- There are three kinds of people in the world
those who pay interest and those who earn interest.
But there's a third type of person
the mega wealthy people who learn when it's wise to
pay interest in order to make more interest.
This is how money works.
So in this educational episode, get ready
I'm going to teach you how money works and how
you can do what wealthy people do to become mega wealthy.
(upbeat music)
So my name's Doug Andrew.
I've been a financial strategist
and retirement planning specialist now
for nearly five decades, helping thousands
of people optimize their assets, minimize taxes
and empower what I call their authentic wealth.
I've been very blessed and honored
in my live to have authored thus far 12 bestselling books.
And in all of my books, I teach how money works
and sometimes my audiences, they sit there
with a deer in the headlight look and they get epiphanies
and aha and they sometimes admit they
they thought about these concepts
but never really understood them before.
So as I introduced at the outset
there are three kinds of people in some of my books,
I call these people strivers, arrivers and thrivers.
So simply put, I said, yeah, there are people
we'll call them strivers who pay interest
and they borrow money to consume
and they buy depreciating assets
and they will always have too much month left
at the end of their money.
These are what many advisors call financial jellyfish.
And so the strategies that I teach are not
for those people until they learn discipline,
how to live on less than what they earn.
So they have discretionary dollars to set aside
and begin to save, compound their money
and then they learn how money works.
But first of all, they have to be disciplined.
Now, the difference between strivers and arrives,
arrives begin to learn how money works.
They learn three marvels of wealth accumulation
compound interest, tax, favored accumulation.
But the third marvel is safe positive leverage
which is the ability to own
and control assets with very little or none
of your money tied up or risk in that asset.
It's what makes the world go round.
And this is how banks and credit unions,
insurance companies make money.
They learn to pay interest in order to make more interest
and this is why they thrive.
And people who understand how to do this become thrivers.
Also, they learn when it's wise to pay interest
in order to make more interest.
And so I started in 1974
and I've been using and teaching these banking
concepts how to become your own banker my entire career.
But I was not the originator of this.
It goes back centuries to the Bible, the New Testament.
Matthew chapter 25 talks about the parable of the talents.
And when you really understand that parable
it is how to pay interest in order to make more interest
to put your talents to work.
The same concept as taught in Luke 19
the parable of the pound.
So this has been around a long time
and there are many financial advisors
and other authors that have come around.
And you may have heard of Pamela Yellen.
She wrote a book called Bank on Yourself
I think it was first released in 2009.
I think prior to her was Nelson Nash
who was the originator of the infinite banking concept.
And then
in 2008 he wrote a book called Becoming Your Own Banker.
In 2007, chapter seven
of my third book where I teach these concepts
was actually titled Learn How to Become Your Own Banker.
So, you know
Pamela has asked me to make sure it's clear when
I record these educational episodes that I am not affiliated
with bank on yourself and they do not sponsor me.
I don't even endorse bank on yourself or infinite banking.
Do those concepts work?
Yeah, they work to a degree
but I have always used it utilizing indexed universal life.
And I think it actually is this banking concept on steroids.
Okay?
And so when I began to teach this back
in the mid 1970s,
it is really understanding how banks and credit unions
and financial institutions thrive by paying interest.
So they borrow OPM, other people's money
and they don't do it just
because they're a benevolent institution.
They're paying one, two, 3%
or more interest by borrowing other people's money.
When you put money into a banker credit union
or an insurance company, they're paying you interest
and they don't just put your money in the vault,
they put your money to work, they invest it
they loan it back out again at 5, 6, 7, 10% interest
often netting twice as much as what they're paying you.
But if you really think about it
they would wither up and die if they did not pay interest.
A banker, credit union's greatest asset is its liabilities.
And so this is what makes the world go round.
And so banks, if they pay you 1% interest
which is what they did for a long time after the turn
of the century on every million dollars that we loan them
because there's only four things you can do with money.
You can spend it, lend it own with it or give it away.
And when you put your money
in a banker credit union, it's in a lended position.
And so if they pay you 1%
that's only $10,000 they have to pay
in interest on every million dollars they borrow from us.
They turn around and they put that money,
some of it they put into insurance companies.
Why?
For liquidity and safety.
See, in 2008 when 400 banks went under
and 900 more were on the watch list, on the brink of going
under, the federal government asked the five major banks
in America to disclose where they had their tier one assets
for liquidity and safety.
And these five major banks admitted
that 30 to 40% of their tier one assets was invested
in insurance companies, okay?
Many times in the form of BOLI.
What's BOLI?
B-O-L-I stands for bank owned life insurance.
And they were paying 1% to borrow the money
from the general public
10,000 for every million they borrow.
And they turned around and earned 5%
in the general account portfolios
of these insurance companies that invested money
in AAA and AA bonds and so forth.
But most of these insurance companies are rated AA
and triple A, which is like five or six notches higher
in safety than a lot of these banks are rated at Triple B.
So the banks are increasing the safety
of the money they borrow from you
and they're increasing the rate of return by five times.
They pay you one and they earn five
they're earning 50,000 every year on a million.
They're only paying you 10,000.
How much more is 50,000 than 10,000?
Don't say you know five, it's five times.
It's 500%.
I've often asked, would you hire an employee
for 10,000 that made you an extra 50,000?
That's a 500% return on employment cost.
Would you buy a widget machine
for 10,000 that made you an extra 50,000?
That's a 500% return on equipment cost.
And so you can do this yourself actually safer
and smarter than the banks do.
And so for years I've been teaching not only
why I sort of use the banking concept with my own money
but I use as the favorite repository where
my money is liquid and safe.
The same institutions that banks and credit unions do.
I use the multi-trillion dollar insurance industry.
And my favorite vehicle is a maximum funded
indexed universal life insurance contract
because my money is not exposed
to risk of the volatile stock market where
if you took a variable insurance policy
you could lose money and people did lose
up to 40% twice from 2000 to 2010.
People with indexed universal life never lost a dime
during those down years.
They may not have made very much, but they didn't lose.
And they actually, in that worst decade, came
out doubling and tripling their money from 2000
to 2012 when most Americans were barely back to break even.
And so with indexing
you get to participate when the market goes up
and not lose when the market goes down.
And so some years I have locked in gains of 16%, 25%.
March of 2020 to March of 2021 because of COVID 19
many people using indexed universal life locked in gains
of 61.33% and even 158% using what are called multipliers.
Okay?
And so let's just round it down to earning 10
and netting nine because I've actually averaged 9.62%
since 1980 when universal life was first introduced.
In 1997 indexed universal life was introduced.
And I've actually averaged 11.17, netting 10
but let's just use nine.
If I was earning 10 and netting nine
what's that 1% difference?
It's not tax, it's the cost of the insurance
that the IRSs has to be there
in order for your money to be tax free.
So I'm earning a net rate of return, let's say
of 9% average.
And if I borrow money for a piece of real estate
or whatever at four and a half percent interest
on a million dollar loan or mortgage, I'm paying 45,000.
Okay?
But that's tax deductible if I do it correctly.
And a 33% tax bracket, it's not costing me 45,000
it's only costing me 30,000 because I get to write
off 45,000 of interest on my tax return
which offsets 45,000 of taxable income in a 33% bracket.
I actually saved 15,000 of otherwise payable tax.
So if I borrow at 4.5% tax deductible interest
it's only a net cost of three.
So every million dollars that I pay a net
of 3%, 30,000, I'm making 90,000,
I'm making 300% more than the cost of the funds.
Well, that is true with my index Universal life.
Whenever I borrow money outta my policy
I could have withdrawn it
but it would no longer be in their earning interest.
Instead, I borrow at an indexed rate
I can borrow at 5% and they will continue to
credit me whatever the indexed rate is.
And I have borrowed at five
and some years I only earn eight, but other years I make 10,
I make twice as much as the cost of borrowing.
Why do I borrow?
Because it's tax free.
There are years I've borrowed at five
and I've had clients borrow outta their IUL policies
at five and they've earned 25 on a million dollar loan.
They were charged 50,000 of interest
but they made 250,000 on the million dollars
of cash value that was collateralizing the loan
that the insurance company gave them using a million dollars
of cash value.
This is how money works.
And so when you can make double, triple
even five times at the net cost of borrowing
whether you're borrowing from a bank or a credit union
or if you're borrowing your own money
out of your IUL policy, you're able to borrow
at a lower rate and earn a higher rate.
And so these are the thrivers who understand that
over time you will be compounding your money tax free
at a rate of return, double, triple, quadruple
or more than the net cost of what you're paying.
And this is becoming sort of your own banker.
This is why banks, you know
they might pay you on a CD four or 5%, but they turn
around and loan the money back on home equity lines
of credit at seven point a half and they're making 3%.
But in actuality, they're making an infinite rate
of return because they're making that spread
and it's not on their money.
They're making it on your money.
And so it, you can't calculate the rate of return.
It's called it an infinite rate of return.
So this is why sometimes Nelson Nash would refer
to this as maybe infinite banking,
whatever you want to call it.
It is why many savvy people gladly pay
like banks and credit unions do, 4% interest
because they know they can safely earn 8% twice as much
as the net cost of borrowing.
And if you continue to earn 8% compound interest tax free
you're earning more interest
on a compounding bigger growing balance
than you're paying simple interest on do the math,
you will accumulate an extra million, 2,000,005 million
over a 30 year period just on a couple
of hundred thousand dollars that you are using this concept.
Does that make sense?
So if you want to learn more about this
I want to gift you a copy
of my most recent bestselling book.
Here's how you can claim your free copy
because you know you could go to Amazon and pay $20
but I want to gift you a copy.
So simply go to laser fund,
L-A-S-E-R fund.com
click on the link below, you'll contribute a nominal amount
towards the shipping and handling.
I'll cover the rest of that cost
and I will pay for the book.
I'll fire out a hard copy to you priority mail
and then you can read, it's actually two books in one.
This side is about 200 pages
14 chapters with all the charts and graphs.
If you're a left brain learner.
If you're a right brain learner
you flip it over and read this one.
This is about a hundred pages
12 chapters with 62 actual client stories
of how a laser fund can utilize this concept
for you to help you thrive.
Now, you can use your whole brain and read both of these
but claim your free book
and then there's options there to listen
and learn or watch and learn.
If you would prefer, you can check
out some of the educational webinars that we teach.
We do them on a regular basis.
You can even plug
in your name to talk to an IUL specialist to
help you see how these strategies could apply
in your particular set of circumstances.
And that consultation
and analysis is absolutely free, no charge, no obligation.
So this is not about me.
This is about you and your brighter future
but learn how money works
and how you can use this incredible concept to
become wealthy.
(upbeat music)