Infinite Banking Concept

Mastering Your Money With The Infinite Banking Concept

Money is the master of our lives, or at least, that’s what it feels like when you’re looking into an abyss of debt, loans, and financial responsibilities. When it comes to getting and staying in control of our financial situations, it might seem overwhelming when you have no idea where to start or even what to look for in creating a better, more rewarding strategy of using, saving, and creating money.

In this blog, we’ll talk about how you’re using your money, how banks use it to make more (for themselves), and how you can replicate their model of money flow to make sure you’re generating wealth for as long as you live. We’ll talk about the infinite banking concept, how it works, and how you can apply it in your own, everyday transactions and money strategies.

Ready to get started? Let’s dive in.

What Does Becoming Financially Free Require?

It Takes Less Than You Might Think

When we think of what it means to be or start becoming financially free, we often imagine luxurious cars, lavish holidays, and an endless flow of cold, hard cash. However, financial freedom looks different depending on who you ask.

For some, it means having the security to enjoy their hobbies and passions without sacrificing their quality of life. For others, freedom simply means learning how to control your finances before they control you through impulsive spending and crushing debt.

The one common fact about financial freedom, no matter who you ask, is that it’s possible to unlock it – and the infinite banking concept is the key.

First Things First…

You Need to Understand It’s Not About What You Buy or Don’t Buy

When you think of saving, you might think of the things that you buy. Instead, you should be thinking of how you’re paying for the things that you buy. In most cases, you’re either paying or losing interest.

Take financing a business for example. When you finance a business, you’ll incur interest that’s paid to the financial institution or lender you’re working with. When you pay in cash, you’ll never see the money that you don’t earn. You’ll essentially keep the interest.

With that in mind, it’s important to understand that the secret to how to control your finances is to control your cash flow. You need to find the most effective, efficient way to earn compound interest on a regular, continuous basis, without halting the purchases that you want or need to make.

Now that you have a basic overview of what you need to know about interest and payments, let’s talk about how banks make money.

How Do Banks Make Money?

They Do It by Using Yours

Becoming financially free means thinking like a bank. No, not loaning out money and hoping you’ll get paid back. We mean keeping your money flowing every single day. To understand the infinite banking concept, you need to understand how a bank makes money in the first place.

The very first step to making money as a bank is starting your bank. This is done by applying for a charter and finding people who want to start depositing money. A new bank might charge higher interest than their competitors at first. Then, this new bank needs to find people who need money.

Starting The Flow and Keeping It Going Forever

Using Depositors and Borrowers in A Perfect Balance

Once they’ve identified a network of depositors and borrowers, the real work begins. They offer sky-high interest rates on savings accounts to tempt you and others like you to start saving your money with them. However, they won’t be losing out by offering you these “high” interest rates. Once they have your money, they’ll start lending it to qualified borrowers.

These borrowers will then be responsible for paying their money back at an interest rate much higher than what you’re getting, which means that Mr. Bank can pay you your interest and pocket the difference. Easy, right?

As you can see, when you’re a bank, “your” money never stays in one place for very long. It’s lent out and stays flowing so that it can grow forever.

How To Apply the Infinite Banking Concept in Your Own Life

Without Spending Years Learning How to Do It

It might seem strange to compare making money as a bank to becoming financially free as a parent, working professional, and/or recent graduate. While you won’t be able to lend out billions of dollars and reap the reward of high interest repayments, you can apply the principle of keeping your money flowing with the right life insurance, savings vehicles, and processes. By owning this banking process, you’ll be able to learn not only how to control your finances, but also how to use them to keep your wealth growing your entire life.

What Does Tier 1 Capital Do?

We Help People Just Like You

Tier 1 Capital provides our valued clients with the permanent life insurance they need to accumulate cash indefinitely. We connect you to a savings vehicle or pool of cash that you own and control.

We provide our clients with a range of financial strategies that cut down the risk and ramp up the accessibility of their money while keeping them in complete control. Our mission is to empower our clients with the strategies and insight they need to take conscious action regarding their finances and their overall financial future. We are committed to keeping you informed, educated, and up-to-date with the best financial practices and services in the industry.

We have worked with families and small business owners of all walks of life, and now, we want to work with you. Reach out to our team now here at Tier 1 Capital  and book a free strategy call today if you’d like to learn more. We’ll walk you through everything you need to know as part of a complimentary strategy session with one of our certified and professional team members.

 

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.

Funding Your Child’s Education

Want to start saving for your child’s future but don’t know where to start? Conventional wisdom tells us to save for college in one account and save for retirement in another. With so many options out there, it can be confusing which one might be right for you and your family. Today’s video covers your basic options for paying for college. The most common ways of paying for college are cash, cash flow, and borrowing/financing. We will give you three great reasons to why you should fund a whole life insurance policy to pay for college!

 

“Additionally, the money that you save in either savings account or 529 accounts are disclosed on the FAFSA form, so you’re actually going to increase the cost of college for your family.”

 

Are you thinking about paying for your children’s college education? The problem with funding your children’s education oftentimes isn’t a problem of funding the actual education. It becomes a question of, how do you fund this huge expenditure that sometimes costs more than your home and still stay on track for your retirement goals. No parent should have to choose between sending their children to college and funding their own retirement.

Conventional wisdom to tells us to save for college in one account and retirement in another account. The problem with that is, it leaves a good chunk of our money inaccessible at the time we need it most. Our process for funding college tuition includes a whole life insurance policy and you may be wondering why on earth would I fund a whole life insurance policy for college tuition and there really are three reasons. Access and control. It’s fast and has continuous compounding of interest. Basically, there’s only three ways you could pay for anything. Cash, cashflow, or borrow. Let’s look at these three ways. The first method of paying for college we’re going to look at is paying cash, whether that’s from a savings account or a 529 plan earmarked for college tuition. In order to pay cash, you have to have saved first, so you will have access to that money and control of that money, but when you pay for college, you’re actually wiping out compounding forever on that money.

Additionally, the money that you save in either savings account or 529 accounts are disclosed on the FAFSA form, so you’re actually going to increase the cost of college for your family. You’re actually being penalized for doing the responsible thing, which is to save for your children’s education. The second method of funding college that we’re going to look at is funding it out of your monthly cashflow, and let’s face it, if you’re fortunate enough to be able to pay out of monthly cashflow, it assumes you have access to that money. However, you’re giving up control of that and with that, you’re forfeiting the ability to ever earn compound interest on that money. The third method of paying for college is to borrow or finance and basically there are only four types of loans you can get for college. First are Stafford loans, they’re in your child’s name, second are parent plus loans. Third, are home equity loans and forth, are life insurance policy loans.

We’re going to discuss why life insurance policy loans as the preferred method of financing your children’s education. Let’s look at parent plus loans. With the parent plus loan, you gain access to someone else’s capital with the collateral of your future income. So, you get money when you need it, when your children are going to college, but you’re giving up control of your current and future cashflow in order to send your child to college. Now it is FAFSA neutral, but because you gave up control, you forfeit the ability to earn interest now and in the future on that cash flow. What you really need to look out for with a parent plus loan is that it kills your ability to save for retirement, not only while your kids are in college, but for about 10 years after that. It really hinders your ability to save for retirement on your own terms. So basically, all you have to show for it is a diploma in your child’s name.

Next, let’s look at a home equity line of credit for paying for college. With that, you have access to the money because you have equity in your house and the ability to repay the loan. But you obviously don’t have control because the bank controls the situation. They can call that loan whenever they want and you’re also forfeiting the ability to earn interest on that cash flow forever. It’s not going to increase the cost of college and you are rebuilding your home equity, so hypothetically you could have access to that money again in the future. Next we’ll look at using life insurance policy loans to pay for college tuition.

Now using insurance policy loans is kind of a hybrid between savings and financing and that the money that you have access to in your policy is the money that you’ve actually saved. However, in contrast to traditional savings account and 529 plans, this money is FAFSA invisible, so it’s not going to go down on your FASFA sheet and it’s not going to increase the cost of your college tuition. Additionally, you’re in control of the borrowing process as opposed to parent plus loans or home equity lines of credit because life insurance policy loans have an unstructured repayment process, meaning that you control the terms and conditions as to when or even if you pay back those loans. Additionally, with life insurance policy loans, you’re not borrowing money from the account. You’re borrowing money against the account so you’re never going to be interrupted in the compounding of interest on that money.

You have access, you have control, you have FAFSA invisible and you’ll have continuous compounding. That’s why we recommend life insurance policy loans to pay for college. That’s why we believe life insurance policy loans are the best way to fund your children’s college education. It allows you to send your children to their dream school without having to reduce your current lifestyle or derail your retirement in order to do so.

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.

 

Why use whole life insurance for the infinite banking concept?

If someone can get your money, is it really yours? In today’s video we compiled a list of six reasons why you should use whole life insurance for the infinite banking concept.
1. Control
2. Safety
3. Guaranteed growth
4. Collateral opportunities
5. Tax deferred growth
6. Asset protection

Life insurance is actually designed to have more cash tomorrow than it does today. “

 

 

Have you ever wondered why people use whole life insurance for the infinite banking concept? The first reason is, control. Let’s face it, you can’t regain control unless you’re actually in control. Life insurance is a unilateral contract. What does that mean? Well one party, the insurance company, has a binding obligation. They have to guarantee the cash value, the death benefit, and any other benefits. The other party, the policy owner, has very few promises, which is basically to pay the premium. Once the policy is approved and put into effect, the insurance company is working for you. That is control.

Number two is safety, life insurance companies reserve 95 cents of every dollar that’s deposited and in contrast, banks only reserved 2 cents for every dollar that’s deposited. Based on that, where do you think your money is safer? During the great depression, over 9,000 banks in this country failed. In contrast, less than one half of 1% of all life insurance company assets were impaired. That’s a big deal because people who owned life insurance contracts during that time were not only able to access their cash value to weather the storm, but they were also able to access it to take advantage of opportunities that arose during that time.

One of the best examples of this is JC penny, the American retailer. He had over 1400 stores before the great depression and he actually borrowed against his life insurance to keep his business open and weather that storm. This takes us to our third reason. Guaranteed growth. Life insurance is actually designed to have more cash tomorrow than it does today. There’s no chance for market loss because your growth is guaranteed. Your money is allowed to continuously compound. This takes us to our fourth reason. Collateral opportunities. What does that mean? Collateralization is important because it allows you to access your money without interrupting compounding. It’s like your money could be in two places at one time.

Collateralization means that your money is always in your policy and if you want to access it, the insurance company gives you a separate loan and puts a lien against your money, your cash value. When the loan is paid off, the lien is released, and your money is exactly where it would have been had you not borrowed. In essence, your money has been able to achieve continuously uninterrupted compounding.

Number five is, tax deferred growth. Money grows in your policy on a tax deferred basis. Keep in mind that doesn’t mean that it grows tax free, but you can access it on a tax favored basis. The point is you can’t accumulate wealth in a taxable environment. Let me give you an example. If you start off with a dollar and that dollar doubles every year for 20 consecutive years, meaning that you earn 100% interest each and every year for 20 consecutive years, at the end of 20 years, your dollar would’ve grown to $1,048,576 however, you didn’t pay tax on that money. If you had to pay tax in a 25% tax bracket, how much do you think you would be left with after tax?

Well, 25% of 1 million is 250,000 so I think we’d be left with about $750,000.
The reality is you would end up with $72,571, but what happened to the rest of the money? Well, it was never there. Your money was never allowed to double. You were never allowed to earn 100% interest because you had to pay taxes each and every year along the way. That’s why you end up with less money in a taxable environment.

Number six is, asset protection. Life insurance is protected from creditors, predators, and legislators. Life insurance is regulated by the 50 States. Each state has different levels of asset protection. Check with your state to see how much protection you have on your policies, but let’s face it, if somebody can get your money, is it really yours?

Let’s recap the six reasons why we use whole life for infinite banking. Number one, control; two, safety; three, guaranteed growth; four, collateral opportunities; Five, tax deferred growth and six, is asset protection. My mentor, Nelson Nash, author of the bestselling book Becoming Your Own Banker, said it best. Wealth has to reside somewhere. What better place than a whole life insurance policy? A free contract between free people!