- LASER fund scenarios.
In this episode, I'm going to address
how does a LASER fund generate tax-free payouts
of 8-10% per year for retirement income
totally tax-free?
You're gonna be blown away with this concept.
Pay attention and stay with me to the end.
(upbeat music)
So I'm Doug Andrew.
I've been a financial strategist
and a retirement planning specialist
now for north of 48 years,
helping people optimize their assets, minimize taxes,
and empower their authentic wealth.
I've helped thousands of people
accumulate their money tax-free
in one of my favorite financial vehicles
which I call the LASER fund.
LASER is an acronym that stands for liquid assets
safely earning returns.
What is a LASER fund?
It is a max funded tax advantaged insurance contract
structured correctly and funded properly.
An indexed universal life policy is my favorite
and I've been able to earn average returns of 9.62%
over a 20-year period for the last 40 years,
any 20-year period.
If you round that down, 9.6 divided into the rule of 72,
while your money's growing,
it will double about every 7-1/2 years.
I've had many people start out with let's say 500,000,
that doubles to a million in 7-1/2 years
and then to two million in another 7-1/2
and then four million in another 7-1/2 years
and then to eight million.
So 30 years down the road from when they put in 500 grand,
they have eight million,
and that eight million can generate 600,000 to 800,000
a year of tax-free income for as long as they lived
based on actual history and performance
without depleting principal
based on what I'm gonna share with you in this video.
So basically about every million bucks
can generate 80,000 to 100,000 a year of tax-free income
without depleting principal.
Why is that so important?
It's because the financial services industry standard
is the 4% rule, why?
Because if you have a million bucks in tax deferred IRAs
or 401ks invested in the market,
DALBAR says if you bought and held,
you'd probably earn 9.14% and net 6% after tax,
but that's not what people actually do.
People get emotionally involved
in their money in the market.
And so when the market starts to go down 20, 25, 30%,
they say enough already
'cause this is their retirement nest egg and they sell low.
And then they wait, wait, wait
'til the market has come back strong and then they buy high.
And so the average retiree with money in IRAs
or 401ks in the market is only earning 3.49%.
If you're earning 3.5%, they only want you to pull out 4%
'cause they don't wanna be sued
for you outliving your money.
So a million dollar nest egg,
they only want you to pull out 40,000 a year
and you have to pay tax on that.
Even in a 25% bracket, you're only netting three.
That's pretty pathetic.
You subtract the 1% asset management fees on a million,
that's another 10 grand.
You're only netting two.
You can pull out 8% or 80,000
and 80,000 is four times 20,000.
If you're netting 3%,
I've earned 10 and netted nine
my entire life with universal life.
And so nine is 300% more than three.
90,000 is three times 30,000
and it's totally tax-free.
So this is the magic behind not outliving your money.
So when we talk about how to create this tax-free income,
in the book I wanna gift you at the end,
and it's a 300-page book,
you don't have to pay 20 bucks for it on Amazon,
I'll gift you a copy, but in the book,
we're talking about Chapter 9,
it talks about various scenarios
of people accumulating money
and you'll see all kinds of examples at different ages,
younger ages stocking away 500 a month.
You'll see older people, maybe a 50-year-old
or a 45-year-old stock away 100,000 a year for five years
doing strategic rollouts
or repositioning money from maybe a rental property.
They're sick and tired of being the landlord
and fixing the toilets and taking out the trash.
And maybe they have 100,000 in the bank
earning next to nothing.
So you reposition assets to increase the liquidity,
the safety, the rate of return.
And so there's examples in here
tucking away 100,000 a year for five years
in compliance with TAMRA.
If you don't know what that is,
be sure and search on this channel
for videos that explain TAMRA,
so that you can access the money tax-free.
And you put in 100,000 a year for five years,
that's 500 grand.
And then we show illustrations of pulling out
51,000 a year tax-free
from then until age 100, age 120 without depleting principal
and all kinds of other investments crash and burn.
And people go, well, wait a minute, 50,000 a year,
that's a 10% payout.
How can you do that
when maybe the insurance policy is only averaging 8%?
I wish I had a nickel for every time
I've been asked that question.
How can they pay you 10%
when you're only earning a net of eight?
So I'm gonna give you this example because again,
a lot of times people go wait a minute,
how can an insurance company
earning 4% on their general account portfolio
afford to pay you 8% double that?
Well, that's through indexing
because you're saying anytime you want, you know what,
I think the market is going to be going up.
I feel bullish about America.
And so the 4% on your million would be only 40,000.
But if you wanna link to an index, you're saying,
oh, you don't have to keep that interest on hand.
Use that interest on my million, that 40,000,
to fund an options budget and buy upside options
in the indices that I'm going to select that you choose.
And so they do that and they have the wherewithal
to pay you 8% or 12% and even 25 and 61%
like many of our clients have achieved.
But then if you guessed wrong and the market crashes,
your million is still safe.
The 40,000 of interest you relinquish
because it bought options,
which expired worthless if the market went down,
but you didn't lose your million.
Why do you link to an index?
It's because you'll usually tweak your rate of return
by two, three, four percentage points higher
than the general account portfolio rate on the average.
In some years, much higher.
And so that's one of the reasons an insurance company
can afford to pay you let's say eight
when they're only earning 4%
on their conservative investments
because they don't have to keep that interest
in your account if you're saying,
oh, I'll relinquish the interest on my million
to give you the wherewithal to pay me
whatever the market does if it goes up,
but you don't owe me anything if the market crashes,
but I didn't lose my million, okay.
Now, how can they afford to pay a 10% payout?
This is illustrated in several different scenarios
in this Chapter 9 of The LASER Fund book,
and you're gonna see where people stocked away
12,000 a year for several years
and then they pull out 125,000 a year tax-free
and you're looking and you're going, wait a minute,
I only had 1,250,000 accumulated in there at age 70
and you're giving me 125,000 a year.
That's a 10% payout.
How can you give me a 10% payout
when you're only illustrating at 8%?
You ready to find that out?
It's pretty incredible when you understand this.
Now, in other episodes, I talk about when you access money,
you can withdraw money
and in a universal life insurance policy
or any permanent life insurance policy,
you can recover your basis tax-free.
So if you put in let's say $500,000
and you start taking out 50,000 a year,
it would take 10 years
before you recover the 500,000 you put in,
but if the 500,000 doubled to a million
and you start taking out 100,000 a year, a 10% payout,
it'll only take five years and you've recovered your basis.
If you keep withdrawing money after the fifth year,
you now have to pay tax because you're into your gain.
The IRS says, "No, you don't have to do that.
Change the nomenclature.
Call it a loan instead of a withdrawal."
Now, people go, "Well, why would you borrow your own money?"
No, stay with me here.
There's two choices when you borrow money.
Now, the biggest reason why you want to borrow
the equivalent of your interest
is because when you borrow money,
that is not deemed earned passive or portfolio income.
Those are the only three types of income
Americans pay income tax on since 1986 Tax Reform.
Earned income is salaries and wages.
Passive income is rent and lease income.
Portfolio income is interest in dividends
and most investments will be
under one of those three categories, right?
Well, when you borrow money for a house or for a car,
you don't have to pay tax on that.
You're borrowing money.
So you have a million bucks in the insurance company.
Now, you could withdraw your interest if it's 10% or 8%,
you could withdraw 80,000,
but pretty soon that's dumb
'cause you're gonna have to pay tax
once you've recovered your basis.
If you borrow the equivalent of your interest,
you're telling the insurance company
just leave my million there and use it as collateral
and loan me, from the insurance company,
loan me the equivalent of my interest.
So if that's 8%, that's 80,000.
They'll loan you 80,000,
which is the equivalent of your interest.
So now at the end of the year, you have 1,000,080
'cause you didn't withdraw anything.
So you have at the end of the year 1,000,080.
Now, you have this phantom loan balance of 80.
I say phantom 'cause it's not doing payable
during your lifetime.
It's gonna be washed away when you die.
But see, you have 1,000,080 at the end of the year
minus the $80,000 loan balance,
that nets you the same million you would've had
had you pulled it out the dumb way
and paid tax on 80,000.
By borrowing the equivalent of your interest, it's tax-free.
So far, so good?
Now, you keep doing that and the loan balance keeps growing,
but your cash value in the policy keeps growing.
And this balance that's growing minus this loan balance
equals the same million you would've had
had you pulled it out the dumb way.
And it's never doing payable during your lifetime
because this minus this equals the same amount
and that blossoms and transfers tax-free.
It's paid off when you die.
Now, when you borrow money, there's two choices.
With indexed universal life,
you can choose what is called the zero wash
or zero cost loan.
Most insurance companies will say if you want,
you can play it conservative.
So on the loan balance over here, to satisfy the IRS,
they have to charge you a minimum statutory interest rate.
That might be 2%, so they're charging you 2%
on this loan balance on your annual statement,
but they're gonna credit you the same 2%
or close to the same 2% on the money that's growing,
that is collateral, the interest that you didn't withdraw,
they're crediting you the same 2%
and the original million's still earning
whatever the index is, let's say 8%.
But if they're charging you two
and they're crediting you two, that is called zero wash.
It doesn't cost you anything to borrow money,
to borrow using your money as collateral.
So that's called a zero cost loan,
but it makes it all tax-free.
So far, so good?
Well, how can you get 10% payouts
when you're only earning 8%?
You ready?
There's another choice and it's called an indexed loan
or a participating loan.
You can tell the insurance company
I feel bullish about America this year.
You can change every year if you want.
I want you to credit my entire balance
including all of the money that I didn't withdraw,
all the interest I didn't withdraw,
I want you to credit me with the indexed rate.
Now, the indexed rate off times is 10%, 11%, 16%, 25%, 61%.
I want to earn that on all of my money, okay,
not just the original million, on the money as it's growing.
Well, if they're gonna do that,
they're gonna have to charge you a higher rate over here
like 4%, or even 5%.
People say, well, why would you do that?
Because of the arbitrage, the spread.
So based on actual history, if they charged you 4 or 5%,
then they charge you four or five,
but they're gonna credit you 10, 12, 15, okay,
16, 25, 61% like in the year 2021
for many of our clients on their IUL policies.
I'll give you an actual example.
In 2017, I had a client borrow a million dollars
out of his policy 'cause he's a real estate investor
and he was tying up a multimillion dollar apartment complex
and he needed a million dollars of earnest money.
He borrowed at 5% the indexed loan,
that's 50 grand on that million.
That year, he got credited 25% on his whole million
that he technically withdrew, but he didn't withdraw.
He borrowed against it.
He got credited 250,000 on that million,
minus the $50,000 loan charge.
He netted 20% or 200,000 tax-free on his million
while he was actually using that million
to make three million
buying and flipping an apartment complex.
This is incredible, okay.
Now, on the average, he made a huge spread that year,
on the average, using indexed loans,
you will usually make at least two percentage points higher,
some years you won't, but on the average,
we have found that you'll make about 2, 2.5% higher return
than the cost of the loan on an indexed loan.
You take those two percentage points
and that gives you the ability to have a 10% payout
instead of an 8% payout.
Is this making sense?
This is how many times we are able to
on a million dollar nest egg generate 10% payouts,
100,000 a year tax-free,
even though we're only showing an 8% crediting rate
because you're using indexed loans
and you're continuing to earn
whatever the interest crediting rate is over and above.
And even though the average rate might be eight,
you can pull out 10% and not deplete principal.
This is how money works.
And so this is how the LASER fund
can generate payouts of 8-10% tax-free.
And this is why these scenarios just blow people away.
They can't figure out the math,
but it's all in there in the illustration
once you understand it.
So if you wanna study some of these scenarios,
I wanna gift you a copy of this 300-page book
called "The LASER Fund."
This is in Chapter 9 of the book,
but I would love for you to study the entire book.
It's actually two books in one.
This side is about 200 pages, 14 chapters,
that has all the charts and graphs and explanations
like I've been talking about.
If you learn more by stories
of how people actually have achieved this income,
you can flip it over to this side and this has 12 chapters
with 62 actual client stories of how the LASER fund is used
not only for retirement, but college funding,
working capital for business or real estate management
like the story I just told you,
and you'll learn how this can be a phenomenal dream solution
for many financial goals.
So this is left brain. This is right brain.
Here's how you claim your free copy.
You simply go to laserfund.com, L-A-S-E-Rfund.com
or click on the link below.
You contribute a nominal amount
towards the shipping and handling.
You've gotta have some skin in the game.
I'll cover the rest of that cost
and I will pay for the book.
I'll fire out a hard copy to you.
And then there's options there to listen and learn,
watch and learn, check out some of the online education,
the webinars, and you can even talk to an IUL specialist
to see how any of these concepts
may apply in your particular set of circumstances
and get a LASER fund report hypothetical for you.
They will not charge you for their time, okay.
You will not get an invoice or a bill.
This is about you and your brighter future.
So start now, claim your free copy of "The LASER Fund."
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