Does it Make Sense to Practice the Infinite Banking Concept?

Yes, that’s the short answer.

You need to understand what is going on though to be able to determine the answer to this question for yourself.

After all, if there is no problem then what good is a solution?

We’re about to go through the problem you and many other Americans are facing. I will explain at a very basic, fundamental level what banking is, and finally we will look at how the Infinite Banking Concept can help you to better your financial position today, and for years to come.

The problem.

Have you ever felt like you work hard (at a job or your business) and you aren’t getting ahead financially for your efforts?

Have you been doing this for a long or short time in life?

Regardless of your last answer above, knowing this rarely talked about problem should be an eye opener for you. If you answered short time to the above question, you’re just fortunate to learn this sooner as opposed to later.

So, what is the problem?

I need to ask you a question to begin answering that.

Where does your money go when you receive income?

If I was to try and guess your answer, I’d list:

Health insurance
Home insurance
Life insurance
Vehicle insurance
Mortgage
Vehicle loan
Qualified Plan
Taxes (Property, income, sales to name a few)

If you go to the link below, the survey by the U.S. Census Bureau found that 63.5% of a household’s net worth was held in their home and retirement plan in 2014. https://www.census.gov/content/dam/Census/library/publications/2018/demo/P70BR_155.pdf

That’s a lot of places you’re sending money to. Several of these result in money that flows away from you which can’t work for you in the future and that is the problem. Most of your money flows away from you instead of back to you. You don’t feel this like an actual expense such as a vehicle loan payment, but this lost opportunity cost of money is huge over a lifetime! Take a look at the graph below to see what I mean.

What is the biggest reason for this problem?

You relinquish control of your own money, relying on others to grow it for you, and put it in financial prison where it is hard to access.
You are letting others perform the banking function in your life and they are profiting handsomely from their service.

You may be thinking right now that this isn’t a big deal, after all the financial talking heads generally tell you to max out your qualified plan and place your money in the market. Over the long run you’ll come out ahead.

For the average person that has little knowledge of how the stock market works I believe this is not good information. You see, having money in a financial asset that you know little to nothing about is risky. Risk in financial terms means the chance of loss, and the less you know about where your money is the riskier the investment.

What if you could implement a more certain way to build your wealth AND take control of your financial success instead of relying on others to do it for you?

You can, but first you need to learn about the process of banking. Once understood, you can begin to recapture the lost interest depicted in the graph above.

What is banking?

Banking is a process that simply involves depositing, borrowing, repaying and withdrawals. It is not a building that you call a bank. Banking happens every day in your life when you purchase a good or service, which makes it vitally important.

What would happen if in a short period of time money didn’t flow from 1 person to another?

If you said nothing, you’re correct. You wouldn’t be able to leave with the goods from say the grocery store and you may have to start a payment plan if you were already provided a service. Banking is going to happen in your life nearly every day so let’s create a system to perform it profitably.

What would it take to perform the banking function?

You have to create a pool of money from which you have cashflows in and out. A cashflow in may be a paycheck, the selling of stock or property, or maybe a check for rent if you’re a landlord. A cashflow out would be buying groceries, paying property taxes, or paying your vehicle insurance. You see everything you do is cash flowing in to your system or out of your system.

The cash flowing in is how to create the pool of money. You might call this cash creation. Once you have created cash in your life, you need to capture it. This is where many Americans use a retirement account and the traditional bank in town. The problem with retirement accounts are penalties and restrictions for using your money and both of these systems have the compounding of your money interrupted when cash flows out. You want your money to always be working for you to avoid as much lost opportunity cost as possible (remember the devastating effect of interrupting the compounding of your money in the chart above).

The ideal way to perform the banking function then would be to create cash and capture it in a system that it stays working forever! You are already creating cash and accumulating some amount of a pool of money, you just need to know what system to use now.

Cash capture with the Infinite Banking Concept.

The Infinite Banking Concept is a thought process of how to accumulate capital (cash capture) and then perform the banking function in your life. This system allows you to take the cash you created and put it in a place where it can continue to work forever for you. The system allows you to collateralize the cash value to finance any items you choose and pay back to the system on a schedule you set with yourself.

This is what you already do, accumulate capital and then spend it down and continue to accumulate capital again. The IBC implemented on a specially designed dividend paying whole life insurance policy with a mutual company is just the system you have been missing. It’s the system that will allow you to start recapturing the massive amount of lost opportunity cost in your life.

Aside from this amazing benefit you also have a system which:

Provides a competitive rate of return (I specifically am referring to the volume of dollars you can use)
Gives you guarantees, control and liquidity
Has multiple jobs for the same dollars
Provides protection and a highly effective system for wealth transfer

I could go on but I think you see there are many more advantages to this system than the typical places Americans accumulate capital.

Think about your own situation.

Is your current financial construct benefiting you or someone else first?

Placing money in places you lose control and access and potentially face restrictions and penalties to use it may not be in your best interest. If your money isn’t growing for you as you accumulate it that’s also a problem. If you’re only doing this because that’s what everyone else is doing, I strongly encourage you to break away from the herd mentality and look at another option.

If you could create a system that was large enough to eliminate even half of the lost opportunity cost in your life it would be a huge step forward for your financial security in the future. No one cares about your money more than you do so take control of it and build the future you want and deserve.