By Jack Carlson | Unbridled Wealth
Last week I was talking to a real estate investor about the topic of banking.
He was shocked after learning that Bank of America paid depositors 0.2% on average in 2020 and loaned dollars on average at 5.2%. Because of the fractional reserve system, that massive segment of their business earns a quadruple-digit return on investment.
His response to this? Let’s start a bank.
Have you ever considered how much more profitable your financial life would be if you were not only benefiting from real estate investment, but also from controlling the banking function in your life?
The reality is that banks control capital better than we do. But let’s lean in for a moment and look at the principles behind how they make money.
- Flow: Banks see the money before we do. When you set up direct deposit or direct contributions to a 401k, those institutions are seeing your dollars first. They’ve set up systems for creating consistent cash flow. Do you primarily control and profit off your dollars or does a bank?
- “Those who have the gold make the rules.” Because banks have a growing pool of capital from depositors, and only need to keep 10% on hand at any one time, people come to them when they need money. Do you think more opportunities would find you if you had available capital ready to be lent?
I’m connected to an oil company that had a short-term capital need last week – they paid 20% interest on 100k for one month! I wish I weren’t only hearing about that but also the one who had that capital available to lend and earn. Have you thought about how banks can only be that entity because we’re providing them capital to lend at next to no cost? What do you earn in interest on your bank account?
You don’t have to look further than the bank’s balance sheets to learn that the cash value of permanent life insurance is an optimal place to store capital. Cash value is the portion of the policy that is accessible while you are living. Wells Fargo has $19.5 billion in cash value as of 2021. A properly structured permanent life insurance policy gives your dollars a place to grow at a guaranteed rate plus dividends for the rest of your life while being accessible to borrow against tax-free at a fixed 4% annual loan rate.
Over 10, 20, and 30 years of utilizing a policy like this as a personal banking system, you will recover the hundreds of thousands of lost opportunity costs because of honoring your dollar’s ability to grow uninterrupted. Not to mention the creditor protection, permanent death benefit, long-term care supplement, and tax-free retirement that it can also provide.
To learn more of the specifics about this strategy known as the Infinite Banking Concept, join us at our Lunch and Learn in January or a live seminar in Tucson and Phoenix in early February.