E147: How to Avoid Being Burned by Conventional Wealth Building Tools

In this episode, we discussed the biggest pitfalls you will experience following the herd. Specifically, we deep dive into what happens when you only use conventional wealth-building tools offered by Wall Street and the government.

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Topics Discussed:

  • The recent market meltdown and what comes next
  • Problems that exist in the convention wealth products
  • What happens when investments meant for your kid’s college tuition or retirement go up in smoke
  • How 529 plans get sucked into the vortex and the implications
  • The biggest problem you face with saving money in volatile places you thought were safe
  • The role timing plays in the intersection of what you’re planning for and when you need money
  • How IBC insulates investors from Wallstreet downturns

Episode Resources:

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Podcast transcript for episode 147: Avoid Being Burned Conventional Wealth

Nate: In this episode, we discussed the biggest pitfalls that you will experience when you follow the herd by using only conventional wealth building tools offered by Wall Street and the government. We also discuss how the infinite banking concept is uniquely positioned to shelter you from those pitfalls. 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. Well, we’ve got a doozy of an episode today that we’re going to try to get across as best we can. But Holly, I’ll go ahead and give the background for what we’ll talk about today. We had read an article in the Wall Street Journal that was describing… This was at the end of May, last couple weeks of May, whenever they wrote this one. The market was melting down and we’re still kind of dealing with that. But the title was, The Market Is Melting Down and People are Feeling It. “My stomach is churning all day,” says the article title. We thought it was very interesting that in this article written by the Wall Street Journal, obviously a very conventional financial planning publication, many of the issues and stories it was telling of people it was interviewing were the exact same things we’ve been talking about for a very long time.

Essentially, we were the only ones mentioning that if you follow the herd and use conventional financial planning strategies, you will automatically, at some point, run into problems. Now, that doesn’t exactly mean in and of itself that doing conventional financial planning is just a horrible thing because it causes problems. I’m not necessarily here to say that. I’m just saying, we all should be aware of the problems that it causes and prepare accordingly, or just be willing to accept those problems. Both of those options are fine. You ought to prepare for them if you don’t like them, or you ought to accept them as the risk of doing business in the conventional Wall Street government-sponsored retirement program, mutual fund world of financial planning. If you build wealth with that being your primary focus, there will automatically be problems that you will run into.

Those problems are magnified during market turmoil. Essentially, we’re going to go into a couple of major points that they make in this article that we’ve essentially been talking about on this podcast for a long time. This is not just because we’ve been drinking the IBC infinite banking Kool-Aid and are very biased. These are the problems. You can accept them. You can plan for them, or you can avoid them completely by just building wealth differently. Most things have some sort of problems. You need to understand what they are, identify them, and see if that’s what you want as opposed to other sets of problems. Does that make sense, Holly? Are we on the right track?

Holly: It does make sense, and hopefully as we go, like what Nate and I don’t want to do is just read the article. We want to show how infinite banking can help solve a lot of those questions you might not have answers to, or you don’t have hope for, or you can’t figure out, “What do I do? Where do I put my money?”

Nate: Exactly, right. The article does a great job of pinpointing some of the problems that we’ve been describing. The reason why we took notice of it is because it’s just so rare for a publication like the Wall Street Journal or the like, to talk about some of the problems of following the herd, of being a part of the Wall Street government conglomerate of financial planning, and most of the time, these surface in times of market turmoil. That’s what we wanted to pinpoint. Those of you who are already practicing infinite banking, you already, I’m sure, feel insulated from a lot of this. We’ll also talk about that. How the infinite banking concept is uniquely positioned in the world of financial planning to shelter you from some of these pitfalls, uniquely, where there’s almost nothing else that will do it, or honestly, there’s nothing else that I know of that does a very good job.

It’s uniquely positioned to shelter you from this. Those of you who are already doing infinite banking will read some of these things that people are feeling, that money managers are talking about. And you’re like, “Well, I’m really thankful I’m not in that same boat.” Because Holly and I would say, “We’re very thankful to not be in that boat at all.” Those of you who are on the fence about it, this does the job for us. I’m describing, this is exactly what we’ve been saying. These are part of the problems of conventional planning. This is why we started this podcast to begin with. The first point we want to make or the first discussion we want to talk about is, in the article, it talks about very early on, “Families are watching the investments, they meant for down payments or college tuition or retirement, shrink day after day.”

This is a point that we’ve made many times, Holly, in this podcast that we’ve been on a bear market practically. We had a COVID blip, where the market like shot straight down and then shot straight back up. But aside from that, Holly, since we started the podcast, we’ve really been in one of the best bull markets in history and we’ve been the only one saying a few of these things. But now everyone’s going to be talking about it because it’s possible the bull market has ended and it’s possible there could be some serious issues. But essentially, Holly, the idea here is, families are watching investments that they meant for certain things like down payments on homes, college tuition for their children, shrink day after day. This is what we’ve been trying to say, that anytime you follow the herd and do the conventional retirement program, government-sponsored concepts, it will automatically cause problems.

One of the problems is that anytime you’re using volatile assets to save for timely events, you are accepting a problem. The problem is, you do not know how much money is going to be there when you are actually needing to pay for the event. That’s the problem. We’ve been saying it for forever. I mean, the article is saying that for us, and anytime you’re saving money using the Wall Street mutual fund based retirement program style, 529 college saving plans, style, assets, you are accepting a problem that, “Hey, if I build this up, it might go well for me, because I could send my kid to school using a 529 plan with mutual funds in it, and we could be sending them to school during a bull market and it’s going to look great.” The problem we’re accepting is, “I could be sending my children to school in a bear market where I actually have less money than what I put in significantly and I’m having to sell out of those assets at a steep discount or steep loss to send them to school.”

This is a problem, Holly, we’ve been talking about a long time and now it’s not just us. Now, we have the Wall Street conglomerate mentioning to the world, “This is kind of the problem of doing it our way,” that if you were saving money for a timely event like retirement or sending your kid to school, you have accepted this problem where it may actually not work out for you.

Holly: Well, and the reality is, you might not be able to retire. Your kid might be set on going to this one school and you can’t send them. I mean, I have clients who are in that situation, who they didn’t start the program or they haven’t utilized it or they had their money in what they thought was something safe that when their kid went to school and they’ve had to tell their kid, “These are the only three schools you can apply to, and this is all we can afford. And if you don’t get us, we can’t send you there. You can’t go to where you wanted to go.” I think, as a parent, that’s a hard thing to say or do versus, we have clients that have been using this concept, that stepped out of the herd mentality, and they can say to their kid, “Where do you want to go to school? You can pick. We’ve got this handled.”

Nate: Article gets very emotional in different things. The truth is, they’re interviewing these people and people are flooded with emotion because they’re very concerned. I think what you’re bringing up too, is that for most people, anytime you’re building wealth in a volatile style of environment, I’m not trying to say to the world that I’m so biased that I would never put money in volatile investment. That’s actually not what I’m saying. I’m just saying, we have to understand the problems when you go into them. The biggest problem whenever you’re saving money in volatile places is that you never have any sort of certainty what’s going to be there when you actually need it. This is just the truth. This is just what it is. You either accept that or you don’t based on your own philosophy on how money should grow and so forth.

Holly: And it can change. Like, I think that, that’s the other thing is, it can change in 24 hours. It can change in a week. That reality is, you have to be okay accepting the fact that you don’t know how much is going to be there when you actually need it.

Nate: That is a problem that is presented with this. There is no certainty in it. You either accept that or you don’t, but you, at least, should understand that the market does not always go up. It comes down, it goes back up, it comes down, it comes back up. Depending on when you need the money, it actually could cause a lot of concerns. We’ve had many of clients with the cryptocurrency bust this year, with the market drop. Of course, we’ve had clients calling and say, “Man, I was way too over risked. I mean, I really pushed way too much money into these things and I’ve lost a lot and it’s caused a lot of emotional turmoil. I thought I had money. It felt really good and I had a great high and I had a really big low. I don’t really want to experience the lows.”

Essentially, point number one is anytime you’re saving money for a timely event, which would be things like sending kids to school or down payment on homes or even retirement, anytime you’re saving money up in volatile ways, which is the Wall Street government mutual fund conglomerate. You have to know that you’re accepting a problem which is, “If I’m in a bear market when I need the money, is that going to ruin the entire strategy?” Oftentimes, it does. People just have to work longer when they get closer to retirement or they have to go back to work. This is not just us trying to play on emotions. I’m just saying, this is a reality when you’re building wealth in that way. It’s possible it will work and it’s possible it will not work, but there’s no certainty so you have to accept the emotional turmoil.

You have to accept the lack of certainty and say, “Okay, I’m willing to accept those for the possibility of great mutual fund returns.” Go for it. I’m just saying that’s not for everybody, obviously. Does that make sense, Holly? I guess we can move up maybe to point number two. To investors, it can feel there is no safe place. While the vast majority of individual investors are holding steady, that is in part because customary alternatives don’t offer much relief. It doesn’t get much more conventional planning than this, Holly. Anytime you’re bringing up customary alternatives, we all know we’re kind of settled in the herd and they’re exactly right. Just to investors, it can feel that there’s no safe place. We, obviously, in this podcast, present the infinite banking concept using dividend-paying whole life policies, high cash value policies as an incredibly safe place that offers very competitive growth in this world of safe money, that’s all liquid all the time.

There is a safe place. There is actually a safe alternative, but if you are stuck in the herd, you really don’t know about it. If you’re stuck in the Wall Street conglomerate, you’re essentially stuck with stocks and bonds and commodities and you’re trying to figure out where to go. They’re all fluctuating up and down. The only safe place to them is cash, but it’s a horrible place to go. So they’re just saying, “Hey, we have to be stuck and ride the ups and downs of the market because there’s just no alternative.” There is one, it’s called the Infinite Banking Concept using high cash value dividend-paying whole life insurance policies. That is a safe place for money to go.

Holly: Well, and Nate, when we say safe place, it is a safe place. I mean, it’s not based on the volatility that’s going on around you. This is your own privatized bank. It’s your thing you get to do. It’s the only product in the world that we know of that works this way, and banks are putting their money in this safe place. They’re not throwing it out into the volatility of the marketplace all the time. If banks are putting their money somewhere that they believe it’s going to be safe, maybe we should put it in that same place they’re putting it. I think that we don’t understand the fact that you can actually put your money somewhere and feel safer or better than if I just left it in the bank and I can’t even access it.

Announcer: Is the money in your bank account losing value instead of growing? Are inflation and taxes going to get better or worse? Conventional banking makes the bank rich using your money and pays you little to nothing in return. We believe in challenging the status quo. After all, most of those conventional tools only seem to make someone else rich. Let us show you how to beat the banks and inflation. Visit livingwealth.com/beatinflation. You’ll receive instant access to what we call The Beginner’s Course. This in-depth and easy-to-follow course teaches people how to create and profit from infinite banking. You can become debt free, in control, and achieve financial security and significance. Stop letting the banks in Wall Street dictate your financial future. Go to livingwealth.com/beatinflation today, to instantly receive free, no obligation access to this priceless course on infinite banking. Again, that’s livingwealth.com/beatinflation. Now, back to Nate and Holly.

Nate: Now is kind of a crappy time to try to go move into a policy. You just lost a whole bunch of money. You kind of want to sell out, but then you got to go start a brand new policy and do some different things. This points to another topic we bring up, which is, we do love to fund investments from policy loans. In other words, I prefer to pay premiums with my cash and then leverage the money that’s built up in cash value to make an investment, as opposed to just keeping money out of policies on the side and use those to make investments. This has been another point we’ve tried to make before. Whenever you move money into policies first and build up capital inside of a policy, and then you can use that capital to make an investment. It’s a really cool concept because you always have an alternative.

Essentially, what they’re trying to deal with is they’re saying, “Hey, we’ve been in stocks and bonds. Both of them are getting hit at the same time and decreasing in value. And so, I can’t move out of bonds to stocks. I can’t move out of stocks to bonds. They’re both being dropped. I feel like I don’t have an alternative. I’d like to sell out of the market and buy some time and come back in a little bit and avoid all this volatility, but I don’t have any place to go.” Here’s what I’m trying to say, anytime you use a policy as your source, you’re paying large premiums and you’re leveraging the cash values to fund investments. You automatically are building for yourself a guaranteed automatic alternative. Because at any given point in time, you can sell out of the investment that you’re in and roll that money back into your policy as a large loan repayment, without even having to start a brand new policy from scratch in that moment.

The place to hold that money is always there. This is why it’s very common that I enjoy doing it this way. That anytime I want, if I built it up that way, paying premiums with cash, leveraging the cash value to make an investment, and then selling out of the investment to plug back the policy loan balance in the policy, I’ve essentially created a cycle where any given moment in time, if I don’t want to be in the volatile investment, I don’t have to be. And I have a great place to shelter it inside the ball and Nelson Nash actually talks about this, Holly, when he talks about building up a place for windfalls.

We don’t really have time to build the whole podcast on it. I’m just saying that it’s actually a very cool strategy. We’ve talked about it before. It’s kind of hard to describe it until an article comes across like the Wall Street Journal. Now, it’s not us saying it. It’s not just Nate and Holly. It’s the Wall Street Journal saying, “Hey, we all wish that we could sell out of this and put it somewhere else that’s safe and profitable and growing.” That exists, if you prepare for it correctly.

Holly: The beauty of owning your own policy in the infinite banking concept is exactly what you said. If you’re in a volatile situation, you can get out, there’s a place to put your money. You don’t have to find somewhere else to put it where it’s more volatile or less volatile. You can just put it back into, what we would call, a safe place, until you want to go and use it again.

Nate: That’s exactly right. The idea here is, there is a safe place. It exists. Maybe people just don’t know about it, but it’s certainly there. It is called dividend-paying whole life insurance policies. It’s a safe place for money and it’s really cool to use those policies to leverage them, to make investments in riskier things, knowing that we can sell out of the riskier things and move the money back into policies anytime we want and create this room to move around, depending on where we want the money. For those of you, infinite bankers, you’re already spoiled. You have this luxury. Other people in the financial world, they do not.

Holly: They don’t.

Nate: Another individual they interviewed for the article, he’s about to retire, he’s in his mid sixties. He brings up this point that he lived through the stagflation of the 1970s, where you have a very stagnant market. In other words, markets chopping up and down, but not really going anywhere while you also have heavy inflation. The market’s stagnant and you have inflation. It’s a horrible place to retire in, the stagflation of the 1970s. Your dollars are losing purchasing power and the money that you actually have is just not growing very well. It may go up and down, but it’s just not moving in the right direction. He says, he’s hoping that we’re not in the repeat of the stagflation of the 1970s, which he already lived through. And he says, “When you’re banking on that money saved over your lifetime to carry you through and it starts to go away, you feel helpless.”

Retirees always get hurt the worst for a couple reasons. Number one, emotionally. That one guy brought up, he feels helpless because he’s worried that if things don’t go according to plan, what he was hoping for in retirement is not going to come true. Secondly, the other guy’s saying, “Well, I’m already in it and I’ve lost a lot of money and I don’t really have a lot of time left to wait for it to come back and I’m counting on it.” These are things we’re trying to say. We’re not trying to scare anybody or use some sort of emotional tactic to get someone to talk about infinite banking with us. But we’re just bringing up the reality of the problems that will surface in the herd strategies. You have to accept them and be cool with it and go forward with it if you want, or you have to prepare for those problems.

That’s why we just believe that nobody should build their entire wealth building goals by the Wall Street mutual fund retirement program style conglomerate because these problems become too much to bear for most people. It just doesn’t work out that well. You ought to transition a big chunk of it into a secure stable place and the only place we know of is these policies, high cash value dividend-paying whole life policies are just the greatest insulator for the problems that are guaranteed to come at some point for the Wall Street conglomerate, if that makes sense.

Holly: Most people that are retirees, the fear of having to go back to work. Your money’s just disappearing on you and you have no kind of hope of, “I either have to go back to work,” or you have to find a different place to put that money. And the reality is, like all these retirees in the article that are saying, if you take all the cash that’s just sitting in a bank somewhere or in your house, or you’ve got to find somewhere else to put it. And you don’t have to be in that volatile environment with your stomach churning every day. You actually can have hope to put it in something that makes sense for you, that you have access to, but you have total control over. I think that’s one of the things we haven’t totally hit on. But with the infinite banking concept, you have complete control over your money.

You are a shareholder. You’re not losing control or giving that control over to somebody else to make those decisions for you as to, “What investment should it go in now? Where is my 401(k) money being put?” You don’t have those questions and somebody else isn’t controlling your money. Because the biggest threat to your money is when you give control of it over to somebody else and let them make the decisions and it causes you to either not know what you’re doing or not know what you have. You really can’t know what you have at any given time if it’s an up and down market every single day.

Nate: Why were they not aware that this could possibly be a thing until now? The reason they’re feeling this way and the reason they’re dealing with these problems is because they did not prepare properly. A lot of people will see the nature of a policy and how it’s guaranteed to grow and how we can use it to leverage to do all these other things. They see it as like the insurance for when things don’t go well. In other words, “Hey, I want to make sure I have money that can never go backwards. That way, when other things are going backwards, I still have a source of money that is growing.” I really think it was a preparation problem because maybe they just didn’t foresee how it would really impact, in a bear market, if they get closer to these timely events. Anytime you have a timely event, retirement, education, all sorts of those things.

This is why people say, “Don’t save for a car in the market.” It’s common sense to not have all of someone’s money in the market because everyone knows that if you’re actually going to need the money, you can’t afford to have it be a bear market when you need it. But people don’t think about that in retirement. I would say maybe our last point here, Holly, before we wrap up too, is this all points to why, as a philosophy, we disagree with the idea of retirement to begin with. It’s not exactly us saying, “You shouldn’t prepare or you shouldn’t build wealth,” but I’ve always said that the goal should be build wealth. “Wealthy people are the ones who can truly afford to retire,” I guess I would say. That’s the reality. The goal should be to build wealth, not to retire someday.

The idea of retirement probably should go by the wayside. Essentially, what happens is people will work their whole life to earn a paycheck or to earn income, save as much of it as they possibly can so that one day they could finally stop working, do what they want. So they’ve wasted all those working years, that’s essentially what they’re saying. “I’ve wasted all my working years by doing things I don’t really like to do, by having a career I don’t really love. And I just can’t wait to get out.” And during their period of time of working, they’re kind of like, “Well, what if I don’t save enough? What if I don’t actually have enough?” So they’re kind of concerned, but they’re hoping it’ll go by the wayside. And then you finally get to the point of retirement and you have the same fears.

The whole time you’re living in retirement you’re like, “What’s going to happen to the market? What’s going to happen to this? Am I actually going to have enough? Am I going to outlive my money and have to move back in with my kids?” I’m just simply saying, “Hey, we could get rid of most of these if we found joy in working and we brought back purpose.” You don’t find the idea of retirement in the Bible. You don’t find it in scripture. I don’t know of any leader of the church or of the Israeli nations who retired one day and said, “I don’t want to do this anymore.” I just don’t believe that it’s a good idea.

I don’t think it was an idea that we learned from following the Lord. I think it’s an idea that we created, that’s a relatively self-centered idea. I don’t mean to judge you if that’s your ultimate plan. I’m just saying that a lot of these issues that these people are bringing up in this article, we can avoid by practicing IBC as well, but we could also completely eradicate them if we would just change our mentality on the reason that we’re building wealth to begin with. I’ll leave that little nugget at the end.

Holly: Well said, Nate. Well said. I think the change of mentality, Nate, from a retirement or saving for the future to my goal and I’m sure probably your goal is, “I want to pass on the wealth that’s been created to my kids and their kids and future generations.” It’s not, “When do I get to be done with this?” It’s, what kind of blessing and education in the sense of how they know how money works and controlling it and not being dependent on the herd mentality. That, that’s what I pass to them as well as the wealth of what’s been built using IBC and planning, not just for the future, but planning to give something back. I think that’s what we’ve missed out in society as well as the giving back. We go to work just to have something in the future, instead of the purpose that you said. I guess I’m going to challenge people, what is your purpose? If you’re not enjoying what you’re doing, you should enjoy what you’re doing every single day and how you’re impacting or changing people’s lives.

Nate: That’s absolutely true. All right. Well, I think we’ve been on long enough. It’s been fun. We look forward to seeing you guys next 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/e147.

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.