Becoming Your Own Banker | Enhancing Real Estate Investments With IBC

Why do you think we need to invest? We cannot leave our money sitting still. If we leave our money sit there, we're losing borrowing power due to inflation. So we are forced to invest. And when we invest. Have any one of you heard this cliche, don't put all your eggs in one basket. Why do we want to diversify our investment? Because underlying we know that saving is different from investing, we know that invest, we're subject to risk, we don't want to lose all our bag of basket. Right? So we want to put in different basket. For you. Those of you who already read the book becoming your own banker, you know Nelson mentioned in his book, he said the infinite banking concept is an exercise in imagination, reason, logic and, and prophecy. So let's start by doing a little bit of exercise of imagination. So I want you to imagine that if you had a property like this in this picture, beautiful property, if you have 45 of those kind of property, imagine that all those 45 properties are 100% paid for. Isn't it great? And all of this 45 properties are 100% passive. Meaning that you actually do not have to do any repair maintenance. You don't have to pick up any tenant calls in the middle of the night. And imagine that those properties will produce you passive income for as long as you live. What kind of impact would you think that would be when you graduate? Because we all have a day that we will be leaving this earth. Seventeen of those properties are automatically sell at the highest value it has. And you don't have to pay any realtor fees. There's no capital gain tax with the 17 properties and also bypass probate. Does that sound wonderful? And there's another 28 properties you can pass down to your loved ones, to your family and they can continue to grow every day, guaranteed. And also they produce income and they can pass down to the next generations tax free. Now Nelson Nash, he used to say everything begins with how we think. And I also like this quote, is that many people believe that they are thinking when actually they are only rearranging their prejudice. I really love this quote because this quote spoke. But to me I attest to this quote. My own prejudice and my own arrogant has cost me 10 years in finding this this concept. Today as a real estate investor, I want you to keep an open mindset. I want you to have a learning mindset because you mind something from a different perspective.

Because I used to think life insurance is a bad place to put your money. I get a much better rate of return investing in Real estate. You know, I've been investing in real estate for over 10 years. And the early years, as soon as I hear someone talk to me about life insurance, I turn away. So I bought term. I knew that I need some protection. But you know, some people, when you hear about this concept, you will say, hey Jingjin, I already have life insurance. What do I do now? Well, you had a policy based on that objective and goals. And I choose this picture here that you see there are some beautiful buildings is ironically many years later as I get a little bit deeper into real estate investing and I find out that the best cash generating properties, the best asset generating real estate deals, the buildings, the commercial buildings, the multifamily buildings, the best real estate are owned by life insurance company. Talking about prejudice. So I wanted to share with you today a little bit about my real estate journey. I came to Canada in early 2001 as a international student. Later on I became an immigrant in the lower mainland of bc. So I live in the greater Vancouver area. As an immigrant, I understand sacrifice because you know, you just know that there's a lot of things you have to make extra effort. And there's no different than investing in real estate. And I had my journey into real estate with in mind that I wanted to provide better financial confidence for my family, for my children, for my parents who supported me to this journey. In Canada, it's not easy to buy a house. Many of you may attest to it wherever you live. Now the picture on the very left, you see the picture 2011. That's the property that I. I get my first bucket of gold is not my first ever property, but it's my first family property For a long time I feel like family banking is just a family property. I say this is because it's not just my own effort. We bought this house with my husband at that time. We have not got married, we're almost getting married. So he has saved quite a bit of large down payment. And he does that is because he was born and raised in Richmond B.C. and he's been living in my in laws house until the day before we got married. So for 30 years he's been eating and staying in my in laws house with very little rent. So I feel like my in laws are very partially contributing to the down payment. And also my parents learned me some money as well. Also I leveraged with a condo that I used. I invested as well. So that's how we pulled up the down payment to buy this house. And that was at my very early Journey of real estate and when we bought that house we converted the basement or the first floor. This is a typical Vancouver special in east Vancouver area. We converted the first floor into an income generating suite. And we actually have a lot of relatives and friends are telling that oh Ginger, why are you guys having a tenant? You know, tenant is headache. There's a lot of work and they are true. And we're the first time landlord almost at that time we don't have a lot of experience the same thing. Sometimes I have clients coming to us and they will say why life insurance? I get to talk to my friends and family and they say what is infinite banking? I don't believe that. So it's important whose advice you are taking. Um, I share this because after some trails and errors that we all make in real estate, I invested a lot in coaching. I joined every single real estate club that I can find locally or online at that time. Online is not that popular. I, I actively learning, I kept open mind because I know those people who give me suggestions. They usually have 0 to 1 properties. If you wanted to learn how to invest in real estate you probably have to find someone who has been done that and in themselves and who has experience with now as time progress you can see the middle picture and the right picture. We start to have children involved. So I would say there's a lot of delayed gratification. We always have tenant because just, you know, as a Robert Kiyosaki fan I just. No. We know what is good debt, what is bad debt. We know that primary residence is great for enjoyment but in the eyes of the banks is bad debt. So we're willing to delay our gratification. We're willing to sacrifice a bed and we do a lot of work ourselves even though our children are young. So a lot of the work are done. When we are off work we have to take our children to the job site. So. So this middle picture we hired someone to do the drain town and to save money we just do the landscaping ourselves and we don't have any babysitters when both of us are putting our hands dirty. So we just give a shovel to my son and say hey play, play with the dirt. So, so yeah, it's, it's a lot of hard work but the reward is great. But being a real estate investor you would know that the first couple years when you own that real estate there is a lot of capital outlet. There's a lot of money that you just put out. You may not enjoy the fruit now that after 10 years I actually start to enjoy the fruits that we have harvest before. I mean, real estate is great. I love real estate, but it's not all joy, it's not all smooth. If you have invested in real estate, you, I'm sure you have a lot more story to share with me now during my real estate journey as I start to build up my portfolio and gaining my experience. The thing in real estate people say you have to find the deal and you also have to fund the deal. So funding the deal is very important, which really involves a lot of mortgages. So as we grow, we also have a lot of money borrowed. And to be honest, that does not give me a lot of peace, even though we are mostly using conventional mortgage. But you just wonder because who make the rules? What if they call the loans and what if the interest rate increases? And many of you fellow real estate investors might be able to attest this because in the last year interest rate has really gone up. And that becomes some trouble to some people when you owe a lot of mortgages because you just don't have that control. And the other thing in real estate, a cliche is called you invest your as a real estate investor, you'll either run out of money or you will run out of money. Have you guys heard about that? Because eventually you're going to run out of your funds and eventually you're going to run out of your borrowing power. And with lending rules are changing and dynamically every day almost is a lot of challenge for people to, you know, expand their portfolio doing residential properties. So you have to really instead of leverage the commercial banks, which is really borrowing someone else's money, you probably start to have to leverage your time and leverage your knowledge, which means that you probably have to look into joint venture deals, you probably have to raise capitals, you probably have to even looking at multifamily deals or commercial deals, which involves a lot more time and knowledge and networking and it become a lot more active. So in 2018, we actually find out that we had by surprise the grace of God, we got our third child, we become super busy and we cannot be very active in real estate anymore. So that's one way that I started to thinking, I started to rethink my real estate journey. Now being a mother of three children, while I'm on mat leave, I really start to think about the managing the risk. You know, Robert Kiyosaki has a great quote which, which really hit home to me. He said it's not about how much you make, is about how much you Keep it's about how much money is working for you and how many generations that money can be passing down to. So leverage is a double sided sword. You know, when you are heavy leverage, it also have a lot of risk involved. So in 2018, I actually know a fellow real estate investor. One of the joint venture partner wants to be out of the deal. So she has to come out with money very quickly. And you know one thing about real estate is not very liquid, isn't it? So she has to force to sell. And unfortunately at that time the real estate market is not very active. She's not able to sell right away. And yeah, and then, and then, you know, the mortgage is one over one over another, almost a domino effect. And I watch her going under the water just because one small flaw that is not planned does not foresee. So you know, building a real estate portfolio is one thing, but managing your risk is really something that, you know, as a real estate investor you have to think about it as well. The other thing is we I mentioned that the reason that I invest in real estate is because I want you to provide financial confidence for my family. And when you have a lot of properties, how do you pass it down to the next generation? So estate planning is something that I have and I do have a lot of term and down in the down in my heart I know that that term is a temporary solution and we all have a best before day. What is our final tax bill? If one of me, between one of us, me and my husband pass away, can the other person deal with all this debt? If both of us pass away, can our children handle all those properties? So we start to think about a lot of things in 2018. And you know one of my mentor, Don Campbell, his real estate investment network, he said, you know, when music stops you have to make sure you can grab a chair. So I started to search and so I read a lot of book. I also interviewed a lot of life insurance agents. I'm looking for what is the best way to protect my estate planning. What is the best way to mitigate the risk. I was not very happy with all the solutions. So I put things in my own hand. I started to read books and getting things in my own. And Nelson, he likes to say, he said plan as if you are going to live forever and live as if you are going to die. Today we all have to have some long term planning. And I am really grateful that you know, after three years there's a lot of podcasts, a lot of searching, a lot of Financial related books. I found the missing piece. I found this book Becoming youg Own bank by R. Nelson Nash. And now if you have not read this book, you have a great opportunity. Nelson used to teach this concept for 10 hours. He used to go for 30 webinars, live events all over the country when he's still around. And this book is a text of his 10 hour seminar. And at the end of the book he also have a list of recommended reading for stocks investors, for real estate investors. Nelson, he himself is also real estate investor and his story is very profound. His story is very touching as well. So I strongly recommend you to to to read Nelson's book. As real estate investors I wanted to share with you what resonated with me the most. Because as real estate investors we are very good at paying ourselves. Last, what do I mean by that? You know, you earn an income. Either this income is from your, you know, employment income or this income is from your rental income. Where do we put that money? We put that income into a bank, we put it deposit into someone else bank. In fact, nowadays I don't even see that number. That number just shows up in my bank account and then what happened to it is gone, A lot of it is gone. And then we deposit to someone else bank and then we have all those bills to pay. No matter you own your properties in a personal level or you own it on a corporate level. On a personal level you have bills to pay for your groceries and living expenses. But also there are car payments, there's mortgages and if you have real estate, there's a lot of real estate related expenses. There's property tax, there's property insurance. You have a lot of bills to pay and you have to make sure you pay the tradespeople, the property managers, all those people so that next time when you call them they are able to come and do the work for you. And what's left? I. I want you to you to think about it when you earn the income and you make sure the bill pays to everyone. In another word is that you doing all this work and everyone else is getting your money. I want that to think in a little bit. And Nelson in his book page 17, he described the problem. He said a average pattern of spending in America is people put in money into car payments, housing payments, living expenses and people can save around 5 to 10%. I think that number is pretty. Pretty right. And with auto, house and living expenses we actually pay quite a bit of interest. If you think about how you finance these things, how much Interest you're paying, especially if you live in an expensive city. In Vancouver, this number is small. I pay a lot more interest by financing my properties. Nelson says in his book, he said, you know, for every dollar of our disposable income, 35 cents goes to all the different interests that we pay for someone. And if you're, if you're saving just 10% thinking about for every dollar you earn after tax, you only have 10 cents left for yourself and 35 cents you are paying for someone else. And with the leftover money, if we say we have that 10%, we real estate investors, we can hardly keep the money with us. We're looking for places to invest it, is that right? So the problem is that when you invest, everyone is talking about what is the rate of return, what is the growth? If you ever talk to infinite banking concept to a real estate investor, their first question might be what is the return? What is the growth? So Nelson in his book, he said everyone is care about the rate. So if we use airplane as example, and that is also in Nelson's book, everyone is care about the speed of how fast this airplane is flying. So if we see the airplane going from point A to point B, we're just looking for, okay, how can we go 105 miles per hour, 110 miles hour, that's all we care for. But nobody really care about what is the environment our airplane is flying, our financings are doing, because there's no airplane can fly in vacuum.

When we paying a lot of interest, when we paying a lot of fees, a lot of tax, when we have to face a lot of market volatilities, or even between deals, you see, I'm earning this percentage of this deal, but maybe you don't have a good smooth connection with this deal. Maybe you have to wait for five, eight months for another deal to come in. So there are a lot of headwinds when we're investing, when we're just looking at the rate. And Nelson would say we need a tailwind. And infinite banking concept is just adding a little process and trying to give us a tailwind. So everyone is care about the speed of the airplane within the safety measure, within the technical measure. But controlling the environment exception, very even more expensive important. So on page 18, Nelson says in his book, he said creating a perpetual tailwind to everything you do in the financial world. You need to control the banking function. And nobody gets a better rate of return before you first controlling the banking function. And I have to be honest, the first few times when I read this, it doesn't kick in my heart. I don't completely understand what is a banking equation. So today I just want to share with you how I get to know this concept, how I understand. So let me take one step back. When we are investing, we were caring about how fast our airplane is flying. We know that we need to invest. Why do you think we need to invest? We cannot leave our money sitting still. If we leave our money sit there, we're losing borrowing power due to inflation. So we are forced to invest. And when we invest. Have any one of you heard this cliche, don't put all your eggs in one basket. Why do we want to diversify our investment? Because underlying we know that some saving is different from investing. We know that invest, we're subject to risk. We don't want to lose all our bag of basket, right? So we want to put in different basket. And when we put our eggs in one basket because we want to diversify, maybe due to, you know, you might lost it, maybe there's different rate of return, maybe there's market volatilities, maybe some of the investment is hard to manage, not everyone can do it. Maybe because of liquidity. Some investment you want to liquid, some it's hard to liquid. So you need to put X in different basket and taxation and so on. And we are, we are forced to look into different investment. So there's people looking into stock investing, crypto or investing, various different real estate deals, private lending, land development, commercial real estate, residential real estate, you know, different kind of investment. We're forced to invest because we wanted to grow our money and build wealth. And you are quite red. But there is a problem. And the problem as a real estate investor that I see is that every egg can only go into one basket. You have to choose either or, or if I choose this residential deal, this dollar, this egg cannot be put in the commercial multifamily deal, right? If I put this dollar in stock market, then I can't put this dollar in real estate. And what we do not see is as real estate investors or as investors in general, we only see in a two dimensional allocation and accumulation dimension. So you have the egg and you may invest in real estate, residential, commercial, you might invest in stock, you might invest in crypto. I put a prison for registered fund because when you put your money in registered fund is really hard to liquidate. So what we see is that okay, I have all this hard saved eggs, now I'm going to physically put my money into real estate. I have to physically put this dollar into the stock, I have to physically put this money in there. What we see is okay, I put my money in the basket. But what we do not see is a dimension called transaction is a dimension called banking. The investment is earning us x percent of rate of return. But where is the money? Is the money still with you or the money is with someone else? You see, when we invest, we have to physically flow this money from our own system to someone else system. The investment is earning us return, but our money is earning us 0% return of rate of return. Because our money is gone from our system until that deal is down. You get that money back, then you get your money back. Because the very first principle that Nelson mentioned in his book is that we finance everything we buy. Even though when we spend our own money to invest, that is a type of financing as well. Let me put it into this graph that I really like. So let's say we start to save our money. We understand that when we borrow money to invest, we have to pay interest. So if we access someone else money, we have to pay them interest. If we access for HELOC home equity line of credit, we have to pay interest. But what if we use our own money? What if real estate investors, we are so careful like me that we care about the borrowing power. We don't want that borrowed money show on our credit report. So we wanted to use our saved money to do the deals. So what we do is we start to save money. And when we save money.

Now we have a real estate deal, we have to use this money. Then what do we do? What we do is we physically have to move this money down and this money is gone from our system. And now that you're going to start to save this money again. But what we see is that we are saving money again. But what happened is all this time has gone. You were only at where you were before. So let me explain it a little bit more. For instance, if we used to save up for $10,000 and now we need to use this $10,000 to do this deal, the $10,000 is gone from our system. And either we slowly save up this $10,000 again, or when that deal is done, we get that $10,000 back. We will only get where we were before. So in a way that we actually going backward because this $10,000 would not worth the same as the $10,000 before. And when we use our own cash, we lose interest because this money is not earning us anything. During this time, when you receive this money again. So the transaction of the money is something that we don't see. I just see I work hard, I earn money and I need to use money, I spend the money. But we don't see there's a transaction, the flow of money happening there. And there is a process that you can add in and can enhance, radically enhance whatever transaction you are doing. And that is a process of banking. And Nelson said, we are always dealing with borrowed $. So if we see we save money, we spend it and we save money again, we spend it and then we save money again, we spend it. This is when we are as a saver, as a debtor. What we do is we borrow money. When we borrow money, we have to pay back money. When we pay back the loan, the financial energy goes to who? The financial energy goes to the lender. Right? All we achieve is that that goes to zero, but all the money is gone. Same thing as when we spend cash.

You achieve the objective, you attend your objective, but the money's all gone. So if we repeat this, does it look like when you are saving money and regain that money back, does that look very similar? Like the debtor that you're, you are saving back that money, you're paying back where you were used before. So both ways we're moving money permanently transferred away from our family both ways. From a transaction point of view, it always goes back to the zero ground. Now you may ask, so what do we do? Is there a better way? Yes, there is a better way. The better way is to become all four characters in the financial play. We always depositor, we always borrower. Now by adding one more process, you're going to become the banker and the bank owner. How do we achieve that? We become a wealth accumulator. We become a wealth creator. We keep our money in our system, always keep it with us, continue to grow uninterrupted. And when we need to use money, we become the banker, we become the bank owner, we borrow from our own system. And I'm still saving money back or I'm still paying money back. By the time I pay back my debt, I never lose my money. Continue to grow. And this is when our money can do in two jobs. Nelson said in his book that what we need to do, understanding this, we need to create an entity, a plan which you can control your money and also make monies on your loans. And how do we achieve that? If we wanted to put our money in an entity, what kind of entity should we, should we have? Now I want you to use Imagination again, let's think about a perfect investment. If you wanted not even perfect investment, perfect place to put your money. If you wanted to think of a investment that you can put your money, all your entities in there, what kind of attribute do you think that will be? I want you to think about.

Might have high rate of return and consistent rate of return. You probably want it to be conservative and safe. Because if you put all your money in that one entity, you also want it to be liquid. Because we all want you to have control. We want you to have the use of money to create wealth. You want it to have some guarantees, some tax efficiency. You probably don't want a market volatility because we can't control when we need that fund. You don't want it to be drawing money at the low market time. You wanted to yield income. And you probably like it if it's creditor protected and private. You also want inflation protected. You want it to be able to control and it's transferable. It's even better and easy to manage, is a good one. No hidden fees or penalties. And you also want it to be reputable. It has a long time, it's legit. Think about all the assets that you have. What kind of attributes does this meet this guideline, what doesn't? And this entity, this investment that I'm sharing has been around for over 200 years in North America. Has been around for over 176 years in Canada. What is it? It's a participating dividend paying whole life insurance policy. And hopefully it's with a mutual life insurance company. How does that happen? It's not an investment. Sometimes when we talk about life insurance policy, people feel like, oh, that's where I put my money. When, you know, put my money into that life insurance. We still view it as investment, but this is not investment. Nelson in his book is that becoming your own banker is not about investment of any client. It is about how we go about financing things in life, which certainly includes real estate investments. And I want this to sink in. It's about how you finance your deals. Is not investment. Is the foundation of our banking system. Now this is not a regular type of life insurance. This is a special design life insurance. Normally when we have a life insurance, it will have a death benefit coverage. Most people look at designing this policy. We're looking for what is the minimum amount of premium that you can put to get this certain coverage. And who decided the minimum? Is a life insurance company based on the big number theory, based on their mortality table they have actuarial scientists to calculate based on the risk of us dying. And that is a policy for protection. But when we need to use a policy for banking as a foundation for our, our entity that we create, we were looking for, for this certain type of, for this certain coverage. What is the maximum amount of money I can float it in because this become my banking, banking foundation. And we are looking into minimum the death benefit and maximum the input of money. So it's almost opposite of a traditional life insurance policy. And ironically, who decide what the max money you can put in. You cannot put in unlimited amount of money in. Trust me, a lot of ultra wealthy, the big organizations, they wanted to fund a lot of money into this policy. And guess something is so good. Actually the government has guidelines to limit what is the maximum amount of money that you can put in for this type of policies. It's kind of like real estate. You know, for real estate, if you own a piece of property, you put mortgage into this real estate, this property. And when you put mortgage every month you start to build something called equity. When we have equity, some of us know that as real estate investors, probably many of you have this is. We can collateralize this equity with a commercial bank. We can access something called a home equity line of credit HELOC but when we collateralize this equity does a bank just you call them and they say okay, Jianjin, all right, you have equity in your house. There you go. Home equity line of credit. I wish it's always that simple and is never like that. They have to do their investigation. They have to look at ask you a lot of information. So in a way that when you need access money to use from your equity from your house, the collateral is your equity, but the underlying lien is your income. You probably never had a bank do not ask you what is your income when they grant you a mortgage or any line of credit and also maybe some of your other assets. When bank learns your money, they have to make sure that you can prove that you don't need that money. So life insurance or whole life insurance is very similar. So only whole life doesn't work because whole life insurance covers for the whole of our life. The life expectancy in Canada right now is age 100. That means that the death benefit will pay out if you have a whole life insurance policy. Now when you have a policy, you pay premiums into the policy and this policy will give you a death benefit. And this benefit, death benefit will pay out. And there's also equities in this Policy, it's called cash value. How cash value grows is your cash value by contractual guarantee that has to grow every single day. So when at age 100, our cash value will meet match the death benefit at age 100. It's kind of like cash, follow the leader. And when we design this policy, your death benefit continue to rise every year. And every year you're just one year closer to age 100. You have less time to grow your cash, you have a higher target. That's how you can achieve a compound growth of your cash value. And what is cash value? So cash value basically is how life insurance company mitigate their risk. Their risk. What is the risk for life insurance company? Their risk is to pay out of death benefit, right? So, so imagine if we're 99 years young, our chance of passing away probably pretty high. And life insurance company has already grown this cash value. So their, their risk is getting smaller and smaller as we get older. And that's kind of the, in a simple way what the mechanics of what a cash value is. So when we have a policy like this, what we could do is we can use our cash value as a collateral. Life insurance company allow us to borrow up to 90% of of our cash value collateralized with the cash value as a policy loan. Why are they willing to lend us money? Because the underlying lien is the death benefit. Before we're age 100, our death benefit is always higher than our cash value. And life insurance company has been around for 176 years in Canada. They have a great track record and they will outlive us and they are willing to lend us because if we pass away, the death benefit will pay out tax free and it will first wipe out your outstanding loan and your loan interest. The rest goes to your family tax free. So it's kind of like a house, the equity that you can access. Now, what is the difference? If I compare this to when you're using house home equity as a collateral versus you use your cash value of your whole life policy as a collateral. We use house as a collateral. We all know real estate price goes up and down. Your equity could go up, could go down. But when you use cash value in your whole life insurance policy as a collateral, cash value can only go one way. Because of the contractual guarantee of life insurance company, that cash value has to meet death benefit at age 100. And it has to only go one way, which is going up. And whatever already been grown is locked in. You're never going to have a loss of your cash value. When we using our house as a collateral, I just shared this. What is our lien? When we use home equity as a collateral, the lien is our income and other assets. When we're using cash value as a collateral, the lien is very safe. Is our death benefit. When we borrow money from the home equity, who is a banker? The bank is whoever can grant you the home equity line of credit. The bank. But in this way, the banker is your cash value. You are the banker. And what's more, if you work with a mutual life insurance company to have your policies on you, also is the co owner of the banker as well. And who has a control and who makes the rules. When you use home equity line of credit, the control is really at the lender. It's the banks, commercial banks. But when you become your own banker, use your cash value as a collateral. You control the rules, you make your rules. You can decide how fast, how soon, how slow to pay back this loan. If something happened, you had a bad financial day, can you take a break of paying the loan? Yes, you can. Who is banker in this scenario?

When you use your cash value as a collateral, and when we design this, our death benefit always grows. And as a policyholder, you always outrank everyone else in access the pool of money from the life insurance company. So you can borrow from your bank and you also can make payment to yourself. And when you make payment to your loan, can you reuse that money again? You know when you have a heloc? Unless you have a readvanceable heloc, when you borrow money and pay it back, most likely the amount does not change and the interest goes to the bank. When you use cash value, become your own banker as a collateral, your cash value always grows. So even when you borrow money and pay it back your money, you always have more cash value every day. Which means 90% of the cash value have more policy loan available to borrow. Now why life insurance company? This is one of the question that I ask. Why life insurance companies, how would they invest money? When I pay premiums to the life insurance company, what do they do with this money? Do you have the same question now? When you put our money in the life insurance company, Ironically, life insurance company has to also look for various investment to grow that money. They are profit company as well. They have to grow our money when we pay the premium. Because they have to pay out for death benefit. And they've been doing this fantastic in the last 176 years. They have a great track record. So if you wanted to Pull out Nelson's book. Nelson would say banking is a process, is not a product. When you pay premiums, the premium goes to the pool of the life insurance company. And life insurance company has to put that money to work. And their number one priority is to loan this money to the policyholders. And when you make a loans, you pay interest, that interest goes to the pool that you and me co own. And you may get that back from a form of dividend as well. You redirectly getting that money back. And life insurance company also have to look for various of investment to grow that money. They actually do loans like mortgages and joint ventures. They have to grow that money. And if you wanted to pull out any life insurance company, you can see their asset classes and how do they invest the participating premiums. You can see that life insurance company they are actually looking into something that is very safe and stable. For instance this life insurance company a third of the money are putting in bonds. I would say bonds are very boring. But bonds are very conservative. They put in equities and areas that have a guaranteed repayment schedule. Because life insurance company they're not looking for a high rate of return. They are concerned with the stability in the financial world. So you can see here a lot of the best real estates are owned by the life insurance company private placement. Many of you might have a car loan, may have a car lease. Where does car financing center get their money? Yes, they use a private placement from the life insurance company. They're just the middleman. And that is also written in Nelson's book as well. And policy loan. When I borrow money in the form of a policy loan, I pay interest. So that money that interest also benefit for other policy owners as well. So it's, it's quite great place to put where your money is. They've been growing their cash value paying dividend every year without a miss for most the life insurance companies. So if money has to sit somewhere, where else is more safer than putting your money here? And you still can't access your money. So building a family banking system, you wanted to put your money in this where your money always continue to grow. But you don't lose the access of your money. You can still access this money kind of like a line of credit. You can still borrow this money to. To. To do things like investment large item purchases. Your money is not, is not in prison. You can still have access of your money. And the green dotted line is, is to have your money grow uninterrupted compoundly. And it is engineered to get better every year. It's engineered to grow and the growth is locked in. You will not see a loss in in the money. And also the growth, the green dotted line is already net tax, net fees. So a lot of people say hey, this sounds like a tax free saving account and would say yes, it's kind of like a tax free saving account because whatever grows in there will grow compoundly and you're not paying a tax on this growth. However, when you need to access money, when you have a tax free saving account, when you need to access money, what happened to the account balance? The account balance jobs. This is exactly what we just talked about the problem about banking, the transaction problem. Because we finance everything that we buy. So instead of withdraw money, your money is, you know you can never go back to where you were before. You can leverage your money that you reside in this entity and use life insurance companies money to deal with this. Remember we always using borrowed money. And when you pay back, you can reuse this money again. Not only that, you can have access to all this money also it create a passive income to for retirement time. You can access more money versus if you have a finite pile of retirement fund, you access more then you have less left. But here you have your money continue to grow and you can access a lot more money as a passive income generation at retirement age. Now on top of all that, you have a protection forever to protect all your real estate deals. And Nelson always say by doing this you actually end up with more death benefit than you can ever ever apply from the traditional way. You actually end up with a lot more death benefit as well. Now Nelson mentioned, he said this should not be called a life insurance policy. It should be called a personal whale house of wealth system with a death benefit as a bonus. And I really think that's indeed what it is. So the question is how much money do you not want to be put in here? So when I understand this, I started to build my own family banking system. It's like water reservoir. I want all my capital to be in here. I want and I can still have control. And this money will be with me for the rest of my life and for the generations to come. How do you fund these things when you wanted to build your own reservoir of money? Nelson in page 65 Nelson says everyone is already spending all financial resources on what he thinks is best. There has to be a honest introspection at this point and a commitment to get out of financial prison has to be a burning passion because this is not easy. This is not a get rich quick scheme. This is cannot build in one day. It's going to require a change in priorities in life. And also recognizing that controlling the banking function personally is the most important thing that can be done in your financial world. So whatever investment real estate deal you wanted to do, we just wanted you to add a process. You're not changing your objective, we're not changing your cash flow. Just by adding one more process. You are going to enhance so much with your return by. By. In. By controlling the banking function. Now this is what I did. When I understand, I start to capitalize. I start to use a groom and sweep all my financial rooms and look for money to capitalize my system. I look for my earned income. I use my rental cash flow. I even use some rental emergency funds that are sitting there doing nothing. That losing borrowing power, I can put in here. Because my money is liquid, I can still use it. I just make sure I. I have a piece of loan available always there. That's my emergency fund and it's always growing. I also look into meltdown my RRSPs. This is something that you should talk with your coach and also consult with your accountant. That's what I did. And also, I no longer put in resp the registered education plan. My question, sometimes people ask me Ah Jing Jin, I want you to put resp. I've been saving for my kids education. Yes, I also save for my kids education. Before I get to know infinite banking concept, what I do is I buy a house for each month my child I thought well that's pretty.

Inflation proof. And when they need to use the money, they can draw the equity or they can sell the property. But now I know an even better way. Because money has to reside somewhere. If you put your money in resp when your children at 8 age 18, they need to go to university. What happened to that account? You withdraw the money and the money is gone. But if you put the same amount of money into this entity, that will grow for the rest of your life. Even when they are 18, you stop putting any money. This policy can still grow. And I put my kids to study is because I want them to earn income one day. So instead of withdraw the money, I am going to borrow policy loan to fund the university. If they are going to and when they start to make money, no matter in three years, in five years, when they pay back that money and never lose that three years or five years of my money continue to grow. And when they pay back that money, can they reuse even more money, can they use that money to buy more real estate or start their own business or buy a car. That money stays in the family forever. And the death benefit will also benefit my grandchildren if I do have some in the future. Right. And I'm also looking for windfall as well. Right. So, so that's a lot of imagination as well. So when you understand what the problem is, you know exactly what to do for the future deals. Like I mentioned here, when I have this readily available pool of capital, we can use it for down payment for income property investment. You can use it for fix and flip deal where you can decide when you pay back this loan. As long as you have a plan to pay back this loan. When you are at building your, your, your banking system the face and you can use it for private lending, you can use it to manage your cash flow. And you know, some people will say hey Jenjian, real estate is such a big amount of money. My down payment is such a big amount of money. I don't have that. What do I do? Well, sometimes I would say it's not built in one day. Maybe combination you can use it with your heloc. For example. When I first had my infinite banking concept policies, I do not have all the cash flow that I can access right away. So I need to buy a car. But I really don't want to borrow someone else money. So what I did is I use all the loan available that, that I have from all my policies that at that time I have plus I borrow a heloc. Now as my policy continue to grow, my loan available start to grow. I start to take that money to pay off my heloc. So kind of I use my HELOC as a bridge while my infinite bank accounts and my, my IBC policies, my family banking system growth if that makes sense. Now the other thing is we sometimes say mortgage is a elephant. As soon as we talk about being your own banker for real estate, people think what my real, my, my mortgage is so large. When can I ever, ever become my, my banker of my own mortgage? Well, that's my ultimate goal and today I'm not able to achieve that. But think about a small things like for a car. If you can use your family banking system to to loan your car. You know, because the policy loan is private, is creditor protected, it does not show on the credit bureau. Does it help with your borrowing power? So things like that. We are not building this empire in one day. We cannot build it one day. But one of your coaches One of our coaches are happy to help you to plan. How do you utilize the system to achieve your goals? Now one last example is a rental house that I sold. This is my windfall. I sold this rental property in March 2022 which is last year. Now usually the old way, when I sell a property, get a windfall, what I do is I sell the house, I have to pay all the fees and taxes and I get a bunch of money. And with this money, I'm looking for the next deal to invest my money. This is a traditional way that we always learn. But when I get this money and put in someone else bank, when I wanted to use this money for a deal, what happened to those money? It's away from my sister system again, right? So knowing what I know now by using my family banking system, what I do now is I have this windfall of money. I pay all those fees and taxes and I have all this block of money and I plan to put this money transfer into into my own banking system. So I have first year premium now put into policy. Everyone's situation is different in my family. I always put whatever premium is I split into half and half between me and my husband. Because we both need life insurance, we both need protection, that's one thing. And also if one of us pass away, yes, great death benefit paid out to protect the other family member. But our banking system, that particular policy banking system is gone, it is paid out. So we wanted to spread that out and split into between me and my husband. So you can talk your coach about that. And then I plan for year two premium, year three premium, year four premium. And when I need to do a deal, instead of physically using the money and the money is gone from my system, I want to keep all this money in my system slowly, gradually put into my banking system. And I use a policy loan when I need another deal to fund it.

And with policy loan I control when I pay back, I can pay back through my positive cash flow or I can pay it back after I refinance or sell that deal. So there are so many different ways you can do. Now one thing I also wanted to point here, which is kind of interesting is that this is a rental property. I do have to pay a capital gain tax. When do you need to pay capital gain tax? I actually haven't paid the capital gain tax yet. Right. The traditional way, I will leave out this portion that I have to pay for the capital gain. But now guess what, how I can pay for capital gain, I can use policy loan to Pay for the capital gain tax, you know, the next year. And then this capital gain money that I was planned to be moving away from my family now it can be redirected as a premium to back into my own system. So there's a lot of creative ways that you can do as a real estate investor by using infinite banking concept. When we put all our money in this one basket, do we still diversify?

Well, I do diversify. I diversify by different life insured. So like you mentioned, I put most of the energy on the policies that are life insured. As me and my husband, we also put policies on my children. And I lately I also get policies applied for my parents. This took a long time being, you know, Chinese culture, it take them a long time to agree to do, do the medical exams. For me, it took me two years to let them kind of understand what I do and why they're doing. Because in my culture I have a life insurance company on my parents, they're like what are you looking into? Get death benefit when I die. But mom is not, it's not like that. I'm diversifying my family banking portfolio now. So, so for those, you probably have your joint venture partners, those can be life insured as well or your family members that you have insurable interest with. Those are all the different areas you can diversify. So I diversify by different life insurance. So I have policies on each of us and that's how we, we build our family banking system. Now I put a question mark on my dad is because you see, when, when I say the bank will only learn your money when you can prove that you don't need the money. The same is for life insurance. You need to secure your insurability. Because I, I was quite nervous. I'm not sure my dad can get approved by, by, by the underwriting. So, so, so yeah, so fortunately he got approved on one life insurance company. I applied for two life insurance companies at the same time. So actually as we speak, he actually got one approved. So it's great. So back to the question I mentioned that, you know, before I get to know infinite banking concept, I already have some policies in place. What if I already have life insurance? Look at me. I had 10 policies before knowing infinite banking concept. You can see most of them are term. As a real estate investor, I know it's important sometimes your joint venture partner might want you to have a term policy so that they know that if the deal went south or something happened to you, they don't have to deal with your Family, the death benefit will pay out for this deal and they get their portion. So that's also something you can discuss with your coach as well. Now I have a lot of term and I have some small, small whole life policies that are not properly designed whole life insurance policy. Do I intend to keep all those policies? Maybe not all of them, but term has its own benefits. Because remember when I mentioned that when we build the infinite banking concept policy, this is a very special design, we're not going to solve for the death benefit. So my initial death benefit will not be very high. But if you still need to have protection for your loved ones, protect your mortgage. So it's good to have a term to cover your insurable need. Until your infinite banking cost of your family banking death benefit grow to cover enough, then at that time you can drop term insurance. So that's just something that give you a little idea of what to do with your existing policies. It doesn't mean that you know you cannot do this anymore. The chances are you can. Every policy has its own goals and objective and any one of the advisors on our team are happy to review your existing policies. I also have, currently I have 29 policies total. So I had another 19 policies in my family. So you can see I have policies me and my husband or each of my three children. The policy that I just showed you guys, the windfall of that rental property is probably number 16 and 17 because I own that property in a corporate level. So that's a corporate policy. I actually started to get to know this IBC concept in 2020 and underwriting takes a little bit longer. Nowadays if you wanted to start this policy, if you have a windfall of money, we have new rules. You probably can Backdate up to 364 days. Like I mentioned that I also have policies on my mom and on my dad. Now sometimes people say, am I too old to start this? Well, when my mom had this policy, she's 69 and my dad just got approved and he's 73 and with a back date he's 72 at the insurable age. Of course, if we look at the cash value standpoint, having a policy on my life versus having a policy on my mom's life, the policy on my life, the cash value is a little bit more liquid. However, I'm building a family banking system. We have to look at things in a more holistic view. If my mom live for a long life, that's great. Cash value continue to grow. We can utilize that cash value for all these Things opportunities in life. But if mom pass away, the death benefit will goes back to our family banking system and we are able to open up more policies. We can keep this money in the family. So that's something that you can think about. You can maybe also see that I have some critical illness and disability insurance here as well. Well we all know that when you have your money, you want to protect your money, you want to protect your eggs. Well you also wanted to protect your, your ability to earn money and your ability to deposit into your banking system. So if something happened to me instead of I have to sell a property, I have to sell some asset, I have to interrupt my family banking deposits. Why don't we use life insurance companies money to have that protection. So that's something that I incorporate for all my family member that I can. And Jason Low like to say the best investment is the one that pays the most most when you need the most. So my friend, I wanted to encourage you to think like a banker. Put yourself in a banker's shoe. Instead of looking into the, the simple interest. Now you wanted to get the compound interest and pay someone else the simple interest. What do I mean by that? What is does compound mean? I really resonate with this calendar demonstration. So there's a cliche saying that you cannot have the cake and eat the cake at the same time. And that's exactly what Nelson's first principle is. So I'm showing you a very, very extreme example. I'm saying that at the first day you have $0.01 and your money can double every day. Now nobody can really achieve that, but I'm just using an extreme example to demonstrate the compound effect. So first day, one cent. The second day double two cents, four cents. How long does it take us to have one dollar?

How long does it take you to get $20,000?

So from $0.01 double every day, it takes 22 days to get to $20,000. My question is, when do we get the second $20,000? You actually just need one more day, you get $20,000. And if you keep let your money compound at 31st day you get $10 million. Real estate investors, I never get to see that money because I never kept my money for that long. But the thing is, life happens. What if we need to use $20,000? Now we see this great deal we need to use, we have a family urgency, we need to use the $20,000. Most people that we are used to, is we going to withdraw the $20,000? If we withdraw the $20,000, what is our money for the next day.

It goes back to one cent. And by the 31st day we only have two and a half dollars. What is the difference if you keep the money in the family? You are getting $10 million at the 31st day. But you interrupted the growth. You only get two and a half dollars. So, dear real estate investors, I want you to ask you on the 22nd day if at this time you need to use $20,000, and I come in and say, hey, I'm willing to lend you $20,000 so that you can have your money grow for the rest of your life. Compound, uninterrupted. Would you like to borrow from me? You probably wouldn't ask what is the interest rate even I charge you 10%. I'm happy to pay 10%. I'm happy to pay $2,000 so that I can have my money at $41,000 the next day. This is what.

The compound growth can do. Because any interruption for compound growth is permanent. And who understand the most about compound? The banks. So this quote, I really like Albert Einstein. He said, compound interest is the eighth wonder of the world. He who understands it, earns it. But he who does not understand it, just not. They don't not earn it. He who does not earn.