A Wealth Capture Machine – M.C. Laubscher | PREI 065
On today’s episode we speak with M.C. Laubscher about a not-so-new concept of how to be your own bank. M.C. Laubscher is a wealth strategist, educator, and financial freedom fighter. He is the founder and president of Valhalla Wealth Financial.
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A Wealth Capture Machine – M.C. Laubscher
Welcome to Passive Real Estate Investing. I’m your host, Marco Santarelli. I want to thank all of you listeners, we are now in 148 countries. That’s right. We are being heard around the world in 148 countries. I’m not even sure there is more than 200 countries in the world. If I’m not mistaken, there’s about 170. I may be wrong on that. Anyway, I wanted to just reach out and thank each and everyone of you for being a loyal listener. I’m glad you’re enjoying the show. We have a lot of great, great five star reviews. I think I’ve counted 407 five star reviews so far. That’s just very humbling and I want to thank everybody.
Today’s episode is a little bit different than the typical episodes I’ve been doing. I’m going to call this a wealth capture machine. This is about a concept that I’ve heard about several times in the last ten, fifteen years. I think many people have heard about it under different names. They’re not sure what to think of it. I really think that it involves a certain amount of education to fully grasp what it is and how it works. That’s really been the problem with understanding this banking concept.
There’s some really interesting benefits and facts about this vehicle. I actually like it. I have to admit, I’m just as guilty as the next guy for not having understood it very well. It goes by different names, but this banking concept has been around for over 150 years. There these new age marketing guys that are calling it by different names, kind of gimmicky sounding. If you go to a search engine online and you type the term infinite banking, you’ll find advocates all over the place.
Really, the most well known person is someone named Nelson Nash. He refers to it as the infinite banking concept. I’m not sure if he’s the grandfather or the creator of it. I believe he is and that’s why he’s the most well known. There’s other people out there such Pamela Yellen, they refer to it as Bank on Yourself. I think that’s the name of a book. Jeffrey Reeves, You be the Bank. Don Blanton, the Circle of Wealth. There’s other folks out there.
Every advocate has, at least up to this point, been able to explain this concept with varying degrees of success. That’s the problem I’ve had, is I’ve been having a hard time understanding it. I wanted to bring someone on the show today to explain it as best as we could within the time allotted. We covered a lot of material, we covered a lot of ground, but unfortunately, it requires at least twice as much time as I’ve put towards this episode.
The concept in its simplest form is this. You create your own private banking system of sorts by saving up some money. Then you use this pool of money to finance everything in your life. If you stopped to think about it, it makes perfect sense because regardless of what you do in life, whether you spend your money or you invest it, you have to use a banking system to facilitate the transaction. You just can’t get around that unless you’re just dealing with straight cash all the time and you don’t park it anywhere other than your mattress.
All the money in the world goes through someone’s bank. The advocates of the banking concept argue that you should just set up your own “private bank” of your own use and your own private use. Of course, that sounds sensible and it’s doable. There is thousands of people doing this.
Again, it’s the whole thing about you don’t know what you don’t know and that leads to ignorance. Hopefully, we’ll help educate not only myself on this episode but some other people who might be interested in learning more about this concept. If you like what you hear on this episode, there is a wealth of information out there as well as a free offer that my guest has offered at the end of this episode. Stay tuned for that. We’ll get to that here in just 20 seconds.
It’s my pleasure to welcome my guest today, MC Laubscher. MC is a wealth strategist and educator and a financial freedom fighter. He’s the founder and president of Valhalla Wealth Financial. It’s his personal passion and purpose to help individuals, families and small businesses, professionals and entrepreneurs build and grow wealth safely and predictably, regardless of the economic and market cycles out there, which I really think is refreshing to hear. He believes the best way to achieve this in the information age is by reclaiming the banking function in your own financial life through structuring what is referred to as an efficient cash flow management system and creating and building assets that provide streams of income. With that, MC, welcome to the show.
Marco, thank you so much for having me. I’m honored to be here.
It’s my pleasure to have you on the show. We’re going to talk about an interesting concept here. I’m going to refer to it as a wealth capture machine as I’ve heard you refer to it as. We’re going to dive in to the nuts and bolts of that here momentarily. I think the best place to start is by you sharing with our listeners a little bit about who you are, where you came from, especially with the accent that you have. Let’s start there.
I’m originally from South Africa. I came to the United States in 2001 after I graduated university with a backpack, $500, a sense of humor and a sense of adventure. I just traveled around for a little bit and ended up playing in a city by national rugby league in the United States up until 2007. While I was involved in playing rugby, in this rugby league and represented of rugby, I started my real estate career and got involved purchasing my first property. This was the first year out of school and that’s when the lesson started for me. I got involved in real estate in the United States actually through a network of mine and worked for a very, very successful private real estate investor in Chicago.
I basically started from the ground up there from a turning over units to leasing, writing leasing, managing teams to turnover units in these apartments, all the way up to eventually getting my broker’s license, working as part of this acquisition team and property management. It was a fantastic experience having a group of mentors basically in that office because these guys were a lot of guys that invested in properties themselves through syndication. That was a fantastic experience.
After that, went into corporate sales, consulted for some fortune 500 companies. I came across the concept, as you mentioned, a couple of years ago. Really saw it as a calling for myself personally as I saw it changed my own life. Started going into business setting up the same plans for investors and entrepreneurs and families and individuals and small business owners. Two years ago, I started my own financial wealth management and education firm, Valhalla Wealth. That was in 2014, that’s where I’m at today.
Nice. Congratulations on all that. That’s a big change going from rugby to financial management. At least you got deeply ingrained in the financial world. Through osmosis maybe, learned about real estate investing.
It was fantastic. I was very young at that stage. I’d look at what the big impact mentorship has had on my life. Without really seeking it out, I found it at a very young age. It was fantastic just to be exposed to seeing how these guys conduct business, how they look for real estate and how they put real estate deals together, how they analyze deals, how they increase the value of properties, how they get properties ready for sale. It was a very fantastic experience.
Nice. You started your own business and clearly, your company has a philosophy. We like to think that you need to think differently. I know you talk about that, which I think is important as an entrepreneur and as an investor. You do need to think differently than the average person or the norm. What is your company’s philosophy? Maybe expand on the thinking differently part.
I think on the thinking different part, I’ve always asked the question that if there’s only a small group of people truly successful, and this could be in any field on the topic of wealth and wealthy, why are we following the advice that the 99% of people are following that are not successful and not really getting anywhere? That never really made any sense for me from a young age. I couldn’t see a lot of millionaires being made from 401Ks and IRAs. I definitely knew that there was a different way.
As I mentioned, I fell into a mentorship program on my own. That really opened my eyes to the wealth building too, what these guys were doing. Not only was it that they thought different than the average person on the street, but they thought the complete opposite. That was the same way that they went about building their wealth as well.
If you look at other ways that even big banks operate, Wall Street operates, big corporations, they’re telling the majority of people to do one thing with their money to get the American dream. Eventually, that retirement that we see on advertisements where people are walking next to the beach. They’re actually taking their own money and doing the exact opposite of what they’re telling people to do as well. The philosophy of my company first of all is financial education. I believe that someone shouldn’t put a cent of their money into something that they don’t understand.
I’m a huge fan of financial education. I try to grow and increase my financial education and IQ on a daily basis and try to learn something new every day. We are really trying to empower people. By increasing their financial education, you’re empowering yourself. We help people along the way, coaching them and showing them how to fish and teaching them how to fish, not fishing for them. I think that’s a very big part.
On the topic of education as well, I think we’re living in amazing times. Is there a more exciting time to live in than now? Technology is amazing. There’s amazing opportunities everywhere. Yes, there are some turmoil, there are old systems crashing and falling down but there are new ones being built and growing very rapidly.
One of my favorite quotes I think is by Alvin Toffler where he said the illiterate of the future won’t be those that cannot read or write but people that cannot unlearn or relearn. Definitely, a very big focus of us. As the world’s changing, we have to learn new skills and learn to adapt and to position ourselves for these changes. That’s a very big part of our overall philosophy.
That’s a good point. Alvin Toffler wrote a book called Future Shock many years ago. It was a window to the future. He wasn’t a Nostradamus per se but he really had some insight into where we were going. When we talk about wealth management and our finances, often I think of the wealth pyramid. I know that you’ve talked about this before. I reference that wealth pyramid from time to time with things like gold and real solid assets that have been around for millennium, it’s at the bottom of that pyramid.
On the far end, you have these very extreme paper assets like mortgage back securities and credit default swaps, all these exotic stuff. There’s everything in between, from businesses to real estate. Do you have anything you want to explain about the wealth pyramid and how it relates to what you do and how you see it?
We actually use the wealth pyramid as a model too in the coaching that we do for our clients. Obviously, right at the bottom of it for us is your human life value and your physical health. It doesn’t do you any good to have all the money in the world but you have deteriorating health. Then relationships, your loved ones, your family, your friends and then your financial education. On top of that, as you’ve mentioned, the very basic things of having certainty, predictability and something that you know is going to be consistent in your plan.
Obviously, you’ve mentioned some commodities, gold and silver. We look at this wealth capture machine that I know we’re going to talk into falling into that category as well as part of that part of your plan. We look at protective strategies, life insurance, health insurance, auto insurance. We look at preparedness strategies, we look at estate planning, we look at legal tax planning and so forth. Very important part of an overall wealth plan.
The layer on top of that too is when you start to look at, and it is one thing that we talk about a lot, is conservative, but cash flow investments and businesses. I work with a lot of cash flow investors. This is obviously the layer just on top of that. The same with businesses where we’re investing to get income streams and create monthly income streams.
Another part of the philosophy of my firm too, the way that it’s going and we’re looking into the future and the way things are changing so quickly. Back to Alvin Toffler’s quote, most jobs that you have today are probably gone. People just don’t realize it yet. They’re probably gone within the next six months, the next year, maybe two years. I think the only financial security that people will have moving forward in this new economy and information age is having multiple streams of income across different asset clauses. That’s what we have into that.
On the third level right at the top, that’s where you swing for the fences. When you have all the other levels in place and you have a solid foundation, you have some income streams from solid assets across asset clauses that offers some financial security for you, that’s where you can invest in that next startup that’s going to take Uber down. It’s money right at the top. Only the money that you can afford to lose with no downside protection.
Unfortunately, that’s where most people are at. I will actually put qualified retirement plans right at the top of that pyramid as well. There’s no downside protection that they. There’s no security, there’s no predictability, there’s no certainty. Theoretically, every single cent that you have in those could be wiped out. That’s usually just an overview of how we look at that wealth pyramid philosophically.
Regarding the qualified retirement plan, are you saying not to have one or are you saying it’s okay to have one but just have a layer of protection or a foundation that it sits on?
I am not a very big fan of it. I’ve been very critical of it at the pause. I would say this, for people listening that do have them, if there’s nothing else that you could do with that money, you should probably build up your savings first, which is part of that foundation, before really focusing on that. There is obviously a place for it in that wealth pyramid. But people should just know as we go through the layers, where that fits in. It fits in right at the top. Unfortunately, people save or they think that they’re saving for retirement in qualified retirement plans.
To your point earlier about thinking differently, I think there’s a lot of concepts being brought up in our society which has really lost its meaning. Saving being one of them. Saving is putting the difference of what you consume and what you produce into a safe, secure vehicle that pays you a predictable interest on it. Saving per se, in a qualified retirement plan, isn’t saving at all. You’re actually putting every single cent that you put in there at risk because as I mentioned before, we don’t know what the markets are going to do, they go up down and sideways.
We’re not Nostradamus. You have the ability to lose everything when it turns the other way around you. Unfortunately, a lot of people found this out in 2008. A lot of clients that I deal with still have not recovered from that. That’s just one of the areas that I think that there’s definitely some clarification needed just off what it is, what savings is.
We talk about our own personal economy. That’s something that I talk to people about regularly because you can’t control the economy you can’t control the politicians, you can’t control policy. Interest rates will changes, markets will change. We go up and down in cycles, in every aspect of our economy, you can’t control and of that. What you can control, and I’m sure you’ll agree with me, is your own personal economy. The decisions you make, the investments you make, how you deploy your investible cash, how you make your cash, how you make your own income. All those things are within our control. Let’s talk about how we maximize that. That would be a good segue into this infinite banking concept. We can talk about what that is and how it works. Let’s start with the personal economy piece.
On the personal economy piece, I agree with you 100%. So important. From a sports background too and still being involved in coaching a little bit, you always want to limit or reduce the unknown variables on the field. You work out strategies just as far as game management when you’re playing sports of doing that. The same concepts and approaches could be taken back in our personal economy. I think probably, the biggest wealth destroyer out there is taxes. Clearly of enormous impact of every single person’s life.
As far as taking control of that personal economy, this is an area where you can limit and reduce your tax exposure. Strategies of limiting and reducing it involves paying taxes on the seed rather than the harvest. That will tie into the infinite banking concept. We’re going to pay taxes, please do pay your taxes if you’re listening, but we don’t have to leave Uncle Sam a tip. Once the money comes into our personal economy, that’s where you want to build a very strong wall around that personal economy and protect what’s inside of it. Taxes being one of them.
This is where the infinite banking concept really comes into play. What the infinite banking concept is, is as you’ve mentioned in the intro too, it’s reclaiming the banking function within your own life and your own personal economy. The banking model, they have an extremely successful business model. Banks are extremely profitable regardless of the interest rate because of the way that they’re structured and setup.
Obviously, on the one side of the bank, you have a deposit side where people deposit money into a bank. Then, you have on the other side, the lending side, which is really powerful. The secret being that once deposits are coming into the bank on the one side, banks turn over their money constantly. They try to maximize the use of every single dollar. I’m not even talking about fractional reserve banking. This is just a dollar for dollar. If we’re putting on money on the deposit side, it goes out on the lending side at a higher interest.
Obviously, they’re borrowing at ridiculous costs right now and paying you almost nothing on your deposits and then still doing a larger margin on the loans that they have out. Very powerful. I think what the infinite banking concept does is we have to start thinking like a bank. We have to start acting like a bank and then reclaiming the banking function within our own life. How do we do that? Banks constantly have money coming in to their economy, which their shareholders profit from and their stockholders. They have money going out on the lending side but the money always flows bank in from the lending side and captures that wealth inside the bank. If we just look at the spreads of banks, it’s quite remarkable. Just this banking model.
One of the things that I mentioned is Wall Street and big banks, they tell us to invest for the long haul because they want your money. They want it on a regular basis. When they give it back to you, they want to give it in the smallest amount of increments back to you as possible. These guys are big advocates of you parking your money with them because you are in their banking system. When I say you have to start thinking like a bank and becoming a bank, you have to try and see what the bank is doing and try to implement those same principles within your own personal economy, which is turning over your money constantly, finding and leveraging your wealth to invest in other assets, then redirect those income streams from those assets back into your own personal economy.
The overall strategy and system, and I like to use those words, that is set up and created is based actually on a specialized vehicle of dividend paying whole life insurance. I know if you’re listening to this, there’s probably an eye roll because that’s what I did the first time I heard about this. What very powerful families and private investors were doing, they actually structure a specialized vehicle built on a chassis of dividend paying whole life insurance with a mutual insurance company. These companies are not listed on the stock exchanges, they have been around since the mid 1800s, the shareholders are the policy holders in these companies.
First of all, let me also just explain that insurance is just another tool in your toolbox when you’re creating and building wealth. Just like real estate, just like businesses, just like paper assets, stocks, bonds and other assets too, commodities, gold, silver and digital assets. There’s different ways to invest in that. When people look at insurance as a vehicle to create strategies and implement it as part of your wealth plan, it has to fall in part of a larger, bigger system for it to work just with real estate investing. Real estate investing one investor can take over a property and it could be a complete disaster. Trust me, I was there too. The next investor can take it over and it can be a cash flow cow for him. The same way with insurance.
Let me just explain too why they actually use it. The first thing is it’s a private contract between the insurance company and the individual. It is private. It offers some asset protect in most of the states. Please check with you legal advisor, but in most of the states, it does. We live in an extremely litigious worlds that I can only see getting more litigious in the next couple of years. This policy of this vehicle is then funded with money just like you would fund with the deposit side of a bank from your own money. The money is immediately liquid when you put it in there. You can access it at any time. For real estate investors, liquidity is huge. That could be the difference between capitalizing on an opportunity or not capitalizing on an opportunity.
The other part of it too is when you have money in there, they pay you a predictable interest rate on the money that you have in there every single year. It’s rolled up and locked in to the next year. That’s guaranteed as part of your contract. You also then get paid a dividend that’s not guaranteed. If these companies are profitable, which most of them have been extremely profitable and have paid dividends consecutively for over 100 years during the great depression. During 2008, when the rest of the financial world was really a mess, most of these mutual insurance companies didn’t skip a beat. They paid dividends and interest on these moneys that’s in there.
The other part is this is tax free. The growth inside of it is tax free. The distribution is tax free. That just turns back to how we limit and reduce unknown variables, tax being an enormous one. That’s why some of the wealthiest families do capture their wealth in this vehicle because it’s tax free growth and tax free distribution through certain strategies.
What makes it extremely powerful for real estate investors and business owners is when you borrow money, when you access your money, you do so through a policy from a mutual insurance company. That’s treated as a separate transaction. Just as the banking model that I described where on the one side you have the deposit side, on the other side you have the lending side. They do the same thing. You don’t actually borrow your money from the deposits that you’ve made. You actually can leverage your account and your cash value by getting a policy loan for the same amount on the other side to then go out and leverage and use and capitalize on other opportunities.
Let me just repeat that. You fund your policy up until a certain point but then you can actually leverage that money that’s in there through a policy loan from the general account from the insurance company and then leverage that to go and invest in more assets and more businesses. Your money is working in two separate places for you at the same time. You still have the predictability, the certainty and the security of your money being in a safe vehicle with extremely well capitalized institutions. On the other side, you can leverage that to go and use and create more wealth.
That was a lot to take in. I followed along. I’m sure there a lot of people that are listening that are thinking that either sounds complicated or that sounds like that’s just a lot to digest. Let me try and summarize that if I may. I like to simplify and dumb things down. Essentially what you have is a tool, a vehicle, which is a whole life policy. You have it with a private insurance company. The policy pays an annual dividend. I’ll call it cash flow. You basically have a rate of return on this account, this policy.
Let’s say hypothetically, someone set up a whole life policy, they funded it with $100,000, they are earning interest or dividends on that $100,000. Now, they want to purchase a piece of property. They can borrow from the insurance company, from their general fund, a certain amount. I don’t know what the percentage is but it wouldn’t come out of the $100,000 you put in. That would just be the collateral for the loan that you get from the insurance company. So far so good?
Yes. Absolutely. I think you might have this question too and your listeners listening might have the same question because this is the same question that I had. I can clearly see how I’m winning in this transaction. From a philosophical standpoint, I like to be part of transactions that are win win all around the table for everybody involved. How does the insurance company benefit? Let’s use your example of $100,000. These companies are extremely well managed and ran. Warren Buffett refers to them as some of the best businesses out there. There’s $100,000 that’s in there that you can then access through a policy loan from them. These guys have your $100,000, they collaterize by that because they have your money. You’re just leveraging your own money through a loan from them. That basically is awash.
Also, there’s a death benefit in there through different strategies of how you can secure some of your insurable interest with it. They have a death benefit so these guys are protected, you’re protected. They’re profitable and then you are in a position to capitalize on opportunities, leveraging your existing wealth that you’ve captured right there and employing that. I would also say Marco, for me personally, I have three of these plans in my own life. It’s made me a better investor because I am getting a rate of return in those policies. When I look at opportunities to go after, I have to run it through my checklist and this is my baseline of saying, does this make sense for me to leverage money if this is basically the benchmark that I’m utilizing?
In addition to the death benefit and the coverage you have as a policy and the dividends you make or earn every year, are there costs involved with having this policy set up? There must be another side to this.
There absolutely is. It’s got a different cost model than Wall Street products. Wall Street just pays a percentage, the assets under management model that they have. If you give them money, they just keep it and there’s a percentage taken right off the top. For me personally, we work on commissions. We actually get paid a commission for structuring a plan by the insurance company, not the person setting it up. For folks listening, if they eventually do look at things like this, make sure that it’s an infinite banking practitioner that you’re dealing with.
The reason why I say that is number one, they do know exactly how to set up these policies. Just from a principles, values and ethical standpoint too, the way that these policies are structured actually reduces the commissions of the agents. You really want to make sure that if you are interested in this and pursuing someone like that, that they are an infinite banking practitioner. From the insurance side, there’s a life insurance cost and then there’s also obviously a fee in there. It’s part of the whole contract.
The one thing that I personally like about this, when I put this up for myself, is I saw right up front, my contract. There was no surprises. It isn’t something where you put money into a vehicle and at the end of the year, you see what these guys are charging you. It’s all up front in black and white, structured for you. From a limit and reducing other variables in your personal economy, that’s one thing that I look at too, is fees and interests paid to third parties.
This model addresses obviously the interest paid to third parties because you can borrow money from your own policy. For smaller purchases like cars, etc., people have used some of these plans to save for college because it’s a private contract. When you’re applying for financial aid in colleges, they don’t count this when they calculate FAFSA requirements and eligibilities. It can be used in many different ways within your own personal economy. Emergencies, you have it right away there.
From an investor’s point of view, if you’re looking at investing in a business, acquiring a piece of real estate, there’s money for a down payment, there’s money to utilize, to participate in a syndication opportunity. The other strategy too as far as using this … If you like, I can give you some real world examples of something that I personally done and clients with this regarding real estate?
Yeah, give us an example that would probably be more typical for our listeners that are purchasing one to four unit properties.
On a single family property that I helped a client setup with, we funded this plan. Every single plan is different. Every situation is different. We funded this plus up until a certain point. I’m just going to round out the numbers. Say, there was $120,000 in cash value in his policy. The property that we wanted to purchase was $100,000. He took the policy loan at a full amount of $120,000, which is available. Because you can only borrow up to the amount that you have available in cash value. The $100,000 he put the property under contract. The $20,000 was then used to do some fix up in certain areas and some upgrades in the single family home. There was about a 45 day period where he was carrying the property until he had a renter in there.
The thing about this as I mentioned before, the insurance company, they’re covered on the one side. They actually have you set the repayment terms of your policy loans. It’s extremely flexible in that way. In this case, my client knew that he was going to start paying back the loan with the cash flow once there’s a renter in. Once you have the renter in, that is when he started paying back his policy loan and paid it back. He took the cash flow from that, he captured his wealth inside his vehicle, leveraged it to purchase that investment property and is now paying him back himself. What I’ve personally done with one of my plans is I’ve set it up as a reserve account. I’ve taken the one investment property that I have and funded with some of the cash flow from that, build up reserves in that account.
As real estate investors know, when it rains, it pours. This was last year for me in this particular one property that I have. A lot of things broke down from it. Electrical to plumbing. I had a ton of work done. I also did some upgrades with some added amenities that I put in the unit. What I could do at that stage was immediately access the funds from this plan, pay for all of the services and the upgrades. From the additional rent that I could then charge my tenants along with the other cash flow, I just paid back the loan that way. It stays within my own personal economy and my own business economy.
My financial firm, I started actually with one of my policies. That was a little bit different because the payback was, I think it was seven or eight months before I started paying it back. Starting a business, obviously at that stage, I didn’t know what my cash flow situation was going to look like. There was a lot of uncertainty. It’s very cyclical in my business. Within the first year, this flexibility of these plans allowed me to start my payback period in seven months and utilize the cash flow that I started generating earlier on to just invest back into my business.
Let me ask you a quick question about the example you had with the $100,000 property purchase. Clearly, there’s going to be a lot of questions coming out of this episode. There’s so much more that we could cover that we’re not going to have time to cover. I think what I need to do is just encourage listeners that find this interesting to dig deeper and maybe go to your website or dig up some information. I know there’s a book they could read out there. They need to maybe further educate themselves and ask some intelligent questions as it relates to their own personal situation.
Back to your example here, this person who has $100,000 policy and they borrowed the full $120,000 not out of their own policy but coming out of the general account of the insurance company. They purchased $100,000 property, they put $20,000 of work into that property. You mentioned that the investor repaid that loan, how did they repay it? Was it a matter of making monthly payments over a period of time or was it a lump sum repayment because they refinanced that property?
This particular situation, it was structured to be a monthly payment. That is something that you can then refinance that and then pay it back because you set the terms of your payback of this policy. If you utilize that to do that, then you can refinance that and then move on to the next property.
I would do it that way. As a real estate investor, building a portfolio, I would want to keep turning over and rolling those funds over and over again. I’ll snap up a good deal. If I have to fix it up, if it’s a fixer upper, fix it up, refinance it, pull your money back out, put it back into the repayment of the loan you just got from the insurance company then just do it over again if that’s what you want to do.
Exactly. To your point, that’s what I like about incorporating the strategy too, you can be so creative. You can look at four opportunities where you put $25,000 down and then still have some money if you’re not using the full $20,000 to fix it up. Depending obviously on the wear and tear and what you’re looking to do. There’s different ways of incorporating this into an overall strategy when you are investing on real estate or other assets.
I don’t know if this is an intelligent or fair question, but is there a typical way that real estate investors use these policies to build their real estate portfolios and invest in real estate? Is there such thing as a typical way to use it?
No. I would say, everybody is different. There’s many different investors investing in different types of real estate with different strategies. The people flipping real estate, I can see how they could obviously utilize, tie up the property like this, make the correction, sell it again and then move on to the next one. I wouldn’t say there’s a one size fits all, which I really enjoy because every day there’s a different situation that I’m looking at and trying to creatively help solve some of the challenges for clients.
Are there any other benefits that we didn’t talk about or missed other than the dividends, the death benefit, the ability to borrow up to 100% of the capital that you put into your policy? Are we missing anything there?
There’s from an estate planning too. This actually exed, and I say that very lightly. It’s not literally. As a trust, because this will not go to a probate court if there’s not an established trust for the family. This goes through to your beneficiaries tax free. That is definitely an added benefit of something like this. Of course, because it is a death benefit, there’s a multiple of the money or more of the money that you actually put in there going to your beneficiaries.
A lot of the very wealthiest families, I’ve mentioned looking at what wealthy people do and implementing some of their own strategies in your own life. A lot of the family offices around the United States, they actually implement similar strategies just like as I’ve just describe within their family offices. The Rockefeller family office, obviously being a very well known one, where they use permanent life insurance products like whole life to set up certain trust.
You can actually set up a life insurance trust and have different policies inside of a life insurance trust. If you have more than one policy and your wife has a policy and children, there’s a very big legacy benefit of this type of thing. As far as legacy planning, grandparents can actually set up some of these strategies on grandchildren and children and be the owners of these policies and fund them. Eventually, sign it off and pass it on to children and grandchildren. It could be a way to help pay for college. It could be a way to help set them up to purchase investment property or start their own business. Those are similar things that some of these families do and family offices. They structure their affairs in such a way and keeping the money together where the wealth keeps growing and it doesn’t erode over generations.
Last quick question. We can go on forever about this it seems. I think people are just going to have to dig a little deeper on this on their own. How does someone determine what the right amount of capital is to fund a policy like this?
There’s a couple of ways to determine it. I would say the first thing is start right at the bottom of that wealth pyramid and look at your personal cash flow in your personal economy. Look at the money that’s available at the end of every month that you’re saving, then structure the savings a little bit more efficiently and effectively. What I mean by that is there could be a portion of that savings set in a separate savings account, in a bank, which is ATM liquid. You could access that right away. A portion of that that you’re comfortable with, because you don’t want people to put added stress and pressure on to their personal economy. That amount that you’re comfortable with is probably a good number to start looking at that.
We could actually work it backwards too. If you’re looking at goals and see I want to purchase a property in this timeframe. This is the amount of money that I need. This is where I want to be financially in ten or fifteen years and have secured and guaranteed in some of these policies. You can then work a little bit backwards and see where you need to be. For a lot of people, I would definitely say, look at a number that you’re comfortable with. I wouldn’t suggest putting everything in there as well. You do need to have some separate liquid savings. This is extremely liquid, it’s about 48 hours liquid, the last time I got it since I put this in.
It’s not like a 401K or an IRA where you have to fill out a ton of paperwork to access your own money. It’s a quick, maybe half a page or a phone call or online that you fill in and they mail a check out to you. To go back to your question, I would suggest that it’s something that you’re comfortable with and does not put added pressure on your personal economy.
This is very interesting. I’m sure there’s a lot of people listening that are somewhat intrigued, maybe very intrigued and they have questions and they need to learn more. As a question for myself and for everybody else, where can people learn more about this concept, the infinite banking concept? How can people further educate themselves? Tied in with that, if they wanted to get in touch with you, how do they do that? What is your website? Maybe just share all your contact information here for us.
Marco, for your listeners out there, if there’s anybody that’s interested about learning more about this, I will actually make a copy of Mr. Nelson Nash’s book, Becoming Your Own Banker, available to you. Just email me at [email protected]. Cash Flow Ninja is actually my podcast too where we talk about everything cash flow and creating multiple streams of income. I have guests on there sharing everything from how to invest and create income streams from real estate, coffee farms in Panama, digital currencies, gold and silver. I’ve been honored to have you on the show there as well.
If that’s something that they want to learn more about, they can go to CashFlowNinja.com, that’s my primary platform. Also, if you send me an email at [email protected], there’s another page on my financial firm’s website, ValhallaWealth.com, that has a ton of resources on there. There’s podcasts, interviews, there’s different articles that I share on there. It’s available all on there. [email protected] if you’re interested in a copy of that book.
Awesome. I’m going to have to get a copy for myself. I’ve heard of this concept several times but I’ve never really stopped to think, let me learn more about it and see how it applies to my life. Now, I think I actually do need to do that. MC, I want to thank you very much for your time. It’s been an interesting and somewhat deep conversation. There’s still so much more that needs to be uncovered, at least for me personally. I’ll be talking to you about that. Thanks for coming on.
Thank you so much for having me. It was a fantastic experience. I really enjoyed it.
Sounds great. Thanks again.
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