Situational Formulas

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Situational formulas, generally speaking, are reliable ’til the day they’re not. Your retirement is far to important for you to bank it on various formulas.

Transcript: All the time I get people that want to talk with me and the first thing out of their mouths is, you talk about EIULs for tax-free cash and retirement. An EIUL just stands for equity indexed universal life. It’s a type of insurance that’s not necessarily structured primarily for a death benefit, it’s for retirement income. It’s structured to be tax-free. Or those say, “Hey you talk about notes and getting them on a discount and all the ways you can buy it in your own name or in a tax-free envelope like a ROTH or even a normal, traditional IRA or 401k. You talk about real estate. When do you do what? Do you do all three?” There is no formula. There almost never is. One of the things that my dad taught me about formulas along with one of my oldest, oldest mentors was that almost any formula they’ve ever used successfully over time worked like a charm until the day it didn’t. I have had to learn that twice the hard way. I’m not learning again. When I tell people, “Look in general notes are great bought at a discount. Real estate, cash flow and retirement is superb. Get an EIUL and get tax-free income. Have a business and set up a solo 401k for small business owners. You can do this and that and the other, and it’s way better than what you’ve been doing.” Everything’s different for different folks. If you’re married with four children and you’re 38 years old, I’m not going to tell you the same thing. I tell the widower in Kansas getting ready to retire, all his kids are grown, he doesn’t need what you need. He needs some things that don’t make any sense for you. What we have to look at is the big picture. The first thing we do is to find out where you are now. That’s the most important thing to do first and there are no exceptions. You have to find out, not just, “Well here’s my point B, how do I get there?” Have you ever noticed when you’re going to get in your car or you’re going to go to the airport? You take a different way to Detroit from San Diego than you do from Sarasota, Florida. It’s funny how that works. If you don’t know you’re in Florida you’re going to try to drive northeast and you’re not going to get far. You’re going to have fun because you’re going to be on the beach. But you’re not going to get far. You have to look at, everybody is unique in the sense that, they might share factors with another person, another investor, even 80%. But man it’s that 20% difference that can just change your entire approach. Maybe not in the beginning but you can see 10 years down the road where you might have to change where the other guy wouldn’t. There’s this all kinds of reasons why certain people who have never invested in real estate and are at a certain age with a set of certain circumstances, should just not at least immediately maybe never buy real estate as an investment. Time is not on the older investor’s side. If they’re just getting started, their real goal, their point B is, “You know what I’m retiring in 11 years not 31 years, I need income and I need to build it to as large as it can possibly be safely in the next decade or so. Because if I fail doing that, I’m not going to be happy pointing to all the real estate I own that’s not enough for retirement.” Same thing with the EIUL. It’s really to point and say, “My son got an EIUL and when he is 60, it’s going to give him a $140,000 a year, tax-free for virtually the rest of his life.” You know what, you’ve found out about an EIUL when you were 53, you’re going to retire at the latest, 65 or 70. You don’t have time to do an EIUL. It makes no sense for you. As a matter of fact, it could actually hurt your retirement or make you work longer than you wanted to. Understand the principle. Everybody’s different. There are no real formulas. People that have these formulas, a lot of times they’ll work 80% of the time and it’s going to be your luck your on the 20%. Look at the specifics of your situation and the semi-predictable facts that could or couldn’t happen in 5, 10, 25, 30 years. Do your analysis, don’t do anybody else’s.

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