Maximizing Investment Returns in Canada

It is not about the interest, it is about who is getting the payment. Right. So he has a participating policy. So he co owns the insurance company. Nelson Nash said that you cannot get a better rate of return investing into anything without first controlling financial function. He has created a daily growth which is uninterruptedly going up every single day and it can never stop growing.

So talking about maximizing investment returns, let's look at a real case example where we're talking about investments. So meet Corey. So Corey is a full time investor. He also came to our online content through our, you know, YouTube channel, through podcast and he read Nelson Nash's book and he is a full time investor. This is what he does day in and day out. He is really focused on making money off his investment. Now Corey is age 38 years old and when he was introduced to infinite banking he really loved the idea of growing and uninterruptedly compounding his wealth. But he had really hard time understanding and wrapping his head around about short term benefits of infinite banking. He loved how the infinite banking can help him grow his wealth in a long term and wealth transfer benefits. But he wanted to understand how he can see the benefits today. So when he met with his advisor he said please help me understand how I can see the benefits in the short term. The advisor asked him hey Cory, what do you do presently today? Like what rate of return on your investment will get you really excited about your investment? And Corey was really excited about 20% rated return. So I will be using this 20% as an example for case study. Now we know that the problem is not the problem. The problem is how we think about the problem, right? So Nelson Nash in his book when he talks about the problem, there's a chapter called the problem for us to better understand. So he says that investors, the they are really looking at increasing the rate of return they are investing and they want to receive a little bit higher rate of return. They want to receive 1 or 2 or 3% more than they are doing presently. But the problem is not just how he can increase the rate of return. The problem is the way we think about the problem. So we are not going to looking at how we can improve his outcome by focusing on his, we will be looking at how we can help him improve the process of buying this investment, how he can go about buying this. So everything we do in life financially is a measure against how someone else is doing, right? So we need to see this is how our brain works, right? So our brain is comparing if I Did well, okay, compared to who? If I did not do really well, okay, compared to who? So his advisor really wanted to compare what is Cory doing financially today, how he's investing, and to show him what can be done differently. Now let us see how we can enhance the transaction for Corey by just changing one thing in the transaction, which is the process.

Right. We're not going to, going to be looking at changing his objective. His objective is investing. He can be investing in anything. We're not, you know, focused on what he's investing in. It can be crypto, it can be stock market, it can be private lending. We're just going to change the process to accomplish his objective, to show the short term benefits of this process and how he can do better. So what is his objective? Again, his objective Is to.

Get 20% rate of return. And this rate of return really makes him very excited.

Now this is what he's doing. Presently he says, I'm investing my own cash. Have you ever invested your own cash?

I'm sure you have and so have I. And then he also said that presently I'm using other people's money, which is borrowing against my equity in a house. Right. I'm using heloc. So he is using cash and he is using Hillock. When he's using bank's money to borrow against the property, against the equity, he has to pay interest to the bank. But he's not using his money. Right, his money in the property. So let's look at method one. He uses his cash. Let's take $20,000. This is what was his, his number, comfortable number to invest. So $20,000, simple math. Invested at 20% rate of return, his total gain is $4,000. Right. Pretty simple, pretty straightforward. Method number two. He uses other people's money, which is Hillock, and the interest rate is 3%. Again, the same exact number, $20,000 he borrowed from a bank and the bank has put a collateral on his asset, which is the house. Now the investment, he used the bank's money to invest in the Same exact investment, 20% rate of return and the gain is exactly the same is $4,000. But he's not using his cash, he's using bank's money. Now we need to see how much he's paying to the bank. Now. $20,000 times 3% interest rate on the loan. The volume of the interest he has to pay is $600. Now if we subtract $600 from his total gain, 4000 minus $600 is $3400 this is his net gain. Let's agree that if he's using these two methods, either cash or bank's money, he did really good, right? I think he did good. So, but let's make it even better. Let's see how he can increase the return. We're changing only one thing, the process. So this is what else he can do. The infinite banking way, the same exact.

Amount, $20,000. He has $20,000 saved up. And instead of giving this money and investing it and saying goodbye to this money for a whole year at least, right. He puts this money into his own bank first in order to start capitalizing, start compounding his cash. So he capitalizes his banking system as an annual premium, $20,000. Now, because we already talked heard today about creating a peace of mind. So this is a participating dividend paying whole life insurance. And because this is insurance, not only he can access cash value in form of policy, loan and invest it, he also has a peace of mind and his family has a peace of mind. So if something happens to Cory, he puts his money into policy. If anything happens to him, he gets hit by a bus next day, then how much does the family get? His family can get $400,000 based on his age, 38 years old, and based on the amount of premium he puts in for the whole life insurance. So let's talk about his method. Number one, his cash. If he puts $20,000 in his investment and he gets hit by a bus, how much does his family get? The answer is zero. The family only gets the investment that he created, right? If he borrows from his heloc, from his home equity line of credit, and he uses this cash to invest and he gets hit by a bus, how much does his family get? And if there is no other life insurance? The answer is zero. Is because this.

Participating whole life policy has a death benefit. And he doesn't have this option with investing cash or investing other people's money. Immediately after he has invested $20,000. Based on this number, based on $20,000, he has access to cash value. His cash value is immediately $10,333. How do I know this number is? Because I've done many of these policies. I know that if based on his age, if he does $20,000 policy, his cash value immediately will be 10,333. So he can use this cash value. He is not going to withdraw it, he's going to borrow against it. Because remember, we are not going to withdraw the cash because if we do, then the compounding stops, it will be interrupted compounding. We want to do uninterrupted compounding.

And not only he has access to this cash value, but guess what, this cash value goes up every single day. This is contractual guarantees. And only in the first year he is getting $8 daily growth based on this number. Again, how do I know this number? How do you know how much it will be going up? Is because I've done many of these policies right? And next year this number will be just better. Will be just better than $8. Immediately he can access the policy loan which is borrowing against his cash value. So his cash value again is 10,333. He can borrow 90% of that money. 10,333 times 90% is $9,300. This is how much he can borrow. So the insurance company will collateralize his cash value and they will put a lien on the death benefit, on the future, on his future debt self. So when he invests into some investment and borrows from the heloc, then the bank will collateralize the house and they will put a lien on his other assets, right? On either on a house or other assets. And also if he is not able to pay this loan back, they will garnish his wages, which means all his income may be garnished from the bank. But here he doesn't have other lien than the death benefit. So he is using his future debt self to put a lien on. It is done privately. So his, his loan of $9,300 is not going to show up on Equifax or TransUnion. It is not going to show up anywhere. And no one except for the insurance company is not going to know that he has a loan outstanding. Let me ask you this. If he does things privately, can he scale his business up or can he scale his business down? Of course he can scale up because it gives him more benefits, more advantages to grow his business and increase his investments. So again, when he borrows from the insurance company there is a cost to it and he has to pay interest on it. The interest the insurance company is charging 6, 0.2% simple interest annually. Again, this interest, is it higher than the interest from the bank from the heloc? It is. It is not about the interest, it is about who is getting the payment. Right? So he has a participating policy. So he co owns the insurance company. So he is okay paying 6.2% to his business that he co owns rather than paying 3% which is a lower rate to a Bank. Let me ask you this question. What is wrong with this process? Nothing. Right. So let's summarize. Using infinite banking way, he uses cash policy loan borrows. Again, his cash value, the loan is $9,300. He invests at the same exact vehicle at 20%. His gross profit is 93, $100 times 20% is 1860. Now he needs to pay the interested insurance company which is $576. And his net profit is 1860 -576. His net profit is 1284. You may be looking at it and saying Roman, how does it make sense? In the first example he made 4000. In the second example he made 3400. In the third example you're saying it is better. It is much better. But how come it is lower? Way lower than we've seen before. And what is missing there? Guys, what is missing in our picture? Doing this with infinite banking concept. And this is what is missing. He has created a daily growth which is uninterruptedly going up every single day. And it can never stop growing. See, when he used his cash method number one, he invested 20,000 of his own money. His profit is $4,000. Second method, HELOC, $20,000. Again he has to pay interest to the bank. Now his net profit is $3,400. Third method, he is putting a premium $20,000 to an infinite banking policy. And this is what he has created. He has created a daily growth of $28 every single day. So his net profit from the investment he borrowed, his net profit is $1284. But it is not all. He already created in his policy a2920. So $8 times 365 days is 2920. This is the amount of how much his capital has grown for the whole year. So combination of these numbers, 1284 plus the growth in his policy 2920 is $4204. This is how much his net worth went up. Is this number higher than method one? Absolutely. Is it higher than method two? Of course it is. How is this process not better than the other two? So also we have a great and amazing advisor on our team. And he's also a CPA in ca. His name is Henry Wong. So Henry, may I ask you this question? So how much of his $4,000 profit in the first example, how much of that money is taxable?

Actually, the full amount that he's gained in this investment would be taxable be added into his income.

Awesome. And how much is his Investment of his profit from the second example is taxable $3,400 that he made from using bank's money.

Yeah, after he made the 4,000 in profit after paying the interest, 3,400 would be included in his taxable income.

Yep, all of it is taxable. So and off of this profit that he created from using infinite banking system and borrowing against his cash value, how much of this amount is taxable, Henry?

Yeah, from the amount that he borrowed from his cash values. 1284 is the only amount that gets included in his taxable income. The other 200920 grew completely tax free.

Awesome. And why is that? Why is that, Henry? What happened here? Why is he paying less tax here?

Well, the amount that was borrowed from his policy was outside in an unregistered vehicle, whereas the 2920 was coming from his increase in his cash value. So there's no tax implications from that growth in cash values.

Awesome. So just summarizing, thank you so much Henry for helping me out with this. So summarizing, he not only he made more money with infinite banking policy, but he also paid less tax. So how this is not better than everything else? Nelson Nash said that you cannot get a better rate of return investing into anything without first controlling financial function of this transaction. So if you are the banker of this transaction, then whatever you're investing in it will be just better.

So you can create a financial tailwind. So the tailwind is what makes different from from whatever he's doing presently, he can create a financial tailwind. And this financial tailwind is not interrupted by borrowing against the cash value. So implementing infinite banking in your bank, in your personal or corporately life, you can use infinite banking and create this financial tailwind for every transaction that you have the need for use of money.