Catching Wild Pigs

I just got this in an email. Interesting analogy.

 

“There was a Chemistry professor in a large college that had some
exchange students in the class.

 One day, while the class was in the lab, the Prof. noticed one of the
exchange students who kept rubbing his back and stretching as if his
back  hurt.  The professor asked the young man what the matter was.
 The student told him he had a bullet lodged in his back.  He had been
shot  while fighting communists in his native country who were trying to
overthrow his country’s government and install a communist government.

 In the midst of his story he looked at the professor and asked a
strange  question.  He asked, ‘Do you know how to catch wild pigs?’

 The professor thought it was a joke and asked for the punch line.

 The young man said this was no joke.  ’You catch wild pigs by finding
a  suitable place in the woods and putting corn on the ground.  The pigs
find  it and begin to come every day to eat the free corn.  When they are
used to  coming every day, you put a fence down one side of the place
where they  are  used to coming.  When they get used to the fence, they
begin to eat the  corn again and you put up another side of the fence.
They get used to  that  and start to eat again.  You continue until you
have all four sides of the  fence up with a gate in the last side.  The
pigs, who are used to the free  corn, start to come through the gate to
eat, then you slam the gate on  them  and catch the whole herd.

 ’Suddenly the wild pigs have lost their freedom.  They run around and
around inside the fence, but they are caught.  Soon they go back to
eating  the free corn.  They are so used to it that they have forgotten
how to  forage in the woods for themselves, so they accept their
captivity.’

 The young man then told the professor….that was exactly what he was seeing
happening in America.

 ’The government keeps pushing the people toward socialism and keeps
spreading the free corn out in the form of programs such as supplemental
income, tax credit for unearned income, tobacco subsidies, dairy
subsidies,  payments not to plant crops (CRP), welfare, medicine ,
drugs, etc, etc,  etc. while the people continue to lose their freedom -
just a little at a  time.  One should always remember: There is no such
thing as a free Lunch  !  Also, a politician will never provide a
service for you cheaper than you  can do it yourself.’

I hope you see that all of this wonderful government ‘help’ is a
problem  confronting the future of democracy in America. God help us when

the gates slam shut!  Listen closely to what the
politicians are promising  you – just maybe you will be able to tell who
is about to slam the gate on  America”

 "A government big enough to give you everything you want
 is big enough to take away everything you have."  

                                                                                  

                                                    Thomas Jefferson

 

 

The Infinite Banking Concept

The essence of the Infinite Banking Concept is how to recover the interest that you normally pay to a banking institution through the use of dividend paying life insurance, so that the policy owner makes what a banking institution does. It is a third alternative to making a purchase. Instead of losing opportunity cost on cash, or the finance cost of using someone else’s bank, this alternative provides a way to do what you would normally do anyway, but recapture the cost of those purchases. Earnings grow within the policy tax deferred. You are both reducing your tax burden and capturing monies for yourself that a banking institution normally would receive. And by the way, you have a death benefit thrown in on the side!

Anytime you can cut your payment of interest to others and direct that same market rate of interest to an entity you own and control, which are subject to minimal taxation then you will have improved your wealth generating potential significantly.

The Infinite Banking Concept is not about investing, it is about financing, and financing is a process not a product. Financing involves both the creation of and maintenance of a pool of money and its use. However, when a financing system is combined with an investment system the combination of the two will always out perform an investment system. When the system combines reduced tax liability with a financing engine and allows complete control over your investments there appears to be no system capable of generating wealth with as much consistency or speed.

A primary concept or principal is that you finance everything. You either finance by: Paying interest to someone else – a bank, lender, etc. Or giving up interest you could have earned otherwise. (When you pay cash the interest the money could have earned is forfeited).For these reasons when we are discussing investment alternatives we must not only weigh the return we will receive but we must also evaluate what we are forfeiting or giving up. This mind set will become more important as we evaluate the “Infinite Banking Concept.” For all of the reasons mentioned above every person should be fully engaged in two businesses – Your occupation and Banking.

Becoming Your Own Banker

We have our new website up and running. Check it out at www.BecomingYourOwnBank.com

 

 

Rate of Return

I was talking to a guy today, a client we’ve been working with for a couple weeks, who is deciding if he wants to pursue his insurance policy through us or another guy. He’s a great guy, he’s a slalom skier (course skier), which is something we love to do, and waterskiers are somewhat hard to find these days. His big question is what I discussed in my last post about universal life and whole life. He understands the incredible benefits of life insurance, and is thrilled about the cash value accumulation by over-funding and maximizing his policy. He realizes that he can self fund it in about 5 years, and it is a great wealth creation tool, but there are 2 problems….

1. He was only seeing the half of it. He saw the advantages of life insurance as a great tool for wealth accumulation, that solves the need for insurance at the same time, but his mind was heavily focused on the product, not the process. Today we helped him see a little more of the “banking” equation, and that he wants to be able to use it as a financing solution so that he can recapture a lot of wasted dollars. This is key to understanding wealth accumulation. So many lose wealth either unnecessarily or unknowingly, because they don’t understand the PROCESS of wealth, and that it is not a product. Understanding the benefits of life insurance is one thing, but understanding the incredible power of banking is another. Its the larger part of the equation. But we talked to him about the cash values in a universal life policy, being eaten up in later years. We told him of a lady we know, who is currently debating whether she should put up the $88,000 to keep her universal policy alive, or lose all the money she ever put in. Her policy has literally deteriorated because the projected numbers (the TRAP), were well below the actual growth. His exact words were, “well…I don’t want to do that.” No one does, but the reality is for this lady, that if she puts in the money this year, it will only keep it alive for this year, she will have to fork up more next year, and even more the year after. Where are the numbers the policy illustration showed now?! These policies are never what they seem. With whole life, you pay the same cost of insurance every year, and the numbers will ALWAYS get better every year.

2. The second problem is this. The agent working with him on the universal life policy is pushing what ever one else pushes…RATE OF RETURN. Though important, and sought after, this is not the factor that should be looked at. This is no what produces the best results. Its the environment of your money that is key in wealth creation. These universal life guys are showing him returns at 8.75% projected over his lifetime, this is just not possible, or realistic. Again, they are alluring him by projecting numbers and rates of return that are just not feasible in this market. What is not understood is that whole life is the safest version of insurance, but will rise with the market as well. The only difference in growth is that whole life policies with a mutual company don’t have to pay stock holders. The Universal life will take more risk in order to compensate both you and the stockholders of the company. With a whole life policy in a mutual company, YOU ARE THE STOCK HOLDER. They don’t have to take more risk to get you your money, you become the stock holders, and by mathematical equations, actuarial data, and safe, safe investments, can get you strong returns that create the foundation for wealth. The rest is the process of wealth accumulation that lies in understanding how to handle money at its most efficient levels.

Example:

The average American spends 34.5 cents of every dollar on interest alone. On the other hand they are doing everything they can to save even 10 cents of every dollar (average saves less than 5), a 3.45 to 1 ratio of interest to savings. Instead of searching for a higher rate of return and risking those hard earned dollars, changing the environment in which your money is working will dramatically change your financial status. Imagine a plane flying at 100 miles per hour, a relatively good speed, but the actual speed relative to the ground will be determined by other factors as well such as a 345 mph headwind. How fast is the plane going now? Still 100 mph in speed, but relative to the ground it is actually going in the reverse direction 245 mph. The pilot might as well ground the plane and wait it out, its only doing him worse. Now let’s imagine that he waits for a 345 mph tailwind. He is still flying his plane at 100 mph, but this time with a powerful tailwind that brings his actual speed, relative to the ground, to 445 mph! A 690 mph difference all because the change in environment.

The same applies to infinite banking and wealth creation. In the case of flying an airplane you cannot necessarily change the environment, but in the financial world you can. You see, most financial advisers are trying to increase the “speed of the airplane.” Going from 100 mph to 110 or 120 mph is not the answer to the problem. It’s the environment. Implementing the principles of Infinite Banking will create as radical a change to your financial situation as the change in wind is to the airplane.

So in the end he understood the concepts we were showing him, and realizes that its not all about rate of return, but about safety and understanding the process of wealth accumulation. Plus, he realized that universal life is not the answer, but another way to project radical numbers that are never realized.

Whole Life Insurance for the Purposes of Banking

Becoming your own banker is the concept of creating wealth by implementing the banking process into one’s financial life, through the use of participating, dividend paying, whole life insurance. But why whole life insurance? Isn’t that just too expensive? How could it ever work if you’re paying for insurance?

Banking is defined as, “engaging in the business of keeping money for savings and checking accounts or for exchange or for issuing loans and credit etc.” Most people are on the side of depositing money and borrowing, while allowing the bank to use their money to issue loans and credit, much of which goes right back to you as the borrower, but you have to qualify to get it, and pay interest too. But let’s take a look from the banker’s point of view, the lucrative part of the business. What do you do the moment you get the deposited money as a banker? Simple, you find a borrower for the money. You want it to grow. As they make their payments you try to find more places to put that money, so every payment is now making money, and then the payments from those payments, etc. This is know as the velocity of money. Every dollar deposited will yield multiple returns.

So the questions becomes this, if at times you are the depositor, and the borrower, why not become all three? The depositor, the borrower, and the banker! The only difference is you won’t have to pay a middle man to give you the money that already belongs to you! So the outcome will be making your money grow safely, while maintaining liquidity use and control. Becoming the banker is very lucrative, but most importantly, it is a safe use of your money, and you will no longer lose interest to banks. Here is a real example that proves that the METHOD you use can make a large impact on your financial worth, and that the banker always wins.

Car Purchase- $30,000

Paying Cash-

If you pay cash for your vehicle, it looks like this:

Purchase $30,000
Car Value $15,000 (after 5 years)

Adjustment to net worth: -$15,000

Financing:

By financing the vehicle through a banking institution it looks like this:

Loan $30,000
Interest Rate 8%
Years 5
Payment $608
Total Pmts ($36,500)
Car Value $15,000

Adjustment to Net Worth: -$21,500

Becoming Your Own Banker

Borrow from “MY BANK”- $30,000
Interest Rate 8%
Years 5
Payment $608
Total $36,500
Car Value $15,000

Increase $51,500

Minus the initial savings
Adjustment to net worth: Positive $21,500

So we can see that by becoming the banker, and using our own money like a bank would, we increase our wealth, and we do it safely because we are in control. We are most likely going to buy multiple cars in our lifetime, so you have the choice to be negative, or positive after those purchases.

Becoming your own banker is not about whole life insurance, but the banking process, so the question still remains, why whole life? The reality is we have looked at other options, an interest bearing savings account, retirement plans, and others, but nothing comes close to the power of whole life insurance as a banking solution, when done right.

Traditional whole life policies require the lowest premiums and emphasize high death benefit, leaving minimal cash value. But de-emphasizing death benefit, and emphasizing high cash values, you will create a self funding system in 4-6 years, and you will have cash values nearly equal to the dollar amount you have put in, including your cost of insurance. This is where it gets exciting. At this point you have a self funding system, meaning no out of pocket premium payments. Within the policy your money will grow tax deferred, and you can draw it out tax free as well. As the policy holder, you have priority over the money in the policy, meaning you have complete liquidity, use, and control. You may borrow it at any time, and because a policy owner is also part owner of the company, that interest will be credited back to you. You are also entitled to part of the companies growth, in the form of dividends. Because dividends are not a factor of cash value, you could borrow all your cash value and still get your dividends at the end of the year, meaning that you are essentially getting a return on your money, even though you are using it for different purposes. This creates exceptional growth within you policy, and is and added benefit that no other vehicle provides. On top of all this, you will always have a death benefit that can be delivered tax free to your  beneficiaries. If they learn the concepts correctly and place this money into additional polices, it can be said that every dollar will never see taxes again.

The advantages of whole life insurance for the purposes of banking is exceptional. Banking is the focus, whole life just happens to be the best place to implement it. Its advantages are incredible as you can see. You can literally recapture the cost of everything you purchase.

Contact Us for more info, or a free webinar.

Creating True Wealth by Infinite Banking

Creating wealth is about changing the environment that your wealth works in. Its useless to seek out new investments to risk your money, when you have all the investments you will need right underneath you. If you pay interest, have debt, pay taxes, or pay cash then this is for you.
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Becoming your own banker is about financing what you currently finance through the bank or pay cash for. We will literally show you how to take your transferred wealth and recapture it. This will do better than any type of return you will ever get on the accumulated wealth. Stop risking your money, and change the environment. Make it grow safely and powerfully, while not loosing the thousands you are currently loosing.

Wealth Accumulation is about safety, growth, and understanding where you are currently losing money either unnecessarily or unknowingly, and bringing that back to the table.

Become Your Own Bank

We have some more additional info on our site now!

Check it out at www.becomingyourownbank.com

The Basics of Infinite Banking

Infinite Banking is a process that allows you to recapture the purchase price of any purchase you make and pay yourself the interest that normally would be paid to another financial institution. Many Americans are searching for safe ways to create wealth. At the same time these individuals search for products and investments with higher rates of return, they need money for things like cars, homes, medical/dental, vacations and so forth. The process of becoming your own banker is a way to utilize your capital as a bank would, but this time you are not only the banker, but the borrower.

By controlling your capital, loaning it out, paying it back diligently and honestly wealth is created almost by accident.

You need to understand that even using your own money and paying cash for an item has a cost to it. You either give up the interest that you could have earned by paying cash, often referred to as opportunity cost, or you pay someone else interest to use their money, there is no other way.

By becoming your own banker you pay yourself the interest, recapture the purchase price of the item, and keep complete control over your assets. Incidentally, use these banking concepts in a business structure and you gain additional tax benefits that make the concept even better.

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