Why do Major Money Institutions HATE Tax-free Investing?
08/30/23 • 24 min
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David starts the conversation by breaking down his book, Power of Zero, and the problem with America's ever-rising national debt.
For David, the goal of the book is to guide people on how to move their assets into tax-free retirement vehicles - and how such a move is the only way to shield yourself from potentially higher tax rates in the future.
David describes the difference between LIRPs and other life insurance products.
All LIRPs are life insurance policies, but not all life insurance policies are LIRPs.
David reveals why he believes HSAs(Health Saving Accounts) are the holy grail of financial planning - you get a deduction on the front end, let that money grow tax-free, and then take it out tax-free.
Can you have too much money in your 401K? Yes.
You want to ensure the balance in the IRA is low enough that RMDs (when you are finally forced to take them) are equal to or less than your standard deduction and low enough that they don't cause Social Security taxation.
You can have a million dollars in your IRA, but unless you can accurately predict what tax rates are going to be in the year you take that money out, you don't really know how much money you have.
David reveals why many financial planners detest tax-free investing.
Life insurance is not a silver bullet for tax-free retirement. It only works as a complement to other tax-free streams of income.
Is it a no-brainer to get life insurance? David believes it's not. It depends on your situation.
Always remember that the IRS is looking at how much money you withdraw from your IRA and 401k. If you take out too much, they'll tax a portion of your social security.
David talks about the benefits of having 4 to 6 different streams of tax-free income.
According to David, we are in the tax sale of a lifetime because taxes in the next three years will never be as low as they are today.
Mentioned in this episode:
David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code
PowerOfZero.com (free 3-part video series)
@mcknightandco on Twitter
@davidcmcknight on Instagram
David McKnight on YouTube
Get David's Tax-free Tool Kit at taxfreetoolkit.com
Comeback America: Turning the Country Around and Restoring Fiscal Responsibility by David M. Walker
David starts the conversation by breaking down his book, Power of Zero, and the problem with America's ever-rising national debt.
For David, the goal of the book is to guide people on how to move their assets into tax-free retirement vehicles - and how such a move is the only way to shield yourself from potentially higher tax rates in the future.
David describes the difference between LIRPs and other life insurance products.
All LIRPs are life insurance policies, but not all life insurance policies are LIRPs.
David reveals why he believes HSAs(Health Saving Accounts) are the holy grail of financial planning - you get a deduction on the front end, let that money grow tax-free, and then take it out tax-free.
Can you have too much money in your 401K? Yes.
You want to ensure the balance in the IRA is low enough that RMDs (when you are finally forced to take them) are equal to or less than your standard deduction and low enough that they don't cause Social Security taxation.
You can have a million dollars in your IRA, but unless you can accurately predict what tax rates are going to be in the year you take that money out, you don't really know how much money you have.
David reveals why many financial planners detest tax-free investing.
Life insurance is not a silver bullet for tax-free retirement. It only works as a complement to other tax-free streams of income.
Is it a no-brainer to get life insurance? David believes it's not. It depends on your situation.
Always remember that the IRS is looking at how much money you withdraw from your IRA and 401k. If you take out too much, they'll tax a portion of your social security.
David talks about the benefits of having 4 to 6 different streams of tax-free income.
According to David, we are in the tax sale of a lifetime because taxes in the next three years will never be as low as they are today.
Mentioned in this episode:
David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code
PowerOfZero.com (free 3-part video series)
@mcknightandco on Twitter
@davidcmcknight on Instagram
David McKnight on YouTube
Get David's Tax-free Tool Kit at taxfreetoolkit.com
Comeback America: Turning the Country Around and Restoring Fiscal Responsibility by David M. Walker
Previous Episode
Dave Ramsey Is WRONG About Fixed Indexed Annuities
David starts the conversation by describing why he believes Dave Ramsey is wrong about Fixed Indexed Annuities.
In a recent live call, Dave Ramsey revealed why he is not a fan of annuities and what you should consider doing instead.
Dave Ramsey’s thoughts on Fixed Indexed Annuities -
- They have a floor that cannot go below a specific number, say 6%.
- Fees are double what you might get in a mutual fund and the advisor commissions are four times as high.
David’s response to Dave Ramsey’s thoughts on Fixed Indexed Annuities.
- Indexed annuities don’t have a 6% floor. If an index ever goes down in a given year, they simply credit you a zero. The floor is zero percent.
- Technically speaking, Fixed Indexed Annuities don’t have fees. You cannot lose money to fees or end up with less than your original contribution.
David goes through the benefits of investing in Fixed Indexed Annuities.
One of the dangers of being a financial guru is you have to project to your listeners that you’re an expert on every financial topic.
For David, fixed Indexed Annuities are not a stock market alternative. They’re a bond alternative.
David believes that if you’re a disciplined investor and want to purge longevity risk from your retirement picture, you should consider Fixed Indexed Annuities.
It’s clear that Dave Ramsey knows far less about annuities, and it’s troubling that he consistently gives investment advice on subjects he’s not familiar with.
Mentioned in this episode:
David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code
PowerOfZero.com (free 3-part video series)
@mcknightandco on Twitter
@davidcmcknight on Instagram
David McKnight on YouTube
Get David's Tax-free Tool Kit at taxfreetoolkit.com
Next Episode
The Truth About Doug Andrew's Retirement Philosophy
David starts the conversation by describing why he’s not a huge fan of Doug Andrew’s retirement philosophy.
David then talks about the differences between Doug’s approach and the Power of Zero approach for funding your retirement.
According to Doug, you risk jeopardizing your retirement if you have money in an IRA or a 401K. There’s the danger of losing a sizable portion of your portfolio if the markets were to crash like they did in 2008.
To protect your retirement, Doug believes it would be best to move all your money in the stock market into a Laser Fund/Indexed Universal Life Insurance.
David interprets this to mean that Doug dislikes stock market investing.
For David, the stock market is the single greatest engine of wealth creation the world has ever seen.
What about risks and volatility? David explains that the longer you invest in the stock market, the more likely you won’t lose money and grow your assets over time.
David prefers a retirement strategy that views the IUL as one component of a balanced, comprehensive approach to tax-free retirement.
David reveals why the Roth 401K is an extremely useful tool for funding tax-free retirement.
David shares what his preferred tax-free investment strategy would look like - and why the zero percent tax bracket is so powerful.
David goes through the 3 things that make IULs a unique tax-free investment route:
- A death benefit that doubles as long-term care.
- Serves as a great volatility shield in retirement.
- Safe and productive returns. Also functions extremely well as a bond alternative.
If you believe tax rates will be higher in the future than they are today, you should adopt a strategy that takes advantage of all the benefits in the IRS tax code.
Mentioned in this episode:
David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code
PowerOfZero.com (free 3-part video series)
@mcknightandco on Twitter
@davidcmcknight on Instagram
David McKnight on YouTube
Get David's Tax-free Tool Kit at taxfreetoolkit.com
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