Achieve Financial Independence faster and smarter uh they came out with indexing in 1997 so that you could keep earning a high interest rate even in a low interest environment by linking your returns to an index but that does not mean you're investing in the index funds in the stock market uh there's a lot of agents that don't understand this including Dave Ramsey and his team if you're going to employ one of my favorite Financial tools a Max funded index universal life you want to make sure it's structured correctly and funded properly and the best way to know that is to work through a certified I professional so I'm Doug Andrew and I've been a financial strategist and retirement planning specialist now for five decades helping thousands of Americans Achieve Financial Independence and when I talk about that um many people Define it differently but generally speaking uh most people agree that Financial Independence is to have enough money enough resources so that they will not outlive their money if they live to be 100 or 120 years old so how do you do that most Americans will not be able to do that using traditional IRAs of 401ks especially invested in the market because they don't realize That Wall Street was never designed to create predictable income and that's why the financial services industry can only illustrate a 4% payout because the average retiree with money invested in the market is only averaging 3.49% uh that's pathetic that a million doll Nest Egg can only generate 40,000 a year of income uh and then you have to pay tax on that even in a 25% bracket and you're only netting 30,000 to buy gas and groceries uh if a million dollar nest egg is being charged 1% a year for Asset Management fees you're only netting 2% uh after taxes and fees with a 4% uh rule that's ridiculous okay uh with a Max footed index universal life you could at least double that to 8% but I'm going to show you how you can move that up to more like 10 11 12 13 14% by diversifying and rebalancing how you can Achieve Financial Independence faster and smarter and not outlive your money okay so let's look at this um to make sure that you understand indexing let's take a moment and simplify it uh if you uh set up a Max funded index universal life and you fund it properly then uh for like with many of our clients if they fund it uh maybe a 100,000 a year for five years uh and so they put 500 ,000 in then that 500,000 doubles in about 7 and a half years to a million or if you're socking away 500 a month from age 35 to age 65 you'll have a million dollars in an index universal life based on average rates of return it's just math compound interest but let's take the snapshot in time of a million dollars uh and uh so when you're using indexing this is what you're doing you're telling the insurance company Hey listen I've got a million dollars of cash value now if you happen to feel bearish about America uh in any given year uh that you think we're headed for a recession you can just tell the insurance company hey I just want to hunker down and play it safe just just give me the the general account portfolio yield now in high interest environments like in the 1980s and 90s I never got credited less than 11 and 3/4% and as high as 15.5% uh from 1980 to 1990 but when interest rates started to come down in the 90s uh they came out with indexing in 1997 so that you could keep earning a high interest rate even in a low interest environment by linking your returns to an index but that does not mean you're investing in the indexed funds in the stock market uh there's a lot of agents that don't understand this including Dave Ramsey and his team and so uh if I have a million of cash value in the general account portfolio is as low as 4% like it was during the Great Recession yeah I can just settle for 40,000 and at the end of the year I now have a million 40,000 it's taxfree uh 40,000 is better than what the banks were credited uh crediting which was less than 1% uh but anytime I feel bullish about America and I think uh that the economy is going to grow over the Long Haul I can link some or all of my million to an index or indices of my choice let's keep this simple because I could link to um the S&P 500 the Dow Jones the Russell 2000 the barlay dynamic balance index we have many clients who diversify as I'm going to show you here in five different indexing strategies okay let's just keep it simple and let's say it's the S&P 500 now here's what a lot of Agents don't understand they think indexed universal life is where your cash values inside of the insurance policy are invested in an index mutual fund no you would have lost 40% in 2008 uh with your index universal life if that's what you did is invest in an index mutual fund the S&P 500 Index dropped 40% our clients were cheering in 2008 go go because they they didn't lose a time they may not have made anything but they didn't lose but the first 90 days of 2009 most of our clients locked in gains of 16% taxfree after not losing a penny with indexed universal life well how okay here's how indexing Works you're telling the insurance company now now the interest you're paying me okay that you're earning 4% uh I'm willing to give up that interest at least for the next year or two years however long the linking period is so you can take the interest on my million this would be 40 Grand and um uh I'm willing to give that up so that you can fund an options budget so you'll have the wherewithal to pay me whatever the index that I choose or indexes I choose uh does so if the S&P 500 goes up 8% % that year they'll pay me 80 grand on a million how can they afford to do that cuz 40,000 of options double to 880,000 they're big boys and girls they they know what they're doing or if it goes up 12% they'll pay me 120 Grand on my million how how can they afford to do that because 40,000 of options but purchased you know will grow to 120 Grand okay it's it's actually quite simple but what if I guess wrong and the market drops uh the market tanks those options expire worthless but I didn't lose my million my million was not invested in the S&P my million was safe in the insurance company earning four and so uh I relinquished the 4% that year but I still had my million and uh so the options simply expire worthless why do I do that because most 10year periods and the American Stock Market you'll have seven gain years and only three down years and uh you'll probably probably average more like 9 or 10% um but even in the Great Recession uh 2000 to 2010 when you had five loss years and five up years uh if you did not rebalance you would have earned 7.23% we rebalanced uh uh we didn't have zero five of the years our clients only had zero two of the years because the other three years we said just move back over and earn this and so they got credited 11.17 and they knited 10.07 so that's called rebalancing so let me show you what that means when you are telling the insurance company hey any time you can take the interest on my money and fund an option budget to have the whereb all to pay me gains but I don't lose and my money will then uh always come back to the million where I started that's really nice you don't lose uh when the market goes down uh but when you talk about indexing and uh rebalancing too any agents they sell ilul with just Target Premium and so they have way more Insurance than is needed which means if you were lucky enough to average seven or eight% rate of return because you don't have annual reviews and do what I'm going to show you here you're going to be lucky to net two or three because the cost of insurance is draining out way more than 1% instead of uh earning eight and netting seven you'll earn eight in net two or three by doing what I'm going to show you you can move the 8% up to 11 or 14% And if you earn 11 you can Net 10 how do you do that well in a normal economy or Market you might have 40% uh link to a one-year High cap uh one year point to point 40% in a 2-year and 20% in a 5ye okay why because in any 20-year period since the Great Depression the average is 11.3 there it is people say Doug you say you've averaged 11.17 how how do you do that okay I just showed you this is as simple as I can make it I I determine this by having annual reviews with my clients and I know what I'm doing I can teach you if you're an agent how to do this now when there's anxiety there's opportunity so when the market drops down 20 or 30% so many Americans panic and they go oh man this is my retirement Nest Egg sell they and they sell low and then they wait wait wait wait wait and then they buy high and that's why the average return is only 3 and a half% if you just bought and held and stomach the downturns you might average more like nine% and net six after tax most Americans are only earning an average of three and a half because they're buying and selling at the wrong times here when there's anxiety that spills opportunity so when the market goes down 20 or 30% we usually say hey we're we're going to put 50% in a 2-year and 50% in a 5 year at this low Point why because the average in any 20-year period since the Great Depression is 14% there you go it's it's not rocket science well this is where you diversify into like five different indices so this is an actual annual statement of one of my son's clients where 20% of their money was allocated to each of five different ones and on 20% of their money that year they got credited 14.89% 16 a half and then 10 and a qu and 15.07 to 13 hey just average those not bad well uh sometimes people say well Doug you also talk about uh rebalancing and um seizing certain opportunities uh when there's a tremendous amount of anxiety okay yes so let's take covid-19 uh lot of anxiety March of 2020 the market dropped 30% in one single month now that doesn't happen very often but oh my Heavens my sons called their clients who had money that was ready to be linked here's an example of a client uh that had um they actually uh had about $36,000 and they took half of that 18,000 6 six and 6,000 and linked it to uh three different ones and they got 9% 12% and 7.25 okay uh and then they took the remaining 18,000 and linked it to a one-ear pointto point with no cap now why don't we use that all the time cuz it's not designed for that a one-ear pointto point with no cap they subtract 5% off of the rate of return because there's no cap uh and so if you had that normal year where you might earn 12 you're only going to net seven no we don't do that normally but when the market drops 30% we do it and so on that 18,000 he got the market was up 66.3 3% one year later in March of 2021 and he got credited a 61% on 18,000 he made another 11,500 that account value was 29,000 at the end of the year there you go people go I've never seen an IL policy do that well you're looking at 99% of the ilul policies out there that are sold wrong okay uh so what about this client uh my my son has a client they had eight well they actually started out with six million in their IA of 401ks when they came to us and all of a sudden they realized they're never going to be in a lower tax bracket they were in the highest tax bracket in the state of California they bit the bullet rolled out 6 million out of their IRAs or 401ks in 5 years and paid 2 million in tax netted 4 million after tax to put into four iul policies okay and then those uh four I policies grew at about a 10% rate of return in the next 7 and 1/2 years to 8 million now in March of 2020 my son told him hey you've got 852 th000 in one of your policies that's ready to be linked link so they did and they got credited 61.3 3% a year later they had 535 Grand of interest on that portion of their cash value and that was worth a, 387,000 there you go that's how you Achieve Financial Independence faster and smarter than just setting up an ilul with any old agent your nephew or your brother-in-law and they don't know and they they put way more Insurance than you needed and so you're lucky to earn seven or eight and net two it would be far better to move up and earn 11 and Net 10 is this making sense you do that by talking to a certified iul professional so that when you get annual statements yeah uh 12.88% average rate of return since you took out this policy you know 11 12 15 years ago that's not bad I have critics out there because they don't see these very often because unfortunately so many agents don't know what they're doing and they say show us any I policy uh that has outperformed the original illustration and so we do several of these on on my YouTube channel he has 110,000 of cash value it was originally projected to only have 63,000 he's achieving Financial Independence faster and smarter he's averaging 12.88 and we only Illustrated at 8 and a half or nine when he took it out uh we do this all the time so what I'm talking about is uh making sure that if you're a consumer you want to work with a certified ilul professional uh and in order to become certified you have to get 100% on a very complicated 100 question exam not 80% not 90 100% And now if you are a professional I'd strongly recommend you get certified and that you learn how to do what I've been talking about here or you're going to be doing your clients a disservice they're going to miss out on a fortune okay and so that it begins by studying my book the laser fund now this is 300 pages jam-packed with information this white covered side is about 200 Pages 14 chapters with all the charts and graphs and explanations if you are a left brain learner if you're a right brain learner you flip it over to this one the orange cupboard side and this is about 100 Pages 12 chapters with 62 actual client stories okay if you want to use your whole Brin then read both of these books but it retails on Amazon for 20 bucks I'll pay for the book uh you simply go to laser fund.com or click on the link below contribute a nominal amount towards the shipping and handling I require ire some skin in the game okay uh I'll cover the rest of that if if the shipping and handling costs more than that which it usually does I'm okay I'll cover the rest of that and I'll pay for the book I'll fire out a hard copy to you via priority mail now while you're in there claiming your free copy if you like to also listen and learn and watch and learn there's those formats available uh you can schedule uh for a free webinar which we teach on a weekly basis there's no charge uh but if you want to talk to an IL professional a certified IL professional you can schedule an appointment to talk with one with no cost or obligation and they're the ones that have passed uh the exams that I oversee so that you know whatever they're created as an illustration is done right correctly so that you don't miss out on a fortune and you can accomplish what I've been talking about in this episode so make sure that you learn that you know and frankly when you read this book you'll know more than 99.9% of uh of I agents out there and I want you to be educated education is power uh and it'll make the difference between having just this much money and being totally Financial independent and not outliving your money [Music]
Tax-Free Retirement Planning