8 Things People Get Wrong About The Infinite Banking System

There's a lot of misleading information, especially on social media. On TikTok, people are drawing a lot of numbers and they will go and explain what the dividend is, what the dividend rate is, what the illustration is all about, insurance and this and that, and there's a lot of confusion because of that. I want to address that so that you can learn more about what it is not and what it is actually. So that you can be aware of things that you can meet on social media and be mindful about what you hear, especially from someone who is not an Infinite Banking practitioner and is talking about that. Then you can know that this person probably doesn't know what he's even talking about. So at Ascending Financial, we are coaching Canadians on implementation of the process and this topic comes a lot, right? So you need to study this subject, you need to properly study the subject. And ideally you also want to read the book. So this book is Becoming your own Banker by R. Nelson Nash was written exactly to educate an average Canadian, an average American, about how you can become your own banker. This book is not for me, it was written for you so that you can read it and learn how this process works for you and what it can do for you. And it's only 92 pages, very small book. So go ahead and click the link below this video and you will find the link to purchase this book on our website. I would encourage you to subscribe to our YouTube General Banker's Vault and hit that notification bell so you don't miss important video notifications. All right, without further ado, let's get into it. I have eight points. What infinite banking is not and let's review them. So number one, it is not a tax loophole or it is not a tax qualified idea of any sort. If you think that infinite banking will help you avoid taxes or it will help you magically reduce your tax liability or increase your tax refund, probably it is not what you think it is, right? Definitely Infinite banking can help you unplug from the traditional monetary system that you can save a lot of money on taxes, but it is not something that it is built around because infinite banking is based on a participating dividend paying whole life insurance. And this type of insurance existed in Canada even before the tax code was created, right? So it is not exactly about the tax loopholes or any tax strategies. And if you hear someone is talking about you can avoid taxes or it is completely tax free, then it is not. So be very mindful of that. Number two, it is not a get Rich, fast scheme. So if you think that tomorrow you can wake up and you will have millions of dollars on your bank account, then it is not a concept that you think it is. The process of becoming your own banker requires a lot of discipline, requires commitment, requires your time, requires your money so that you can take this money and put into place that you own and control and build it over time and be consistent with it, be patient, because this is not something that tomorrow you will magically solve all your problems. It will not. It will solve problems in the long run. Number three, it is not a silver bullet if you're struggling with paying your debt, or maybe you want to find a solution to financial issues, or if you're thinking about, you know, consumer proposal or bankruptcy or you're behind your payments, mortgage, rent, credit cards, interest. If this all is snowballing like crazy and you're behind and you're thinking that, oh, I can become my own banker and then stop making those interest payments to bank, then it is not for you right now, maybe it will be for you in the future, but right now you need to get current with your payments and you need to start spending less than you make in order for you to have some money to set aside and put in it into your own banking system. Number four, it is not an investment and it is not meant to be diversification for your portfolio. So I have a lot of clients approach me and say, Roman, I want to open this policy so that I diversify my investments and then I add a little bit of guarantees here and there. And that's why I want to open this system and open this bank and then maybe just put one lump sum into it and forget about it. This is not how this works. It is based on a participating dividend paying whole life insurance. And with that you need to constantly make premium payments, either once a year or once a month. You have to be consistent and doing the right thing. Exactly as Nelson Nash is describing in this book. If you're planning to just put one lump sum as an investment and forget about it and maybe come five years later when it has some profit or some gain, it is not something you think it is. It requires your attention, your discipline to grow this and fund this properly. Number five, it is not a game of interest rates and it is not an arbitrage. So some people will say, oh, it's because the dividend scale is this and the borrowing rate is this and it creates an arbitrage. So I can borrow from it and I can make some profit from this. Because basically I'm playing with interest rates. It is not what you think it is. It has nothing to do with rates, it has nothing to do with arbitrage, and it has nothing to do with markets. So depending on rates, rates change very often. And the process of becoming your own banker works with low rate environment and high rate environment doesn't matter. But what matters is the volume of interest you're sending away from you. And that can potentially could be sent to your banking system. That what matters. It's not about even numbers at all to begin with. For some reason. I get this client specifically in Manitoba where people hear about this specific product from one of big banks where you put all your paychecks into one account so that your mortgage is in this account. And then all your paychecks you deposit into the same account so that your overall debt or overall balance goes down with those paychecks. And then you start spending or you start paying bills, you start paying very hydro bill, insurance, whatever you have. And then that balance goes up again. But because for some time you're bringing it down and then it is slowly goes up, then you're saving a little bit on interest. So people say, oh, is this like that? So it is not like that because that product is specifically designed for a bank. Because all your money is sitting in someone else's banking system. You do not control it. You do not control the interest rate, you do not control the payments, you do not control the terms, you do not control nothing. Because it's not your bank to begin with. It is not the same product and it is not even like that. Number six, it is not a sales tool for life insurance agents. At the beginning of this book it starts with explaining what infinity banking is all about and what it is not. And it says that it is not an instrument for life insurance agents to sell life insurance. And I heard many times that oh, this is amazing, I can make so much money. It is not for you to make a lot of money because the way the product is structured actually it reduces life insurance agents commission. It is written for someone who wants to become your own banker. It is for your client, not for you as an advisor. Number seven, it is not a cookie cutter solution to fit everyone. In fact, it is not for everyone to begin with. When I meet with clients, there's no such a thing as just giving someone a quote or someone will say how much will people start a policy with like 10,000 a year or 20,000 a year, 50,000 a year. It is based on the specific situation you're in is based on your specific income, based on your wife's specific income. It is based on specific numbers, specific liabilities, specific objectives to begin with, right? So it is based on how many children you have in a family. Everyone's objectives and everyone's circumstances are different. So it is not a cookie cutter for everyone. So for us as advisors to understand how we can help, how we can design a policy for you or design a solution for you, we need to understand the holistic picture. We need to see what we're solving for. We need to know what you want to do and which ways, how you want to use this system to flow money through your banking system. I need examples. I ask my clients, hey, give me examples how you are going to flow money through your banking system so that I can build a solution that is tailored exactly for this objective. Number eight, it is not life insurance. In fact, it has nothing to do with life insurance at all. In some countries, like European countries, this product doesn't even exist to begin with. The product we're using today here in Canada and United States, but you can still do that using different tools. So, so the infinite banking is all about the process, not the tool. It is not based on life insurance. And the fact that here in Canada and United States we're actually using participating dividend paying whole life insurance with a deal with a mutual company is coincidental. And the reason for that is because this particular tool meets all necessary criteria to be a perfect tool or be perfect reservoir or perfect storage for your money. And this way it ideally meets the description of this tool. That's why we're using specifically this product. And this product has been in existence for many, many years and actually several centuries in Canada. It started even before the tax code was created in Canada. All right, so we discussed eight points. What infinite banking is not. Let's now talk about what infinite banking actually is. And I have five points here. And those points are built on Nelson Nash's golden rules. So Nelson Nash, discoverer and the pioneer of the infinite banking concept. In his book he's actually talking about a lot about human behavior and about rules, what you need to know about becoming your own bankers. Number one, think long range. So the infinite banking is all about legacy preservation today and legacy transfer in the future for future generations, for the following generations, in the most tax efficient manner. So for me to think long range, I need to think not about, for example, me being debt free. I need to think about my grand grand grandchildren being debt free and then transferring the legacy to them. So I need to think about future generations, not about just three or five years from now, right? Even though I can use the system today, I need to think in the future. I need to think how the system will be used in the future by my children, grandchildren, great grandchildren and so on. So in order to do that, I need to change their mindsets, I need to give them education, I need to give them knowledge and teach them to be great stewards for all this legacy that they're going to receive one day from me and my wife so that they know exactly what to do with the windfall that they're going to receive and they're not going to spend it all because I want to have a long lasting legacy for future generations to come. Nelson Nash's golden rule number two is don't be afraid to capitalize. This strategy is all about lifelong uninterrupted compounding. So if you know what compounding is, it's basically creating profit on profit, interest on interest. And if this is the way you want to create your wealth and increase your net worth, then you're right. But in most cases, when financial advisors or financial gurus tell you that you need to compound, you need to compound. You need to put money into, for example, stock market and then earn interest on interest on interest on interest. In 15 years, you will compound so well that you will have X amount of dollars. But the problem is that the minute you access that account, the compounding stops. You need to start all over again. So that is interrupted compounding. In order for you to create truly generational wealth, you need to do uninterrupted compounding so that you put your money into your system for lifetime and you never stop compounding. At the same time, when you put money into the account and it starts compounding and earning daily growth of cash value and providing increase in your net worth at the same time, you're not restricted with access to liquidity. If you need cash, for example, tomorrow is a financial crisis and everyone is selling, everyone is panicking, what are you going to do? You're going to take a loan from the policy you own and control so that if you have gold, you will have great opportunities to actually take advantage of those opportunities and you will be able to to find great deals and you will buy everything with discount. Number three, don't steal the piece. So this strategy is really dependent on the behavior of the owner of the system, right? So don't steal the piece actually comes from page 15 from this book. Nelson Nash is talking about the Grocery store example. If you don't know what I'm talking about, go ahead and buy this book and read the grocery store example or find it on our YouTube channel. You need to understand that the behavior of the policy owner, of the owner of the system is way more critical than everyone else's. So the outcome may be as good as was presented to you by your advisor or as you read in this book, or if you steal the piece from your business, if you don't do what you're supposed to do as an honest banker, then the outcome will be way different. Number four, don't do business with banks. So this process is the process of recapturing interest that one pays to banks for major items that we need during our lifetime. So if you're paying cash, you're losing opportunity cost, you're losing interest that you could have earned otherwise. If you're financing your car or your lifestyle, other purchases in life, then you're paying interest to someone else. And Nelson is talking about that a lot in the book. So don't do business with banks, stop paying them interest. Create your own banking system and recapture all that interest. So the infinite banking is all about recapturing the interest that you're otherwise paying to banks and other people. Number five, rethink your thinking. So what infinite banking is, is a paradigm shift for most people, right? We are taught in a very specific way that all your money needs to be deposited in a banking system. We don't even know any better, right? And we are taught that you need to put money into your banking system and then you need to start paying for your bills. And then at the end of the day, you may hope that, that you will save 5%. You will not save 5% because the system is designed to work for a banker, not for you. Because all your money is hard earned by you and your family and then it is being put in someone else's system that you don't even control. So in order for you to understand how you can do things in a different way, you need to first change your mindset. You need to be open minded, you need to rethink your thinking. So with that, these are five points, what infinite banking is about. I would encourage you to continue watching our videos on our YouTube channel about some real cases of how the process can be implemented in your life. Reach out to us as financial coaches and we will help you get started on your amazing journey of becoming your own banker.