How To Become An Ultra High Net Worth Individual - YouTube

Employ the 3 miracles of wealth accumulation. In  this episode, I'm going to address the question,  

"How to become an ultra-high net worth individual.  

So, I'm Doug Andrew and I've been a financial  strategist and retirement planning specialist  

for more than 4 and a half decades. And  I've helped many, many people accumulate  

wealth. But I've also been blessed to meet  many multi-millionaires and billionaires.  

And so, I've had the opportunity in private to ask  them how they accumulated that wealth. There are 3  

basic marvels or miracles of wealth accumulation  that I have discovered. And I've also used these  

to help many people become wealthy. Even  ultra, mega-wealthy. The billionaire class.  

They used these 3 marvels or miracles in one way  or another. Now, I'm going to also use a metaphor  

in this episode. And as you go through and learn  if this clicks and you want someone else to watch  

this, be sure and share, click like. Subscribe  to this channel because I post an in-depth topic  

every single day that answers a financial question  on this channel. So, the 3 marvels or miracles of  

wealth accumulation when I first disclose them,  some people go, "Oh, yeah. I understand that."  

We'll see. Are you ready? The first  miracle or marvel of wealth accumulation is  

compound interest. Now, you wouldn't believe  how many times I say that in a room full of CPAs  

or Tax Attorneys. And they roll their eyes and go,  "We thought this was advance continuing education?"  

I go, "So, how many of you think you've got a  pretty good handle on compound interest?" -"Yes,  

we do." I go, "Okay." Now, it was Albert  Einstein that said, "Compound interest is  

the 8th wonder of the world." So, this is  what I do. I pass out an 8 and a half by 11  

sheet of copy paper. This is a 26-pound copy  paper. Now, I don't know if you know what  

that means. It means that it'll hold 26 pounds of  weight before it rips. 26-pound copy paper is the  

typical and it's five one-thousandths of an inch  thick. And so, I pass out a sheet to everybody  

and I tell them to fold it in half like that.  And then fold it in half again. And then I say,  

"Now, imagine if you fold this over 48 more times  in half..." Now, you can't physically do that  

because of the folds. And  they pretty much know that.  

But imagine if you could fold it over 48 more  times. A total of 50 times. I want you to take  

out your pen and write down on this sheet of paper  about how thick this would be if you fold it over  

48 more times. A total of 50 times in some  form of measurement. Millimeters, centimeters,  

inches, yards, miles. And so, they all write it  down. Now, I've done this with rooms full of 80  

financial professionals. And then I go around  the room and say "Hold up your answer."  

The most common answers are 3 quarters of an inch,  6 inches, 2 inches. Some people say a mile and  

they get laughed at of the room. Now, I understand  compound interest. I didn't have a calculator.  

But I said, "Oh, it's at least 26,000 miles." And  I get laughed at of the room. Then I go, "Okay,  

I thought you had good handle on compound  interest? What is this doing everytime you fold  

it in half?" it's doubling. Yeah. Double, double,  double. On the sheet of paper, I hand them the  

math is on the inside. Do you know that a sheet of  copy paper five one-thousandths of an inch thick,  

if it's folded over 20 times, it's already a  1,048,000 time thicker? It is almost a mile high.

"WHAT!?"

If you fold it over 42 times (Double, double,  double, double), the stack of paper would be  

from here to the moon. If you fold it over 8 more  times, 50 times, it would be 93 million miles high  

from here to the sun. If you could've fold it  over one more time, 51 times, it would be from  

here to the sun and back. It's double, double,  double, double. They are shocked. Because they  

were thinking 3 quarters of an inch when it's  from here to the sun. That's compound interest.  

Now, it was Rothschild who said, "No. The  8th wonder of the world is compound interest  

tax-free." Not tax as earned. Do you know  most Americans save their money in taxed as  

earned investments? It's the worst way to save  and the most common way people save money. So,  

I want to illustrate this for you  because I've shared with you so far,  

2 of the 3 miracles --compound interest and  tax-free accumulation. So, let's go over here to  

the screen and I'll show you a dollar doubling 20  times. Now, linear growth would just be a dollar,  

dollar, dollar. It's like taking 20 steps. But if  you double the number of steps, that's exponential  

growth. So, here we go. A dollar doubling to  2 to 4 to 8 to 16 to 32. After 20 doubling,  

would be worth $1,048,000. That's one way to  stack up a million from one dollar. Just double it  

20 times. Now, it's a million dollars if it's  tax-free. But most Americans save their money in  

banks, credit unions, regular mutual funds. Some  people use tax-deferred IRAs. So, they may say,  

"Well, I have a million. Tax-deferred." Well, it's  not all your money. A third of that belongs to  

the government. Only about 650,000 of that is your  money. I prefer totally tax-free. So, a million is  

only if it's tax-free. And that's my preferred way  of saving. Let's say you have to pay tax as you  

go at the bank or the credit union every year on  your earnings. And let's say you're in a 25% tax  

bracket. So, dollar doubles to $2. You have to pay  tax of 25 cents on that dollar. So, you only have  

a buck seventy-five left. That buck seventy-five  doubles to 3.50 and you pay tax on that. Guess  

how much you'll have instead of a million. Only  $72,000. Only 7.2% of what you could've had.  

This is how most Americans save. But do you know  that most Americans are in a higher bracket than  

25% at the end of the day? Between federal and  state tax, many of them pay 33%. In California  

over 40%. In a 33% bracket, instead of having a  million, you'll only have $27,000 instead of a  

million. 2.7% of what you could've had. So, that's  why Rothschild said, "No. It's not just compound  

interest." Because this is compound. It's compound  interest tax-free. There's a big difference  

between a million and 27,000. This is only 2.7%  of what you could've had. But this is why I  

prefer tax-free accumulation. That is the second  marvel or miracle. Now, what's the third one?  

A lot of people have a hard time getting their  brains around this one. I'll say it this way. Safe  

positive leverage. What's that? Again, if this is  intriguing you already, share this with a friend.  

Subscribe to this channel. And at the end of  this episode, stay with me and I want to gift you  

a copy of my most recent bestselling book where  this is all explained. But what is safe positive  

leverage? It is the ability to own and control  assets with very little or none of your money  

tied up or at risk in that asset. Did you hear  that? Okay? In other words, it's owning and  

controlling assets where your money is not tied  up or at risk in that asset. If I own real estate,  

I get to participate with the growth on the real  estate. But the actual equity in the real estate,  

I keep separated. In a position of liquidity  safety and earning predictable rates of return.  

Because that real estate could drop in value.  And I'm earning compound interest over here  

tax-free while the real estate does whatever it  does. If the market is growing, I don't have my  

money in the market. I link my returns to whatever  the market does. But my money is not at risk  

in the market. I leverage. Now, a lot of times,  you'll have advisors like Dave Ramsey that'll say,  

"Oh, no. I leveraged and I got into trouble. I way  over-borrowed." And so, he pounds on get out of  

debt, get out of debt. And don't ever leverage.  Well, that's because he did not have liquidity.  

See, leverage without liquidity is stupidity.  It is what makes the world go round. This is  

the parable of the talents in Mathew 25. This is  the parable of the pounds, Luke 19. This is where  

I can control assets and own them with very little  or non of my money tied up at risk in that asset.  

In other words, if Donald Trump going to be buying  a skyscraper, what's the first thing he does?  

Does he talk to his money manager and say, "Hey,  bring the checkbook and write out a check for that  

skyscraper." No. He says, "Hey, what's the least  amount of money that we can tie up in order to  

gain ownership and control of that building? And  then let's refinance it as often as possible and  

keep the money separated from the building.  Because the building is going to go up in  

value regardless of how much money is tied up in  a property. But by having the money separated, he  

can use it for other purposes than when it's tied  up in the property, okay? This is safe positive  

leverage. But you want to have liquidity.  When people leverage with no liquidity,  

then all of a sudden, when a recession hits,  they don't have any liquid money because it's  

all tied up in the properties. That's not what I  am talking about. You want to have full liquidity.  

So, that is the third marvel or miracle of wealth  accumulation. So, how does this all come together?  

So, how this all come together? if you study the  lives of very successful people like Walth Disney,  

JC Penny, Ray Kroc, the originator of McDonald's,  the hamburger restaurants. They all used life  

insurance to accumulate their money and keep  it safe and liquid. And this is where they  

leveraged money to be able to save Disney Land  when it was in trouble. And Ray Kroc did it with  

McDonald's. JC Penny did it to save his department  stores. They used life insurance policies to keep  

their money liquid safe earning compound interest  totally tax-free. And then they leverage that. I  

have many multi-millionaire clients who will keep  millions of dollars inside of their max-funded  

index universal life insurance policies. I call  them Laser Funds. L-A-S-E-R, liquid assets safely  

earning returns. Because they're tax-free. They  compound. Now, it's not pie in the sky rates of  

return. But I have a client in 2017, he buys  apartment complexes that are sort of worn down  

and he buys them and he fixes them up and then he  flips them. And so, he bought a 30-million-dollar  

property that year. He needed a million dollars  to tie up the property on his earnest money. So,  

he borrowed a million out of his life insurance  policy with me. And the insurance company charges  

him 5% because he could've withdrawn the  million. Instead, he borrowed it. Why?  

Because the insurance company kept crediting him  25% that year. It was an incredible year in the  

market and he links his returns to what the market  does but he doesn't lose if the market goes down.  

That's called indexing. He made $250,000 on his  million while he was using it in his business.  

Because the insurance company loans you a  million. There's no loan application. You just  

fill out the form and say, "I want to change  the nomenclature. I want to borrow a million  

using my policy as collateral." Fine. They gave  them a million bucks. Charged him 5% or 50,000.  

He made 250,000. He netted 20% return tax-free on  his million. He made 200,000 on his million in his  

insurance policy while he was using that million  as leverage to fix up a rental property and sell  

it and double his money over there. Hello? This  is what savvy smart people do. That's why I use  

a max-funded indexed universal life insurance  contract because it has these incredible marvels.  

You accumulate your money tax-free compounding.  You can access money tax-free. But you can use  

it for safe positive leverage to become your own  banker. To be able to have your own family bank is  

what I call it. Would you like to learn more? This  is what has motivated me to write 12 books so far.  

My most recent bestselling book is called the  Laser Fund. Because I affectionately call a  

maximum funded indexed universal life insurance  contract structured correctly to do what I am  

talking about, the Laser Fund. Liquid assets  safely earning returns. This is how to diversify  

and create the foundation for a tax-free  retirement, a tax-free emergency fund. All kinds  

of other goals. College funding for your kids,  grandkids. It's like a financial swiss army knife.  

But it envelopes all of those miracles and marvels  in one. So, go to laserfund.com or click below.  

And you contribute a nominal amount towards the  shipping and handling and I'll pay for the book  

and fire it out to you. But also look at the other  options to listen and learn and watch and learn.  

My 2 sons and I, they're co-authors with me  on this book recorded an 18-hour masterclass.  

And everybody who has gone  through that 18-hour master class  

takes their finances to a whole new level  when they learn these principles. So, here's  

to your brighter future. Make sure and  claim your free copy of this 300-page book.