The Best Investment Ever (no risk and guaranteed returns??)

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– What if you could have an investment that would guarantee your principal, pay you more than what you’re getting at your bank with the potential to make as much as the stock market makes? And by the way, you’ve got 100% Liquidity, meaning you can cash it out anytime you want. Does that even exist? Is that too good to be true? I used to be a skeptic, but guess what, there is such a thing and we’re gonna talk about what this is today because, this might be the best investment that you’ve ever heard of.

What’s going on? You’re welcome back to the channel Wealth Hacker Labs. As you can see, I’ve got the wealth board behind me and we are talking about what could possibly be the best investment ever. Is it the best investment ever? We’re gonna find that out. Now, you have to remember that anytime you hear something that’s too good to be true, then it probably is. So yeah, we’re gonna talk about some of the finer points of this investment but with any pro they’re also cause well, so we’re gonna look at both sides today. So how did this come to be? So this was working with a client, this was a multi millionaire, they just had inherited a good chunk of money, but they weren’t sure if they had to pay taxes next year. So the requirement that they came to me is Jeff, we wanna give you this large sum of money, and we wanna make more than what our bank is paying us, we wanna make sure that our principles guaranteed and we also want access to that money.

So we want Liquidity. And let me tell you, like, I’ve heard that a lot of times as a financial advisor throughout my career, like everybody wants that. They want that risk free return where I can put my money and I can make 20% interest, and I’ll never lose a penny and that doesn’t really exist. What we’re gonna talk about today is probably the closest that you can get to that, but when you hear that it just you don’t know how the market works, but that’s okay, that’s why you’re here. That’s why you’re here on the channel and actually why you’re here, once you go ahead and like this video if it’s gonna provide some content and also subscribe because we wanna get the wealth hacker nation out to all. So go and take care of that right now. So this is was the requirement that my clients came to me they’ve got over a million dollars, they want access to the money they want, their principal guaranteed and they want to make sure that they’re making more than what they get at their local bank.

Like Okay, that’s it, that’s all you want. But so I started calling around and started doing some research and that’s where I was introduced to what is called an IUL policy. So what is IUL stands for it stands for Indexed Universal Life, Index Universal Life insurance policy. Now, you have to keep in mind that in my career as a financial planner, financial advisor, I ran to so many insurance agents that were selling whole life insurance, variable Index Universal Life Insurance. And they always would start, like this was the first thing that they would lead in with. So if you had student loan debt, if you weren’t investing to a Roth, IRA, if you weren’t putting money into your 401k, it didn’t matter. Like you need to buy some sort of insurance policy, because it’s the greatest investment ever.

And as you’ll see, there are situations where it can make sense, but a lot of times I ran into, it didn’t make sense.

So when the IUL policy was proposed, as an option for my clients, like I was a huge skeptic. But once again, as I started to learn how this policy works, and I understood all the pros and all the cons, then I recognize how this actually could work. So let’s go and start with the pros, which we already talked about a little bit. So the first pro that we had is we’ve got protection. So we’ve got our {Principal Protection wanna make sure that we put money in and we’re not gonna lose anything.

That’s why many people put their money in banks they want that FDIC insurance, we don’t have that with insurance policies but let’s talk about what you can look for. So the other pro to this is that you have Liquidity. And Liquidity is just a fancy word of saying can I get access to my money, can I get my money like if I want my money tomorrow Can I get my money that’s what Liquidity is. The other pro at this offered was Greater Return. So, this is what it offered. Now the question is like, okay, well, how is it offering this? Like, what does this really mean? So with protection, once again, life insurance policies don’t have FDIC insurance, they are only insured by the insurance company.

So what you wanna look for is what is their insurance rating. So this is where you can look at companies like Moody’s, Fitch and all these companies do all they basically do is give a report card rating and how financially strong that insurance company is. So if you’re taking out an insurance policy, and they’re gonna pay you some phenomenal rate, well, if their report card rating, if their insurance rating is like a C minus, I’m not sure how much I’m gonna trust that my money is gonna get paid back to me, in case I need it. So that’s one thing you wanna look at. The other thing is with Liquidity, we’ll get to that one here in a minute. And the other part is return, Greater Return than what the banks are paying.

The Fed continues to keep rates really, really low so what we’re looking here was we had the option of getting paid a dividend and also it had market linked return, which we’ll talk about more here in a second. So that’s what this policy offered {Principal Protection, Liquidity and the Greater Return that what they were getting at their bank. Now with all of this, there are cons. So we’re looking at some of the pros, some of the how, like this works. So what are some of the cons when it comes to these points over here? Well, protection, if we wanna make sure that our principles protected, we talked about the ratings of those companies. And that’s one of the biggest con like what is the insurance companies rating. We to talked about Liquidity, this is also a big one. So with these insurance policies, the IRS has caught on to this and they know that the ultra rich can and will take advantage of every single loophole that they can. So with these policies, you can’t just dump a big chunk money in there, you have to put enough in there that makes sense for how much you have in your savings how much you have investments, how old you are, and what is the right amount of life insurance that you need.

Otherwise it will trigger what’s called a MEC, which stands for a Modified Endowment Contract. So basically all this says that if you put too much money in then instead of getting some of the pros of the tax free low nature that these offer which we’ll talk about here in a second, you have to pay ordinary income tax. Which basically just means that you have to treat it as income. So if you are in a 35% bracket, if you take money out, you got to pay 35% tax. The other pro that I forgot to talk about here but with having this if you hold it for a period of time, you can take a basically what’s called a loan or a tax free withdrawal. So that’s why when you hear these policies talked about, a Roth IRA Alternative, because you get all of that.

Now, the other con we have to mention which kind of plays into this, we talked about the Modified Endowment Contract. So once again, that is just saying that, if you’re 40 years old, and you are trying to stick a big chunk of money in there and you say, Well, I need $25 million a life insurance and the IRS, they look at your financials and look at your net worth statement, your assets, liabilities, all that good stuff, and like wait a second, why do you need $25 million? Like No, this is all that you really need. So you know, they they will catch on to that.

So the other issue here is that it is a life insurance contract so you’ve got the cost of insurance on top of getting approved. So this isn’t a hey, I’m gonna fill out this form it’s online forum, I’m gonna send it off and then boom, I’m gonna get it automatically approved. Like this is a life insurance policy so you have to go through the medical exam, you got to go through, they’ve request blood work, they’ll, if there’s any conditions, they’ll need to get some notes from your doctor to find out what’s going on. Does that mean that you won’t get approved? Not necessarily, but it will mean that whatever the benefit is, that you get approved for it might just be less for the amount that you’re gonna put in.

Okay, let’s talk a little bit how you actually make money on this type of policy, like what was the attraction?

Going back to Greater Return than what the bank is paying. So with this particular policy, there was two different ways that you could make money. The first way was the dividend payment that the policy had. The other way was the market linked return. So let’s first talk about the dividend. So you probably have heard this with a whole life policy, where you take out the policy and especially the insurance agents will both say, oh, our company’s paying a five and a half percent dividend and that’s how much we pay into our policies. And when I hear that like that may very well be true but once again, there’s also the cost of the insurance that they just failed to mention or feel like that you needed these to be brought up. So this it’s been a while since I took out this policy, but at the time, it was paying, I think it was around two point two percent.

So if you’re looking at savings accounts now, I mean, I know that right now you got an online banks that will pay close to that but back at this time, like there wasn’t really anything pay more than one. So at that time when interest rates were really, really low, it was paying two point two percent. That sounds pretty good but once again, we have to talk about the cost of insurance. So the cost on this policy, I recall was about five percent so the net return was about point seven.

Is that a lot? Well, not really. But it was more than what they were getting at the bank and that was one of the requirements.

Now the other thing that this offered and you hear a lot about this and in any type of indexed investment, Index Universal Life, Index variable annuities, you have what’s called the market link to return and advisors they can misrepresent this all in all different ways.

But basically, what the insurance company is trying to do is tie some sort of investment that is linked to another investment that people are more familiar with. Typically, that’s the S&P 500, the most common investment that people know. So in this case with this policy, it had a market link return so it was tied to the S&P 500. And basically what this policy would say it would look at the policy year after year after year, so the anniversary date of when you took the policy out is when it would look and see which one of these paid more.

So for example, if they put a million dollars in and after a year has passed, has the S&P made more or has the two point two percent dividend payment minus the cost paid more. So which one of these paid more? Whichever one paid more than that’s what would get locked in and that would be your starting point for the next year. Now let’s look at it from a different point of view if the S&P 500 were to go down that first year, then your principal is guaranteed, what you’re getting is the difference between the dividend and whatever the cost of life insurance is. Like that’s where the win win is. Now, what really worked out well for my clients is they took this out this is, somewhere between the 2011, 2014 timeframe.

And if you look at any sort of investment chart like you see that the market has been good. So in that first year, I don’t remember exactly but I wanna say they made anywhere from seven to eight percent in that first year, did something like that in the second year, and obviously it’s worked out really well ever since.

So they had the it made a lot more than what the bank was paying like it wasn’t even close. Now the thing that you have to be careful on going back to this whole MEC thing is if we cash this out too soon. So if you do cash it out, if there are any gains that you have, then that is where typically you’re gonna have to pay ordinary income. Like, it’s still not a bad thing, like you’re paying taxes on money that you make, like that’s not a bad thing obviously, if you can minimize that it’s so much better.

So that’s why holding the contract holding that and just taking those tax free loans, tax free withdrawals from the investment make a whole lot of sense. The one final thing that I wanna leave you with the one thing that I wanna say that you need to be aware of, put some stars behind that one, are shady financial advisors that are trying to sell this. Now you’re probably noticed that I have not mentioned any sort of insurance company during this video and there is a reason for that. Because if I did, then chances are that insurance company would be contacting me and probably issuing some sort of cease and desist for misrepresenting them.

Like that does happen that’s why I’m not going there. But what I will say is that, when I was looking at this policy for my clients, I went to two different places, and two different places that were offering different types of insurance products for potential investors. And in that process I learned that the exact same insurance company, they both had the exact same investment product, but the way that they ran the illustrations, the way that they ran, which is basically like the sales proposal, one was a lot more beneficial for the client, while the other was a lot more beneficial to me, and how I how much I get paid.

Because the more I get paid, the more that they would get a cut of that. And what these policies, they can be structured in so many different ways so that some they can structure it better for their client, others they can benefit it where it or the structure, it was better for the advisor, and helping out with their checking accounts, just paying them a much larger commission. So you wanna be aware of shady financial advisors that are just trying to sell you something that just is too good to be true. Now, I know all of this sound like that at the beginning, but as you can see, there are pros and cons to each. And if you’re not 100% confident that what they’re saying is true, then get it in writing. If they will offer it in writing, then I would probably go to somewhere else.

Also have somebody else take a look at it and for God’s sake, if you haven’t done this if you’re working with a divisor, and you’ve never done this, do a background check on them. You can go online do a Google search or you can go to sec.gov, you can go to finrabrokercheck.org and you can find out if there have been any complaints filed against that advisor. If there have been then I don’t think I’ll be investing with them, but as you can see, there is something that does exist that offers Principal Protection, offers Greater Return, then where do you get your bank and also Liquidity.

Just kind of work out some of the details and see if it makes sense for you. Hope you enjoyed this video, if you did, be sure to like, subscribe, share it with anybody that needs to know what else is out there because when it comes to hacking your wealth, you gotta get the information, you gotta find out what’s out there what all the options are, this could make sense for you it could not either way you’re more educated and more education equals more wealth and buying power. Till next time y’all take care, peace..

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