Real Estate and the 3 Keys to IBC

Every Canadian controlled private corporation has something called a capital dividend account. I refer to this as the cash you deserve account. It is the greatest tax advantage that exists in the Canadian tax system.

Well, for a lot of people what happens is they go and get that capital item and they go down here.

Then they got to work and work and work all the way back to the zero line and then this cycle repeats for a lot of people over and over and over and over again.

And the result is they don't get to build or keep any equity in anything and they're always seeing the money slide. The financial energy that's required to make these payments all along this time frame is walking out the door to someone else's bank. Insurance contract is not an investment. If we think that it is, we're not looking at it through the right lens. This is a savings vehicle. It's a warehouse for money.

I'm really grateful to be here with you folks. I'm very pleased to have the invite. So I'll talk quickly about what we're going to cover today. I'll just bring all this up on the screen. I'm going to do my best to wrap up in 90 minutes. I'm going to try and even condense it a little bit more than that, but we'll kind of see how we go today. So I was a licensed realtor for almost just shy of 10 years in Edmonton. I was on title to my first rental property at the age of 13 in 1994 as a beneficial interest to a suited rental property that we did in Camrose. Pretty much. I mean I've had probably all the tenant stores, maybe not all, but I think most of the big ones that I'm sure everyone on this call has experienced. I've experienced those as well. I became an expert at moving appliances as I'm sure many of you have done in the past, down the smallest set of stairs I ever saw at a, at a rental property, you know, and I still have several rentals today. You know, I remember when I bought my second rental property in 1999, I was just turned 18 years old and the interest rate at the time had just dropped in the mortgage which at the time for the rental property we had to put 25% down, not 20% and the, the interest rate on that loan. I remember I did this deal with my parents and we high fived each other. We were so happy and excited because the interest rate had dropped to 6.97% for our five year locked in rate. So just to Give you guys some context. I'm aware of scene changing rates. I've dealt with payout penalties and the whole. All the things that you guys are already talking about and you're familiar with. So I understand a lot of your struggles and your pain because I myself have experienced those. In fact, I've got one more story. I've got a property in Fort McMurray. I've owned it for, well, I guess it's actually. It's about 20 years now, I think about it. I didn't realize it was that long until just saying it out loud. And at one time, at the peak of the market, that property was worth appraised at 225,000. If I wanted to sell that unit today, I could probably sell it for 30 grand. I know what happens when the market goes down, too. Now, the good news is that property, we did do a refi on that at one time when the market was up and coincidentally, we pulled out more equity than our original purchase price on that property. So the way I look at it as the property's free to me anyway because I already pulled out my value. But nevertheless, I do recognize we have certain struggles in the real estate industry.

So we're going to.

We're going to look at setting a concrete foundation today. You would not want to build a house or buy a house with a crappy foundation. Part of your home inspection. You want to make the foundations good. In fact, as a realtor, I remember one time I was doing a home inspection for some folks in Edmonton. It was in the trend. Remember the area was off 156 street, you know, kind of zone. And the particular property, we were at the end of the inspection and boom. The inspector moved a little bit of insulation that was on the corner of the wall.

Bam.

Huge horizontal crack right in the corner of the foundation. So I'm like, everybody out. We're done. You're not buying this thing. Let's go. So you have to make sure you have a solid foundation. And we're going to work on that a little bit today, giving you some of the basic principles of this thing that we teach people, which is called the infinite banking concept. And I'm going to be referencing a lot this particular book, this book, becoming your own banker. I've also got it, you know, right up here on my wall. And I'm going to talk to you a little bit about how this book really changed my life. We're going to talk about utilization of money, the three critical keys of the infinite banking concept. And I'M going to do a case study for you guys today. It's going to be a corporate owner case study. Everything I talk about from the corporate side, there's a reason I'm doing that. There's, there's a couple advantages for real estate investors. I want to highlight that at the end. But this works personally or corporately, regardless. I myself do it in both formats, so we'll talk about that as well. I'm going to show you a visual example on a building equity in a different type of. A different type of equity, different type of tool that you can access without question. And then we'll do a bit of an income summary on that case study and hopefully have time for some questions. A little disclaimer. I represent Ascendant Financial. We're based out of Edmonton. Our head office is in Edmonton. We operate pretty much coast to coast in Canada. We have folks all over and we operate online, we operate digitally. We meet with people, you know, through this zoom format. And I've been doing that for the better part of a decade anyway. Not an accountant or a legal professional. So just, you know, getting that out of the way. People often want to know probably when a session like this is how to reach out to me at a later date, all these resources. So that my email address is there. I pop that in the chat. You can get a report that we have. It's seven simple steps on how to become your own banker. That's available at Seven Steps CA great webinar. You can access@learnibc.com and then our podcast. I recommend watching it on YouTube because sometimes we do little demonstrations and stuff. So that's where I'd prefer people go to watch it. Wealth Without Base Read is a podcast. This is my co host, Jason Lowe. He's the CEO of Ascended Financial. Amazing guy, a good friend of mine. And we launched this crazy podcast about two and a half years ago and we just released our 118th episode. So we released an episode every single week on Tuesday. And real quick math I did with the YouTube views and downloads, we're at about 300,000 lifetime downloads and views, which is pretty cool. We do have a client series. I want to point that out because we actually interview a lot of our clients who are real estate investors. Not that we're seeking them out that way. It's just coincidentally those happen to be the people that are like, yeah, absolutely, I'll hop on your podcast. We can have a chat. So sometimes we have people who are just buying their first, you know, one or Two properties, often like school teachers and police officers, that sort of thing. There's a gentleman, Dave, who wanted Jason's clients. He's a police officer in Edmonton and he actually paid off his mortgage using the system and he's then used that to also acquire some additional property. And then we work with people who are even real estate coaches. So there's some good stuff that's in there. You guys may get value out of it. Now what we're going to be digging into and just kind of talking about real estate a little bit. One of the, you know, some of the key reasons that people do real estate, probably why you guys are part of this group, I'm going to guess, is that you wanted to create some equity. You wanted to get the combination of mortgage pay down. It's having someone else pay the mortgage off. You wanted to have appreciation. Hopefully the market does what it's supposed to do now.

Right.

You know, in maybe in the last year or two, that's been working well in Edmonton. But if we shoot back to, oh, I don't know, 2007, when we hit a really nice peak and then things dropped precipitously and you know, really they're in certain areas, they're back up above that line and some areas are kind of still not there yet. And I can speak to that as well. I signed the contract to purchase a brand new build right around the new Anthony Henday extension. I thought, ah, this is going to be great. I'm following what all the real estate coaches are telling me. Of course. I signed that contract In June of 2007, right at the peak of the market. I took possession of that property about 10, 11 months later and the property was worth $100,000 less than I owed on it the day I took possession. So that was super fun. And hopefully no one on this call has gone through that experience. But I certainly did still have that property today. Imagine why that is. Anyway, you want to have access to capital and you want to be able to create a passive income. These are some of our common things. You know, I've done some renovations. I'm a very tactile guy. I know how to install floor. I've done some flip projects. So probably a lot of similar things that you guys have done. And you know, now in what I do now, as far as what Ivan was sharing is now I teach this concept that I learned from my mentor, Nelson Nash. Becoming your own banker. We teach it to Canadian families. This is me presenting in front of 200 financial professionals in Birmingham Alabama, where we congregate every year for an annual conference. So I was invited to emcee and speak at that event a number of years in a row. But I want to talk a little bit about this book, Become youg Own Banker and, and specifically this unbelievable man right here. There's certain people that come into your life. You guys probably have a real estate mentor or coach or someone. Maybe it's a, you know, a grandfather, a figure in your life that has made such a tremendous impact on you that it's unshakable. There's, there's, there's a feeling of like, wow, if it wasn't for this individual in my life, where would I be at? What would be different in my life? If you, if this person here, she wasn't there. Nelson Nash was that person for me and a number of people have filled that role. But Nelson was my mentor and my friend and I loved him dearly. Sadly, he passed away in 2019. I'll talk a little bit about that. But when I, when this book came into my life, it was the spring of 2009. This book at present has sold over 500,000 copies worldwide in multiple countries. It is self published. That's unheard of for a book in the financial category. If you want to get a copy of the book, you can you reach out to me, email me, we'll give you details on how to get that. We ship them in Canada cheaper than anywhere else in February 2012. So 10 years ago was the first time I had the chance to meet Nelson in person. And I attended his two day seminar. It was a, you know, Friday evening and an all day Saturday, it's 10 hour seminar. And it changed my life again. After reading the book and then meeting him in person, it was like I had a new hard drive dropped into my head which was really powerful. And now moving forward, you know, in 2019 they launched the documentary film this is Nelson Nash. You can find it on YouTube. You can go to Nelson Nash film.com and I'll bring you right there. It's a one hour documentary and Nelson's life. I was involved in the making of this film. It was one of my greatest privileges in life where we could share the essence of what this man brought to the table. He also is the recipient of the Blinking Lights Award which is people who stand up for their people's rights and liberties. Again, amazing thing. And we, we also have a commemoration event that we did called Day of Nelson on day of Nelson.com where we interviewed people who, whose Lives he impacted dramatically, including mine. So Nelson passed away in March 27, 2019 at age 88. He would say he was 88. Revolutions around the sun Nelson over his lifetime, he created this, this process of becoming our own banker. We work with what Nelson describes is your, your personal monetary system. He says that the insurance that we use, we use an insurance vehicle here. It's a dividend paying, participating, whole life insurance. I'll talk more about that later. But when he discovered the utilization of this tool similar to real estate, Nelson was also a real estate investor. He, he realized that he could control the banking function in his life and he could, he could have far more control of appreciation and all the things in his life by using this vehicle to do a whole bunch of things. So he accumulated 49 over his lifespan on multiple people, his, himself, his wife, his children, his grandchildren and seven business partners. When Nelson was alive, he experienced two death claims. And of those two death claims, about $350,000 of tax free money showed up for him. He did not buy the policy for that. He bought it to build capital and create equity that he could use to fire the bankers in his life. And he did that. It took him 13 years to fire his bankers. And in 1980, 81, when interest rates spiked, Nelson Nash, who again is in a real estate investment project, he was doing a development project. He was caught owing $500,000 on a line of credit at 23.5% interest. Now I don't know anyone on this call, but I would imagine if you had 500 grand on 23 and a half percent interest, you probably wouldn't be very happy about it. And that could be pretty crippling to you. After that happened, shortly thereafter, the, the lawyer who was a part of their partnership in this development, bankrupted on them. He was a big name lawyer at a firm in bir, so it bankrupted on him. And Nelson's share of that deal that he had to eat was 300 grand. So now he owed $800,000 at 23 and a half percent interest. And so Nelson realized through all that financial pain and hardship, the only thing that was stopping him from getting out of that mess is how he could access capital. He had access to a whole bunch of capital he could get to in a whole bunch of insurance policies, whole life insurance policies that he built up over life. The problem was he didn't have access to enough of it because he hadn't been putting enough in. He realized he had to change the way he was flowing money through his life so he could rapidly increase how he was creating deposits into a system he had total control and autonomy over. Now here's the interesting thing. When Nelson passed away in 2019, there were 17 tax free death benefit checks paid out to multiple members of his family and several organizations that actually own policies on Nelson's life. 17 death benefit checks, tax free. The IRS couldn't get a dollar of it and neither would have CRCRA. And there's 28 assets, 28 policies that are still enforced today since Nelson passed away as a very powerful way to transition wealth to the next generation. Similar things. Why a lot of people buy real estate. So I want to talk about how we buy things. What happens for a lot of people. We buy things like so rental real estate, right? We need down payments, we got renovations, you got to pay the property tax bill, you got replace a furnace every now and again on a hot water tank, you have to go on vacation, you got to buy cars, well, etc. These are common things that we're all buying today. Everyone on this calls buying these kind of things. Well, for a lot of people what happens is they go and get that, that capital item and they go down here and they, they come all the way down to this point.

Then they got to work and work and work and work and work and work and work all the way back to the zero line. So they're starting below the zero line. In other words, they're going to borrow capital or finance that. The thing that they need, an example we use is a car as a perfect example. And then they got to work to pay that off. And they're going to, you know, have fees and jump through hoops to go and get that capital. When they get back to zero in the example of a car, well now you need to go and replace that car very often or the spouse needs to replace the car. So you go back below the zero line, you got to work and work and work and work and work all the way back just to get to zero. And then this cycle repeats for a lot of people in our country over and over and over and over again.

And the result is they don't get to build or keep any equity in anything. And they're always seeing the money slide. The financial energy that's required to make these payments all along this time frame is walking out the door to someone else's bank, not going to your bank where you own and control it. Now of course, the other way that people go about this process is they purchase vehicles or capital items. But in Order to purchase a capital item, you first need to have the capital.

So what you have to do is you have to save that capital up. Now you're either doing it intentionally or unintentionally. A lot of people are doing it unintentionally. You got to build up and build up and build up the capital until you have enough capital that you can go do the thing that you want. So if we continue our car analogy, we're going to go pay cash for a car. Well, our account balance drops all the way back down to zero.

Now if we want to go buy.

Another car for the spouse or for ourself, we have to work and work and work and work and work. And we got to build up that capital reservoir, the savings account, the checking account, whatever it is, to get to a point where we have enough that now when we need to go buy the next thing, we have the capital and boom, the capital is gone. It can never work for us again. It's a permanent transfer of that money away from you and your family lineage. It can't operate or continue to grow for you for the rest of time. So what happens in this situation? There's nothing wrong with this example, but what happens is we're transferring away the opportunity cost. We're either going to pay up interest to someone else or we're going to give up the interest that we would have otherwise earned. And so then this cycle repeats itself for people all the way throughout most of their life. Again, in this example, it's a little bit better in that we're not quote, unquote, paying interest to a third party and you have more control and more autonomy. But as soon as we get up to that peak level, we have a.

Constant transfer of the money away and the energy that caused the buildup of that is now gone. And then you have to go through that process again. Meanwhile, we're cruising through time, the whole period. So now in our world, what we're going to talk about today is how do we create an environment where even when we go to buy that capital item, we can have it so that our pile of money, our original capital, our original savings dollars, can continue growing uninterrupted, but you still have the ability to go get the capital item. So in this situation, the difference that's going to happen here is that we're going to have capital building inside of a properly designed high cash value insurance policy. We'll talk about that in a moment. And when I get to the case study, we can access collateral with no Questions asked, total and complete autonomy and control. And we're going to go and borrow from the company to go and get that capital item so we have an outstanding loan. And instead of saving all the money up again, we're just going to pay that loan off when we get to the end of the example. Everything in between these two lines is equity. I can access that equity again to reuse it for anything I want, which includes renovations on a flip project, down payment on my next rental property. Whatever my imagination can achieve or what my family needs require, I can always access that capital with no questions asked from this type of machine. That's the big difference that we're shifting here as we move from doing business where we're giving up opportunity cost or we're paying out the financial energy to someone else instead, we're trying to contain and house that energy so it can work for us more than one time and more than one lifespan. And that's the thing. We're gonna, we're gonna talk more about Robert Kiyosaki. I'm sure most of us have read one of his books or played the cash flow game. I know Ivan, I know you and I have. We've probably even played the cash flow game together at one time. It, it's not how much money you make, it's how much you keep, how hard it works for you and how many generations you keep it for. Who thinks that that's a really good quote. You think that that's a powerful quote. This one resonated me probably more than anything else I've read from Kiyosaki. It really stuck out for me when I realized that this particular quote is perfectly in alignment with what we do with Nelson's concept. To become your own banker. The two things kind of go hand in glove. What exactly is the infinite banking concept? I'm going to go to Nelson's book and I'm going to go right to page three and I'm just going to read something out of the book for you guys. Because, you know, the way that Nelson puts it here is very powerful. He says that this book is not about investments of any kind. It's about how one finances the things of life, which can certainly include investments. So just like we need down payments for, for our rental properties and we have capital requirements for our rental properties on an ongoing basis, we're financing those items. It's got to come from a reservoir. The financing is either someone else's money, joint venture partner, third party bank, private lender, or your capital reserves, which Means your capital can't do something else. You're always making a choice between doing this or this. With the infinite banking concept, we're not doing this or this. We're doing this and this. It's an and asset. It allows you to multitask capital. Okay, and the next piece I want to talk about is having a capital storage location. So right now you have a capital storage location. It's probably a checking account or a savings account at a bank. It might be a home equity line of credit that you're using on one of your properties. That could be, could be. You know, if you have your portfolio, maybe you have an account for each property or for each partnership, or maybe you just have one big fat giant account where all your rent, revenues and things go into one account. And that piles up and piles up and piles up until you have to go deal with a problem that arises. Everyone's at a different stage in their real estate journey. And, you know, probability is wherever you're at right now, your goal is to acquire more. That's often the case. So again, we have to recognize that you finance everything you buy. There are no exceptions. You pay interest to someone else or you give up the interest you can earn. It's just all there is to it. I want to talk about this concept a little bit more. The recapturing idea of interest is part of what we're focusing on here because we're paying interest in finance fees and charges to major finance companies. But really this is about optimizing efficiency. That's where our primary focus is. Capital can be growing every single day that you take air to your lungs. When we implement this strategy, that's what is able to happen. I want to introduce you real quickly to a friend of mine. His name is Ryan Griggs. He's an Austrian economist. He's based out of Texas. Amazing guy. And he says quite emphatically that, simply put, the best way, infinite banking is the best way to systematically accumulate and then optimally deploy capital over a lifetime. That's really its function. You're going to be doing that anyway. You might as well have it in an efficient resource. So here's what's happening. For a lot of people in the world, they've got their money. The rest of the financial industry saying, we got to accumulate your money and put it at risk. I'm sure everyone's familiar with our different government programs. Of course we got our mutual funds or the banks deposits. These are the things that we're putting money into. They're Kind of a trap for our money in a lot of ways. It's like a teaser and you're just waiting to get snapped by that mousetrap. Infinite banking is about utilization. Instead of it being about the accumulation of money, we do that also. It's about the utilization of money and not having money trapped away from you in some kind of a financial prison. Instead being able to liberate capital on demand and put it to work for all the things that you're doing anyway, again, renovations, cars, like all these things we talked about, including investments. You know, there's probably some folks that are even doing, you know, some, some gold, silver and cryptocurrency here. These other items are all places where they lock your money away. It's hard for you to get at it. You know, GIC, hard to get at it. RSPs, hard to get at resp, hard to get at. TFSA is not so bad, except that you can only put it back in one time per year. So there's, there's always these restrictions. With infinite banking, it's not about restrictions. It's about usage, access, safety, and control. So here are the three primary keys to the infinite banking concept. First, one is access and control. You have contractual access to the utilization of your capital that is building up inside of your system. There's no government restrictions and you have peace of mind because it's in constant motion. Now, I don't have time to go into a huge amount of detail on that today, but we have lots of other content that you guys can reference where we explain that. In fact, we draw it out. You get uninterrupted compounding on your money. And again, I can't say enough about opportunity cost. Opportunity cost gets thrown around a lot of times. I think you guys probably at this state of your real estate journey, you'll recognize opportunity cost in things like, hey, if I go and do this, you know, replace, put the suite in this property, it's going to cost me 40 grand to do that. But by making that investment and doing it now, I'm going to generate an extra 6, $700 a month and passive income. It'll only take me five years to pay for that initiative. So you can isolate opportunity cost in those ways. Where we don't recognize it is often on our own capital, our own save money as we deplete that money for the things that we purchase on a regular basis. The third key is flexibility. Flexibility over your ability to control your deposits into the system, the contractual adjustments you can make to the insurance Contract the ability to have policy loans on demand, loans that you can have at your own terms. When we set this up, it's kind of like a home equity line of credit in a. In the same way. So just like you might. You would go have a property, and.

You, you know, you can access some of that equity. So, you know, you got 15% as a traditional mortgage down here, 65% is.

Your home equity line.

And way up here, of course, is 20% of your equity is still stored up here in the attic of this house. Well, you're able to liberate some of this money, but you can't liberate this money. The only way to liberate this chunk up here is to sell the house. You got to call Ivan and say, oliver, I need you to come sell my house for me. That's the only way to liberate the equity in a property, to get all of it, or you need to go to a private lender, or again, you have to go back to the banking system. So. But in the same way that you can create access here, we can create the same kind of access with an insurance contract. As you plug money into the insurance contract, the equity builds up and builds up and builds up and builds up. Whatever builds up, you can access, no questions asked, using a policy loan. The way that we do that is through the power of collateralization, very similar to how you do it with a house. So instead of having the differences in the house, the bank makes all the rules as to how you access it, what the payment structure is. You have to jump through some hoops to do it. You need a guy like Sean, who's there on your, you know, working for you as a broker to help you get through that experience and get through it without, you know, pulling your hair out all the time. Whereas in this situation, because we're dealing with contractual rights that you have with this insurance contract, you have total access. It's one piece of paper money on demand. And the insurance company gets money direct deposit in your bank account in a short period of time. It's a phenomenal way to put money.

To work in your life.

So here's the world of this or that. We have things that we need to buy in life. Here's a list of a bunch of them. I'm sure everyone's familiar with most of these things. And then you have the choice of putting money into different items. Down payment on a house, stock market, crypto, all these different items. But you're always making a decision of, okay, I have A certain amount of money. Well, I can either do this or do that. Do this or do that. I can buy things like I need. I just bought a hot tub here for my, for my family at our place in Chilliwack. Cool. I wanted that. We've been talking about it for 10 years. I finally, you know, made the jump. Well, I would have had to drain my own capital to pay for that hot tub. Instead, I took a policy loan and a policy loan paid for my hot tub. And I'm going to resave the money to replenish that capital resource. But my money never left the policy. It continues to grow uninterrupted. So I have perpetual motion on the same money I use to buy the hot tub. Whereas everyone else has to make a this or that decision. With Nelson's, Nelson's principles of becoming your own banker, we don't have that happening anymore. Now you get to do this and that. You can become your own banker and also choose these other options in life and have the autonomy to decide how.

You, how you do it.

That's the difference. So here I'm going to go through an example of $100,000 going into one of these programs. Now, I picked this number for a reason. I'm going to go through that with you in a second. But I'm going to be talking about a corporate example. But everything I discuss corporately works the exact same way. Personally, there's only a couple of differences, corporation wise, which I want to address. This is why I'm showing a corporate version of it. So I talk about how age impacts this. The we're going to do a visual example of deposits and how that shows up in this example. I'm going to talk about an example of taking a passive income cash flow from one of this as a retirement stream.

And then I'm going to highlight something.

Very important called the capital dividend account. Why the $100,000? Well, I picked $100,000 for a couple of reasons.

First of all, it's an easy round number.

You can add a zero or you can drop a zero. What do I mean by that? If you want to make it a million bucks, add a zero. If you want to make it 10,000 bucks, drop a zero. Okay? So you can quickly use your imagination as we go through the example and we look at some numbers. If the 100k is too big, no problem. Make it 10 grand and make that your baseline as we go through everything else and just drop a zero off of all the numbers. All right? Or you can Cut it in half pretty good. And I picked that number because again, 50k, it's very common when we're working with real estate investors. This is the type of thing that we see. It ranges dramatically. We help people for as little as 400 bucks a month to as much as a million dollars a year. I'm working with a dentist right now in Ontario who just applying for a million dollar program right now. He's got a $14 million net worth. He can handle it. Okay. Everyone's in a different circumstance. So you can be your own banker regardless of where you're at in life, as long as you have the desire.

To do it now.

But I think it makes sense in this 50k level because if you just look at down payments, you got to save up 20% for a down payment anyway. You got to get that resource from somewhere, whether it's equity or some other location, building up savings, et cetera. You know, you need 50k just to do a 250, 000 property. I don't know what that's going to get you into these days, Ivan, but I'm guessing if you're buying some, you know, decent rentals with some decent cash flow suite of properties, you're probably hovering this 400 to 500k range. So you know, you're looking at 80 to 100 grand anyway, plus any renovations you need to work with. So you guys on this call should recognize the need of capital for these types of projects. Of course. This is me doing some renovations and this is suited rental that I just sold last year that I owned for about a decade, which was a good, good property for me.

So put me on your payroll. So using that business owner analogy, a hundred thousand dollars a year over 50 weeks is $2,000 a week. Or if we look at that, that's about $50 an hour. If we look over a 40 hour work week, well, if we looked at $10,000 instead of 100, it's about $5 an hour. This is what you should be looking to contribute, at least to pay yourself first in some area of your life. I'm just going to suggest that this is the best area to do it in. Think about this. How many employees would you want in your business, whatever your business is, if it's a real estate business, how many pieces of real estate would you want where they work? 24, 7, 365. And they never take a holiday. They don't get Covid, okay? They don't call in sick. I would want as many of those as possible when you have a policy like I'm going to show you the type of program we set to get set up, we have that constant motion on money. Once, once the deposit enters the system, it's going to accumulate for the rest of time by contractual obligation, which is really powerful. So again, 10k is about $5 an hour or two, 200 bucks a week, giving you that reference point. So you guys get a barometer between the 100 and the 10. And you can kind of use your.

Imagination as we go through this, but the key is to pay yourself first. Now, what is the most important thing on a balance sheet of a business or as a rental owners, you may be doing joint venture partners or whatever. So if you have spouse, kids or grandkids and something happens to you and, or happens to spouse, you might still have the real estate portfolio. But if you're the primary person, you're the driver and the expert, the one that's attending these meetings and showing up and you're handling all the tenant calls and dealing with the property managers and finding all the deals. If we lose you, aren't you the most important thing in the business? In your real estate business, if you had a corporation, if you looked at a balance sheet of the corporation, the business owner doesn't show up on the balance sheet anywhere. The most important person in the business, because if we lose the business owner, the business tanks. There's no more business. So the way that we add that person onto the balance sheet, I'm going to show you in our case study, this is how you get added to the balance sheet and you build equity. What's really interesting about this is I have several clients of mine that are real estate investors, of course, and, and also infinite bankers. And they're actually looking for joint venture partners. And what they've done by getting their partnership insured properly is they're finding an easier way to attract joint venture partners because they're also providing a new level of security. If something happens to them. They can say, look, I have all this insurance that's going to show up and it's going to take care of a bunch of problems. So we can make sure you get your original capital back. We can make sure that your deal, your joint venture is covered and that there's a support system in place to make sure that your money is safe. In our joint venture, that is a powerful way to show up differently. So if you've never considered that, consider how you can show up differently when you're looking for joint venture partners. So here's our $100,000 program. What I want to show you guys is what this looks like at different ages. I'm personally 40. I'm going to be clocking over 41 here soon. I know I look really good for my age, thanks for saying that. But I bought my first property at, you know, with my family at age 13, second one at 18, you know, a number throughout that, that whole decade. And things are different in different stages of life. So I want to show you what that same hundred thousand does for different people. And the key thing is what I'm going to show you today is not a one size fits all approach. They're everything that we do at our organization is cut, is a custom design. It's a it. We build a plan based on what's going on with your life, your cash flows, your portfolio, your age, your family dynamic and your objectives. I'm just going to show you an example, but I want you guys to exercise again, your imagination. So I'm going to throw some numbers up on the screen. And the purpose of these numbers is just to recognize the same hundred thousand dollars that we've got here is the premium that we're putting in the deposits that we're making. I'm going to show you how flexible these deposits are, which is really important. And I'm going to show you the difference between age 30 versus age 50. And I'm going to show you an example. I'm just making an assumption that we're depositing for 20 years. Okay. There's a lot of flexibility here. I don't want to get wrapped on what we're doing other than like showing you the relevance point between these different examples. So you can see Here at age 30, this person is putting in $100,000. He has a flexible portion that is not required. It's 100% optional to him. And then he has a minimum required amount. We refer to that as the base premium or the foundation premium. So he's got a fund of his 100 grand, $31,000 a year. He has the option and the flexibility to put an extra 69,000 in. And depending on his structure, there might be some wiggle room there. But that, that's what gives us our $100,000. Now if you want to convert that to 10 grand, cool, it's $3,100 a year and $6,900 a year. Very simple. For the privilege of doing that, he's.

Going to get death benefit immediately of participating, dividend paying, whole life where he is Now a co owner with the insurance company. The only way to have ownership with an insurance company in this way, a mutual insurance company is to be a participating owner. It's the only way you can't purchase them on the stock exchange. It's kind of like a co op in that example. So he's immediately going to get ownership right away. And then if we go down the list, I'm going to do our example on a 45 year old person here. You can see it's the same 100,000 going in in each circumstance.

The difference is there's a slight change in the breakdown of what's flexible and what's not and the death benefit changes. So I think that's pretty simple. If you're younger and you put in a dollar, you get a death benefit. If you're older and you put in the same dollar, you get less death benefit. In my numbers here I'm also showing some other things because I, you know, often we need some extra coverage. So I'm showing there's some term insurance as well. I'm not going to explain all the reasons for that. There's some certain advantages that this is going to provide for us and it's also being strategic. But I'm factoring in the, the cost of that rented benefit. Term insurance is like renting the benefit participating whole life insurance dividend paying life insurance structured. The way that we design these is basically like buying a long term buy and hold piece of real estate where you're building equity. It's the same scenario. It can you build equity, you have access to the money, you have guaranteed appreciation and, but you don't have to deal with tenants toilets or midnight moves or any of those other things. Okay, so if we assess this looking at the $10,000 number just to give you that reference point. Well we take our 40 year old guy, he's not going to get $1.5 million of death benefit for 10 grand. He's only going to get about $100,000 of death benefit for 10 grand plus the term insurance I'm showing here. So he would still have good coverage but the size of his asset and what he can build is a smaller version because he's putting less into it. So I just want to give you that reference point as we go through this. Now when we look at the death benefit differential between these, these two numbers, it's 200 and you know, 260 grand. We go to the next one, it's $81,000. 40 to 45 is 155,000 and 45 to 50 is 160,000. When we look at the whole gap, if we just look at age 30 to 50 where there's a 20 year difference here, the total differential is only $655,000. So same hundred thousand going in, tons of flexibility, building equity. I'm going to show you that in a moment. And the difference is only that you get less death benefit as you age. That's all there is to it. Okay, so I wanted to make that distinction. Now I'm going to briefly talk about a very important thing. This is where we get into the corporate stuff. So for you, you that have corporations, this is really important to you. If you're watching the replay of this and you have a corporation, very important. If you don't have one yet, but you're thinking about it as you build your practice and build your, you know, build your portfolio, then this is going to be really, really important for you to understand. Every Canadian controlled private corporation has something called a capital dividend account. I refer to this as the cash you deserve account. It's also, in my opinion, and I'm just giving, just stating an opinion, it is the greatest tax advantage that exists in the Canadian tax system. We are talking about life insurance here. When the corporation owns a policy, the corporation is the owner and the corporation is the beneficiary. At some future point in time, you're going to utilize as much of the equity that builds up in this policy while you're alive on planet earth. In our corporate example, what's going to happen is the death benefit amount will be received. But before it's received, there's going to be an outstanding loan. Because you've been using money, it'll have to pay off that outstanding loan the same way you and you sell a house, you got to pay off the mortgage first, second, third mortgage, you got to pay that off in order to pass clear title onto the next owner. So that has to happen first. The difference or the jelly in the sandwich is equity. That's what you get to keep. Well, in our insurance example, that'll be the net tax free death benefit that is received. The capital dividend account. What's really cool is that it provides a huge ability to extract capital. Because if we have a death benefit of let's say $10 million, we have an outstanding loan of $8 million. The net death benefit is only $2 million. Okay, so that's what the corporation is going to receive. However, 10 million is going to be a ledger entry in the Corporation's books. And if your corporation owns a whole.

Bunch of other assets, probably investment real estate, I threw other things on the list here, but I've got some real estate. You know, maybe you got apartment building, whatever you've got there, maybe you've got some cryptocurrency, maybe you have one Bitcoin and eventually Bitcoin's worth a million dollars, like whatever you've got going on and the corporation's the owner of that asset. Well now all of those other assets that are on the corporate books can be extracted tax free to the remaining shareholders of that corporation or who ends up inheriting the shares of the corporation in the will and the estate. Extremely, extremely powerful, which means you can maintain and control without taxation the maximum amount of capital over a over generational path by utilizing this important tool. So very, very critical. So in this example I've got, you know, a million, million, 2 million, 100 million, $5 million of assets to extract. So we're going to talk about that as we go through our example.

So we're going to take a look at deposits into one of these plans and we're going to get into our visual example. So this is a tool that in one of my business, a few business partners I created, we have a small software company where we show some demo tools for this concept. And this is what we refer to as a wealth access system. So in my example we talked about the age 45 individual. That's what we're going to be referencing. So you guys should see here, there's a few bars. I've got annual deposits, I've got a number of years for deposits. So I'm going to drop this to zero to kick us off where there's nothing happening yet. I have the starting age, so I'm using the age 45 example. If you're younger, I gave you a reference point. If you're older, I gave you a reference point. Okay, we already talked about that. What we're going to do is we're using our 100,000 example and I'm going to show funding it for seven years in a row.

Okay?

So we're going to fund the first seven years, 100,000 a year, which is $700,000. Pretty simple math. Everybody with me? Okay, down here I have a cool little slider bar where we can assess what are the values at 5 in 5 year increments. Okay? So we're not going to look at every single year. We're just going to keep it high level and look at every Every fifth year. So if we're funding this thing for the first seven years, I'm going to look at the fifth year. Let's see where we at. We put in $100,000 a year for five years. So our deposits are 500,000. We have an asset, cash value asset. It's referred to as cash value of $503,000. In other words, that's the equity of the insurance contract. Now this could be two, three or four contracts spread out over husband and wife and business partner, joint venture partner, husband, wife and two children, et cetera. So I'm just picking one number and it can be spread out amongst as many people or bodies that need to get insured as possible. I personally have, I just acquired three in the last two months new contracts, one on my wife and two new ones on my children. And so I have a new policy of $35,000 a year on my wife that I just did. I just took first policy loan. I think it landed my bank account. Today I'm going to use it to pay my Canadian government tax bill, corporate tax bill, which is amazing. So I'm going to pay the Canadian government money.

They needed it anyway, but I ran.

The money through a policy before. I'm going to give it to them. So I have perpetual motion on the tax bill I was going to give the Canadian government. Now in my example here, I think this is pretty cool. We put in 500,000. We have an asset value of 503,000. In other words, did this insurance contract cost us any money? If you had access to every dollar or you had an asset value equivalent to every dollar you contributed, did it cost you anything? Would you guys say yes or no? If you put all of your money into a piece of property and you put your down payment in and then you got all the down payment money.

And all the money you put into.

The property back out of it, how much did that property cost you? It's technically a free property because all of your money is out. You used other people's money. OPM might still be, might still be money attached to the property. But if you have all of your dollars back out, the property didn't really cost you anything. The same concept applies to what we're doing here with the insurance. Now we've created a pretty healthy tax free legacy. So if we died early, do we get a lot more money than we put in out? Now here's what I want to show you. I want to show you 10 years out. So in the 10th year we remember we were going to fund for seven years. We've put in 700,000 of deposits. We have an asset value now of 864. Can we access every single dollar that we contributed with no questions asked by way of a policy loan? I'm going to tell you flat out, the answer is yes, you can absolutely do that. The legacy value has increased. Now here's the key thing I want to show you. As we keep growing forward in time, the cash value continues to grow, and.

Of course, the legacy value continues to grow as well. So we're going to isolate age 85. We're going to remember this cash value asset number of 2.7 million. 2, 705. Okay, so 2 million 700. Well, $2,706,000. We're going to make the decision to continue adding deposits.

In the first 10 years. So we're going to add three additional deposits of $100,000. So another $300,000 on the front end. So as soon as I do that, let's see what the change is. What kind of impact did we just see happen in the cash value column there? We committed to funding the program even though we'd already had access to all the money we'd contributed. By the way, if you had a bank account where every time you put 10 grand in or 100 grand in, it gave you more money that year than what you contribute into it, and it would do that every year for the rest of your life, would anyone here stop contributing to that account?

I would assume not. Because if you put in 10 grand and it gave you 11, the next year you put in 10, it gave you 12. Next year you put in 10 and it gave you 13. You'd probably want to put 10 again the next year. Same concept applies here to this insurance contract. So we went from $3,900,000 versus $2,700,000. Was it safe to say we got about $1,200,000 difference there? Okay, so that's capital that you can use during your lifespan, not just at death. The worst thing that can happen is you die early and you get more money out to your family, or you live a long time and you get access to more money than you contributed. So again, if we add three deposits here, we added three years of $100,000. The difference of that $300,000 that went in was, it was an impact in our life of $1.2 million of usable value that we can work with while alive on planet Earth. You'll also notice that the tax free death benefit went up substantially. So it went from 3.3 to 4.7. Now no one knows what day you're leaving planet Earth. I sure do not. I'd like to be here a long time. I don't mind saying, even though it's ridiculous, I'm personally setting a ridiculous goal that I want to live to age 165. Whether that'll happen or not, I don't know. Probably not. But if I don't have a high target, I'm certainly not going to reach it. So the things I need to do differently in my life today to reach that target need to start changing now around my health, et cetera. And so we encourage people to think long range and think about living longer. And so I would encourage you to do the same as well.

One thing I want to show you.

On the graph here, if you look out to age 100, you'll see this low green bar. Those are our deposits.

Okay.

We only put money in for the first 10 years and then that's level. We never put any more into the example. But notice the green bar here, the dark green is the cash value. At age 100, the cash value is 6.6. And back here, the yellow bar is the legacy value, the death benefit. It is also 6.6 by age 100. The cash value, which is your asset while alive must, I repeat, must equal the death benefit by age 100, period. Just like when you get a mortgage contract and you borrow 400 grand for a first mortgage to buy a rental property, you have a contractual obligation to return that money plus the payments of interest and or interest penalty when you go to break that contract in the three years. So you have a contractual obligation to do that. The same thing applies to the insurance company. You have them now contractually obligated to constantly grow your cash value every day that you take air into your lungs until the day that you die all the way to age 100. And then those two things must be the same. Now we're writing our second book. We're launching a book here in the next two months and then our follow up book to that is coming out probably in December. It's called Cash Follows the Leader. And in fact I just got the return of the manuscript edit on that where we're going to be speaking to that very topic. So the key takeaway is that the cash and the death benefit are the same because the insurance company is growing the cash for the purpose of paying the death benefit. That's why you can access it via what's referred to As a policy, loan or collateral. Anytime along this earlier path. If you want to access money from this dark green bar here, I'll turn the deposits off anytime you want to access money from this, you can access 90% of this value with no questions asked. Okay. From the insurance company. The money doesn't come out of the account, the money comes from the insurance company. The account is simply collateral. No different than you have a home equity line set up on your house. The difference is it's an insurance contract instead of a house and it doesn't have the maintenance required that a house does. So it's very similar to a long term buy and hold piece of real estate. Now what I want to show, I just want to show the impact of continuing to fund those deposits for a longer period. If you took it out for 20 years, you know, what's the impact there? You can see obviously how these numbers begin to escalate by making those continued deposits over time. Now in our hundred thousand dollar example, obviously it's, we're talking about a good amount of money on an annual basis. Not everyone has that to throw around. But I wanted to stretch your imagination. Even if we're looking at the $10,000 number, the same trend of growth applies. So the, the difference is only in the extra zero added on the end of it. Okay, before I move on to the next thing, we're going to start looking at now, doing this over a period of time and then taking an income stream off of it.

One question was, can you access the cash value asset at any time and is your deposit guaranteed by the federal deposit insurer?

Oh, those are two really good questions. Okay, I'm going to try not to rabbit hole here a little bit. So first off, we have a podcast episode on that second part. The actual guarantees on this blow Canada deposit insurance out of the equation because there's a company called Assurus, which is a nonprofit organization that all insurance companies need to pay into that guarantee benefits for insurance companies in Canada. There's nothing like it in the world that I'm aware of. We have a podcast episode specifically talking about that, and we isolate the whole thing. But the protections in place for this outweigh anything else that the country has. The first part of the question was about accessing capital. So the answer is yes, you can access 90%, 9 0% of whatever the cash value asset is on any given day. The minimum loan amount is 500 bucks. Okay, so what we're going to talk about is an insured retirement plan. This is the terminology that the financial industry uses. We're redirecting money from your other resources, money that used to go to other contributions.

And we're just redirecting that to funnel it towards whole life contracts. Well designed. You get a whack of benefits and you can access capital either from the life company themselves. Again, no questions asked. Doesn't show up on a credit report. It's a unstructured loan arrangement. Unstructured meaning if you never send a dime back to it, there was a little bit of interest that accumulate, but there's not a white van with an insurance company logo. It shows up at your house and two guys with baseball bats looking to kneecap you. Doesn't happen. It's you have total contractual authority over it. So there's no minimum payment, there's no monthly yearly interest only payment. All those are recommended. That's part of what we teach people about in our other training, in our client portal, in our online membership group and in our quarterly coaching sessions. The content in this book is the mindset that you need to have to operate this effectively. It's not just about getting an insurance contract, it's about how do you use it. That's where the real rubber hits the road. Additionally, you can also collateralize this the same way you can with equity from a house. But there's specialized lenders for this. They will actually lend you 90% and in some instances 100% of that cash value. It's easier to qualify for than most bank loans because the the actual cash value asset is supported by a tax free death benefit. So the insurance company, there's the collateral is unmatched when you stack it up against property. Because house values go up and down. The insurance contract can't go down. It only has one trajectory up because of the contractual nature of it and the way that we design the contract. Again, this works both personally and for corporations. Now in our example we're going back to our 45 year old individual. They funded $100,000 into their program and I showed doing it for a 20 year period of time. Okay, so for that 20 year period of time they built up huge amount of equity. They could have been buying real estate, funding equipment for their business, going on vac, doing all the things that they wanted to do. So I'm going to show them taking 26 years of income from age 70 to 95, which includes age 95. The corporation is the owner of this. So if you own this personally, you would just do this personally. But as the corporation is the owner, the corporation is going to go and apply in this case because of some of the tax efficiency that we can create. When I say tax efficiency, I mean tax free. They're going to take a collateral loan against this policy. Pretty easy to get those at this point. They've been very popular in Canada for the last 40 years. And in fact more companies are getting into this business, so it's becoming more popular. They're going to access an annual, basically like a line of credit, and they're going to take an annual stream of income into the corporation. Now the corporation is receiving the money tax free. The shareholder or shareholders will receive a taxable dividend. Okay? So the corporation funded the money, corporate dollars funded it. Corporation receives the money tax free. Corporation issues a taxable dividend to the shareholders. No different than you would with other income that a corporation would generate. So they're going to take $154,000 bank loan per year. I'm assuming 5% interest rate. Similarly, you know, a lot of these are generally based on prime. And you can, you can, depending on the strength of the borrower, you can get prime plus 0.5, 0.1. Some lenders might be 0.1, 0.4, most likely not. Usually it's like prime plus one. So I'm using a higher rate than what you can get today in these assumptions. Shareholder takes a dividend and they're getting $100,000 net after they pay tax. So I'm using a 48% marginal tax rate. In this example, I'm using a higher tax rate to generate that net income. So 100,000 net, corporation paid the premium 100 grand for 20 years. Okay? Shareholder was able to spend the money. So 26 years at 100 grand after the taxes paid, the net amount that you were able to spend in your hands outside of the corporation, that's $2.6 million of passive tax free income. In this example, the corporation funded the money, they funded 2 million, but it was corporate dollars. You know, it hasn't been, you know, taxed at corporate rates. And the shareholder outside of the corporation got to spend $2,600,000. That's a pretty good deal. Okay, now the shareholder dies tax free. Death benefit's gonna pay out, including all the outstanding loan interest. In my example, when they took that $154,000 of annual loan amount, they didn't send a single dime back towards repaying the loan. There wasn't an interest only payment. They capitalized the interest, okay? And they let that thing grow. Now could you send some money back could you make payments? Could you sell a piece of real estate and replenish that? Many of those options are possible and that is most common what we see with people. But to keep it very simple, all they did is they took 154 a year for the corporation interest stacked and capitalized on that number for the 26 year period of time. And they were able to continue drawing that income out that whole period. So there's a huge large loan balance now that exists on that policy. The Death benefit is $10,200,000 at this point. They have a bank loan. The bank loan is $8,300,000 because of all that additional interest plus what they drew out. So the net death benefit, the corporation's going to get a check on graduation day. We talk about graduation, you know, the day that you finally graduate from here.

And go where you're going to go.

There's no money for the CRA on this. The insurance company cuts a check to the corporation for $1,900,000 tax free. Now the corporation receives this death benefit number as a ledger entry in the CDA account, the capital dividend account that I explained earlier. So 1,900,000 is the real dollars that the corporation receives. 10,200,000 is like a notional account, it's a fictional account, but it has a ledger entry in it. And it's saying, look, any shareholder has the ability to withdraw tax free capital dividends up to this number if that means they can immediately withdraw the 1.9 tax free and any other assets can be extracted later on. So going back to the image I had earlier, here we have all of our assets. We had some real estate assets. I had bitcoin on here. I had a stock portfolio. I showed 5 million that was on there. Those things get sold. There might be a capital gain on the property when it sells at the corporate level as the owner. But whatever the net amount received at the corporation is after the corporations paid their tax bill, all of that can now be extracted outside of the corporation to the remaining shareholders, tax free. Now I want to just tweak this a little bit. What if you adjusted the age for income because some people want to start taking income earlier or whatever. If this same person said, look, I'm not going to wait till 70 to take that income, I'm going to take it 65, they did it for 31 years instead of 26, hey, they would get slightly lower income, but they get it for a longer period of time. Same idea. If they went from age 65 to 135 years. Well, they get a slightly lower amount of income, but they get it for a longer period of time, age 70 to 100. Okay, hey, I get a higher income, again longer than the 100,000 I showed earlier. So I want you guys to recognize that when you control this type of a system, you dictate the terms as to when and how you want to take and receive capital.

Okay?

You get to have the control that's really the key in the whole situation. So, you know, circling back to the end here, I'm going to reiterate again how to get a hold of me. Also, if you're interested in getting a copy of Nelson's book, I really recommend that. It's only 92 pages long. It takes the average person about two and a half to three hours to read this book. We recommend reading the book multiple times, at least minimum once a year. I personally read from this book all the time. It's a guidebook. It's my bible for the process of infinite banking. Other than my family, it's my most prized possession, period. I never go anywhere without that book. So we would encourage you definitely to watch our, our client series and you know, certainly get the seven steps report, which it gives you a good guide on the best way to learn more about this, this process. Now our process at Ascended Financial is really unique. We have what we call the infinite wealth plan. I have Nelson here. Nelson had five critical rules to the thinking process around implementing this in your life. Number one is you got to think long range. He says you got to learn how to start thinking beyond your own lifespan. Don't be afraid to capitalize. You can't, you know, just like you wouldn't be afraid to stick money into down payment on a piece of real estate, you wouldn't be able to capitalize in this system. Don't steal the P's means. Don't take a policy, loan or access capital without having a plan in place how you want to replenish that resource. Okay, so we expand on that. There's an example in the book about the grocery store, which is really powerful. Don't do business with banks. The reality is we need banks, especially in the real estate industry and what we're doing. The idea is that over time doesn't happen immediately, overnight, over a 20, 30 year period of time, whatever it is, you can phase them out of your life, some people much earlier than that by controlling capital in the system and then re redirecting to buy out or replace the debt. Whose control the Debt is under and then the payments that used to walk out the door are now constantly flowing back in under your financial control. So we have some videos on that. We call it debt recapturing. And the last one is to rethink your thinking. So we have a ton of free educational resources we do, including our podcast. A lot of people find our podcast very helpful. We do a initial become your own banker call. You get a chance to meet a coach.

That coach could be me.

It could be another member of our team. We have unbelievable teammates all across the country. We custom design a plan. If it's what you want to do. If it isn't, that's totally cool. It's. You're always in the driver's seat. We introduce you to our client success team that's about, you know, getting applications going, that sort of thing. Then we have a kickoff where we talk about ongoing lifetime coaching that we provide with this process. We have quarterly group coaching sessions. We have an online membership portal with about probably a hundred hours of different, like, you know, different resources for, for, like, like video content and things of that. So like there's a lot in there and we add to that on a regular basis. Would you suggest cashing in a self.

Directed RRSP and putting it into an insurance vehicle?

Really good question, Lana. Thank you for asking that. I'm going to quantify that by saying I wouldn't necessarily recommend anything. I would say if someone has that question, there's a reason that question comes up and it's worth having a good in depth discussion about what the objective is and what's sensible for the individual. And I'll share a quick example with you. I have a gentleman recently who actually I'm doing a case study on. It's going to be in our second book. And he re. He was a. He's a software guy and he was working for a company and in the last 12 months he started contracting now. So he set up a corporation. Everything's in the corporation. They were already very diligent on living off of his wife's income. She makes pretty good money as some kind of manager. I don't know if she's of course a government job. And they. So they were living off of one income and they were saving a lot of his and they were prepaying their mortgage, doing all this other stuff. He was putting in like 25 grand a year in RSP contributions. So he stopped that, number one. And because he can earn his income corporately now, he doesn't need to take any of that money out of the corporation so he can let that resource work for him much better. And now his income, he gets to control his income. So for him it's a sensible reason. Now because he had like 200 grand in a registered account RSPS. Now he can strategically look at melting that down when he's in his lowest income phase. Now I'm not a tax professional or an accountant. I'm not going to make recommendations to anybody here because it could be really damaging to do something like that without knowing someone's real circumstances. And it's not not my place to do. I'm simply talking about an individual who was able to position himself in the lowest tax bracket and actually start to strategically withdraw that resource because it had to come out anyway and it was going to come out at some future tax rate that he didn't control. Now he has a known tax rate and he can control the dynamic. He can do a shareholder loan to the corporation which means he'll be able to extract that money back out of the corporation at a later date and that can fund his program. And amongst other things that we were able to move around in his life, we had that resource. They were putting 20 grand extra on their doing weekly accelerated payments on their mortgage. They were putting 500amonth in resps for their kids. They'd already maxed out the government benefits there. There was no reason to continue doing it. We restructured everything. We put together four policies, two kids and the parents overall about $60,000 worth of premium because we were able to reallocate things that we're already spending money on. They didn't change their habits or working any harder. We just changed how they move the money around. In some circumstances it's sensible for people. We have a lot of people that decide that's the fit for them. But we want to make sure they're understanding or aware what are the withholding taxes and the implications of making that decision. The reality is I don't like the government. Sorry, it's not, not my friends, I'm not built that way. I believe you should be in the driver's seat of your money and you should be in control of things. And I don't think putting it into a government sponsored system where they can dictate and control the rules and change them at any moment. Because we know now in our country they do like to change the flipping rules and you don't have any control of it, neither do I. So I would rather see that you can maintain your capital warehouse in something that you have the most amount of control in ideally in my. I'm biased of course, obviously I have a bias here. It should be in private contract. The insurance is a private contract that you enter into voluntarily. No one puts a gun to your head and forces you to do it. You are dictate the terms because it's free contract with other free people. You voluntarily enter that you don't. You're not forced into, coerced into it.

Do you pay interest on the money you take out from the capital value deposits?

The answer is yes. So again, I'm going to equate this to a real estate. If you had a piece of real estate fully paid for, you own nothing on it, you had 100% equity in that property and you went and called Sean up and said, hey Sean, can you help me get a HELOC on this property or refinance my loan? Refinance the property. You're going to pull out money tax free because the money came from the property, from a, from a lender. It didn't. You didn't sell the property, you never capital gain, you didn't get rid of the asset, you got the money from a third party lender. So there's no tax consequence number one on that situation. We have a, by the way, episode 100 of our podcast, we have a big explanation on tax consequences. And then additionally, you would now be responsible for making a structured payment to that lender at their request. No, you don't have control over that. They determine the payment and the payment structure and the payment time frame and you would be minimum. You'd be paying interest to that third party. So the same principles apply with the life company. The difference is there's no structured payment. You have total control over the time frame, the repayment terms, whether you repay it or not. If you don't repay it, will interest accumulate? The answer is yes. Here's the other thing. You go and make a payment right now to. I'll just, I'll pick on a bank, I'll say TD bank or bmo, whoever it is, you're paying them for a mortgage payment right now. There's interest attached to that, they get that. But they don't just get the interest payment, they get the whole principal payment too. So think about that. They're not just getting the interest payment, they get the whole payment. So if the payment is $2,000 a month, $2,000 of financial energy is walking away from you in that month and then every month thereafter, you cannot spend that $2,000 again. It's gone unless you sell the property or refinance to liberate equity. So we want to try to control that payment and bring it back. Now you don't get any profits from the bank at the end of the year. They don't send you a dividend check or send you profits to say thanks for being a great customer, here's a portion of that interest that you paid back. Whereas you're, if you're working with the insurance company, you are a co owner. You co own the lender, you're a participating owner. So they, the only people that they put money to work for is folks like you. There's no one else that can access the profits. They share those profits with you annually in a dividend. That is when we plug it back into the system it increases both the cash value and the death benefit and it creates more compound effect. So yes, you pay interest to the life company and every life company is a little different but you're paying interest for the privilege of having total control over your money constantly growing. So the answer is yes. We have several examples about that as well.

There's a question about what interest rate is the money growing in the example provided.

Great question. There isn't a direct interest rate on the example that I showed because that's not how the policy grows. It is not. So I want to be super mega like ultra emphatically clear about this statement. This is not an investment period. Insurance contract is not an investment. If we think that it is, we're not looking at it through the right lens. This is a savings vehicle. It's a warehouse for money. You know, I'm guessing most people here probably have a garage or they at least if you don't. In Edmonton you want 16 months of the year.

When you back out of your garage and you go to work or you go look at one of your properties or go do a tenant showing you've taken the gar. The car out of the storage. The warehouse, the garage is your warehouse. You go and do things, you truck along, you go buy groceries. When you're done your day, you bring it back home and you park it back in the garage. You're always returning it to the warehouse. Does that make sense? Your money needs a warehouse. It has to come out and go do stuff and the money should come back to the warehouse. The contract that we set up is simply an efficient warehouse for that activity. Banking is a transactional aspect of money flowing through our life. We're trying to harness that flow in an efficient Manner and making it so that your money gets applied into something that is always growing. And this is not a get rich quick thing. There's no, like, it's, it's, it's, it's not an investment structure. There is absolute growth that happens here. But the reason that growth happens is, is because of the foundation of the contract and how it's built. We're placing the insurance company on notice and we're saying, look, I've got this contract right here. This is, this is a contract you have to perform to this contract. It's a unilaterally binding contract. My job is to pay the premium, the minimum premium. Your job is to guarantee the death benefit and guarantee that my cash value, which is my asset, must grow to equal the death benefit by age 100. Now, if Richard or any of Richard's friends over at Ascendant Financial or, you know, you know, an authorized infinite banking practitioner that you're working with, please, please, please, please always make sure you're working with an authorized infinite banking practitioner. Because no one else understands this, then you would be getting a policy that designs things so that you're optimizing the increase of the death benefit as it leapfrogs and jumps up and gets bigger and bigger. Like I showed on my graph, you are forcing the insurance company's hand to make them grow a constantly accruing amount of cash value. So there's not really an interest rate because it's how the contract is built to create accumulation.

Can you cash out the death benefit early or loan against it?

So I think the second part of that question is, can you loan against the death benefit? So the answer is no, you cannot loan against the death benefit. That would be like saying, hey, bank, I've got this property that appraised at $500,000. But you know, I know 25 years from now it's going to be worth $2 million. Can you give me a loan on the $2 million? Not going to happen.

No.

Those banks have no sense of humor at all. Okay, so you definitely can't do that. But can you cash out the death benefit early? So you can't cash out the death benefit early. You can cash out the cash value if you wanted to. You would lose the contract. The contract is now done. You might no longer be health insurable, in which case you would not be able to get a new insurance contract, which is really, really bad, by the way. And hypothetically, let's just say that you'd had that contract for 10 years. If you'd had it for 10 years, then now you're cashing it in. You've, you've got, I'll just pick a number. You've got $100,000 in cash value in there. You are putting in 10 grand a year. You have exactly what you put in. I'll just keep it very simple. Simple math. You say, I want to cash it out, you get your money back, you no longer have death benefit. But what you've Also lost is 10 years. You can never replace the time. See, the insurance contract gets more efficient each and every year. And so the least efficient year is the first year. But as soon as it gets efficient and you're putting 10 grand in and it's giving you 15, and you put in 10 and it gives you 16, you put in 10, it gives you 17. If you collapse that, then now you've given up all the time that you put in and you can never get that back. You have to start over from square one. It's an option that people can use. Unfortunately, it does happen with people who have a lot of insurance contracts that aren't familiar with what their rights are and what they can do with it. And they haven't been educated or coached properly on things that they might be.

Able to work with.

Capital. I meet people like that all the day that have cash value, have never used it and don't know how.

So you can cash out the policy and close the policy. You would receive the cash value, the asset value, whatever the net amount is. If you'd borrowed out all the money, you're not going to get. You know, if you had a house and it was 500,000 and you owed 200,000 and then you borrowed 300,000 off of it on private loans, well, when you sell the house, you're not going to also get more money because you've used all the equity. Does that make sense? So you're only going to get equity back. No different than a piece of real estate. Again, this is very much like a piece of long term buy and hold real estate, there's not a lot of difference.

Okay, so then there's a question. So how does the insurance company make money if we are using the money in the interim and at the end and they are paying us out that death benefit?

Cool question. Okay, this is actually really interesting. So first point is the summary point. The summary point is every day that the insurance company, the insurance contract is in force, the insurance company's risk goes down. So I'm going to use a real estate analogy here. You went and bought a property today and you put 5% down. Okay? So it's a $500,000 property. You came up with 25 grand. You had to pay CMHC a boatload of money. So you end up with a mortgage balance that's. You know, maybe Sean can chime in here, but it's going to be hovering. $485,000.

Ish.

You put $25,000, but your mortgage balance ends up being around $485,000. Who has all the risk in that deal, the homeowner or the bank? Cmhc in the bank.

That's right.

In this case, it's actually CMHC that's got the risk because they have guaranteed the loan. So the bank has absolved risk. The only reason they're going to do that deal is because CMHC insurance premium is covering their.

Their butt. All right?

So CMHC has all the risk, but if we didn't have cmhc, the bank would have all that risk. Okay? Now they're not lending you the money because of the property. That is a factor. They're lending you the money because of your ability, demonstrated ability to make payments. They don't want the money. They don't want the house. They want the stream of payments. They want cash flow. That's what they want. Okay? Every time that the payment comes in, it comes in with friends, principal and interest.

Cool.

We can go put it to work again at lightning speed. That's how banks operate. So now let's put that insurance company in the mix. Let's flip the switch and look at the insurance. I go get an insurance contract today. You know what? I'll give you an example of one I just did. I've got a policy on my wife. I just. It's not even two months old. My premium. I decided, I made the choice. I designed the policy to what I wanted. Okay? I wanted to deposit, deposit $35,000 a year into the new policy on my wife. By the way, I'm doing this in a holding company that I set up. It's owned by the corporation. So my goal was to do a $35,000 deposit. The minimum premium on that policy is about $9,500 a year. Okay, so you guys want to write that down?

You can.

The minimum required Premium was about 9,500. My flexible premium that, it's totally optional, is a 26 grand. It's 265 or something like that. Okay? So very flexible policy. The death benefit on that policy is about a million dollars, give or take. What I Did is I converted term insurance that my wife had and I, and I flipped it from being term into this whole life structure. So it's about a million bucks. Maybe a little under that. Maybe it's 900,000. I don't know the exact number. Now the very first day I paid that premium, that 26,000 instantly bought paid up insurance a block of new whole life death benefit of $109,000. So I traded $26,000 of today's money to guarantee me $110,000 of continually growing cash value for the rest of my natural life. Can't stop it. Additionally, I was able to borrow on my $35,000. I was able to borrow about just under 24,000. I'll call it 23. It was about 66% of every dollar I contributed I could access the next day. That's pretty liquid. It's not 100% liquid, but it's pretty good. Now let's talk about the insurance company's risk. I put in 35,000 and the insurance company has pledged tax free money of 900,000. Who has the risk on day one? Insurance company.

Right, right.

Because if I die, my wife, in this case, my wife dies the next day. They only got 35 grand. They got to pay me out 900 grand. In fact, it's more because remember I, I put in extra. So I bought another hundred grand. So they actually have to pay me out a million bucks on my 35 grand. Now each and every year that goes by, the, the death benefits rising and the cash values rising. Death benefits rising. Cash values rising because of how we build the contract. Just like you saw in my little demonstrating tool. As the cash value builds up, the amount of risk that the insurance company has goes down because the cash value, the reason that they're accumulating the cash value and they have a contractual obligation is because they must pay a death benefit. They have no choice in the matter. And they know because it's for my whole life, they can't get out of the deal. They can't. I will die some point. My wife will not be here. At some point death will happen. Sorry, I don't want to break anyone's, hurt anyone's feelings, but it's coming for you. Reaper is going to show up one day. Sorry. Might as well have a little bit of fun with it. And so they know that they're going to have to pay the death benefit. They are growing the cash, the asset of cash value for the purpose of paying the death benefit. So every time that the cash gets.

Closer and closer to the death benefit.

The insurance company's risk goes lower and lower and lower and lower. Their risk is the biggest on day one. And every day the policy is enforced, their risk goes down. So again, if, if you have additional questions, we have resources to answer those we have. Again, our podcast is very popular. I would encourage you to, to subscribe to our podcast. Specifically, I put a link in there to the client series. There's a playlist that we have on YouTube where we've interviewed, you know, 25 of our clients. Several of them are well known real estate investors. You know, we have, we had CPAs. We work with a ton of great people and we have a ton of fun doing it. And I hope you guys learned a lot today and support you guys learning another way that you can build and control equity.