Ep18: Deeper Dive Into Infinite Banking: Part 2 - Making Your Lazy Money Work Hard For You

You must be wondering in your mind that if this is such a powerful system, why haven't I heard about it? That was my question too. This system, this tool stayed with America's wealthy for the longest period of time. And they created this system and utilized it year after year, generation after generation to create that generational wealth. It was not a common knowledge.

Are you frustrated watching your hard earned money ride the knee jerking Wall street roller coaster? Are you looking to diversify into alternate investments and set them on autopilot to achieve financial freedom? It's time to learn the ways of the wealthy. It's time to Think Outside the Stocks with your host Madhvi Jain, an immigrant from India and ex IT professional who will bring you industry experts to illustrate a passive and holistic financial approach to build not just passive income but also your generational wealth. Madvi is on a mission to change the financial trajectory of one family at a time. And a thousand more to go. Are you going to be part of this vision? And now without further ado, here is the host of Think Outside the Stocks, Madhvi Jain.

Hey. Hey. Hey. Welcome to Think Outside the Stocks. Another episode with your host Madhvi Jain. Today we are going to be talking about continuation of our infinite banking system. The problem that you didn't know that you have to make your lazy money in your bank very, very efficient for you. Let me ask you a question. Are you satisfied with the banking institution and the growth that they are providing year after year to keep your emergency money, to keep your savings money and your parked money in this institution? Are you completely worry free and happy about the growth that you have been getting year after year? If the answer is yes, you have to listen to this episode. And if answer is no, you have to listen to this episode too. In this episode we are going to talk about summarizing the problems that we discussed in the last episode. Now if you are joining in and listening us from this episode and haven't heard our part one of this infinite banking system, I highly encourage you to go back and listen to it. Because there we talk about and discuss the problem areas in a very, very detailed manner. Why is it important? Because unless we understand the problem, how can we understand a solution? Right? So stop right here, go back, listen to that episode and come join us in this episode. We are going to talk about the problem areas, just a overview of it. Then we will talk about what infinite banking system is and actually what infinite banking system is not. We will talk about advantage of this, how you can use it, what Are the benefits provided by this historically, who has been using it generation after generation. And then we will wrap it up that how you can implement this strategy and what steps you can take to bring this strategy to your financial structure. Before we go ahead, I do want to mention that this podcast is educational information purpose only. Before you invest in and before you take any decisions, we highly, highly encourage you to consult your team, your legal advisors, your tax advisors and financial advisors. Now we have that cleared up, let's jump right in. In last episode we talked about some of the problem areas, why your savings is inefficient today. First of all, we are talking about savings today, not investing. We are talking about your savings money which I call your sleep well money, your emergency money, the money that's sitting in bank account provides you that satisfaction, that peace of mind that if something happens to me or my family, if I have emergencies, medical emergency, job emergency, I have this buffer in the bank account that I can utilize and go back and utilize it anytime I want for my family expenses. This is the money that we are talking about. We are also talking about the parked money that between the investments that you keep this in the bank account for the lack of better institution. So we're talking about that money, keeping this money in a regular bank account. There are several disadvantage to it. There are several things that you have to consider. First of all, how is the growth has been on this savings account Currently you must be really happy that you're getting about 5% in money market account or so. But couple of years back it was less than 1%. So the growth itself is very volatile. And also the institution, the FDIC insured institutions, the banking institution where it's sitting. We have seen recession after recession that this banking institute has tendency to fail. Even currently we have had this SVB likes of the banks that have failed. So is that money really, really secure and it is really efficient for you? That's the first question. Now when you get this growth, the interest in this banking institution, how is the taxes, how are you paying the taxes on it? This is getting calculated towards your active income. So your money actually comes out from the top tax bracket. So even if you're getting 5% right now and if your tax bracket is really high, 30% of it is going to the taxes. So that's not really growing as efficiently as you think it is. If you do consider the tax saving buckets, that is your retirement accounts, your qualified plans, right? Your maybe even 529 plan where you can contribute to it and it grows inside tax free. It's an advantage. But you have a limit on how much you can contribute to it. And you also have a limit on when and how you can access this money. If it is tied to a retirement, it's tied to certain age. If it is tied to education, it is tied to a certain purpose. Without that purpose, without that age, if you decide to take it out, you're going to get hefty penalties. We also looked at how family could be a wealth destroyer. So if you are generating this generation after generation, and this generation, by the way, has started creating that massive wealth for the next generation, this family destroyers by dividing it by, you know, divorces and legal threats, this can get depleted. It does not provide you asset protection while you're alive. So when it's sitting in the bank account and you get into legal issue, it's going to get impacted straight away. And then in addition, I have a question to ask. Does it provide you any additional benefit? Now you must be saying, Madhvi, what additional benefit you're talking about? Just listen in and we will talk about how infinite banking can actually provide you an additional benefit as well. So clearly we have problem areas and we are looking for the solution. What is the solution? What options do we have? The infinite banking system can be that alternate. When you can think like a bank, you can create that structure and you can utilize it for different purposes. To understand infinite banking system, however, further, I want to clarify some of the basics of the infinite banking system. The infinite banking system is foundational of your financial structure. In some of the previous episodes of Think Outside the Stocks, we have been talking about a pyramid structure for your finances. The foundation, the bottom layer of it being so solid, so strong, almost like a foundation of your home, which can weather many, many storms. So in your financial structure, when we are looking at that foundation, we are looking at some guaranteed growth, some risk, managed growth, something that can never lose money. So there's a protection, there is a cap, a tight lid to it. And it also provides you protection against your life. So something happens to your life, your family is kind of covered, it is protected with that loss. As you start going up in this pyramid, your control goes down. And then the level one, level two, level three, you also have more risk and maybe more rewards, right? So this could be your realistic estate investments in level one. It could be your indirect investments, maybe oil and gas and some speculative investments in in stock market, which sits on the top. Most of the times when I talk to clients, their pyramid is upside down. They have most of their life savings sitting in the speculation, that is the stock market. So that is the basic number one, basics number two. To understand infinite banking system is to understand the eighth wonder of the world. And what is the eighth wonder of the world? Compound interest. That's what Einstein thought, that it's the eighth wonder of the world. And why? Because when compound interest adds your interest on top of your principle year after year, it has an ability to create a snowball and create a tremendous growth with your wealth. This is the velocity of money that we keep in motion. That is what we are talking about. And the third basic I want to talk about is the uninterrupted compounding. When we are typically saving and investing or doing expenditures on our money that we have stored in the bank account. This is how we live. Typically we start saving into the bank account when these savings achieve a certain growth. Say, for example, if we start saving 5,000, 10,000 a year and it comes to a level of say, 50, 60,000, this is the first time we see that this is an opportunity. Now we can take that opportunity, either spend that money getting a car or something, or we could invest that money put as a down payment towards maybe our first house, our investment property, or even a syndicated real estate. So once we get there, we take that money out, we deplete that savings, we put it into either that expenses or the investments. And the money in the bank account has come out now, it has stopped its growth. So we again start saving again building that to another 50, 60,000 and kind of rinse and repeat from there. What in turn ends up happening is that we are interrupting the growth of this money. Compound interest grows if it is uninterrupted. So for example, if you start saving $1,000 every month for 30 years in bank account, which can give you 6% annualized interest, this has a capacity to grow million dollars in that bank account. So when you are doing the saving and depleting and saving and depleting, you are taking the power away from your money to compound into snowball year after year, hence losing that uninterrupted compound growth, the velocity of the money. So with these three basics, the wealth structure, pyramid and the solid foundation, where the infinity banking system stays at the foundation level, the compound growth as an eighth wonder of the world, as Einstein says. And third, to achieve that uninterrupted compounding without depleting your savings, that is the foundation of the infinite banking system understanding. Now, let me explain you what infinite banking system is. Infinite banking system Is, wait for it, your life insurance product which is very properly structured, right? Life insurance product in a permanent life which is dividend paying with mutual companies which have been in existence for hundreds of years now. Every word that I said in this statement is really, really important. The properly structured proper product with right companies. That is the important aspect of it. Now many of you, when you heard the life insurance word, you kind of turned your head around, right? Well, I don't blame you. I was like that too When I heard about the infinite banking system and I was excited about it and I learned that it is built on a chassis of life insurance. I was quite honestly very, very reluctant and I was very skeptical. When I am skeptical, what I do is I go back to my spreadsheet, I go back to my numbers. Numbers don't lie. So I keep creating scenarios till I kind of prove myself right or wrong. And I did that with infinite banking system. And to my wonder, to my surprise, it actually did come out right on the other side and I was the one who was wrong. So this is what I was mind blown by and hence this has been my passion to bring it and explain it, implement in a correct way for people like you. Now let me explain again with the infinite banking system. Now you are putting this money into a life insurance product. And how are you doing that? Remember I talked about proper structure. A typical life insurance product works very, very differently than the infinite banking system. Let's understand the typical life insurance product first. The typical life insurance product, I'm not talking about term, I'm not talking about any other product. I'm talking the permanent whole life product. The whole life product has a stable premium and a stable death benefit. So when you purchase a life insurance product, your premium is going to go towards, you know, for maybe certain amount of years towards a life insurance which is going to be the death benefit which does not change. So no matter when you die, that if it is a $1 million death benefit, you're going to get that $1 million. No matter when you die, even if it's, you know, in your 40s, 50s or even in 90 year of age, right? So you're going to get that death benefit that the guarantees of it as a characteristic. When you are getting that death benefit, when you are adding the premium to it, it starts building cash value. That is the characteristic of a whole life product. When it builds the cash value and it increases year after year, it starts getting dividend from the mutual companies. Now what is a dividend? When you are in a Part of a mutual company, the premium that you add and the cash value that gets created in this life insurance product is every year when the insurance companies, they do well in their business, they actually provide you dividend as one of the stakeholder in the proration of that cash value sitting in there. So taking that benefit, the infinite banking system is structured in a certain way where we push more money than it needs to have. So that instead of keeping this money in the bank, you push it into the life insurance product. And now when this money dividend paying companies, the mutual companies are pushing that dividend year after year, you're getting that dividend on that high cash value, sitting there, doing that velocity, doing that work for you. Not only that, this is a tax free, kind of a tax deferred bucket, right? So this is growing tax free. You're not losing that money to the taxes. Now this is growing compounding year after year without losing, having that leakage of the taxes. And that is what the snowball is getting created. So now in a nutshell, you created the infinite banking system, a properly structured high cash value so that you get dividend year after year from these hundreds of year old mutual companies. And now your lazy money that was supposed to just sit in the bank doing nothing for you, or the parked money that was just sitting between your investments. Now that can grow compounded and create that velocity. But wait, it also provides you that death benefit. So now in one stone, you have achieved two things, my friend. The efficient savings and also the death benefits. That's the life protection on your life. We saw how this infinite banking system is implemented. Let's see how you can utilize it. Many have misconception about this concept. If you have heard about it, that it cannot be utilized immediately, but you can implement it and utilize it almost immediately if you want. In earlier years it might not have all the money that you have added in there because it's kind of creating that compounded growth year after year. But you can look at that cash value and up to certain amount, you know, sometimes 95% of this cash value can be utilized to put into different uses. Let's talk about how you can utilize this money. You can withdraw the money if you want, up to the level that you have contributed to, completely tax free. Once it crosses that threshold and you go into that growth area, that's when you will start paying taxes for it. But the power of system is into the uninterrupted compounding. Remember we talked about that. How can you achieve the uninterrupted compounding. If you want to utilize money from this system, the key part of it, the key component is to leverage this money. So take a loan, borrow it from somebody else, maybe from the insurance company itself. So you can still achieve that uninterrupted compounded growth. The money has technically not come out of it, you borrowed it from somebody else. It's almost similar to your home equity loans. If you want to access your home equity, you don't have to sell your home and come out of that home. You can go to the bank, borrow a home equity loan and utilize that money for whatever purpose you want. This is exactly how this system works. When you are borrowing this money now, where can you use that money? You can use this money for your expenses, for your investments so you can grow or you can use it for expenses, you can utilize it for purchasing cars, you can utilize it for going on a vacation, that vacation trip expenses. You can also utilize it for investing, you can utilize it for kids education. And if it doesn't get used, you can utilize for your retirement itself. Let's talk about the investing part. When typically you invest money, you take that 50,000, 60,000 out of your bank account, put it into investment, the money has depleted from your bank account, but in this case the money does not deplete. The money is still growing compounded. So the growth of say part one is happening here. You are borrowing that Money say at 5,6% interest rate and putting into use in an investment, say about 15, 20% annual growth. Now your money is growing inside this system. The same dollar is growing into the investment at the small fractional cost of the interest that you're pay to the insurance companies or other companies. And the money can be quickly accessible. So this is highly, highly liquid money that you can utilize simply for your emergencies or any other purposes. So this is the high liquidity that you're looking for when you're putting this money away into the bank accounts. Another usage of it is if you want to utilize this money for the educational purposes, you can do that. Now in fafsa, when you're completing the form for the college admissions and you're putting about your net worth and your liquid assets in the fafsa, the life insurance cash value does not even have a place in it. You actually don't report it into the FAFSA forms. And what it means that that it's not going to impact the grants and the scholarships that your kids are going to get. So if this money does not get utilized for educational purposes, which typically when you are in a 529 plan, it does not get utilized. You will have to pay penalty on that to access it. But this money, if it doesn't get utilized for educational purposes, now you can utilize it for completely different purposes. This, you can utilize this money for the retirement income as well. Now, retirement income, typically in your qualified plans you can access only after certain age. That's defined by irs, right? But in infinite banking system, if you want to start taking the retirement income, say even at age of 55, you can start doing that. So that's the advantage of it. It's highly liquid, it's highly accessible, it does not have that long processes and it is based on the collateral of the money, the CA value setting into your life insurance system. So you can get easy access from either the insurance companies or the third party lenders. So to wrap it up, when you are achieving the tax free growth inside this system, you can also achieve the tax free withdrawals by using the power of leverage and utilize it for any purpose, any age, for anything that you need in the life. We talked so far about benefits of the infinite banking system. Let's talk about things you should remember about it. Now this is based on a life insurance product. So you have to remember that it's tied to your age and it's your health. So based on your actual calculations, this structure, these tables are going to be different for every person based on the age and the health. Now if you must be thinking that, hey, if I'm not at the right health, I cannot implement this, and that's not true either because the purpose is to implement a banking system in your structure, so you can create that structure if your health is not right on your spouse or your kids or your family members, where you have that interest, right, direct interest relationship. So you have to keep it in mind that your age and your health is a component that we have to consider when we are implementing the infinite banking system. The second thing that you have to consider that it's a tax deferred growth. So even if with the leverage, you can borrow it tax free, it's not a tax free withdrawal. The amount of money you can take out, if you want to take the cash out from the system is equal to what you have contributed. And if you want to go beyond that and still want to access as cash, you have to pay taxes on that. Now we talked about how the infinite banking system is created. We talked about how you can utilize the infinite banking system. Let's summarize and wrap it up. With 10 different advantages of this system. Number one, it's providing you that efficient growth. Growth to your lazy money, your parked money, your emergency money that's just sitting in the bank account. It is providing you a better growth than the banks typically can provide. It's not that volatile. It is actually providing you consistent growth. It is also providing you tax advantages. You are growing this money tax free without any leakages. You can can contribute to it without any limit. You can actually create your own limit. You can create a minimum and maximum and within that range you can contribute to it. It is achieving a compounded growth for you which is also providing you cash value increase as well as death benefit increase. Typically when the life insurance is just set for that million dollar, for example, it does not increase. In this system, your death benefit is also increasing. Number six, it is also providing you an opportunity to withdraw tax free by using the power of leverage. Number seven, you can utilize this money for any purpose, at any age and for any reason that you want. Number eight, this is highly liquid so you can have a quick access to this money. Number 10, which we didn't even talk about it yet, is it provides you asset protection of this money so creditors do not have access to this money. This is actually sitting in your life insurance. So it's protected in most states. Finally, it is providing you all these advantages of making your savings efficient. But it is also providing you the protection on life which by the way, you are, you're one of the biggest asset. It is providing you that protection of life so your family is protected. And it's creating opportunity for generational wealth. Wealth completely, completely hassle free. And finally, this system has been in existence with mutual companies which have been existing about 150 years, 200 years even, which have been provided that consistent dividend year after year. It's a very conservative growth, but it's a risk free growth. And compared to your bonds, et cetera, this is the system which can actually now hold your savings and make it more efficient. And also in one stone provide you two different advantages, two different purposes to create efficient savings and the life protection as well. Now, if you have listened to this episode so far, you must be wondering in your mind that if this is such a powerful system, why haven't I heard about it? That was my question too. This system, this tool stayed with America's wealthy for the longest period of time and they created this system and utilized it year after year, generation after generation to create that generational wealth. It was not a common knowledge. And second reason that you haven't heard about it because this is created on that life insurance chassis. Many life insurance agents, they don't even understand the system that this can be implemented in a certain way. They just understand the life insurance product as a death benefit. And that's another reason that when you maybe have heard about it, you have not implemented it. Because it has the word life insurance tied to it. It with the word life insurance, it is categorized as a death benefit. Something that you're never going to see. But with infinite banking system, it's not only creating that death benefit for your family, but you can now live your life insurance when you are alive. For all the purposes that we talked about. What is the evidence of it? Who has utilized it? In last episode we talked about Rockefeller's family and how they have used it generation after generation. And even the seventh generation is kind of utilizing this strategy. Let's talk about few more evidences that are prominent in the history. Do you know the happiest place on the earth wouldn't have been the happiest place on the earth if it was not for this kind of a system? Yes, that's right. Walt Disney, when he had the idea about creating this Disneyland, this dream project of his, the lenders, the bankers actually did not believe it. They thought it was crazy idea and it will not be successful. And that's when Walt Disney went back and accessed the cash value in his life insurance product so he can borrow that money and start implementing his dream project. He also had to, you know, get some more money from different sources as well. But this is, you know, one of the primary source of money that he utilized in 1929. In another historical evidence, JCPenney actually did not have money to even sustain the payroll of his staff. So JCPenney as a business, to survive the 1929 recession, when everything was impacted, he utilized his life insurance cash value and provided the payroll to his staff. And as a company, as a business, he could sustain that. There are many other evidences in the history and this is the reason that why you should consider this strategy in your financial structure. Now the next thought may come to your mind that what's next? What's the process? Well, with think outside the stocks, our purpose and our passion is to bring you that immense amount of education. First of all, we say that you should not walk into a product that you don't understand. We take this education very, very close to our heart in think outside the stocks platform under membership vault area, which is completely free for you to use. We are Add more and more education, more and more scenarios and more, more and more and more purposes that how you can utilize this system. In a very detailed look, you can take this education and once you are ready, you can submit a financial questionnaire. So we understand that what is the purpose that you're trying to implement, what can you do and what kind of system can we create for you? Once we create that system, kind of a draft version of it, there are many, many sessions that we can go through and kind of of tweak different gears of the system with you, help you understand this system based on how you want to utilize it. We tweak these gears and once we finalize it, we submit it to a life insurance company for their approval. Once it gets approved now you can implement it. And the purpose is provide you that high cash value. When you are starting to build this system, once that high cash value is created, it starts giving you dividend year after year. When you want to utilize it for any purposes, education, expenses or investment or anything else, you create a leverage from it so that the uninterrupted compounding growth is happening year after year. When it's time to kind of repurpose that, you can pay that money back, you kind of rinse and repeat for next purposes of education, retirement, etc, and you kind of keep creating this system. Sometimes people even create, when they, they run out of one system, they create multiple systems. People have created 20, 30 different banking system in different life insurance policies. So you can keep on creating that and you kind of create that rinse and repeat cycle in your lifetime. So you create that generational wealth ultimately for your family. So so far we learned about infinite banking system, how you can implement it, how you can utilize it, what are the advantages of it and what is the process for it. Let me also talk about what infinite banking system is not. It's really, really important. Infinite banking system. As you may recall, I talked about mutual companies and a permanent life insurance. It is a whole life product, dividend paying product. It is not an IUL or VUL because in IUL and vul, which are based on the stock market indexes, it is t to that volatility. When life insurance is created on someone's life, it is a purpose of you taking that risk of life and handing it over to the insurance company and saying that I do not want to take this risk at the cost of this premium. I'm giving this risk to you. But with the IUL products and the VUL products, you're taking this risk back to your bucket and you are actually tying yourself in the indexes of the stock market market. So this is not an IUL product or a VUL product because that foundation should not be the shaky. That concept is kind of shaken if you create it into IUL and vul. If you want to know further about why it is not a right product, just reach out to me and I would love to explain it to you. This mutual companies have been existing over 150, 200 years and have been having consistent history of paying dividends year after year even through the one of the toughest time, even like through Great depression. And that is what we are trying to achieve here because this is your hardened money. It needs to have that risk managed growth. Kind of conservative, but still risk managed. So you are protecting that emergency wealth for you. Many people ask me that. I know, I have heard about the infinite banking system but I haven't had a chance to implement it yet. When I meet these people there are top reasons why they haven't implemented this system in their financial structure structure. Number one reason is that they don't completely understand it. They find it very, very complex. Number two that they think that oh I do not have time to implement this system. Number three that they have heard many myths that hey, it takes time to start utilizing it. And finally they say that if this is such a great system, why haven't everyone utilized it? So with think outside this talks, my purpose and my passion is provide you that right tools, that right education so we can sol solve this problem. When you don't understand the complexity of it, the education, simplifying that education is what we do so that you can understand it. We also try to take the myths away that you have heard about that hey, it takes time to utilize it well, you can implement it and next week you can start utilizing it for any purposes that you want. And the last thing that I heard, very commonly people say that I do not have time or maybe this is not the right time for me. I'm utilizing for my money for something something else. I have to ask you a question. If you haven't implemented yet and you have been hearing about it and analyzing it, sometimes we do go into that analysis paralysis state. If you haven't implemented it yet. My question to you my friend is tomorrow the factors that's the basis of this system, age and health, tomorrow at least one of them is going to be changing and not in your favor. So if you are trying to take that action, the time to take that action is not tomorrow. Is not even today. The time to take an action is now. So if you want to jump on a call and start talking about this is the right strategy for you or not, just go to Bit lely think and schedule that 15 minute quick call with me. Or you can go to our website thinkoutsidethestocks.com and schedule a free strategy session 1 hour strategy session with me so we can start implementing and understanding this strategy in your own financial structure. Again, thank you so much for listening. We had such a fun talking about infinite banking system to solve a problem you didn't not know that you had. I hope that you have learned a completely out of the box strategy with me today and if you need any help in further education, understanding it and also completely strategically implement for you, you can reach out to me. I am here to help you out for just that reason. Thank you so much again for listening. Till the next time I will see.

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