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What's The Minimum Amount You Can Invest In A Tax-Free IUL? - YouTube
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Become a millionaire with 500 bucks
a month. In this episode, we are going to
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address the question, "What is the minimum amount
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that I can put into or invest in an IUL,
indexed universal life?' You're going to
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see it's not what you begin with that
counts,
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it's what you end up with.
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So, I'm Doug Andrew and I've been helping
people with max-funded IUL,
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since universal life has been around in
1980.
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I started as a financial strategist in
1974.
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But when indexed universal life came out
in 1997,
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I was all over that. And my average rate
of return
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went from 8.2 percent up to over 10
percent since that
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time. And so, I'm a big proponent that
people as they prepare for long-term
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goals such as retirement or maybe in
their business or with their real estate
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management,
college funding for their kids that one
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of the best
places to accumulate their money
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tax-free safely where it's liquid it's
safe
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it earns predictable rates of return
between 7 to 10 percent is what
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I've averaged for
45 years. And I don't have to pay tax
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when i take it out.
And I don't have to pay tax when i
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transfer it to my heirs.
When I'm 6 feet under, there is not an
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income tax due to whoever I leave it
behind
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to. There's very few vehicles that give
tax advantages like that. In fact there
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is no other vehicle in the internal
revenue code
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that allows you to accumulate access and
transfer your money totally tax-free.
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But when it transfers, it blossoms in
value. So, my average returns
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as I alluded have been between 8.2% up to
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10.07. Even though some years I've earned
25%, okay?
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Other year, 16%. Other years when the
market totally crashed,
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I didn't lose. I didn't make anything
maybe but I didn't lose.
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But see I've averaged a rate of return
between the 8 to 10 percent range.
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So, when the question is asked
"What's the minimum amount I can put in?"
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Well,
you have to cover the cost of insurance
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that was dictated under the tax
citations
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under TEFRA, DEFRA, TAMRA to accommodate
the maximum amount you wanted to put in.
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So, the real question is,
"Well, what's the most that you want to
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put in?" And
generally, this is called the guideline
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single premium.
This is how much you want to be allowed
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to put into the policy
over the life of the policy and no
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faster than the first
11 years. And so, let's say it's 500,000.
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Now, you don't have to put in 500,000.
That's the
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most you could put in over the first 11
years. In fact, you could probably put
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that much in in the first
5 years but then you're done. There's
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no
limit to what it can grow to. It can grow
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to
millions and millions of dollars
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tax-free there's only a limit to how
much you can put in.
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So, if you're trying to set up a contract,
a policy, a savings vehicle using indexed
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universal life
with the least amount of premium, then
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you want to think about "Well, what's the
least amount
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that i could probably average on a
monthly basis?"
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I remember when my wife and i raised our
six children, when they were born,
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shortly after, we would take out a
universal life insurance policy on them
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and start socking away 25 bucks a month.
Now, that was 40 years ago, right? And so
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25 bucks a month putting into their
policies and then adding more money
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later and so forth grew
to hundreds of thousands of dollars just
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at 25 bucks a month.
I would say right now, if you can set
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aside 500
a month in today's dollars, 500 bucks a
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month, that's 6 000 a year.
Now, you can put in more than that. You
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can put in less than that. If you
put in more, you can coast. So, if you
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throw in 10 or 20 thousand
and then you have to stop and not put
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anything in, you can do that
if the minimum amount was 500 because
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you just divide that
into how much you've already put into
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the policy. It allows for flexibility.
That's why it's called
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universal life because it's universally
applicable
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to minimum funding, maximum funding. But
the question is
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"How much do you want to accumulate
to generate tax-free income at the end
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of the day?" And so, I
back into the minimum amount when i talk
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to most of my clients.
Here's how. So, based upon the rates of
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return that I've
quoted that I have achieved... And not just
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me. Heavens!
Thousands of our clients that we've
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helped with this
have achieved incredible results. Let's
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use the rule of 72..
See, the rule of 72 says that you take
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the
interest rate that you're earning on any
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investment and divide that interest rate
into the number 72. So,
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8 into 72 means your money will double
every 9 years.
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If you're earning 10 percent, your money
will double every 7.2 years.
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If you're earning 7.2% which is
the average that people earned in the
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worst
decade since the great depression,
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2000-2010,
just falling asleep and waking up 10
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years later,
people doubled their money. The average
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return was 7.23%. Let's use 7 陆.
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If you started stalking away 500 bucks a
month
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and you earned an average of 7.5%, you would have a
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a million fifteen thousand dollars in
35 years.
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So, I guess the quick answer is "Well, the
minimum might be 500 bucks a month if
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your goal is to have a million bucks and
you've got 35 years to get there."
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Or if you had a lump sum, how much could
i set aside so that 30 years from now i
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have a million
if i have 125,000 right now? Well,
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125,000 right now, if you're earning 7.2%,
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it will double every 10 years. So, 125,000
grows to
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250,000 in 10 years. 250 doubles to 500
in the next 10 and 500 doubles to a
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million in the next 10.
And so, it's it's quite simple. But what I
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alluded to
is when i met with people, I would say,
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"How much
money do you need in today's dollars?" And
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they would say,
"You know, this would be like 30 years ago."
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Well, I need at least
$3,000 a month on top of
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social security to buy gas and groceries.
I go, "Okay."
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3,000 bucks a month. So, that
would be
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some type of an investment vehicle
that would generate
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36,000 a year of of cash flow at 3,000 a
month.
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But we have to take into consideration
inflation. What do you think inflation
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will average? And they'd say, "Oh,
let's say 5%." Well, that means the cost of
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living
will double every 15 years. That means
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that
3,000 a month will only buy what 1500 a
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month bought 15 years earlier.
So, you're going to need 6,000 a
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month and 15 years to buy the same
gallons of gas and loaves of bread that
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three thousand a month bought
15 years earlier. And if you are
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looking 30 years down the road, it
doubles again.
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So, 6,000 goes to 12,000. You're going to
need 12,000
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a month to buy the same gallons of gas
and loaves of bread that 3 000 a month
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buys today. So, in order to have 12,000 a
month that's
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144,000 a year. We're going to have to if
we
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assume a 7% rate of return or a 10 rate
of return.
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We back into it and we go we need a
million and a half, we need 2 million. We
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need 3 million dollar nest egg
to hit your goal. And so, it's really a
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function of
not what's the minimum how much do you
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need to set aside and then with
flexibility
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the allowed to put in nothing or a very
low amount. But it's really what's the
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most
that i can put in to achieve my goals.
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So, yeah. You could become a millionaire
by
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socking away 500 bucks a month for 30
years at 7.5%
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interest.
If you're in 10%, you'll do it
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quicker. But maybe a million
is not going to be enough. And so, you may
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need to accumulate 2 million or 4
million.
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Can I tell you people who have used max-funded indexed universal life, IUL
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where it was structured correctly and
funded properly
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under the TEFRA, DEFRA and TAMRA
guidelines,
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this has turned into a cash cow for them.
I call it the
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the Laser Fund,. It's the title of my most
recent book.
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It has actually two books in one. A left
brain side and a right brain side that
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has stories and examples.
You will see in here that there are
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people who started out with
$500,000. Maybe 30 years ago.
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And so using the same math 500,000 doubling every
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7.2 years... Because they have averaged 10
like I have. So, 500,000 doubles to a
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million
in 7 陆 years, let's say. In
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15 years, it's doubled
from a million to 2 million. In 22 and a
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half years,
it's doubled again to 4 million. And at
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the end of 30 years,
their original 500,000 in the laser fund
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is worth 8 million bucks.
And that 8 million dollars at 10% is
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generating
800,000 a year of tax-free cash flow
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for as long as they live. Do you know
what any other vehicle that does that?
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If you want to know how and why, that's
why i wrote this book. It's my 11th book.
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I'll pay for the book, you pay $5.95
shipping and handling and i'll fire one
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out to you. Just go to laserfund.com
and you learn how to be able to have
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this
work for you and not outlive your money.
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And to be able to have a vehicle that
will accumulate your money
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tax-free. And it doesn't matter what you
put into it.
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It will knock the socks off of any other
investment vehicle that's only tax
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deferred
especially in the markets where it's
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volatile.
Because this is stable.
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