Becoming Your Own Banker | Depositing Money in Banks is a BIG Lie

You can't be afraid to capitalize. People talk about, I can create a policy for you where you only have to pay the premium for the next 12 days and you never have to pay a penny a premium for the rest of your lifetime. If you understood the fact that you're creating a business where no business existed before, and this is your family banking business, your thinking will change and you'll be asking your advisor, how long can I pay the premium for? This is something that Nelson often said. Learning to think long range is extremely important when one of his golden rules is to think long range. But learning how to actually do it is what's really important. If you have not read this book titled becoming your own banker, click through the link, buy a few copies, one for you and one as a gift to someone who you think would benefit from implementing this process in their lives. Now, Nelson spent some time as a forester, and he would often say that he was thinking 70 years ahead because it takes time, right, for these trees to grow and then for the harvest to happen and then for the replanting. And it's all done in a very calculated, very methodical way. And so I learned from NELSON to think 70 years down the road. He could have just said it to me, hey, I need you to think 70 years down the road. But I had to learn how to do that. And Nelson said that unless you understand the problem, the solution just won't matter to you. But let's start with a basic fact. Isn't it true that at present, all of your money is flowing through the books of someone else's bank? What are some of life's major expenses? A house, cars, debt, food. How are all of these financed presently? Cash, leasing, loans, credit cards. All of these methods of financing involve permanently transferring money away from you. The problem is that all of these things are financed through someone else's system, not yours. Here's how it works, right? Your income, regardless of the source, flows into the books of someone else's bank. All of your payments, your debit transactions, your houses, your cars, your business equipment, all flows through the books of someone else's bank. Your passive income streams flow through the books of someone else's bank. Your company revenue and your expenses flow through the books of someone else's bank. In addition to all that, do you feel like you're not taxed enough? Here's what just came out. The Fraser Institute just released this. In Canada, the average family pays 43.5% of their gross household income in. In taxes. The more you make, the more they take. In addition to that, 34 and a half cents of every disposable dollar is paid out in interest. Take a moment and think about this. All the money that's flowed through yours and your family's hands up to this point in your lifetime, think about all that money. Could you write me a check for that amount of money right now? Probably not. And if you're a business owner, it's even worse. Much worse. Neither you, your family or your company will ever see any of that money again. How does that make you feel? But yet we just sit here and take it. So you earn income, you're taxed on that income. Before you even see it, all of that money flows onto the books of someone else's bank. And then you begin the process of systematically transferring it all away permanently. And where does it all end up? Right back in someone else's bank. Why do most people behave this way? Because nobody has ever explained a better way to do it. Nelson said that how you think makes all the difference in the world. And I know and my teammates know how to perpetuate everything that you're already doing in your financial world. But in order to do that, you've got to get into the banking business, more importantly, the family banking business. So we're going to talk about the family banking system, but we're going to start with a very basic fact. Your money must reside somewhere. Now, if you think about how long you, your family, and all the future generations that come after you are going to need the use of money, think about all of that money that you're either going to continue having flow away or that you're going to gradually and incrementally have flowing back to your family versus away. Now, becoming the banker in your life gives you the ability to control how you finance all of those life's major expenses and has all that money flowing to you versus away from you. Family banking, something that we've been practicing now in our family since the inception of beginning our journey back in July of 2008. We get our family together, we have annual family banking meetings and we talk about the utilization of the family banking system. We've created the IBC Youth program where all of the kids are learning how to be good stewards of the family banking system. Nelson said that this was meant to be a system of policies. What a lot of people are doing out there is they're all wanting to find a way to get as much capital into a single policy as fast as possible. So here's Our system. So we began in July of 08. So fast forwarding to our first anniversary in 2009 and then looking at 2023. So we started with two policies on our journey. We have 74 policies now. The premiums that we pay into our system have grown just a little bit since Our last update. $628,000 a year. Our total death benefit started at a half a million. It's $33,354,000 today and rising every single day. Total cash value is $3,064,047. Loans $894,000 loan amount available today $1,863,000,000 on demand on my terms. So when I request a policy loan there's no repayment schedule. It's an unstructured loan. So I decide what the repayment schedule is going to be. A lien is placed on the death benefit for the loan balance. So the life insurance company itself knows that a repayment is assured. That the insurance company itself is guaranteeing the collateral for the loan. So there's no risk that the loan is completely de risked. I co own the insurance company. So when you have a policy you may already know that you are a participating policy owner. So you co own the life insurance company which means you co own the lender. Knowing that, where do you want your financial energy flowing to? You want it flowing to the business that you have an ownership interest in because you know that that business is going to put that money to work for the owners of the business. So what better place to have that financial energy flowing to? Loan repayments back to our family banking system are 65,000amonth. That's 780 grand a year. That's money that would have otherwise been permanently transferred away from our family permanent. That money is now coming back to an entity, a system that we and we co own the originator of the money. So it is now our own aquarium of money windfalls. We've had two death benefit proceeds. My father in law passed away after a very brief battle with cancer and he was life insured. We had two policies on his life. And those death benefit proceeds replenished the family banking system. And there were no taxes triggered on that event. What I want to show you here is what's happening so how, how this construct comes together. So we have premium payments, right? So we're purchasing these dividend paying participating whole life insurance policies. We buy them, we decide the premium that we're going to pay. Those premium payments go directly to the life insurance company which is Our warehouse for our wealth. So the premium payments flow into the insurance company. The life insurance company immediately begins putting that capital to work to multiply it. Because the insurance company has to pay claims, death benefits. So they need to put that money to work. When death comes tax free, death benefits get paid. But then if we're doing this properly, we're flowing that money right back into the very life insurance company that it came from. And we're doing that by putting the money into more policies. We're growing the system. Policy loans come out of the life insurance company into our family banking system. That money flows into private lending, investments, business, anything that you would otherwise have paid cash for, leased, financed. All of that money is coming from the life insurance company. All of our cash value is accumulating every single day inside of our system of 72 policies. So there's something that would be very important for all of you to know. Your net worth is growing every day and you're not taking on any of the investment function to grow the capital, the life insurance company's money pool. You're not taking on any of the risk because these policies are unilateral, binding contracts. They're not an investment. Now when you lend that money and you're utilizing the policy loan proceeds and you're lending it out or you're utilizing it yourself, there has to be a structured loan repayment plan for the family banking system. The life insurance company itself doesn't care what your repayment schedule is and they're certainly not going to ask you for it. This is the great wall of your family banking system. And it's impenetrable by someone else's bank. It's impenetrable by Revenue Canada or the IRS if you're tuning in from the us so you're keeping all those snakes and dragons away from your warehouse of wealth. Nelson also said to plan as though you're going to live forever and live as though you're going to die today. You all have a hundred percent probability of death. Someday it's going to happen. Both my parents passed away suddenly and unexpectedly. They left a lot of problems behind and there was no tax free windfall of death benefit to take care of the problems that they left behind. I had to step up at a very early age and be the patriarch of the family. And I wasn't ready for that. I wasn't expecting that, but someone had to do it. And the way that we've now constructed how we go about things financially, my family will never have that same burden and neither will generations that come after. And we're not just handing over blank checks to future generations. Family has to learn how to become their own banker and they have to learn how to be a good steward of the system. And if they don't, we're not going to force it upon anybody in the family. If you don't want to participate, you don't have to. But you're not going to receive any of the death benefit windfall. You're not going to assume control or ownership of any of the policies that we own on your lives. You have to be a willing participant. And the fundamental truth is your money must reside somewhere. What better place to have it reside than here? You've got more money, more control, you're really managing your entire tax situation much better. You've got liquidity, you've got privacy and you've got ready access. Money on demand, on your terms. You control the repayment schedule. You've got to reckon with all those life's major expenses anyway. What better method of reckoning with them than doing it from a place of total control? I'll offer you a few suggestions, one of which is that we understand what our clients truly value and we deliver on that every single day. We've also got a little bit of a track record, 15 years specializing in this process. We have a nationwide presence. We have our clients trust as evidenced by thousand plus five star Google reviews that you're more than welcome to go and read and I'll challenge you to find one of them that doesn't have the word team and great service in it. Lifetime coaching. We do quarterly group client coaching. You're not a lone ranger when you work with us. We do quarterly group client coaching. We have family banking summits. We're planning our inaugural annual family banking retreat. We've got chartered accounting expertise, trust and estate planning, certified financial planning, chartered life underwriting, specialization in finance, all of that expertise. And we've been empowering our client community since 2008. More than 2300 clients, that number's gone up today. And so that's why people choose to work with us. You can do this, but you've got to possess the desire before the action. If the desire is there, text the word schedule. 780-809-4599.

Can we borrow equity and become our own banker? Nelson would answer. Truthfully, he would say yes, that is something that you could do. But I wouldn't recommend borrowing your way into the banking business. You should be really closely examining where you've already prioritized the allocation of 100% of your existing financial resources. What I mean by that, you've already prioritized where you've decided to allocate 100% of your existing financial resources. What are your financial resources? Income, interest income, dividend income. So if you want to get into the banking business, if you want to literally create a brand new business where no business existed before, there's a crank up cost. And that crank up cost is capital money. So you've got to closely examine that 100% existing allocation and say, okay, what percentage of that allocation do I want to reprioritize into creating our family banking system?

What if you're uninsurable? What if you're too old? I'll address the too old thing first. The last time that you went to deposit money on the books of someone else's bank, did they ask you how old you are?

They didn't.

They don't care. They want the deposit. So if you're thinking about this from a place of insurability where you say, gosh, I'm much older, maybe I'm not insurable. Well, Nelson addressed that in his book Coming youg Own Banker. And on page 82 he shares the scenario. So in this scenario you've got a father who's 50 years old, but he's highly uninsurable. The life insurance companies will insure you up to age 85. Meaning if you're just about to celebrate your 86th birthday, then you would not be able to apply to be the life insured. You could apply to be a policy owner and you could own the policy but have a beneficial interest. Be the life insured. Right. Remember the kids grandkids, great grandkids, the list goes on and on. So what he elected to do, I want to have passive income at age 70 for the rest of my lifetime. What I want to do is I want to put a policy in place on my daughter. So I want my daughter to be the life insured, but I want to own the policy and pay the premium and control all the access to cash value. And he decides to put $20,000 a year into that policy. 10,000 of that goes into the base or the minimum premium required and the remaining 10,000 goes into the accelerated deposit option or paid up additions. So they do this for 20 years. The father is now 70. He decides at this point that he's going to stop paying premium. The minimum premium still has to come from somewhere. Okay, so the minimum premium now is being taken care of. It's not coming out of the father's pocket any longer because he's 70 now and he wants to start accessing passive income. But he wants to use the policy as a tool in order for him to achieve his objective. He starts taking $28,500 per year. And he's doing this by surrendering the cash value of paid up additions of death benefit. He didn't have to do that. And Nelson would not have recommended that he do that. Nelson would have recommended that he. He get his daughter at that point. Now she's much older, right? So she's 43. She could start paying the premium and then he could borrow against that accumulation in the policy and then his daughter would take it over. We assume that he dies when he's age 85. His daughter is now 56. The cash value of the policy is 1,110,000 and the death benefit is 2.682 million. Now remember, his daughter is the life insured. Did the father get back all of the money that he paid into the policy?

Yeah, much more.

He sure did. Now the 1.1 million in cash value is that the equivalent of him leaving a death benefit to his daughter? Does that sound a little bit or a lot like life insurance? But he wasn't the life insured. But he still left something behind for his daughter. His daughter to retire at age 70. She gets 150,000 a year. We kill her off at age 90 and she leaves behind 2.378 million to the next generation. How is that for solving the problem of not being insurable?

Was the daughter paying back the loans that the father had taken out or she had loans. He didn't take loans. Are you.

He didn't borrow a dime. He dies right now, his daughter becomes the primary owner of the policy. Initially he owned it. He paid the premium. She was the life insured. She had no control over the policy. He dies. But he named her as a contingent owner. So the moment he died, she became the primary owner of the insurance contract that now had over 1.1 million in cash value that had piled up in that contract.

So did he leave behind a legacy?

Yeah, he did. He left her a working system.

And did he leave behind stress and financial worry and burden?

No.

No. Is his daughter ever going to forget what he did for her?

If anything, she'll learn.

And she replicated what he wanted her to do was leave behind for the next generation at minimum what was left behind for her. Did she achieve that? She left behind more than double what was left behind for her. Let's think of Nelson's golden rules. The first golden rule. Think long range. He did that. And so did she. Don't be afraid to capitalize your system. Your money must reside somewhere. He could have taken $28,500 at age 50 and put it into an RSP. And the year in which he turned 71, he would have had to have converted whatever the balance was into a riff and started taking withdrawals at a prescribed rate. He would have had to get money out on the government schedule, not his. His money had to reside somewhere. And if his daughter would have kept paying even one more dollar in premium, what would that have done to all of the policy values for the rest of her lifetime? Increase them permanently?

Yeah.

Is this learning how to think differently? Sukman?

Yes, it is.

If you want to achieve the objective of passive income.

We'Re not going to change your objective. We're just going to change the process of how you go about achieving it. Because when could the cash value in this policy have gone down?

It couldn't.

Who caused it to go down?

It's going down because the policy owner chose to. It was the policy owner's choice.

Right, exactly. And so Nelson would not have recommended that the father do that. But the father said, listen, I'm the one who's in a position of total control. I can do whatever I want. And Nelson said, yeah, just understand what you're doing and that there's a different way to go about it. Do you know who the only loser was in this scenario? The government.

On page 48, Nelson is addressing expanding your system to accommodate all of your income. Now, he asked, doesn't all your money go through someone else's bank? Now, when you get a paycheck, what do you do with it? You deposited into someone else's bank. Now they're automatically deposited. And the moment that that paycheck gets directly deposited into your savings account or checking account, it's not your money anymore. It's an on demand deposit account. It's not your money. Would you become as an unsecured creditor of that bank? That account balance is simply an iou. And what you think is there isn't really there. It's just an illusion.

And so then you start writing checks, swiping your debit card to pay for all those things. And while that money is flowing through the books of someone else's bank, the bank's lending it out and making a very good living doing it. Nelson's saying, hey, this whole phenomenon seems a little bit ridiculous. But my all American MAN on page 17 of becoming your own banker, he's depositing all of his paychecks in a bank and then writing checks for 34.5% of every dollar to pay interest alone to someone else's banking system. He'll never see that money again. I talked about, once a pattern is learned in life through culture, it is almost impossible to change it. Okay, so your paradigm might be fixed as well. There's got to be a desire to change it. When he starts building his banking system through life insurance, he makes loans to buy those cars, he pays back his policy or his system, the very same payment that he would have paid to another banking institution. Then he makes what the banking institution would have made from him, and all of it is done on a tax deferred basis. And the interest that he pays never leaves his account or his control. If this is done consistently throughout his lifetime, it will make a tremendous difference in his financial picture. But so far we've only looked at what would happen if we created a system that just financed one car every four years. Well, why not expand it, add another policy so you can finance the other car in the family and you can do that every four years. This will of course require capitalization. You can't be afraid to capitalize. People talk about, I can create a policy for you where you only have to pay the premium for the next 12 days and you never have to pay a penny a premium for the rest of your lifetime. If you understood the fact that you're creating a business where no business existed before, and this is your family banking business, your thinking will change and you'll be asking your advisor, how long can I pay the premium for? Because you realize that your money must reside somewhere. And if you're building a system so that you can pay premium for the least amount of time, then you are not building that for the purposes of implementing the process of becoming your own banker. You're just purchasing a life insurance contract. But you would not be implementing the process of becoming your own banker, the infinite banking concept, properly, if that was your objective.