May 17, 2022
Do you want to bulletproof your wealth?
Today’s guest is Tom Laune. As a music industry professional who lost part of his hearing due to an accident, he realized that if he didn't have some form of long-term disability insurance, he would have been in a lot of trouble. He created the Bulletproof Wealth Strategy to help others protect their income and grow their wealth. Key to his strategy is saving your capital in a place where there is compounding growth.
Tom solves the problem of low returns and increased taxes when storing money in a traditional bank. By creating a line of credit using specially designed whole life insurance, they help real estate investors across the country. The cash value of the policy is guaranteed to grow, creditor-protected, and tax-advantaged. Real estate investors love that there are zero loan origination fees or required interest payments!
[00:01 - 05:40] Learning About Long-Term Disability Policy
- Losing his hearing after 29 years as an audio engineer
- Why it is uncommon for people to have a standalone disability policy
- Helping other people be aware of this coverage
[05:41 - 11:12] The Bulletproof Wealth Strategy
- Tom on the best place to save your money: collaterals
- Everything can be collateralized
- Bulletproof wealth plan vs home equity line of credit
- Convertible term insurance and whole life insurance
[11:13 - 17:45] Optimizing Collateralization
- Alternative to a savings account but with a better rate of return
- Using insurance money to fund your real estate investing
- A capital with uninterrupted compounding growth plus an actual asset
- It’s not a get-rich-quick scheme
[17:46 - 18:59] Closing Segment
- Reach out to Tom!
- Links Below
- Final Words
Tweetable Quotes
“I have searched high and low trying to find the most tax-advantaged, and the best place to store long-term capital that allows you to collateralize it. One of the big things I talk about is collateral.” - Tom Laune
“Creating like a line of credit inside of a specially designed life insurance policy, that is what I teach people, I think it's the safest place to store long-term capital because you have compound growth.” - Tom Laune
-----------------------------------------------------------------------------
Connect with Tom! Follow him on LinkedIn. Visit their website and schedule a call with Tom to know more about The Bulletproof Wealth Strategy.
Connect with me:
I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.
Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on. Thank you for tuning in!
Email me → sam@brickeninvestmentgroup.com
Want to read the full show notes of the episode? Check it out below:
Tom Laune 00:00
The best way to do that is to protect yourself with what's called convertible term insurance which I'm telling you nobody understands how that works either. It's a really misunderstood product. And there's huge advantages to it.
Intro 00:19
Welcome to the How to Scale Commercial Real Estate Show. Whether you are an active or passive investor, we'll teach you how to scale your real estate investing business into something big.
Sam Wilson 00:27
Tom Laune created the Bulletproof Wealth Strategy to help others protect their income and grow their wealth. The secret to his strategy is teaching people to use money like banks do to earn much higher rates of return than the average investor. Tom, welcome to the show.
Tom Laune 00:42
Thank you, Sam. I really appreciate it. I'm so glad to be on your show. And I'm looking forward to spending some time with you today.
Sam Wilson 00:48
Absolutely. Three questions I ask every guest who comes on the show in 90 seconds or less? Can you tell me where did you start? Where are you now? And how did you get there?
Tom Laune 00:55
Okay, I started in the music industry. And I was a professional recording engineer and mix engineer who started to lose hearing in one ear after 29 years. And I realized that if I hadn't had some protection on my ability to earn a living through some special type of insurance, I would have been in huge trouble. So I got this really great long-term disability policy that I had enforced for over 20 years, and then transitioned and went back to school and got three financial designations. And now I'm teaching people, especially real estate investors, how to make their wealth as bulletproof as possible. So I've created a strategy called the Bulletproof Wealth Strategy.
Sam Wilson 01:43
That is really unfortunate. You were in the music industry for 29 years?
Tom Laune 01:48
Yes, sir. Yeah, I worked with like Bruce Springsteen and REM and Amy Grant and a bunch of, you know, The Fabulous Thunderbirds, a bunch of great artists. But of course, I used my hearing that whole time to do it. And if I didn't have the protection that somebody put in place for me, I would have been really in trouble. So that's what I decided to do is to help other people learn the same strategies that I had was fortunate enough to be able to learn.
Sam Wilson 02:17
Outside of a long-term disability policy, what was the other protection that you had in place?
Tom Laune 02:23
So that when I was doing this, for me, personally, that was the main thing that I had, then. And that is a part of my strategy. Now, I will tell you this, very few people have that I'm telling you right now out of 1000 people, there might be 15, that have a long-term standalone disability policy, unless it's been given to him free from work, which those aren't interesting. The work ones are okay, they cover about 60% of your income, but it is taxable. So that's not the main thing that I do now. But it is a part of my strategy for sure.
Sam Wilson 02:57
Yeah, that's really interesting. I mean, I'm not one of your 15 and 1000. I mean, it's so uncommon, you hear so few people talk about it.
Tom Laune 03:04
It's very uncommon. The reason it's so uncommon is because it's not a lucrative thing for advisors to talk about it. It's very difficult to get somebody covered, oftentimes, their coverage is reduced. And the thing does not really pay. You know, it's just not advantageous financially for people to talk about it for the most part, but because I was helped so much by it, I'm willing to, you know, help people get it because I know, super important for me to have.
Sam Wilson 03:34
What do you think is not a profit center for insurance companies? And so that's why...
Tom Laune 03:41
They're dropping like, there's a huge amount of liability on that type of coverage. Because if somebody goes on claim, they can be on claim for 40 years, right? And the payout is tax-free. It's just unbelievable, the advantages that you have with that, and that's why they're very, very picky about who they let have it.
Sam Wilson 04:04
Yeah, that sounds really challenging, I guess, on that side of things, you know, if they're really picky about who they actually give insurance to how can you go out to the masses and say, Hey, here's a product of things you'd have.
Tom Laune 04:18
So yeah, I can go out to the masses and say that because there are people that can get it, and I was one of them that could get it. You know, I can't guarantee I can get it for everybody, but I can sure try. You know, that's all I can tell you is that most people don't aren't even aware that they need it.
Sam Wilson 04:35
Right. No, it certainly not. I mean, your ability to earn if you become severely impacted. And I think this even falls in the Dave Ramsey camp. And, you know, everybody's got their own opinion on Dave Ramsey, but I think even Dave Ramsey said, you know, have a sound financial plan. This needs to be part of it.
Tom Laune 04:51
100% I mean, this is one of the things that Dave and I agree on, and we don't agree on much. But this is definitely one of them. I mean, I don't have any problem with Dave, he lives is right near where I live. I used to go to church with him. It's just that his speaking to a certain audience and that certain audience is very, very middle class, you know, scenario. And I'm most my mostly my client base is real estate investors, and I'm a real estate investor. And that's who I speak to primarily.
Sam Wilson 05:20
Right? Yeah. Again, like you said, there's a certain segment of our society that needs to hear what Dave Ramsey has to say. And they need to totally, and they need to implement it without questioning get it done. Yeah, exactly. Another segment where it's like, well, we can take that and and kind of mix in a little bit, a few other ideas in here, because this isn't going to work for everybody. So write that in. We're not here to discuss Dave, we're here to discuss what the bulletproof wealth plan looks like. Can you tell us what are some other components to it?
Tom Laune 05:47
Absolutely, well, the main thing I do is help people figure out where is the best place to save money, right, because traditional banks have one advantage, and that is liquidity. That means if you put $100,000 into a traditional bank, the only advantage you have is that you can pull that $100,000 out the next day, if you need it for something, right. That's basically it. Other than that, you're losing money to inflation by leaving money in a bank number one. And number two, there is no other advantage to it, because the money that you earn in a bank is piddly diddly, almost nothing. And it's taxable at your ordinary income rates. So the interest that they pay on traditional savings accounts is terrible. So I have searched high and low trying to find the most tax-advantaged, and the best place to store long-term capital that allows you to collateralize it, one of the big things I talk about is collateral. And I know your audience probably understands collateral, but that's really just having an asset the bank can use to pledge to be able to borrow against it. Really, that's what collateral is and everything can be collateralized to one degree or another so you can collateralize stocks and bonds, you can collateralize diamonds and, you know precious metals, you can collateralize cryptocurrency, you can collateralize real estate. But those all have a lower collateral capacity in terms of how much you can collateralize them versus what I do, which is creating like a line of credit inside of a specially designed life insurance policy. That is what I teach people, I think it's the safest place to store long-term capital because you have compound growth, that means the money is growing year over year on in a compounding way. And you're able to collateralize it at 90 to 100% depending on the account value. And you're able to have all of these other amazing benefits like asset protection, it works very similar to what I teach people to a home equity line of credit, the big difference between a home equity line credit and a bulletproof wealth plan is that on a home equity line of credit, when you take a loan against it, it dings your credit score, your FICO score, it's reported on your debt to income ratio, when you take a loan from the place where I have my clients storing capital, it does not. And of course, a home equity line of credit does not pay a dividend. So it's another huge differentiator is that you've got to be looking at where are you saving capital so that you can take advantage of deals when they come along.
Sam Wilson 08:35
Right. Yeah, that's a very, very interesting point. So you've got you've hit on two key parts of this, one is the long term disability. The second one is the whole life insurance, upset whole life, there's probably some nuance there that I'm getting completely wrong, you can clarify.
Tom Laune 08:50
That's fine. The whole life is the traditional the thing Dave Ramsey has, right, is that you can design whole life to be terrible, or you can design it to be great. And he only talks about the terrible kind, you know, so going back to that it's frustrating is that he's only getting a tiny little sliver of the picture out to the world. And basically everybody thinks it's awful. Well, you can design it just right here. I'm here to tell you, you can design it to be phenomenal to pay very low commissions and to have a lot of cash value. You just have to work with somebody who understands how to do this. And that's what I specialize in. So that's the second component of the three components of the bulletproof wealth strategy.
Sam Wilson 09:34
What's number three?
Tom Laune 09:35
So number three is that there is an option strategy that I employ. And it is a special type of long is a special type of term life insurance that allows you to convert later to a whole life policy. Because everybody asks me, hey, what happens if I start saving $25,000 a year now but then two years from now I want to start saving 75,000 Because I've got a big raise, or I have a financial windfall. And the best way to do that is to protect yourself with what's called convertible term insurance, which I'm telling you, nobody understands how that works, either. It's a really misunderstood product. And there's huge advantages to it.
Sam Wilson 10:20
What are… would you ever put someone in a whole life and a convertible term at the same time?
Tom Laune 10:27
I do that all the time. So they start with a whole life to hold whatever amount of money that they want to initially put into it. And then they have a convertible policy that allows them to convert to another whole life policy later, when they're ready. So it is very, very frequent that I do too. In fact, I usually set somebody up with three things I long term disability policy, a term convertible policy and a whole life policy. That way, they can have all the optionality and they can move money into these things as they're ready. And I always look out for making sure that their maximum insurable interest is protected, and that their wealth as bulletproof as humanly possible.
Sam Wilson 11:12
How much of a, what you're gonna call it, a properly structured whole life policy is insurance for you in your eyes, and how much of it is actually just more of an investment vehicle with some really cool benefits?
Tom Laune 11:28
Okay, so zero of it is an investment vehicle, none. And what it is, is that there's a huge percentage of it, that's a savings vehicle. So it's like an alternative to a savings account, but you're getting a much better rate of return than a savings account. So I'll give you some numbers on a $130,000 deposit, which I have a lot of people, that's just kind of a magic number, because you can create a line of credit for usually depending on your health and your age around 100,000. So if you put in 130, you can get a loan for around 100, after 30 days, so it's not tied up for a long time, you know, a large amount of your capital is able to come back to you to then put into an investment. The difference is, is that you're not actually putting your own money in, now you're doing this collateralization, where you're using the insurance companies money to find your real estate investing, does that make sense?
Sam Wilson 12:29
Sort of if I put 130 in bucket, and I can get it out?
Tom Laune 12:35
Yep, so you're down 30. But now all of a sudden, you also have about 3 million or so in life insurance. And then every year you put more money in, the amount of money you have available grows relative to the amount you put in until around year eight, you have more money available in your life insurance than you've put in all for the previous seven years. And then it keeps compounding to where by the time you're ready to retire, you have saved double what you put in, and you've been able to make your investments as well. So if you put in a million, you might have 2 million in your cash value. That's just an example over your lifetime, I'm talking. And then you would be able to use that 2 million to put into your real estate investments. And as long as you're earning more on your real estate investments than you're paying the insurance company, you're employing arbitrage to be able to pay down that balance quicker. And the whole thing works out in an unbelievably advantageous way. It's just it's incredible.
Sam Wilson 13:41
Yeah, I kind of you know, it was not the sharpest pencil in the drawer. So I'm trying to run the numbers here and I go, Gosh, why not just take the 130 Grand, put it in a real syndication have your money doubled in five years, and now I got 260 grand I can go and do something else with?
Tom Laune 13:58
Right. So in this case, you would be taking 130, taking 100 out and putting it into a real estate investment. But this is the thing is that the 100 continues to work for you and earn dividends and grow. And your money is also in the real estate investment. So at the end of the day, you're going to have this huge pool of capital that you've been building for your whole life with uninterrupted compound growth. And you're going to have the real estate investment as well. And your wealth is protected because what happens if two years into this plan, you get hit by a truck. Now all of a sudden your family is going to have millions of dollars that they otherwise wouldn't have had. So you have this layer of protection as well. And depending on what state you live in, you have asset protection that is incredible as well. So you have creditor and creditor protection up to 100% for most of the states I work in California does not have it But Texas, Florida, a lot of the big states do have 100% creditor, creditor protection. Where are you based out of again?
Sam Wilson 15:08
I'm right here with you, man. I'm just down the road Memphis.
Tom Laune 15:12
No way, okay, that's amazing. So Tennessee 100%.
Sam Wilson 15:16
Yeah, I know the 931. It's my wife's from so. Absolutely. That's really so if I understand this, right, the 100,000 that you pull out, is still treated as if it never left your policy?
Tom Laune 15:30
Or because you're not pulling your own money out. You're doing a collateralization. Right. So you aren't...
Sam Wilson 15:36
That policy or that insurance company? Some form of interest?
Tom Laune 15:41
Yep. It's 4% currently. So if you were putting $100,000 into a real estate investment, earning 8%, that would be $8,000. Right? Your cost of capital would be $4,000. Right? So you're just paying the interest. So rather than making, let's just say, a percent total return, now, you're only investing 4000? Because your 100,000 is still earning money for you. Right, right. And so you're actually converting an 8% return into 100% return by thinking and acting like a bank does. You remember, when a bank lends money, they're not lending their own money, they're lending their depositors money out, right? That's exactly what I'm teaching people. And I'm telling you, it sounds a little bit difficult to uncover right at first. But once you start digging into this, it is a mind-blower. What actually happens as these things mature, and they get into them a little bit. It's not a get-rich-quick scheme. It's more like a get wealthy, slow scheme.
Sam Wilson 16:47
Yes. And I know plenty of very savvy people that use this strategy. I think the key here, and I've talked to I don't know, probably three other people on this show before, you know, maybe obviously, you guys all do very different things. But one of these components is the same. And this is it. Yeah. But the thing that I think is the key here is that it takes until about I think you said year eight, here are my notes. Yeah, you're right. Yeah, is when your the money you've put in and the available money to borrow is the same.
Tom Laune 17:16
Yep, it's very close, though. year four, usually your year on year cash is the same meaning if you put in, let's just call it $50,000, you have 50, mew $1,000 to be able to borrow against so you can get a collateralized loan for the same amount you deposited, which believe me that is the magic here when you're not down at all in liquidity or even and then it starts compounding from there, you know, so it really is amazing.
Sam Wilson 17:46
Tom, thank you for taking the time to come on today. This is a blast. If our listeners want to get in touch with you learn more about the strategies. And again, you know, even just talking I know disability insurance probably isn't the most thrilling Yes, we'll talk about but these are important components of a financial strategy, what's the best way to reach out to you and learn more about you?
Tom Laune 18:05
So I've got free educational videos that is really breaks this all down at bulletproofwealth.info, bulletproofwealth.I-N-F-O. Just go put your name and email address in, watch some of these great videos that I've produced. And then if you want to do something, just click the schedule a call with Tom and I'll be happy to go through and show you what you can do.
Sam Wilson 18:29
Thank you for your time today. I certainly appreciate it.
Tom Laune 18:31
You're welcome. It's great to be here. Thank you, Sam.
Sam Wilson 18:34
Hey, thanks for listening to the How to Scale Commercial Real Estate Podcast. If you can do me a favor and subscribe and leave us a review on Apple Podcasts, Spotify, Google Podcasts, whatever platform it is you use to listen, if you can do that for us, that would be a fantastic help to the show. It helps us both attract new listeners as well as rank higher on those directories so appreciate you listening. Thanks so much and hope to catch you on the next episode.