Tariffs, Social Security, And What It All Means For Your Retirement (Episode 11)

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This is 93 million with Doug Andrew. Welcome to 93 Million with Doug Andrew, where we talk about how to optimize your assets, minimize taxes, and empower the three dimensions of your authentic wealth. My name is Greg Duke, your host, facilitator, and lover of donuts. And in today's show, we're talking about how much money you should be saving the social security gap and

multipliers within ILS. And and we are joined by the OG of properly structured IL, New York Times bestselling author and the author of the laser fund and a man who loves a good dad joke, Doug Andrew again. Great to be here. uh the co-author of the laser fund, IL mastermind and a man who's a bit of a mad scientist when it comes to IL Andrew. Welcome Eron. Hey, I'm happy to be here. Also co-author of the laser fund, the IL Einstein, top IL specialist and someone who wakes up way too early

in the morning. Erin Andrew, welcome. Happy to be here. I was up at 5 running this morning in a little tired. Okay. And our featured host for today, one of the original converts from whole life to IL, the president of Laser Financial and a man who's never had a bad hair day, Brandon Johnson. Welcome, Brandon. Some

people have bad hair days. I have a bad hair life. It looks great. Looks fantastic. All right, gentlemen. We have some really fun um topics for today. I'm excited to get into those. Let's jump right in. Starting with our first segment. Oh, how the tables have tariffed. There's been much debate over whether Trump loves tariffs or if he's using them for leverage. According to Yahoo Finance, China eases some US tariffs as Trump says he wants

concessions. Okay. Now, in a related article, according to Fox News, President Trump says the money is so great coming in from tariffs that that I'll be able to reduce taxes. Okay. So my question for the group is Trump using tariffs as leverage or does he love tariffs and is and he wants them as a permanent installation or both? Doug,

let's start with you. Well uh Trump has says that he doesn't really like tariffs but he's sort of fi fighting fire with fire in order to get things accomplished to get uh reciprocity reciprocal tariffs. He was recent uh recently interviewed by Glenn Beck and he simplified it with this metaphor. He said, "America is this great big store, department store, and people throughout the world want to buy goods and services from this store and they will pay." Yes. Okay. Uh likewise, when we buy things

from them, we pay. But uh if if we have reciprocal tariffs and then all of a sudden we bring it down to zero maybe now it's a win-win and I think that's what he really wants in the long run and then he can lower taxes and here's why we have a a GDP of about 30 trillion. Okay. And uh the IRS brings in about 6 trillion. So that's about 20% of the GDP. in 2017 when he lowered taxes because the Republican philosophy basically is let's raise the revenue that's being taxed to raise tax revenue

instead of raising taxes. So what happened the next year in 2018 the average growth in the GDP is usually about 3.2% average it went up 5.2 two an extra 2% that was an extra $600 billion dollar and so we we received an extra 150 billion more tax revenue which equals about 3%. And the tax cuts of 2017 were 28 down to 24, 25 down to 22, 39.6 down to 37. He knew in advance he could lower taxes about 3% and end up just fine by raising the revenue that's being taxed. And I think that's the long

the long game here. Okay. Yeah. So a GDP play that's really good. Erin, your thoughts on this? You know, whether whether you like them or not, I mean, it is in the sense of you've got to create like a fair market. I know I remember, you know, studying in economics, they're always talking about free trade. Free the free market the free trade would market would be the ultimate economy. However, if you have uh other governments out there, other countries out there, Europe for example, tariffing

us at 20 plus%. Yeah. I mean, how in the world are we No, you've got to get it down to equal footings, right? And I think that's exactly where he's mostly pushing to. If you can get everybody down to zero, great. We're all down to zero. However, if we're going to be all at 20%, let's all be at 20%. You know, if you're all going to be at 60%, great. We're all going to be at 60%. Yeah. So, I mean, I think it's getting us on a level playing field so that we can protect uh the American way of life.

Yeah. Especially China. That could be a whole another subject, right? It's all on China, but that's kind of a different subject altogether. Erin, thoughts on this? Well, it's kind of interesting because I've watched a lot of stuff and it's like, you know, people right now 61% of people are not fan of of the tariffs, right? 39% are. So, it's interesting. Yeah. And Trump, of course, what can make or break a presidency is their how the economy does while they're

the economy. It's the economy stupid. That's the old quote. Yeah. It's like, so like right now, for example, Trump went from what was it? He was at 45% approval rating in February. Sounds about right. Down to about 39. Yep. And so he's gone down a little bit. So it's like interesting to see how this has kind of affected people that are kind of in the middle and things because of course there's always going to be the die hards on either side that you know don't agree with them or do agree with

them no matter what. But uh the people in the middle are kind of um you know having a hard time with the tariffs. It's going to it's going to see like how this is affecting things because we are so shortsided we can't you know hang in there. It's going to be interesting to see how the tariffs kind of affect um you know people and there there could be some I mean things are they're saying right now that could affect um you know the cost of living and inflation and

different things. So it's going to be interesting to see what happens if they yeah because a lot of the play of tariffs is companies bringing bringing businesses onshore and that could take years to set up. It could take quite a while. It's like this could be a longterm play and it's like we are we are so like one or two days. We're shortsighted, right? Like what did the stock market do today? Yeah, exactly. So, it's like it's going to be

interesting. I um hope everything like this it seems like things are going well, but it's there's some shakiness. So, it's going to be interesting to see what plays out over the next just couple months. Yeah, that's a great great point. Brandon fi wrap us up on this final thoughts. You know, it kind of boils down to the golden rule. And I think that's what Trump is is implementing is something that you others do unto you. Right. Yes. Right. And and I love what Eron said about free

market, free trade. Like if it were me and it was a perfect world, it's like get rid of tariffs all together. Let's just let's all just basically Yeah. If they're so bad, why is everybody else doing them to us? Right. Well, I thought I was I was well informed. I thought I was somewhat well informed. I had no idea these other country every other country in the world was terrifying this idea to this extent. I mean ours are down to nothing and they and I had no idea that it was that big of a

disparity. So I'm grateful that he's actually brought this to our attention. Big buyer. We're the big buyer. We you see lots of different cars of all over the world. You go to Europe, you're not going to see a lot of American cars. And that and that is what gives the US a lot of leverage, right? Yeah, I was just in Europe and I didn't I was looked for that and I was like, "Wow." See a lot of for no US cars out there. Yeah, exactly. Yep. That's ex That's exactly right.

Okay, good stuff. We'll continue to monitor this. Uh let's go to our next segment, but first just a reminder that if you're enjoying this content, you want to see more of it, please like and subscribe and ask us a question or comment. We may use one of your comments in one of our uh next shows. So, uh all right. Okay. Our next very controversial

segment, the best way to save money. Hat tip SNL. I love that. Where where do where do you get this saved money? Where does it come from? Oh, it's so fun. I love that clip. All right. Sometimes saving money is hard to do. Okay. According to Google AI, Americans only save 3.4% of their monthly income. Ouch. Woo. Doug, how much of someone's income should they save for retirement and what is the best way to save? Good question.

Okay, if you're in your 20s or 30s, okay, the minimum in my opinion is 10% of your income. 10% if you want to retire basically with the same lifestyle. Maybe not hedge against inflation if inflation gets out of control. If you're in your 40s or 50s, uh you've got to start saving more like 10 to 20%. Right? And uh if you want to hedge against inflation even more, if if you would like to have a lifestyle equal to or greater than what you had during your earning years, uh we have many

clients that that save 20 to 30%. Yeah. They're able to be charitable. They have freedom. They can do what they want to do. they don't have to worry about outliving their money. So, determine and and there's good, better, best. Okay. A good way used to be the traditional IRA or 401k, but on this show we talk about you defer the future perceived unknown advantage. Uh taxes will likely be higher. A better might be um paying tax on the seed money but enjoying the

harvest without tax like a wroth. But, uh, the best way is totally taxfree, and I'm sure we're going to talk about that one. Yeah. All right. Well, Amron, according to a 2024 Vanguard report, 41% of Americans who contribute to a 401k are saving more than the employer match. What do you think about the the 401k employer match? And should workers contribute more than the match? Should they contribute the match? I don't know.

What do you think? Well, you know, and I I think I've talked about this before. An IRA or 401k is not a sole proprietorship. It's a partnership. And who's your partner? Very true. Uncle Sam. Uncle Sam. The government. Talked about that many times. If you're like, you want to put more money into a partnership with the government, then otherwise you might want to rethink your thinking. Right. Right. I mean, let's let's let's think about how we can regain. I talk about this all the time.

You know, one of the greatest secrets is how you can reclaim choice and control. And so sticking more in I mean I I don't mind people putting it up to the match but often times I mean that's one of the very first pieces of advice I usually give is hey anything let's look at rerouting being smarter with anything over and above the match. So if you're putting in I one I want to applaud you. If you are saving more than your match job well done. You know you're you're

disciplined. You're saving. That is a good thing. However, where and how you're saving, man, let's rethink that. Let's let's significantly make an improvement on that. More choice control. Take control. That's right. Instead of having it all tied up. Yeah. Erin, um, we talk a lot about ILS, index universal life. Is an IL a good way to save for retirement. I would say definitely. To be honest, that's where

all my retirement money is. Yeah. Now, don't typically suggest that for everybody, but it's where all my money is personally in an IL or in the bank account. I I don't you know do the IRA 401k thing. The reason being is inside the IL your money is growing taxree. Now any money you put in is after tax dollars right establish that pay it now versus paying it tomorrow when it's on the seed versus the harvest. Pay your taxes now. Now the money grows taxree. You get money out taxree and when you

die it transfers taxree. Not only that you have access to it before 59 and a half. Guess what? You can take out a big chunk of money and you can put it back. very flexible for for our business owners out there, right? Very flexible. And then you could also um of course be able to uh yeah, not lose when the market goes down. Yep. Indexing taxfree death benefit come along for the ride.

All those features are so beneficial to be able to have access taxfree and so it's it's our favorite place to put retirement and multipliers potentially multipliers which we're going to talk about in a later segment. So stay tuned for multipliers. Brandon, wrap us up on this uh uh IL saving general thoughts. Anything you want to wrap us up on? What are your thoughts? Yeah, I I'm actually blown away with 3.4%. I mean, that's that's low, right? Oh, I couldn't that.

So, so I think fundamentally if you can create or establish like a forced savings plan, like I love plans. I have them set up for my kids where every month it just goes into a plan and and it you set it, you forget it. And even for yourself, if you're younger, just get something where it's like it just automatically drafts. You don't have to think about it. If you have to think about it, it's hard. Like, hey, do I buy the new golf clubs or these new shoes or do I save, you know, this this month?

Like, get something that's a force savings and then you can ramp up as you get older. Yeah. I think it was Napoleon Hill, wasn't it? Think and Grow Rich. Pay yourself first. He talked about paying that first 10%. Pay yourself first. Get that paid and then move on. Yeah. Very good. Very good. Okay. The great social security gap. Will it exist for you? This is such a great question, you guys. It has so many ties to other subjects and things that we talk about.

But according to a CNBC article, Social Security is estimated to become insolvent in the year 2035. Just let that sink in. Social Security, nobody wants to touch Social Security. That's 10 years away. But it's going to become insolvent in 2035. So after that, or sooner. Yeah. After that, the Ponzi sche or I mean ongoing contributions will only allow retirees to receive 83% of their benefits. Otherwise, something has to give, right?

Something's got to be done. Eron, should people count on social security in their future retirement? Well, I mean, didn't I pay into it in my entire life? That's absolutely right. I've been playing my whole life. Where did all that money go? Now, I should be able to It went into a lock box, right? Will I be will I count on it? Should I be able to? No, I will not count on it. Right. Right. I will not count on this. I' I've been preaching this from the day I started

with my dad. You know, I'm looking at it, especially our generation. You know,

I'm looking at it like the they've got to do a couple different things here. Either either push it off. I got to wait until I'm in my 80s to start collect change the retirement age. You know, they got to make some drastic changes to this overall. Either that or I I I laugh. Like, look, if you're counting, if you're count and you want to count, you want to count on social security, you better get out there and motivate your kids, your grandkids, and your great grandkids to start having more

kids. That's the only way you're going to get this. Increase the replacement rate of the country. Yes, you better pay attention. Throw up that throw up that population. You got to go out and have kids. We get on another baby boom. Yeah, get another maybe about 10 more baby booms and you can count on it cuz today's social security dollars are being funded by our our kids, the new generation. Like if I'm putting money in right now, is that going to my social security down the road? Think about it.

I don't think it is right. No, it's going to pay for my dad right now. Exactly. You know, so if we want it, better start having better start producing. Yeah. Erin, I mean, is are we going to be able to count on like what's going to what what's going to give in social security? I this is the pro problem is politicians won't touch it. Nobody wants to touch it. No one. I mean, they keep trying to attack Trump on it. He's like, I'm not touching it. Yeah. He's even going to

touch it. Like they keep saying he's going to touch it. Political suicide. Yeah, it is. No one's going to touch it. So, everyone's kicking the can down the road. We all know eventually it's like, okay, there's going to print money. When it runs out, just keep printing money, which is going to hurt us. So something's got to give down the road or raise taxes. Yeah. Raise taxes or or something. So basically, we need to we

need to be planning ourselves. And yes, if you're at an age where you're close to retirement, you could bet on it for a while, probably. Yeah. But it's like you need to we need to start planning ourselves, not betting on the government planning our retirement. Amen. Yeah. Brandon, would you rather retire later or take a pay cut in social security? Which would you rather? What do you think? What do you think about all this,

Brand? Well, I mean, Eron alluded to this, but really to keep it around for people in our generation, they're just going to keep pushing it back to when you're like full retirement FRA F. The FR will keep and also probably most likely shrink the benefit amount. You have to you just to keep it to keep it around. Um otherwise, yeah, I mean, it's political suicide. No, no politician is going to run on, well, we're going to cut social security and we're going to

save a ton in taxes. Like, you can't put grandma out on the streets fending for herself. That is relying on a social security check to pay for her groceries and just just to get, you know, you can't do that. So, yeah, for for us though, like, yeah, the benefit is going to look different than what it is today, most likely. Well, we all we all probably agree the existing Social Security payments that are exist on the books, they're they're probably nobody's going to touch those. It would be

future, right? Yeah. They're not going to touch them. Yeah, because those people have finally they started counting on them. Yeah. Yeah. Okay, Doug, final thoughts on this subject. Wrap us all up. Put us in a nice bow on this thing. Yeah. Unfortunately, when Social Security first came out um shortly, it was like 16 workers to every one recipient. I remember when it got down to six to one and everybody's like, "What?" Yeah. And then and then 3

to one. Now it's about two to one. two people are sort of riding on the wagon to every one person. One person's riding on the wagon for every two pulling it. Yeah. Have more kids. And so that's why it's it's almost a train wreck waiting to happen. So I've always recommended social security should not be the basis of your retirement. It should be a bonus. It's just icing on the cake.

Yeah, that's what you were saying. Well, and you know, ideally I've even thought I' I've wrote a little bit about this as well. Why not incentivize, right? incentive. I would take the incentive. Incentivize me. I will opt out of social security right now, right? Today, right? I will I will I will not claim my benefit. Give me a little bit of a tax incentive to do that. Right. Give me a tax credit every year. Just don't have

to pay into it. No, I'll pay I'll you know, even if I have to pay into it, give me some kind of tax credit in return. I think it's that very conversation that terrifies politicians. They just don't even want to touch it. They need your money right now. They need it right now. I'll pay in tax, but turn around and give me a tax credit a little bit. Yeah, we can some kind of compromise. Pay for him anyway. I like it. I like it. Some kind of compromise.

Okay. Hey, if you're enjoying this content and you're wondering how to take advantage of these ideas, Laser Financial helps individuals and families like yours implement proven strategies to grow and protect your wealth. One of our most powerful tools is the index universal life policy or IL. It's not just insurance. It's a tax-free retirement strategy, a way to grow your money with compound interest and a safety net against market downturns.

Imagine being protected from market losses while still participating when the market goes up, and tax-free income that allows you to keep more of what you've worked so hard to save. Go to laserfinanicial.com or call 8015049 to schedule a free consultation and see how these strategies can work for you. That's laserfinanicial.com or call 8015055049. Don't wait. Take the first step toward a brighter, more secure financial future today. This content

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IRR, what does it mean to you? According to Chat GPT Research, taxes and fees could account from anywhere from from 1 and a half to 5 and a half% of an investment's total annual return. Just let that sink in just a little bit. Wow. Uh this can have a massive effect on the internal rate of return of an account. For example, even a moderate drag of taxes and fees can take a 10% hypothetical return on investments down to 6 and a half%. A moderate drag, right? Ouch. Aaron, what

does what what does IRR mean? What is an internal rate of return? And uh why should it matter to retirement plans and why taxes and fees matter to people? I think people are looking too much at their gross rate of return and they're like, "Hey, this is what I'm earning 10%." That's what their advisor tells them, right? Their advisor reports the gross return. Yes. Ding, ding, ding. I'm earning this kind of return. Like, great. You know, but they don't take into consideration the taxes and the

fees. As Greg just mentioned there on the screen, taxes and fees are a huge impact um on your accounts. That's why you got to look at the internal rate of return, the net return after those things can really show you what you're really earning. and to help you project what you're going to grow at. You can't just project it 10%. Yeah. When you got to factor in taxes and fees, it's going to take you down to possibly five, five and a half. Yeah. On a worst case

scenario. That's crazy. It's it's a that's a lot of taxes and fees, right? Mhm. Um Emran, we talk about IL and there's a lot swimming online if you just go search a lot of negative stuff about cost and fees of an IL. We've talked about this in previous segments, but how does an IL stack up with internal rate of return when accounting for taxes and fees? Oh man, this is one of my favorites because you really want to minimize this, right? I mean, we talk

about it. 93 million. This show's called 93 million to talk about the miracle of compounding. If you don't know what that means, watch the first show. Exactly. Episode one, and you'll see that million dollars go down to 72,000 with those taxes, 25% tax rate. But let me show you how we minimize that with an IL. How do we make this down to where it's little to nothing here? So, I'm going to go to the I'm going to go to the table of wisdom. Oo, the table of wisdom. Here we

go. Okay, so I've got a statement right here, and this is a this is the first statement I want to go through. And this statement shows an account that started at the beginning of the year. Okay, this is a this is a a policy that was sold in 2014. Okay, that was 2014. Uh $700,000. it grew to $740,000. Okay. Now, when we look at this here, we've got uh the let's look at the expenses. That's what we're talking about is what do the expenses drag on this. Okay. So, we've got our

expenses right here. We've got $5,000 there and $90 there. So, in order to earn to get the internal rate of return, it's pretty easy. Let's see what this is going to Let's see what this is costing in this given year right here. Okay. Okay. So, I'm going to take the $5,366. Oops. Okay. 5366.15 and we're uh add the $90. Going down to the Yeah, we're going down to the penny on this. Man, this is great. And now we're going to divide that into

our into our uh year-end uh return. So, the year- end balance $740,25.70. When I hit equals there, you're going to see that's 0.7. In other words, that's not even 1%. That's 7/10 of 1%. So point the the fees weren't 1%. They were 73%. Where's the taxes though? Yeah, that's Yeah. What about the taxes? Are you accounting for taxes? I did. I did because there is they're itemized on tax. No tax. Wait, there was no tax. As long as it's structured properly and done correctly, right?

You know, you got the same one on this one here. Here's another one. You know, you got uh again $1,230 right here. 60 and I'll forget the 60. So this is a this is a this is a totally separate statement. This is a totally separate statement. Another client right here. Okay. They've got total fees that year of $1,320. Okay. Their balance ended at 391. So divide that by $391,13458. Okay. We put that right there. 3%. Wow. 34%. I mean that's it. That's all we're looking at here. So how

do we do this? Now, that's not that's not going to happen every single year. Sure. That this is a snapshot of a given year, right? Correct. And the nice thing is is the one the most cool the coolest thing about an IL is the longer you stay in the IL, the cheaper it gets, right? So, when I need when do I need my money the most? Do I need my money the most right at the beginning or do I need my money to last as long as possible? You for most people it's in retirement.

Yeah. Later on and so it just keeps on getting cheaper and cheaper. So, that's right here. This is where you kind of look at it right here. Your internal rate of return just keeps on improving right here. as I look into as I pull this here. Okay, you got your internal rate of return right here. Yeah, it's g it's g it's not looking very pretty in the in year one, right? But as you pull this in, as you look at this here, we pull it up and uh we pull down right

here. This is where I can get the the internal rate of return at 5.88%. Yeah. In fact, actually, let me get And this is a gross return of what? So, this is this is a this is a showing a gross return of Yep. So, if we go up here, we're going to pull up right here. The gross return right here is showing 6.33. Okay, 6.3. So if you have 6.33 6.33, but my net, okay, my net internal rate of return right here, as I scroll down, it's 5.88. Okay, so 5.88. Subtract the two from each other

right there. And what do you get? I mean, if I do this right here, you're going to get five. You know what's two and that's going to be four. So 0.45%. Yeah. 045%. That's what you net right there. So that means if I would have gotten includes all the years. Yeah. So if I would have gotten 10% I would have netted I would have netted 9.3 9 55%. Right. When he said netted that's the net cost. Yeah. That's the Yeah, that's a good point Aaron. That's not the net

return. That's the net fee. Like Eron's showing a 6% return. That's just a projection. We could earn zero some years but not lose which is so cool. Yes. Other years we can make way higher which we're going to see with multipliers. You got to stay tuned for multipliers. Stay tuned for multipliers. But yeah, that net cost is under 1%. I mean, under half a percent, right, M? Yeah. Yeah. It's pretty good. Retroactive back to day one. Yes.

Meaning all years. If you rebalance and diversify and you earn eight, you'd net seven and a half. If you earn nine, you'll net eight and a half. I mean, that's very impress. How How'd your brother do, Aaron? Your slightly older brother. How'd your slightly older brother do? You okay? No, this is incredible. So many people do not understand when we say this gets cheaper as you get older. They don't get it. Yeah. Because they've not seen one structured like this. Yeah. So got to be

structured right. Structured right. Brandon, what are your thoughts on intro rate of return IL? What have you seen over your career? You know, meeting with clients all the time, it's it's incredible how many of them have no idea what the fees are, what the cost, what they're paying inside their IAS, 401ks, whatever. There's so many hidden fees. they just have no idea. They see that gross return like you talk about and and so but there's all these baked in hidden

fees. Um we fully we'll disclose like in the IL like it's so engineered. Here's here's the cost and here's when we get it selfinsured and when it's self-insured you've got this this cost that's maybe like.3, you know, 30 basis points per year, right? Compare that to a managed account. I'm an investment adviser. I'm charging one one and a half percent. Right? regardless if your account's up or down plus taxes plus plus taxes and so and more volatility in

the market higher risk elevation. Yeah. You you hear us often say if it's structured properly, right? Which is what we teach, what we write books about. I mean that's like the YouTube everything is about structuring it properly using the right indexing strategies. Um yeah, it's beautiful. It's beautiful. It's a beautiful thing. Doug, wrap up us wrap us up on this

topic, will you? Yeah, it you would have to earn a 12% rate of return uh assets under management to net eight, let's say, based on these statistics we've been talking about, right? You have to earn 12 to net eight. Okay? It's like playing red light, green light when you're a kid, okay? And you keep going up and back and up and back, but at the end of the day, you save money for when you're going to use it the most. And so,

you earn 12 to net eight. But Dalbar that we talked about on a previous show says the average investor in the market uh if they bought and held is only earning nine. So you have to earn nine to net five or six, right? But they're actually not doing that. They're only earning about three and a half, right? IL you only have to earn nine to net eight. You'd have to earn 12 to net

eight in the market. So it's way more predictable and safe to earn seven, eight or nine and have it be within a half half percent of the gross rate of return, you know. And that word does not get enough credit in your finances. Predictable. Predictability. Peace of mind. Got to figure out how to increase the predictability of your results. Yeah. It affects your It affects your actual lifestyle and your peace of mind and your comfort level and all those things. Yep. Very good. Okay.

Multipliers coming up. But first, if you're enjoying this content and are wondering how to take advantage of these ideas, at Laser Financial, we help individuals and families like yours implement proven strategies to grow and protect your wealth. Go to laserfinancial.com or call 8015049 to schedule a free consultation and see how these strategies can work for you. Don't wait. Take the first step toward a brighter, more secure financial

future today. And if you're a financial professional tuning into the show and you're wondering how you can expand your business working with index universal life or IL, join us for the IL challenge. It's a free 3-day event designed specifically for financial professionals who want to master the art

and science of IL. Visit ILchallenge.com to save your seat. Spots are limited, so don't wait. That's ILchallenge.com/93. take your business to the next level. And now for the podcast question of the day. Okay. So, uh, you suda4234 YouTube user. Okay. All right. Said, "Invaluable content as usual, gentlemen. If you can go over how participation rates and multipliers work in one of your next episodes, that would be great." Well, what a coincidence. Here we are. Yousef Suda 4234, whatever

YouTube user. All right. Uh Brandon, why don't you get us started on this subject? What are multipliers and and participation rates for that matter? Uh and how do they work within ILS? Great question. Um something that we love love to talk about. Um multipliers are are really cool. So I'll jump into that first. So really um indexing strategies. All these carriers, they have different indexing accounts. And you know, you always have a floor of zero for the most

part. And then you're going to have like an upside cap. So, it could be anywhere from like 10, 11, 12% depending on the account, the carrier. Um, and so that's a typical indexing strategy, one-year S&P 500 pointtooint. Um, what some of these carriers did is they said, "Hey, look, it um they got creative and said, if you want more upside um on that cap, because really the cap's kind of priced out based on like option costs and all that they're earning in their portfolio

portfolio." We won't get into too much of that, but but really if the cap set at like 10% and somebody says, "Look, I'm willing to invest and pay more to get more upside, more more participation in the market, I will pay for this rider." That's what a multiplier essentially is. It is a rider. And so, somebody will pay for it and then they will get um a multiplier. It could be like 2.x, right? It it it's sorry, 2.6x um 2.4x. depends on the carrier and the

particular rider. Um but we actually have um me meaning that they could take the result and multiply it by two or two and a half or three or whatever the number is. Yeah. If if the if the one year S&P is at 10% rather than getting that 10%. You can actually have a rider turned on where you're like, hey, I'm going to get that 10% credit plus that 2.6x or 2.4x depending on what the multip you're getting like in the 20s

getting like 23 or 24% now. That's I I'll take I'll take that option and the math works out. I mean like it it really just comes down to math. And so we actually have an actual statement here that Emer think you were going to pull up here and we can walk through the table of wisdom. Going to go to the table of wisdom. So pull up the table, the whiteboard table. There we go. This

is an actual statement of one of our clients. Yeah. Right. Oh, now this was um this was a return that we uh were able to get a client after we we had some volatility from COVID. Um we we took advantage of that. Um Emin was kind of the brains behind this emailing all of our clients had indexing dates coming up in March prior to all that volatility in February of 2020. And we said, "Hey, um to our clients, we would highly recommend you use or utilize this

uncapped S&P 500 strategy." So on this particular one, you're going to see a is 61% because they were using the uncapped this is crazy S&P which the S&P was actually year-over-year at that time in that segment 66%. They just didn't get the first 5% we call it a threshold rate or a spread rate. They didn't get the first 5%. Right? So you take that 61% and now on a typical year without the multiplier their interest would have been credited to that $1.2 million um

balance. they would have had 748,279 even just without the multiplier. Wow. But this is what's so cool. You look at the multiplier they had turned on was a 2.49x, right? So you you get a multiplied that's 748,000. So it's just simple math. 2.4. Now they paid for that, right? So that segment balance we're looking at is net of the fees and cost. So they paid that percentage. Typically with the carrier that we like, it's 7 and a half% to pay for that, right? But

they get that 2.49x. Look at what they earn then. 1.867 million was the credit. So you add that to their their balance that they had for that previous year that 1.2 million which is what gives you the 3 million. I mean they earned more in interest than what they had in the account. You're you're you're investing more money. You're paying more money to have more upside and more participation in the market. That's basically it.

you're saying, "Hey, I know the cap's at x amount and I want to get more, so I'm willing to just shove a little more money into this this um policy to get that upside. It's tax-free, right?" So that $3 million, that's where they reset. They're resetting for the next year at 3 million. That is locked in as principal. Yeah. They can never lo if the market crashes what Yeah. Aaron 50% or whatever. They don't lose that right

now. That it's locked in. That's what's I mean, when do you lock in your gains in the stock market, you guys? when never never ever sell. If you sell Yeah. If you sell, that's a good point. In these things, you ne I mean in IL you lock in your gains every year unless you have a two-year or 5year strategy. You're locking your gains every year. So if the market crashes, you can't lose those gains. It's so cool, right? These

multipliers are so awesome. Just just a couple months ago, we were getting um some there again, there's different index accounts, but some just got like 44 30% returns in this kind of strategy because of the um the upside. Yeah, Erin, I mean, should we Is this is this an account we should plan? Is this an example we should plan on? I mean, is this is this very typical? This is rare. This is rare, right? This is March 2020, everyone go back to March 2020, the market crashed and then it just like

soared after that for one year. Went up 66%. Right. Okay. 153% after the multiplier. Yeah. This turn 15 I mean 60 61% without the multiplier. Get a life insurance policy. 153 tax-free. I mean, it's just crazy. But again, if we go back to some of the more conservative index accounts, yes, bring us back down. We say like some of those accounts, yeah, they'll average, you know, maybe 7 8 9%, right? With a multiplier net of the multiplier fee, we'll be making like 11, 12, 14, 15%.

Yeah. Net of these extra because Yeah, it's an extra cost to get these multipliers, right? You got to pay for it. It's a rider. Yeah, it's a rider. But you can but you can go ahead. What were you say? You can turn it on or turn it off, right? Sometimes you can just you know if you're approaching the market is hey I think this is a great opportunity to use it. Yes. So you're not like locked into it for the like every year for the life of the something you decide on every year. Okay. I got a

client right now. Yeah. He's about to retire. He's like I'm getting a little nervous with the multipliers. I think I'm gonna turn it off. It's great. You can turn it off. He's like wait a second. My two-year account I just got 51% return right with the multiplier. instead of getting seven instead of getting 17, he got 51%. And I was like, "Yeah, you got 51, you know, minus the cost, you know, a little less than that." But he's like, "Okay, maybe I'll rethink." What do you think?

What did we just calculate the 5-year account doing? March March of 2020. March of 2025. What did it just do? I can't remember what over Okay. And again, you don't take all your money, stick it in there. But if you got long term, right? So stick, you know, I've got, you know, stick 20 25% into this long-term for those listening. You can you can allocate different percentages to different indexes. It's not like someone just uses one index. They could

use a bunch, right? But it just it just hit over 400% return over a 400% return over five years. The five years that's five times that's that's taking a million dollars and turning it into $5 million. Yes. And again, that's rare. Yeah, that's rare. But the fiveyear account has no cap right now. It has like all the growth of the market over five years. So yeah, at the bottom of CO all the way to five years later. Oh, that that makes sense. Yeah, the bottom of co. So be ready like you know

when to do this, right? Work with work with somebody that knows how to do this for you. Yeah, very very good. Okay. Uh any other thoughts before Doug wraps us up? Any Are we all good? Doug, wrap us up on this. Yeah, you know, this may be hard to grasp. Um so let me just simplify it in the way I like to uh think of this. We talked about some of these phenomenal rates of return which

come few and far between. When there's anxiety, there's opportunity. And there was twice a decade an opportunity in March of 2020, right? Uh we just posted on IL performance watch a whole bunch that the multiplier like Erin just said went from eight or 9% and went up to 21 30%. Those ranges, that's what we're talking about. Yeah. That you have those opportunities. Now, let's just simplify

this. Let's say you have $100,000 of cash value in your policy and you know that u the insurance company earns what is called a general account portfolio interest rate. Let's say it's 5%. That's $5,000 which if you feel bearish about America, you can just settle for that $5,000 on your 100 grand taxree the

fixed rate. Yeah. If you want to link to an index, you you say, "Hey, I'm willing to give up that 5,000, that 5% interest, so the insurance company can buy options so that if the market goes up, they have the wherewithal to pay you 8% or 10% or 12%." Okay. But if the market crashes, zero is your hero because they didn't use your ba your principal. Yeah. Your principal stayed there. Zero was your

hero. Now, what the way I look at this, I sit down with a client and I say, "Do you feel bullish about America this next year like I do?" "Yeah, I think I think the market's going to go up." Well, how would you like to get 2.4 or 2.7 times whatever the S&P does? Oh, yeah, that'd be great. But what if I guess wrong and the market loses? Let's cap your loss at seven and a half. Yeah. If the market drops 40% like 2008 and you did this and you guessed wrong, we capped your loss at 7

and a2 on your 100 grand. You simply told the insurance company you can use another $7500. So if you guess wrong, you lose $7,500. You lose only seven and a half. Yeah. But see, you're capping your loss to go for it to earn seven 2.7 times. So I look at it like let's cap the loss. Yeah. Instead of zero, you're here. Well, I'm I'm willing to lose, but not any more than five or seven and a half. Yeah. And and by the data, it looks

pretty good. And by the way, all this we've talked about, it's chapter six of the laser fund book. Section one, chapter six. Chapter six. We get into multipliers. We get into all these indexing strategies. Get even more detail. So, yeah. If you want to learn more, you did a pretty good job writing that chapter, by the way. Yeah, Erin does a good job at all that kind of stuff. All right. Well, just a reminder that if you enjoy this content and you want to see more of it, please like and

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