Laser Fund Investment: Strategies For Success

The LASER fund, an acronym for liquid assets safely earning returns, is a financial vehicle that enables tax-free retirement income. It is a properly structured, max-funded, tax-advantaged insurance policy that can be used to free oneself from the tax trap that millions of Americans are in with their 401(k)s and IRAs. The fund is based on four key criteria: liquidity, safety, rates of return, and tax advantages. Liquidity refers to the ability to access your money when you need it, ideally through electronic funds transfer or a phone call. Safety refers to the security of the institution and the protection of your principal from market volatility. Rates of return that are predictable are also important, with a focus on historically predictable rates and a 0% floor to safeguard against market downturns. Finally, tax advantages are crucial as taxes can significantly impact your financial future. The LASER fund aims to provide unparalleled liquidity, safety, predictable rates of return, and tax advantages, making it an attractive option for those seeking to secure their financial future.

Liquidity: Access your money with an electronic funds transfer or a phone call

Liquidity is a key component of the LASER fund, referring to the ability to access your money when you need it. Ideally, this should be possible with an electronic funds transfer or a simple phone call. This is a significant advantage, as it means you can access your money quickly and easily without any hassle. It is paramount to surviving the storms of life and is a priority for financial strategists such as Doug Andrew.

The LASER fund provides unparalleled liquidity, and your money is protected from market losses. This is a notable difference from traditional retirement vehicles, where millions lost up to 40% of their money twice during the post-9/11 market crash and the Great Recession. With the latest market volatility due to the pandemic and an anticipated recession, market losses are a serious concern.

The LASER fund offers a solution to this problem, ensuring that your money is protected and accessible when you need it. It is a powerful financial vehicle that provides liquidity, safety, and predictable rates of return. It is a max-funded tax-advantaged insurance policy, allowing your money to grow or accumulate tax-free.

The LASER fund, therefore, offers a unique opportunity for individuals seeking a secure and accessible way to invest their money. With its focus on liquidity, the LASER fund ensures that you can access your funds easily and efficiently, providing peace of mind and financial flexibility. This feature sets it apart from other investment options and makes it an attractive choice for those seeking a reliable and accessible retirement vehicle.

Safety: Protect your principal from market volatility with strategies like indexing

While it is impossible to avoid risk entirely when investing in the markets, there are strategies you can use to protect your principal from market volatility. Here are some ways to safeguard your investments:

Diversification

The cornerstone of modern portfolio theory (MPT) is diversification. Investors can preserve their capital by diversifying their holdings across different asset classes and choosing non-correlating assets. Non-correlating assets, such as bonds, commodities, currencies, and real estate, tend to move in inverse directions to stocks, smoothing out the volatility of your portfolio's overall worth.

Put Options and Stop-Loss Orders

Put options and stop-loss orders can help limit losses when investment prices start to drop. Put options give you the right to sell a stock at a certain price by a specific future date. Stop-loss orders trigger the sale of a stock at a fixed price or when the price drops by a certain percentage.

Dividend-Paying Stocks

Investing in dividend-paying stocks can increase your overall return and provide a cushion during market downturns. Dividend aristocrats, or companies that have increased their dividends for 25+ consecutive years, can provide more certainty of yearly payout increases compared to bonds.

Principal-Protected Notes

Principal-protected notes are fixed-income securities that guarantee the return of your principal investment if held until maturity. They also offer equity participation, allowing investors to benefit from market gains. For example, a $1,000 principal-protected note tied to the S&P 500 with a 90% participation rate would return your original $1,000 investment plus $180 in profits if the index gained 20% over five years.

Direct Indexing

Direct indexing is a strategy that can help take advantage of market volatility. It involves owning individual stocks that represent a chosen benchmark index, providing extra opportunities for tax efficiency through tax-loss harvesting. Volatile markets provide an abundance of opportunities for tax-loss harvesting, as periods of loss are often followed by rebounds.

Predictable rates of return: Aim for historically predictable rates, ideally with a 0% floor

When investing in a LASER fund, it's important to understand the concept of predictable rates of return and how they can help you aim for consistent returns with minimal risk. Here are some key considerations:

Understanding Predictable Rates of Return:

Predictable rates of return refer to the expectation of consistent and stable returns on an investment over time. In the context of LASER funds, it means striving for returns that are relatively unaffected by market fluctuations and remain within a predictable range. This predictability is a key advantage of defined benefit plans like LASER, where retirement benefits are set by law and guaranteed by the state, providing retirees with financial security.

Historically Predictable Rates:

Historically predictable rates refer to investments that have demonstrated a track record of stable and consistent returns over an extended period. When considering investments for a LASER fund, it's essential to examine historical data and identify assets that have shown steady performance. This involves analysing past returns, relative value, and the likelihood of mean reversion to make informed decisions.

The Role of Diversification:

To achieve historically predictable rates, it's crucial to diversify your investments across different asset classes. LASER funds typically invest in diversified stock, bond, and alternative asset portfolios. By spreading your investments across various assets, you reduce the risk associated with any single investment and increase the likelihood of achieving predictable returns.

Target Investment Rate:

The LASER Investments team sets a target investment rate of return to strive for consistent and competitive returns. For example, the target rate for LASER investments is set at earning at least 7.6% over the long term. This target serves as a benchmark and guides investment decisions to ensure they are in line with the fund's objectives.

Managing Risk:

Achieving predictable rates of return also involves carefully managing risk. The primary focus of asset allocation in LASER funds is to maintain a broadly diversified portfolio while minimising risk. Tools like risk budgeting and scenario analysis are employed to ensure that the target rate of return is achieved with the least amount of risk. This approach helps protect investors from significant losses and provides a more stable investment environment.

In summary, when investing in a LASER fund, focusing on predictable rates of return involves targeting historically consistent returns, diversifying your investments, and carefully managing risk. By following these principles, you can aim for stable and secure investment returns, providing peace of mind for your retirement planning.

Tax advantages: Minimise taxes to get the most from your money

The LASER Fund is a tax-free retirement vehicle that enables you to minimise taxes and maximise your financial gains. By utilising specific sections of the Internal Revenue Code, you can legally and permanently reduce your taxes, increasing your internal rate of return and keeping more of your profits.

The fund is structured as a max-funded tax-advantaged insurance policy, allowing your money to grow and accumulate tax-free. This means that you can contribute after-tax dollars, and your investments will not be subject to early withdrawal penalties. The fund provides unparalleled liquidity, allowing you to access your money when you need it with ease. Additionally, the safety of your principal is ensured, protecting your investments from market volatility and potential losses.

The LASER Fund also offers predictable rates of return, providing stability and minimising risks. With this fund, you can take control of your financial future and make the most of your hard-earned money. It empowers you to build a secure and prosperous retirement, free from the tax trap that many Americans find themselves in with traditional retirement vehicles like 401(k)s and IRAs.

Furthermore, the LASER Fund offers the advantage of tax-free wealth transfer. When the time comes, you can pass on your wealth to your heirs without incurring income taxes, ensuring that your money blossoms in value even after your lifetime. This feature makes it an attractive option for those looking to provide financial security for their loved ones.

By investing in the LASER Fund, you can take advantage of tax citations such as TEFRA and DEFRA, which allow for minimal insurance requirements. This structure is in the government's best interest as it encourages self-reliance and reduces pressure on social systems. Ultimately, the LASER Fund provides a unique opportunity to minimise taxes and maximise your financial gains, helping you build a secure and prosperous future.

Investment managers: The LASERS Board of Trustees chooses managers with advice from investment staff and an independent consultant

The LASERS Board of Trustees is responsible for selecting investment managers, a process that involves advice and input from investment staff and an independent investment consultant. This comprehensive analysis and due diligence process ensures that the best candidates are chosen to manage LASERS assets.

LASERS assets are invested in diversified stock, bond, and alternative asset portfolios. The investment team aims to achieve a long-term rate of return of at least 7.6%, and in the 12-month period ending June 30, 2024, they achieved an impressive 14.0% return.

The LASERS investment strategy focuses on maintaining a broadly diversified portfolio while minimising risk. They conduct an annual comprehensive study, utilising tools like risk budgeting and scenario analysis, to determine their target allocation. This study is a collaborative effort between internal staff and their external investment consultant.

The LASERS fund offers several benefits, including tax-free retirement income and wealth transfer. It provides unparalleled liquidity, safety, predictable rates of return, and tax advantages. The fund is structured as a max-funded tax-advantaged insurance policy, allowing individuals to contribute after-tax dollars and accumulate tax-free growth.

The LASER fund prioritises liquidity, enabling individuals to access their money when needed through electronic funds transfer or a phone call. It also emphasises safety, protecting individuals' principal from market volatility and losses. Additionally, the fund offers predictable rates of return and tax advantages, minimising the impact of Uncle Sam on individuals' financial futures.

Frequently asked questions