Give Me 20 Minutes And I Will Save You 5 Years Of Wealth Mistakes

The future is unknown. You know, you have to consider what if scenarios. We all know that we're all going to, we're all going to leave planet Earth at some point in time. We don't know when, we don't know how. For the most of us.

If you're a business owner, Rich and I are business owners. Haven't you always deeply desired a way to grow wealth without market risk, to build a financial legacy for your family and to never be at the mercy of traditional banks.

Now layer in the tax system. So let's just see how the, the tax system works against James and works for Alex. Let's just compare them and see how, let's just see what the outcomes are. So James is.

Much like every business owner that we're first introduced to. He's, he's fighting against that.

Just refer to it as the tax man, for lack of better description.

Right?

Because his business is doing well and he's facing another problem. So if you think of this sort of mid business journey, this mid career phase, business is doing great. He's got passive, essentially money, retained earnings that he's deployed corporately into investments, and he's generating passive investment income and that is taxable. And he now is at a point, he's 15 years into the business and he's accumulated north of 2 million in corporate savings. The problem, plural.

Government doesn't like business businesses hoarding cash, especially in passive investments, and all of that money is sitting on the books of someone else's system. So who's really retaining the earnings? That's a question that I ask business owners all the time. You're telling me these earnings are retained, but who's really retaining them? Where are they retained? Well, they're in our corporate savings. Okay, where do those corporate savings reside? And the light bulbs start to go off. It's like, wow, I've never really thought about it this way. Because his accountant sits down and warns him and says, hey, listen, like, once your passive income from these investments that you've been making corporately exceeds 50,000 a year, that small business deductibility shrinks significantly and you're going to pay a much higher rate of tax. And, and so what are his only options? He can withdraw the money. He can get absolutely decimated by personal tax. He can invest it in traditional vehicles and keep losing capital in the way of taxation. But either way, he's at the mercy of tax laws which change whenever the government wants more revenue. Alex's situation, coincidentally, the.

That's all the time, right?

And Alex's situation.

All of his accumulation is invisible to the government. And so by year 15, he's got 2 million, but that 2 million is not sitting in taxable investments. That 2 million has been accumulating inside of his system of corporate owned high cash value life insurance contracts, which are exempt from passive investment income tax rules. And so when Alex borrows against the cash value of those policies, meaning the company.

And he's not triggering any taxable event on that borrowing.

And he's not sacrificing any of the ongoing daily growth of cash value.

And he's in a position of total and absolute control. He's thinking to himself, okay, translation, government doesn't see it. I've got a system now that gives me access to capital without triggering a taxable event. I can avoid the passive investment income tax rules. I'm using a process.

A process that is remarkably efficient and keeps me in a position of total control. And they're not even at retirement yet. And so if Alex and James got together and sat down and had a cup of coffee and talked about how they were financing the things their businesses need and how they were dealing with retained earnings, surplus capital, two completely different outcomes there.

They're not changing their objectives. They need money to grow the company and they need to do something with surplus capital. Ideally, they want that surplus capital multiplying and growing. So the objectives are almost identical, but the process that they're deploying to achieve the objectives is remarkably different. And Alex knows that, and he knew long ago he's on to something. And James.

Is still in that position where he is not really in control. And so that's concerning.

You know, you mentioned that the, you know, the government doesn't see it and like, there's nothing nefarious there. It's, it's not, nothing's being hidden. It doesn't need to be because it's a private contract. And, you know, I think a lot of business owners value privacy. A lot of people value privacy. So where can you create more of that? You already have to report enough things on your, you know, your financial statements and every year in your tax return. You know, in Canada now you got to report if you sell a property, even if it was your primary residence, there's all these things you have to do and you can't control these rules. But like as an example, there's a lot of locations where you can pull a land title, the title or the deed to a property at a, you know, municipal office, or a lot of it, you know, in Canada, A lot of it's online. As an example in Alberta, you can do the Alberta land titles. You can pay $10 and you can pull a title on any property if you have the land description or the address, any property that you want. And if you want to spend another $10, you can pull an instrument. So if there's a mortgage or a document that's listed there, you can pull that documentation too. That's a public database. Yeah, you might have to pay to access some information, but it's all publicly available information. There's no database of insurance contracts. Like no one can get in there and figure out, oh, okay, well, they're Richard. There's Richard. He's got this corporation as corporate policy and okay, so we can pull that, we can pull that contract and see who the life insured is and who's got all the control over this. We could see the original. Like, they can't see any of that information. They can't see your loan available, your loan outstanding. They can't see any of that stuff. You have to report on your financial statements that there's a cash value asset on the books. But if you have 10 policies and they're on 10 different life insured people, your key employees, your spouse and whatever, you just have to have a line item that says you've got a bunch of it. You don't need to indicate that you have 10 different line items. You know what I mean? Like there's, there's a way that you can manage that effectively. And there, there's. Maybe that's a subtle thing, maybe it doesn't matter to some people, but I think to some people listening to this, it will matter. That degree of autonomy and control. You know, we, we talk about the seen versus the unseen. Jason, we can see how a spreadsheet looks and the projections of something. We can see a piece of equipment, that CNC machine that we bought, and we can see it land in the shop. We can see it plugged in with the electricians. And then we can see out the window of our office. We're looking down on the shop floor. We can see the guy that's sitting there with his goggles, you know, with his safety glasses on, working away at that machine. Yeah, that's the scene. But once the product that you generate off that machine gets on a truck, gets boxed and packaged and goes out the door, you don't see it anymore. But revenue starts showing up in your business structure. So there's a bit of a disconnect with the scene and the Unseen, because not. You don't look at that one little item and say, oh, this is exactly how much revenue that one item generated. What you do is now you're looking at the end result on the month, month, or the quarterly, you know, financials. So sometimes there's a disconnect between financial statements and financial things that we see or projections and the reality of what's going on. And I think it's important that we understand that there's so many unseen advantages. And the feeling, like everyone will recognize the feeling that when you know, you're standing up tall, your shoulders are back, like you've got good posture because you're, you know, there's a confidence that you have in life about certain things. That feeling that you have on. On those days, that's the feeling that Adam has around how he finances everything in his business.

And he. He feels really, really good about it. And we're talking. So we're talking about James and Alex, and now we're in the retirement phase, and these are clearly two very different outcomes yet again. And then once we're done that, we'll do a final scorecard just to sort of line it up. I think, you know, our viewers and listeners are, are understanding the distinctions here, but we'll do a final scorecard just to. To emphasize a few key, few key points. So James in the retirement phase, so he's stereotypical age 65. He realizes, okay, my business has done extremely well. I'm asset rich, but I'm cash poor. I need to start drawing down investments. I'm going to trigger, obviously, taxable events, whether it's capital gains or, you know, he's being taxed on interest income every single time. And so his options are to pay an exorbitant amount of tax on those withdrawals. He could keep his investments tied up, and he could live on a modest budget. He could sell his business and obviously forego a portion of that sale in the form of tax. He spent decades building wealth, but I just want to really think about that. Who was he spending decades building wealth for and only to watch taxes take a massive bite out of it? Whereas with Alex, different story. He's got access to capital, he's got asset preservation.

And at the same age, he doesn't sell assets or drain investments. And he's structured in a way where he didn't trigger any tax bombs either.

So what did he do instead?

He was structured properly. He was able to generate retirement cash flow, and he was able to do it in a way where he didn't trigger a taxable event because he was structured properly and he's able to pass on wealth to his heirs in an incredibly tax efficient way. And he's leaving a business with a essentially now, given that there are several policies in the corporation, he's leaving a business with a self funding financial system that's going to benefit future generations. And his assets never stop growing even while he is in that retirement phase. That's a very clear distinction. So if you line that up right, we talked about business expansion, we talked about the passive investment income tax rules and the impact of that. We talked about retirement income and legacy and estate planning. So if you look at James business expansion, he's paying interest onto the books of someone else's bank, permanently giving up the opportunity to earn interest on that money. It's a permanent transfer of capital away from his company and by proxy away from him.

Passive investment income tax, he's paying exorbitant amount of tax on corporate investments and he could avoid that altogether. And then in the retirement income phase, he's paying an exorbitant amount of tax as he's drawing down on his RSPs and his asset withdrawals. And then from a legacy in estate planning, he's leaving behind a taxable inheritance. That's the worst inheritance anyone can receive is one that's taxable. And then you look at Alex business expansion, he gets to borrow against the cash surrender value of those policies on demand, on his terms. He's recapturing the interest he would have otherwise paid to someone else's bank during the passive investment income tax impact. He doesn't see any of that impact because the money's growing, he's paying premium and his cash values are growing. Uninterrupted retirement income, he's got tax free access to capital without reducing the assets value and without triggering a taxable event. And then at legacy and estate planning time, he's got a tax efficient wealth transfer.

They worked with the same business conditions, the same amount of capital. They just changed the process of where the money resided and how they financed the things that their businesses needed.

And how they addressed that retirement phase of life and what happens when you graduate, when you die. And so James, if you think about the, I guess the takeaways, I'd love to hear your insights. Too rich on the takeaways. But here's what I see. You've got James, who he literally followed the traditional path and he ended up doing what the whole way. He's fighting against taxes, banks, the government at every turn And Alex just played a different game. And he essentially implemented the infinite banking concept corporately. He became his own banker. He controlled how, he financed everything that he needed, and he used the tax laws to his advantage. These are all perfectly compliant methods of operating, fully tax compliant. And so my question to all the business owners watching or listening, who do you want to be, James or Alex?

The other thing I would just add to that is the perspective of what if, okay? So the future is unknown. And, you know, you have to consider what if scenarios. We all know that we're all gonna. We're all gonna leave. Leave planet Earth at some point in time. We don't know when and we don't know how for the most of us.

And so you have these same two gentlemen, and let's play the what if scenario that they're. They're in this structure that we've identified. They got their 2 million in revenue, businesses humming along. They're focused on growth. They're trying to go from 2 to 3, 2 to 4. They want to double the business over the next five years. You know, typical model for a business. And now we go one, two, three years down the road, and all of a sudden something happens. And both of these individuals, they just so happen to be on the same city of Edmonton, ETS bus. Not sure why they were on a bus. Maybe they were going to a hockey game. All right? And something happens. They're no longer with us, okay? So in both scenarios, the same thing needs to happen. Someone's got to clean up the mess. The business needs to keep going. Okay? Someone's running the business. So they have key employees, the spouses, maybe, maybe involved, not involved, don't really know. Someone's coming in to take over. If there's a partnership arrangement, we got to sort all that up. Could impact the business drastically to the point that the business dies in a very short time frame. Couple of years. Takes the value of the business and usually declines it rapidly because we've lost the primary. You know, the suppliers, the different people that you work with, the different clients, they've got a relationship with that business owner who's now gone. And so they want to reestablish a relationship. And if no one comes in to fill the void, that. That's a problem. Meanwhile.

The government tax man is hovering over their assets and saying, hey, really sorry this happened to you, but you've got this business asset and it. And the assets within the business, and then you have. No, no, maybe. If it's running and it continues running fine, we Might be. Okay, there's. But now you've got all your personal assets and one of your personal assets is your share value of your business. Right. So whatever your business is worth, there's a value proposition that you would own as the individual shareholder that is part of your total estate value that's going to have to get cut up in the machine here. So you want to leave a bunch behind for your family. How much is going to be left behind when you go in each scenario? Well, we know for a fact that at least one of these gentlemen, Alex, is going to have a lump sum of capital show up for the business and probabilities. If he got the business set up, he probably got himself set up personally as well. Because most people who do this, Jason, they don't just take care of the business, they take care of their family. And so they're doing this personally in their life as well as at the corporate level. So we have both of these things happening in tandem. Family's much better looked after. It's still going to suck. It's going to suck for both parties, but we're going to have an influx of capital in a very short period of time to solve major financial challenges and problems so that the family has a right to go on living and they can. Meanwhile, James, if he hasn't done a very good job of that and he doesn't have that set up, and he may, but is it really going to the same spikes term insurance, like what is end up happening? He's got all these registered accounts that are subject to a massive tax hit because he's going to have to report them as income and because he's no longer there or he's got to roll it over to the spouse. Like there's just a number of factors that create a whole nother dynamic. When you look at the what if scenario of okay, we lose these individuals early on in the business, not later on in life and they're both looking at a very different story. So there's the story of how they're financing, there's a story of how they're growing their business or the story of how they're growing their wealth. And then there's a story of what the hell happens when they're dead, right?

Yeah.

Basically.

I think that what's super important for us to get across is that.

If now you know that you could have, I guess, the things that every business owner needs, right? Tax free growth on capital and access to capital whenever you need it without having to ask for permission or to Rely on someone else's system. And if you could achieve the one thing that you want as a business owner, right, a system that puts you in a position where you can control cash flow, you can protect your business from the tax man, you can eliminate what's likely your biggest fear about your business, which is losing hard earned profits to taxes or running out of capital when you need it the most. And let's be honest, I mean, if you're a business owner, Rich and I are business owners, haven't you always deeply desired a way to grow wealth without market risk, to build a financial legacy for your family and to never be at the mercy of traditional banks? If you've already tried the usual financial advice or.

Tax saving schemes, or even dipping into lines of credit, you're probably just sick and tired of over complicated solutions that are continually falling short of delivering real value. And when we are describing high cash value, corporate owned life insurance, which is dividend paying and you can legally and compliantly save on taxes, you can grow capital, you can remain exempt from passive investment income tax rules, you can implement the infinite banking concept, which is a proven process that puts you in a position of control of how you finance your business needs. Recapture interest, keep more of the company's profits working for you, and have ready access to a reserve of capital for your company that gives you flexibility. So you can seize opportunities or you can weather challenges and you're not having to rely on traditional loans. And so if you're tired of watching profit disappear to taxes and interest payments and you're wanting an effective strategy that aligns with those goals, then schedule a conversation, get together with the right person on our team and let's explore and let's help you step into control.

Isn't that good? Compounding dividends is like a runaway train. And once it gets going, it's the key to building wealth. And that's one of the reasons why I have so many policies as well. I don't invest capital in anything that I don't know. I don't care how appealing the investment opportunity is. If I'm unfamiliar with it, I don't invest in it. Keep reinvesting those dividends into more stocks.