to use your right brain or left brain,
you can read both books.
But here is the offer.
This is not about me, this is about you.
And so you can go to Amazon and purchase the book
for 20 bucks and pay shipping and handling.
If you do that, thank you.
But I'll gift you a copy.
And so you simply go to laserfund.com
L-A-S-E-R fund.com or click on the link below.
You contribute a nominal amount
towards the shipping and handling.
I'll cover the rest of that cost and I'll pay for the book.
I'll fire out a hard copy via priority mail.
And while you're in there claiming your free copy,
if you'd like to listen and learn, watch and learn,
check out the audio and video formats,
check out the educational webinars that are free.
We teach on a regular basis.
You can register for one of those.
You can even schedule an appointment to talk to
an IUL specialist that I oversee
that can show you some illustrations
of how a laser fund may work for you
so that you will make more prudent investments
with your serious cash.
(upbeat music)