cash flow banking

Is Whole Life Insurance Too Good To Be True? The Truth About The Infinite Banking Concept

If you’ve been reading our blog posts for a while, you will know that we often talk about using specially designed whole life insurance policies to help our clients accomplish their goals. Sometimes, people come to us and say, “Hey guys! This seems like it’s too good to be true. What’s the catch and why aren’t more people doing this?”. If you’re interested in having those questions answered, stick around to the end of this blog post.

People come to us because they are generally frustrated that they’re making a good income and they are doing everything by the book according to the so-called financial experts. They are maximizing their retirement accounts. They are paying down their mortgage and they are saving for their two children for college. But they just don’t seem to be getting ahead. They feel frustrated because they don’t have access to money when there’s a financial or medical emergency, or they don’t have access to money when there’s an opportunity that they’d like to take advantage of. Because of that frustration, they seek assistance from financial advisers who could help them.

We met with a client who was a surgeon. He and his wife were very frustrated because they wanted to take their children to Disneyland. It was only going to cost $13,000. They make $800,000 a year and they were frustrated because they didn’t have access to their money. Why? It’s because they were maxing out their retirement accounts. They were saving money for their children’s college education. They were paying down their mortgage. So they didn’t have access to any of the money that they made.

Clearly it’s not the income that was holding the family back. It was how they were using their money. That’s why we always preach, “It’s not how much money you make. It’s how much money you keep that really matters”. One of the first things we do when we meet with clients is take a look at their personal economic model. We look for inefficiencies. Places where they are giving up control of their money unknowingly and unnecessarily. Unknowingly, meaning they’re not aware that they’re giving up control of that money. Unnecessarily in a sense that, they could actually change it. Although not necessarily that they could change it as quick as a snap of a finger. That’s one of the first things we look at and that’s really why we focus on regaining control of your money  so that you could get rid of those frustrations and you could accomplish what you want with your good income.

Regaining control of your money means putting you in a position where you could access your money when you need it. When we talk about plugging those leaky holes in your financial bucket, it’s literally identifying the five major areas where you are giving up control of your money. Those areas are taxes, how you fund your retirement, how you pay for your children’s college, how you pay for your real estate mortgages and how you make major capital purchases. We do a deep dive as to how you’re using your money in these five areas to show you exactly where you’re giving up control of your money.

Where am I giving up control of my cash flow?

It all becomes so simple. Whoever controls your cash flow controls your life. We find it very important to identify the exact places where our clients are giving up control of that cash. So they could regain control of their financial life. Keep this in mind, anywhere you place your money, besides under your mattress, is a financial tool. They are all financial products. But the products we use to help our clients accomplish their goals are specially designed whole life insurance policies, specifically designed to accumulate as much cash value as possible and as quickly as possible.

The reason why we do this is to help our clients accomplish short term, intermediate, and long-term financial goals;
Short Term Goals –  maybe it’s paying off debt or planning to go on a vacation.
Intermediate Goals – could look like saving for a wedding or a down payment on a house or sending your kids to college.
Long Term Goals –  would be planning for a retirement, supplementing your retirement, or using the cash value on a tax favored basis to supplement your retirement income, as well as leaving a legacy for your family.

When we’re recommending a financial product to our clients, we have a few things in mind.

Number one, they need to have access to that money, complete liquidity to use and control so that they can use it for whatever they need, whenever they need it, no questions asked.

Second, we want them to be safe. Safe from market losses and their money protected from Wall Street and creditors, if they are subject to a lawsuit or bankruptcy. Finally, safety from the government so that if the government increases or changes taxes, their money is protected.

The next thing we want is continuous compounding so that they could access their money, but still earn interest. As if their money is in two places at once. And think of this. What’s the rate of return? Getting $1 to do two jobs.

Finally, we want a reasonable rate of return. Let’s say somewhere around three to four percent.

If we can get all of those things with one product, then that really helps us to accomplish our client’s goal of having access to their money, but more importantly, making their money more efficient.

We believe that there is more opportunity in helping our clients avoid the losses than trying to pick the winners. Using this specially designed whole life insurance policies allows us to accomplish all of the things mentioned above and so much more. Because they are able to take advantage of opportunities when the stock market is down or when a business opportunity comes up. They are able to pay off their debts or buy a car. They’re able to use that money, however they want to use it without interrupting the compounding of interest. This is such a powerful tool.

Now that we’ve listed all of the benefits that you can get from owning cash value life insurance. Let’s talk about what it won’t do. It will not give you the highest rate of return in the shortest period of time. For a lot of people, that’s a deal killer. But that’s okay because you see, we’re worried about helping our clients who want to regain control of their money, who are sick of being frustrated from not having the cash to accomplish their short term intermediate and long term goals. The cash value life insurance gives them the opportunity to do those things we mentioned earlier.

We believe that there’s more opportunities in avoiding the losses and making your money more efficient and working for you consistently with no risk of loss than there is in picking the winners. That’s why we use this product so passionately.

Why aren’t more people doing this?

Well, it’s real simple. This is the way people used to save back in the seventies. But unfortunately the wall street model took over. IRA’s and 401k’s became popular or started in the seventies. The Wall Street model has pretty much taken over for the past 40 years. But prior to that, this is the way people used to save. But keep in mind, cash value life insurance has been around for over 200 years.

Ray Kroc used cash value life insurance to keep his business going when he was trying to figure out how to make money from McDonald’s. Sam Walton bought so much life insurance for many of his employees that he ended up paying a fine. Walt Disney borrowed against his life insurance when no bank would loan him money to start the theme park in Florida. Keep this in mind, banks are the largest purchasers of cash value life insurance. They take profits from their customers.They recommend the customer to put money in places where their money is tied up and then they take those profits. Put some of those profits in cash value life insurance.That’s very ironic.

So when the question is posed, “Why aren’t more people using this product?”. The answer is quite simple. Advisors today are not trained on how to use this product to its full potential. But for our company, we have been using this for several years with all of our clients, as well as personally. We use it to purchase cars, to invest in our business and send kids to college. All of the things that we’re talking about to our clients, we’ve done personally, and we’ve been doing it for several years. That’s the difference between us and most advisors. They are not trained on how to use this product and how to make it as efficient as possible for their clients.

If you are tired of feeling frustrated and stuck that your cash is pinched, or you feel like you’re doing everything right, but still can’t seem to get ahead and would like to learn about how you could put a whole life insurance policy, specifically designed for cash accumulation, to work for you and your family. Feel free to schedule a free strategy session or check out our web course where we go into great detail about how this process works. Remember, it’s not how much money you make, it’s how much money you keep that really matters.

How Business Owners Can Increase Cash Flow

 

When you first start your business, it’s very important, actually, it’s vital that you reinvest the profits into the business to help the business grow. However, as your business continues to grow more and more, your net worth becomes enmeshed in the business. Consequently, your net worth becomes illiquid and inaccessible. And that has a direct impact on your cash flow.

As business owners, we face many challenges at various times throughout the year: how to increase revenue or increase sales, how to decrease expenses or overhead hiring people. Currently, it’s very difficult to hire people, and more importantly, it’s difficult to get the right people for the right position.  One common thread challenge that all business owners face either consistently or at various times throughout the year is how to increase cash flow.

Today, we’re going to talk about how to increase your cash flow as a business owner and we’re also going to show you how to do it without increasing your sales and without reducing your overhead expenses.

When you first start your business, it’s very important, actually, it’s vital that you reinvest the profits into the business to help the business grow. However, as your business continues to grow more and more, all your net worth becomes enmeshed in the business.

Consequently, your net worth becomes illiquid and inaccessible. And that has a direct impact on your cash flow, which has a direct impact on your ability to continue to grow your business on your ability to take care of your personal obligations, as well as your ability to procure financing, to grow your business, or even just to operate it.

In every business, there are seasons of good cashflow and bad cash flow and for the business owner, the typical diagnosis is something like this: “If only I could make some more sales, if only I could earn some more revenue, then I could finally feel the cashflow relief that I’m looking for.”

You see, typically business owners usually correlate lack of cash flow to one of two things, either too little sales or too much overhead. What we found that the real culprit is how they are using their money. How they use their money is really going to have a huge impact on a consistent basis on their cash flow.

About all the competition we have for our business checkbook. We have vendors, we have consultants, we have taxes. We have insurance. Everyone is trying to get into our checkbook and they’re trying to get in there on a consistent basis. So it’s really important that we make our cash flow as efficient as possible so that we as business owners don’t feel pinched when we need more money.

Exactly. And understand that all of those competing industries or those competing vendors are very good at what they do. And because of that, we’re giving up control of our money unknowingly and unnecessarily. But the good news is that’s where the opportunity exists for you to really increase your cash flow.

Because once we bring the awareness that knowingness, that you’re doing things in a less efficient way, we’ll be able to bring that awareness and make the changes necessary to give you the relief you’re looking for. Here’s a perfect example. A few years ago, a business came to us for some consultation on some business succession planning. Basically they had some partners that were looking to retire and they didn’t have the cashflow to buy them.

After a thorough analysis, we determined that the major culprit in pinching their cash flow was that they were in a race to get out of debt.

And what happens when you’re in a race to pay off your debt is all your disposable, monthly income is leaving your control and going into the control of a bank or a finance company.

Now understand the bank loves that because the bank was taking that money and turning it over. And literally by paying off their debt quicker, this business was making the bank’s position better and their position worse.

So what’s the moral of the story. Well, we’ve said it once and we’ll say it again. It’s not what you buy. It’s how you pay for it. That really matters.

And to underscore that point, let me share with you an analogy that we share with our clients. Let’s say that you want a special drawing to appear in the masters golf tournament in the spring of 2022. And you came to us to improve your chances of winning. Well, we point out to you that there’s really only two approaches. Number one, you can purchase the clubs of anybody who’s ever played on the tour or approach number two would be to have the swing of anybody who’s ever played on the tour. Which strategy do you think would improve your chances of winning?

Well, the obvious answer is to focus on the golf swing, how you’re using your money in our example is so much more important. And whoever has the control of your money controls your life. Sometimes we get hung up on things like loan terms and interest rates, and we take our eye off of what’s really important controlling our cash flow

When you control your cash flow, and that becomes your major focus, all of your decisions become much clearer.

NEVER be at the Mercy of Banks Again | Shuttered Line of Credit – What Happens?

 

…there’s an old saying, “A banker is somebody who will give you an umbrella when it’s sunny and take it away when it’s raining.”

Wells Fargo recently closed credit lines on their customers. Stick around to the end of this video, because we’re going to go over exactly what that could mean for their customers, for the economy, and show you a solution that will make sure that you’re never at the mercy of banks, the government or Wall Street again.

On July 8th, 2021, Wells Fargo announced to its customers that if they had a personal line of credit, they were shutting it down. Basically, if you had this line of credit, you’ve got to notice that in 60 days, Wells Fargo was going to shutter your account. Let’s go over exactly what that means.

Well, when your account is shuttered, it means two things. Number one, any unused portion of your credit line is no longer accessible to you. So you don’t have access to the unused portion. And secondly, they’re going to be getting a payment schedule for the outstanding balance that’s remaining. So how is that going to affect their customers? Well, it’s going to affect their customers in four ways. First and foremost, their access to credit has been limited. Secondly, their future cashflow is limited because now they have a payment schedule. Thirdly, because they had credit and it was shut down, that’s going to have a negative impact on their credit score. And all three of those issues are going to negatively impact their customer’s ability to obtain credit in the future.

So you could see how this simple shift from a line of credit to a term loan could have such a waterfall effect on these customers and not only their present cashflow position, but also their future ability to access capital. In the last week or so, we had the opportunity to speak with some of our clients and a lot of them asked “Is this even legal what Wells Fargo is doing? Are they even allowed to do this?” And the answer is yes, it’s written in the terms of their loan agreement.

You know, there’s an old saying, a banker is somebody who will give you an umbrella when it’s sunny and take it away when it’s raining. And this action by Wells Fargo only underscores the meaning of that saying. You see Wells Fargo is protecting themselves. They have it written into the loan agreements that they’re allowed to shutter or shut down those lines whenever for whatever reason. And by the way, it’s not only personal lines of credit, it’s home equity lines of credit that they can do this on. They can do it with business lines of credit. And not only Wells Fargo, other banks can do the same banks write documents on those loans. That’s why there’s all these legal documents when you take out a loan. Why? To protect the bank! But this should come as no surprise for Wells Fargo customers. In 2008 and 2009, when they took over Wacovia they did the very same thing.

They shut down credit lines for people, business credit lines. And I had clients call me and say, Hey, I’m in trouble. I’ve got to get a new credit relationship. I just got a letter from Wells Fargo that says I have 60 days to obtain new credit. Well, the ideal situation back then would have been to have control of their own pool of money so that they wouldn’t be affected when the bank decides that the bank wants to protect itself and they shut down your access to capital. So this is all part of what Nelson Nash referred to in his bestselling book, Becoming Your Own Banker. And in there, he has a chapter called the golden rule. And basically the golden rule, according to Nelson Nash was the one who has the gold makes the rules. Well, if you’re in control of your own pool of money and you’re making loans to yourself or to your business, you are truly in control of the process. So the question really becomes, do you want to continue to be controlled by the process and be at the mercy of the banks? Or do you want to be in control of the process? Again, the one who has the gold makes the rules!

Banks are really good at getting us to do what’s in their best interest and they do it under the premise that it’s in our best interest. And they’re so good at doing it, most of the time, we don’t even know what’s happening. And the perfect example of this is a 15 year mortgage with a low interest rate versus a 30 year mortgage with a higher interest rate. Let’s take a look at a solid example of a $250,000 mortgage.

So if our choices are a 30 year mortgage for third, for $250,000, at 4% interest, our payment is about $1,200 per month, a 15 year mortgage for 3.75%. And that’s how they entice us to do what’s in their best interests. They offer us a lower interest rate on a shorter term loan. Our payment will be about $1,800 per month. Now that’s a 50% increase in cashflow that we don’t control. And that’s cashflow that the bank now controls, but again, they have us focused on the interest. So with the 30 year mortgage, we would pay the bank $179,000 in interest with a 15 year mortgage, we’re only going to pay the bank $77,000 in interest. So here’s the issue, if the amount of interest paid is really in the bank’s best interest, why would they cheat themselves out of $102,000 of interest? Well, the answer that is, it’s not the amount of interest that’s paid. It’s how fast the bank gets it back. What the bank literally did by getting us to pay the loan back quicker, they increased their rate of return on the loan, the 30 year loan, they had about a 9.5% rate of return. And on the 15 year loan, they end up with a 13% rate of return. They almost increased their rate of return by 50%.

The thing is that with businesses, when they sell products, inventory turnover gets them more profits. And with the bank, they have a product to it’s loans. So the quicker they’re able to get the loan money back and then turn it over with a new loan, the more interest, the more profits that they’re able to make. Imagine how stressful it would feel if you had a credit line out for tens of thousands of dollars, and only had 60 days to secure new financing, to secure a new banking relationship.

Conversely, imagine having access to your own pool of money, so that when you got this notice, you can borrow against your pool of money, use it to pay off Wells Fargo or anybody else who calls your credit line and buy yourself time to obtain another relationship. In the process, while you’re using that money, you’re still earning uninterrupted compounding interest on the money you used to pay off that loan. Wouldn’t that be a great situation to be in?

If you’re ready to learn more about our process and exactly how it works, check out our free web course at tier1capital.com. It’s one hour and you could register right on our website.

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

How to Increase Your Net Worth

 

Because our money never leaves the policy, our money continuously earns compound interest even while we’re using it. It’s as if our money’s in two places at once, because quite literally it is. We’ve cracked the code on creating wealth by making purchases.

 

Wouldn’t it be great if you could increase your net worth by making everyday purchases? Most people think there are only two ways to make a purchase. You could either pay cash or you could finance. But today we’re going to talk about a third option, an option that allows you to earn continuous compound interest on your money even after you make the purchase.

When it comes to making major capital purchases, the often most convenient way is to finance the purchase. Think about it – when you go to buy a car, how easy is it to show proof of income and them to give you a loan?

So when we borrow, we have no access to capital. We have to use somebody else’s capital, therefore pay them interest, and in the process, we’re not earning interest, but make no mistake we’re using the collateral of our future income to pay for the purchase. The bank is loaning us money because they know we have the ability to earn income.

Since we’re financing and we’re giving up that monthly cashflow, it hinders our ability to save for the future. And then the next time we need to go buy a car. We’re forced to finance again, because we didn’t have the ability we didn’t have the cash flow to build up a pool of cash to self-finance or pay cash for that car.

So you see how every financial splash we make creates a ripple effect down the road.

Every decision we make financially could either move us towards financial freedom or further away from financial freedom. Often times these debts snowball. So it’ll start with a car loan and then it’ll be paying for the wedding and tuition for our kids and appliances and furniture. These monthly payments slowly grow and grow and grow. Before you know it, we’re out of control of our cashflow.

Think about it from the perspective of a financial institution, what does the financial institution want? What does it need? It needs our money. And the best way to get that is to do it on a systematic basis – on a monthly basis. So the more of our monthly cashflow that the financial institution can control, the more that they can control us, but the more profits that they could make.

The goal of every debtor is to finally be able to go out and pay cash for that car. They’ll save month after month, year after year until they finally have enough money to go out and pay cash for that car. But what happens when they drain their tank down to zero is – they gave up all the potential to earn compound interest on that money.

You see the person who pays cash – does so, so they don’t pay interest. They think they’re getting ahead of the game, but really they’re always going back to zero. They save. They wipe it out. They save again. They still have payments – it’s to a savings account, but at the end of the day, they’re still not earning interest and they’re really not in control of their financial future.

You see, there are only two components when it comes to compound interest and that’s time and money. Every time we drain that tank, we’re losing all that time. And we all know time is an asset that we can never regain.

A lot of times we talk to folks who don’t finance and the reason they don’t finance is because, “I hate paying interest.” they’ll say. My response to them is, “Oh, so you like to lose interest?” And then I get a look like, what are you talking about? And then I explained to them how they’re losing interest by paying cash.

So if financing isn’t the answer and paying cash isn’t the answer – what is the solution to finally achieving financial freedom? And here’s the secret. It’s not what you buy – it’s how you pay for it, that really matters. So you may be wondering how we do this. The answer is we use specially designed whole life insurance policies. Mainly because they have some unique characteristics and that we’re able to collateralize loans against the cash value of the policy. What that means is we’re never taking money from the policy. We’re never draining that tank, but instead we’re placing a lien against that cash value so that we have access to make major capital purchases and basically self-finance.

Because our money never leaves the policy, our money continuously earns compound interest even while we’re using it. It’s as if our money’s in two places at once, because quite literally it is. We’ve cracked the code on creating wealth by making purchases.

There are two main differences between this type of financing and traditional financing. The first is that it’s an unstructured loan repayment schedule. Meaning that you get to determine when and how much you pay back towards this policy loan. And the second key difference is that every time you make a payment, your payment is literally increasing your net worth.

Make no mistake about it – whether you finance through conventional methods, through a bank or a finance company, or with using our process and borrowing against your cash value – every payment you make will increase somebody’s net worth. Using our process, you will increase your net worth.

So every time you make a payment, you increased your future ability to access that capital again. So that over time you’re less and less dependent on the banks and financial institutions – and ultimately can reach freedom this way.

Earlier we mentioned that it’s not, what you buy, it’s how you pay for it. We talked about financing, we talked about paying cash and then we talked about using our process. In this process, we focus on showing you how to regain control of your money. You see, when you focus on controlling your money, all of your decisions become very clear. It’s only when we take our eye off the ball and we focus on interest rates, or we focus on getting a high rate of return on our money that we really start to lose control of our financial future.

If you’re ready to finally regain control of your financial future, please check out our one hour web course. It’s on our website tier1capital.com. We go into great detail about how our process works and how it could work in your life.

Remember, it’s not how much money you make – it’s how much money you keep, that really matters!

How to choose an insurance company for the Infinite Banking Concept.

In this video we break down the important things to consider when choosing an insurance company for the infinite banking concept.

1.) Choose the right agent

2.) The process is much more important than the product

3.) Make sure the company you choose is a mutual insurance company

4.) The company should have a proven track record of paying dividends and sharing profits with policy holders

There are hundreds of thousands of insurance agents out there, but only about 200 are licensed IBC practitioners with the Nelson Nash Institute. “

 

Are you thinking about getting an IBC policy but aren’t sure where to begin? The number one criterion when choosing the right insurance company for the infinite banking concept is to choose the right agent. There are hundreds of thousands of insurance agents out there, but only about 200 are licensed IBC practitioners with the Nelson Nash Institute.

As a licensed practitioner, we’re not only trained to set up and structure a policy, but most importantly, to guide you on how to use your policy throughout your life. It’s important to find someone who’s not only knowledgeable but who’s also implementing this in their own financial life. The last thing you want is someone who’s pitching you a policy but doesn’t believe in the concept enough to put their own skin in the game. Ultimately, your success or failure in any given methodology is going to come down to your execution.

The process is much more important than the product. The next criterion is to make sure you’re dealing with a mutual insurance company. Mutual insurance companies were formed for the benefit of the policy holders. All profits that the insurance company makes are funneled back to the policy holder in the form of tax-free dividends. In contrast, a stock owned insurance company funnels their profits back to their shareholders because they’re the owners of the company.

So, a stock owned insurance company is there for the benefit of the owners of the company, the shareholders. It’s similar to a bank. A bank is there for the benefit of the owners of the bank, the shareholders of the bank. You see, if you want to become your own banker, it’s important not only to control the process of the banking, but also to benefit from the profits of the banking, which can only happen with a mutual insurance company.

The next criterion you want to look for when choosing an insurance company? Does it have a proven track record of paying dividends and sharing profits with policy owners? The companies we choose for our clients have been paying dividends for more than 120 consecutive years. That’s World Wars, depressions, recessions, gas crisis’s, you name it. They’ve been through it all.

In conclusion, these are the criteria we use when choosing an insurance company for the infinite banking concept, but again, the most important thing is choosing the right agent for you. You want somebody who’s going to take the time to understand your situation and then set up a plan that will help you to maximize your benefits from the plan according to your situation.