- Money has to have a home.
Don't choose a house of straw or a house of sticks.
Choose to put your money safely tucked in a house of bricks.
I'll explain next.
I'm Doug Andrew and I'm going to answer
in this educational episode,
how you can benefit when the stock market
or real estate market does well
and avoid losses when those markets have downturns.
I'm gonna show you what I do with my serious cash.
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So I've been helping people optimize assets
and minimize taxes now for north of 48 and a half years.
And I'm going to explain to you
what I mean by keeping my serious cash.
This is money that I don't wanna jeopardize.
I don't wanna lose, it's earmarked for future goals
like retirement, or maybe college funding for your children
or grandchildren or your business or what have you,
so that you do not lose when the economy, the markets,
the stock market, the real estate market goes down.
Even though you can participate when the economy,
those markets are going up.
So here we go, I alluded to the story
of the three little pigs.
Houses of straw, sticks and bricks, If you recognize that.
So as a financial strategist now for nearly five decades,
I've noticed there's a lot of people
who like to invest in real estate.
I do too.
I don't have a huge real estate portfolio
but I probably have owned and invested in more real estate
than most Americans.
And I would consider real estate to be
a moderate risk investment.
There's various ways you can own real estate.
If you understand safe, positive leverage,
you can own and control assets like real estate
with very little or none of your money tied up or at risk
in that asset.
Because if you leverage without liquidity, that's stupidity.
This video episode is not about that.
I have other educational videos on
the 3 Dimensional Wealth Channel that talk about
how I own my real estate.
I will simply help you understand
that I own real estate, but I keep my money,
the money that a lot of real estate investors tie up
in their real estate properties in the form of equity
or send in extra principle payments against the mortgages
or putting huge down payments
or paying cash for those real estate properties.
They are violating the key elements of a prudent investment,
liquidity, safety, and earning predictable rates of return.
Because if you get into trouble and the real estate market
crashes, and you need money or you have vacancies
because you are renting that property
and you need cash flow, or you need to be able
to meet the mortgage payment, or what have you.
There's only really a couple of ways to get your money
out of a piece of real estate and that's to sell it.
And sometimes you don't wanna sell it in a down market
'cause you may end up giving up hundreds of thousands
of dollars that you would have in there,
If you waited till it was a better market
or you have to refinance the property
and borrow back money that you were giving
the mortgage company.
And I have found that when you need that money,
the worst is the hardest to get
because they're not gonna loan you money
based upon just the asset,
they're gonna loan you money based on your ability to repay.
So if you don't have the ability to repay,
they're gonna say, sorry, fat chance,
you can't borrow on that piece of property.
And I've seen people lose properties that they've
been paying on for years
and they lose it in foreclosure 'cause they lack liquidity.
They don't have safety of their principle.
But real estate, yes, I've benefited many times
from owning real estate
but I don't keep my cash in the real estate.
In fact, I've never paid a down payment outta my pocket
for any piece of real estate I've ever acquired.
I've satisfied down payments, but not with my money.
I keep it safely tucked in a house of bricks,
as I'm gonna show you here in a moment.
Now the other main area that a lot of Americans
put their money, is in the stock market.
Whether it's in stocks or mutual funds or what have you.
And they hear the phrase, okay, there's only three things
you can do with money.
Spend it, lend it, own with it
or actually there's a four thing you can give it away.
Well, a lot of people assume that the best option
is always to own with it.
So let's own some real estate, let's own some stocks.
Well, I like to own and loan on the same asset.
This is like double dipping.
And I'm gonna explain this to you here.
So the stock market can do well, but as you know
the stock market is like a house of straw,
compared to the real estate market.
The real estate market can be volatile,
but it's a little bit less volatile than the stock market.
The stock market can take a nose dive of 5, 10, 15
20% in a day or a week or a month.
Usually real estate will not react that hard, that fast.
And so the stock market, I compare to like a house of straw,
the big bad wolf, the recessions, the rumors,
the things that go on the tsunamis, the physical disasters
and what have you cause economic ripples
and tsunamis to happen.
And so the stock market can crash.
Well, I get to participate, when the stock market
is doing well when it goes up, but I don't wanna lose
when the stock market has a crash.
So how do I do that?
I keep my serious cash safely tucked over
in a house of bricks.
Now what's a house of bricks?
It's an investment where your money is not subject
to that volatility.
Where when the market goes down
because the big bad wolf, who's the big bad wolf?
Some people say that's the IRS.
Well, yeah, but the big bad wolf in this
particular situation would be those things that happen,
whether it's pandemics or whether it's a crash
or it is a tsunami, a physical disaster,
people panic and it ripples and the stock market,
all of a sudden takes a dive.
We see this all the time.
You want to have your money safely tucked over in a house
of bricks, in my opinion, so that you do not lose money
when that house of straw gets blown over
by all of these external forces and influences, okay?
Well the same is true of real estate.
I don't wanna have my money all tied up in a bunch
of real estate properties.
When the real estate market goes down
because sometimes it'll drop down 5, 10, 15, 20% or more
and then it takes several years to come back.
Why do you wanna do that?
Sometimes it takes four or five years for the stock market
to make back what you lose in one single year, like 2008.
So, when we look at the house of bricks,
you could have your money in a bank
in a money market account or CDs
but you're gonna be rowing upstream with the rate
of maybe one mile an hour, 1% interest.
And the current of inflation's coming down at 10,
you're going backwards.
So that is not where I put my serious cash.
You could put money into an annuity
but that's only tax deferred.
I've never owned an annuity.
I doubt I ever will.
They're okay, they're better,
especially an indexed annuity.
Bonds, okay.
But my favorite, without question is a max-funded
indexed insurance contract.
This is where my money is safely tucked
into the backbone of America.
The insurance industry.
It's also the backbone of the world
and insurance contracts allow me to put money
into the insurance company
and I can take the least amount of insurance
the IRS will let me get away with,
if I wanna earn a high rate of return.
If my objective is high rates of return
and high income payouts on my money,
where I could have a million bucks generating
80,000, 90,000, 100,000 a year of tax free income
without depleting the million dollar nest egg.
People say really, oh yeah,
that's in a max-funded insurance contract.
So in other episodes on this channel, I talk about
how to structure an insurance contractor policy to do that.
My favorite is an indexed universal life insurance policy
because my money is in the insurance company, safe.
The insurance company's paying me maybe a general account
portfolio interest rate of let's say 4%
Back in the 1980s I was earning between 11 and 15%.
But if they only pay me 4%
in a low interest environment,
that's four times what banks are paying.
I'm earning 40,000, but anytime I want,
I can let them take that 40,000 of interest
by upside options.
So they'll have the wherewithal to pay me 8% or 12%
if the market, the stock market goes up.
But if the stock market crashes, gets blown over,
my million is still safe over here in the house of bricks.
I simply gave up the 4% that year on my million.
So I get to participate when the market goes up
which it's gonna do about 70% of the time
and only 30% of the time does it get blown down,
in any given decade.
Now I know the decade, 2000, 2010, there were five years
the market was down, only five years it went up
and my money in a house of bricks still doubled,
a million doubled to 2 million in the worst decade
since the great depression.
So I want to participate when the market goes up
by using a strategy called, indexing,
that's not an index fund if you had your money
in an index fund, it would be in the house of straw
and you would've lost 40% in 2008.
Instead I didn't lose a dime in 2008,
none of our clients did.
They were cheering.
And the first 90 days of 2009, most of them locked
in gains of 16% tax free, after not losing a penny in 2008
because their money was not in the market,
it was linked to it.
So when the market goes up, you get to benefit.
When the market goes down, you don't make much of anything,
if anything, but you don't lose.
Same thing with real estate, when my real estate properties
go up in value, I benefit
but I keep my equity separated from it.
I don't pay huge down payments.
I don't pay cash for the properties.
I don't take the positive cash flow from a rental property
and send it to the mortgage company.
I keep it safely tucked over here into
max-funded indexed universal life.
And if you wanna get out of debt, you'll actually get
out of debt two and a half years faster
putting it over here, compounding tax free.
When you're borrowing money, maybe at four
and a half percent tax deductible
it's only a net cost of three.
Or if you borrow at 6% tax deductible, it's a net cost
of four and I've been earning eight or higher.
How much more is eight than four?
Don't say four, it's a hundred percent,
it's double on a million bucks.
Would you pay 40,000 to make an extra 80,000?
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?
That's called a hundred percent return on employment cost
or equipment cost.
So I keep my money safely tucked in a house of bricks.
The best option, you'll find out if you read a book
I'm gonna gift you at the end of this episode,
would be a max-funded insurance contract.
I'll give you a glimpse of what they do.
So Warren Buffet had two rules of investing.
You probably heard this.
He said, don't lose money is rule number one.
Rule number two is, don't forget rule number one.
Well, people go, well, that sounds pretty clever
but how do you do that?
I just told you with indexed universal life.
See if you took a series here series one,
which is a taxable stock market investment
and a hundred thousand dollars grew up to here.
And then the market went down and then came back up again.
You have to experience that yo-yo effect with your money.
So it goes up and then it may come down to 150, 2000.
But if you used indexing, you participate,
maybe not as much when the market goes up
but you don't lose when the market goes down.
So at the, at this point, instead of having 152
you still have 189,000 and then the market recovers
and you would have 238 here
but at the end of this 10 year period, you'd have 269.
I'd rather have this one and eliminate this heartburn
of this downturn in the market. Does that make sense?
That's having your money in a house of bricks.
So a lot of people hear me say, lock in and reset.
What is that?
With indexing, if you had a hundred thousand dollars
in an indexed account compared to in the market
and the market went up 10% it would be worth 110,000, right?
But what if the money's in an indexed universal life
that 10,000 now becomes newly protected principle
because if your money's in the market, the market drops 10%.
You would lose 10% of 110.
You'd be down to 99,000 with your money
in an indexed mutual fund, like the S&P 500.
When you're linked to an index, you don't lose.
You can have a floor, let's say of 1%,
you have 111, your money in the markets down to 99.
Let's say the market rebounds 5%,
here you'd end up with 103.
You'd barely be 3,900 over the break even
but here you'd have 116,000.
This is just a three year period.
That's a 12.2% better rate of return
because you're able to lock in your gains and reset.
It's like a ratchet wrench, where you're cranking up.
But when the market dives,
you're not undoing the progress you made
you're just going click, click, click
and then you start tightening again and making money again.
It's incredible.
So, this is where I put my serious cash
in a house of bricks.
The million or whatever I have in my insurance policy
and you can extrapolate from this example,
allows the insurance company to take the interest,
let's say 4%.
They can pay you that or they can fund an options budget
which allows them to pay you 8 or 10 or 12%.
Or if the market crashes, the options expire worthless
and you don't lose your million,
but you don't make anything,
but you don't lose the principle,
which is what most people are concerned about.
So when you look at periods of time from 2007,
ending in 2012,
there are times where indexed universal life
may be zero as your hero, but at the end of the day
even if your cap was 10 and a half percent,
this is out of the book i'm gonna gift you.
You would end up with 691,000
in that short time period from a half million
instead of still being under the half a million
at the end of that time period,
with your money in the market.
Here's an actual statement of a client who had 18,000
in March of 2020 in a portion of his IUL policy.
And his advisor said link to a one year point to point
with no cap.
Why? Because of COVID 19, the market dropped 30%.
That spells opportunity.
One year later, he got credited 61.33%.
The market was up 66.33, when you choose that option
they subtract five percentage points.
Which normally you wouldn't do in just normal markets.
But when the market drops 30%, that spells opportunity.
He ended up with 29,000.
Here's a fellow that had 852, 000 that same 12 month period,
March of 2020 to March of 2021,
he made 535,000 that year tax free.
He ended up with a million 387,
he didn't add a dime to this.
Now, if the market crashed the next year,
how much of that half a million he made the year before
would he lose?
Not one dime.
Because that gain becomes newly protected principle.
You lock in that gain and reset.
The next year actually didn't lose.
But if it had have,
he would've kept his half a million bucks.
That's the beauty behind having money safely tucked
in a house of bricks.
I want you to understand this.
And so I mentioned, I wanted to gift you a copy
of my most recent best selling book.
It's flying off of our warehouse shelves.
We're sending out about a thousand of these a month.
I don't want you to miss out.
I will pay for the book.
In fact, I just ask that you contribute a nominal amount
toward the shipping and handling
and I'll cover the rest of that cost
and pay for the book and fire out a hard copy to you.
You simply go to laserfund.com, l-a-s-e-r fund.com
or click on the link below and you'll see options there.
If you want to listen and learn or watch and learn,
there's even a choice, if you want to talk
to an IUL specialist to see how this may help you
in your particular set of circumstances
and you can just fill in an appointment, if you would like
with an advisor, a professional that I've trained,
that I oversee that I point my students to,
they will not bill you for their time or anything.
It's worth checking out, but claim your free copy.
This is 300 pages of charts, graphs, and explanations.
You flip it over and there's 62 actual client stories
that talk about how the Laser Fund can be the dream solution
for many of your financial goals.
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