Hello again. In this episode, we are going to address the question ,"How do I protect
my money during market downturns?" Or even crashes. This is going to empower you to
protect your money from being lost, especially during critical times in life
like retirement. And I'm going to turn the time over to one of the top financial
strategists in America. He's my son, Aaron. And he's been doing this for almost 20
years now. He's going to blow you away with these
strategies. So, put your seat belt on as he explains how to protect yourself.
Hi! Aaron Andrew here. Excited to talk to you today about some incredible
strategies to protect your money from the downturn like we mentioned a minute
ago. So, we're going to get into like some details in some ways of how this works.
It's really powerful. So, as you watch through this video, you're going to get some
good content of how what we call indexing works. And that helps protect
you against the market downturns. So, this is available inside a very unique
product called IUL or Indexed Universal Life. But it's really important. First of
all that you have the right company, right product and so forth. But anyways,
I'm just going to get into a few nuggets of how indexing works which helps
protect you against market downturns. Back in like 2008 or any time when the
market crashes, the cool thing about this strategy is you earn zeroes the hero. So,
you want to always remember that. The worst case scenario the market crashes,
you don't lose any of your gains from the previous years. You lock in those
gains and you get zero if the market crashes. So, it's pretty powerful as you
start to learn this. So, a few other bullet points to kind of remember is first
of all, zeros to hero. You can't lose the market crashes, okay? Another one is "Is
your gains are locked in annually?" So, with this strategy of indexing, if
you get a return of let's say 5 or 10 or 15 even 20% one year, that gain becomes
locked in and becomes principal. If you're in the stock market, you don't
lock in your gains ever until you sell and get out. Inside of this kind of
strategy, you lock in your gains annually and
they're tax-free if you do it the right way as well which is pretty cool.
Basically, gains are locked in zeros the hero. And they usually go point to point.
There's a few that are a little different but most of them go what we
call point to point. So, what is the S&P? We're going to use like the S&P 500. With
that index, there's different indexes but most companies use the S&P 500. So, what
is the S&P today for example? And then what is the S&P exactly one year later?
So, it's called point to point. So, what's the S&P today? It doesn't matter what it
is in one month or 6 months or 11 months. What matters what it is exactly 1
year later. So, if that return we get up to a return point to point. If it's 10%,
we get 10. And that then becomes locked in. Like, I said, locked in gains each year
and then it resets. So, the other thing I want to mention real quick is it resets
each year. Let's just use a example of 2007. Let's say you got 7%
that year. That becomes locked in and becomes principal. Now, the next year 2008,
we all know that the market crashed and went down 40% about. That year, you get
zero like I just mentioned a minute ago. So, 7% becomes locked in. Then you get
zero in 2008, then in 2009, the market comes back up. And with this strategy
let's say you get 12. Well, you get 12 that year because you don't have to wait
for the market to rebound for 4 or 5 or 6 years and catch up all the
losses. It resets to whatever the market is on that one-year basis. Because these
are usually a one-year time frame. So, let's get into it. Let me kind of show
you a few things on the board and just kind of draw up here a couple of the
indexing strategies. Because every company is a little different. And
through time, these caps can change and kind of evolve or go up or down based
upon cost of options and hedging and interest rates and so forth. But right
now, like I mentioned you'll have like a 0% floors. So, zero is the hero that we
can't lose. And then you'll have typically what's called like a cap with
a lot of them. So, you might have a cap for example of let's say 9.25% linked to
the S&P 500. So, the S&P goes up over 1 year. 5%, that's between zero
and nine and a quarter. So, you get 5. The SP went up like 12% in this
example. You would get 9 and a quarter, alright? Now, the market went negative,
zero is the hero. I'll share what this would have been historically.
Let's go over another strategy. There's another one that I really liked. It has a
zero floor. The company and you have a 12.25% cap. You
say, "Well, yeah. That one's a lot better. Has a higher cap." Well, this one has an
extra fee of 0.8%. By the way, if you look at the numbers historically,
it's well worth it to have this little extra fee 0.8% to get you a
higher cap of 12 and a quarter. So, you could opt to have the 9 and a quarter
cap. If we pay 0.8%, the insurance company says, "Hey, well if we
pay 0.8% more, we can afford to pay up to a twelve and a
quarter cap right now and so forth." So, zero to 12 and a quarter. And another
one of our favorite ones is again, I'm always going to be putting zero over
here. You can't lose in the downside. But another one we have has no cap on the
upside. You say, "Well, what's the catch with this one?" Well, this one, you have
what's called a Thresh old of 5%. So, threshold of 5, so I'm
just going to put a negative here so you understand. You've got to subtract five
off the top. So, this one with the way that the insurance company does it, is
that the SP goes up 25%, you get 20. If the SP goes up 15, you get 10. Because you
just take 5 off the top. But if the SP goes up let's say 2%, you don't go
negative -3. You get zero. Zeros the hero. Remember, you cannot lose, guaranteed. So,
that one, believe or not is the best historically. But it's not the best in
all time frames. So once again, we like to diversify and put some of our cash value
or cash in a few of these different options to diversify. Another one that's
really popular is a 2-year. So, we have a zero is the hero here. And I'm going to
say this one. I'm just going to put 2-year. This is a 2-year point to point and it
has a cap of 25%. So, the S&P goes up 2% one year. We're not done yet. We
have to wait 2 years. This is a 24 month period on this one. The other ones
I shared so far were a one-year basis. You know, point to point as I just
explained. And they typically by the way to give you a few more nuggets and meat
about this is they typically do this on the fifteenth of the month. So, when you
put your money in into the policy, if it's the what's the market on the
fifteenth and what's it a year later, on this 2 year, it's going to be 2 years
later what the market is. And so, you're going to get up to a 25% cap. Historically,
if you look at the math, I mean you can look up the SP and pick a point in time
and go 2 years later. Markets almost always up over 2 years. And it has a
nice high cap of 25%. So, really powerful. The 2-year is very, very popular. We
really like that one as well. There's another one that I like is the 5 year.
This is a bit of more of a long term. But a five year strategy. Still, zero is the
hero. You still can't lose. But the cap on this one again is also no cap. And the
cool thing about this one is right now, you get 110%
what's called participation rate. So, 110% participation rate means that if
the S&P goes up (let's say) 60% over that 5 years. So again, what's the SP
when we start... Not in a year, 2 years or
3 years. What's it years later? So, 5 years. Let's say, it
went up 60%, you get a 110% of that with no caps, you'd get
66%. What if the SP went up 100%? You would get
110%. That happened with a bunch of clients of ours back in 2009.
But a lot of people got into this 5 year one after the market crash. And they
were seeing... After 5 years, 80%. 120%,
90% returns with this 110% with no cap. Really powerful.
So, that one's a little bit more of a long-term strategy. But the cool thing is
you can move between these when you're what we call segment matures. This is
called the segment dates that you're linked for 1 years or 2 years or for
5 years. So now, I want to tell you what the historical returns are on each
of these? Because it sounds all great but so you don't have to go and look at the
S&P yourself and see what you would have you know received in different time
frames. I'm going to give a 40-year historical. So, the last 40 years, the one
that has a zero to a 9 and a quarter was about 6 and a quarter over that
time frame. So, 6.25% is what we would have earned
historically with a zero floor and a nine and a quarter cap. The one that has
a high cap that you pay the extra fee for. That one right there would be about
7.75% historically. Here as soon we'll add
another year. And these numbers will change slightly, okay? Because we drop off
and we're looking at a 40-year period. But you could always look at different
time frames. But this one with a zero floor in the no cap, this is the one
where... Yeah, we take the five percent off the top.
Well, this one is 8.99% the last forty years. I told you
that one's kind of the best historically. One of the best. But I wouldn't put all
my money in that one because there's some time frames where I like this one
better and the 2-year. The two-years really solid. The 2-year is
7.63. So, 7.63 is the annual rate of return. Annual
compounded rate of return with the 25% cap on the 2-year.
And then on the 5-year, it's about 9.18% is the
historical on the 5-year. But the 5-year can be hit and miss of course. So
again, if you're putting in money monthly, the cool thing is is you're diversifying
on different months for a year or 2 years or 5 years with these
different strategies. But those historical returns. One thing I want to
note is the one with the 12 and a quarter cap that's 7.75. Again, it's got a
0.8% cost. So, take that one down to just under 7%
it's probably the real net historical on that one. But out of these, I mean that is
really solid returns that you don't have to worry. The market crashes, you get zero
and you don't lose any returns from the previous years. Don't forget, with some of
our other videos, you'll learn how this is all tax-free and you can take
tax-free income for retirement out of these strategies which is so powerful.
Now, I'm also going to share another video you've got to see we're going to talk
about how you can multiply these returns. And we can get these returns you know, up
to 9 to 14 percent and supercharge it with what we call these
multipliers. You kind of learn about that because that's a new stuff that is just
powerful in these. But this is just a powerful historical. One last thing to
kind of mentioned too is there's mother historical data we say, "Hey, last 40 years..."
Alright? So, listen to this one because it's important to understand what I'm
talking about. The last 40 years looking at any 20-year period in the last 40
years... So, I'm talking about 240 different examples of 20
years the last forty years. In that period, we have a 90% chance that we
would earn 7.11 in this no cap strategy. Pretty powerful. In the high cap,
it's 7.07% is the 90% chance that we learn that
return or higher in any 20-year period. And then the 2-year, it got
6.38%. 5.7 or higher in the 9 and a quarter cap
option. So again, this right here is a 90% chance that we learn this or higher. And
on the 5-year, it's 6.35% is the 90%
chance that we'd hit that. So, pretty cool when you look at this that these things
are solid because you can't lose on the bad years. And you don't lose your
returns from previous years. It's locked in plus your money's where the company
has been around since the 1800s, typically with these companies that we
use with this. Then also with it being tax-free. So, don't forget, these are not
taxable returns, folks. This is tax-free. So, that's kind of a summary there of
using indexing having the guarantees with great awesome
returns tax-free. -So, how was that? You probably didn't know what you didn't
know. Aaron, I appreciate you explaining that. And if you didn't understand, you
can diversify. Let's say you had a million bucks, you could assign 20%,
200,000 to each of those 5 that you talked about and
diversify that way. When you pull it out, when you see that predictability, 90%
chance you're going to earn around 5, 7, 8, 9 percent. That means
on a million bucks, you could pull out 60, 70, 80 thousand a year of tax-free income
into perpetuity and not deplete your nest egg. -Yes. That's indexing and zero is
the hero. We explained this in great detail in our latest book The Laser Fund.
And Aaron and my other son Emmett are co-authors with me. I want you to have a
free copy of this. If you go to laserfund.com,
you will be able to obtain a free copy. I want to fire it out to you. You just
cover at nominal shipping and handling fee. And there are 14 chapters in there
that explain this in deep detail if you're hungry to learn even more. If you
like stories and examples, there's 62 actual client stories on the flip side
when you read it this direction. So, go to laserfund.com and you'll have
opportunities to also purchase if you want many classes taught by Aaron, by all
three of us on this book. I want to empower you for your brighter future.