- How to hedge against inflation?
By the end of this video episode,
you will understand
that buying gold or silver just keeps pace with inflation.
It does not outpace inflation.
It hedges against inflation.
And a lot of people just say, I just wanna keep up with it.
Well, that's hedging,
but if you really wanna outpace it,
I'm going to share some insights
on how you can do this.
To outpace inflation,
you've got to link your returns
to the things that are in flight
and actually be able to earn rates
of return greater than the inflation rate at any given time.
I've always been able to do that for the last 48 years.
And I'll give you some insights
into how I've been able to do it and how you can too.
(upbeat music)
So, my name's Doug Andrew.
I've been helping people prepare
for long term goals like retirement,
college savings for their kids and grandkids
working capital for business, real estate management,
by optimizing their assets
and minimizing taxes and earning predictable rates
of return for more than 48 years.
But there's three big dangers
that cause most people to not earn the best after tax rate
of return or after inflation rate of return.
So taxes, inflation and market volatility
is actually what causes most retirees
to outlive their money, okay?
And so in this particular episode
we're talking about how to hedge against inflation.
So let's start with the milk
and then we'll end up with the meat.
Does that sound good?
I mentioned at the beginning that a lot
of times you'll hear advisors that will tout,
hey put some of your money
in gold or silver precious metals
because inflation is going to be coming around.
Now let me simplify this because
if you decide to put some of your money in gold or silver
that's probably wise if you want hedge
against inflation and just sort of keep up with it.
So if inflation is 3%,
the cost of living will double about every 24 years
at 5% every 14.4 years.
If the rate of inflation is 7.2%,
your cost of living it'll double every 10 years.
If it's 10% inflation, it'll double every 7.2 years.
Actually in 2021, the year before the recording
of this episode, inflation exceeded 15%.
Now some Americans go,
no that's not what the government told us.
They said the CPI,
the Consumer Price Index only went up 5.8%.
Clear back in the early eighties,
they changed the way they calculate
the Consumer Price Index.
If you're not aware of this, it's smoke and mirrors.
What happened?
Back in the 1980s,
during the Carter years when inflation was double digit,
the government could not afford to pay social
security retirees recipients,
the true rate of inflation
the cost of living increase.
And so they decided to change
the way they calculate inflation.
I have other episodes that talk
about how you can calculate the true rate of inflation,
but they basically changed it
from apples to oranges comparison.
So they can compare the price
of one commodity to a different one the next year
or even stake to hamburger the next year.
And they do that.
So in 2021, they said the Consumer Price Index
went up about 5.8 to 5.9%.
And that's all the raise that they gave social security
recipients and the government acted like they were heroes.
It's the biggest increase
in social security we've we've ever given
for several decades.
It didn't even begin to touch
the actual increase in cost of living.
Look at gasoline, look at used cars, look at meat.
There's all kinds
of things that went up 20%, 50%, even 100%.
The real rate of inflation was over 15%.
So whatever the government says that the rate of inflation
or the Consumer Price Index is,
you can basically triple that at a minimum, okay?
Now, to hedge against inflation
you've got to equal the rate of inflation, first of all.
And so a lot of advice is buy gold and silver.
Now, let me just help you understand this basically.
Gold and silver,
basically, that's a medium.
You can't eat gold or silver,
but it is the precious metal where there is a scarcity
in the supply because when they print, print, print money
that causes inflation.
They make a bigger supply of money.
And so therefore the cost
of goods and services has to go up.
And if you don't understand that,
be sure and watch other episodes where I explain this.
Milton Friedman, the economists that won the Nobel prize
explains it very clearly.
You wouldn't believe how many politicians don't
understand it, but the point is this,
why would you buy gold and silver?
Because it's scarce.
And it has always sort of kept up with inflation.
It rarely stays ahead of it except for short time periods.
Why?
Okay, let's go back a couple
of thousand years ago to the time of Christ.
Let's say at the time of Christ
a custom tunic, what's a tunic?
Okay, it's a suit of clothing.
That's what they were, okay?
And so let's say that you
had a nice custom tunic clothing
and it cost you
about an ounce of gold, which is what it did.
So a nice set of clothes at the time
of Christ was worth about an ounce of gold.
Today for the price of an ounce of gold,
you can buy a nice suit,
a tailor made suit of clothing, okay?
So for 2000 years,
an ounce of gold will buy you a nice tailor
made quality set of clothing, a suit.
It's only kept up with inflation.
It doesn't stay ahead of it.
It just keeps up with it.
So hedging inflation,
first of all,
when people say hedge inflation
they're talking about, hey, let's just keep pace with it.
Gold and silver will help you do that.
And sometimes it'll be a little ahead of it.
Sometimes it'll be a little bit behind,
but I'm more interested in outpacing inflation.
So in order to do that, I want to earn a rate of return
that's greater than the inflation rate at the time.
One of my favorite vehicles to do that
is Indexed Universal Life.
Now, other episodes, explain what indexing is.
In a nutshell, I'm putting money into an insurance policy,
a max funded insurance policy for living benefits.
This is where I have earned rates of return of 7%, 10%
15%, 25%, 61% in 2021, even 153%.
Why?
Because we had inflation and people go, huh?
Well, my advisor didn't tell me about this.
Yeah, that's why you ought to rethink your thinking
about aligning yourself with the proper advisor.
So let me simplify this.
Back in the 1980s,
when Universal Life was first introduced by EF Hutton,
they weren't an insurance company.
They were a brokerage firm,
inflation under Jimmy Carter hit double digits.
When it was 10%, I was earning 15%
and a half percent on my Universal Life.
5.5% greater than the inflation rate.
So I was staying ahead.
I was outpacing inflation.
Now, when inflation started coming down around the threes
I was earning eight and a half, nine, 10.
I was earning still, about five and a half percent
greater than the inflation rate at the time.
3% in the 1990s and the early 2000 and 2010.
And then all of a sudden inflation started to creep up.
And when inflation started to hit 5%, 6%, 7%
I was earning 12%, 13%, 14%.
We'll let's move forward to 2021.
Inflation, true inflation, was not 5.8,
it was over 15.
You know what I earned
and many of our clients earned
by owning Max Funded IUL in the year 2021?
Many of them locked in gains of 25%.
What was inflation?
15%
They earned 10% more than the inflation rate.
Many made 61.33% tax free on their IUL.
And some earned as much as 153%.
Why?
Because the advisors that I teach,
two of my sons are some of the top IUL specialists
in the world.
And they told their clients in March of 2020
when the market went down 30%
because of the COVID-19 pandemic,
the government is printing money like crazy,
link to an index, like the S&P 500 one year point-to-point
with no cap.
Now, when you do that,
they're gonna subtract five percentage points
off the top.
In a normal period, you would probably
not choose that choice with Index Universal Life.
You would choose one with a cap at 12% or 15%
and they don't charge any spread.
Well, what happened from March
of 2020 to March of 2021?
The market rebounded 66.33%, the S&P.
You subtract five percentage points
and our clients ended up with 61.33%.
We had a client that had about 850,000 bucks
in March of 2020.
He didn't add a dime to his IUL policy.
And in March of 2021, 1 year later,
it had grown by over a half a million bucks
to 1,000,382,000.
And he made a half a million tax free.
He got 61.33%.
And that was way ahead of the 15% inflation rate
'cause he was linking his returns
on his IUL to the things that are inflating.
And you wouldn't believe how many financial advisors
do not understand how to do that.
So I would implore you
to not have inflation work against you.
Have it work for you.
I don't like inflation anymore than you probably do,
but it doesn't hurt me, it helps me.
So you can't be rowing upstream, so to speak,
especially in the banker credit union
at 1% interest at one mile an hour,
when the current inflation comes down
at three or five or seven,
but you can't have your money in traditional IRAs
and 401ks in the market and you are earning,
8% and the current of inflation is 15%.
You're going backwards.
This is what causes so many people to outlive their money.
So to learn about this,
I want to gift you a copy of my 11th bestselling book.
It's called "The Laser Fund."
It's been flying off of our warehouse shelves.
It retails for 20 bucks.
This isn't about you buying my book.
I want to gift you a free copy, okay?
Here's how you can claim your free copy.
You simply go to laser fund L-A--S-E -R fund.com
or click on the link below.
You contribute a nominal amount
towards the shipping and handling.
I cover the rest of that cost, but I will pay for the book.
I will fire out a hard copy to you,
300 pages, charts, graphs, explanations,
62 actual client stories about how to diversify
and create the foundation for a tax free retirement
and protect yourself from the negative impact of taxes,
inflation and market volatility.
There's options while you're claiming your free copy,
if you wanna listen and learn with audio.
Watch and learn with video.
There's even an 18 hour masterclass
where we do a deep dive on this and you can also check
out how we teach educational webinars on a regular basis.
But if you want to be pointed to an advisor
who understands how to do this,
'cause maybe you're realizing,
my advisor has no clue how to do what Doug is talking about.
Let me point you to an advisor who can help you, okay?
Or maybe you ought to point your advisor
to IUL insiders, which is an exclusive mastermind
group that I organize where I teach advisors,
how to help their clients eliminate those dangers of taxes
inflation and market volatility, okay?
So you would be doing your advisor a favor
if you told them or pointed them to do that.
If they refuse, I can point you to an advisor
who will help you.
But claim your free copy
because this is about you
and your brighter future.
(upbeat music)