The Philosophy of Infinite Banking
Infinite banking is a concept that allows an individual to capture the opportunity cost of their money. The whole idea is to recapture the interest that one is paying to banks and finance companies for the major items that we need during a lifetime, such as automobiles, education, homes, investment opportunities, and business equipment. The only vehicle that should be used for Infinite Banking is dividend-paying whole life insurance. The Cash Value that is always increasing on a guaranteed basis can be used as collateral to take out low-interest policy loans to assume the position of banker in your life. As the Cash Value grows every year it will provide a passive income source for later years.
The Infinite Banking Concept
Once you have decided how much of your income you would like to save into a dividend-paying whole life insurance policy, you are now on your first step to becoming your own banker. Depending on how much money you are saving into the policy will determine how quickly the cash will accumulate. Obviously the more you save the more you’ll have access to.
Here’s where the banking part comes into play. Let’s say your family or business needs to buy a new vehicle. You have a few different options. Option 1 is to finance the vehicle through a commercial bank or financial institution. The problem here is that now you have created an interest payment. Nobody likes to make interest payments. Because we hate making interest payments so much, we’ve been taught to use option 2 – save up our money and pay cash for the vehicle. That way we don’t pay anyone interest.
But we are giving up something called an interest cost. We should be a hundred times more concerned about the interest cost than an interest payment. The interest cost is what that cash could have earned you if you were able to keep control of it your entire life.
Nobody ever sat us down and taught us about option 3. This option will allow you to use your new savings account, which is your banking policy, as collateral for a private loan that you can get from a very specific life insurance company. By exercising this option, you will still be able to pay cash for the vehicle and you will be able to earn interest at the exact same time, therefore never giving up any interest cost!
Think about it for a minute, out of all the vehicles you’ve owned and driven up until this point in your life, how much money do you have left over? The answer is zero! Because we’ve only been taught to pay cash or finance using a commercial bank. Either way, the money is transferred away from your family or business. By learning the process of becoming your own banker, you can keep all of that money inside your business or family!
The Features of Infinite Banking
Cash Flow
Control
Legacy
Liquidity
Creditor Protected
Certainty
Are You Ready to Become
Your Own Banker?
It is easy to see why individuals would want to utilize their whole life insurance policies as financial tools to improve their cash flow. Infinite banking allows you to borrow from yourself, in some cases up to the total amount guaranteed by your life insurance policy. You repay the loan over time without losing any money or any interest cost.
Ultimately, the process involved in becoming your own banker, with a responsible financial management plan and a repayment strategy, is you borrow money from yourself and repay yourself while generating interest on your total account value. It is an effective financing method for large projects, startup businesses, and other important purchases throughout your life. And, when you pass away, you leave behind a significant amount of money for your family members.
Now that you understand the infinite banking concept, if you find yourself interested in more information about the process and the requirements for getting started, we encourage you to reach out to a professional. Factum Financial Wealth Strategists are well-versed in infinite banking and understand its benefits. They will be able to assist you in finding a policy that provides you with a high-interest cash value account so that you can get started today.
Ultimately, we understand that our clients want to take their finances into their own hands. We are here to guide you through the process and provide resources, feedback, and insight to the marketplace, so reach out to us today.
