Two-year point-to-point may be the answer. IN this episode, I'm going to address the question
how to earn safer higher returns using a two-year strategy. Get ready, you're gonna be blown away.
So, my name's Doug Andrew and I've helped many many people optimize their financial assets
for now more than 47 years. Also minimize taxes and prepare for a comfortable retirement so they
don't outlive their money and my favorite vehicle for doing that if you've watched any of my other
episodes on this channel is what I call the laser fund. In fact ,my 11th book is a 300 page book I
want to gift you a free copy of at the end of this episode so stay with me here and it's called the
laser fund laser is an acronym. That stands for liquid assets safely earning returns and people
say, what is a laser fund? Well, it's a properly structured maximum funded indexed universal life
insurance contract and sometimes people tune out and they go, "What? I've never seen an insurance
policy perform very well", well you haven't seen one structured correctly and funded properly
and frankly the majority of indexed universal life policies are not structured correctly or funded
properly to do what I'm going to show you here. Where you can earn average returns like I have.
Where over let's say a 25-year period I earned 11.17 netting 10.07. A little more than one percent
of my rate of return was the cost of the insurance that the IRS said had to be there
in order for it to qualify to be tax-free as it grows and tax-free when I take it. But
if I'm netting 10 percent it means every million dollars will generate a hundred thousand a year of
tax-free income without depleting principle and there are critics who have never seen an IUL do
that because they're looking at the wrong ones and so they don't think they exist and sometimes I go,
"Oh, so that's your reasoning? You've never seen one so you don't think it exists? Have you ever seen
your brain before? Well, then how do you know that exists?". You know it's sort of silly sometimes the
reasoning I hear. But I can show you all kinds of statements thousands of them where clients
have earned returns averaging between seven to ten percent but some years we've had clients lock in
gains of 16, 25, 26, 61, 150, by using the strategies I explained on this channel. Now in this episode, I am
talking about a two-year strategy and it differs from a five-year or a one year most universal life
policies that are using indexing it's a one year annual point to point. I'll review that quickly
that means let's say you have a million dollars of cash in your policy it doesn't matter if you have
ten thousand a hundred thousand a million or ten million. But a million is an easy number
to work with people can extrapolate from it and many of our clients accumulate a million or more
by the time they're ready to retire. So let's use a million. When you have a million dollars
sitting in your universal life insurance contract you can just leave it there and
have it earn the general account portfolio rate which is what the insurance company is earning
on their billions and even trillions of dollars in aaa bonds double a bonds
and mortgages on shopping malls and skyscrapers. They put very little money in the stock market
and so they have an average general account portfolio rate. During the 1980s I never earned
less than 11 and three-quarters percent i earned as high as 15 and a half percent
on the general account portfolio rate. But that was back when interest rates were high CDs at banks
were paying 10. But inflation was high mortgages on homes were 18 to 21 see interest rates
are relative. So, in the last uh 10 15 years we've gone into this 40-year interest rate low
and so interest rates at banks are less than one percent pretty pathetic. But if truth be
known where is the bank putting some of your money? You see, in 2008 when 400 banks went under
900 more were on the watch list the federal government asked the five major banks
to disclose where they had their tier one assets for liquidity and safety and they
had 30 to 40 percent of their money in Boli bank-owned life insurance. In a nutshell,
they were paying you one percent interest on your money. So every million that they borrowed from
the public opm other people's money when you put your money in the bank it's in a limited position
they're turning around and putting it into an insurance company to increase the safety usually
by six notches higher triple a is six notches higher than many banks who are only rated triple b
and they're increasing the rate of return by five times five hundred percent.
They're making five. Now, you say, "Well, that's only four percent more", now five percent on a
million is 50 grand they're making 50 grand and they're only paying you 10 grand. They're making
five times what they're paying you that's 500% more. Is this beginning to intrigue you? Now,
if you're getting interested already be sure and subscribe to this channel. I have over 500
episodes of education that give you insights into opportunities that maybe you didn't know
existed before. Click like post a comment but subscribe and click the little bell and you'll be
notified every time I post a new educational video which I do about five days of every single week.
But stay with me to the end because I want to gift you a copy of my 300-page best-selling book.
You don't need to pay 20 bucks retail I'll gift it to you. Okay, so let's talk about the two-year
strategy on indexing because most of the time when you link to an index you're telling the
insurance company okay link and let's say it's the the 15th of October and they wait until October
of the next year and if the s&p was a thousand when you linked and a year later it's 1100 that's
a 10% increase and on your million dollars they will pay you 10 percent that's a hundred grand
and people say, "Well, how can they afford to do that?", they know what they're doing. The interest on your
million is what you let them use to buy upside options. If you guessed wrong in the economy tanks
the options expire worthless but you didn't lose one dime of your million dollar principle. But if
the market goes up you get to participate without the risk if the market goes down that's indexing
is not the same thing as index mutual funds. If you have your money in an index mutual fund you will
lose if you have a crash. So, that's normally what people use is a one year point to point. A two year
point to point very simply you link let's say from October or June 15th it doesn't matter you link
from June 15th and you wait two years. If you link in you know the year 2020 you wait until the
June 15th of 2022 you wait two years so that's maybe a little bit of a downside. You have to wait
two years to see what you're going to be credited but what's the advantage of a two-year strategy?
Well, the insurance company if they have a longer-term to calculate the change in the
s&p or whatever index you link to they have a longer term that allows them to save money. They can get
options cheaper and so they are able to pass that on and they're able to raise the cap. So let's say
one year point-to-point has a cap of ten and a half percent on a two-year strategy they may say,
hey we'll pay you up to 19%. So, if the market went up over two years 19% or more they're not going
to pay any more if they cap it at 19. But the cap is 19 on two years for that two-year period
and so this off times over the long haul it sort of helps you diversify. Now, I may not recommend you
put a hundred percent of your money in a two-year strategy but maybe twenty thirty or forty percent.
So, on a million dollars of cash value you may want to link 400,000 of it to a two-year strategy.
Maybe 40 or 400 000 to a one-year strategy and maybe the last 20% to a five year strategy and you
can watch an episode on what is different about a five year than just a two year because it's not
you just wait five years and you say okay what was the return. They actually averaged the last
year and you'll learn that in that episode. So, what does this mean at the end of the day? What have the
average rates of return actually been using a two-year strategy? So, in summary up till this
point the insurance company if you use a two-year point-to-point strategy because of the longer term
the insurance company can then afford to pay higher caps or maybe higher participation rates
and they can pay you more than a hundred percent of whatever maybe 110%, 130% so you can participate
and if the s p goes up 10 they'll pay you maybe 130 percent of 10 or you'd earn 13 or whatever.
But see, the caps are higher because the option costs are less they're cheaper. So, let's look at
some of the advantages and actual rates of return using the two-year strategy
maybe as a part of your portfolio. When you use a two-year strategy and let's say the cap is 19%.
So the most they're going to pay you is 19% over 24 months and you know you would annualize
that which would be an average of nine and a half percent a year if you average 19 over two years
okay. Keep in mind it's tax-free so sometimes with a 19% cap there is absolutely no fee.
Other times there is no cap so they don't stop you at 19%. There is no cap they'll pay you whatever
it grew to in that two-year period and there are some two-year periods where the gain was
tremendous over that two-year period especially if you started out in March of 2019 and ended
up in March of 2021 and what took place during that time period. You wouldn't have lost money
had you been in the one year and it would have linked in 2019 and gone to 2020 when it crashed.
So, often you can choose a no cap and then they will pay a participation or
they will have a threshold or a spread so they subtract five percent or 10%
off of the no cap. So, let's say it went up 30 percent and we had many clients who experienced 30%.
If they charged you 10% you earned 30 minus the 10 and your net was 20% gain over 24 months. That
average is 10 a year. So the two-year strategy may be wise to use or allocate 20%
maybe up to 40 percent of your money in an indexed universal life insurance policy just to be able to
spread it out and diversify. The key is you want to diversify into superior strategies. Diversification
doesn't mean oh I'm going to have some of my eggs over in this basket in the bank or credit union
earning less than one percent because it has a drive up window. No, just because they have a
drive up window doesn't mean it's necessarily safe. That's convenience, that's not really liquidity. A
bank could hold off giving you your money for up to six months if they really had to if things
got in serious trouble in this country. So for liquidity safety and predictable rates of return
my choice bar none is a maximum funded indexed universal life insurance policy and a two-year
strategy can be a wise choice to diversify how you earn money either one year point to point
two-year point-to-point or maybe some of your money could be linked to a five-year strategy.
Search that episode on this very channel and you'll see the differences in what I'm
talking about. So, if this is intriguing you this is why we wrote the book the laser fund
and there's actually two books in one and it retails for 20 bucks don't pay that.
I will gift you a copy and it's actually 200 pages of charge graphs and explanations on this side
if you learn more by stories you flip it over this is a hundred pages with 62 actual client stories
of how the laser fund is used for all kinds of financial goals not just retirement. But in this
left brain side chapter six we address indexing and how it works and the differences between one
year point to point with a cap with no cap a two year a five year multipliers bonuses and
this book is designed to help you understand how powerful indexing can be for your serious cash for
your future and why so many people use it as their preferred retirement planning vehicle. I recommend
40 to 60 percent of your income come from this and it's not even taxable. The IRS will know
you're receiving it but they don't even audit you because it's been tax-free for over a century as a
sacred tax-free cash cow in the internal revenue code. Read and learn why and how you can use this.