E144: 3 Easy Ways Infinite Banking Can Skyrocket Results on Every Investment

Nate: In this episode, we discussed three things you can do to get the best results from infinite banking. She is 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, well, welcome back to this week’s episode. We’re so excited to have you and excited to talk about our pet favorite topic, Holly, of infinite banking. Something that we both passionately pursue and advise other people on accomplishing. One of the most powerful money tools that we know of. So we’re going to dive in today discussing three things, what you can do to get the best results from banking.

Now, Holly, as we spoke before the show, it’s kind of hard to narrow down to three. So we tried to narrow it down to what we feel are the three critical, most crucial things that if you do these three, you’ll definitely have a great time with infinite banking. Now, there’s a whole bunch of other things you could do to have a great time as well, but these certainly will let you have a great time.

Holly: And these will probably lead to other infinite things you can do, but this is kind of how to get started or when you’re making that decision, this is one of the best ways to utilize it and put it into practice.

Nate: Exactly, exactly. So whether you are listening to the podcast and you are already an infinite banker, you already own these types of policies and you’re trying to use them. I think this can help you maybe re- center your focus on some of the things that really matter, but especially if you’re getting started or about to start or thinking about starting, I mean, this episode’s really we’re going to try to help you focus in on the things as a vision. These are the things you’d want to try to accomplish with it.

So first off, Holly, first thing for you to do to get the best result from infinite banking I believe and people hear this talked about probably in various ways, but the first thing to do is essentially the whole goal is to redirect money into policies first and then to go out and try to spend it or do whatever it is you’re trying to accomplish with it.

So I guess we’d say the first way to get the best results is to stop paying cash for everything and using bank accounts as your main source to go fund everything. And instead transition money out of other accounts into your own bank and then leverage your policy to go do whatever it is in life that you’re trying to do.

Holly: Yeah. So what we mean by that is typically or most of us when we get a bill late or when we’re going to do something, I’m going to say like we get our credit card bill, or we need to buy new furniture. We go out and we buy the furniture. We might put it on the credit card, that bill comes in and we just write a check or we just pay it online.

Instead, what you really should be doing to change the direction of your money and to really keep that money within the family or within your banking system is put it into your policy first before you go out and make those purchases, and then set up a way to pay yourself back. But if you just keep letting the bank be the bank, your regular bank and you don’t put the money into the policy, you’re losing that buying power of that dollar and that interest that generates as well.

Nate: And the point I was going to make as well at this very moment, which is interesting. So the question is why like why would somebody put money in policy first? And it really goes back to that. That every time we spend money, that money is out of our hands for forever. It will never make money for us again. It’s stuck in wherever we sent it. Maybe we bought something of value for it, but nonetheless, the dollars them of that we once had are gone and we have whatever it is we bought in exchange for that. And those dollars can’t make us money in two places at the same time.

Here comes infinite banking to save the day as the rescue, because the whole purpose of this is, “Hey, once I have taken those dollars and moved them into a policy first, it creates cash value that is guaranteed to grow every year for the rest of my life, plus earn dividends. I can take a policy loan against my cash value and have the cash value continue to earn interest and dividends the entire time, even while the money has technically been deployed.” I mean, we post our money as collateral inside of the policy to get a policy loan. So we’re not actually taking any money out and just living life.

That’s what it kind of feels like. I guess what I’m trying to say, Holly. In other words, we accomplished our task, the same task in either scenario with the same dollars we accomplished the same thing. The only difference is one guy has only what he bought. The other guy has cash value and the thing that he bought at the same time. So this is how we get money doing multiple jobs is by redirecting money that we normally would use to go accomplish certain things financially, redirect that to a policy first and then move it out.

You could contrast this a bit of if you wanted to to the individual that does have policies or a policy at least, but never finds himself using the “the banking system.” You can’t trust that because essentially what he’s doing, he or she is they’re starting a policy as kind of a glorified savings vehicle. And maybe one day they might use it, but essentially they’re not really becoming their own banker yet.

They’re mainly just, “I still fund everything from bank accounts and do everything like that the way I’ve always done it. And I put a little bit of money here on the side of the policy,” but there’s no redirecting of money into a policy first to then be deployed. So they’re really missing out on some of the benefits of practicing this concept.

Holly: Yeah. And really what they’re missing out on, Nate, too, is the value that that adds by using it. When you develop and you start your infinite banking system and you just use it to store money, you actually aren’t benefiting from the system because you just are taking your money and instead of storing it one place, you’re storing it somewhere else. And you’re not actually utilizing the benefits of being able to gain interest, of being able to be a shareholder of making those purchases produced value now and in the future.

And so I think that one of the biggest things is when people just are start like, “All right, it’s my new savings account and that’s it. And I’m not going to do anything else. I’m just going to leave it there one day for that rainy day.”

Nate: There’s a between owning a life insurance policy designed to practice infinite banking and then the actual practicing the infinite banking concept. So there’s a difference. So you can buy a life insurance policy and not really be doing infinite banking. You just own a life insurance policy because you like the benefits that the policy provides with guaranteed cash value growth, tax-free status and death benefit. And that’s fine. I’m just saying that’s not actually achieving what Nelson Nash, the creator of the concept tried to achieve, which was essentially that this would be an integral part of your life that would be used often, treated as truly a replacement as much as possible for the banks.

The only way to make that happen is to start redirecting money that we are going to spend anyway, whether that’s from money that we’re spending on taxes or charitable giving or money that we’re spending when it comes time to buy cars, sending our kids to college. I mean, we can go on and on. Buying other assets, buying real estate, lending money to other people, all sorts of things. All of these things should be redirected. You want as much of your money to hit policies first so it can do more than one job at the end of the day.

Holly: And I think we talked about this Nate, too, but what we’re really saying is you have to have a mind shift of, yes, those premiums are deposits, but you can’t treat the policy as a savings account. You really have to look at it as your checking account.

Nate: That’s right. There’s a difference between savings mentality and just using mentality. So to get the best out of infinite banking, a lot of times it happens inside your two ears inside your head of trying to change the way you think about certain things. So number one, Holly, redirect money into policies first, then deploy it. That’s first recommendation. Second one is when it comes time to take policy loans. Whenever you’re ready to use the money, many people they’re not totally sure when and when they shouldn’t use policy loans or what would be the best use of their policy loans. So that’s number two.

I would recommend to get the most out of your infant banking system is to find areas that you can take policy loans out that produce value in and of themselves. So I know that might be a little bit … You got to decipher that, I guess, but.

Holly: It’s very broad, but, Nate, it’s broad for a reason because every person is at a different financial situation or a different financial place. So one area of being able to produce value is to pay off debt. Maybe you don’t have any debt and it’s actually to be able to take that loan and create a profitable asset or an investment. So it’s broad in the sense of you have to say how does this produce value? And it’s not just a loan to be loan.

Nate: Sometimes I think people think there’s some sort of magic in the policy loan system like, “Hey, if I take loans out, I’m magically making my policy grow faster.” That’s a faulty understanding of policy loans to begin with. And so I think this can help center us on or at least help provide focus. You can use it for anything. I mean, we use it for just regular daily items. We use it for going on vacation and weddings. And there’s a time and place to that, but what we’re trying to focus on this point is that if someone was to just ask me, “What’s the best use of policy loans? I mean, what should I be using my policy to do?” Oftentimes the answer is find things to use your policy that produce value in and of themselves.

So as Holly mentioned, that would be things like paying off debt can be of value in and of itself. Now I have a policy on one side and I have less debt on the other. I’ve got two great valuable things right now are happening, but the same thing would happen whether we went out and bought assets or made investments like buying a piece of property that produces cash. Or maybe even lending somebody else money using our policy as the source and getting into the lending business. All of those types of transactions have value in and of themselves.

So what you end up having whenever you do something like that is you have a policy that’s enforced, growing and valuable and you use your policy to do something else that’s valuable. So you’ve got multiple things that are hopefully growing or producing value in your life at the same time. I would even mention maybe a little asterisk here, Holly, and say I also like to use my policy loans to do things that I can end up getting tax deductions for.

So in other words, if I borrow money from a policy and use it to buy an asset or an investment or use it to fund something in my business, not only do I get the benefit of all of that, but now because it was for an investment purpose or business purpose, the interest I pay back to the policy is all deductible. So now I get to add this little extra benefit too.

So sometimes I’ll throw that in, especially if I’m meeting with a business owner and we’re trying to figure out what the best route is to put his policy loan money to work. I would say that, too. Any anywhere inside of your business or inside of the investment world can add this additional benefit of additional tax deductions, which is always nice.

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Holly: Yeah. And it’s not just like when Nate talks about using it for your business, maybe it’s to buy a piece of equipment. Or maybe it is to fund a business trip or a conference you would go to or that your business is being represented in. There’s so many different ways to use it, but you want that to create a valuable, profitable asset or reason why you’re doing it.

Nate, I had a client call and say that they basically wanted to take out a loan just because they wanted to take out a loan, not to use it for anything. And that’s what you don’t want to do. You don’t want to take out a loan and just leave that money’s sitting in the bank doing nothing. It’s not profitable for you. You just moved it from one vehicle to another, but now you’re paying interest on something that’s just sitting in the bank and now you’ve let the bank use the money.

Nate: Just like the first time, the first point we contrasted it with the wrong type. This would be contrasted to just taking out policy loans just because it makes you feel good to have money back in the bank account or something like that. Kind of goes against the whole point. We don’t want money in the bank.

Holly: Which leads us to the third point in all of this is don’t leave your money just sitting in the bank doing nothing.

Nate: And I know this might come just with the package, but if it comes with the package I wish more people would do it. Many of the things we say probably are not even that unfamiliar to most people, but yet it’s still so rare to find clients or people who are just venturing into infinite banking understand that this is the goal. If you’re going to start a bank, why would you leave money in a bank account with somebody else? It’s fundamentally flawed. If you are a bank owner and there’s a bank that every time you put money into it helps you make more money because you are a bank owner there. Why would you take money and leave it in somebody else’s bank that makes somebody else money and not you? It doesn’t make any sense, but yet we find this happening.

I think honestly the problem is we’ve been conditioned to believe that there is some sort of sense of security and success if I have money in the bank. We’ve been conditioned to think this bank account is my lifeblood and I like to have big bank account balances. And I don’t like when money leaves my bank account. We have this mentality that has to shift, by the way, when you really want to dive into infinite banking and get the most and best results out of infinite banking, you got to shift that to where money in the bank actually means to you cash value in my policies. That’s where it has to start to me or at least if you want to get the best results, that’s where you have to end up.

Holly: It’s the simplicity of think of it this way. If it’s the bank of Holly, I don’t want to take my money and put it in the bank of Nate.

Nate: I wouldn’t mind it.

Holly: You wouldn’t mind it at all. You’re going to get the benefit and make more money using my money. And that’s really what banks are doing, traditional banks. When you take the money out of your policy and you just put it in a traditional bank, they are actually making way more money and you don’t get anything. You get nothing in return other than maybe you have to pay bank fees or you’re paying interest back to yourself, but you could have left that in the policy and avoided it all together.

Nate: Exactly right. So the first point was redirect money into the policy before it gets spent. The next one was create value with policy on. The last one is simply there’s no reason to leave money sitting in banks. So I guess my suggestion on this side as well would be to focus on … And so we make recommendations here, too, Holly, as far as I would recommend you still need a bank account unfortunately. The vast majority of the time, you’re going to still need to live life with a bank account of some sort. But that bank account should never really exceed more than let’s say two months of expenses.

Every other dollar above that at least needs to be moved out of the bank into policies and then have the policies be your main reservoir and source for the various opportunities that come your way. Whether it’s something as simple as buying a car or paying taxes or charitable giving, or whether it’s making real estate deals or expanding your business or purchasing Bitcoin or all sorts of things that you can do. Because every dollar in the bank is money that could be working for you that’s actually working for somebody else instead.

There’s no reason to do it once your eyes have been opened up to the Infinite Banking Concept. Now we know how to open a bank and know how to profit ourselves so we really should have as much money as possible in that environment.

Holly: And the reality is that if you’re not sure ask, ask Nate, ask myself, “Should I be doing this? Why am I taking this loan out?” One of the biggest questions I ask my clients is if when they want to take a loan out, “Do you know what it’s for and what you’re using it for?” Because if they don’t know why they’re taking the loan out other than, “I thought I should take a loan out,” then it’s not a good idea.

Nate: And actually it brings it up concerns for me sometimes, Holly. Like in other words, the clients that I get concerned about are the ones that ask for policy loans and they don’t tell me what’s going on. They don’t really want our advice they’re not using. So we offer a free GPS system, which is a way of planning future policy transactions, as well as kind of keeping track of prior policy transactions. We just offer free to everybody.

And you do find that the clients that get into running into some issues or just you never really know if they’re doing good or doing bad are the ones that are to taking policy loans and not including our counsel on any of it. Sometimes I will worry like, “Hey, I don’t want them making some weird, foolish decisions with their system that don’t help them achieve their goals.” So, of course, we’re here to help with that.

Holly: Yeah. And it’s as simple as, “Oh, I need to take a loan out for this.” All right, well, let’s say it’s taxes. That’s very easy to help a client figure out here’s what you’re taking out. Here’s a repayment or a system to put into place to pay that back. I think number two goes along with number three, Nate, not to beat a dead horse.

But if you can say, “Yes, it’s producing value” and it’s creating either profitable asset, paying off debt, whatever that may be then there’s not a problem with leaving money in the bank because your money is being utilized within your policy. And you’re not just storing money in a traditional bank. So if you don’t know why you’re taking it out to put it in your bank account, don’t ever take the loan out to begin with.

Nate: Exactly. So I guess to recap, Holly, we’ll wrap up. Three things that can help you get the best results from infinite banking, number one being redirect money that you’re planning on using for certain things. But see if you can find a way, be creative with it to find a way to get it into policies first before we use it that way your money can do multiple jobs at the same time.

Secondly, we also we’ll discuss when you do take loans from the policy, always try as a priority to find opportunities that produce value in and of themselves. That’s not to say, Holly, that there’s no reason to use it for other things. Absolutely not. It’s a very broad term, but it would be my recommendation is, “Hey, if I can have a policy producing value, leverage that policy to go buy something else that’s producing value, I’m in great shape.”

And then lastly, if you want to get the best results for infinite banking, you’ve got to stop leaving money sitting around in banks. At the very most you should have about two months of your expenses for your personal or your business or both in banks and the rest should be in policies. There’s no reason to help make banks get rich off your money when you instead could be getting rich off it. You know the truth now so it’s just time to put it in an action. Any last words, Holly, before we close off?

Holly: No, you’ve you summarized it perfectly.

Nate: Perfect. Okay, guys, well, thanks for joining us. It has been Dollars and Nonsense. If you follow the herd, you will get slaughtered.

Holly: For free transcripts and resources, please visit livingwealth.com/e143.

Announcer: Listeners, one last thing before you go start your journey towards financial security and wealth today. Visit livingwealth.com/beatinflation. You’ll gain instant free access to the Beginner’s Course Ray, Nate and Holly made just for you. Again, that’s livingwealth.com/beatinflation.