How To Weather Market Downturns | #RetirementFund #TaxFreeRetirement #LASERFund
Don’t lose money. In this episode, I’m going to address the question. How to weather market
downturns? This is extremely important because we are headed for some topsy-turvy markets and this
is nothing new. But I’m going to share with you in this episode how to protect yourself
during recessions market downturns and actually capitalize on them. Get ready.
So, my name’s Doug Andrew I’ve been a financial strategist and a retirement planning specialist
now for more than 48 years. I’ve been very blessed in my career to have authored 12 books thus far
and many of my books talk directly about how to optimize financial assets and minimize
taxes. But also how to protect yourself from the negative impact of taxes inflation and market
volatility and so I’m going to show you in this episode how you can protect yourself when the
market goes down. Because I’ve often described the stock market as sort of like a person
with a yo-yo hopefully walking up some stairs. What do I mean by that? The market goes up and down
we all know that on a daily basis. That’s like the yo-yo but walking upstairs means you hope that in
the long run year after year that your investments grow. The market is going up the dow jones the S&P
500 is going to be higher in the long run. That’s walking up some stairs. Now, there are periods
of time where that person with a yo-yo was not walking upstairs. In fact, for 12 years that person
with a yo-yo of the stock market was going across a flat surface. Meaning, at the end of 12 years
the measurement the S&P 500 the dow jones these are measurements of how the market’s gone
was basically where it was 12 years earlier. That’s what I mean by a flat surface and how people
doubled and even tripled their money even though the market did not grow at the end of the day
12 years later. So, the first key to protect yourself from market downturns is to
get your money out of the market. This is what I did for over 3,000 of my own clients back in 1980.
Now, in my various books that I’ve authored I tell the story about from 1974 when I started
until 1980. I ended up with over 3,000 clients in 13 western states and I used to diversify
their money in a portfolio of mutual funds and we were trying to get an average return of 12
back then. Now, we actually were doing a pretty good job. Darbar who studies investor behavior says,
“You know if people would just buy and hold and not get involved emotionally with the market
they would average 9.14 percent with their money in the market based upon 20-year periods of actual
history.” Now, there’s periods where sometimes it’s a little higher and a little bit lower but on the
average around 9. Now if that’s in a tax-deferred IRA 401k that’s not your net because you got to
pay tax between federal and state taxes at the end of the day when you take the money out and so
you’re netting about six. So, if you earn nine that means a million dollars in a nest egg
at retirement should generate 90,000 of income without depleting principle but you’re only
netting 60,000 after taxes to buy gas groceries prescriptions, and golf green fees.
So that’s why I employed a strategy starting back in 1980 to eliminate the dangers of the taxes.
You want to have tax-free strategies. You want to link your returns to the things that inflate. But
the third big danger is this market volatility. Wall street was not built to create predictable
cash flow. In fact, Dalbar, reveals this. The average investor in the market especially retirees
the return is 3.49 percent. Why? If they just bought in hell they could earn nine. It’s because
Americans watch the market when it starts to go down and it happened in 2001 and 2003 after 911
it happened in 2008. It happened in march of 2020 during the covid 19 pandemic. The market starts
to go down 20, 25, 30, people go enough already and they sell low. That’s when institutional investors
are buying. Most Americans they panic and they sell low and then they wait till the market comes back
back… and then they buy high. That’s the opposite that’s why the average retiree in
america only earns three and a half percent that’s pretty pathetic. It means on a million-dollar nest
egg you’re only earning 35,000 a year. Do you save a million bucks to have 3,000 a month of income?
That’s pathetic. Let me show you a better way. So. my favorite vehicle that allows me to accumulate my
money tax-free and then later on be able to access my money is tax-free and when I die it ultimately
blossoms and increases the value of transfers tax-free is what I call the laser fund. Now, laser
is an acronym that stands for liquid assets safely earning returns and that’s why at the end of this
episode I want you to stick with me because I want to gift you a copy of this 300-page book
called the laser fund how to diversify and create the foundation for a tax-free retirement
and as I show you what this did during the worst 10-year period. I’m gonna even go
until 2012 the turn of the century until 2012. The worst 12-year period since the great depression
how people double to triple their money. If you’re already intrigued and you know somebody who should
watch this episode. Be sure and share click like but subscribe. This is a free channel of course
and almost on a daily basis I post a new episode answering a question like this one. How do you
protect yourself or whether the market downturns? So, here’s how. This is the actual market the S&P
500 standard force 500 from November of 1999 and I’m gonna go 12 years out to 2012. This
is what we call the great recession and so we had people who had their money in the market. Let’s say
you had saved your entire lifetime like many baby boomers had and he had a million bucks
at the turn of the century. Now without adding a dime to this most Americans what happened to
that million dollars they saved? In the market it dropped in value here in by 2003. Many
people lost 30, 35, 40, 50%. The average was about 40%. A million dollars dropped down to $600,000.
It took four years to make back what they lost and get back up here to a nine percent
increase. They had to put off retirement seven years. They felt like they lost their future.
Now, during the seven-year period using my favorite vehicle our clients did not lose
when the market went down. They may not have made very much but they didn’t lose. The second the
market turned around they started making money again many of them had two million at this point
when most Americans barely were back to the million they started with seven years earlier.
This is significant. Then what happened here in 2008? As Warren Buffett put it he said in 2008 when
the tide went out it revealed who was swimming naked is what he said yeah in one single year
people lost 40 percent again in one single year and it took four years to come back to break even
to where they finally had a million forty six thousand dollars to show for the million they
started with twelve years earlier and that forty six thousand. Well, was it near enough to cover the
inflation rate during that 12-year period. During that period many of our clients were cheering when
the market went down because they weren’t losing. The first 90 days of 2009 many of our clients
locked in gains of 16% tax-free after not losing a dime due to market volatility and at the end of
this period many of them had two and a half three million for the million they started with. Most
Americans barely had their million back. Are you intrigued? Now this comes from one of my favorite
vehicles called indexing, indexed universal life insurance. Universal life is the only vehicle that
allows you to accumulate your money tax-free access your money tax-free and when you die
whatever’s left behind blossoms increases in value and transfers tax-free. That’s under three sections
of the internal revenue code that have been grandfathered for over 107 years in the internal
revenue code. So, here I’ve superimposed that lost decade that great recession. That was an average of
one third of one percent annual rate of return. How pathetic is that? Having your money in the market.
By using indexing they did not lose. They may not have made very much but they didn’t lose when
the market went down and they made money here they didn’t lose. They ended up with 130 percent
instead of 4.6%. This is using indexing which is a strategy that I teach. I’ll give you a glimpse
of how it works but in a nutshell back in 1974 when I started let’s say
starting the next year you had $500,000 in the market. In the red
this is what it would have looked like you know the 90s were pretty great and then here is after 2000.
At the end of 2010 that 500,000 was worth 5.6 million and you went through all of these ups and
downs the heartburn. Wouldn’t have been nice that every time the market went down you didn’t lose?
You may not have made very much but you would have ended up here and you would have had 8
million totally tax-free instead of 5.6. Now, a lot of people say, “Well, the 5.6 isn’t bad”,
well it’s not all your money. Most people have their money in the market in IRAs or 401ks you
have to pay tax on that of 1.7 million you’re only netting 3.8. Now, what would you rather have 3.8
million with a bunch of heartburn or 8 million tax-free with no heartburn because you never
lost when the market turned down you stayed level or you made a little bit but you didn’t lose and
as Will Rogers once said people get more concerned about the return of their money instead of their
return on their money when things get bad. So, again, if this is intriguing you, I would encourage you
to subscribe to this channel but look at other episodes where I talk about indexing one of my
favorite strategies and what the laser fund is. But I’ll show you how you can claim your free copy of
this book. In a nutshell, indexing allows your money to be linked to the market but your money is not
at risk in the market. Your money is safely tucked in a financial institution that’s crediting you
4, 5, 6, 7, 8, 9, 10 percent whatever their general account portfolio is.
But any year that you feel bullish about America your money is safe in that institution.
This is where banks and credit unions put a lot of your money when you deposit it into them for
liquidity and safety. It’s the multi-trillion dollar insurance industry the backbone of America
and the backbone of the world. So, you can have your money and just be safely tucked there earning
right now in a low-interest environment 4 or 5 percent. But if I feel bullish about
America my money stays safe and I relinquish the interest I say, take the 4 or 5 percent on a
million dollars that would be 40 or 50,000 in this example. You don’t have to have a million
dollars in there. You can have 10,000 in there but you’re relinquishing the interest they buy upside
options and if the market goes up they will pay you 8, 9, 10, 11, percent. Do you know
that this year that I’m recording this episode 2021 we’ve had many people that have locked in
gains of 61.33 percent. We had a client that had 850,000 in March of 2020 we said link and a year
later in March of 2021, they had a million three hundred and eighty thousand. They made over five
hundred grand in one single year tax-free. But if the market would have gone down they wouldn’t have
lost money. But when the market went down in March of 2020 due to covid 19 our advisor said link.
Because they knew the chance of it coming back up was great but if they guessed wrong they wouldn’t
have lost their million. They wouldn’t have lost their money. They may not have made very much
but because the market went back up again pretty predictably they locked in gains of 61 percent.
I don’t have time in this episode to explain that. Search this channel and find episodes that
talk about indexing because I don’t want you to miss out. But if you like to read and learn
I’m going to gift you this book it’s called laserfund.com. It’s actually two books in one.
This side is 200 pages with 14 chapters that has all the charts and graphs and explanations.
If you are a right-brain learner you learn more by stories and examples, you flip the book over.
You read this one this is about 100 pages 12 chapters with 62 chicken soup for the financial
soul stories. If you want to use both your right brain and left brain you read both books.
But don’t pay twenty dollars I’ll gift it to you. Go to laserfund.com…
Click on the link below contribute a nominal amount towards the shipping and handling. I’ll
fire out a copy of this book to you and there’s options there to listen and learn watch and learn.
There’s even an 18-hour master class if you like to do a deep dive. So, here is to your brighter
future and you will learn how to weather market downturns and come through them with flying colors.