Insight & Analysis

Finding Opportunity in a Recession

Finances are cited as a worry for 87% of us. Inflation is up. Savings are down. And the talk of recession has reared its ugly head again. How do we navigate this new economic environment that we’re living in right now?

The point is, consumers are starting to feel the pinch. They’re spending less, they’re going out less, and they’re searching for better deals. Inflation is going up, meaning our buying power of our dollar isn’t going as far. So you could cut back your savings. Sure. But that’s only going to get you so far because let’s face it, incomes and the increase in our salaries oftentimes isn’t keeping up with the increase in the cost of living.

So what’s the impact? Well, once your savings is cut down, once you’ve cut back your budget as much as possible, you’re either going to have to cut back on your lifestyle and feel the pinch there, or to maintain your lifestyle, you’re forced to use credit.

Two years ago, our economy was awash in liquidity, meaning there was so much money coming from the federal government that people had access to money. They were buying houses, they were building houses, they were renovating their house. Well, the liquidity isn’t there anymore and savings is down dramatically. People have accessed their savings. So now if they want to build, if they want to renovate, they need credit. But here’s the problem. Interest rates have gone up dramatically. 

We’re being squeezed from both ends, but we still have goals to reach. We only have this one life to live. How do we make the biggest impact for our family and our community to move ourselves forward? Not to mention our own ultimate goal of retiring someday and living comfortably in our retirement?

How do you position yourself so you don’t feel this pinch? Is there actually a way? Are the rich feeling this pinch as much as the middle class?

Well, the answer is no, because the rich know the importance of having access to cash. Having a pool of cash set aside that they’re able to access without being impacted by the rising inflation rates, without being subjected to the approval of creditors, without being subjected to the lack of liquidity that comes with saving in a retirement plan or stashing money away in your home equity.

You see, one thing we’ve learned over the past 37 years is that access to capital trumps everything. When you don’t have access to money, your life sucks. And that’s where we can help you. 

I would argue that most financial stresses come from not having access to cash for what we really want or really need, because like I said, we still have these goals to reach. Maybe your child going to college, maybe you do want to renovate your house or buy a new car, or maybe your hot water heater went over the last month or two and these things need to be addressed.

So how do you build in flexibility in your plan instead of having buckets marked for your different goals? How do you accommodate all of life’s goals without feeling the pinch?

We always say it’s not what you buy, it’s how you pay for it that really matters. We’re not saying, “Hey, cut back your lifestyle. You don’t need that car. You don’t need that hot water heater.” We’re saying there may be a better way to finance your purchases in life so that you’re in control of that financing function instead of those terms being dictated by credit companies or the bank.

You see, this financial environment has really created opportunities for everybody if they step back and see exactly what’s going on. It’s more incumbent now than ever to be as efficient as possible with your money, with your cash flow, so that you can thrive through these very difficult economic times.

Earlier, we mentioned that recession has reared its ugly head over the past three recessions. 91% of all businesses and 91% of all families were affected negatively by recession. But here’s the key. 9% actually thrive, and they’re the ones that we want to emulate. They are the examples that we want to share with you, because, keep this in mind, success leaves clues, and the people who thrived during the last recessions are the people that can show us how to thrive during the coming recession.

Have you ever heard this? Buy low and sell high? What lower time is there then in the middle of a recession and in the middle of economic turmoil? That’s when it’s most important to have access to cash, to be ready to take advantage of opportunities, whether it’s an investment, a business opportunity, or real estate.

The best time to buy is when everybody else is forced to sell. That’s when the real value appears, and that’s when the opportunities are out there.

In conclusion, if you like to be in a position where you could take advantage of the economic turmoil that’s forthcoming, check out our Four Steps to Financial Freedom Webinar found right on our homepage.

And remember, it’s not how much money you make. It’s how much money you keep that really matters.

Incentivizing Key Employees

When you’re a small business owner, your people are key. But how do you keep your key people happy and keep them from going after a better offer from your competitor?

We recently came across a case where the business owner needed to retain his key employee. He came to us and he said, Hey guys, if I lose this guy, my business is going to fail because I could only go so far. I only have so much bandwidth. And so we need to come up with a way to make him want to stay. How do we incentivize this guy?

The loss of a key employee is devastating to any business, but for a small or medium sized business, it could literally mean life or death because that employee might be the only person in your geographical area who has the required skills and expertise to perform that duty.

For example, we recently had a business owner client whose key person, the plant manager, retired. His skill set was so wide and so vast and accumulated over many years, that it took three people to replace just that one employee.

On average, it could cost about 200% just to replace one key employee. Not to mention the lost time and the lost sales. So what’s the solution? How do we overcome people headhunting our key employees or them going off and looking for a better offer?

Good employees are hard to come across these days, and they’re even harder to keep in many cases. According to the U.S. Bureau of Economic Analysis, 48%, that’s almost one out of two of our employees, are either actively searching or open to the conversation of a new opportunity. That is troublesome if you’re a small business owner.

There are a few solutions that small business owners could take advantage of to incentivize key employees, but more importantly, recapture the cost of that incentivizing in the long run so that they’re not out a ton of money and they could take care of the key employee, their business, and their family.

We have seen several situations where the business put in incentivized campaigns to keep their key employees. The problem is, the employee didn’t recognize it as something that had teeth or something that would keep him from shopping his job.

So the first step when incentivizing key employees is to draw up documents that are going to protect you, as the business owner, and the employee, as the person who’s being incentivized. But also making sure that whatever plan you’re putting together is valued by the key employee. If it’s not, there’s no sense going down that path.

We recently worked with a business in Long Island, New York, and they had a key person that they wanted desperately to keep around. His job was in high demand, not only in their industry, but across the board. So the question became how can we design a plan that has such high value for this individual that he would never consider leaving that employer?

Well, we sat down with the employee and asked him what his biggest financial challenges were, and he indicated to us that he had two children that he needed to send to college. One was eight. The other one was six. He needed to make sure that he can provide them with the best education possible in his eyes, a private school, so that it would not have a significant impact on his overall finances.

So we worked with the employer to design a plan that would provide the employee with bonuses when his children were ready to go to college. And by doing that, that literally tied the employee in. But here’s the kicker. When we presented the plan to the employee, he was in tears with joy, knowing that his employer cared enough for him that he would take care of his children and send them to college.

However, when we met with the employer, we made sure that they knew that they’d be able to recapture the cost of that plan in the long run so that the business wasn’t suffering just from keeping that key employee happy.

If you’re looking to get started with this type of planning, the first step as the employer is to come to us, identify your key employees and say, “Hey, I have this guy or gal and they’re great. I want to make sure they’re taken care of and they don’t leave me.”

The second step is to sit down with the key employee and find out what is most concerning, or what is most valued by that key employee. And then, it’s just putting together the resources that the employer is going to provide and the value or what’s valued by the key employee. But for the key employee, nothing changes. They continue to come to work, excel and provide and build your business.

And by the way, if that key employee chooses to leave before they receive the benefits, they don’t get the benefits. That’s all written into the plan. This planning could seem daunting or maybe complex. However, it’s important to keep it simple. Make sure the employer is happy and the key employee is incentivized.

If you’d like to get started with this type of planning, visit our website at Tier1Capital.com to schedule your Free Strategy Session today.

And remember, it’s not how much money you make. It’s how much money you keep that really matters.

Navigating the Great Resignation

Americans are quitting their jobs in record numbers, it’s called the Great Resignation. Over the past two and a half years, over 47 million people have voluntarily left the workforce. If you’re a business owner, this could be bad news.

On average, it could cost up to 200% of that employee’s salary to replace them with a new employee. Seeing these statistics can be troubling for a business owner. However, there are some ways  to help you take advantage of the great resignation so you could be in a position of control and not a position of victimization.

According to the Society for Human Resource Management, a loss of a key employee can have particularly damaging effects for small businesses. And here’s why.

The first reason is because that key employee may be the only person in your entire area who has the skill set to perform that job. Not only that, but a lot of times in a small business, they’re the only person who has that particular skill set and knowledge. Meaning the business owner may have trained them, but that key employee may have gone on and learned other things by themselves to help progress. They take things to the next level and that’s why it’s so important to retain them.

The second point is that the loss of a key employee also damages the culture and morale of the remaining employees. For example, if Bob was a really good performer and really moving the company along and Sally sees that, she may think the business isn’t going to continue to grow and prosper because Bob had so much to do with the success of the entire business.

The third reason is because there’s a smaller pool of internal employees who can perform the tasks and the duties of the lost key person.

The fourth reason is because a small business might have less resources, cash, cashflow and contacts that can be used to replace the lost key employee.

Let’s face it, employee departures cost companies time, money and other resources that many small businesses simply don’t have. With talent scarcity on the horizon, it’s going to be harder than ever for small businesses to retain that key talent within their business.

So that’s why it’s important to plan for the future, to protect those key employees and to reward them for their hard work and what they bring to your business. But there must be a delicate balance between taking care of your key employee and not giving away equity in your business.

So what are the possible solutions?

Well, one may be setting up a special retirement plan for that key employee to make sure that they’re taken care of in the future, something comparable that they might get from a larger company. But within your company’s budget. But again, let’s face it, there’s only so much cash flow to go around. How can you take care of the business, take care of your key employee, and also take care of your cash flow?

That’s where we come in. We’ve developed a process that looks at cash flow and makes it as efficient as possible. You have the same amount of cash coming in every single month. However, it’s not how much money you make, it’s how much money you keep that really matters. It’s not the products you buy with the money. It’s how you make those purchases.

How can you make your cash flow more efficient so you’re able to get $1 to perform multiple jobs? The dollar to protect the business owner, to build the company and also to retain this key employee. Getting $1 to do multiple jobs increases your efficiency. It increases your availability or accessibility to cash and also puts you in a position to weather any storms going forward.

We specialize in helping small businesses find the money to reward their key employees without sacrificing the business owners or the business’s livelihood.

You see, the money is literally hiding in plain sight. We show you how to unlock that cash flow or that cash and put you in control of it instead of a bank, an investment firm or the government.

If you’d like to learn more about this process, check out our website at Tier1Capital.com

And remember, it’s not how much money you make. It’s how much money you keep that really matters.

Planning for the Unexpected

When it comes to planning for the future, there are a lot of factors to consider. How do you know what’s going to happen from day to day? One day you could have it all and the next day you could be scrambling for cash flow.

Typically when you’re a business owner, the reason why you got into business in the first place was to control your own destiny. Take your fate out of someone else’s hands and to stop being dependent on them for income, and instead go off and make it on your own and be in control of your own destiny.

However, in life and certainly in business, we know that we could plan for the future, but it doesn’t always happen the way we think it might happen. There’s an old saying: man plans and God laughs. The point is you need to build flexibility into your finances.

A lot of times in the beginning stages of business. It’s important to reinvest all your profits back into the business to get the ball rolling so the business will be able to take care of you. However, as your business ages and matures, it’s important to build flexibility into your plan and plan for life’s uncertainty. A lot of times in business there’s cyclical or chronic cashflow issues that need to be addressed.

Think of it as a three legged stool. The first leg is to make sure there’s enough cash to operate the business. The second leg is to make sure there’s enough cash to grow the business, and the third leg is to make sure there’s enough cash for you and your family, both now and in the future.

Now, if you could picture a three legged stool, you need all three legs or else you’re going to fall over. And what we have found in most business is they’re so focused on pouring all their profits back into the business, to run the business and to grow the business, they don’t take enough time to take care of themselves and their family, both now and in the future.

Think about it. What’s the point of pouring your blood, sweat and tears into the business if you don’t get to also enjoy life and provide for your family? This is why it’s important to plan for the flexibility, not only within your business, but also within your family finances.

That’s why we always build flexibility and access to cash for our business owner clients, both in the business and outside the business. So they’re able to take care of emergencies and also take advantage of opportunities, whether personal or business.

Think about it. What would happen if a piece of equipment went down, or your hot water heater went at home, or your child’s college tuition was twice as much as you expected it to be?

All of these aspects would pinch your cash flow further and could leave you feeling stuck. And the best way to make sure that there’s enough cash available both in your business and outside, is to make your money more efficient. Get one dollar to do multiple jobs, and by doing that, that positions you to take advantage of opportunities and to work through emergencies because you have access to cash.

The key is not to save in buckets. Don’t put a bucket on the side for retirement, for college, for building your business. All of your dollars need to be accessible so they’re available when you need them. Availability, without penalty and without major tax consequences, so you’re able to adapt and grow within your life.

And that’s the flexibility that we automatically build into the plans that we designed for our clients, making sure that their major needs are taken care of, but also that the plan is flexible and they have access to cash.

If you’d like to learn more about exactly how we put this process to work for our clients and how to build flexibility within your financial plan, visit our website at Tier1Capital.com.

And remember, it’s not how much money you make. It’s how much money you keep that really matters.

Conventional Savings Account vs Life Insurance

Since that whole fiasco with the Silicon Valley Bank, a lot of our clients have been calling us and saying, “Hey, is my money safe with a life insurance company?”

One day everything is fine. The next day you have nothing. One day you think your bank is safe and now you’re facing uncertainty. When it comes to saving in the bank, we’re certainly not depositing our money for high interest yield returns. We’re putting it there for safety, for security, for liquidity use and control.

However, when something happens like adjusted with SVB, our faith and trust in the banking system gets rocked. Silicon Valley Bank became insolvent because there was a run on the bank, meaning that a lot of depositors wanted to withdraw their money because they saw that the bank was unsafe. The problem is, not everybody got their money. 

You see, in the old days when you wanted to do a run on the bank, you went to the bank, you asked the bank for money. They gave it to you. Or if there was none left, they would let you know. Nowadays, with online banking, we’re able to withdraw money and transfer it somewhere else without the bank even being open.

We’ve all seen those iconic pictures during the Great Depression of people standing in front of a bank waiting and hoping to be able to get their money before the bank ran out of money. Because of electronic banking, the ability to access your money should be quicker. However, when there’s a run on the bank, that liquidity disappears. 

So you may be wondering what safeguards do the banks have in place to make sure that you’re able to access your money?

First and foremost, the bank needs to put money in reserve to guarantee that you could get your deposit. Do you have any idea how much the bank needs to put aside in reserve to make sure that you can get your money?

Well, the answer is somewhere close to $0.10 for every dollar. What that means is if you deposit a dollar in the bank, the bank only needs to put aside $0.10 to guarantee that you’ll get your dollar. Now, they’re banking on the fact that not everybody is going to want their money at the same time. And for the most part, that holds true, except when it doesn’t.

So what happens when it doesn’t? Well, that’s where FDIC comes in. FDIC stands for the Federal Deposit Insurance Corporation. One of the first things people ask when they’re putting money with an insurance company is, “Hey, is this FDIC insured?” And my response is, “No, thank God.” And then they look at me with a puzzled, look and say, “What are you talking about?”

You see, the reason banks need FDIC insurance is to guarantee that you’ll get your money, because if there’s a run on the bank, they know they don’t have enough money set aside to make sure you’ll get your money. So they have to offload that risk to a separate company, the FDIC. What the FDIC does is they charge banks a premium that they use to create the deposit insurance fund. It’s called the DIF. And in that deposit insurance fund comes premiums from all the banks, small, medium and large. And there should be enough money in there, hopefully, to make sure that everybody will get their money.

Here’s the problem. As of December 31st, 2022, the FDIC held $128.5 billion in the deposit insurance fund. But consider this, It was backing $22 trillion of assets. That’s like a penny and a half for every dollar of deposits. Is your money really safe?

So let’s transition over to the reserve requirements of an insurance company, specifically a life insurance company, whether it’s with an annuity or life insurance. Life insurance companies have the highest reserve requirements of any financial institution. That means they have a higher reserve requirement than banks and investment firms. And consequently, your money is safer with a life insurance company than any of those other financial institutions.

You got to realize the reason the banking industry pushed for FDIC insurance during the Great Depression, when 9000 banks failed, was because people lost faith and trust in the banking system. And that’s why FDIC was created.

So how does this translate? Well, let’s take a look at a poorly run insurance company, a poorly run life insurance company would have a dollar and $0.04 of assets for every dollar of liability that they own, meaning they could pay all of their claims and still have money left over, not like an investment where your money is at risk, or a bank where there’s only a fraction of your deposit actually held by the institution. We believe that life insurance companies are a much safer place to store and build and accumulate your wealth.

And as we just learned, it’s not how much money you make. It’s how much money you keep that really matters.

The Magic of Compounding Interest

Unless you’ve been living under a rock, it’s clear that inflation is running rampant. In fact, it’s at a 40 year high. Spoiler alert, it’s not Putin’s fault.

They call inflation the stealth tax. It’s not written in our tax code, but it affects each and every single one of us. Some more than others. So if you want to combat inflation, there’s one secret. It’s called compound interest. Albert Einstein, once called compound interest the eighth wonder of the world. He who understands it, earns it. He who doesn’t, pays it.

We have a perfect example on illustrating the magic that is compound interest and we’re going to lay that out with a magic penny. This penny doesn’t exist, but if it did, it would double every single day for 31 days.

So we start off with a penny. Day two, it’s two pennies. At the end of seven days, it’s worth $0.64. At the end of 14 days, we have $81.92. After 21 days, we have a whopping $10,485.76. And as we continue to grow, day 28, we have $1,342,177.28. Just three days later, we’re looking at a whopping $10,737,418.

Now that, my friends, is the power of compound interest.

What’s the problem? Why aren’t we all multimillionaires? Is the problem market fluctuation? Is the problem taxes? Is the problem fees? Or is the problem a combination of all of these and something else?

Absolutely something else. The biggest culprit to compound interest is draining the tank. You see, when it comes to compound interest, there are two factors to consider time and money. Time is something we can never get back. So each and every time we drain that tank down to zero, we stop the compounding of interest. We’re no longer earning money on our money. We start back at the zero line and we have to make up all that time that we lost originally.

So let’s carry on with this magic penny example. What would happen if we drained the tank after 22 days? Hey, we may have enough money in there to buy a car. And are we going to go to the bank and finance to buy that car?  Heck, now we have the cash. We’re going to lose money to interest paying the bank back? No, we’re going to drain our tank. Pay cash. Cash is king. But let’s take a look at what happens when we do that.

On day 22, we have $20,971.52, enough to buy a brand new car. Now, instead of having $10.7 million, we got to start over and go back to day one. But we only have nine days left for compounding.

You had the potential to earn, hypothetically $10.7 million, but because you made that one decision on day 22, your tank is only worth $2.56. That is why we never drain the tank. And that is the power of compound interest.

So this is where we talk about the seen and the unseen. We see the interest that we’re going to pay on a car loan, and that is not acceptable. Because let’s face it, debt is bad. We spare ourselves of the embarrassment and the pain of paying interest on a car loan, and we drain down our tank and we utilize our savings.

But what we don’t see and what we’ll never see is the interest we could have earned had that money been compounding. You know that we always say you’ll never see the interest that you don’t earn. And this example really underscores how much you don’t see, and more importantly, the value of continuous compounding of interest.

If you want to combat the effects of inflation and that eroding effect on your money. We do have control over is our own personal economic system and what our money is doing for us. And part of being in control of your cash flow is earning continuous compounding on your money, especially when it comes to combating inflation and making sure your money is as efficient as possible, which is something we talk about all the time. Small minor adjustments on how you’re using your money can have tremendous impact on the bottom line.

If you’d like to get started with your compound interest curve so you’re able to use your money and never drain that tank, check out our website at tier1capital.com to schedule your free strategy session today.

And remember, it’s not how much money you make. It’s how much money you keep that really matters.

Avoid Cash Flow Issues for Your Growing Business

Everybody knows that cash flow is the lifeblood to any business. But many businesses have chronic and cyclical cash flow issues that inhibit their ability to grow. In fact, 80 to 90% of businesses have most of their wealth tied up within their business.

Within a small business, there are two main factors that could cause these chronic and cyclical cash flow issues. Number one is reinvesting all of your profits back into your business. When you do this, you have little to no access to cash because you’re constantly trying to grow and expand your business, which makes sense because that directly impacts your income. And number two is paying off debt as quickly as possible.

A lot of times business owners are in a race to get out of debt, and so they have a ton of money going every single month, to entities outside of their control. But what happens with this is when they need money again they haven’t built any up for themselves, so they’re forced to go back and borrow the next time something comes up.

That’s why we always say it’s not what you buy, it’s how you pay for it that matters. And when you look at purchases through the lens of you being in control of your money and your cash flow, your decision becomes much, much more clear.

You see, what they don’t tell us is that every single purchase we make is financed, whether we pay cash and give up interest or finance and pay interest. You’re either going to pay up or give up. There are no other choices. This is exactly why it’s so important to be strategic with how you’re using your money.

 

You see, when it comes to golfing, it’s easy. There are only two ways you can improve. You could either buy the best clubs and hope that you have the best golf game ever, or you could practice and work on your swing. We work on the swing in the sense that we focus on the process and how you’re using your money instead of where your money is parked. And that is the difference between us and other advisors. Most other advisors are looking to manage your assets, while we are focused on showing you strategies to increase your cash flow by working on how you’re using your money.

And when it comes to business owners, a lot of times, like we said, their assets are tied up in their business, so it can feel difficult for them to get financial advice on how to maximize their assets and grow their business because their financial advisors are simply there to manage the money. Another thing we see with business owners is that they get their financial advice from their accountants. They have a good relationship with their accountants. They’re there every year. Maybe they have their books done by the accountants, but with accountants they’re looking through the lens of, how can I save my client taxes this year?

Let me give you an example. Your accountant approaches you and says, “Hey, you had a really good year last year, but you’re going to owe the IRS $100,000. However, if you take that $100,000 and put it into a retirement account, it’ll reduce your taxes by $40,000.”

Well, that sounds great. You certainly would rather pay 60,000 in taxes instead of 100,000 in taxes. But what they don’t tell you or what you don’t maybe realize is that you have to take the whole hundred thousand invest it in a retirement account. So now you don’t have use or control of that 100,000. Now you got to come up with another 60,000 on top of that in order to pay the IRS. Are you in a much better position or are you in a more illiquid position as a result of that advice?

This is why we always look at things through the lens of control. Sure, there are tax benefits associated with the methods that we use, but when we look at things through the lens of control, is this going to leave you in more control of your cash flow or a less control of your cash flow? Are you going to have access to this money in the near future or are you going to have to wait 15, 20, 30 years to access that money penalty free? Everything becomes much more clear.

It’s our goal to help as many people as possible to make the best financial decisions possible. We do that by looking at things through the lens of how can we help you be in more control of your money? You see, when you’re in control of your money and your cash flow, you’re in a much better position to address your short term, intermediate and long term goals and objectives, whether it’s from a business perspective or on a personal basis. Our mentor, Nelson Nash, used to say when you have access to money, opportunities will find you.

If you’d like to learn more about how to put these strategies to work for you and your business, be sure to visit our website at Tier1Capital.com and schedule your free strategy session today. We’d love to chat with you, or if you’d like to learn about how we put this process to work for business owners, check out our free guide for business owners right on our website.

And remember, it’s not how much money you make. It’s how much money you keep that really matters.

What is a Limited Pay Policy?

As a young person, the thought of paying life insurance premiums until age 100 or 121 can seem a bit daunting. I mean, who makes commitments for that long, really? But here’s the secret. There are limited pay policies, policies that are paid for X amount of years. These policies can be a great saving solution for young people.

A limited pay policy could make sense in a lot of situations, but it especially makes sense when you’re dealing with these specially designed whole life insurance policies designed for cash accumulation.

By its nature, a specially designed policy for cash accumulation puts extra money into the policy, and a limited pay policy has extra premium because you’re shrinking down the amount of years in which you’re paying the premium from age 100, let’s say, to age 65 or for a 20 year period or a ten year period.

The lower the amount of years of funding, the higher the premium. But again, if you’re designing a policy for cash accumulation, a limited pay policy makes sense because it puts you in a position where, let’s say a life paid up at age 65, there are no more premiums due after age 65. Now you’re collecting checks instead of paying premiums.

But let’s take a step back. We’re saying a higher premium. And what we mean by that specifically is, it’s a higher premium for the set amount of death benefit, which isn’t necessarily a problem when you’re designing these policies for cash accumulation. You’re focusing on the cash accumulation versus the death benefit. And many people, when they’re young, they don’t have a great need for death benefit. So it’s really not a deal breaker.

But the key is you’ll have the death benefit at your life expectancy when you’ll need the death benefit the most. And consequently, if you have a limited pay policy, again, let’s say a life paid up at age 65, by the time you’re 85, there will have been 20 years where you didn’t have to pay any premiums. But you had a completely paid up death benefit that’s actually growing every year because there’s no cost of insurance dragging the return or the growth of the policy.

In my case, I started limited pay policies years ago and it was a simple way to get started with saving. I put away a 500 or $1,000 a year into these policies, and in ten or 20 years they’re going to be paid up completely and the cash value and the death benefit are going to continue to grow and accumulate interest and dividends throughout my entire life, even after the premiums aren’t being paid anymore.

But keep in mind, there is a trade off with a limited pay policy. And what the trade off is, is that’s less money that you could stuff into the policy for any given death benefit. And what that means is your cash value will be slightly lower in the earlier years, but then you have to weigh the cost of having less cash value in the early years versus the benefit of having no premiums in the later years.

But let’s take another step backwards and think about compounding interest. Compound interest curves require two factors time and money. We all know we could never get time back, and it’s important to consistently put money in to these policies to accumulate the best compound interest curve possible. But with a limited pay policy, you’re limited on how much money you’re able to put in.

So again, in my situation, what I do is I have a term policy that guarantees convertibility of that death benefit, and I could create more whole life policies throughout my life as my budget allows. So as I pay up policies I have the cash flow to now convert a piece of my term policy into a new whole life policy and start the cycle all over again.

But the key is I’ll be building capital that I could access everywhere along the way to take care of the things of life, whether it’s buying a car, whether it’s going on vacation or moving across the country. Not to mention for business opportunities.

 

These policies are great for entrepreneurial type people. You have full liquidity use and control of that money to take advantage of business opportunities that come about. So you could earn an internal rate of return within the policy and also an external rate of return by starting your own business and putting that capital to work for you without interrupting the compound interest curve, which is key.

Nelson Nash, the author of the bestselling book Becoming Your Own Banker, put it so eloquently, “When you have access to money, opportunities will find you.”

If you’re considering a specially designed whole life insurance policy designed for cash accumulation, whether the traditional design or a limited pay policy to meet your needs, visit our website at Tier1Capital.com to get started with your free strategy session today.

You can hop right on our calendar, or if you’d like to learn more about how we put this process to work for our clients, check out our free webinar, The Four Steps to Financial Freedom. It’s right on our homepage.

And remember, it’s not how much money you make. It’s how much money you keep that really matters.

Can My Money Be More Efficient?

Are you thinking about taking the leap and expanding your business but feel hesitant in doing so? Well, one reason may be that your cash and your cash flow aren’t working as efficiently as possible.

Today, we’re going to talk about how making your money more efficient could help you take on those risks with more confidence.

First, let’s take a look at what happens when your money isn’t working at peak efficiency. Basically, what happens when your money’s not working at peak efficiency, you have less cash flow. And when you have less cash flow, you’re less likely to take risks or expand your business because you’re always thinking of, “Okay, if I take this money and put it towards expanding the business, then I won’t have the money available for operating the business”.

And this could be the case even if you have a pile of cash sitting in the bank, it’s all about cash flow because cash flow is the lifeblood of any family or business.

Furthermore, when your money isn’t working at peak efficiency, it leaves you susceptible to the past decisions that you’ve made and the success or failure of those decisions. Because think of it, if those decisions don’t work out, that puts a further pinch on your cash flow and again, makes you more hesitant to take the risk, a risk that most business owners are willing to take the risk, because it’s usually a risk that they can control.

So what happens is once your cash flow gets pinched, it makes it harder and harder to make that jump in expanding your business because once you’re stuck, you tend to stay stuck because you’re not taking on those risks for expansion and growth.

So the key is to make your cash and your cash flow as efficient as possible so that you’re able to take on these opportunities for growth and expansion with a safety net.

 

Here’s how we do it. We look at four key areas of business wealth transfer taxes, how you’re funding the retirement, how you’re making major capital purchases, and how you’re handling your debt. And when you look at those four areas, it’s really clear as to where your inefficiencies are. That’s where we’re trained and that’s how we can help you.

Our unique process helps businesses make their money and their cash flow more efficient by using specially designed whole life insurance policies designed for cash accumulation that will give you full liquidity use and control of your money while still able to access it to grow your business and earn uninterrupted compound interest on that money.

In addition to that, we’re able to answer key questions like business exit strategy, business continuation, taking care of key employees, and more importantly, what happens to the business when a key employee dies?

Each and every one of these issues could make or break a business, and it’s important to address these issues while you have the cash flow flowing through your business and the wherewithal to make these decisions. What do you want to happen? Even if you’re not here to see it happen?

If you’d like to get started with a free cash flow analysis to see where you are giving up control of your business cash flow, be sure to visit our website at Tier1Capital.com to schedule your free strategy session today. We’d be happy to help.

Remember, it’s not how much money you make. It’s how much money you keep that really matters.

Are You Feeling Financially Frustrated?

Cash and cash flow, the lifeblood to any small business or family. We all have experienced the feeling of being stuck and frustrated for not having access to cash when we really need it.

Traditional financial planning tends to give away control of our cash flow, whether it’s funding your retirement account, paying off your mortgage as soon as possible, or being in a race to pay off your consumer debt. All of these actions leave us in less and less control of our cash flow each and every single month. But the need for liquid cash to achieve our financial goals has never been greater. With inflation at an all time high and the market fluctuating every single day.

Not to mention that if you own a small business, the uncertainty and the possible turmoil that’s coming down the road, we need to prepare to make sure that we’re able to weather that storm so that we can get through it and be in a better position than we were going in.

 

But the question is, how do you achieve that goal, especially with interest rates rising each and every single month?

So keep in mind, because interest rates are rising, it’s not necessarily a bad thing. It’s a bad thing if you’re borrowing, and that’s your method of accessing capital in the markets. However, if you’re a saver and interest rates rise, doesn’t that mean that you’ll be earning more interest on your savings?

This is the reason why we help our clients focus on building capital, building liquid cash so that they have access to that money. They don’t have to beg, borrow and steal in order to move forward and to grow their business. They can do it by accessing their own money on their own terms. No questions asked, whenever they want.

There are several reasons why a small business owner would want and need access to capital.

Number one, to run their operation so that they can turn a profit.

Number two, to stay competitive, maybe reinvest in equipment or a plant.

Number three, to hire a new or a key employee to grow their business.

And number four, in general, just to create a higher rate of return on their capital.

In general, having access to capital allows businesses to invest in their business and run it as efficiently as possible. Keep in mind that businesses that have access to their own capital have a much higher success rate than those who don’t have access to their own capital and have to therefore pay for access to somebody else’s capital.

We use specially designed whole life insurance policies designed for cash accumulation to help our clients meet their financial goals, like growing their business without taking on more risk. We do this in creative ways that allow us to integrate key person insurance as well as business succession planning.

If you’d like to get started with the business succession plan, key person insurance or building cash for your business to help it grow and expand, especially in economic turmoil. Visit our website at Tier1Capital.com and feel free to schedule your free strategy session.

Also, if you want to see exactly how we put this process to work for our clients, check out our webinar, The Four Steps to Financial Freedom.

And remember, it’s not how much money you make. It’s how much money you keep that really matters.