E86: How to Get The Best Results From Infinite Banking

Nate: In this episode we discuss one of the most common questions asked by those that have started their infinite banking journey. And also how you can get the best results out of your policies once you’ve gotten started. She’s Holly and she helps people find financial freedom.

Holly: He’s Nate, he makes sense out of money. This is Dollars and Nonsense. If you follow the herd, you will be slaughtered.

Nate: All right, welcome back to our podcast. And for those of you that are new to the show, this podcast might be a little bit more into the weeds of a concept that we really like and we teach all the time on called infinite banking. And so there’s plenty of podcasts that you can listen to before this that would catch you up to speed. We do post a new podcast every other week so you can stay tuned for those.

If you’re listening and you haven’t started an infinite banking policy and you’re not going that route yet. And I just wanted to let you know that those who do go that route have a few common questions that we may actually get into in the next few podcast episodes.

But one of the most common ones that people ask is, well, when is it a good time to start another policy? I’ve got my policy, when should I be thinking about starting a new one? Is that even make sense to have more than one? Who can I get it on? So Holly and I thought we could answer that question today as best we could. We may give some practical advice. Some of it’s going to kind of go back to the concept to help you see whether or not you should or not. But anyways, Holly, if someone was to come up to you and ask, “Hey, when should I start another policy?” How do you even start the discussion for what makes sense for that individual?

Holly: Well, normally I would want to say as soon as you can because you and I know we always want to be putting money into a policy if we can. But one of the very practical, I say practical ones, is asking some questions of have they possibly had a raise with their job? Have they inherited any money? Is there something monetarily in their lifestyle and in their living that has increased to start another policy or has something changed? Maybe they no longer have a student loan or something like that. So, I think it comes down to asking more about what is their financial, not just goal, but where are they at financially today? What does that financial picture look like in order to say, “Hey, just start another policy.” Because I would probably love to start a policy every day, but that’s not actually practical.

They’re asking it normally in my viewpoint because they have had something financially shift in their life or they just want to know when do I start that second policy or how do I know when to start that second policy? I think it comes back down to how do I know when I should, and sometimes when they get started, they probably should have started a second one right from the get go if it’s a couple or they have kids or something. But often it’s trying to get started first and get a little wet instead of just throwing you into the deep end and telling you how to swim. Taking a little wading steps first before you swim, so.

Nate: I think what you said in the very beginning is always rings true for people. So, there’s not very much a black and white answer to it, but you have to understand the whole goal of infinite banking is to put more money into your bank and have less money going elsewhere. We just have to always keep in front of us that the more money we have in the policies, the better off we’re going to be just period. It’s just math. I mean, there’s nothing crazy about it.

So, when someone comes to ask, “Well, when should I start another policy?” I think Holly’s right. Well, right now, as soon as you can. I mean, whenever you’re dealing with compound interest, if you’ve ever seen a compound interest curve, which policies are growing over time and there’s nothing you can do to stop them. If you get started sooner rather than later, it makes a huge impact on the future wealth that you can build. And we like to think of it as if you wait even just one year, you always have to start in year one. It doesn’t matter if you start today or a year from now or two years from now or three years from now. There’s always a year one. You’re always starting whenever you start. But the more you wait, you don’t knock off the starting years. You knock off the final years. Because if you start a policy three years later than today and you could have done it today, well yeah, you’re starting in the same place no matter if it’s three years or from then or now. But what you’ve done is you’re only going to live for so long and the most profitable years on the compound interest curve by a huge margin are the last years. I mean that’s just math.

So, it is true as soon as you can, it can make sense. But there’s certainly some practical ways to know, like Holly’s already mentioned. One of the most common way and I mean a lot of people, they received tax returns and that almost kind of, I mean it’s almost that time of year, I guess, when people are doing their taxes or they’re starting to figure out what’s going to happen. And so a lot of times you see that every single year we get calls, “Hey, when should I start another policy?” And kind of in the back of the mind they’re thinking, “Well, I am about to get this tax return. I’m going to have some money.” The goal being we want to get them started because the more policies you have, especially mature policies, I mean the faster you can get your policies to maturity, which to me Holly is like year five or so of owning a policy. When they’re growing, like every single time you put in a dollar of premium, they’re growing by like a 1.40, you know? I’m getting a 40% increase on my premium. I want as many policies as I can get that are doing that. What do you think keeps people from starting policies?

Holly: I think fear stops a lot of people. We fear what we don’t know. So, instead of doing our job to research or find that out, we just wait for somebody else to tell us what to do. But the biggest thing I think is they’ve been taught, well, why do I need more than one policy? I go back to that same question of, well, do you have more than one bank account? And most of us do, but a bank account can hold your money, but eventually you look for a better rate or something else or you have another entity you want to use it for. But I would say it’s because what happens, that biggest question of can I afford another policy instead of actually seeing the longterm picture of it? Of could I afford it and not only could I afford it, but what is it going to benefit me? I think the biggest fear is those, first, I’m going to be honest, Nate, those first three years are the hardest years in my viewpoint. I would say the fear is lack of discipline or-

Nate: What if I can’t do it next year or the next year? Yeah, exactly.

Holly: What if I can’t do it next year?

Nate: I think you are probably right. It’s the fear of the unknown. Like I don’t know what’s going to happen to me financially for sure. I mean nobody does. I mean you may have a great job, but the economy crashes and you lose your job or you lose your business. I mean, there’s a valid fear of unknown issues that could creep up and I think that obviously is a hindrance to most people. They’re like, “Well, I want to start another one. I think I can start another one. But what happens if things go haywire or what happens if I don’t have enough money to continue funding it?” It’s a valid fear but it may be more dramatized than people think.

And it kind of goes back to the thought that most people have is in order to be able to fund this policy premium and do it right, I have to like carve out money from my lifestyle in order to make sure I get this premium paid. I’m budgeting for it. It’s almost like a payment. And we’ve talked about that many times on this podcast that if you come in to the system with the premium is a payment like an obligation or liability, an expense, then you’re going to be very limited on what you can accomplish with it because you kind of begrudge putting money into a policy which is supposed to be something you look forward to. And we’ve talked about that before. I look forward to premium. I have huge premiums. I love when they come do it because I love putting money in. I look forward to it and I try my best to be able to do it.

But I guess when it comes down to it, there’s some creativity that you can have that can kind of unlock your ability to potentially do new policies, even if things do go poorly. Like I know for me personally, money is money. It doesn’t matter where it is. So, money is money in a shoe box, money is money in a checking account. Money is money in cash value of a infinite banking policy. And I have a premium come due and I don’t happen to have the cash sitting in my shoe box or my checking account, but I do have money in one of my other policies, it is true that it’s really not that hard to go pull money from one policy to help fund that premium for that year.

I mean, we may be getting into even further in the weeds than I wanted to today. But I guess what I’m trying to say to help people overcome the fears is there is a bit of imagination that needs to be used when you’re doing infinite banking. There’s a bit of an imagination and being creative of how you can fund it. But then also when you have them, you don’t always have to fear the premium as if like it’s all hell going to break loose if I can’t fund it this one year. Like in year three or you know, I’ve got the money now, but will it be there later?

I guess if that’s a fear of yours, you should just come talk to Holly or me because really I think you can unlock it a lot more than you think you can. And you can do a lot more than you think you can, especially if you already have one policy moving. And it makes everything else much simpler.

So, when should I start another policy? I mean, it certainly depends, but at some point you’re going to want to push yourself, I guess is what I’m trying to say. Because if you don’t really ever kind of become a little bit aggressive with it, it just becomes a glorified savings tool where you’re just saving some money into it and you’re living life and you’re still banking the old way without even really needing to use your policies. And that’s normally a sign when someone is not using their policies. It’s normally a sign that it’s probably just too small. Like they’re still dealing with the old paradigm way too much and they’re limiting themselves on how big they can get their bank to grow. And that would mean how profitable it can become.

Announcer: Come meet Holly, Nate, and the rest of the Living Wealth team in person. Visit LivingWealth.com/events to sign up for our free workshop in your area. These beginner and advanced workshops are an excellent chance for you to understand better what it means to pay yourself first and the impact infinite banking can have on your life. They’re hosting workshops in Orlando, Florida, Juneau, Alaska, Lawrence, Kansas, and many more. Again, visit LivingWealth.com/events and sign up for a free workshop in your area.

Hope to see you there.

Holly: I think another fear, Nate, is that in reality we view our retirement programs such as 401ks and that is something that we do it because everybody else is doing it, but that money we actually never see. It never comes into our paycheck or our bank account. It’s just taken out of our paycheck and it goes into that 401K plan. And with the life insurance policy, in all honesty, you are having to make these deposits that it’s you actually seeing the money and you’re seeing that go into a premium like Nate said. But instead of seeing it as a deposit into another bank account, we truly see it as a payment. And so we believe and have this fear. Great, that’s money that’s leaving that I can’t use right now.

So, I think changing that mindset of not just the payment but if you actually believed you were depositing that money into another bank account that you could use or have access to some of it, it changes the mindset. But the bottom line is we feel like we’ve just lost more money because we have money that’s deducted that we never see. We don’t count that as money being lost because we never see it to use.

Nate: Yeah, I think that’s a good point and I think that all comes back is everything comes back to what we’re trying to teach to begin with. Like some of these questions would just be simple answers and we just really understood what we’re trying to do, which is create a bank. There’s a simple question. If you own a bank, real bank with a building. You know, down the street on the corner. And you own a bank, there would be no reason for you to have a bank account at somebody else’s bank. It just wouldn’t even make any sense. If I’m an owner of a bank and I own this little small country town bank, I’m not going to go get loans and open up accounts at somebody else’s bank. I mean it’d be crazy. You do business with your own stuff.

So, I think you’re right Holly, that it can be difficult because no matter what, we’re so ingrained in the way we’ve done it within banking that we like to see money in the bank, in the bank account. And anything that takes money out of the bank account we don’t normally love because it feels like a payment. Because you’re right, a lot of people save before money even hits the bank account, you know, with a 401k and things like that. That makes it even more difficult.

But once it hits the bank, we like to keep money in there. And it takes a total shift and it’s hard. I mean I can sit here in front of a microphone and talk about it all day, but you have to experience it where you really feel a transition from I want money in my bank account to my policy actually is my new bank account essentially. I mean I know we don’t get a debit card and a checkbook towards it, but I mean for all intents and purposes, the policy is my new bank account and that’s where I want as much money to get into as I can. And we all know and we’ve talked about it a little bit before, you can’t just put an unlimited amount of money into any given policy. There’s a max amount that can fit.

So, if our goal is get as much money into these policies as we can to get us out of the bank’s control, be able to take over loans we have with them and deposits we normally make with them, and we want as much money in there but there’s a limit to how much can fit once you get a policy started. That single policy will have a limit. Then we do know that, hey, I can only go up to so far and then I’m going to need another policy and need another one.

And Nelson Nash, when he talks about the system, when he writes about it in the book that started it all. He says it has to be a system of policies and it’s going to take time to build your banking system to where it can essentially function and accommodate all of your needs financially. That should be your goal. Never to see a bank again unless you want to and to keep as little money in a bank account as you can.

One last thing on this soap opera box that I’m on, that for me personally, the policy is just as much a checking account as anything as far as like, I don’t think of, oh, here’s my money I have in my checking account and here’s how much money I have in my policies. I don’t actually differentiate the two. I just have money. And it’s one of the two buckets, but I combine them as far as what I have the ability to use and the ability to do. And obviously I just want to have as little as possible in my checking account and as much as possible my policies. But as far as the way I see it, I actually see them as the same. So, when I pay a premium it does not even feel like I’m making a payment. It just feels like I’m moving money from one account to another. That’s honestly what it feels like because that’s essentially what’s happening. I know it’s different, but that’s essentially what’s going on.

Holly: Well and I think Nate, is a transfer. Whether it’s at the same bank or not, it’s not at the same bank, so it’s an external transfer. But because we view it as that money leaving our bank account, we don’t see it as actually that money being able to be used. Premium deposits, money you are making to your policy is money you actually can use. Now, in the beginning, no, you can’t use 100% of it, but it’s money you can use. So instead of money that’s always going away from us whenever we make a payment from our checking account and we see it and it’s gone never to return, what you really have to start seeing it is that money is actually going to be able to be used again and come back to me. And if you have the mindset like Nate, I’ve never actually thought about it that way. I just think of it as transfers, but I never thought of about it as it’s just two buckets of money and which bucket do you want more money in? Really, that’s what you’re doing even with your premium. You’re just taking money from one bucket and putting it into the next.

Nate: Exactly, and it makes it a little less intimidating because we’re not trying to push people to start new policies just for the heck of it. But most people come to me and they’re like, “How can I make this system better for me?” Honestly, the only way to do it is to put more in. I mean that’s the case. It’s like somebody who comes up and they’ve got one rental property that they own in the world of real estate. They come and they say, “Well, what can I do to make more money in my real estate business?” And almost everybody’s going to say, “Well, you probably need to buy another property.” It seems to be the most obvious way. Like you can remodel that property maybe and get more bang for your buck and charge a higher rent. I mean those things are possible depending on the situation.

And that same type of thing is true with a policy. Like there’s minimal things you can do with that one policy to make it a little bit better. But if you’re really treating it like a banking business, like I’m getting into the business and I want to be as profitable as I can as a banker, you’re probably going to need to open up additional policies in the same way you probably have to buy new properties to expand the real estate business.

So, you need to come into it thinking of it that way. Not as like a payment but really as a good steward of the money you have and how to make the most of it. So, I mean there’s some practical things Holly, like when’s a good time? We spoke kind of more theoretical, like anytime is a good time to start a new policy. But it is true like as we mentioned, like whenever you get a raise, it’s easy to spend money. We would suggest don’t spend all your money whenever you get a raise. Devote some of that to continue building your bank and expanding because there’s just something wonderful about having access to capital. And no one has ever come to us and said, “Man, I’ve just got too much money.” It’s never a problem.

And it feels good to have money. So I just encourage you to do that. But whether it’s an inheritance, whether it’s a sale of another asset. Even for those of you who are banking and know what I mean when I say the paid-up addition rider coming off of a policy. Usually we fund it at a pretty high level for about four to five years and then your premium will reduce dramatically. That’s normally like a built in timeframe. That’s a good time to start another policy. Whenever one policy’s paid-up addition rider falls off or drops down or is reduced. So, there’s some practical things. Yeah, you should, but in reality, don’t feel like you have to wait for something practical to happen if you just get a feeling that it’s probably time and you want to expand and that’s all good feelings to have.

Holly: And I know another one that I’ve been having a lot, even out here, is a lot of people because your company matches the 401k, that’s why you’re doing the money in the 401k. And yet I’ve just been working with people that their company stopped matching the 401k. And so for them it was a great time to actually take what they were putting in it because there’s no match and actually take the money that they were giving to their 401k and putting it into actually a life insurance policy.

So, there’s a lot of answers to when do I start a new one. But I would hope you reach out to Nate or I and say, “Hey, this is what I’m thinking of doing and here’s why.” Or don’t be afraid to ask the question. It’s time to start a new policy even though maybe you’ve started one recently or maybe it’s been a few years. Really, in all honesty, you know when that is. But if you stop viewing it as money leaving your bank account and you really start viewing it as money being deposited and growing exponentially for you, you’ll be great. Because I had a client who I was going to start just for him $5,000 a year. He wanted to do all the research and do all this. He waited three years and he said to me, “Well, it really only costs me $10,000.” Because he waited three years and he put it in. And I said, “Well, let’s look at three years off your life,” because the third year when he started as the five and in actuality it costs him over $300,000 of growth. Just taking if he’d started it in reducing that death benefit and the cash value just by those years that he hadn’t started.

Nate: Exactly right. I mean compounding is powerful and the longer it compounds the better. Waiting typically doesn’t help anything. You’re leaving money on the table. I mean, you can be too crazy with it. I guess I would mention Holly like, yeah, I mean you want to be wise how you start it. We don’t want you to go, “I make a hundred grand a year, I’m going to start $100,000 premium policy right out the gate.” I mean, you can go too far, but most people are not there. Most people are being more conservative and that’s fair. I’m not trying to push you out of your comfort zone. But I am saying that if you kind of take some ownership of the system, don’t just wait for Holly or me to say, “Hey, time to start another one.” You know? Not that even we really say that very often.

But we want you to say, “Okay, yeah.” If the end game is to have more money in my bank, then I probably need to put more in and it probably means that I have to open new policies. But what you need to make sure you have in the back of your mind is at least a backup plan like I mentioned. Like, hey, even if things are tight, can I at least pay the base premiums? Can I move money from one policy to the next? I mean those things are good things to think about as well.

It’s true that waiting just costs money for the most part. And so we encourage you to not wait until the paid-up addition rider drops off. Like I’m going to wait five years and then I’ll start my next one. Why? You’re just going to let the other banks make a whole bunch of money off you for five years? No, you’re missing the whole point of the system. Remember the policy is not an investment. It’s not about saving you. It’s a banking tool and I find that most people who are kind of shy of doing new things are the ones that are just rarely ever using their policies to begin with. They’re just putting money in it, letting it sit there and wondering what’s so special. And they just never even use it. The more you use it, the more competence you’ll gain in it and the more you’ll understand it’s money in money out like a checking account as opposed to like a 401k where you know you’re putting money in and you don’t get to see it for a long time. So that you have to really kind of budget around that, which a policy is a much more flexible way to build wealth.

Holly: Until you change that mindset. It’s really going to be hard to really stop viewing it as a payment. But I think if you start thinking like a banker, there’s no hesitation of, yes, I’m ready to start another policy. Because you understand as a banker, you want as many deposits as you can going into your policies.

Nate: Yeah, I’ve started more than on average, more than a policy a year over the last, is it eight years now? Yeah, it’s eight years.

Holly: Yes.

Nate: There’s no plan on stopping. I mean, I’ll stop whenever I’m dead and there’s going to be a huge death benefit that passes at that point. When you understand what you’ve got and you understand how to use it, things really just start to open up.

Holly: They do.

Nate: But with that, it looks like we are about out of time. This has been Dollars and Nonsense. If you follow the herd, you will get slaughtered.

Holly: For free transcripts and resources, please visit LivingWealth.com/e86.