Birth to Net Worth with Ira Sorensen - Episode 13

Welcome to Birth to Net Worth, where we normalize the conversation and emotions surrounding money and wealth to effect a massive change for future generations in their relationship towards finances, building family wealth as a collaborative legacy. Here is your host, Trystan Trenberth.

Good afternoon and welcome to Birth to Net Worth. We got another fantastic guest for you today. Uh, we met through a friend of mine in the community in real estate, and he made the introduction and realized this gentleman also knows my CPA as well. So it's, uh, it's all about relationships in this game. So in the past, we've talked to people about financial literacy. Last week we had, uh, Toilet Paper Hands talking about their animated education series. Uh, we've had Maria Baginski, who's putting together a financial literacy, uh, curriculum. This week we've got somebody at the other end of the scale where we're talking about how we can invest our money, how we can invest with our children, how we can invest ourselves, and how we can put our money to use and really get out of that scarcity mindset. And this is going to be a mind-blower for many people. It took me a few a few explanations to get my head around the concepts you're going to hear today. They really aren't complicated, but just it goes against, you know, many things that we learn. And without further ado, I'm going to introduce Ira Sorensen. Ira, thank you for joining us today. I appreciate you.

Yeah, thanks for having me on. Really appreciate it.

Most welcome. So Ira, as you're saying, we met through one of your clients who's a friend of mine who introduced us. Um, I've obviously worked with you since, and, uh, then I found out that, you know, our mutual friend Dustin is, is a, is a friend of yours. You work very closely with a CPA, and, you know, it just really opens up doors. The, the network just expands like an onion. You're just finding more and more areas where people are connected around us, but we don't necessarily realize. So Um, so I think you're a little bit familiar with what you're talking about. We're really looking at Birth to Net Worth to sort of discover how from birth we can change the dynamic of financial literacy, the relationships, and the mindset around money for children. Um, and most adults are not financially literate. I'm growing in my financial literacy, and I find that every level of finance that I get to, there's another level of literacy and understanding and clarity of of finances and numbers that I need to find. So what we're really looking to do is find ways that we can educate children and also re-educate parents as well at the same time when they're smaller children. So if we can find education, um, books and other things that can kind of bring these ideas to, to the children, parents are going to learn at the same time. So that's one end of the scale, but on the other end of the scale, in which you deal with. We'll get into a little depth of the products later on, but would you like to just explain a little basic about what industry you're in and the basics of what you do? And then we'll start the conversation from the genesis of your experience with money.

Sure, sure. Well, again, thanks for having me on. This is a very, uh, a very needed topic. Uh, I think that obviously, uh, our kids these days are not taught nor were we taught the truth of money and the truth behind money and how that can actually, how that can actually work for us. Obviously, we have banks and institutions that are trying to teach us how money works for their benefit, not necessarily for ours. So it's been an interesting process for me. I, I, uh, I actually worked at a major mining company here in Salt Lake. It's actually one of the biggest mines in the world. And this was back in the late 1990s, early 2000s. I was out there working and I had my brother come to me who was just getting into the insurance business, into the financial services business. And I knew everybody at that mine from the janitor on up to the president of the company. So he came to me and he said, you've got to, you've got to come check out the financial services world. It's just, you can build residual income, you can learn about finance, you can create and help so many people. And so he talked me into it. I was one of those, I was very nervous to leave. I had a very secure job, one of the best jobs at that mine. And, and most people have worked there 40 years to get to where I was in 10 years. So it was, it was a very tough thing for me to want to leave. But I did finally jump and jump full headfirst into this financial services industry. And I've been doing it for 18, 19 years now. But it's been a process for me too, because when I first got in the business, I was being taught by the financial institutions of how to take people's money and invest that and how to create that. But I always struggled because I never really felt like it was the best way for my clients to invest. And I know that's a whole conversation of the different products and investments and opportunities, but in a nutshell, I was selling and providing services for selling term insurance, the whole buy term and invest the difference. And then I was helping them invest in mutual funds, IRAs, Roth IRAs, just very traditional things. And I, I was in the business for about 2 years, and I had a gentleman, uh, come to me and say, have you ever heard of, of LEAP? And a LEAP is just a planning process that uses permanent insurance. And, well, everybody's always told me that permanent insurance isn't a good thing, so I don't know why I'd really want to look at that. I mean, everybody said it says it's not a good thing. But I took the time and started investigating it and learning it on my own. I actually had him run my plan through his process and through this, this, uh, this LEAP process. And once he started to unwind and start showing me some of the options and opportunities that I had for not only for myself but to teach my clients, it was mind-blowing. And again, a lot of that is based off using permanent insurance whole life specifically, that we're all taught is a bad thing. But once I started to open my, my mind, the potential of there's other ways to look at finances out there, it became a very, very powerful thing. And that's when I bought my first policy back in 2005. And here today, I, I've used that policy to finance rental properties. I've bought cars out of it. I've paid for college, you know, for my daughter. I've paid taxes. There's just so many uses that I've been able to do with that. But I would have never even understood that had I not taken a little bit of leap of faith and had this gentleman teach me and help me understand what those finance— or what the whole process was.

Yeah, fantastic. Well, yeah, leaps of faith are important. We don't— you know, there's no risk— there's no reward without risk. But obviously Obviously it's calculating the risk and balancing that and knowing that, you know, you do your due diligence and, and get clear on these things. So, so let's, let's move the needle backwards in, in the timeline. What was the first thing you remember involving money? Was it your parents buying you an ice cream or down at the grocery store? Tell me about your first memorable experience with money.

Well, one of the things that always, as I've been in the financial industry and I've really thought about that is I used to always love to go to the bank with my parents. Yeah, the bank was something when I was a kid I'd love to go because what did you get when you went to the drive-through with your parents or walked into any lobby? What, what is it a child did you get from the bank? You know, you get that Dum Dum sucker, you get some candy, you get something. So now all of a sudden I have this relation of finance, bank savings and, uh, candy. Yeah, so it was just interesting now that I'm looking back on that to see how, again, we all need banks, but they're there for a specific thing, and that is to get our money and to pull that money in and then have us believe in this miracle of compound interest by leaving that money there for our lifetime, right? Just earn that interest and compound. Yeah, but that's That was one of my first memories of being able to go to the bank and get that candy because that's all I cared about back then, right?

Absolutely. Absolutely. Yeah, we didn't have candy at the banks in the UK, but I see it down at Chase every time we go in now and I pick one of those up from time to time. Yeah. So from being familiar with banks and candy, what was your first experience of either spending money or saving money? Is there something that you remember where um, you just had an experience where you had money available to you, whether it was your money or somebody else's, that, that you were able to spend somewhere? Is it— was there something you recall from your childhood there, or is it just putting it into the bank and leaving it?

Yeah, yeah. So my grandfather, uh, he was a World War II survivor. He was shot on D-Day, laid on the beach, on Utah Beach actually, wounded for days before he was rescued. He was one of the hardest workers I'd ever met. But one of the things that he taught me very young was this whole idea of hard working hard and getting paid for, for what you do. And so he actually helped me set up a savings account when I was very, very young. And in the summers when I would go spend time with them and, you know, live with them sometimes for a month at a time, I would go do little jobs with them and we would be able to save that money, and that money would be, you know, just put into a savings account. And that was really one of my first memories, and again, of, of finances, what my grandpa taught me, which was what he knew, was just save money and put it in the bank.

Yeah, yeah, yeah, it's, it's very familiar. I mean, so many people don't even get the chance to save because their parents aren't really aware of that. So I think that you're very Very fortunate, but we live in a different age now than we did when you and I grew up. And, and, uh, I think instant gratification is something that I noticed 15 years ago when I moved to the States, and I think that's got its way back to the UK more so, or at least I'm more aware of it now. Um, so yeah, so saving your money— what, what was the first major purchase that you bought as a child? Was there a bike or something that you came across that you had in your mind that now I've got this savings, did it just permanently stay there, or was something that you drew some of that out for? I see bicycles behind you, that's why I ask.

Yeah, I mean, I was very into bikes. I was fortunate that my parents, you know, were nice and just purchased the bike back in my first bike anyway. Yeah, I wish I'd purchased my bikes now. I just purchased a new one and it was like buying a new car. They're so expensive these days. Yeah, yeah. I just, I remember for me, a lot of the times it was just being able to use that money to, you know, go buy something for myself. It was usually some sort of toy or some sort of, of food or candy or something where my parents were trying to teach me obviously a lesson of, of this is the money you've saved up and you can have some choice of, of what to do with that. But yeah, I just remember it was always, we would go to a store and it would be whatever the latest toy was or something that I really wanted that I would, I would use that money to be able to do that, you know, in my younger years. That's, you know, was the focus. That's what— yeah, that's what was exciting back then was be able to take that money and purchase, you know, some— a toy or something. Yeah, yeah, give me some gratification and have something to play with, right?

Yeah. So, so at what age did, did your experience with money change in your your relationship with money as far as first it was just buying sort of toys, um, I guess financial responsibility or, um, awareness that there was a greater purpose than just, you know, one-off purchases that came along. Was, was there a time or an experience, somebody in your family? So maybe I heard about your grandfather. How different were your mother and father with, um, money? Because often I find that one parent is very scarcist, one's very, um, you know, quite the opposite, and the child develops some— somewhere leaning towards one or the other. Was there a variance in, in how your parents sort of viewed money or used money, or were they kind of fairly on the same page?

Well, and again, I love my parents, and I, I am who I am today because of them. But one of the things with this, talking specifically with money, is we brought— we grew up very, very poor. Um, there was— we grew up on a farm and we really lived off a lot of what that farm provided. And, you know, as far as raising our own cattle and beef or, you know, and that's really what we lived on for the most part.

Yeah.

I remember actually going to the store and I didn't really understand it, but we would go and we would always get free cheese and we would always get free, like, powdered milk, and we'd go get these things. I didn't really understand why or how or what the reasoning was, but my mom, she's from old school Park City, which is, which is, you know, now Park City, it's just crazy how, how busy it is, and it's just now it's just a massive town, and not massive, very, very popular. But back then, she grew up in a a 2-bedroom house with 9 kids. Wow. Main Street. And so, and my grandfather passed away very young, in his 50s. He was a silver miner. So my grandma was left with 9 kids to raise. Wow. So there was a very broke mentality. I mean, it was just, they just didn't have money. And then my father, the same thing, just grew up on a farm, worked hard. He didn't have much money either. And so to bring that together, they never really taught us much more about money. I always just felt like there was this, you know, disconnect with us. Like, we just, we never really had money. And I remember the other challenge that my, my family had was my dad worked the same mine that I did. I was a third generation miner at this, the Kennecott Utah Copper And back when I was young, I would remember times where my dad would be off for a strike because it was a union-run, uh, company. Yeah, there was times where we would go months and months. For me as a kid, I thought it was awesome because I got to hang out with my dad a lot. We would just go spend the mountains and camping and have fun. But at the same point Now I know, but back then I had no clue he wasn't getting paid during that time. Yeah. And so again, that's where my mindset around money was really very skewed because I just needed the handouts that my family got to try to get through those tough times. Yeah. And my parents were very, very good savers. They've done really well for themselves. They have, you know, great assets they build up, but it it wasn't something that was really focused for us of how to do that. They just were surviving.

Yeah, it's interesting you mentioned what I'm, you know, paraphrasing as struggle in, in those times. As a parent, I've, I've kind of not intentionally avoided sharing struggle with my kids, but you kind of protect them from certain things. But it's important for kids to know that there is struggle and know that there's light the other side of that struggle. Because I think financially, I come from a place that wasn't affluent. It wasn't, wasn't, you know, poor, but it wasn't anywhere near affluent in any way. We had everything we needed, but we didn't have everything that maybe wanted. But, you know, they say humble is good, but I think that it's just a good solid base. We had a similar background. My parents saved for some things. They start, you know, they— I was aware that they did do some budgeting at some point. I can't remember quite when that was, but, you know, my mum used to sort of run the finances a bit, you know, a lot more than my dad did. He was busy working hard and working a lot of hours at his blue-collar job. Um, and it was just an experience where, yeah, again, there was no education. I knew there was a savings account that they had that I had Um, and I think knowing what struggles are as a child that your parents are going through would be very helpful for them to understand that if they haven't experienced that and they experience something's going wrong, that they don't think the world's going to crap and it's all over, that there's that high level of stress. I think that exposing them to some, some struggle, some stress, to a degree that we, you know, can honestly manage to a certain extent. Because we don't want to worry kids to death, you know, that they get anxious and so, so forth about it. But I think there's definitely a lot of people that share a similar thing than you, that they observed a lot of things, but now they look back, now they can analyze it in a different way and re- and acknowledge some of these things that were there. But it's, you know, maybe 10, 20 years down the line when potentially we've gone through other things that we might have avoided had we known some of those things were there, some of those pitfalls to avoid. And that's not just in— it's not in financial terms, like sports careers, personal life, you know, professional life. There are all of these things where struggles occur, but it's great to be able to know that there's something the other side of it, that every breakdown is the beginning of a breakthrough.

Yes, exactly. Yeah, 100%.

Yeah. So let's, you know, with your specialty of the, the, the topic that we're going to kind of discuss in the sort of second part of this, let's, let's really give a little overview of, of what the products are in whole life that you're— that I purchased from you and that you, you know, provide for many other people. How much money people need to get involved in this type of product and what the benefits are and how you can scale it either by volume of policies or volume of amount of money in the policies. Can you just give us a little rundown of— you shared with us a little bit how you found out about it. How can a parent invest themselves and how can they invest and how early can they invest with their children or for their children? Because the big problem with retirement funds, 401, I'm hearing more recently wasn't ever set up to be a retirement fund. It was to incentivize the common man to buy stock, get involved in the stock market in a, in a low-level way where they didn't really have to handle the individual transactions. But it's being lent on as a crutch these days, as a retirement tool, which really isn't a very productive or growth-oriented product, and it's very susceptible to market changes. Share with me how you learned it to be a different option for people. And I think where I was going with that is the 401 is something that people generally, they put off down the road until, oh, I'm only in my 20s now, I'll start then next year or in 5 years' time or 10 years down the road. How can we change the dynamic for kids so they understand the basics of some of these things that are going on? I'm going to talk about self-directed IRAs with a future guest. But in this area, how can we put these things into place to help set a solid foundation for kids? And is it something like a team sport that parents can do in parallel? Obviously they can't— I don't think they can put the money in the same policy, but how can they work the same kind of thing so that they're doing what Dad or Mum's doing at the same time and kind of follow along in a relay race type pattern instead of a single man sprint? That hopes they get the result that they, they were looking for with the 401?

Well, and again, you touch on it, and this is a very touchy subject, right? Because we've all been taught that the 401s and those retirement plans are the way to go. And then you throw in the, the, the free money with the contribution that employers will put in as well. And so again, that was a big thing for me because that's all I used to help people do. I would, I would support that idea of the 401s. I would help set up Roth IRAs and IRAs. And when I went through this process that I was speaking of earlier, the whole backing of that process is just really trying to identify the pitfalls of investing in certain asset classes, investing in certain things. And one of the things that I learned very, very early on, and it changed my life, was this whole thing of finite money. And finite money— we all have finite money. We only are going to make so much money on that money stream. Even Bill Gates has finite money, or Elon Musk has finite money. They just have, right? And so one of the concepts was, is you have to get your dollars to perform like 4 or 5, $6. If you can put $1 into something and get 3, 4, 5, 6 benefits or more benefits on it, it just financially will make more sense to get in the benefits. And again, that's where you start looking at— it's really, you can identify this with many products. If you put $1 in a savings account, just keep it simple, that savings account, it's solid, it's good, it's guaranteed, it's going to be a rate of return, but it's $1 doing one thing, and that's all it's ever going to do. Yeah, same with 401s. It's $1 going into a 401. Yeah, you can pick, you know, different stock funds, bonds, different portfolio and it can spread out, but it's still just one rate of return versus if you could put your money into a product that now you can get multiple benefits for those same, uh, for that same dollar. That's where I just respond to that. And it just so happens that product is whole life insurance, because I put money into that, $1 into whole life. Now I get a death benefit, which is a concern for me. If I do pass away prematurely, I want to make sure my family's taken care of. I get the cash value growth in it that I can use throughout my lifetime, and it grows tax-free, and then it's protected from lawsuit. I have a loan provision where I can take that money in and out for whatever I choose. Now you start to look at those same— that same dollar going into a whole life policy. Now you get these multiple benefits, and you get this multiplication. Yeah, big deal. If we have finite money, we have to get those dollars to perform to the best they can. And I'm not saying whole life insurance is the, the golden ticket and that's all you're ever going to do, but for me and my clients, that's where I'm trying to help them build this financial house. And with that, you have a very, very firm foundation, and that firm foundation is whole life insurance. Yeah, that allows you to do whatever. I mean, again, I pulled money out of my policies to do rentals. I've bought Bitcoin with it, you know. I've, I've invested in it. I've, I've been in startup companies. I pulled money out. Again, there's no one thing or a constraint that you have to use that money for certain things. Yeah. So once I started understanding that, the very first thing I have I have one daughter. I'm actually getting married next month and I'm getting a stepson. So I am getting my son.

Congratulations.

Yeah, thank you. But for my daughter, I bought the first policy as soon as I found out about this. I bought that and she was 2 years old.

It was—

wow, that's young— that I purchased on her. And again, it was selfish in a way for me because I want to put more money away. So I'm utilizing her life to do that. I own that policy, I control that policy. But through this process of me educating her, I show her how that policy works. Well, she's in her second year of the, uh, the University of Utah, and she's taking finance classes, and she's telling me that they don't teach me any of this at the university. I never— in high school, and I'm not learning anything. The, uh, at the university level either. But now I'm helping her understand what this policy is and how it, it's going to work for not only me and protecting if something happened to her, but that's the last thing that I'm doing that for. I'm doing it because I'm going to give that to her when I decide to give that to her. Yeah. And so that's where a powerful tool, because now I'm really just prefunding her retirement. I'm just pre-funding what she has the ability, and at some point, like I said, I will pass that over to her when I, when I feel like she's ready. Yeah, she can use that. You know, when she was younger, she just thought it was the Bulldog Fund. She just thought she was safe. I was saving money to buy a puppy with it or whatever. Now that she's grown up and, and 19, you know, all grown up continuing to educate her of what this policy is going to do. And now I have— yeah, I think I have 3, maybe— yeah, 4 policies on her now. And I've just purchased those over time where my cash flow is allowed and then been able to do that. But, you know, we were talking what, what should somebody start? I think it's the greatest thing and the greatest gift you could ever give your— yes. Your child, because again, you were getting that started for them. But my— that first policy, I think I'm only putting in $1,500 a year, which is a commitment. But it's amazing to watch how that thing has grown and what it's done so far just in, in her life.

So what's the youngest you could buy a policy for a child? Or not buy, but open a policy?

It's a few days old. They just want to see that the child's here, it's healthy, if there's no complications, hasn't had to be in the hospital for any, you know, extended stay, or has to be in the hospital with any complications. It's very, very easy to get those policies started. So you can start, yeah, within days of their, their life.

There must be a lot of paperwork involved for a child that young, or is it pretty straightforward, similar to an adult's policy?

Yeah, it's very straightforward. It's just like an adult policy. The difference, or the easy part for kids, is under 18 they don't have to go through an exam, which some, some policies when we place, you do have to go through an exam process, and some you don't. Yeah, it depends on the company and every, every, you know, thing that way. But yeah, you could— it's very, very simple to get those set up, especially these days. When I first— date myself here— but when I first got into business in 2003, it was all paper. You know, we were signing big applications and—

oh, I bet—

of course, nowadays with technology, everything's just done, you know, online with, with DocuSign, being able to use those digital methods.

That's amazing. Um, sorry, I've just locked my screen here. I was just moving an alert out the way that popped up. Um, I think that's incredible. I'm gonna definitely be reaching out to you about my kids, um, getting them set up by the end of the year. So explain a bit more about tax implications. IRAs— I mean, sorry, 401s— it's tax-free when you put the money in. So when you're putting money in at this level, your employer's matching it. When it grows to maybe that at the end of the policy, or further through. When you draw on it, if you draw before a certain age, there's a quite high taxable penalty involved. How does tax work with whole life insurance IRA?

Yeah, so like you said, with it, with any sort of qualified plan, any IRA, 401, yeah, there's all these tax rules and there's all these rules that you have to abide by, which the basic ones are you have to leave that money in there until you're 59 and a half. If you take it out prematurely, you have to pay a 10% penalty. And then you defer a tax. And that's, again, just to take a second on that, but that's the challenge I always had is taxes. We— you look at tax rates, and I'm not an accountant, I'm not giving tax advice, but in general, if you look at tax rates and taxes, they've just only gone up. Yeah, this fallacy that we're taught within a 401 is, is defer, put this money in and defer that, because then when you get out there in retirement, when you go to pull the money out, you're going to be in a lower tax bracket. But we're finding most people aren't in a lower tax bracket just based on taxes have gone up. And to be in a lower tax bracket in retirement, you have to make less money too. And so who wants to make less money in those golden years?

Oh my goodness, yeah, absolutely.

So that's where, again, we, we kind of— we're having this conversation. I'm not saying they're a bad thing, it's just if I'm going to put my money into something, I want to get the most benefits out of it. And the difference is when you put into those, obviously it's a deferred— you put it in post— pre-tax, and then when you pull it out, you don't pay taxes. Well, one of the benefits within whole life insurance, and it wasn't always the case, in the prior to the 1980s, people could have very, very small policies and they could dump millions, millions of dollars into them. It was a tax shelter. So again, this is where anything too good, the IRS comes in and says, we're going to put some rules and some limitations on that. Yeah, or they came up with the MEC, the modified endowment contract, that's tied to any sort of life insurance, permanent insurance. And basically what they were deterring people is you have to have a certain amount of death benefit will allow you to get a certain amount of cash. And it's this formula, it's based on your age, it's all calculated for you when you start. Yeah. But that's where, when we can, we want to build policies that are right up to that limit. We want to maximize that right to the MEC limit, which basically means you're not paying any tax deferred and you won't pay any taxes. It grows tax-free. Now you have to put the, the disclaimer in there. The only way a person ever pays taxes on their policy is if they cancel the policy and there's a gain there, so up and above their cost basis. If they do— and again, that's the only way, is if you cancel and say, 'I don't want the death benefit anymore, I just want—' Right, I see. That's where you would pay tax on that, which again, that's where with my clients I'm always advising, never cancel it, just loan the money out and there's subtraction there to never pay the tax. But yeah, that's the bit— one of the biggest benefits of this is the IRS is allowing to still have that grow tax-deferred, and then you get that death benefit and the cash value tax-free.

And what happens in death when a family member might inherit the proceeds of a policy and as well as the cash value? Presumably with no inheritance tax up to a certain limit, there's, there's no tax for the family members, is that right?

Yeah, so again, that's a— depends on the situation, but in general, if depending on where the, the tax, the estate tax is and all that, that's some— that's a whole nother conversation.

That's a localized conversation.

Yeah, in general, the tax— there's no tax due when that is paid out. Now again, it just depends on if that goes into their estate. If that now bumps them up to certain levels, there could be some tax due. But in general, most will never pay taxes on the benefit or the cash value.

So, so would this be an opportunity for somebody to replace a 401k with and roll that into, or invest that into, a whole life policy? And again, not asking you directly what you would recommend, you're not a CPA, but is that something you see your clients do?

Well, I can tell you what I did personally, and again, it's just my personal experience, but it's oftentimes we will evaluate this with clients and we have to be very careful with the taxes and, and not giving tax advice again. But what I did, again, going back to my, my starting where I worked at that, uh, mining company, I had a 401k because that's all I knew back then. I was just— yeah, everybody was doing— and I had a value grow that had accumulated in that, and I just had it sitting there. And when I went through this process with this gentleman that helped me understand finances and looking at the big picture of everything, the question he asked me with having that money just sitting there is, what's my purpose with that money? What am I doing? What's going to happen long term with that money? And so really, he asked me two questions, and one of them was, am I going to make more or less money in the future? And of course, I'm a go-getter. I'm like, I better make money or I'm going to be mad at myself. That was the first question. The second question is, do I think taxes are going up or are they going down? And we looked at tax rates and there are tables anywhere you can go search it that they've only gone up. Yeah. Based off those two things, I made the decision to pull that money out, pay my tax and pay my penalty, and then I use that money to fund and seed one of my policies. And that policy, there was about $40,000 in there, or $40,000 in my account, and I used, uh, $8,900 of that. And I did that for 4 years. So I paid the tax, and that paid for my policy for 4 years. So the quote-unquote cost for that policy for the first 4 years for me was zero. Yeah, what that allowed me to do is then get this policy up and running, because that is one thing with these policies, it's like a clock. The sooner you get that started in life, yeah, or it's going to build, it's going to compound. The less cost there is based off the insurance and your age. Yeah, so me, I pulled that out. Now I take away the market risk because I don't have that risk of that money, of losing that money. Yeah, and that was close to 2008. I started, I did that in 200 2005. So I got that money out and moved before 2008 hit, where, as you know, many people lost— yeah, 50, 70% of their, of their stock accounts. Yeah, IRAs and that. So looking back, it was a very good decision, um, as far as that goes. And now I had that money in something that when I wanted to buy a rental property and I needed a down payment if it was in my IRA or 401k, I just had all these rules I had to deal with and taxes and all that. With this, yeah, policy loan for my policy, paid it to myself, and then went and made that, made that investment. Yeah, so it is a potential, but again, case by case, that's where we, we work through that with clients and just see what the best situation is that's, that's gonna both short-term and long-term be the best decision of them.

So how— these have been around for hundreds of years pretty much, haven't they, these policies? I might be exaggerating a little bit, but it's been around a long, long time. Why don't more people know about this?

Yeah, so again, it's not an exaggeration. Life insurance companies were created with this cash value idea, basically whole life, uh, you know, back in the days when when you would have these villages and people would go off to war, they would create a fund. And then if spouses wouldn't make it back, that fund would help give that widow money. Yeah, that's how the basic life insurance policy was started. One of the companies I've worked with, they've been around for 175 years selling whole life as one of their main products. Wow. Behind that, so Again, that's where I, I sometimes have to bite my tongue when it's a very, very, um, almost like a religion. I hate to say that way, but it's, it's almost like a religion. People either believe in permanent insurance or they don't, and it's an opposite belief. And so again, I just look at the longevity of these. You can't lose money in them. Now, there are insurance policies out there that are tied to the stock market market directly and you can lose money, or if you're in a whole life policy a few years and haven't gotten past those first startup costs, yeah, I mean, that could be considered a loss. But yeah, you just look at the longevity of these, it's, it's one of the most tried and true, uh, products that's out there. It's been through the depressions, it's been through the wars, it's been through inflation and hyperinflation, it's been through all that.

Yeah, and it survived, survived with flying colors as well. Exactly. Pretty much the only thing that's come out with, uh, flying colors. Everything else has just been a downward spiral. I mean, real estate values went down in 2009, but again, it was one of the biggest transfers of wealth during that time. Um, a lot of people lost their homes, which is possibly gonna recur here or repeat itself in a different representation on how it can. But these are the, these are the items that I'm working with my private lenders to lend me money from their whole life policies, their self-directed IRAs. I, I'm planning on putting between $5 and $10 million to work this year from private funding, um, to invest in my projects and the projects of partners I'm working with. And we're doing some smaller scale things, we're going to be announcing some bigger scale things before too long. And, you know, it's definitely an opportunity for people to put their money to work without being the hands-on shoveler of— I was going to say a British expression there, but they don't have to get their hands dirty in the deal, but they can go and get up to double-digit returns in a lot of cases guaranteed by real estate. And that puts the investment in that loan from the property to work. And can you tell the audience about how the money doesn't stop working for them even when they take a loan out on the, on the policy. Yeah, this was the thing that messed me up first of all. It just sounded— oh, that sounds too good to be true.

Well, and again, people that are naysaying it, really most of them don't truly understand it, or they have financial reasons why they're saying it's not good. Yeah, yeah. You know, the Dave Ramsey's, the Suzy Ormans, it's not that they're you know, bad people. They're teaching great stuff, but they're teaching to the masses. And they are also— they are also paid by mutual fund companies to get people to sign up in mutual funds and buy term insurance. Yeah, that's the difference. So, but that's where this whole idea, when you start running in this side of, of, you know, the investments and that side of it, is this idea of infinite banking. And how can you— there are policies out there that may not be the best for people too. And that's where understanding and educating clients on the, the use of whole life but structuring it correctly. And what I mean by that is keeping your cost as minimal as possible, but then having the ability to pump a bunch of cash into that. Because a whole life by itself, long term, it's good, it'll do its thing, but it's not as powerful as if you use a base policy at a minimum but maximize these cash riders. And these cash riders are what accelerate the policies to build that cash day one, which again is misunderstood. Most people say it takes years. The policies that we design for clients, they're— it's day one they have cash. Yeah, so the ability is, is now to leverage this on the loan provision. And it's very, very misunderstood because essentially it's going to take a person about 3 years to go what we call cash positive. 3 to 4 years, meaning you're putting money in and we're talking a base policy with cash rider. In about 3 years you go cash positive, meaning the value is growing by— you make the payment and it grows by more than that after 3 to 4 years. And most policies, after 7 years you exceed your investment and then you're just cash positive even more past that. But what happens is once you get into these years where you have that cash positive Basically, you know, I would say it's really after year 3 to 5. Now you have value to build there. Well, you have— yeah, right now I had a client come to me, um, who's a client of Infinite Banking. And so they came to me and said, hey, I need some money out of my policy to do an investment. I said, well, if you ever have any investment opportunities, you know, I've got policies here. Yeah, I'd love to utilize. So I used my oldest policy for this. Again, it's been around 18, 19 years, and they had an opportunity to buy— they're in North Carolina— they had an opportunity, um, they needed somebody to take down this property that they were going to do a fix and flip on it, and the commitment was $150,000, and they were they were just going to need that money on a 6-month note, which again, there's risk, as you know, and, and teach, there's risk with the real estate and have that side. But I actually closed on the property myself, my name's on the title, everything. But I pulled $150,000 out of my whole life. Now here's the power behind it. That whole life policy by itself, it's old enough, it's probably making 8 or 9%. Just, just because it's an old policy. It's just— yeah, so, but just for easy math, let's just say it's making 7%, and I can go put that money into this investment where they're actually paying me 18% on that money. Nice. Again, for me, that's just another move on my money. It's like thinking like I'm just creating that, you know. Option. I'm just creating that opportunity. Yeah. So what happens, and this is where it's very misunderstood, is the $150,000 doesn't come out of my account. My account stays in there earning that interest. So it's earning that— say, let's say that's earning the 7%. Now the insurance company, they lend that out of their general account, and then they charge me to do that. But here's the difference. I'm still making the money over here, and let's just say I'm making 7 again and they're charging me 5. I'm still arbitraging 2% out of that. Yeah, we'll get a move on that money like a bank, my own bank, and now I go make 18%. So now I have that 2% I'm still making, plus I'm actually supposed to be sending me that money back next month. They're closing on it. It's been fun to watch that process anyway. Yeah. So then I'll get that money, and essentially it was 6 months, so it'll annualize to 18%. I'm going to make somewhere— because they had it 6, 7 months, it'll be around 10 or 11%. So I'll get the 10 or 11% back for the $150,000, and I'm still making the $200,000. I'm making still 13 to 14% on my money. Yeah. Now once that money goes back in, then my loan's back paid off and I'm making obviously the same interest rate, and now I have this earning that I have, and it's going to be around $15,000, $16,000. Well, my insurance premium on that one policy is $9,000, so now that pays for a year, and I have excess. Now it's creating this, this wheel where I— if I go find these investments, they pay for your— yeah. Just start— the policy starts paying for itself.

Yeah, that's amazing. So does all of that return have to go back to the insurance, or the profit they make from the investing, that whole life policy, can that come back to you? Just, just for the, the audience watching, so, you know, the self-directed IRA, they can't really touch the money when it comes back. They can either invest in buying an entire asset or invest in somebody else's asset, but any return has to go straight into that self-directed product. Is that the same? As long as it goes into the policy either as a premium, can you add in more cash value that's outside of the MEC because it's a return on the, the loan that you took against it?

So yeah, in comparison to a direct self-directed IRA, this one you don't have to— there's no rules. You don't have to put the money back in. You don't have that, those rules at all, right? The idea though, and the basis behind it, is if I have a loan out, and I can only put back in what I took out. If there's still a loan out on the overall policy and I have excess cash, I can put money back into that to pay off the loan. Yeah, once the loan's paid off and the premium's been made, that is the downside of whole life, is you can't— to keep it under that MEC limit, you can't put additional cash in. There's— if there's not ability either to make the premium payment or to use that to pay back some of the loan.

So hence start another policy, start the process over again, and start building other— up another cash reserve they can borrow against.

Yeah. And people always say, well, that sounds too good to be true. Why would an insurance company ever let that happen? Well, when I take that loan, they leverage and they basically collateralize my death benefit. Yeah. Well, if I've got a million-dollar death benefit and I take $150,000 out my family's only going to get if I pass away, and that's how they're only going to get the $850,000. They recapture that loan, so they're never at risk of not getting theirs.

Yeah, yeah, that's, that's a, that's a great thing. That really is a great thing. So is there a limit on the number of policies you can have issued, or is that just down to your available finances to invest?

Yeah, so that's a great question. We get that a lot. I mean, between me and my family, we have like 14 whole life policies now. It's— and again, that didn't happen all at once. It happened over time with what cash flow allowed. But an insurance company, they have what's called the human life value. They're only going to insure you for your human life value, and the only way they can really identify that is based off your income. Yeah, so they'll just look at it, and if a person makes $100,000 a year, an insurance company in general, if the insurance industry will only give maybe 20%, 25%, depending on your age, maybe as high as 30% of that in an insurance offer. So you'll top out. That's what makes you top out is your human life value based off income. But as income goes up, human life value goes up. That allows you the ability to get more policies. Yeah, to put more in place just based off that. And that's what I've done over the years is, as my human life value's grown One, I want to protect my human life value. If I'm not here on this earth creating this value for me and my family, then I want a full payout. So I'm buying— and this is just a mindset that a lot of insurance people don't have— I'm buying up my human life value, and every time that increases, I'm buying more.

Nice. Yeah, so I mean, like we did in the beginning, we, we got a certain amount of approved coverage from the health questionnaire that we did, but we didn't utilize all of that coverage up front. We got another type of convertible coverage that we could put in. So I, I guess what I want to share is that we don't have to use the full value and, and fund all of that policy with the riders all up front. We can put in a smaller policy and then add, add other policies from that convertible area of potential insurance as long as we're paying into that other policy. Is that, is that right, or is that—

yeah, so specifically that's where we deal with convertible terms. So again, in general, you have two different types of insurance. You have term insurance, which is like renting, and then you have permanent insurance, which is like buying. And there's times where you can buy the house, but there's times when you have to rent, and there's times where you do a combination. I still do a combination because if we could all afford just all whole life, that'd be the perfect world. But that's not the case, right? We have this— we have the ability of where we're at, we just have to maximize that. So the use of term insurance is powerful. Yeah, very inexpensive term policy, you know, $1 million depends on age and all that. But say you get $1 million and it's like $20, $30 a month. That's protecting insurability too. So God forbid something happens, now your family will get a higher payout if you have term and whole life. Yeah, but the ability to then protect your insurability— because that's the hard thing with life insurance. Yeah, you have to qualify for it. And when you're younger and healthier, that's the best time to lock in that insurability. And you can lock that in as a 10-year term or a 15-year term or whatever choose. But now you're giving the ability to then do more whole life policies in the future and take the unknown out of, can I qualify for that in the future, if you do the term insurance too. So that's where, in general, that's where we try to do both, just so we can protect on all sides.

Yeah, fabulous. So is, is your investment strategy purely whole life, or do you, do you do other things as well? How do you spread your risk or spread your strategy over maybe multiple things where you put your— or what would you recommend how people balance? Because I know, you know, I think from, uh, from Cody's conference, they were talking about a 20-40-40 strategy where you put 20% of your available investment capital into a high-risk investment where you're able to, you know, either benefit very greatly or maybe lose. More easily because it's a high-risk, high-return. Then maybe 40% in a medium-risk, medium-return, and the remaining 40% in a low-risk, low-return environment, just so you balance it. This is obviously a low risk of— a low-risk situation but a fair, fairly good return if somebody's putting it to work. Obviously, just sitting there at 4 or 5%, it may, may as well be a 401k, but it's the ability to loan against it and invest it and put it to work, which is the, which is the, the huge benefit here.

Yeah, well, and that's something that we're always working with clients and trying to understand where they're at and how much should they be saving. But if it goes back to that whole idea, and I'm a visual person, so if I can build this firm foundation for myself, which is what I've done, yeah, all of our investable income into the whole life first And then that's, again, that's that foundation of that financial house. And then the other parts of the structure are investments that we've done with doing real estate, rental properties, um, Bitcoin, stock. I mean, we have stock, we have invested in startup companies. So we've diversified that out but started with the base policy or started with getting value into the policy first and then use that, those policies to do these other things and create this, you know, this wheel of wealth in that creation. But I would say, I mean, you won't get a more secure guaranteed investment than buying a policy with a 175-year-old mutual company. Yeah, there's, there's no risk to it. I can't say no risk. The risk is, is obviously if the insurance company goes out of business. But if they've been doing that 175 years, if they go out of business, we got bigger problems. And I'm not right, but that's not a bigger problem. And even if we see insurance companies go out of business, bigger ones, they just absorb those and take those, those contracts over too. So it's just very, very secure. Yeah, but it allows me, if I have that security and if I'm putting 20 to 30% of my income into that is the number. A 10% is a minimum that somebody should look at into this type of investment. But if you do 20 or 30, it's— you're just maximizing it. Yeah, much more. But then that allows you, like you were saying, to then take, you know, this 40% and go do these other things with it. I just choose for me and my family to start with the insurance and then go spread out to these other opportunities.

That makes sense. When it's going to give you a return when you're taking it and putting into your 20/40/40 or whatever your strategy is, it's still maintaining that, that gain and you're arbitraging the difference. So exactly, exactly. Well, tell us, tell us how we can get hold of you, how the, the audience can, can reach out to you and find out more about what you do if this interests them, and I'm sure it will, um, and what the process is to get on a call with you, one of your team, and just run over the process of getting into this sort of policy?

Yeah, so again, we're very— it's very catered, meaning every person's situation is different, but that's where we'd like to just meet one-on-one. Typically, especially with the pandemic now, the Zoom calls are so easy, right, for everybody. But yeah, just hop on a Zoom call and just have a discovery process to understand what they're doing and kind of help them understand what the options are for this. It's a very simple process. It's just, yeah, getting the understanding of it. And a lot of people we meet with, they're like, well, I've heard of this, I just didn't know anybody that did this. I, I've been wanting to learn more about this. I've heard so much, I just haven't had the ability or somebody to go to. So yeah, I would just say, uh, send me an email, uh, ira@revive reviveinsurance.com, spelled out, dot com. And that's one way, uh, to just send me an email and then we can start the process and schedule an appointment, see what makes sense.

Well, what I'll do is take your contact information, I'll drop it into the description below, and, uh, that people can find the email address and reach out to you and just find out if this is a good fit for them, which I think it probably will be.

It's, it's something that's been— like we talked before, why do, why do more people not know about this? Yeah, again, it just depends on what vein you run in and what group and, and sphere you're with and talking. Because if you're running in a group that understands this, it's like everybody's doing it around. Yeah, I haven't been introduced to it, it's foreign. And, and, you know, maybe it's something that you've just never been introduced, so this is the opportunity. Yeah, perfect.

Well, Ira, thank you so much for spending your time with us this afternoon. We talked for almost an hour. I've really enjoyed the conversation, really enjoy your company. As you know, I've experienced you well before this. I appreciate you sharing your knowledge and your, you know, the opportunity to really make something lasting and workable for families. I think this will really offer something towards birth to net worth. And we may— maybe you can just briefly, because I didn't even think about asking, explain a little bit about the retirement benefit of using it in a way to enhance your retirement. I know we mentioned a little bit earlier about if they cancel the policy, that could be a taxable event. How can you utilize— just in, you know, maybe a— just 5, 5 minutes or so, just kind of explain how that can enhance somebody's retirement where they choose not to do the 401, some of the other more traditional things. How that is going to help them retire more comfortably?

Well, as part of the, the growth of the cash value and the way the policy grows, it's built off a dividend-paying policy. So you build dividends into the policy. So those dividends in the future can be used for many different things, and one of those is just cash to you on an annual or monthly basis. So when you look at the growth within these policies, and the goal that I have with my own policies I'm putting enough into these, and I'm 47 now. When I'm in my mid-60s, I could take $200,000 to $300,000 just in dividends out of these policies each year. Yeah, like this mountain we're finding, we're just putting the money in, putting the money in, and letting it grow and accumulate. And at some point, we're going to start coming down that money, or that mountain, mountain of money, right, and start descending down. Just alone taking those dividends out, that's a tax-free return that you can take money out and you're not going to pay taxes on. Yeah, so dividends coming out of the policy, but then we have cash value that's grown and accumulated too. Now how can we start pulling those cash values out to start doing and spending and enjoying it too? Because again, passing it on, it, it's a piece of that. The life insurance is going to pass on But yeah, that's grown in there. Of course, everybody should have the peace of mind to go spend and enjoy and spend.

Yeah, tax-free. Fantastic. Well, brilliant. I think that was the final piece I was missing, that, uh, of how it can benefit us during life instead of just afterlife, you know, the, the future generations. So thank you again, Ira. This has been such a pleasure. And I look forward to, you know, here opening some more policies with you very soon and, uh, seeing what else we can do to, to bring this to many more people.

Well, and I, I appreciate it again and your passion to helping people understand, you know, the truth behind money and, and what the truth is and, and help that, uh, to teach their kids. And again, these are some of the best opportunities people can put money in for their kids, and it's this this legacy, you know, what I am doing in my policies now, more than likely I'd love to spend and enjoy all that, but I'm— most people won't. So now, yeah, legacy that I'm going to leave with these policies and my assets based off this, these concepts. Fabulous. So it's great.

I appreciate you. I'm just going to end the broadcast. Thank you so much. Have a good day.

You too. Thank you for your time in joining us on this episode. Please follow these links to learn more about this week's guest. Don't forget to subscribe and to leave us a comment below. We look forward to you joining us on the next episode of Birth to Net Worth.