When it comes to thinking about investing, people not only have to consider the risk of their money but also the risk of time. How much time do you need to be invested in order to earn a reasonable rate of return? And is that time commitment worth the risk associated with the investment? That’s what we’re going to talk about today, the importance of thinking long term when it comes to your finances.
When it comes to thinking about money, saving, investing, it’s important to think about timeframes, right? And think about what to expect over a certain amount of time. There’s an old Chinese proverb: “The best time to plant a tree was 20 years ago. The second-best time is today.” That really outlines that you can’t go backwards, but you can make decisions today that will set you up for success going forward.
And you know, when Nelson Nash wrote his bestselling book Becoming Your Own Banker, he had the human factor. And one of them was thinking long term. I’ve got to tell you, Nelson Nash was trained as a forester, and they think 70 years in advance. Like Nelson would say, “I’m probably not going to be here, but somebody is going to benefit from my long-term thinking.” That gets me thinking about infinite banking because it is definitely the long game, right? You’re going to finance things over the entirety of your life. And just think about the amount of interest you’re going to pay if you’re borrowing, or the interest you’re giving up if you’re paying cash. That’s going to be a huge pile of money, and somebody could recapture that interest. You’re either going to pay up or give up through the death benefit of the policy you set up to finance all of those things that you’re buying over your lifetime. That got me thinking that we live in a society where we want instant gratification. And infinite banking is the long game. You have to think long term.
Exactly. And I think a key component of that is starting now and starting where you’re comfortable, right? Whatever your cash flow will allow you to save comfortably on a monthly or annual basis, start with that, and you can always build from there. As circumstances change, as your job changes, as you earn more money, maybe you start a business, maybe as we clean up your debt, your cash flow becomes more efficient. And especially as you see how this process works and how it could impact your life going forward, you’re going to want to put in as much money as possible into this extremely efficient way of saving for the future, saving for every single purchase that you make in your life. You could purchase through the life insurance policy loans with no questions asked. And that’s freedom. And not only those purchases, but also take advantage of opportunities, especially as that cash value grows and your banking system grows.
But these are just ancillary benefits of thinking long term. Right? You have access to money, you have tax benefits, you have the ability to recall the flow that was previously going away from you. Now that flow of cash is coming back to you. All of this emanates from the initial decision to think long term. And thinking long term is never a bad thing.
Your future self is going to thank you for the decisions that you’re making today, right? You want to put yourself in a position in the future where you have this pool of money. And with that pool of money, it’s not just any pool of money it’s sheltered from taxes, it’s sheltered from creditors, and it’s accessible all along the way. Because you know, you need to be saving. Ideally, the magic number is 20%, but maybe you start at 5% or 10% and you build from there. And as you do that on a consistent basis and build up that compound interest curve, money and time, you’re going to have access to more and more money and have access to more and more opportunities as time goes on. And that’s really the key of thinking long term starting now and setting yourself up for the most options in the future.
That’s a good point, right? Your future self will be thanking you for the decisions you made today. Now, there are a lot of things my future self needs to talk to like the guy who was a teenager and a lot of those stupid decisions that we made. But I’ve got to tell you, there are certain decisions that I did make thinking long term that have actually paid off. Those instant gratification decisions I’d like a couple do-overs on those.
We don’t necessarily know the outcome when we’re making those decisions, but I can tell you with the life insurance policy, we have little to no risk, right? We have guarantees by the insurance company with this life insurance contract associated with it. We have guaranteed access. We have tax benefits. Like I said, we have the creditor protection not to mention the death benefit that’s going to go on to our family, named beneficiary, or business at the time of our death to recapture the finance costs for our entire life, right? So think about that pool of money that we talked about earlier of all the interest paid and all the interest you didn’t earn. Think about getting that huge pile of money back and passing it on and leaving that legacy behind. That’s really the key, right? The family banking system. How do we set this up for generational success, right? And it comes down to having multiple generations involved in the banking system. And as you build up those pools of money, actually using it, right? Putting it to work. You have access to that money. Yeah. Why not use it so that everyone can finance their purchases through this banking system? And then as windfalls come in, i.e., death benefit, we’re able to roll it into more policies because the family knows how to put this process to work for them.
Here’s the thing this is the key, right? Thinking long term. You can’t think intergenerationally without thinking long term. So it goes hand in hand. And this concept has generational wealth built into it. Exactly that. I mean, it is such a tight system. It’s amazing.
And then some of the most valuable dollars that your family will be able to put their hands on, right? Think about it. If you’re passing on an IRA or qualified plan, the family has rules on how quickly or how slowly they are going to access that money. They have to pay taxes at their tax rate when they access that money. So it looks like you have, let’s say, $100,000, but you really only have $60,000. And it’s increasing the taxes, right? Yeah. So it doesn’t feel good to pull money from those qualified plans when people have to or want to do that. But when it comes to life insurance, that money automatically gets passed on tax-free to the named beneficiary. And they have options, right? They don’t have to take into consideration income tax or state tax or going through probate.
Again, these are all the ancillary benefits of thinking long term.
If you’d like to start thinking long term and put this process to work for you, your family, and your business. Visit our website www.tier1capital.com and click the “Schedule Your Free Strategy Session” button to get started your no-obligation strategy session today. We’d be happy to chat about your specific situation, how we can make it as efficient as possible, and how to put you in the most control possible.
Remember: It’s not how much money you make, it’s how much money you keep that really matters.