Earn 100% to 300% more. People go, "Really?" In this episode, I'm going to address the
question "What is the best way for my money to make more money?" It's not what you think.
But I'm going to explain how money really works. And most people sit here with dear
on a headlight looks when they begin to listen and understand what I'm about to teach you.
My name is Doug Andrew and I've helped many, many thousands of people and audiences, students,
business owners optimize their financial assets and minimize unnecessary tax. Now, a lot of
times when I'm teaching across America in particular and I start talking about how money
really works, people sit there with their mouths open. Even CPAs and tax attorneys because
they've never really understood the concepts that I'm going to teach in this episode. But
let's start out with a milk and then I'll end up with the meat. Basically, there are
3 sources of income or money, okay? You have mankind at work. We go out and we earn money.
So, we can go out as long as we're in good health and we're able and we use our skills.
And so mankind at work. Now, a second source of income is money at work. Now, I like that
one because money working and earning more money works 24/7. I can't be awake 24 hours
a day but I can position my money to make money 24/7. Interest just keeps earning every
single minute of every day when you're earning compound interest. So, at the end of the day,
many at work is more predictable than mankind at work especially when you start to run out
of energy and the vitality that you once had when you started in your career. What's the
third type of income? Charity. Now, most people that I taught to don't want to have to rely
on others --on the government, on their parents, on their children to take care of them. They
don't want to be a burden on charity or welfare. And so, we want to work ourselves and as we
work, we want to set aside a good chunk of our income that we earn in vehicles where
the money will earn as much or more than we do. In fact, my 2 sons, Emron and Aaron authored
a book, co-authored it with me called Millionaire By Thirty. How to have your money earning
more than you do by age 32. Every 32-year old in this country, 10 years after graduating
from college should have at least a million-dollar nest egg generating 80 to 100 thousand a year
of tax-free cashflow if push came to shove. That they work because they want to, not because
they have to. The sad fact is most college graduates 10 years after graduating don't
even have a net worth of 50,000 bucks. So, get ready. I'm going to show you how to earn
100 to 300 percent more. So, I've talked about the 3 sources of income. Now, let's talk about
what I call the 3 marvels or miracles really of wealth accumulation. Are you ready? Number
1, compound interest. You wouldn't believe how many CPAs and tax attorneys think they
understand compound interest. And I can stomp them in less than 60 seconds. Okay? Many times
I'll give them a sheet of paper 8½ x 11 copy paper. And I'll say, "Fold the sheet of paper
in half. Now, fold it in half again." And I'll say, "Now, right down on the sheet of
paper how to think you think it would be if you could fold that sheet of paper in half
48 more times. You can't physically do it because of the folds. Right down some form
of measurement --inches, millimeters, centimeters, yards, miles. How think would the paper be
if you fold it over 48 more times. That's total of 50 times." Now, most of these CPAs
and tax attorneys who a minute earlier said, "Oh, I understand compound interest." They're
writing down answers like 3 quarters of an inch. Some of them even write down even less
than that. Sometimes say, "Well, 6 inches." Some who understand compound interest say,
"a mile". And they get laughed out the room. So, they all write down, their answers. And
then I say, "Okay. What's the sheet of paper doing everytime you fold it in half?" It's
doubling. And I have an unfolded sheet of paper and printed on it is the math. A sheet
of copy paper, 26-pound copy paper is five-one-thousand-7-inch thick. If you fold it over 50 times is doubling.
Double, double, double. Do you know that in 20 folds, it will already be a million times
thicker? It will already be about a mile high. in 42 folds, it would be from here to the
moon. If you could fold that sheet of paper in half 50 times, it would be 93 million miles
thick. It would be from here to the sun. In other words, if you could fold that sheet
of paper in half one more time, 51 times, it would be from here to the sun and back.
They think they understand compound interest. No. It is the first miracle. It's what Einstein
said was the 8th wonder of the world. Now, what's the second one? Compound interest tax-free.
Rothchild said that is the 8th wonder of the world. Tax-free accumulation instead of taxable.
Because if you double a dollar, okay? If a dollar double to 2 dollars, to 4, to 8, to
16, to 32 into 20 periods, it will be worth a million forty-eight thousand dollars, if
it's tax-free. If it's taxed as earned like most save in banks and credit unions, a dollar
doubles to 2, in a 25-percent bracket, you only have a buck 75 left. A buck 75 doubles
to 350 and then you pay tax on that. Instead of a million, guess how much you'll have?
72,000. 7.2% of what you could've had. In a 33-percent bracket, you'll only have $27,000
instead of a million. Now, if it's tax-deferred, you won't have a million. You'll only have
650,000. I would rather have the full million. So, what I do is I teach people the 3 marvels
--compound interest, tax-free compounding and the third is safe positive leverage. That's
the ability to own and control assets with very little or none of your money tied up
or at risk in that asset. I use to be a private pilot. And I compare these 3 marvels to lift,
thrust and drag. To get the airplane off of the tarmac, you've got to have a lift. That's
like compound interest. You've got to have thrust. That's like tax-free accumulation.
A jet engine would be tax-free. A propeller engine would be just a tax-deferred IRA or
401(k). But see, a lot of pilots forget about the 3rd force. IT's drag. What? If you do
not have drag or friction or resistance, you'll never get off the tarmac. And if you have
a stall, you'll fall out of the sky if you lose that resistance or friction. You must
have a lift, thrust, and drag. Most people view leverage or paying interest as a drag.
I'm going to share with you how that will have you soaring financially. So, when we
think about how to make our money make even more money and understanding that you can
go out and earn money but you may lose the ability to go out and work. So, money at work
is more predictable. Now, how do you make 100 to 300 percent gains? Well, you need to
understand how money works if you have money in the market. Dalbar who studies investor
behavior says, "You know, if you just bought and held a portfolio of stocks, you might
average a little over 9%. Maybe 9.14-9.16 percent over a 20 year period." And they've
studied many 20-year periods since the Great Depression. You're not netting 9 because you
have to pay tax on that sooner or later depending upon whether it's a tax-deferred IRA or 401(k)
or it's taxed as earned in a mutual fund or whatever. So, between federal and state income
tax, you may have to pay out as much as 33% or more if you live in California, for example.
I've seen many Californians pay 40 to 50 percent in tax. Let's just say 33% or a third. So,
if you're earning 9, you're only netting 6. If a million-dollar nest egg is earning 9%,
that's 90 grand. If you report or take out 90,000 of interest, you have to pay tax of
30,000, you only net 60,000 to buy gas and groceries. Are you with me? Well, the sad
thing is most people, they get emotions involved in the market. And so, Dalbar said the average
investor return is only 3.5%. Because people are buying and selling at the wrong times.
In other words, you have money in the market and you see the market start to go down, down,
down. This happened in February, March of the year 2020 because of covid 19. And when
people go past 30, 35 percent, they panic and they sell low. And they wait, wait, wait,
wait until the market comes up and they buy high. So, the average actual return of investors
because they don't just leave it alone, emotions get involved is only 3.5%. And so, this is
why we have this 4% rule in the financial services industry. A broker-dealer, a financial
planner, a fiduciary is never supposed to illustrate if your money is in the market
more than a 4% pay-out. That's pretty pathetic because they don't want to be sued for you
outliving your money. And if you're only really averaging 3.5% and you pull out 4, you're
going to slowly deplete your nest egg but not before you L/E. L/E means life expectancy.
And so, that's called the 4% rule. If you take out more than 4%, you're supposed to
sign a waiver that you will not sue them. You're going to hold them harmless for you
outliving your money. Now, 4% is pretty pathetic. On a million bucks, 4% would be 40 grand a
year. You pull out 40,000 out of an IRA or 401(k), you pay tax. Even in a 25% bracket
of 10,000, you'll only net 30,000 to buy gas and groceries. Many of these money managers,
they charge 1% asset management fees on what? The whole million. That's another 10 grand.
If you subtracted taxes and fees from your interest, you're only netting 2% or 20,000.
Now, how pathetic is that? You ought to be able to earn 6 to 7 and a half percent. I'm
going to share with you next how you can do that, a no-brainer. And you can actually earn
more like 8, 9, and 10 percent. This is double to triple. This is not 100% more. It's 200,
it 3 times as much money. 9% or 90 grand tax-free is way better than 3%. It's 3 times as much
or even 2%. This is how you can earn 2 to 3 hundred percent more. But then get ready
because I'm going to share with you how you can use leverage with full liquidity and become
your own banker to make 200 and 300 percent more. Reason with me here. If I can earn 6
percent tax-free and if my money is in the market and at best, I'm earning 4% but I have
to pay tax on that, I'm earning 4 but I'm only netting 3. How much more is 6 than 3?
Don't say 3. It's 100% more. If you have a million-dollar nest egg, that's 60,000 of
annual income instead of 30,000. 60,000 is 100,000 more than 30,000. So, that's 1 way
you can have tax-free rates of return. But instead of 6, I teach my various books how
I've earned average rates of return more like 8%, 9% and 10%. Let's say you're only netting
3% after tax and you do a conversion over. And you know can earn an average of 9% by
using indexing and rebalancing. Or by using what are called multipliers. I have earned
9.2% predictably for over 25 years by using those 2 strategies. Let me ask you this: How
much more is 9 than 3? Don't say 6. 90,000 a year of income is 3 times. 300% more than
30,000 of income on a million-dollar nest egg. Is this making sense? So, when you can
have 100%, or you can have double or triple, that's a way to earn 100 to 300 percent greater
returns on your money by increasing the rate of return but you increased the safety as
you do it by getting the money out of the market using the indexing. And you convert
to tax-free because automatically, if you're only earning 4, you're not netting 4 after
paying tax. But if I can earn 8, 9 or 10 percent tax-free, it's a huge difference. This is
how I've helped many, many people get 100 to 300 percent more rates of return. But hold
on, I'm not finished yet. So, as I connect the dots here answering the question, "What
is the best way for my money to make more money?", we've talked about 3 sources of income.
The 3 marvels of wealth accumulation --compound interest, tax-free accumulation. But the least
understood is safe positive leverage. The ability to own and control assets with very
little or none of your money tied up or at risk in that asset. So, let me explain a little
bit how money really works. When you have money, there's basically 4 things you can
do with it. You can spend it, lend it, own with it or give it away. Now, I double dip.
I own and loan in the same assets. And so, when I have money in my favorite vehicle which
I call the Laser Fund, I'm able to earn a tax-free rate of return predictably averaging
in the 6 to 10 percent range. It's been doing that for 4 ½ decades. In fact, you can go
clear back to the great depression and the average is about 8.2%. Now, what I do is I
use safe positive leverage because banks, credit unions, insurance companies, they pay
us interest. And if they stop paying interest, they would wither up and die. A bank or credit
union's greatest asset is its liabilities. So, when you put money in a bank, it's in
a lended position. Did you know that? Are they just benevolent institution paying you
interest? No. They don't put your money in some vault and just pay you interest. What
are they doing with your money? they're loaning it back out again. They're investing it. And
so, banks pay a pathetic rate right now around 1%. So, every million dollars that they borrow
from us when we put it in their saving accounts or checking accounts, they pay 1%. 1% a year
on a million dollar is 10 grand. They turn around and loan that million dollar to you
to buy a house or for your business. And they charge you 4%, 5%, 6%. Hello? How much more
is 5% than 1%? Don't say 4. It's 5 times. On that million, they're paying 10,000. They're
making 50,000. That's 500% more. Would you hire an employee for $10,000 that made you
an extra 50,000? If you did, that would be a 500% return on employment cost. Would you
buy a widget machine for 10 grand that made you an extra 50 grand. That would be a 5%
return on equipment cost. So, when I use safe positive leverage, what I'm doing with my
money is I am using my own money. I can borrow money out of my laser fund and the insurance
company will charge me 2-2.5 percent. They may even charge me 4 or 4.5 percent. But I
keep earning 10. Sometimes 15%. Do you know in 2017, many of our clients borrowed money
out of their laser fund at 5%. And they earn that year 25% on their money that was still
in the laser fund? They simply borrowed using their money as collateral. I had a client
with a million bucks, he borrowed out, they charged him 5% or 50 grand. But they credited
him 250,000 that year. See, that's how money works. When I borrow money on my real estate
and I'm able to borrow at 4.5% tax-deductable interest, it's a net cost of 3. I'm able to
earn 9% that's in my laser fund. How much more is 9 than 3? 300% more. Would you hire
an employee for 30,000 that made you an extra 90,000? I'll do that all day long. That's
what I mean by safe positive leverage. When you understand this concept, this is what
makes the world go round. This is the parable of the talents in Mathew 25 in the new testament.
Now wicked and slothful servant, you should've put your money in the bank with usuary. Okay?
You shoud've put your money in a bank and at least somebody is paying interest. Somebody
is earning interest. But it's a win-win. So, when you do this, you're not borrowing to
consume. You're borrowing to conserve and make money just like banks do. You're becoming
your own banker. If you want to learn more about this, I've written 11 books. Most of
them talk about this concept. But my most recent bestselling book is called the Laser
Fund. It's 300 pages. Charts, graphs, explanations. You flip it over. This has 62 actual stories
of how clients used the laser fund for all kinds of goals. But it will help you understand
these 3 marvels of wealth accumulation. How can you claim your free copy? Simply go to
laserfund.com. LASERfund.com. You contribute a nominal amount towards the shipping and
handling, I'll cover the rest of that. And I'll pay for the book and fire you out a free
copy. Begin to listen and learn, read and learn, watch and learn. Subscribe to this
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