How Canadian Infinite Banking Works In 30 Minutes

The question is, how much of the banking function do you control right now as it relates to your needs? Your money must reside somewhere. What better place to have it reside than inside of an instrument that you own, that you control? And from that place, you can implement this process of becoming your own banker. Someone must perform this function in your life. It should be you.

Now, what's super important to recognize is that there are four characters in the financial play. Now, what I mean by that is when I walk through these characters, I want you to write them down. If you have a pen and paper handy or if you're typing on your computer, I want you to capture the four characters in the financial play. Now, the first character is the depositor. All of you are familiar with that character. When you get paid, you earn income regardless of the source. Who sees the money first? The bank. It gets deposited onto the books of someone else's bank. That makes you the depositor. The second character is the borrower. The borrower is the most important of the four characters in the financial play because the borrower makes this all go round. The borrower is the person who goes to a bank, goes to a private lender, goes to a third party finance company and wants to gain access to someone else's pile of money. You have to jump through hoops. You have to fill out lengthy, nosy credit applications. You have to get your credit checked. If you're in the real estate realm, you have to prove and demonstrate your ability to repay those loans.

Provide personal guarantees, subject yourself to a process that's very frustrating and very time consuming. The third character in the play is the banker. The banker is the one who decides who gets access to the pile of money and what the terms of that access are going to be in terms of repayment, schedule, payments, interest, etc. The fourth character is the bank owner. The bank owner has an expectation of profit. Now, if you can become all four characters in the financial play, not only will you accumulate wealth, but you'll also maintain control. And for most of you, if not all of you, on today's webinar, you are only two of the four characters in the financial play. You're both the depositor and the borrower. We're going to show you how to become all four characters in the financial play. Now, how many of you have heard of the Golden Rule? Now, the golden Rule simply states that whomever has the gold makes all the rules. Now, people have abdicated their responsibility and more importantly, the opportunity as it pertains to the banking function in Their lives, they're depending on someone else. Much like the heart and lung machine, they're depending on someone else to perform that job. And that character in the play is the one making most of the money, and rightly so. Because of the golden rule, whomever has the gold makes all the rules. Now, the person on the street in Canada today understands the subject so poorly that they're doing the equivalent of living off of a heart and lung machine. And what I want to talk to you about is how to create a system in which you can control everything about the banking function as it relates to your needs. Now, I want to take a moment and highlight this particular book, which, if you do not have a copy of this book, you'll need to get your hands on a copy. It's titled Becoming youg own Banker. Over 470,000 copies sold. Why? Because it works. And so be sure to get your copy. We sell it for less than Amazon, we ship it anywhere in Canada. And while you're there picking up your own copy, pick up a copy for someone who you believe would benefit from the gift of what we do. Let us know where to ship it and we'll get it sent right to that person's front door. Or we'll send it to you and you can pass along that copy as a gift. Now, the very first principle that must be understood is that you finance everything that you buy. What that means is that you either pay interest to someone else to access their pile of capital, or you permanently give up the interest that your own money could have earned. Otherwise, there are no exceptions. I say that again, there are no exceptions. It's called lost opportunity cost. When you pay cash for something, you've permanently transferred that money away. You can't earn interest on it again, you can't spend it again, you can't use it again. It's permanently transferred away, not only for you, but for every generation that comes after you. Now, so many people that we meet with pay lip service to the term lost opportunity cost, but very few people actually reckon with it. We're going to teach you how to reckon with it and how to change the flow of the money so that it's coming back to your family versus flowing away. The whole idea is to recapture the interest that you're presently paying to banks, to finance companies for all those things that you need throughout your lifetime, and to have the money flowing back to your family or business. The question is, how much of the banking function do you control right now as it relates to your needs, Your money must reside somewhere. What better place to have it reside than inside of an instrument that you own, that you control? And from that place you can implement this process of becoming your own banker. Someone must perform this function in your life. It should be you. Now, the process is not an either or. I want to emphasize that because again, we meet with so many people across the country every day and we often hear, gosh, I wonder if I should invest in real estate or become my own banker. Should I purchase bitcoin, non fungible tokens, dodge coin, digital coin, whatever coins there are out there, Should I be purchasing that or should I become my own banker? This is not an either or. The process of becoming your own banker is an as well as. Because you cannot achieve a better rate of return doing anything if you ignore who's controlling the banking function as it relates to that thing that you want to do. Becoming your own banker is not about addressing the yield of an investment. It's all about how. It's all about how you go about financing the things in your life when, which can certainly include investment. Now with that, I want to turn it over to my dear friend and colleague Vern, who's going to lead us into the grocery store business. Vern, take it away.

Well, Nelson taught us that we need to learn how the grocery store business works because we wanted to pick a business that you are both a consumer and a distributor of the product and.

You have an unlimited market. Everyone has to use groceries. So just like banking, everybody has the use of money, everybody has the use of groceries as well. Right now somebody actually has to perform the function of distribution.

Now if you were going to get into the grocery store business, obviously we'd probably want to spend some time, some time studying the business. Just like we're here today to learn about the process of becoming your own banker.

Right?

You need to purchase a superior location, you need to build an attractive building, and you need to stock your shelves with high quality merchandise. So at this point, if you think about the grocery store business, we found the building, we've stocked the shelves, we've done all that, we've spent a lot of time learning about it. We put a lot of money into the business, but at this point, how much money have we actually made in the grocery store business? Zero. Exactly. So what's the job? What's the function of the grocery store? We have to turn over the inventory, we have to sell that to our customers. Right.

So if we turn over the inventory in the grocery store 15 times, we're going to break Even if we turn it over 17 times, we're going to be profitable. And if you can turn over the inventory 20 times, then you can retire early. Okay, so now if we consider how do things actually work at the grocery store? The inventory is going to come into the grocery store, and then we need to sell it to customers at a specific price. So we're going to use 60 cents as an example. So Nelson taught us that we want to put as much capital back into the grocery store as we can to create more profit so we can buy more inventory to sell to more customers. So instead of putting 60 cents in the grocery store cash register, what if we were to put 62 cents into the grocery store cash register? Because that's just going to give us more capital to work with to purchase more profit.

Right?

Okay, so I want to ask you a question. Let's think about this for a moment. Think about who does the grocery shopping in your home that might be you. Maybe it's a combination of both. Now, first of all, if you were going to fill up your grocery cart with groceries, there's no way that you would go shopping for groceries at someone else's grocery store. If you own your own grocery store, right? That would be crazy. That would be like stealing from your own grocery store. So you're going to fill up your grocery cart full of your cans of peas or whatever the rest of the inventory is. Now, here is the question. Remember, you own the grocery store, so you're the boss. So when you fill up your grocery cart, are you going to go out the front door like all of your customers and pay retail costs for those groceries, or are you going to go out the back door with those groceries? If we go out the front door and we pay retail costs, if we put a little extra cash in the cash register like we shared here, 62 cents. All that is doing is pumping more money back into your own grocery store so that you have more profit to buy more inventory to sell to more customers. You know, a lot of business owners trick themselves into thinking that going out the back door, hey, I'm the boss. I can do what I want. I've already paid wholesale for this, for this inventory. They go out the back door. And what that is is really a polite description of theft. And you might be surprised to hear, I mean, if you. If you think about your staff for a moment, if they see you going out the back door, what are they likely going to do? They're going to go out the back door just like you did. And that is actually where the highest margin of theft in the retail industry comes from, is from the staff.

So they're going to take on your behavior.

Now, like Nelson would say, once you understand the grocery store example, once you understand that pumping more money back into your own grocery store is just going to help you create more of a profitable business and make it more attractive so that you can one day sell it so that you can enjoy passive income time, think about what the other business owners are doing down the road. They're going out the back door for the next 15, 20 years. And you've been going out the front door and taking your cash and turning over that inventory. That's a really, really important piece of the process, is it's all about recycling, it's all about turning over the inventory. So once you understand the grocery store example, the rest of the process of becoming your own banker becomes ridiculously simple. Like Nelson would say, don't steal the peas. And I actually, I don't have a can of peas here to remind me. I've got a can of chickpeas. So this is my reminder.

Okay, awesome.

So here's the problem. Oh, sorry. I've got.

Yeah, this is, this is something that we need to think about. Again, the problem. Remember, wherever your wealth resides, somebody will try to steal it.

Think about what's happening right now. During the pandemic, Canadians are saving more money. $150 billion saved by Canadians during the pandemic. There's going to be a deficit rise to 381.6 billion. Statistics Canada has required Canada's largest banks in credit unions to turn over personal data, highly sensitive information about their customers without the custom knowing. So deposits, withdrawals, bill payments. So government bureaucrats are going to have information about you. They're going to be able to see all of your sensitive details. And not to mention, regardless of political leanings, the COVID 19 bill that was passed gives the Liberal government the opportunity to raise taxes without parliamentary approval. So the question becomes, who is the banker in your life today?

So think about this for a moment. Remember, this is all about a process, the process of banking. So today you're working, you're earning an income, and then that income, what do we do with it? Well, your income gets deposited. It gets deposited into someone else's bank. I say that again. Your income, you're doing all the work and your income gets deposited into someone else's bank. And who are they putting that money to work for? Not for you. And what do you do with the money once it lands in the bank. We got to take it out. We got to live our life, right. We have the need for the use of money. We have bills to pay. Right? In other words, you're doing all the work, someone else is getting use and control over all of your money.

Now think about that for a moment. You're doing all the work, someone else is getting all the money. How does that make you feel? Does it make you feel like this? Oh, our giphy's not working. But that's okay. We know Jim Carrey is a crazy guy with lots of high emotions.

Now think about that for a moment. Now let's. Yeah, this is a really great point. You know, if the minority of people in the world are controlling and accumulating the capital, why is it that you and I continue to do what the majority of people are doing with their money financially, and then we wonder why we don't get ahead. It's. It's crazy. Now, if you understand the problem, you'll know what you need to do to. Excuse me. If you understand the problem, the solution will become clear. That's why Jason wanted to take a deeper dive into the problem so that we can understand.

Exactly what the solution will be. We're going to turn it over to.

Sarblo for this one.

Thank you, Jason. Thank you, Warren. This has been really good. Now, this is straight from Nelson's book. And Nelson is demonstrating a teaching point where he talks about exactly what one you should. All our income gets deposited in someone else's bank. And once the money is deposited, we take that money and we use the money to buy the goods and services that we need. So we are doing all the work, somebody else is getting all the money. So building on that, so this is an annual pattern of spending. Let's assume a family. They make about $26,000 per year net after tax income. And in this graph, this is again straight from Nelson's book. He's showing where the family is spending all their money. Well, first the money gets deposited in someone else's bank and they're using the money to have a car payment. So you can see 20% of what they earn is going towards car payment. Now, that 20% is a combination of principal and interest. Now, the smaller red bar just above the auto car payment, that represents the interest volume paid on that car payment. So it's not that 5% is the rate of return, 5% is the interest rate on the car financing. That 5% is a total volume of interest paid on the car's dollar amount of Interest paid, that is what that 5% represents. So again, 20% of what they make is going towards car payment. And 5% of the total car payment is the interest volume. They're spending about 30% of what they make on housing mortgages. And 25% of that mortgage in the first five years is in trust. So out of the total mortgage payment that they're making in the first five years, 25% of the total mortgage payment is in trust. Now they have living expenses. They got food, clothes, groceries to buy, and they may have some credit card debt, lines of credit debt, some board payments. So the 5% just above the living expense bar, that represents the interest paid on the living expense. Now, after everybody's paid, they're saving 10%. So after car dealership is paid, after housing is paid, after living expenses are covered, they are setting aside 10% of whatever they make. Now, the financial gurus in the marketplace, they talk about, let's focus on that 10% because that is the amount of money that we have to work with. Let's go take that 10%, let's go invest. It doesn't matter what we invested. Let's chase rate of returns or let's chase investments with cash flow to push us ahead financially because we are only be able to work with what we have saved, which is that 10%. Now, if you add up all the red bars together, so if you add up the car interest loan, you add up the housing interest.

On the loan, you add up the 5% of living expenses, all that adds up to about 35%.

So for every dollar that the family earns 35% or for every dollar the family earns 35 cents. Is LE the family just on interest payments? They're not focused on that. They focus on, let's take that 10%, let's go put this money to work and let's get ahead financially. So saving is a step towards progress. So if you're saving 10%, that's one step forward towards progress. But you're giving away almost 35% in interest payments over the year, you're taking three and a half steps backward. Next year comes along, you're taking another step forward, which is you're saving 10%, but you're giving with 35% on interest payments, you're going back three and a half steps. I wouldn't categorize that as a progress. I would categorize as we're trying to get ahead in life financially, we're pushing hard, we're working so hard, but we don't really know what the problem is because we haven't really taken the time to understand holistically what is happening in a financial situation. The problem is not taking that 10% which we save and let's invest it in market to get 20, 30% rate of return. That is not the issue. The issue is we have more money leaving the family than we can ever earn on interest rates on investments. That is the problem. The reason why that's a problem is because the family is familiar with the process of banking. They're just not controlling it. Someone else is controlling the function in their life. They're the one making the payment and the money is leaving them. Now imagine if they are able to take control over the process of banking, which is how do we go about financing things that we buy in life, like cars, housing, things like that. Now they take that 10% and they start controlling the banking function. So now they're putting the savings to control the function called banking. And let's just assume they are now recapturing payments coming back to them. That is going to produce much more access to capital for the family by keeping money in the, in the family and also access to capital for multiplying family wealth in maybe future investments like real estate and things like that. We cannot get a better rate of return investing into anything without first controlling the function called banking. And this what you see on your slide right now, this is again speaking and building on Nelson's teaching point where he talks about interest rates and interest volume to two different things. And to demonstrate the example or to demonstrate the essence between the interest rate and interest volume, we're going to use this simple analogy. So let's just assume that we take a mortgage in a house and we are, we are, we are buying a house worth $400,000. And let's assume that the amortization that we have from the bank is 25 years on that mortgage. And I'm going to assume that the interest rate on this mortgage is 2.92%. Based on that, a monthly payment is 1880 to the bank.

Now let's just talk about how do we get approved for markets. First thing is we have to qualify. We have to put a down payment. We literally have to prove the bank that we don't need the money. And then, and then alone the bank gives you the money. So the 400,000 comes to us before we put the down payment. Now the monthly payment, which in this case is 1880 per month, the monthly payment is a combination of principal and interest. So in the first month you can see the principal paid is 906.91. And the interest that we pay on that monthly payment is 973 and 33 cents per month. You add the first month principal to the interest, that is 1880 per month. Now when we go apply for a mortgage, we are just to focus on the interest rate in this case, which is 2.92%.

Now we all do math the same way. So if interest rate is 2.92%, please help us understand where is the 2.92% in the first month mortgage payment? Do you see 2.92% there or is it more than 2.92%?

It's a lot more than 2.92%. It's almost equal to mortgage. The principal payment that we have in the first month, see 2.92% is the rate that 973 that you're paying is interest in the first month. That is the volume of interest. So rate and volume are just two different things.

Banks make money on volume, not the rate.

Now who's in control on this transaction? The family is doing all the work to make sure that the payment comes to the bank. But the bank is in control on all the transaction. If you Fast forward to five years.

The principal payment now is 1046 for that month in the five year mark and the interest payment is 833. Do you still see 2.92% in the transaction? That's a no. Because 2.92% is what the bank is going to charge you every year on the remaining balance.

So 2.92% is what the bank is going to charge you every year on the remaining balance is not the. It's not about the rate as the volume and velocity of the interest that we're going to pay to the bank. We borrowed $400,000 in this transaction to buy a house. Let's just assume we stay in the house for 25 years. We end up paying the bank $564,000 in total money. And out of the $564,000, 164,000 is the interest paid.

So total interest volume paid over 25 years is almost 40% of what we borrowed. And that is the volume. And that is insane. And that is how we help reuse the banking term.

Now, at any time in this whole transaction, if we miss a payment to the bank, how do you think the bank is going to get paid? But realizing the collateral, which is the house, because when they give them loan to you, the House is the collateral, the lien is your income. They put a lien on your income, they house the collateral. So in case we miss a payment to the bank, they're going to take over the security, sell the house and get paid. Banks always lend with security. They do not invest with risk. That is the fundamentals of banking. So when you become the banker in your life, that is exactly how you're going to build wealth. It's security, not with risk. Now, in the above example, the bank is in control. So when we ask a question, who is in control of the money in the above example? Jason, if you could go to the next slide.

It's the bank.

What is the underlying asset of the bank? And the above transaction, is it real estate or the stream of payment?

It's the payment that is the underlying asset. Because once they're getting the stream of payments back from you, principal and interest and interest is this extra money that shows up for the bank. They can put all that money to work and make more profit. Banks make money by keeping the money in motion. They do not make money by letting the money sit still. Whoever controls the motion of the money is going to accumulate wealth. So when you become the banker in your life, the more money you move using your banking system, the more opportunities you're going to create, the more wealth you're going to generate for yourself and your family and business and for whoever who's depending on you financially. So let's look at this example. Let's look at. Let's just say this is the bank. Now banks need deposits to operate. So let's just say there's a depositor who put in 50k as deposit into the bank. Now in exchange for the deposit, the bank is giving them 2% on the money. Now think about this. If you today deposit money in a bank, that's your money in your mind's eye. So that money to you is an asset because it's your money. You're depositing money in the bank. That money is your asset. But what's it to the bank? What is your money to the bank? To the bank that money is a liability because A they have to pay you in trust on that money and B, they know that you can go in and take a portion of that money out at any time. And if you take a portion of the money out, it leaves less with bank to make profit. So what you call an asset, which is your deposit, the bank calls a liability. Now immediately the banks lend that money. Let's just assume in this transaction they're lending the money to somebody who wants to buy a house. Now, if they're charging you 2% on your deposit, the way the banks make money is charging in trust. So somebody who's buying a house so bank lend them money via mortgage. So again, I'm not focused on the rate. This is a teaching point to show you the volume and velocity of keeping the money in motion. So bank is charging 4% to the buyer of the house. Now, the buyer of the house gives the money to the seller. And where do you think the seller puts their money? Right back into the banking system. It doesn't matter which bank the money comes from or which bank the money goes to. It goes back into the central banking system. It's part of the banking system. Now, somebody wants to finance a car, they go to the bank, they borrow money at 5%. Now the person who buys a car gives the money to the dealership. We know that dealerships do not have a big mattress in the warehouse where they stack all the money. Once they receive money from the transaction that they do of selling the cars, they put all their money right back into the banking business. Now, let's just say you want to get your house remodeling done, you go to the bank and you borrow money on your line of credit at 7%. You give the money to the contractor, and where do you think the contractor is going to put all that money? Right back into the banking system. Now, you pay off your living expenses, your credit cards at 12%. Now, where do you think that money ends up? It ends up right back into the banking system. So let's go back to the deposit. You deposit 2% into the bank, and on the first transaction on the house, the bank is charging 4% on the loan. So the spread for the bank in that transaction is 2%. Now, they're giving you 2% on your deposit, but they're charging 5% on the car loan. So the spread for the bank and that transaction is 3%. Now they're giving you 2% on your deposit. But for house remodeling, they're charging 7% on the line of credit. The spread for the bank in that transaction is 5% on the living expenses. Again, they're paying you 2% on your deposit for living expenses. For credit cards and things like that, they charge 12%. The spread for the bank in that transaction is 8%. So if you add up all the spreads for the bank, that's 2 plus 3, plus 5 plus 10, that's 20%. So if the bank is giving you 2% on your deposit and the spread is 20%. If bank is charging you 2%, the spread is 20%. Technically, the bank is making 10 times more than you on the spread.

So the bank is making thousand percent more than you by keeping the money in motion. It's not 18%. It's not the difference between what they pay you and what the spread is. It's the volume and velocity. So if you're getting 2% and the spread is 20%, the bank is making 10% more, 1,000%, 10 times more, 1,000% more than what you are earning on your deposit. And this is all possible by keeping the money in motion and not letting the money sit still.

That business, that bank can be used. So again, I asked this question. Your deposit in the bank is an asset to you. Think about your mortgage payment, your car payments, your living expenses. Are those payments an asset to you? Or is that a payment liability to you? Let me know if your mortgage payment is an asset or liability. It's a rhetorical question, but I need to know the answer. So is your mortgage payment liability or an asset? Liability. Great. Thank you, Neil. Thank you, Eli. Yes. So your mortgage payment is liability, but to the bank, that payment is an asset. Think about it. Your deposit is asset to you, but your deposit is liability to the bank. Your mortgage payment is a liability to you, but your mortgage payment to the bank is an asset. What you call asset, they call liability. What you call liability, they call in the asset in the end who has all your money. It is the banking system. If you want to change your liabilities to assets, which is your mortgage payment, your car payment, your house, modeling your living expenses, your investments, whatever it may be, you have to take over the function called banking because you need to have the payment flow back towards you. It's not the house that is the assets on the car. It's the stream of payment that determines the flow of stream of payment that determines if it's an asset or liability.