Mistake number 9 out of 10 for saving for retirement.
In this episode, we are addressing the biggest mistakes people make when saving for retirement.
Out of all of the mistakes that I've seen people make there are ten that stand out above all the
rest these are the biggest mistakes and this episode is mistake number 9 out of 10.
So, my name's Doug Andrew and I've been a retirement planning specialist for more than
four and a half decades and I've watched many many people work hard, save money, invest, to prepare for
a comfortable retirement and all too often as they approach retirement they would come in for
an analysis and I had to be the bearer of bad news. That they would likely outlive their money because
of several factors or mistakes that they've made. so in this series, I've talked about all kinds of
mistakes like thinking that IRA's and 401ks are the best way to save and people have a root awakening
or having their money exposed to market volatility which does not allow them to have predictable
cash flow or income or thinking they were going to be in a lower tax bracket when they retire
and most people who save very much are not in lower brackets. Underestimating their
life expectancy these are all huge mistakes. But here is mistake number 9 of 10. Using short
term investments for long-range goals and also the opposite of times people use long-term investments
for short-range goals. But when we're talking about a long-term goal like retirement it never ceases
to amaze me when people would come and they would have several hundred thousand dollars.
I've seen people with several million dollars in a short term account at a bank or a credit union
and I would go, "What are you thinking?". I remember one time a lady had
about three-quarters of a million dollars in a bank earning less than one percent and I
asked her, "What's this earmarked for", and she said, "Well, I was thinking about going on a little trip",
I'd go, "Where to the moon?", I mean, this was back when a trip normally. If you went on a lavish trip you
might spend ten thousand dollars and she had three quarters of a million there. Sometimes people don't
know where else to put their money. They get afraid the market is volatile they don't know what to do
with their money and so they put it in a bank or a credit union which is a short-term investment.
Banks and credit unions are okay if you're trying to accumulate or save money for a short range goal
like buying a new grand piano or if you're starting a family you're expecting
a child in nine months. Those are short-term investments but I can't believe how many people
have hundreds of thousands if not millions of dollars sitting in banks or credit unions
earning less than one percent the last two decades average and this money is earmarked for long-term
goals and I'm like, "Hello, do you know what the inflation rate is?", "Oh, it's low", "Oh, really?",
"Well, it's like three percent", I go, "You know, it's really like nine percent."
Do you know the government changed the way that they calculate inflation back before the
1980s and 90s. They used to compare a basket of goods meat, a produce, a gas for your car
year to year. But then they changed it because they did not want to have to increase social security
benefits based upon the actual consumer price index the cpi and so they change the way they
calculate inflation. So now, when they report 3 or 4 percent inflation it's more like 11 or 12
percent inflation. Because they're not doing apples to apples comparison. The government can compare
a filet mignon steak to hamburger the next year if they choose to, a lot of people didn't know that.
And so, when people are looking at places to put their money they hunker down they're afraid
and so they put it in the bank. That's barely above putting it in your mattress. If you were to bury
money in a tin can in your backyard. I mean, yeah it's liquid if you need to get to it if you
remember where you buried it. It might be safe as long as maybe your spouse doesn't know where
you buried it. But is it earning a rate of return? No. Well see, money in a banker credit union is
barely earning a rate of return. Let's say you're earning one percent on a million dollars in the
bank one percent is 10,000 a year. Now, you're rowing upstream at the rate of one mile an hour
and the current of inflation at three you're going backwards. But if three percent inflation is really
nine percent you're really going backward you're losing purchasing power. This is what causes people
to outlive their money. So, the mistake is they're using a short-term vehicle like a bank or a credit
union for a long-range goal like retirement because they don't know what else to do with
their money. Can I share a secret with you? Before I do, I'm going to share with you where banks and
credit unions put your money when you deposit it in their bank and they earn five times.
They earn 500% more than they're paying you. Before I do that. If this is intriguing you
and you can think of somebody you want to share this episode and the other nine episodes in this
series of the biggest mistakes made by retirees. Be sure and share, post a comment, click like,
subscribe to this three-dimensional wealth YouTube channel. It's free and I have over 500 educational
videos on this channel and I post at least five new educational videos every single week.
I do not want you to miss out. So, are you ready? This is what banks and credit unions do
with your money. A bank or credit union increases the liquidity safety and the rate of return.
If you and I and a whole bunch of people passed a hat around a room and we collected a million
dollars and we deposit it into a bank and they paid us one percent they're going to sell out 10,000
a year on the million. How can they afford to do that? Is it just sitting in a vault are they
just a benevolent institution paying you one percent interest? What are they doing with your
money? They're loaning it back out again at 5 or 6 percent or in 2008 when over 400 banks
went under out of business, 900 more were on the brink on the watch list. The federal government
was concerned and they asked the five major banks in America to disclose where they had their tier
one assets for liquidity and safety. Guess where they had 30 to 40 percent of their tier one assets
in Boli, bank owned life insurance. What? On who? Didn't matter. They own insurance policies on
their board of directors on their stockholders because the owner of the insurance contracts
get all the tax-free accumulation and they had been earning at least five percent. Now, wait a
minute? How much more is five than one? Don't say four. On a million dollars they borrow from us
at one percent. They're making five percent five percent on a million is fifty thousand. How much
more is that five times? It's five hundred percent more. Let me rephrase it this way. Would you hire an
employee for ten thousand that made you an extra fifty thousand? Would you buy a widget machine for
ten thousand that made you an extra fifty thousand? That's called a five hundred percent return
on employment cost or equipment cost. Business owners get this. Now, you can bypass the middleman
and instead of putting your money in a short-term vehicle like a bank. Why don't you put your money
where the bank is putting your money? For greater liquidity safety and rates of return.
You could be earning the five percent and increase the safety off times by five or six notches higher.
Many banks are only rated triple B by standard poors. Most of these A-rated insurance companies
are six notches higher in safety and you can earn five percent, eight percent, even ten percent by
linking your returns by using indexing which I explained in the book I want to gift you here.
But just at five percent you have money invested in a long-term vehicle where banks and credit
unions take some of your money to increase liquidity safety and rate of return. Just bypass
the middleman and then you'll be able to stay ahead of inflation like the banks try to do. Does
that make sense? Otherwise, the banks loan the money out of 5 or 6 percent but they're making
4, 5, 6 times what they pay you. Because they know how money works. So, the biggest mistake that people
make is they use short-term investments like banks and credit unions for long-range goals
thinking their money is safe and it's there and they're not going to lose. Well, when you
put your money into a triple A or double A rated insurance company and you use indexing. You will
not lose due to market volatility. You will earn predictable rates of return of 5, 6,
7, 8, 9, 10 percent. I've watched clients do this for decades to where every million bucks
can generate eighty thousand even a hundred thousand a year of tax-free income. You wanna use
long-term investments for long-range goals. You don't choose investments based upon which ones
grow to the most. You choose investments for long-term goals based upon those that will
generate the most at the time in life you're going to need the money the most. When you read this book
the laser fund you're going to see that it takes at least five years to comply with IRS rules. So
that as you put money into a properly structured maximum funded insurance contract the laser fund.
You can be earning 8 percent netting 7. You can earn 11 a net 10 like I have for decades
and every million can generate 8,000, 9,000 a 100,000 a year of tax
free income. Because if you leave your money in a short-term investment like a bank or credit union
you will outlive your money at the end of the day. Put your money where banks and credit unions
put your money when you lend it to them. Because there's only really four things
you can do with money. Spend it, lend it, own with it, or give it away. Bypass the middleman
learn how to become your own banker. Go to laserfund.com click on the link below
contribute a nominal amount towards the shipping and handling. I'll cover the rest of that expense
and I'll pay for the book. I'll fire out a copy for you. This is actually two books in one this
side is 14 chapters about 200 pages with all kinds of charts and graphs of how this works.
If you learn more by stories and examples you flip it over and read this side 100 pages 12
chapters 62 chicken soup for the financial soul stories. But folks, do not make the mistake of using
short-term investments for long-range goals. Bypass the middleman create the foundation for a tax
free retirement. Use long-term investments for long-range goals and it will help you
not outlive your money. Study here, there's options there to listen and learn and watch
and learn. Also, I want to empower you and I want you to watch the other nine episodes in
this series to avoid the 10 biggest mistakes so that you can correct them before it's too late.