Whole Life Myth Busted and so I love dispelling these myths i call them myth-conceptions and in this episode I’m going to dispel the myth that when using the banking concept and if you don’t know what that is stay with me and I’ll explain it that somehow whole life insurance is superior no it doesn’t even hold a candle and I’ll help you understand why so get ready so I’m Doug Andrew i’ve been a financial strategist and retirement planning specialist now for uh north of five decades helping thousands of Americans uh become their own banker okay but optimize their assets and minimize tax and understand how money works so in this episode let me show you that if you want to become your own banker which is incredible when you understand this get ready to be blown away if you if you have never heard this before that uh when you use index universal life it blows whole life insurance out of the water you can do it with whole life but it it’s lackluster okay so you have to understand first of all how money works uh before you can understand banking now there’s basically four things you can do with money you Four Uses of Money & Double-Dip can spend it you can lend it you can own with it or you can give it away now uh what I do is I double dip i own and loan on the same assets by becoming my own banker okay uh and so let’s make sure you understand why bank credit unions even insurance companies uh are so willing to pay interest their greatest assets are actually their liabilities okay so uh if if you have a bank here the bank is willing to borrow OPM other people’s money and they’ll pay you let’s say 4 and a.5% on a CD now are they just a benevolent institution uh paying you that interest and they put your money in a vault no what do they do with your money they put it to work okay and so How Banks Profit from OPM they might even loan it back to you at 7 and a half% on a on a home equity line of credit so you that’s a difference of 3% they have overhead sometimes they only net 1% and there then there’s you know uh people out there say they’ll do all that for 1% absolutely they make millions and billions of dollars doing what I’m showing you here this is how to become your own banker you’re borrowing money and paying low interest and you’re using uh that money to make more interest that’s that spread or that difference is called arbitrage okay where you’re making more than the cost of the funds but when you think about it if a bank credit union an insurance company a financial institution stopped paying interest stopped borrowing money and paying interest they would wither up and die okay their greatest asset is their liabilities if they stopped having liabilities they would stop having assets and money being made okay sometimes you need to understand an employer knows that uh you hire an employee and you hope the employee makes you more than they cost you if they don’t your days are numbered as the employee but see that’s a return on employment cost would you hire an employee for for 100,000 if that employee made you an extra 200 300 400,000 yes do you hurry and save money by firing the employee no now you’re giving up 200 300% rates of return on the cost of the employment okay would you buy a widget machine for 50,000 if that widget m machine made you a h 100,000 every single year yes you’re making a 100% return on equipment cost okay now you need to understand that or you’re going to you’re you’re going to miss out okay so here we go uh banks they borrow a million dollars of OPM back in 2008 uh they were paying even less than 1% but let’s say they pay 1% interest on on the million because this 500% Bank Arbitrage Example includes money even in checking accounts which a lot of banks don’t pay any interest on checking accounts because that’s a demand deposit you can demand all your money in in that account so they’re going to pay $10,000 a year in interest on every million uh of of money that they borrow OPM now they’re very willing to do that why well in 2008 when 400 banks went under 900 more were on the brink of going under the uh federal government asked the five major banks in America to disclose where they had their tier one assets that’s money they have to have on hand liquid and safe in case it would run on the bank uh guess where they had 30 to 40% of their tier one assets in insurance companies where I put my money because they’re rated you know five or six notches higher in safety a lot of banks back then were rated triple B and they take your money put it in insurance companies and increase the safety to triple A and they got credited 5% uh 50,000 how much more is 50 than 10 how much more is five than one don’t say four it it it’s 500% now it’s a 400% profit but it’s a 500% return would you hire an employee for 10 grand that made you 50 grand that’s a 500% return on the employees cost would you buy a widget machine for 10 grand that that made you 50 that’s called a 500% return on equipment cost it’s a 400% profit okay now uh here’s me over my lifetime i probably borrowed on real estate let’s say uh at an average of of 6% some years I I borrowed as little as 3 and 3/4 in 2008 and I’ve also borrowed as high as 18% but it’s tax deductible in my tax bracket if you learn how to do it Personal Arbitrage & Tax Deductions correctly okay uh because I always make sure that I can itemize and deduct it greater than taking the standard deduction now I don’t have time to explain that here but you can you can deduct the interest but it it’s not contingent on being able to deduct the interest because if I borrow at six all I have to earn is six or higher compound interest because this is simple interest if I borrow at six and earn eight how much more is eight than six don’t say two okay i’ll I’ll pay an employee 60 grand if that employee makes me 80 grand I’m making 20,000 profit that’s 33% profit 33% more than 60 okay is another 20 grand up to 80 are you getting it okay but if I can tax deduct that in a 33% bracket is it’s a net cost of four now on my max-funded IUL it’s it’s pretty much a no-brainer i can earn eight okay net how much more is eight than four don’t say four it’s 100% more you get that okay now uh in low interest environments like 2008 I was borrowing at at at three a net cost of two okay and I was earning 10 by rebalancing on my IUL how much more is 10 than two 500% so the banks make 500 I make 500 we’re both happy but you can’t believe how many Americans miss the boat because they don’t understand how money works okay now the primary key elements of a prudent investment are number one liquidity the ability to access your money when you Liquidity, Safety, Return need it number two is safety not only of the institution like like the multi- trillion dollar insurance industry where banks put their money for safety but also to earn a rate of return a rate of return either greater than inflation or rate of return greater than the cost of the funds when you are using the banking concept okay now that’s why I use property structured max-funded IUL because it has liquidity safety rate of return uh way better than most other investments by far that’s why I call it a LASER Fund which means liquid assets safely earning returns okay so often I’ve taught people how to make 100 to 300% returns on OPM like banks do so if you’re not getting it yet let’s go to 2008 uh banks if they borrowed a million dollars and paid 1% that’s 10 grand a year if they turned around and only got 4% by putting it into insurance companies how much more is four than one don’t say three they’re making 400% more than the cost of the funds uh if I borrowed at 3 and 3/4 tax deductible interest in a 33% bracket that was a net cost of 2 and a half i was making 10 i was making 400% too that’s all I’m saying we’re both happy because I understand how to become my own banker now my house in 2008 uh December of 2007 I could see the writing on the wall i I could see that we were about to maybe have a a collapse of the a mortgage meltdown which happened my house was valued at a million five and I went in and I refinanced that house 80% loan to value on a first mortgage and also the 2008 Home-Equity Case Study last 20% I borrowed on a second and third mortgage 100% loan to value okay if you have good credit you can do that on the first mortgage okay four and a half% interest tax deductible a net cost of three now I don’t care if I can’t deduct it i’m paying 67 and on that million five okay I’m earning 8% that’s 120 i’m making tons of money more than the cost if it’s tax deductible I’m even making more 75,000 profit the first year this is the first year it gets better than this as it starts compounding so far so good well on uh the the second and third mortgages let’s say I’m paying uh uh 6% now my house went down in value by the end of 2008 down to a million one okay now what people don’t understand is I had critics that went neerener mr andrew you’re underwater uh you owe more than your house is worth did I care i was in control see if I would have left my equity in the property I would have lost 400 grand for sure guaranteed and it would have taken several years before my house went back to a million5 i didn’t lose anything that 400,000 let’s separate that 400,000 that I would have lost had I left it in the house it’s out here in my IUL uh let’s say I borrow that at even higher interest 6% tax deductible it’s four i’m paying 16,000 i don’t care if I get unemployed i don’t care if the house uh gets destroyed in a natural disaster I’m in control because I can peel off half of what I’m earning if I’m only earning eight I’m earning 32,000 tax-free on that 400 grand i only need half of what I’m earning to make the mortgage payment the mortgage company loves me they don’t have to worry about me they’re not going to foreclose on me everybody else that that that lost their equity and lost their job they they lost their home in foreclosure see I’ I’d rather if I lose my job I’d rather have a $600,000 house with 450,000 of liquid cash in an IL than to have a a lower mortgage balance and no liquid cash because try to go borrow on that house when you when you don’t have the ability to repay it’s a lot better to have and not need than need to not Rental Re-Fi for 300% Returns have does that make sense now this is how to become your own banker so uh this is not only a personal residence but rental properties i’ve helped many uh real estate landlords refinance their properties and I did that back in 2012 with this gentleman to resurrect tax deductions to offset uh the money we were taking out of his IRAs or 401ks and we got it out basically with no tax every million dollars every one of his rental duplexes that he refinanced for a million okay he separated a million dollars of equity that was trapped in the property earning zippo okay because the property is going to increase or decrease in value regardless of how much equity is in it or whether it’s mortgaged to the hill or free and clear okay equity has no rate of return in the property you only give it a ability to have a rate of return when you separate it every million that he separated every one of those properties he refinanced for a million and got a million cash out into the IL he borrowed at 4.5% he was able to tax deduct it you can tax deduct it on rental properties so he pays 45,000 but he gets 15,000 back in actual real money tax savings because he writes off 45,000 and so the net cost is 30,000 is what it cost him 3% he was earning 9% on his IL how much more is nine than three don’t say six 300% you know he’s like “Doug you’re making me so much money I can’t you know see if you’re getting it it doesn’t matter if his rentals are vacant how can you make money on a on a rental property when it’s vacant if all of your money is tied up in that property you’re not making anything but if his properties are vacant or it gets destroyed in a fire or hurricane he still is making three times what the mortgage is costing he’s still making 300% even if it’s vacant okay that is how money works now when you have money in an IUL we call it a LASER Bank so if you have a million dollars of cash value we have savvy business owners that they they uh can go borrow using their cash value and their IL as collateral could they withdraw a Leveraging IUL Loans for Deals billion sure but now it’s no longer in there earning interest why do they borrow because they’re smart see uh they’re not really borrowing their money they’re borrowing from the insurance company because the insurance company will loan them a million because there’s a million of collateral sitting there they don’t have to qualify for a loan they don’t have to have good credit or anything okay so the insurance company loans him a million okay or her and uh they give them two options you can uh borrow at uh at a zero cost so we’ll charge you 2% interest and we’ll credit you 2% on the million that’s collateralizing this loan okay and so they they charge you two they credit you two why do they even charge you because if they don’t it’s not tax-free it’s not really a true loan so you have to abide with the IRS so it’s tax-free but most of our savvy business clients and they use what is called the index or alternate loan especially if the economy is doing well so it may be a higher interest rate why would you have higher interest let’s say 5% that’s 50,000 instead of 20,000 in interest it’s because now the million isn’t credited the same five it’s credited whatever the indexing rate is and some years it could be zero but other years it’s 10 20 25 61% if you borrow at five and earn an average of 10 how much more is 10 than five 100% okay now let me show you an actual example in 2017 had a a savvy business owner he understands how money works he uses his IUL as his working capital account that’s his foundational asset and then he uses the money in his IUL to seize investment opportunities he likes to buy uh properties fix them up and flip them and I’m talking about big strip malls or uh shopping centers and so uh he called and said “Doug I need a million dollars out of uh out of my IUL.” Well what he merely means is I need to borrow a million dollars using my IL as collateral okay it’s just semantics but he calls up and u he says “Doug send me the form.” The form is a one page form where he puts his name and his policy number which is like his account number and it says uh okay do you want to withdraw a million no because then it’s no longer in there earning interest do you want to borrow a million from us the insurance company using the cash value as collateral yes do you want the zero cost loan where we charge you to credit you to no no uh uh you can charge me uh five in 2017 so he borrowed a million and agreed to be charged 5% that’s 50 grand he doesn’t have to write out a check for that 50,000 why because it’s automatically deducted from the money in the policy which grew that year it capped out at 25% so the million that he left there as collateral got credited a quarter of a million of tax-free uh interest that minus the 50 is a net of 200,000 he netted 20% tax-free return on the million that he used to collateralize a loan where he bought fixed up and flipped a real estate property to make two or three million you got you talk about double dipping yeah that’s all legit that is how money works now why is this better than whole life whole life can’t even hold a candle to this okay I’ve never seen a whole life Why IUL Crushes Whole Life policy that you can actually borrow and the uh the insurance company if they charge you five will credit you 25 or like in uh the year 2020 to 2021 credit you 61.33% and some of our clients got credited 158% because when there’s anxiety there’s opportunity most whole life policies that use the banking concept uh if you borrow five uh they’ll only credit you four or they’ll charge you six and credit you five they they’ll credit you even less but they’re charging you oh but you can use it tax-free and you’re paying yourself back that’s that’s what they think the banking concept is even if they let you borrow at four or 5% and credited you seven or eight there’s only about a two-point spread well you’ll come out ahead whole life works but oh my heavens with IUL you can earn a spread arbitrage like this uh way easier than you can with whole life because whole life crediting you 25% good luck okay now folks if you want to learn more and see examples of this um study uh my Get the LASER Fund Book book The LASER Fund and this will help you understand how money works and why the LASER Fund knocks the socks off of uh so many other investments and there’s some myths out there and uh I want to dispel those myths so watch all of the episodes where I uh dispel these misconceptions but if you want to study uh I recommend you get a copy of my book The LASER Fund it retails on Amazon for 20 bucks up to 60 bucks and if you buy it on Amazon I want to thank you but I’ll gift you a copy for free you just simply go to laserfund.com or click on the link below and uh you contribute a nominal amount towards the shipping and handling i require a little skin in the game and then I’ll pay for the book i will fire out a hard copy to you via priority mail and uh while you’re in there claiming your free copy if you like to listen and learn or watch and learn there’s those educational formats available for your investment you can even schedule to attend a free educational webinar that we teach on a weekly basis no cost no obligation you can even schedule an appointment with an IUL professional that we train and oversee that will help you uh design a properly structured max-funded IUL so that it will perform at its utmost best so that you can become your own banker