This book is not about getting rich quick. It talks about emulating the entities that contain all the wealth – “Banks”. This is a big deal because you can leverage tax deferred growth, pay interest to yourself, leverage tax write-offs and see the power of compounded growth over time. This strategy is very powerful and is how the rich preserve wealth through the generations. I am a big believer in Financial Education and this book will help you in that endeavor. As always, Buy Study Summaries I am not a financial planner and always recommend you do your own research. This summary is designed to help you with that research.
Why is this important to me?
This may not be important to you but in my opinion, it should be. Most people work their asses off to make money and then do nothing to preserve it and build upon it. Remember that your financial goal should be to have your money work 10 times harder than you. I know this is an easy statement to make but it requires diligence and education.
Money flow is a key concept. It is either flowing toward you or away from you – there is no standing still. This is why they call money – “currency”. Remember that if you pay cash for a car then you lose the earning potential of that money. Likewise, practice questions if you finance it then you pay interest to the bank. In both scenarios, the money flows away from you.
Infinite banking will show you how to eliminate this problem.
This book is broken down into 5 parts. I will touch on each part and drill into the most important aspects of the Infinite banking Concept.
1. Becoming your own banker – The problem with not doing this concept is the “volume of interest” paid by people to buy stuff. Most people focus on the interest rate without truly thinking about the volume of interest paid. Here is a quick example: Let’s suppose you were going to buy a house for $200,000 at 6% interest over 30 years. You end up paying $431,677. So basically the house costs you double. If you look guides and other study documents for all subjects at the rule of 72’s then your money should double every 7 years then this is not a bad tradeoff. Here is the killer. Let’s suppose you sell the house 10 years in, you will still owe over $167,000. Guess what – the banks know this.
On average you can calculate for the average person that about 30% of every dollar goes to interest in some form or another. Thus you need to focus on the “Volume of Interest” and not the Interest rate. Think about this – what if you could have purchased that house with your “savings” and paid yourself the interest instead of the bank?
2. Dividend paying life insurance – Let me caution some of you who listen to Dave Ramsey. His stuff is excellent and he hates whole life insurance as an investment. I disagree with him and can show you why. This book will touch on that. There are some real secrets with this device as an investment strategy. They include: tax free growth, instant access to the money, law suit exempt & the money stays in the policy. This is the real secret. When you take a policy loan, you still receive your dividend. Thus it is like your investment is still growing and you can write off the policy interest on your taxes. Everybody focuses on rate of return using investment vehicles but you need to look at all the pieces that make up the pie and I can tell you nothing beats this concept. Why do you think Warren Buffet loves insurance companies and insurance vehicles for his investments?