How To Pay Yourself The Extra Interest

The reason Nelson puts it in the book, he says that the purpose for the intent is that the quote unquote, extra interest or the, the amount that you're paying yourself greater than what you would have paid a third party person or paid, you know, the insurance company, that extra capital is more P's on the shelf, it's more inventory, it's more capital that can go towards premium. And so there might be a future point in time where maybe your income is lower in a year, you didn't have the funds you thought you were going to have to fund a premium, or you decided that you wanted to, you had had a plan in your mind to later on reduce the premiums at a future date. Well, now if you've built up the size of this extra capitalist extra fund now you can actually pay that premium for a longer period of time. The end result is an increase in your overall capital base. So the key is to really get clear on the theory and the intent of what Nelson is indicating that we should do.

You evaluate your own program. What are some ways that I can expand my program? Because is there anything stupid about expanding my program?

No.

Is there any downside to expanding my program? No. Is there a whole lot of upside to expanding my program?

Answer is yes.

Now let's swing it over to Mr. Dan Allen. Dan, I'm excited. We're going to talk a little bit about paying yourself and some ways to do that effectively.

That's a great topic. So we get questions from time to time from people about what if I have excess funds and what do I do with them. So this is just some ideas for you to consider as to what you can do. And I'm just going to give you a few things to consider and hopefully just helps you with the process of becoming your own banker. You have to own that process. We're there to help you and coach you, but you own it. And you're going to need to make the best decisions for you, your family or your business, wherever it is that's involved. As I started to speak about this, it's what if you have excess funds? And there's going to be a multitude of reasons why people have excess funds. So this might be the case like you have a lump sum of money. And I work with people that this is the case where they have a lump sum of money and they've earmarked it to put into their policies over time. So most of us think would know that if you have this huge amount of money, you want to put it into policy well, you can't put it all in at one time because A, you have to keep on sustaining that policy for a few years. So that's one of the reasons why people may have, you know, just excess funds and how they're going to put them in. And we're going to talk briefly about that. And another one in was that when people have policies, they've got them fully funded and they're practicing what Nelson taught us to do, like grocery store. You go to the grocery store example and you remember that don't just pay for retail prices, pay it back at an extra two pennies. Well, why is that? He's talking about putting more capital into your system as you get through the book. And I always take people to page 58 in the equipment financing section and it talks about, you know, that interest is really not interest, that, you know, incremental amount you're paying over and above what the Life company calls for. That has to go in as premium, like you're trying to put additional capital in. So people often ask, well, how can I do this? So we're going to look at a few things to start with. I just want to make sure. So just a bit of a couple of qualifying statements so you can be doing this with registered or unregistered funds that you have. So you have a lump sum of registered fund. So what I'm going to coach you to do is, if that's the case, make sure you're engaging a qualified individual to help you, like an accountant or cpa. Just to make sure you understand there's always tax consequences if you're taking funds out of a registered plan. And you just need to make sure that you're doing it in a strategic way, in a way that minimizes the cost of taxes. And, and let's face it, you're never going to not pay taxes on those. So it's just a matter of reducing how much you pay. So I'm just going to go through three options actually today, and this is not all inclusive. So again, I go back to, you're the banker. You have to make decisions on what's best for you and your business or in your family. So these are just some options for you to consider today. Now, the first one is a premium deposit fund. Now, if you're not familiar with what a premium deposit fund is, it's like it's a fund that you have with the Life Company. And when might you use that? Well, this is just my thought. I always coach people around when it's a Short term solution. So I've used this, you know, I've used premium deposit funds and I, you know, when I'm practicing paying myself back at a higher rate, I've actually got, you know, I've had those cases where I was trying to put more money into my policy than what there was room to do and then I would just end up in a premium deposit fund. Well, what do I do with it? Well, I get the choice of what I want to do with that premium deposit fund. I've used it for other premiums that are coming due. So again, key thing is, and I like the word premium deposit fund because when you're practicing what Nelson taught, it's about premium, put more premium into your system. So if you're not fully capitalizing every policy you have, if you have a series of policies and you've built up a premium deposit fund in one, you can use that to pay the premium in another one. So again, I think it's more of a short term solution. And again, you'll see this throughout my presentation. I just put that last line in there for a reason. And I always tell people, well, when's a good time to use the premium deposit fund? Well, all these suggestions. It's like when you're more interested in the return of your money than the return on your money because there's certainty that comes with using this process with the life company, that premium deposit fund becomes very certain. You're not putting that risk anywhere. So that's why I see that line in there. Another way, way you can use to put, you know, premiums that you have that you're earmarked or put into your policies is to use a guaranteed interest account with your life company. Now this is very similar to a gic, except it's a GIA and it's a guaranteed interest account. And so when might you use that? Well, when you have excess funds, you're planning on moving into premiums over time. So I've actually used it with, you know, this is something where I've had clients that said, I got this much, I want to put it into my policy over the next five to seven years. And again, this is when you're interested in certainty and a consistent rate of return. So just built a little example of how this might look. So here's a simple case where someone had a lump sum of $175,000 and they decided that they're going to put it into their policy over the seven year kind of window. So what they do is obviously the first year they pay their $25,000 and they have 150 remaining. So what do they do with that 150? Well, they can put 25 of it into a one year GIA until after that year's up. They can put that in as premium into their policy. Same thing. For the second year they actually did a two year gia and when that thing matures, they can dump it into their policy as policy premium. And just what I wanted to see is like these are interest rates that you can guarantee and so that's what you'll get paid throughout the term of that GIA and the compounds year over year. But it's an interest rate that gives you certainty. And if you're really fixed on, I want to utilize this money and I want to make sure it's going to be available. Now there's other things you can do and some people choose to do that. They choose to manage that outside a process like this. And that's again your call. I take it back to, you know, this is, you know, you become the banker, you make the decisions that work best for you. And I'm going to talk towards the end about why I've done this. Like I've done all three of these methods that I'm going to go through and I'm going to give you one of the biggest reasons right at the end as to why I do that. So I hope you understand this little process. Again, I only showed it for three years because with guaranteed interest accounts, especially what's going on right now, I wouldn't lock in for too long of a period of time. Time, because I think interest rates are going to get better than what they are today. But anyhow, that's a personal decision. Again, third way, segregated funds. So this is something that life companies all offer and you know, so when might you choose this? Well, when a longer term kind of solution. And this is why I got involved in it because I had this lira, so I had this locked in retirement account and I was looking for some place to put it. And when you work with the segregated funds, you again, you get all kinds of options as to how and where you put that money that you can use. They look very similar. You can buy funds very similar to what you'd buy if they were mutual funds. You go through the same investor profile questionnaire and find out what kind of an investor are you, how much risk you want to take and, and there's all kinds of variables when it comes to segregated funds. So I'm not going to go through all those today. But you can talk to your coach about that. And if you want to know, life companies have great resources, tell you how these work, and they can be a good call for you in your situation. I don't know what it was. I had a big lira when I first started this process. And that's where one of the tools that I used in the toolbox that I had available to me. And again, guarantees. That's what comes with this process. Just like with buying dividend pay and whole life insurance, you get to pick guarantees that you're comfortable with. When you're using segregated funds, you can decide to guarantee the principal up to 100%. Now, there's always cost to do that. So, you know, the more certainty you want there, the higher your MERs are going to be. But yeah, it still gives you certainty. And that's one of the things that this process really can help you do. If you're looking at a place and you have excess funds that you want to be able to put into your system over time. And that's, hey, that's what I've been doing. This is, you know, when I speak about these, I've been utilizing this process since I started implementing the concept in my life. And just as a ways to have funds available, slowly step them down to minimize the tax burden. But yeah, all kinds of options that you can use now, some of the advantages of SEG funds and I just covered them, you can go through, you can get different death benefit guarantees, you can get different principal guarantees. You can end up bypassing probate and all the associated fees that can go with that. And it's very quick. Again, private and confidential. There's a lot of things. And this is all of the stuff you're doing. If you're using a life company, you're going to have, you're going to be protected by assurance. And that's something just to know about. If you don't, you have that protection. Now, here's one of the things that I wanted to leave you with. So why might you do this? And this is one thing that really resonated with myself. And if you don't know, Jason was my coach from the time I started this, and we had some good conversations about this because I had, you know, substantial size of lira and other assets that I owned at the time when I first, you know, started to work on this. And, and it was a great question. And that's what I'm going to leave you with. You know, if you are sharing in the profits of a life company because you happen to be own a dividend paying whole life insurance policy with that life company or a multitude of them, wouldn't it be a good place to warehouse money like this somewhere where you can help that life company be profitable and you're going to share in those profits. And that's the part that I just wanted to share with you today that this is just an opportunity for few things to think about and I hope you found it useful. That's all I had for today on that topic.

Awesome. Thanks Dan. I'm going to ask Jason to maybe jump in and share a little bit with that as well. And something additionally I want to just kind of share with people is that the key is the foundation, what is the core of what our intent is. So the reason Nelson puts it in the book, he says that the purpose for the intent is that the quote unquote extra interest or the, the amount that you're paying yourself greater than what you would have paid a third party person or paid, you know, the insurance company, that extra capital is more P's on the shelf, it's more inventory, it's more capital that can go towards premium if you don't have a space for the premium. Now what Dan's given us is, is some options of what you can do. And as that builds and accumulates, eventually you have enough in there that you can go and get it to premium either in one of the existing policies or in a new policy that gets created. And so there might be a future point in time where maybe your income is lower in a year. You didn't have the funds that you thought you were going to have to fund a premium or you decided that you wanted to, you had a plan in your mind to later on reduce the premiums at a future date. Well now if you've built up the size of this extra capital, extra fund now, you can actually pay that premium for a longer period of time. The end result is an increase in your overall capital base. So the key is to really get clear on the theory and the intent of what Nelson is indicating that we should do. And then Dan's just giving us literally the how you can implement that over time. And Jason, I'd love to hear some of your thoughts on that.

You know what comes up for me all the time with my interactions with clients, regardless of how long they've been practicing the process, is that everything begins with the way that we think. And so if Henry and I co owned a Loblaws grocery store together, would we Ever buy our food from Walmart? Something to think about. And if we had producers of goods that we sold from the shelves of our grocery store and we had a convoy of trucks lined up to deliver these goods, would we want those trucks pulling into our Receiving bay or Walmart's Receiving bay? And that inventory is your money. And you co own Equitable and you're building your warehouse of wealth or you co own some other life insurance company if you have policies with other companies. Nelson often said this process is ridiculously simple. It does not need to be sensationalized. Your money must reside somewhere. What better place to have it reside than here? And there's no logical other place, there really isn't. But your program, your system only has so much square footage to accommodate all those pallets of money. And so when you run out of square footage, you got to get more warehouse space, which is another policy. That's the only way to do it. And if you don't have plans to expand your square footage, then you have to use some of Equitable's additional square footage in segregated funds in GIAs and guaranteed daily interest accounts and tax free savings accounts and all of these options that they make available to you. And then when your system has square footage opened up, you move the money from where it is into your warehouse and it goes in as premium. And your system will grow to become massive over a period of time. And if you show me any client who's here today who's been depositing premium for seven years, I'll show you a client who's conquered Parkinson's where they didn't allow their expenses to rise to consume all of their income. And so this is, this is something that's on my mind all the time, is just really simplifying this for the general public so that the general public understands the bankers, the Wall Streets, the Bay Streets, the mutual fund institutions, they all want one thing, your money, to produce a benefit for them first and then you get what's left over. Hopefully the life insurance companies that you co own also want your money and they want to put it to work for your benefit, not for the benefit of Wall street or Bay street or the central banking system and certainly not for the government. And so just think about that as you evaluate your own program. What are some ways that I can expand my program? Because is there anything stupid about expanding my program? The answer is no. Is there any downside to expanding my program? The answer is no. Is there a whole lot of upside to expanding my program? The answer is yes.

There's something that comes up for me that I just want to pull it back to and connect what you're saying. Nelson was still paying premiums at age 88 before he passed. Yep. And Nelson had 20 policies, so he had been giving them away. And so he was still paying premium on those policies. And it goes right Back to page 85 of Nelson's book. Point number two. If you knew at passive income time that you would be getting back everything that you paid into a system tax free or potentially tax free, would you object to putting any more money into it? The obvious answer is no. And then further, you flip over to the next half of the page on number five, he says wealth has got to reside somewhere. Where would you prefer to have it reside? He lists a few things. The third thing is or free contract with other free persons. From this base of financial operation, you can do any of the other things in life that you desire. That's the power of what's happening and what the updates that Jason gave us about equitable life earlier today really connects that it loops and ties that all together. You know, even during the Great Depression, one of the most well known historically bad economic times in the globe, people used policies to sustain them and get through those hard times. And we don't know when hard times are coming or where they're around. And maybe some of you have experienced those. I know I've experienced them in my lifetime. And policies can help you get through that. And then when times are good again. I asked Nelson about this. In fact, there's a video, I did an interview with Nelson that's in our client portal and I asked Nelson about that. Hey, when times are hard, when things are changing, people are got their back up against the wall and they're taking policy loans out, but they feel the pressure like they might be stealing the P's because they're not making loan repayments. Well, Nelson said, well, isn't that what the policy is there for? You use the money and then as soon as times get good again, you simply commit to putting peas back on the shelf. And the key is in the second piece. It's in the commitment to put the peas back on the shelf. You have to get started at some point in time. So just wanted to share that with folks as well.