The Right Kind of Investment

Imagine your life if you had and just, just back even over the last year, last two years, the last decade, if you had every single payment that was walking out of your family's life and just, just focus on the credit card, the line of credit, the loan payment and the cars, the mortgages, et cetera, just focus on those items. And you just added every single one of those up and you took it out over 10 years or 20 years. What is the sum of money? And how would your life be different right now, today, if you had every single one of those payments stacked up in a pile that you could access if you needed to.

Having a roundtable discussion about infinite banking. A bunch of advisors getting together for no good reason other than to talk about how amazing infinite Banking is and how it's helping a bunch of people, including their clients plus themselves. So we've got a lot of fun things we're going to talk about today. Everyone's got a little bit of a topic that they want to kind of bridge the gap on. I kind of want to kick it off because you know, right before we, we got started recording here, actually Vern mentioned something that was really interesting and you know, at the time of this recording we're about to have this really incredible event live in Edmonton. We're getting back in a live events in a, in a post Covid world and Vern has an opportunity to share a really amazing story about how he's operating his family banking system. And you talked about a really interesting ratio. We might have to trademark this or something for you but you know, walk us through a little bit about you know, part of the topic and discussion that you're going to have. Give everyone a bit of a preview as what's going to come up with a live event during the Family Banking Summit when you talk about your own family system.

Yeah, thanks Rich, I appreciate that. I'm really excited about this personally because the whole idea that we, you know, want to create here is a peaceful, stress free way of life. Right? That's what we want to do. I always say to my clients, whatever your belief is, spiritual belief, whatever, you're here for a bigger purpose than to worry about just like keeping the lights on, paying the Visa bill and like going to the grocery store and making sure like it's pretty important we have food in our bellies, but there's more to life than that and you have more to offer the world than that. And your attention units are all jumbled up because you're focused on all those things they got to work harder again, got to pay the Visa bill, got to pay off the car, got to pay the mortgage. Hopefully I can send my kids to school. Maybe one day I'll pile up enough money to live until I die. Gosh, that is a pretty bleak outlook. And so I just think that there's more to offer the world. Everybody has a gift. And so one of the ways that I've chosen to serve the world is to help people solve that money problem, create a peaceful, stress free way of life. So you never have a bad financial day. We all do that here on our team. And one of the quick, easy wins that I talk to my clients about is there's a very specific problem that we talk to our clients about which is, well, banking. You do all the work, someone else gets all the money, all the money gets put to work for that bank, right? And so you work real hard, money shows up in your bank account, you feel good for about five minutes and then the automatic debits kick in, right? So what I talk to clients about is how to shift. I don't know if I coined this rich, so I appreciate it, but I call it your debit to deposit ratio. Most people in my experience have a whole lot more automatic debits coming out of their bank account than they do deposits. So that's one of the major topics that I'm going to share with people at the annual. Annual, I shouldn't say annual because I don't know if that's for sure yet. But the family banking summit that we're having in Edmonton here on October 21st. And so in this process I need to do a bit of math to get this more accurate. But I can tell you, 36 to 48 months ago, in that range I had probably north of 25 automatic debits that would just come out of my bank account every single month. I'd work hard, money would show up and then Ford and then this insurance company and you know, this, a line of credit and that line of credit and this credit card, right? So all these payments are just flowing out of my bank account, out of my control and really not doing anything for me other than keeping the snakes and dragons off the what do they keep with the wolves at bay or whatever. So that didn't feel real good. And so over the course of that time I've been able to take that 25 plus automatic debits and shift that to a zero. And so I don't have to think about moving money around, I don't have to worry about NSF because I had money in this account and forgot to move it to that account. Oh, it's the 15th. I don't have to think about any of that. It's a really peaceful, stress free way of life. And I started the call by sharing with you guys that guess what, I control all the payments and the entire function of banking as it relates to our needs. So in the month of September, enough, not enough cash showed up for me to fulfill upon the loan agreements that I created for myself and my family. Those repayments we're collecting all those payments we used to send to other people. Well, I didn't, I wasn't able to pay the entire amount back to my loan system. So I can make up for that in October. And what I did not get was a call from those organizations who I didn't pay because they don't exist. That organization is the McCarty family banking system. So no one's going to come looking for my keys to my Ford F150 because I own it outright, even though I'm technically still paying it off. But we're the ones collecting and accumulating the payments that were flowing to Credit Canada, God bless them. So yeah, that's kind of a high level of what we're going to get into a little bit deeper on the.

21St, collecting and accumulating the payments. There's a lot of really good buzz statements you said. But I like how you ended that with collecting. We are the ones collecting and accumulating those payments. And if you just, you know, just stop and think that through for a minute, what would your life be like today? Imagine your life if you had and just, just back, even over the last year, last two years, the last decade, if you had every single payment that was walking out of your family's life and just, just focus on the credit card, the line of credit, the loan payment and the cars, the mortgages, et cetera, just focus on those items and you just added every single one of those up and you took it out over 10 years or 20 years. What is the sum of money? And how would your life be different right now, today if you had every single one of those payments stacked up in a pile that you could access if you needed to. And on top of that pile or surrounding that pile was a giant protection mechanism that even if you didn't touch those payments and something happened to you and you got taken out by Covid and you are no longer with us, a big boatload of tax free money showed up and you still Got all your pile of payments back and. And it's a self sustaining system. What an incredible magical way of thinking about your financial life. Now it's okay to think about it, but it's so much better to actually implement. That's really what you're talking about. It's going from the thinking realm to the implementation realm and actually putting this into action in your life. And it didn't happen overnight, did it?

No, not even close. And to your point about putting things into action, every time we sit down with somebody, you know, some people just immediately catch it. As Nelson would say, more caught than taught. Right. They immediately just get this concept, they understand it, they're like all in, ready to go. Sean Quigg's name comes to mind. Some people just like anything else, I always joke and say I'm a little sort of. Some of the other kids takes me a little longer to learn some of these ideas. Right. But you know, repetition, they come back and practice and then ideas start showing up.

Right.

But we want to help create some quick wins for the family. But people are always looking at. You hear the concept, you read the book, you go and watch some of our videos, and there's case studies and stuff where people are talking about investing, buying real estate, doing private lending or recapturing a large amount of debt or even building up their system for an inevitable thing that we know is going to happen. Oh, I don't know, a large expense like a vehicle or whatever, in a few years down the road, they're building up for those kinds of things. But then sometimes if I'm going to plan to put 2,500 bucks or 5 grand or maybe even 10 grand into a policy, it's going to take me a while to get to the point where I can, let's say, finance my $60,000 truck that I need to buy because I work in Northern Alberta or whatever. Well, what does that mean? Oh, I got to wait. No, no, no. We want to find ways to put the system to work immediately so we can start to experience it, start to practice it and start to get some of those quick wins. And to your point earlier, I still have to pay my home and auto insurance. I have to pay it, but I used to pay it monthly and they would just pull out $420 per month, two different automatic debits, money just flowing away. Now I'm not lucky enough to get a discount on my auto insurance and home insurance when I pay it annually, the discount is just a bonus. They charge me the same either way. But it's the $420 a month that's leaving my family and being put to work for someone else's family that I'm real upset about and real excited now to recapture that because I've been able to build up my system, access a smaller loan, four or five grand, whatever that is, pay the home and auto insurance. But now for the next 11 months I get to collect and accumulate and get use and control over the money that was leaving me before. So if something happens in three months where I need access to money, I can access the money from my system and then repay it later on my own terms. But if I'm sending it to the big green insurance company that takes my takes the money every year, I can't access that money and it's being put to work at some other entity. But now it's being put to work at a company that we all collectively co own. That leads to a peaceful, stress free way of life and a quick win because that's how we start to change our debit to deposit ratio.

Well and speaking of those quick wins.

Tron, talking about implementation things, we spend.

A lot of our time, a lot of our videos, our education is based on the bigger ticket item because those are the ones that, you know, let's face it, there are things that stick out for people more. The cost of your car tends to, you know, rattle around in your brain.

A little bit more than maybe the cost of your.

As an example, Vern mentioned the home and auto insurance. You know, give us an example of those quick win items that you've been talking to people about where they can start putting this into traction mode in.

Their life right away.

Yeah, for sure. Just to piggyback off what Vern was saying with regards to auto insurance and home insurance there, that's a quick win right there because most auto and home insurance companies give you the option to pay annually and monthly. And it is very common for people, including myself before I discovered this process to pay monthly. And people don't realize that there is some savings. It's not, it's not gigantic by any means but if you look at it percentage wise it and be 10 to 10%, 15% which if you change your perspective around it is a return on an investment for most some people and considered a really good return. So if you looked at it from that perspective, you could immediately look at expenses in your cash flow where you could change the payment to annual, get savings right off, right up front just by doing that. Because now you're no Longer paying monthly. And in order to to pay it annually, most people, the reason why they do monthly is because they don't have, may not have the means of putting down the annual amount right up front. And so that's why they tend to go the monthly route. However, if you implement the process of becoming your own banker, you start your system, you could do this right from day one of starting your system. They you start with $5,000 a year in premium, you may be thinking, like Warren said, you know, it's going to take me a long time to get to 60 or 65k in terms of loan availability. Loan availability to purchase a car or a truck or whatever I wanted to purchase. That's a big ticket item. But if you start at 5,000, you can easily fund an annual bill like auto insurance or home insurance or a telephone bill or Internet bill. And so you could easily take out the loan to pay it annually. And then that same monthly payment that you would have otherwise put towards the billing company that you would have been sending it to, you just send it to your own system. You could use it towards, say, if you were getting a critical illness policy.

Same idea there as you were speaking on trans, because I got this little office, I rent it, it's in a commercial building. And one of the requirements that was handed to me when I signed the lease is I had to put insurance in place in case somehow I caused a harm to that building. So it's not a big ticket item really. It's like less than $600 a year. I pay for insurance on this little space I got here. But again, when I had the conversation, just like you were saying, Tran with the insurance company, they gave me the option to pay it monthly or I could pay it annually. So the first question I had is, okay, if I paid annually, how much less would my bill be? And so they told me and there's an opportunity. It's not a lot of money because not dealing with a lot of money. But think about it. It doesn't take much of a system to be able to cover off a $600 annual kind of payment, which is going to give you a increase in your wealth. Because that's what we're focused on here. That difference increases wealth. For me, even if it's a small amount, it's every little penny helps to make a difference. And as you get that mindset going, and I think this is what we coach people to look at, what are those little things you can do to make a difference? And I know even when we go to Nelson's book and he talks about it. He says people will look at what's the biggest bill I have, what's the biggest debt I have and some mortgage for a lot of people. And he says, well, it's going to be overwhelming if you start with that. And he coaches you right in his book to start with something smaller. So I think what, what you're speaking about, Tran, it just makes so much value for people to consider because we're building a tailwind financially. That's what we're after. Get some tailwind building. And whether you start with a simple example like the insurance one you used or something else that's going to make a difference to you financially over time.

So everyone's got one of these, right? This is another item that isn't necessarily a big ticket item, but it's very common for people, especially in Canada, to get a cell phone plan where you're paying monthly to use the cell phone or to get a brand new cell phone. And the big advertisement is, oh, you don't have to pay upfront, you just paid over time. And you bundle it with your monthly payment of your phone bill. And what you don't see is over time it actually adds up. In some cases, yes, you may save on it, but in most cases you're probably better off buying the phone up front. That way you're not even locked in into any contracts. And then you would apply the same idea that we, we've been talking about in this session where you just take out a loan from your policy and you purchase the phone outright. Again, you're looking anywhere from 600 to 1000 bucks depending on the phone you get. Right. And set up a payment plan. It doesn't even have to be the same one that you would have been sending out to the phone company. You could be something that works comfortably with you with your cash flow because.

That'S a really good one. And you know what I also used to pay for monthly, I used to pay for the insurance to replace my phone when I smashed my screen. Now I self insure my phones. I don't pay that insurance premium anymore.

Yeah. What I found even to building off that is like if you go to a provider, one of the Bell Rogers tell us whatever provider out there and, and you say how much could I buy that phone for outright? They'll give you a number. But I know you go right to the manufacturer, you get a cheaper yet.

Oh yeah.

And, and that just saves you money. And then it doesn't matter which provider you're with, like Tran was saying, then you go to that provider and set up, you know, what data you're going to get and all those kind of things. And every little piece of that adds to your wealth. And that's what we're talking about. You don't have to chew off too much every time. You just got to start where it's comfortable and look for opportunities. Yeah, every little bit of difference you make is going to make a big difference over the long term.

You guys all mentioned some really interesting stuff. What's popping up for me here is the infinite in the infinite banking concept.

And so it brings me to page 48 of Nelson's book, expanding the system to accommodate all income. So on the very first column at the bottom, he says, in time, the total cash values in all policies are adequate enough to take the next step. Self insuring the automobiles for comprehensive and collision coverage. Please note that I did not say liability coverage. This is the insurance that covers you in the event of a lawsuit. Comprehensive and collision coverage is for damage done to your car in an accident. This is required coverage if you have the car financed with some other banking service. But if you are using your own banking system, it is your decision to make. What's really cool about that is at the time that this book was written, yeah, sure, cell phones were starting to become a lot more popular, but there was no iPhone in 2000. So just think about that for a second. There was no such thing as smashing your phone or glass replacement insurance on cars and electronics when this book was written. So this is an area now where, Vern, you've identified and drawn with some of the thoughts you have here, where people are spending money on these things. We don't even think twice about it because you're there, you're getting the phone, you're marketed, you've already had a smash screen, you've already had this, you don't want to deal with it. Same idea with the upsell and warranty items when you go to the electronic store and that kind of stuff. So if you're going to go pay for the cost of the warranty replacement or go pay for the insurance to replace the glass on your phone or an electronic item, these types of smaller ticket things. If you were happy to pay someone else the money, why on earth wouldn't you be happy to pay your own family the money?

If you would give the money to.

These guys, why wouldn't you give the money to you so that it can work for you and your family for Multiple generations. Now we're not talking about huge sums, but these are little nickel and dime events, you know, the death of a thousand paper cuts, but in your financial life. So if you can stop bleeding all the paper cuts of money that's draining out the lifeblood energy of your financial life, that's draining away in all these little areas. Well, if you just think about every time that you bought a warranty, every time that you bought a new piece of electronics, every time that you, you know, you know, all the things we've just mentioned here, every phone that you're going to use, you, your kids, your, your spouse for the rest of time, and I'm guessing our cell phones aren't going away. I'm sure there'll be the next best thing or the cell phone replacement. But that replacement item is still going to require all the same marketing techniques are going to be utilized to sucker you in. Like that's not going to change. So as soon as you break the habit in the cycle, you're self insuring for those items, you will build up more capital, less capital will walk out of your life, more capital will be in your life. And you don't need to go and invest any money to do that. It doesn't mean that you shouldn't or that you can't. It just means that if we start and focus on the efficiency of the flow of money first, there's going to be more money. And if there's more money, well then isn't there more opportunity? And if there's more opportunity, well, doesn't it just kind of cascade from there? It's just a rock and a pond and all we're seeing is the ripples of your financial life expanding out further and further because of what you did first, which is you focused on this thing, this brain power that you've got to start re engaging. The way that money is flowing through your life, all these little things, they might seem small and trivial, but they all add up and they add up over time. And that's why we don't see it. We don't see it because it's just little slices of money disappearing out of your life all the time. All you want to do is you want to get that money coming back into your life so you can optimize it and, and choose how to utilize it moving forward. But it does require commitment and it also requires a little bit of some intentional tracking. I never once considered until today replacement cost of whatever, cell phone, electronic items or something. What a genius idea. It's Literally taking exactly what's in Nelson's book. And it's just relating it at the you and I level on the smallest kind of components of life where we're getting, you know, nickeled and diamed on all these little things.

Yeah. Building off nickel and diamond too. Going back to Vern's original topic about debits, like, how many debits do you get at your commercial bank for the fees they charge? And the more debits you do, the more you get charged. So just that taking off from 25 debits down, you can change the monthly fees that our friends at the commercial banks like to charge. So it's just little things like that make a big difference over time.

I also remind me of page 15 of Nelson's book about the grocery store example. Now, in the page 15, Nelson mentioned that, you know, grocery stores operate on a very small margin on such items. You know, a can of pea, the margin is only 3 cents. Right. You, you ship it from the back door, it costs you 57 cents. And when you sell it from the front door, it's 60 cents. And is inevitable is just such a small margin when you sell the canopy, but yet you need to have the velocity, you need to have this canopy to, you know, sell many times so that your, your store is profitable. Now we're talking about banking is a business. Even though when we use this very small item that just make a very small amount of money in our own banking system. But when we do it many, many times, when we do it on multiple items, it will make a huge impact. And this is our banking store. Right.

So good, Jingen. It's so good. And you know, another thing that you know, further to these little ideas, we talked about insurances as several of the items. I was on a call recently with a gentleman and his wife. They have policies with a particular company, this particular company is very well known in North America and your neighbor is the sales force for this particular company. And their, their big focus is of to sell term insurance. Now there's nothing wrong with term insurance and having it make sure your family's covered, that's good. They suggest that you have it for a rainy day. What's interesting though is I was looking at it, I was assessing the policy statements and he's looking at implementing ibc. Didn't know what that was when he got the original insurance. He just needs something to cover his family. And there's this whole multitude. It's easily one of the most, I hate to use the word I'll say confusing or I guess less clear to identify type of statements essentially. And as you go through it, there's all these different riders and all these different pieces bolted on. But when you look at the monthly cost versus the annual cost, if you were to pay it out annually, the savings value mathematically was 13% or 12.85%. So here everyone's out there trying to hustle to go and get a great rate of return on their money and they're taking it on the chin. Getting beat up like with a baseball bat. You know, we're just getting like, you're already down and you're just getting kicked and kicked and kicked because the market's doing that to you. And then inflation's turning it to you. It's like, it's like imagine a person is getting beat up in a parking lot and, and it's, you know, it's you and your financial life and it's the banking system and it's the inflation guy and it's the tax man, it's the government and they're all just like beating the crap out of you. That's, that's basically what's happening. And so here, here's another place where you're getting, now there's, now there's the, you know, this other insurance over here that's beating you up because you're paying monthly and no one thinks to call you and say, hey, by the way, if you just flip that to annual, you would get an instant 13% return on that line item. It's like, wow, here's a guy, he's spending, at the time, he was spending about $4,000 a year on term insurance, on multiple term insurances for him and his wife. Not a small amount of money for what it was. Not only was it costing him more than necessary because he was paying monthly, it's also costing him more than necessary because that particular company, their rates that they charge for their insurance is pretty high. We could go get him equivalent coverage even if he just stuck with term insurance. He didn't do IBC or anything. Equivalent coverage for the same amount, same value, even though he's four years older and he's going to save him money with a different company because it's much cheaper rates. Plus now he understands that he can pay himself. So it's like a double win, double win, double win. And all he had to do was get a second opinion consult to have someone show it to him. No one explained this to him at all. And it's just frustrating to me because there's a lot of people who are sitting around and they've got a junk drawer full of insurance statements. They have no earthly idea what's in there. Go get opinion from someone. Go and actually have someone explain it to you. And if they can't explain it to you, go and talk to someone else.

This is really good. We're like, come in. We're like special forces to help protect you. That parking lot beat down you're going to get in the financial world. We're here to solve that problem for you. Jingen, you brought something really amazing to the table. Ties in really well with what we've been talking about so far. Team and I'm just going to share a quick visual if it's okay with everybody. Now earlier I did the math. I said that my home and auto insurance and again insert any kind of a monthly bill here, something that needs to be paid anyway. You can see that probably $420 times 12 months. That's what my auto insurance was. Again, I wasn't lucky enough to get the discount. So the double win there. So my annual, look at how insane that is. My annual premium just for insurance for my home and my car cost me about 5,000 bucks a year. So what we've got, what I show my clients is we got to think differently. We're talking a, a lot about the unseen here, right? And what do we hear? Hey, I don't want to borrow money from somebody else because then I have to make a payment and I got to pay interest and da da, da, da. We can see the interest that we're going to pay because it's wrapped up in the contract. You can see what you're going to pay for whatever purchase you bought or whatever, right? It's still a permanent transfer of money away from the family. And we've got a double whammy there because we're paying interest to somebody, but we're also giving up the opportunity to earn interest on that money. So we don't think about the giving up the opportunity to earn interest. So people think, oh, I'll just pay cash for something instead. I'll save up my money in someone else's bank and let them have use and control over it for a number of years until I build up this pile of cash so I can go buy my next car for cash only. Well, when you make that 30, 40, $50,000 decision, it's not actually a 30 or 40 or $50,000 decision. The good hard working Canadians that are out there right now paying Five grand a year for property taxes or home and auto insurance or whatever it is you're paying for. You've paid cash for it. You're not actually making a $5,000 decision. So let's take a look at it. What's Vern talking about here? So in this case, we have $5,040. That's the cost. So what we want to do is we want to imagine this imaginary fictional account. If it were possible, if it existed, imagine you could put $5,040 into an account today. For context, Verne's 38 years young today. Statistics Canada says I'm going to be around for a good about another 48 years or so. Okay, what is a very, very extremely conservative, reasonably easy rate of return that we could get on our money anywhere? I'm not picking up a specific investment. I'm just saying, hypothetically speaking, what's a really conservative number for our investment return?

Let's go at six.

God bless you. I'm going to cut that in half. Six is great. If we can get six, we're doing good. But three, if we can get six easy. Three is like walk in the park there. Okay, so let's imagine we put $5040 into some kind of a fictional account, and now we can earn 3% per year, uninterrupted, for the rest of the days that we're on planet Earth. Like I said, me being just a youngster, I'm going to be around here for quite a long time. That's at least the objective. So now when I show my clients, I say, look, you're not making a $5,040 decision. You're making closer to a $21,000 decision every single time. That's just one transaction, one time, one in that insurance. That means I gave up the opportunity to earn over $16,000 for my legacy, for my future self, or passive income. Time to take advantage of future opportunities. And just by shifting the way that we control the banking function, implementing the process of becoming our own banker, we have the opportunity to recapture all that lost opportunity costs. Because not only are we collecting and accumulating the payments that we're sending to somebody else, we're storing our capital in a system that allows us to grow our capital uninterrupted, day after day, week after week, year after year. The thing just keeps growing every day, whether I like it or not. Better keep on capitalizing and so on.

I get that. And great visual, great example. Opportunity cost is something we do talk about. We mention it on our channel and things quite a bit, but we don't really get a chance to, I guess dig into it or debrief it, I think to a degree where people really understand. And so you showing that visual, and there's many tools and calculators that are kind of like that, it really does make a difference. And so with that in mind, one of the things that's missing out of your example, and so in this example we talked about quote unquote and investment. You did exactly what I expected you to do. You heard someone throw out a number and you cut the number basically in half to say, let's be more conservative than that. But if you had capital growing inside of an optimized vehicle where you could get constant growth on it, even though, if not home run growth, but just steady, stable, consistent every single time, all the time, and, and on top of that you would also have constant growth and accumulation on a tax free basis of protective death benefit, which is what is taking place inside of a well designed, you know, infinite banking style. So policy, we are able to create a very powerful way now because in that same example or description that Vern indicated there, now imagine on top of that $21,000 number, there is also, let's, you know, ballpark, let's say fifty, sixty thousand, a hundred thousand dollars worth of tax free death benefit behind it. So there's the opportunity cost on the capital itself that you have through your working life. And then there's the, you know, people talk about rate of return, well, what about the eternal rate of return? What about what you're leaving behind and doing it in a way that no one else can get their hands on it. That's a really, really impressive thing that you're able to do with that example you just gave us, Vern. I think it's absolutely phenomenal.

Okay, Canada, we know you're getting a ton of value from this roundtable discussion from these amazing IBC practitioners. Make sure you check out the rest of the conversation over at the banker's vault.