By Jack Carlson | Unbridled Wealth
Where do you store your cash before you deploy it for investments?
That answer might not seem like a big deal if the investment itself and what it can provide for you is the focus. But, if a bank account is your answer, you’re leaving a lot of money on the table. Your dollars should and can be performing multiple jobs for you in your real estate business.
Say you have $100,000 of capital in savings earning 5% interest per year. After 25 years, that’s over $338,000. However, if you withdraw $50,000 in year one to invest in a syndication – your balance drops, and you miss out on $135,000 in growth.
That’s opportunity cost. And it’s not your friend.
You want to earn that back along with the return from the syndication. By storing your available capital in a properly structured cash-value life insurance policy, you can honor each of your dollar’s ability to grow for your whole life.
In the cash value, your dollars are accessible and grow without interruption at ~5% long term – even while you borrow against the cash value tax-free to fund investments or other major life purchases. This is similar to how banks function, they’re willing to pay us 0.1% on deposits to loan out our money for more favorable returns from loans ranging from 5-29% in annual interest.
In the process of recapturing the banking function for yourself, you’ll experience what’s called positive arbitrage. This is when the interest your cash value earns, out-paces the interest owed on policy loans. Over the course of your investing career, you’ll not only own real estate assets but you’ll have capitalized a massive personal banking system that can also provide for you in retirement, with long-term care, a tax-free death benefit, and plenty more.
If you’ve been hearing about this strategy, known as Infinite Banking, but aren’t sure how it could work for you, send us an email and we’d love to connect the dots on how it can enhance your real estate investments.
This is an asset that won’t only serve you today but will make your ceiling financially, your kid’s floor.