Rocky Mountain discussed on Live Abundant Radio


National audience three dimensional well nestled at the base rocky mountain this show is about empowering you people and organizations that want to optimize their assets minimize taxes and empower their authentic well folks you have probably heard me talk about my you tube channel where and I released every single day and answer this is usually an eight to twelve minute answer to a specific financial question that is been asking anywhere from thirty to three hundred times every single month for the last several months and so I'm going to answer a few of those questions for you here and then the next segment and I get asked this question many times dot got a what is the best way to save for long term goals now a long term goal I would define as any financial goal where you were setting aside money for I I need to want five years or longer down the road it would definitely include to saving for retirement or maybe for a major purchase a home or what have you maybe college funding for your children or grandchildren and so that would be a long term goal and I've often said that one of the biggest mistakes people make is they choose short term investments for long range goals that's not the way to go that would be putting money and maybe a bank or credit union in a savings account earning the apathetic one percent rate of return for example when the curtain of inflation coming down at three or four miles an hour you're rowing upstream one mile an hour you're going backwards another mistake people make is they choose long term investments as if it was a short range goal in other words they put money into a long term investment like a mutual fund and then they treat it like it was a drive up window at a bank and they dip into it in a year or two or they get antsy because maybe they think they're missing out on opportunities what have you so the first thing is you want to choose a long term investments or strategies for long range goals now in the various books that I have written and I've been very blessed to write eleven thus far I am working on my twelfth right now and I talk about my a test of a prudent investment and it spells an acronym laser okay the L. stands for liquidity the S. stands for safety and the R. stands for return a rate of return and if there is any tax benefits that's sort of like icing on the cake and so this is what motivated me to co author with my two sons are most recent best selling book the laser fund because I have a particular Fundo wear I think it passes that laser test with flying colors in other words I think IT prudent investments first of all should be liquid to be able to access that money when you need it with maybe an electronic funds transfer phone calls and it doesn't incur penalties by the IRS if you dip into it because an IRA or four oh one K. if you touch that before age fifty nine and a half there's a ten percent penalty and so forth and so it's not as liquid there's penalties or you have to pay tax and so that's not really an investment that would pass the liquidity test real estate doesn't pass the liquidity test because you usually have to sell all of the real estate sometimes it may take you weeks or months to do that or you have to borrow the equity back out and it may be hard to qualify to borrow the equity out when you need the money the worst is the hardest to get to qualified so there's lots of investments that do not pass the liquidity test with flying colors my favorite vehicle which I called the laser firing I could access money in twenty four hours if I needed it most emergencies don't you don't need the money in twenty four hours usually a day or two or three and so many of the clients that I have coached through the years and my mentees they like the laser Fonda to be able to access money when they need it that's liquidity that's number one whenever I've gotten into trouble financially is because I lacked liquidity number two would be safety and I'm not just talking about the safety of the institution where my money is yes you want a a strong financial institution ranked high by many of the ranking agencies alike guys standard and poor's and the the various methods by which financial institutions with their acid test ratios on their assets and liabilities on their liquidity would pass the safety test but I'm also talking about the safety of principal that whenever I set aside money I don't want to lose at the principle that I've set aside especially due to market volatility and in the years that I make my name I want to have that become newly protected principle I don't want to ever lose in the future money that I've made in the past few years I was just having lunch with a very successful and businessmen and he is very savvy and it has made millions of dollars in real estate and in the market and so forth and he understands it really that if you can get an average return of seven eight nine even ten percent average especially this tax advantaged that will outperform most money in the market when you have some years where you have twenty and twenty five percent games but other years you have twenty thirty and forty percent losses and I can prove this mathematically all day long because when you have your money in the market and you lose let's say thirty three percent a hundred thousand goes down to sixty seven thousand eight thirty three percent loss has to be followed by a fifty percent gain to get back to break even C. sixty seven thousand have to have a fifty percent an increase to get back to your to your hundred thousand level many people in two thousand eight suffered a fifty percent loss a hundred thousand went down to fifty thousand well a fifty percent loss has to be followed by a hundred percent gain to get back what you lost I would just as soon not lose when the market goes down and make money every time the market goes up and that's what I call the laser fund and it is done through indexing so for example in two thousand one two thousand to two thousand three I may not have made very much money but I didn't lose most Americans lost forty percent and it took four years until two thousand seven to make back what they lost in that seven year period because I actually averaged a seven point two three percent and then by a re balancing a little over ten percent a million dollars in two thousand it was worth two million at the end of two thousand seven most people if they had a million Bucks in the year two thousand it dropped down to six hundred thousand and barely came back door a million in two thousand seven then one single year two thousand eight it dropped forty percent again a a million went down to six hundred thousand I didn't lose any money in two thousand seven two thousand eight I didn't make much of anything but didn't lose the first ninety days of two thousand nine many people following our indexing strategies locked in gains of sixteen percent tax free after not losing a dime at the end of the decade they had definitely double their money at the end of twelve years two thousand twelve most people that have their money in the market we're barely back to the million dollar break even point people following that indexing strategies had tripled their money a million was worth three million dollars this is because they did not lose when the market went down and they started making money again when the market recovers data going back up again you're not having to make up for the losses you just pick up where you left off more more or less and this is called lock in and reset which is one of my favorite strategies and so the dream solutions for long term goals like retirement or college funding is all talk about or any type of a goal where you're saving money for maybe a new home that's five years out I would strongly recommend that you choose a vehicle that passes the liquidity test safety test rate of return test with flying colors and if it has any tax benefits that's icing on the cake the reason why I like the laser funders because it's totally tax free is the only vehicle that I'm aware of in the Internal Revenue Code that allows you to accumulate access and transfer your money tax free when you ultimately die and it blossoms in value see municipal bonds do not blossom in value when you die a Roth IRA does not do that so this knocks the socks off of all of those and it usually produces at least a hundred percent more in net spendable retirement income if that is your long term goal then the same amount of money put into a traditional IRA or four oh one K. or even a Roth IRA or four oh one K. that's right the laser fund is often referred to by savvy CPA's in tax attorneys as the rich man's rod I wish I had more time in this segment but join me for the next segment but if you have to go over teaching and educational events and if you happen to live in the greater San Francisco Bay Area we're coming.

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