E90: Ray Reveals How he Turned the Tables on a Bad Investment

In this episode, Nate and Holly bring back the founder of Living Wealth, Ray Poteet. He shares how the process of infinite banking has allowed him to recoup money that he lost from a bad investment.

Turning Bad Investments Around:

  • Why Ray is back in the market for the first time in nearly two decades
  • The shape of things to come for the markets and society
  • What’s happening to 401Ks and Roth IRAs
  • Using IB for investments
  • Building layers of insulation and systems that pay no matter what

Episode Resources:

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Podcast transcript for episode 90: How Reverse Bad Investment

Nate: In this episode, we bring back the founder of Living Wealth, Ray Poteet, to share how the process of infinite banking has allowed him to recoup money that he lost from an investment that went south and how he is using that money today. 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: Hi and welcome back to the episode today. We do have a special guest with us, Ray Poteet, back by popular demand. He’s the founder of Living Wealth. He is Holly and my mentor. We owe a lot to him. We’re always thankful when he takes the time out to come share. Today he’s got something special as well of a real life example of what he has done and how infinite banking has helped him. Welcome back to the show, Ray.

Ray Poteet: Thank you. I’m looking forward to it.

Nate: In this time with the coronavirus kind of wreaking havoc recently and everyone panicked and the market’s going up and down like a seesaw, I had a lot of people worried. I think that kind of really almost stirred your spirit up to really get, I don’t know, revitalized or re-energized about infinite banking.

It sounds like it from you just speaking with me, it reminded you of times where you had dealt with what the world is feeling today and how you’re so thankful to not have having to be dealing with that. A couple incidents came to your mind of how this has kind of changed your viewpoint of investing. Tell us what’s been going through your head lately.

Ray Poteet: Today is the first day since 2003 I’ve decided to jump back into the market. I have not been in the market since 2003. I have a total peace about doing it, which before I was just hoping like mad that the choices that I made were correct and that I would be profitable because I had experienced times when there was great losses rather than profits.

Holly: What was your reasoning in deciding today to get back into the market?

Ray Poteet: Two reasons primarily, I recently reheard a interview they had with John Templeton. I think it was somewhere around 2005 or ’06 or ’07, before his death. They asked him what was the best investment he had ever made? He said, “There’s been a lot over the last,” and I think he was actually 60 years into the investment arena, which is a long time. He said he invested in airplane stocks, airline stocks, excuse me, after the 9/11 episode.

He said since the beginning of time, business has always been done face-to-face across the table and it will happen again. I believe even though we’re in this period of time when we’re not supposed to be face-to-face or near people, I believe that business will happen again in the manner it has always happened. It encouraged me to jump in at this time with money.

Nate: Yeah, sure, exactly right. I think we talked about infinite banking and how it can secure yourself from getting off of this volatility, having access to money and using it at any given time. But we also encourage people to not just leave money in policies, but to keep it in motion and keep it working, which Ray, you’ve probably done better than anybody else. We’ve talked about that on the podcast before for those who haven’t listened to him of what you’ve done, how you’ve built almost a lending empire finance company really that you fund with your policies. You’re just constant keeping money moving and making other investments.

I know you were sharing with Holly and me a time when you made an investment and it didn’t turn out that well, but a lot of people are stuck here just seeing mutual funds and their 401Ks and their IRAs and balances just getting hacked. There’s not really much recourse. There’s no way they can can get it back really without just waiting the market out or something. But whenever you use a policy it’s a little different. I thought you could share the story of what actually happened. How you made a bad mistake, how you lost it? But since you use the policies, what’s occurred since that happened? If you wouldn’t mind just kind of given us insight onto some testimony here of what’s happened in your own life.

Ray Poteet: Sure. I was heavily in the market in the 80s and 90s, even the early 2000. I believed just so much so in a stock. It was Lucent Technology, which had broken off from Bell Telephone, which was Bell Labs and they had come up with inventions after inventions. I bought into it heavily, heavily, heavily. I mean, other than a couple of other stocks, it was my primary holding personally. I learned and I realized I could buy more Lucent Technology if I put the stock I bought up as collateral and the brokerage firm would loan me money using the stock as collateral, which I did. I bought more of it.

What happened was the market turned south. It didn’t turn slowly. It didn’t turn slow enough so that I was wise enough to get out. It turned south and headed south and I kept margining my account. Not only did I lose the money I borrowed, I lost the stock. I mean, not only did I borrow money, I lost it. It was like the bottom of the pit. You talk about having sleepless nights and questioning your understanding. It had taken me 20 years to accumulate that money. It took me less than 60 days to lose it. You don’t replace 20 years of earnings very quickly. I wondered, “How could I be so foolish?” Or, “Why would I keep doing it,” and a lot of those questions you ask yourself.

I stayed in the market, was in the market. As I said, I have not been in the market since 2003, but then in 2011, I sort of repeated myself. But this time, I got into an investment with an individual client who was just sold on it. I was sold on him. I put a $100,000 dollars into this investment because it was just a sure thing rate of return. We were chasing rates at the time, but I borrowed $100,000 from my life insurance policy, policies. It wasn’t just one policy at that time, it was three policies, but let’s assume it was one.

We got one investment check and then the investment went south. It didn’t go south. It went belly up. It was a fraud. The US government caught this individual and he’s actually now in prison, owes the government $1 billion. That’s a lot more than he owes me, but I’m never going to see that. But I had a lot more peace when this investment went south because my actual policies continued to grow. They didn’t take a hit like I had before. I knew eventually that $100,000 would totally be earned back because the money never left the policy. It was continuing to earn.

Actually this year, the policy had grown back to over $100,000. I had my money back. Where everybody else but me and this individual that had encouraged me to get into it, who also used his policies, I didn’t have to go earn that money again, pay taxes on it to put it into an investment. My policy just continued to grow and finally to the $100,000 dollars so I was made whole.

Based upon that, I’ve now taken that amount of money and I’m back into market because I’ve seen the market go down. I’ve seen it go up. I believe that airlines are going to fly again and people are going to be on them and we’re going to do fine. They’re not flying today or it’s on a greatly reduced schedule and they’re not profitable because nobody’s flying him because they can’t get out. But I do believe that we will come out of this. I believe that we will travel again. I will go to Hawaii and other places again on an airplane and that it’s a matter of time.

With my policy, that’s on my side because every day my cash value grows. It grew last night. The market’s up today, it didn’t matter. The market’s been way down and it’s grown every day and my death benefit has grown. The difference between the 80s and 90s when I lost a lot of money, I lost a lot of sleep and I questioned who I was and what I knew, I haven’t done that this time. It’s just been a huge, huge reward factor from an emotional standpoint. Let’s just put it that way.

Financially, if I made the wrong decision again, my policies have covered the wrong decision of putting money into the market because they’re continuing to go up. One or two things will occur, one of three things. I’ll earn the money because the market went back up and I will sell. I’ve already predetermined when I will sell. I’ll put that money back in my policies. Or let’s say the market goes south and my policies will continue to grow and we’ll make up that loss. Or I’m going to die and the whole losses comes to my family in the form of death benefits.

I don’t look at it at a loss financially in any way, shape or form as I did previously because I lost the money and I lost the borrowed money and I never will get it back because the way I did it was 20 years of earnings gone in 60 days.

Nate: Yeah, I think it’s huge. That’s what we’ve been trying to convey to everyone is that the policy itself, just as you’re saying, right, that is not the investment. It’s a tool. It can supplement all the other things that we’re doing, including making investments. It’s really powerful as we’ve always said. It’s always better to have two for the price of one. That’s kind of like what we’re doing with a policy.

When we put money into a policy, that money contractually guaranteed to grow every day, no matter if you take a loan out against it or not, it’s going to keep on growing. If you can leverage that appreciating money to go buy something else that hopefully appreciates, you can have two things growing side-by- side and end up making more money. But even as Ray said, even if the investment that you make with your policy loan goes south, at least you’re not out everything. You still have the policy. You still have it growing. You still have its death benefit. Absolutely, just a really good case study for what we’re trying to teach people how to do and what to do.

Ray Poteet: Wait, I’d like to say why you were talking there, Nate. I thought, “Man, I know what I’m going to do. I’m going to have Paul calculate how long it’s going to take this time to recover the money.” It was 1,109 to 1,120 last time. It took nine years. I know because there’s more money in there today. It won’t be nearly nine years if I made the wrong decision again. I’m happy the time period is shortened because my life period is shortened. I’m still going to be okay. It’s kind of a different thought pattern today than it ever has been. I think that I’ve just been through five down really crazy periods in the market, same with housing. Things are going to turn around it. Why? Because history has a way of repeating itself. It just does.

I talked to one of our clients two days ago. He was worried about all the money that the government is pumping into the economy. He said, “What do you think about what it’s going to do to the policies?” I said, “I’m going to use good dollars. It’s not going to affect it at all.” I mean, the values that they said would be there will be there. If we use it properly, we will help increase the dividends. But I said, “The really amazing thing is 2008, 2009 some people have forgotten that time period.” I probably have, but we did find from 2008 and 2009 to current, we’ve done okay financially, emotionally, spiritually.

We probably could have done a lot better job being closer to the Lord than we were. Probably got complacent with things that I shouldn’t have. My faith and my source is not the market, but it’s this tool that the Lord showed us how to use effectively to control the banking situation. We need banking, but it’s who’s going to be in control. I pray and hope that as we grow and teach others that they will take control of that banking situation in their family.

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Now back to Nate and Holly.

Holly: What is the policy bring you in regards to the stress of having to invest in the market or wanting to invest in the market? Do you have more or less anxiety because you know you have a plan in place that actually is going to work for you?

Ray Poteet: Well, I would say since I’ve learned how to use the policy that I guess we would call it stress. I’m not sure what exactly it is, but I don’t have any problem going to sleep at night and worrying about what the market’s going to do or not do because of the continued increasing compounding on a daily basis actually with my policy. I thought about this after I heard an individual in a webinar that I had trained. I said, “He’s absolutely correct. You can call the life insurance company today, ask what your cash value is, get a number, call them next week, ask what the number is and that number will be higher than the number you got today because it grew on a daily basis and they credit it to your account on a daily basis.”

I was going, “That’s amazing.” The market could have been down as it has been 30% from its high and my cash values went up. The peace that it brings is you can’t put it into a financial term, but in an emotional thing without ever having thought about it, it’s brought into my life that we will function normally. We’re not going to have to cut back on things unless something else drastically happens, but we’re going to be prudent. We’re going to be wise. We’re in a position to help others and spread the gospel of IBC as well as the gospel of Jesus Christ as effectively as we were previously. This did not affect either one of those.

Nate: Amen to that. What I find interesting too, Ray, is that back whenever you were deep into the market, whether that’s the 80s and 90s or anywhere in between, you were also heavily in whole life insurance. You’d been a believer in it to some degree for a long time. But to stress things that we’re talking about, it’s one thing to own the tool, it’s the other thing to actually know what you’re doing with it. It really wasn’t until 2000, 2001, when you read Nelson Nash’s book Becoming Your Own Banker that there’s an aha moment of, “I own this thing, but I never used it.” Because you could have been investing in the market that way for 20 years. It would have been a totally different story.

Ray Poteet: Yes, it would have been.

Nate: Yeah, it’s crucial to know what you’re doing with the policies, to know what you have access to. There’s so many people out there who own life insurance who are not using it. It’s because they don’t know how or they don’t know that they can or that they should. Infinite banking is what we call the truth. It shines a light on what you really should be doing with this tool.

Ray Poteet: I think that the industry made a mistake. It is life insurance, it’s for life, but we have presented it as a death benefit and not a life benefit. Each day that the Lord gives me here on earth, I’m seeing that more and more and more. It’s for living. It’s not about dying. You’re absolutely correct. I owned a tool. I didn’t know how to use it properly. It’s sort of like I’ve heard Nelson say, “You can have an operator or you can have a driver on a piece of equipment. If you have a driver, he’ll tear your equipment up. If you have an operator, he’ll make you money because he knows how to use that tool.” I think that’s true of what I’m learning. I’m trying to become an operator of my life insurance policies where previously, yes, I owned it and I probably tore them up.

Because you know the story, I had a policy on my wife. I had taken a lot of loans on it. I let it lapse. Got a 1099 on it because I didn’t know how good the tool was. I mean, today if that company would allow me to go back and pay all the back premiums and give me back the policy, I’d have that in our portfolio tomorrow. I don’t care what it was because I know I’m going to be dollars ahead, okay. The whole thing is when I’m going to move dollars, am I moving them into my accounts or out of my accounts? Until I learned banking, I was just a hamster on a wheel running as fast as I could throwing the money off into everybody’s else’s accounts hoping that my net worth was growing at a substantial rate.

Nate: Yeah, that’s true. I like what you said about it too because you let it lapse most likely just due to a misunderstanding. You didn’t quite see the picture of why you would keep it. As you were I think kind of alluding to there, the reason most people would stop funding a policy and let it lapse is because they see the premium as a payment or an obligation.

I’m guessing you were just thinking, “Nah, I don’t need that in my life right now. Things are tight,” or whatever it was. “It’s not worth me keeping. I’ll just close it down and let it lapse.” Instead of seeing the premiums the way you do today, which is I’m sure in a lot different vein as we always talk about it as depositing money into your bank as opposed to a payment.

Ray Poteet: Right. It was quite honestly, I hated the interest payment. Today I realize that if I pay that interest, that just increases my availability of a loan dollar-to-dollar. There’s no hassle or hardship with interest except when you can’t pay it. If I can’t pay it today, it accrues, but it accrues not against me, against my death benefit. Wow, I mean, I had my CLU and my CHFC, which was supposed to say, “I know what I’m doing.” I didn’t understand the product the way I do today and use it effectively today.

We’re on a different level today than we were in the 80s and 90s. You’re correct. I was spending by 80’s and 90’s standard big money on life insurance. It was just a way then to force me to save money because I have the ability to spend great amounts of money. The only way I have to create for Ray a bill because Ray was programmed by his parents to pay their bills. Good people pay bills. The spirit doesn’t know if that bill is for you or against you. But then when you learn that it’s a deposit and not a bill, that premium payment is not a bill, but a deposit, I cannot make enough of those. In other words, I want to make deposits every day, every week, every month, every year until the Lord takes me home.

Holly: I think that’s really important is just realizing that you do have to change your mindset. If you guys hear anything, it really is if you are thinking of premium as a payment, we really have to shift the mind to the deposit. Because it’s so much easier to make that deposit when you view it as a deposit versus a payment and you realize it’s actually not leaving you. It’s not leaving your family. It’s actually benefiting and growing for your family, for their future and for generations to come.

I don’t know many people that when they get their premium notice do a happy dance, but I get excited to figure out and know how much my policy’s going to grow just by making that premium deposit. I know I’m already helping my family. There’s such peace in knowing that we can do that, not just for my family, but for many, many families. That there’s such a freedom.

If you hear nothing more today, just the peace of mind of knowing your money’s safe, that you are in control of your money. That no matter what happens, you go to bed at night and you sleep okay because you’re not concerned with what’s going on with the stock market or 401k or this or that because you know where your money resides and that you have control and access to it.

Nate: Yeah. My only concern at night is trying to figure out what I’m going to wipe my butt with the next day with the TP gone. But money, I’m fine.

Ray Poteet: I hear you.

Nate: Toilet paper, man, it’s amazing what happens when you got money, but you can’t spend it on the things you want. That’s a different worry. But, yeah. Holly, I totally agree with some of the things you were saying about being excited to pay the premiums. It seems so unusual to say that, but I think the same thing, especially for these the policies that I’ve had for a few years and the premium bill comes up. I look at it and let’s say it’s like, I’ve got one policy I just paid a couple months ago that was a $30,000 premium. I write this check. I go look at my policy and it says this year it’s going to increase by $34,000. That’s a good day.

You write the check for three, you’re like, “I just created $4,000 tax free with no risk.” I’ve got other policies that are doing similar things in various amounts. I’ve got other policies that are brand new that are not growing by what I’m putting in, but I’m even excited to pay those because I’m like, “Hey.” I know I’m kind of weird, but I sit here and think to myself, “Hey, only more premium left until this thing’s going to be spitting me out of profit for the rest of my life no matter what I do.” Plus, I mean that premium’s going to produce a lot of cash value. But even if it’s not profitable yet, I’m still excited just to get one step closer to the day when I can write a check and get back more than I just wrote. It is super-exciting. It’s powerful. Ray, I wanted to thank you for telling that.

As we wrap up today, Ray, Holly, do you guys have anything else you want to leave us with?

Ray Poteet: I just want to say that the last 10 days, even though our country and the situation seems dire, I’ve been more excited than even when I first learned about banking, about what my policies are doing and how they will look next week, next month, next year. I received in the mail yesterday an annual report on a policy on my bride. I just took it out and I looked at it and I was going, “Hmm, what really happened with this policy?”

I’ll tell you, it’s 11 years old. We just paid the 12th premium actually. It was just a shade under $15,000. It grew $27,000. That’s $13,000 profit. I was going, “Wow, I didn’t know it did that. I probably should keep better track of these things.” But when you’re making profits, you don’t worry nearly as much as when you’re losing money. You lose track of all the good things. I just want to say I’m thankful to Nelson Nash. I’m thankful that the Lord has allowed me to work with you, Nate, and you, Holly. But I am just totally thankful that he’s allowed us to share this truth with each and every individual that has become a client of Living Well.

It’s a fun time. I’m excited about the future. Regardless of the roller coaster ride of the market, we’re going to be okay.

Nate: Absolutely. With that, let’s go ahead and just wrap it up. 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/e90.