The Financial Planning Fiasco - Infinite Banking Simplified · If you're tired of crossing your fingers and hoping that the stock market doesn't crash, but don't know what else to

Regrets of Two Former Financial Planners

The Financial Planning

You Need a Major Paradigm Shift to

Create Sustainable WealthIsis B. Palicio, LUTCF, MBA

Pedro A. Palicio, MBA, Ph.D.

Fiasco!

|Page UniversalWealthManagersLLC 1

CONTENTS INTRODUCTION: Regrets of Two Former Financial Planners 2 CHAPTER 1: “Typical” Financial Planning Just Doesn’t Work ! 6 CHAPTER 2: Financial Insanity 10 CHAPTER 3: How Did We Get Here? 19 CHAPTER 4: The Infinite Banking Alternative 29 CHAPTER 5: Infinite Banking in ACTION! 33 CHAPTER 6: So, What’s Next? 46 About the Authors 48


INTRODUCTION:

Regrets of Two Former Financial Planners

Tenyearsago,welefttypicalfinancialplanning.Wehadcomeintoitwithhighexpectations.Wehadahighdegreeofsuccessinashortperiodoftime.Andweleftbecausewewerehavingacrisisofconscience.

Wehadpreparedlongandhard,earningourSeries7,Series24andSeries65licenses.Wehadbuiltaclientbasedoingallofthethingswelearnedfromotherfinancialplannersinouroffice.

Andthen,weabandonedthetypicalfinancialadvicewehadbeendolingout,evencallingclientstoletthemknowtheadvicewehadgiventhemwasmistaken.

Why?Becausewenolongerfeltthat"typical"financialplanningadviceallowedustodowhatwasbestforourclients.

Wehadcometobelievethatwhatweweretellingclientswasmisleadingatbest,andatworse,flat-outWRONG.

Togiveyouapeekbehindthecurtain,letustellyouwhatit'slikeinatypicalfinancialplanningoffice.

Clientswouldcomeinwithquestions."HowmuchdoIneedtosave?""WhereshouldIinvest?""WillIhaveenoughmoneytolastinretirement?"

Inturn,weaskedTHEMquestions."Whendoyouwanttoretire?""Whatkindofincomeandlifestyledoyouwant?""What'syourrisktolerance?"Andthirtymorequestionstheclientsoftenhadnowayofaccuratelyansweringfromwheretheysat.

(However,wedidn'taskthemtoanticipatehugestockmarketcrashes,divorce,orspellsofunwantedunemployment.)


First,theclientwouldguesswhentheymightwanttoretire,howmuchtheycouldsave,andsoon.Then,asadvisors,wewouldmakeguessesandassumptionsabouthowmuchtheirinvestmentsmightearnandwhatfuturecosts,taxes,andinflationmightbe.

Next,we'dplugallofourguesstimatesintoacomputer.Usingourcompany’simpressivenumber-crunching,graph-generatingsoftware,we'dcreateimpressivefull-colorillustrations,anddelivertheir"financialplan"totheminabeautifulbinder.

Thepeoplewhoreceivedthemfeltreassuredthattheywere"ontrack."They'dthankus.They'dstartwritingchecks.Andthebosswouldcongratulateus.

Butitwaspureguesswork.(Theirsandours.)

Itwasaninsanesystem,allbasedonenormousassumptions.Thequestionsandanswershelpedusbuildarelationshipandcreatetrustwiththeclient,butdidwedeservetheirtrust?It'sabsurdtoimaginewecouldactuallypredicttheirfutureincome,alongwithtaxes,inflation,theirchildren'scollegeplans,andthemarket!

Whendoassumptionsholdtruefor25,30,40+years?Whohasn'thadtheir"best-laidplans"disruptedbyrealitiestheydidn'tseecoming?

Oftenabitnervousaboutthefuture,mostclientswererelievedtogetadviceandfollowedrecommendationswillingly...eveniftherecommendationsmostlyconsistedofputtingmoneyinthestockmarketeverymonthandhopingitallworksout.

Butinside,weknewwecouldn'tguaranteetheirfinancialsuccessanymorethanwecouldguaranteetheweather.

Weknewweweregivingpeoplefalsehopes,andtellingthemthingsthatwehadnobusinesstellingthem.

Andwejustcouldn'tdoitanymore.

***


Thisisourstoryofwhyweturnedourbusinessmodelupsidedown,abandonedourSeries7andSeries24licenseswehadworkedsohardtoearn,andwhywestruckoutonourownandnolongermanageassetsorsellmutualfunds.

ThiseBookisalsoanintroductiontotheInfiniteBankingConcept,whichisatruealternativetoFinancialPlanning.InfiniteBankingisasetofconcepts,philosophies,andstrategiesthatWORK;theonesusedbymanywealthypeoplewehaveknownandobserved.

Yourbankerandyourfinancialplannerwillnevertellyoutheinformationweareabouttosharewithyou.

Theyprobablydon'tevenKNOWit-orunderstandit-tobeginwith.(Andlet'sbehonest-mostofthepeopledoing"financialplanning"areessentiallysalespeople.)

Financialplannersmaybewell-educatedandtheymayhavemanylettersaftertheirnames.(Weknowwewereandwedid.)Theymayevenchargeafeefortheiradvice.Butthey'reoperatingfromaskewed,limitedperspective,whichiswhatwehadtocometotermswith.

Wecametorealizethatperhapswewerejustwell-taughttobelievein(andnotquestion)theproductsandstrategieswewereselling...andwewerenottaughtthattherewereotheroptions.Betteroptions.

Wehadtogosearching,butwhenwedid,wediscoveredthosebetteroptions.Theyweretheconceptsandstrategiesthathavehelpedpeoplebuildsustainablewealthformanydecades,evencenturies...longbefore"FinancialPlanning"evenexisted.

We'llsharemoreaboutthatalternativeandwhywefounditnecessaryinthefirstplace,butfirst...Letussayhowgratefulwearethatyou'vefoundyourwaytothiseBook!Wetrulyhopethislittlebookandtheresourcesthatfollowwillallowyoutoseethingsalittle(orperhapsalot)differently.

Andbeforewegoontothenextchapter,wehaveafewsimplerequeststomake.

First,weencourageyoutoreadthisentireeBook,rightnow,oratleastwithinthenext24hours.Whetherthisperspectiveisnewtoyouorwhetherit'sjustareminderofwhatyoualreadyknow,weencourageyoutonotletthepriceofthisinformation(free)diluteitsvalue.


Secondly,weaskthatyoukeepanopenmindif(orwhen)theinformationwepresentcontradictswithwhatyoualreadybelieveorknow.Tryontheideas,doyourownresearch,andconsideriftheremightnotbeotheralternativesworthtryingthan"typical"financialstrategiesandadvice.

Lastly,please,don't"just"readthiseBook.Takeaction.Yourmoneyandyourfuturedependonit.Whetheryoudecidetoworkwithusorsomeoneelse,weaskthatyoudosomethingtoimproveyourfinancialsituation.It'sajourneyworthtaking.

AndifyoureadthiseBookanddecidethatInfiniteBankingmakesmoresensethantypicalfinancialplanning,you'llwanttocontactustofindouthowyoucanalignyourfinancesforgreatersuccess.

Ifyou'retiredofcrossingyourfingersandhopingthatthestockmarketdoesn'tcrash,butdon'tknowwhatelsetodo,wejustmayhavetheanswersyou'relookingfor.

We'retakingbackourthinkingandourmoneyfromtheinstitutionsandcorporationsthattoooftenputtheirownbestinterestsfirst.

Werepresentadifferentpathtofinancialindependence...aless-traveledyetprovenpaththatwillhelpyoubuildwealthwithgreaterconfidence,morecertainty,andlessworry.Weadvocatethisalternativepathbecausethetruthofthematteristhis:

Typicalfinancialplanningandadvicehasfailedus.


CHAPTER 1:

“Typical” Financial Planning Just Doesn't Work!

Weenteredthefieldoffinancialplanningwithgusto,optimism,andtheenthusiasmoftruebelievers.Atfirst,financialplanningwasexactlywhatwehadhopedfor-achancetobesuccessfulthroughhelpingpeoplefinancially.Butovertime,disillusionmentsetin. Financialplanningsoundedlikeagoodidea,andit'scertainlymuchbetterthandoingnothing!Butaswelearned,itwasallbasedonbestguesses,assumptions,unfoundedoptimismandmathematicalhalf-truths.

Peopleareledtobelievetheycanexpecttoearncertainreturnsinthestockmarket.(Somefinancialgurusevenassurepeoplethey'llearnanaveragereturnof12%overtimeinthestockmarket,anumberthatisNOTbasedinhistoricalfacts!)

Clientsaretoldaboutthewondersofcompoundinginterest,butlikelynotabout

• howfeesalsocompoundovertime,• how"average"ratesofreturndon'tequal"actual"ratesofreturn,• thefactthattarget-datefundsdon'tprotectpeoplefromriskasassumed,or• whyspeedtradinghasmadetoday'smarketmorevolatilethanthestock

marketourparentsinvestedin.

Furthermore,investorsareencouragedtodefertaxeswithoutseriouslyconsideringthepotentialimpactthedeferralswillhavewhentheyactuallyspend"their"money.

Orworse,investorsareassured"yourtaxratewillbelowerwhenyouretire,"whentheoppositemightbetrue!(Whothinkstaxesaregoingdown,orthatthey'llbesomehoweasiertopayafteryoustopworking?)

Thenthereisthemath.It'sacruellietoletmostpeoplebelievethattheycanworkfor40years,saveasmallpercentageoftheirincome,thenquitworkingand"retire"fordecadesofhighinflationtocome.Yetthisistheculturalexpectation,whatwethinkis"supposed"tohappen.


Behindthescenes,thoseofuswhowerepayingattentionbegantorealizethattherealnumbersrarelyaddeduptotheprojections.

Formostpeople,thenumbersflatoutjustdon'twork.Peopledon'tsaveenough.Manypeopleonlysave2%oftheirincome,thinkingtheycan"makeitup"withmiraculousratesofreturninthestockmarket.(Buttheycan't.)

Theyfindtheirinvestmentsdon'tearnenough.Marketsriseandfall.Inflationisunderestimated,asistheenormoustollthattaxesandthose"tinylittlefees"willtake(which,formanyinvestors,canbeHALFoftheirretirementaccount...orMORE!)

Whathappenswhenthenumbers"don'twork"?Whatdoplannerssaytoaclientwhojustdoesn'tearnenoughorcan'tsaveenoughtoEVERreachtheirretirementdesires?Thetruthisadirtylittlesecret:

Inmanyfinancialplanningenvironments,plannersaretaughthowtotweakthenumberstomakefinancialplans"work."

Typicalplannersandbrokersmightuseaverageratesofreturnofthestockmarketbecausetheactualratesofreturn(whicharelowerthantheaverages)don'tlookasimpressive.

Thetimeframesusedtocalculatepastmarketaveragesarecarefullyselectedtoshowthestockmarketinthebestlightpossible.

Illustrationsarerunthatdon'taccountforallofthefees.Ortaxes.Orrealisticratesofinflation.Orinvestorbehavior.Ortheclient'struepotentiallongevity.

Astheexpressionsays,"Thedevilisinthedetails."Thatiscertainlytruewithtypicalfinancialplanningandadvice.Thefancygraphsandchartsgiveth,andthefineprinttakethaway.

It'stimetotelltheTRUTHaboutfinancialplanning,retirement,andthemarketsthatwethinkwillsaveus.

TheTRUTHisthatthesuppositionsoffinancialplanningarebasedonacombinationofguesswork,mathematicalprojections,andwishfulthinking.


TheTRUTHisthatevenwhenpeoplebelievetheyare"ontrack,"theyaregenerallyundersaving.

TheTRUTHisthatevenmillionaireswhohavefollowedtypicalfinancialadvicearenowafraidtospendtheirprincipalforfeartheywilloutlivetheirsavings.

TheTRUTHisthatmostpeopleonlyhaveenoughinsavingstolivethelifestylethey'vegrownaccustomedtoforadecadeatmostbeforetheybecomedependentonthegovernmentortheirfamily.

TheTRUTHisthatmost"typical"plannersandbrokerscrosstheirfingersandpraythatthestockmarketdoesn'tcrash,becausetheydon'tknowwhatelsetodo.

ButtheproblemsgoevenDEEPERthanunrealisticexpectationsandoptimisticmath!

TheTRUTHisalsothatfinancialplannersandadvisorsarefinanciallyREWARDEDwhentheyconvinceclientstoputandkeeptheirmoneyatrisk!

(It'sjusthowthesystemworks...advisorsaretypicallypaidfor"assetsundermanagement,"andthoseassetsaretypicallyatriskinthestockmarket.)

Thenthereareallthe"half-truths."(Andun-truths.)

Conventionalwisdomsays,"Getagoodjobandmaxoutyour401(k),"butthatisrarelyhowwealthisbuilt.

Thefocusisputonaccumulation,eventhoughpeoplemustLIVEoncashflow.

Peoplearetoldtopaycashfortheircarsandprepaytheirmortgagesearly,insteadofputtingthatextracashtoworkforthemtobuildcash-flowingassets.

Financialguruspreach"Buytermandinvestthedifference,"eventhoughmanyrichandsuccessfulpeoplethroughouthistoryhavedone-andstilldo-theopposite.(Sometimes,theappropriateanswertothewholelifevs.termdebateis"both.")

Retirementisassumed,insteadofthepossibilitythatpeoplemightbepassionatelyproductiveatanyage.


Peopleareprogrammedtobelievethatsomehow,they'llspendlessinretirement,inspiteofinflationandlifestyledesires.

Financialprojectionsassumethatretireeswillbeina"lowertaxbracket"inspiteoflogicthatsaysotherwise.(Thismythandtheoneabovepersistsbecausetheyarenecessarytomakefinancialplans"work"-atleastonpaper.)

Thenthere's"PlanB"-whenunexpectedlifeeventsderaileventhebestofplans.

Whenthejob,orthestockmarket,orthemarriage,ortherentalhousedon'tgoaccordingtoplans,peopleneedmoney.Andwhenpeopleneedmoney,theytypicallyraidtheir401(k)sorIRAs,incurringpenalties,incometaxesataninopportunetime,andevenbackendsalesfees.

Andretirementaccountsmakepoor,inefficientemergencyfunds.

Ironically,thebest-laidfinancialplanssometimesmakepeopleLESSpreparedtoweatherafinancialstorm!AccordingtoBloomberg.com,nearly10%ofAmericanswithretirementaccountsarefindingitnecessarytocashpartoralloftheiraccountsoutearly,tothetuneof$57billionin2011alone.

Thefactis,"Planning"ofanykindcanbeajoke,becausewhendoeseverythinggoasplanned?What'sthesaying-"Manmakeshisplans,andGodlaughs."Sotrue!

Afewyearsintoourcareersasfinancialplanners,wecametoahardrealization:

Financialplanningjustdoesn'twork!

Whileitmaybebetterthannothing(thoughyoucouldarguethatfalsesecurityisworsethaninsecurity),thefactisthatit'sabrokensystem.

Andtokeepfollowingthesameadviceanddoingthesamethingsandexpectingadifferentresultissimply...insane.


CHAPTER 2:

Financial Insanity

What'ssowrongwithtypicalfinancialadviceanyway?Let'sexploresomeofthecommonproblemswithtypicalfinancialplanningandhowtheInfiniteBankingConceptoffersanalternativepath.

MoreRisk,LessControl.

Typicalfinancialplanningassumesthatyouarewillingtolosemoney,andthatthemoreyou'rewillingtolose,thefasteryourportfolioislikelytogrow.Butisthistrue?

Wehavebeenconditionedbyriskassessmentprofilestothinkthat"safe"or"predictable"equalsalowreturnoninvestment,andhighriskequalshighreward.Butperhaps...themorewe'rewillingtotoleratelosing,thegreaterchancewehaveofloss!

We'reconditionedtobelievewemusttakebiggerrisksifwewantachancetoearnhigherreturns,butagain,isthistrue?Or,aretherealternativestostockmarketrisksorcashequivalentsthatgrowatasnail'space?

Typicalfinancialadvicepresentslimitedoptions.Essentially,thequestionsontherisktoleranceformsareaskedtodeterminetheappropriateratioofstocksvs.bonds,asifstocksandbondsarethebest,oronly,validinvestments.

Ourownpersonalrisktoleranceiszero,wehavenotoleranceforlosingmoney;ourorourclients.

Buttypicaladviceispredictable:unlessyou'reveryclosetoretirementorextremelyriskaverse,you'retoldyoubetterbemostlyinstocksorstockmutualfundsratherthanbonds.(Notthatwe'readvocatingstocksasthe"solution.")


Unlessyouhavetheabilitytoearnandsave(orperhapsinherit)verylargesumsofmoney,typicalfinancialplanningoffersyounooptionstogrowyourmoneyotherthantoplaceitintheWallStreetCasinoandrollthedice.

Whenitcomestoyourfutureandyourhard-earnedmoney,doyoureallywanttorelyonspeculation,hopingthatshareholderpricesriseinsteadoffall?

Or...wouldyoupreferalternativeswithpredictablegainssecuredbyrealassets?

InfiniteBankingdemonstratesthatinvestmentssecuredbyassetssuchaslifeinsurancepoliciescanprovideatruealternative-ordiversification-tothestockmarket.Ulcersnotrequired.

TheMoneyManagersvs.theMonkeys.

Ofcourse,you'renotliterallygamblinginthestockmarket,right?You'replacingyourmoneywithestablishedfirmsthatemployprofessionalmoneymanagers...surely,theyknowathingortwo.(Right?)

Actually,manystock-pickingcontestshavedemonstratedthatportfolioschosenbymonkeys,cats,randomdarts,orfourth-gradersoftenoutperformprofessionally-managedfunds.

Thetruthisthatnobodyhasacrystalball,andthemarketisunpredictable.(Themonkeysmayalsohaveanadvantagebecausetheydon'tchargehighfeesorcollectbigbonuses.)

Thegreatmajorityofstockbrokers,moneymanagers,andfinancialanalystsalikewereSURPRISEDbythestockmarketcrashof2008,thebiggestdeclineinmanydecades.

Thisfactoughttoraiseseriousquestionsaboutwhatinvestorsarepayingfeesforinthefirstplace!


Furthermore,theambushofthe2008stockmarketcrashshouldcallintoquestionwhattheroleofafinancialadvisorshouldbe.Sincefewplannersareeffectivefinancialpsychics(norshouldweexpectthemtobe),perhapstheyoughttobedirectingustoinvestmentsthataren'tsovolatileinthefirstplace!

Whileitmayseemlogicalforthefinancialexpertsamongustoprotectourmoney,weshouldn'texpectthefinancialcorporationsthatmakebillionsfromAmericansriskingtheirmoneywillleadthatchange.

InfiniteBankingdoesnotrelyonspeculationandguesswork,butonaprovenvehiclethatmakessense.Returnsarepredictable,atleastwithinarange.

"ButEverybody'sDoingit!"

You'remadetofeellikeyou'redoingsomething"risky"orevenfoolishifyouinsistoncontrollingyourownmoney!Butisitreallyriskytoinsistonprovidingyourownfinancing,startingabusinesstobuildyourownincome,orbuyingassetsyoucanseeandunderstand?

Nevermindthatyoucanreceivehealthyreturnsandevensteadypaymentswiththeselesser-knownstrategies...

NevermindthatthehistoricalsafetyandperformanceismostofthetimeBETTERforInfiniteBankingstrategiesthantheinvestmentsthefinancialcorporationsaretryingtosellyou...Afterall,yourinnerskepticmayask,ifthesealternateinvestmentsactuallyworked,wouldn'teverybodybeusingthem?

We'vebeenconditionedtobeskepticaltowardsthefinancialchoicesthatactuallymakeMOREsense,butnottoquestiontheoptionsthatofferinvestorspoororunpredictableresults.

Whenyou'refacedwithadecisiontosinkyourhard-earneddollarsintostocksyoucan'tcontrolandfundsstuffedwithfinancialinstrumentssocomplexittakesmultiplePh.D.'stocomprehend,rememberyourmother'squestion:

"Ifeveryoneelsejumpedoffacliff,doesthatmeanyoushould,too?"


InfiniteBankingisastrategythatWORKS.Infact,sometimeswehavetoworkHARDERtoselltheBESTstrategy,becausethefinancialmediaworksover-timetoconvinceyouthatit'sNORMALandNECESSARYtokeepyourmoneyatrisk!

TheQualifiedPlanQuandary.

Ifyoufollowtheadmonitionsto"maxoutyour401(k)"orothergovernment-approvedqualifiedplan,you'reactuallylosingcontrolofyourassetstothegovernment,thestockmarket,andtherulesofyouremployer.

Youdeferincometaxesuntilretirement(whenyoucanafforditleast),giveupwhatcouldhavebeenlessercapitalgainstaxes,andpaylayeredandoverblownmanagementfeeswhichdrainenormousamountsofmoneyfromyourretirementplan.

Justhowmuchwillyoupayinfeesandtaxes?Youwilllikelypaymoreinincometaxesthanyourtotalcontributionstoyourretirementplan!

Thisisbecausedeferringtaxesinaqualifiedplanmeansthatyou'llpaytaxesontheharvestratherthanjusttheseed.

Itistruethatbyputtingpre-taxdollarsintoaqualifiedplan,you'llhavemoremoneygrowingforyou(andtheplannersandmanagerswhoskimfeesfromiteachyear,alongwiththegovernmentthatwaitsforitsshare),butyou'rerunningtheunnecessary-andlikely-riskofhighertaxesinthefuture.

Italsomeansthatyou'llgethitthehardestifyouhavetowithdrawmoneyinadownmarket.

Thistypicalstrategyalsopsychologically"fools"investorsintothinkingtheyhavemorethantheyreallydo...becauseagoodportionofthemoneyin"your"retirementaccountwillgotopayfuturetaxesandfees.Itgivespeopleafalsesenseofsecurity.

YoucanenduppayingoutTWICEinmanagementfeesandcommissionsthantheamountyou'reputtingintotheplan!(Yes,inadditiontotheinflatedtaxbill!)


Thenumbersareshocking.Retirementcontributionstotaling$400kcangenerate$575kinmanagementfees,assuminganaverageinvestmentrateofreturnof6%.Atanaveragerateofreturnof8%,thequalifiedplangivesupawhopping$834kinfees!

Howisthispossible?Howcanyoucontribute$400kandpay$834kinFEES!?(Theexampleassumed30yearsaccumulation,20yearswithdrawals,andtotalplanmanagement,administrationandfundfeesof2.5%.Mostinvestorsthinkthey'repayingless,butthat'sfairlyaveragewhenallofthe"hidden"feesarefound.)

Payingsuchbloatedfeesisacommonoccurrencebecausecompoundinterestdoesn'tjustgrowyourmoney-italsogrowsCOSTSaswell.

JohnBogle,founderofVanguard,calledthisthe"tyrannyofcompoundingcosts,"andtheresultsarestaggeringtocomprehend.It'snowonderWallStreetspendsbillionslobbyingtheDepartmentofLabortoauthorizeautomatic401(k)contributions!

Worstyet,eventhoughit's"YOUR"money,youcan'tactuallyUSEitwhileothersareprofitingfromit!Youhavetofollowyouremployer'sandthegovernment'srulesonwhatyoucan(andcan't)dowithyourmoney.

Forinstance,youcan'tleverageorborrowagainstyourmoneyinaretirementaccounttouseascollateralformajorpurchasesorasseedmoneytostartabusiness.

True,youcansometimesborrowmoneyforcertainlimitedpurposes,aslongasyoupayitbackaccordingto"therules."Youcanalsooftenwithdrawfundsandpaythepenaltiesaswellastaxesintheprocess,butindoingso,you'llalsobegivingupthegainsthatmoneycouldhaveearned.(Theinterestyourmoneycouldhaveearnedisyour"opportunitycost.")

InfiniteBankingtakesopportunitycostsintoaccount.ItalsoencouragespeopletotakecontroloftheirOWNmoneysothatitbenefitsTHEMfirstandforemost,notthefinancialcorporationsorthegovernment!


TheTarget-DateDisaster.

Themostpopularvehiclefor401(k)sandotherqualifiedplanshasbecometarget-datefunds.Overwhelmedwithoptionsofendlessmutualfunds,investorsandemployersalikelovetheset-it-and-forget-itsimplicity."Justpicktheyearyouwanttoretire,andsitbackandrelax!"

Itsoundssosimple...aprofessionallymanagedfundthatautomaticallyreallocatesmoneyperiodicallytoassureinvestmentrisklowersasretirementapproaches.Insteadofhavingtomanuallymakecontinuedadjustmentsinyourportfoliotosecureyourretirementfundsfromstockmarketriskastheyearsprogress,atarget-datefundpurportstodothatforyou.

Whatcouldpossiblygowrong?

Thenthemarketcrashedin2008.Participantsinthe2010retirementfunds-peoplewhointendedtoretireinthenextyearortwo-lostsubstantially.

Insomecases,target-datefundsdroppedevenMOREthantheS&P500!

Oops.

Target-datefundsweresupposedtoglideinforasafeandsecureretirementlanding,butmostofthetarget-dateparachutesfailedtoopen.Thebulkofmanytarget-datefundswereSTILLinthestockmarketevenasretirementdatesapproached-orpassed,thusfailingtoprotectinvestor'sretirementfunds.(Andunfortunately,strategieshavenotchangedandtheresultwillbethesamethenexttimethestockmarketdrops.)

Therearemanyotherissueswiththefundsaswell.Performancehasbeenlacklusteratbest,disastrousatworst.Theirpredetermined,formulaicdesigndoesn'tallowfordrasticreallocationsinresponsetomarketconditions.Andfeesarehigh:as"fundswithinafund,"manyhave"feesuponfees."

And,ironically,althoughtarget-datefundsaimtosimplifyinvestmentdecisions,they'retremendouslyconfusing!


Withoutanalyzingthepagesoffineprintthattheauto-investingtargetmarketwashopingtoavoidinthefirstplace,there'snowaytoknowwhatafundiscomprisedof.Target-datefundswiththesametargetyearbutfromdifferentcompaniescanvarywildly,creatinga"buyerbeware"situationforaproductthat,unfortunately,continuestosellitself.

Weagreethatinvestingshouldn'thavetobehard,buttarget-datefundsarenotthesolution.InfiniteBankingutilizesafinancialvehiclethatactuallyisset-it-and-forget-itsimple.

WhateverHappenedtoSaving?

Typicalfinancialplanningdownplayssavinginfavorofinvesting,i.e.,"assetsundermanagement."Whilesavingmoneymaybetalkedaboutfondly,actuallyestablishingatrulyadequateemergencyfund,andbuildingliquidityinone'spersonaleconomygetslittlemorethanlipservice.

ManyAmericansthinktheyare"saving"intheir401(k),butasaresult,theydon'tactuallyhavemoneywhentheyneedit.In2011,astherecessioncontinued,over$57billiondollarswascashedoutfrom401(k)plansearly,costingplanparticipantspenaltyfeesaswellastaxesandopportunitycosts.OnestudyreportedasmanyasoneinfourAmericansareborrowingfromretirementaccountstopaybills,suchastheirmortgage,collegetuition,evencreditcardpayments.

SavingsandinvestingareBOTHimportant,anditisactuallySAVING,notinvesting,thatbuildsourfinancialfoundationandflexibility.

Savingappropriatelywillenableustolaterinvestwithoutresortingtoliquidatingourinvestmentseverytimewehaveafinancialemergency.Butsavingisn'tjustforthosewhoarestartingoutandestablishingemergencyfunds.Savingisanessentiallife-longhabitthatprovidesliquiditytoone'slifeandbusiness.

InfiniteBankingencouragespeopletosavebefore(andduring)investing,tosavefor"opportunities"aswellasemergencies,andtomeasureopportunitycostsbeforepayingcashformajorpurchases.


Butwherecanyousafelysavewhereyourmoneycanoutpaceinflation?Thelow-interestrateenvironmenthasturnedaccumulatedwealthintomeretricklesofincome.Thesedays,evenmulti-millionairesarechallengedbylivingoffinterestifitisheldinbanksavingsaccountsandcertificatesofdeposit!

InfiniteBankingutilizesasafe,reliable,tax-advantagedcashalternativewithmultiplebenefitsandtremendousflexibilitythatgeneratesstrongerreturnsthanbankaccounts,CDs,moneymarketfunds,annuitiesortreasurybills.

BankINsecurity.

Speakingofsavingmoney...everyoneassumesthatthesafestplaceforyourmoneyisinanFDIC-insuredaccount;meanwhile,theFederalReserveonlyhastheequivalentofabout2%ofthenation'sbankdepositsintheirreserves!Thismeansthatiftherewaseverarunonthebanks,itwouldsoonbecomeevidentthatourbankingsystemisjustoneenormousfractional-reserve-bankingPonzischeme.

Butthefinancialsystemdoesn'thavetocollapseforyoutolosesavings.Cyber-crimesandfraudstripmoneyfrombankaccountseachyear,andgovernmentagenciessuchastheIRSandlocallawenforcementhavebeenknowntoconfiscatefundsfrombankaccountsinaprocessknownascivilassetforfeiture.Shockingly,wrong-doingmerelyneedstobe"suspected,"notproven.

However,themostlikelythieftostealmoneyfromyourbankaccountisinflation.Atcurrentbankrates,having"moneyinthebank"isaguaranteethatyourwealthisbeingeroded.

That'swhyInfiniteBankingutilizesanalternativetotheBigBanksforstoringcashsafely,andacashflowalternativetoCD'sthatgeneratessubstantialcashflowforthosewhoneedtheirinvestmentstoearnincome.

ThesadtruthisthatAmericansarebeingsoldapathwaytowealthbythefinancialindustrythatisactuallyleadingusinthewrongdirection.


Ourprimary"investments"havebroughtusgreatinsecurityandtheinabilitytotrulyplanonorcountonanything!Theinducementstostopworkingatage65havealsobetrayedus.Wehavelessstability,lesscontrol,lessrealprosperitythaneverbefore.

EarningInterest-orConflictsofInterest?

Tocomplicatemattersfurther,manyAmericansaregetting"financialadvice"fromthosewhoarenotevenobligedtoadviseinvestorsaccordingtotheinvestors'bestinterests!

Brokeragehousesandfinancialrepresentativesgenerallyoperatefroma"suitability"standard,whichmeanstheymustsellproductsthatare"suitable"foryoursituation(i.e.,yourrisk-averseretiredgrandmothercan'thavehernesteggplacedinaggressivestocks),buttheycanrecommendfundsorproductsthatpaythemthehighestcommission,evenifit'snottheBESToptionforyou!

Advisorsandplannersthatoperatefromafiduciarystandardorplatformcommittoservingthebestinterestsoftheirclients...evenifthatmeansNOTsellingaproductatall!

However,eventhefiduciarystandarddoesnotguaranteethatyou'llreceiverecommendationsfortheBESToption.

That'sbecausemostfinancialadvisorsoperatefromalimitedperspectiveandwithlittleawarenessofalternativeproductsandstrategiesthatmightbeBETTERchoices.

Andthat'swhyweassert...

"Typical"financialplanningandadviceisinsane.

So,wherediditallgowrong?

HowdidwegetINTOthismess?Andmoreimportantly...

WhatcanweDOtoprotectourselvesandescapetheinsanity?


CHAPTER 3:

How Did We Get Here?

WealthypeoplehavealwayspracticedwhatwecallInfiniteBanking.Therefore,itishelpfultolookathowpeoplebuiltwealthpriortotheexistenceofthefinancialplanningindustrytoseewhatwentwrong. Priortotheriseofthefinancialplanningindustryinthe1970's,themost-usedstrategieswere"savingsaccounts,wholelifeinsurance,andthehomemortgage,"accordingtoSteveUtkus,directoroftheVanguardCenterforRetirementResearch,asquotedinthebookPoundFoolish.

WereAmericansmorefinancialsavvythen?Theydidn'tneedtobe,becausethetypicalfamily'sfinances-andfinancialproducts-werelesscomplicated.

Nobodyneededtoknowthedifferencebetweenindexfundsandexchange-tradedfunds,hedgefundsandtarget-datefunds.Andnobodyneededtounderstandthedangersofderivatives,credit-defaultswapsandcollateralizeddebtobligations.

Stockbrokerageaccountswereprimarilyfortheupper-middleclassandthewealthy-thosewhocouldaffordtotakesomeriskswiththeirmoney.Thecostofentrytothestockmarketwashigher,andtheaveragepersondidnotyethavethesortof"easyandautomatic"accesstostockmarketandmutualfundinvestingthatexiststoday.

Peopletrackedtheirsavingsinsteadoftheircreditcarddebt.Overtime,homesturnedintofree-and-clearassets,ratherthanusedascollateraltorefinancecreditcards.

Thenumberonefearwaspublicspeakinginsteadofrunningoutofmoney.


Lifeinsuranceprovidedforwidows,widowers,andotherheirsleftbehind,andthegreatmajorityofpoliciesprovidedlifelongsavingsinadditiontoprotection.In1976thegreatmajorityofpoliciesissuedwerewholelifepolicies.

Today,typicalfinancialadvicesaystopurchaselifeinsurancejustuntilourkidsgrowup,thengetridofitbeforeweneeditthemost.

Muchmorethansimplyashiftfrom"permanent"to"temporary"terminsurance(whichdefinitelyhasitsplaceandfillsagenuineneedforaffordableprotection),thisshiftispartofalargershiftinsavingspatternsandliquidityofU.S.households.

Personalsavingsratessoaredtoapeakof14%in1975andbottomedoutpost-2000atlessthan1%.Evenatmorerecentsavingsrateshoveringaround4-5%,Americansarestillspendingsignificantlymoreoftheirincomeandsavinglessofitcomparedtoearliergenerations.

Thedeclineinsavingsisamajorfactorinthefinancialchallengesthatweface.Fortunately,savingmoneyissomethingthatwecancontrol.Itmaynotbeeasy,andittakesbudgeting,discipline,achangeofprioritiesandachangeofhabits.Butsavingmoneyispossible.

Longevityisalsoakeyeconomictrend.Again-there'sGOODnewshere,consideringthealternative!Whencombinedwiththetrendofretirementat65,longevityturnsinto(inthelanguageofmutualfundmanagers)a"risk."

Typicalfinancialadvicetellsusthatthesolutiontolowsavingsratesandlongevityistochasehigherratesofreturninthestockmarket.Butthisadvicehasonlyservedtocreatemuchfinancialinsecurity.WerecommendthatyoufindworkyouLOVEtodosothattotal"retirement"becomesunthinkable.Asabonus,theworldgetstobenefitfromyourcontributions!

TwootherfactorsthathavechangedthefaceoftheAmericaneconomy,perhapsmorethananyother,aretheadventofSocialSecurity,andtherise-andsubsequentfall-ofpensionplans.


PriortothedepressionandtheSocialSecurityActof1935,therewasnosuchthingas"retirement."However,theGreatDepression(triggeredbyastockmarketcrashalongwithashrinkingmoneysupply,complimentsoftheFederalReserve)broughtsky-highunemployment.Asyoungerworkerswithfamiliestosupportstruggledtofindwork,itwasdeterminedthatforcingolderworkersoutoftheirjobswasthesolution.

PresidentFranklinD.RooseveltproposedtheSocialSecurityActtosolvetheproblemofunemployment,essentially"bribing"workersintheir60'storetirebyofferingthemasafetynet.Itworked,andcompaniesfollowedsuitbyencouragingandevenmandatingretirementatvariousages.

Thus,beganthe"safetynet"andasetofculturalexpectationsthat,alongwithincreasedlifeexpectancies,hasevolvedintoanunsustainablesituation.

Between1945and1965,thedeclineinworker-to-beneficiaryratioswentfrom41workersperSocialSecuritybeneficiarytoonly4workersperbeneficiary.AccordingtoMercatus.org,todaytherearejust2.9workersperretiree—andtheratioisexpectedtodroptotwoworkersperbeneficiaryby2030.

Simultaneously,defined-benefitpensionplanshavealsobecomeunsustainabletothecorporationsthatonceembracedthem.PensionplansgrewinpopularityafterWorldWarIIand,untilacoupleofdecadesago,wereoftenconsiderednecessarytoattractqualityemployees.However,asretireeslivedlongerandascorporationsfoughttocontrolcosts,defined-benefitpensionfundsbegantobereplacedwithdefined-contributionplanssuchasthe401(k).

Onceagain,increasedlifeexpectancieshadaprofoundimpact.Eachyearofadditionallifeexpectancywouldcostcorporatepensionplanshundredsofbillionsofdollars.

Realizingtheycouldnotsupportseniorswhoquitat65andliveduntil90andbeyond,manycompaniesabandonedpensionplansorcombinedthemwithdefined-contributionplans,shiftingmostoralloftheresponsibilityofretirementsavingsontoemployees.


Today'spensionplansoftensufferfromthesame"typicalfinancialplanning"problemsthataffectindividuals.Theyaretoooftenunderfunded,relyingonmarketmagictoturntoo-smallcontributionsintodecadesofincomeinaninflationaryenvironment.Whethertheinvestorsareindividualsorcorporations,themathjustdoesn'twork.

Evenin2014,afteroneofthebiggestbullrunsthestockmarkethasseen,thegapbetweenprivatepensionliabilitiesandassetswasestimatedbyMoody'stobenearlytwotrilliondollars.

Whetherthemechanismissocialsecurity,pensionplans,orindividualretirementaccounts,oureconomysuffersfromtheassumptionthatpeoplecanretireat65,andsomehowthenumberswillallworkout.

Ofcourse,somepeopleCANaffordtoretireat65,oryounger,withplentytoliveon.Butisthatthebestthing?WearguethatwearebetteroffaspeoplewhenwediscoverwhatitiswelovetodoandfindawaytodoTHATforalivingforaslongaswecan!

Butthestoryof"whatwentwrong"goesbeyondastrainedsocialsecuritysystemandthefallofpensions.Whiletherehavebeenmanyeventsthathasimpactedourfinancialsystem,let'sbrieflylookatafewofthehighlightsandlowlightsofoureconomichistorytimelineintheUnitedStates.

SignsofaFinancialDisaster:

#1.1913:TheFederalReservewascreated,puttingourcountry'smonetarypolicyinthehandsofprivatebankers.

#2.September3,1929markedthestockmarket'shighbeforethelongslideintotheGreatDepression.

#3.1935:TheSocialSecurityActispassedinordertogetolderworkerstoleavetheirjobstoyoungerworkers.


#4.November23,1954:TheDowfinallyregainsitsSeptember3,1929high.

#5.The1950's:"financialplanning"consistsofasavingsaccount,awholelifeinsurancepolicy,andhomeownership.Americaenjoysaperiodofprosperity.

#6.1958:TheAmericanExpresscardandBankAmericard(whichbecameVisain1976)areintroduced,butnotwidelyusedoraccepteduntilthe1980's.

#7.Late1960's-early1980's:Personalsavingsratesaveragebetween8-12%peryear.

#8.In1971,underRichardNixon,thegovernmentdecidesitistimetomoveawayfrombackingthedollarwithgold,whichopensthedoorstotheFedbeingabletoprintmoneyatamorerapidpace.

#9.1970's:Themoneysupplymorethandoublesinthenextdecade,causinghighinflationasmoredollarschasethesamegoodsandservices.Inflationbecomesespeciallyapparentinimportpricesofgoodssuchasoil.TheWallStreetJournalreflectsinJanuary1986,andsaid,"OPECgotallthecreditforwhattheU.S.hadmainlydonetoitself."

#10.1972:IAFPenrollsitsveryfirstgroupofstudentsfortheCertifiedFinancialPlanners(CFP)courseattheCollegeforFinancialPlanning.

#11.1978:ThesectionoftheInternalRevenueCodethatmade401(k)planspossibleisenactedintolaw.Itisintendedtoallowtaxpayersabreakontaxesondeferredincome.However,in1980,benefitsconsultant,TedBenna,takesnoteofthepreviouslyobscureprovisionandfiguresouthowitcouldbeusedtosaveforretirement.

#12.By1980,pensionplanscovernearly36millionprivate-sectorworkers,bothunionandnonunion.

#13.1980's:Fueledbydemandcreatedbytheriseofqualifiedplans,themutualfundindustryexplodes,loweringthebarrierofentrytothestockmarket.


#14.1980's-early1990's:DeregulationopensthedoortothemassiveSavings&LoanCrisis,whichcoststaxpayersupwardsof$124billion.

#15.1980's-1990's:As401(k)sandqualifiedplansriseinpopularity,themassesbegintoinvestinthestockmarket."Financialeducation"programsbegintoteachandencourageemployeeshowto"invest"-orspeculate-inthestockmarket.

#16.Late1980'sandbeyond:Manydefined-benefitpensionplansbecomedefined-contributionplans.Theriskandresponsibilityforretirementsavinggraduallyshiftsfromemployerstoemployees.

#17.Late1980'sandbeyond:Savinglessandless,Americansshiftfrombeing"savers"to"investors,"seekingtoearnhigherandhigherratesofreturnontheirinvestments.

#18.1980's:A.L.Williamspopularizestheconcept,"buytermandinvestthedifference."Williamsfoundsacompanythatrakesinbillionssellingpriceyterminsuranceandhigh-feemutualfunds.

#19.1980'sandbeyond:Mutualfundfeesand"assetsundermanagement"createmassive,unprecedentedprofitsforfinancialcorporationsandamassivedrainonretirementfunds.Americansbegintoshifttheirsavingsfrombankaccounts,CDsandinsurancepolicycashvalueaccountsto"securities."

#20.Until1986,creditcardinterestistax-deductible,fuelingtherapidriseofthecreditindustryandfurtherloweringthesavingsrate.

#21.1980'sandbeyond:Chasinghigherreturns,moreandmoreAmericanscashintheirlifeinsurancepoliciesandgointooldagewithnolifeinsurance.Themiddleclasslosesaprimarymechanismfortransferringwealthtoheirs.TheMonopolyboardcardthatsays,"Collect$100,yourlifeinsuranceendows"becomesnonsensicaltoyoungerAmericans.


#22.1990'sandbeyond:CreditcardcompanieschangethewayAmericansspend.Nowamiddleorworking-classAmericancould"haveitall!"Savingsratesplummettoamere2%-orless.PeoplespendmoreandsavelessinattemptstohaveitallNOW.

#23.Late1990'sandbeyond:Target-datefundsgainpopularitywithincreasingspeedasmoreAmericanshandtheresponsibilityfortheirfinancialfuturesintothehandsofWallStreetcorporations.

#24.Early2000's:Deregulation,speculation,newaccountingpractices,executivespendingandcompanycrimescreatemassivecorporatemeltdowns,suchasEnron(2001)andWorldCom(2002).Thestockmarketstraysfurtherfrombeingavehicleforinvestingincompanieslookingforcapital,andmoreaboutgamingasystemwherethebigwinnersarefew.Marketinvestorsgetskimmedonagooddayandoutrightswindledonabadone.

#25.December2007:After14monthsofheavylobbyingofCongress,thePensionProtectionActauthorizesemployerstoplaceemployeesqualifiedplansavingsintarget-datefundsasa"default"optionifanemployeedoesnotchooseotherwise.Target-datefunds,usuallycomprisedmostlyofstocks,replacestable-valuefunds(generallyregardedasasafe,conservativetypeoffunddesignedtoprotectprincipal)asadefaultoption.

#26.ThesamePensionProtectionActalsoestablishesa"safeharbor"foremployerswhoautomaticallyenrollemployeesinto401(k)plans,ensuringthattheycannotbeheldliableforinvestmentlossesaslongastheyplacetheiremployees'moneyintoeithertarget-datefunds,managedfunds,orbalancedfunds(alltypicallystockmarketsecurities.)

Canwepauseheretopondertheabsurdityofthislegislation?Employerscannotbeheldliableiftheyplaceanemployee'smoneyinaninvestmentthatlosesmoney.Andnow,employersonlyenjoythissafeharborprotectionIFtheyplacetheiremployees'moneyininvestmentsthatAREriskyandthatDOlosemoneyinstockmarketdeclines.AndTHISiscalledthe"PensionProtectionAct"?Itsoundsmorelikethe"WallStreetCommissionandBonusProtectionAct"!


#27.2008-2009:Oneyearafterthosechangestookplace,AmericaninvestorssustaintremendouslossesinthebiggeststockmarketcrashsincetheGreatDepression.Neitherthelawmakers,brokers,moneymanagers,theDepartmentofLabor,ortheemployerscouldbeheldliableforthelossofretirementfunds.

#28.2007-2010:Thesub-primemortgagecrisisalsocausesdeephomeownerandinvestorlossesinrealestate,whiledevaluinghomesandcreatinganationalwaveofforeclosures.

#29.2007-2008:TwoGoldmanSachstradersinitiallyturnthecrisisintolargeprofitsforthefirm,earning$4billionby"betting"onthecollapseinthesub-primemarketwhileshort-sellingmortgage-backedsecurities.GoldmanCEOandChairmanLloydBlankfeinoverseesGoldman'sriskybetsonthehousingbubble,thenturnstheinvestmentfirmintoabanksoitcouldgetTARPmoney.

#30.2008:WallStreetexecutivesreceivegoldenparachutesforluxuriouslivingwhilelosingMainStreetsavingsandinvestments.TheBigBankstake$175billionintaxpayerbailoutswhilepayingout$32.6billioninbonusesalonetoCEOsandkeyemployees.Notwantingtoappeargreedy,Blankfeinforgoeshis2008bonus,butstillrakesin$42.9millioninsalary,stockoptions,andothercompensation.

#31.December2008:Interestrateshitanall-timelowandstaythere,turningaccumulatednesteggsintomeretricklesofincome.

#32.March5,2009:TheDowJonesfallstoitslowof6,594.44,lessthan50%ofitsall-timehighlessthan18monthsearlier.

#33.2009andbeyond:Asunemploymentremainshigh,recordnumbersofpeoplebegincollectingSocialSecurityat62becausetheycannotfindworktomeettheirexpenses.


#34.2000totoday:Seeminglyunawareofrisksandrecentfailures(andnotknowingwhatelsetodo),workingAmericanscontinuetobuytarget-datefundsinincreasingamounts.(It'sworthnotingthatmanyinthefinancialplanningarenaareNOTfansofthesefunds,butfornewbieinvestors,target-datefundsbegintoreplaceprofessionaladvice.)

#35.2011:Newcensusnumbersthattakeintoaccountrisinghealthcarecostsrevealthat1in6Americans65andolderarenowlivinginpovertyintheU.S.Seniorshavelostmoreeconomicgroundthananyotheragegroup.Medicaidcostsincreasinglystrainstateandfederalbudgets.

#36.By2011,97%ofprivatesectorcompanieshaveeitherdiscontinueddefined-benefitpensionsorwateredthemdownseverely,combiningthemwithdefined-contributionplans.

#37.April2012:ThefirstUSPublicPensionplandeclaresbankruptcy.Underfundedpensions,privateaswellaspublic,becomeincreasinglyinvestedinthestockmarketandbegintofailwithgreaterfrequencyandwithgreaterimpact.

#38.2012:TheRetirementSavingsDrainReportdiscoversthatmanagementfeesdrain31%ormoreoftheaverageretirementfund,whichoftenleakssixfigurestofeesbythetimeatypicalinvestorentersretirement.(Fundswilldrainfurtherprofitsduringretirement.)

#39.2011-2014:Americanscontinuetoinvestinthefinancialindustrythatcrashedonlyafewyearsbefore,evenasthestockmarketbecomesmoreunstablethaneverwithspeedtradingandothertechnologies.Target-datefundscontinuetogrowinpopularity,especiallywithnewerinvestors,inspiteoftheirrisksand(often)hiddenandlayeredfees.

#40.2013:Americanswatchtheirmutualfundsbouncebacktopre-recessionlevels.Theystartusingcreditagain,andspendingincreases.Itisdeclareda"recovery."


#41.2012-today:Whilethestockmarketrebounds,rumorsbegintocirculateofthe"educationbubble,"the"bondbubble,"thenext"stockmarketbubble"andotherfinancialaccidents-waiting-to-happen.Thosewhopredictedthe2008crashpredictthatanotherperhapsworsefinancialmeltdownisonthehorizon.

Intypicalfashion,thefinancialmediaignoresthewarningsigns,censorsthesolutions,andanalystscontinuetheirnever-endinggameofspeculatingwhatthenexthotstockswillbe.OnlyfinancialexpertsNOTsponsoredbyfinancialcorporationsdaretosuggestthatstockscannotcontinuetoriseforever.

Isthisa"recovery"orthecalmbeforethenextstorm?

WebelievethatanyobjectiveobserverwholooksattheeconomichistoryoftheUnitedStateswillagreethatcontinuingtotrustWallStreetcorporations,BigBanksand"typical"financialadviceisNOTthepathtoasustainablefinancialfuture!

Itisclearthatmassiveconflictsofinteresthaveshapedtheinstitutions,productsandfinancialeducationthatinfluencehowAmericansinvest.

Typicalfinancialadviceisnottheanswer.

Regardlessofwhatregulationsarepassedorrepealed,ampleevidencesuggeststhatthebigfinancialcorporationswillcontinuetolookforopportunitiestomakemoneyFROMtheircustomersandinvestors,whetherornottheymakemoneyFORtheircustomersandinvestors.

Meanwhile,typicalfinancialplanningandadvicecontinuestoutilizeabrokensystemfullofhalf-truthsandmathematicalshortcomingstohelpAmericanscreate"financialsecurity."

Peoplecontinuetoaimforretirementat65-orevenearlier-inspiteoftheeconomicrisksofdoingso.Manycompaniesandindustriescontinuetoencourageorevenmandateretirement,inspiteoftheexperienceandwisdomthatseniorshavetocontribute.

Andstill,thenumbersjustdon'tquite"work."

Isn'tittimetochangecourseandtrysomethingDIFFERENT?


CHAPTER 4:

The Infinite Banking Alternative

Iftypicalfinancialplanningdoesn'twork,whatdoes?

Whenwebecameawarethatthereweresomebigproblemswithtypicalfinancialadviceandstrategies,westartedobservingwhatwealthypeopledid.Welookedforthepositivepatterns,andnoticedwhathabits,beliefs,strategiesandphilosophiesthetrulywealthyhadincommon.Andwenoticedthatthoseontheirwaytofinancialfreedomdidthingsdifferently.

Wealthypeopleweren'tfollowing"conventionalfinancialwisdom"ortheplanthatWallStreethadforthem.Oftentimes,thesuccessfulbusinessownersandentrepreneurswemetwereNOT:

• Investinginthestockmarket;

• Maxingouttheir401(k)s;

• Prepayingtheirmortgages;

• Savinginsavingsaccountspaying1%interestorless;

• Workingtraditionaljobsuntil"retirementage";

• Deferringtheirincometaxesuntilretirement,or

• Puttingtheirincomeandtheirfutureinsomeoneelse'scontrol.

Wealthypeopledon'tfollow"typical"financialplans.Theydon'tmaxouttheir401(k)s,crosstheirfingersandwait.Andtheydon'tputtheirdollarsandtrustunderthecontrolofthebigfinancialcorporationsandthegovernment.

Mostwealthypeoplepracticewhatwecall"InfiniteBanking."


InfiniteBankingisathoughtprocessthatrepresentsamajorparadigmshift.ItwasdiscoveredanddevelopedbyNelsonNash,authorofBecomingYourOwnBanker,anditusesasitsplatformaproperly-designeddividend-payingwholelifeinsurancepolicyfromamutuallifeinsurancecompany.Thispolicyisdesigned–withtheassistanceofriders-toemphasizethecashvalueaccumulationratherthantheearlydeathbenefit.

InfiniteBankingseekstoprotecttheprincipalasitgrows,ratherthanchaseunreliablereturns.Itprovidesguaranteedaccesstocredit,andremember,whencashisavailable,opportunitieswillseekyouout.(AndsomeopportunitiesproduceVERYstrongreturnsaswell.)

Theopportunities/strategieswetypicallyencouragedonotrelyonguessesandassumptions,thepoliticalclimate,themoodofthemarket,orgovernmentpolicy.

Wewantourclientstofocusoncreatingcashflowthatwilleventuallyfundtheirfinancialfreedom.Therearemanywaystodothis,suchas:

• rentalproperties;

• traditionaloronlinebusinesses;

• intellectualpropertypublishing,licensing,androyalties;

• networkmarketingorreferralmarketing;

• providingfinancingforothersthroughpeer-to-peerloans;

• commercialmortgagebridgeloaninvestments.

Toooften,weforgetthatsuccessfulwealth-buildingisnotaboutamassingthebiggestpileofmoneywecan,butit’saboutusingourwealth(dollars,skills,knowledge,etc.)tocreateasustainablelifethatinspiresus,empowersus,andenablesustoofferourdeepestgifts.

Whileunderstandingthatdifferentinvestmentvehiclesdohaverulesthatmustbefollowed,weteachourclientstokeeptheirdollarsundertheircontrolsothattheycanmakechoicesabouttheirmoneyinsteadofhavingsomeoneelse-oranunpredictablemarket-makechoicesforthem.


Waystocontrolyourwealthinclude:

• Avoidingspeculationandtryingto"timethemarkets."

• Beinganactiveinvestorwhounderstandswhatyou'reinvestinginanddoesnotdelegateyourmoneyanddecisionstoothers.

• Limiting401(k)orotherqualifiedplancontributionstoamountrequiredfortheemployermatch,andinvestingadditionallyoutsideofqualifiedplans.

• UsingRothratherthantraditionalIRAsand401(k)s.

• Notreinvestingdividendsintaxableinvestmentaccounts(wheredividendsearnedbecomesubjectedtofurtherfeesandtaxes),butinsteadinvestthedividendselsewhere.

• Utilizinghighcashvaluewholelifeinsurancetobuildliquidity,growthandprotectionoflong-termsavings.

InfiniteBankingrecognizesthat"planning"isoflimiteduse,becausewhendoeslifeevergoasplanned?

InfiniteBankingputsYOUbackincontrolofyourmoney,usingtried-and-truestrategiesthatdonotrelyonluck,speculation,constanttime-consuminganalysis,orabullmarket.

InfiniteBankingallowsourclientstogetresultswhileprotectingthemselvesfromanunstablestockmarketandbankingsystem.

InfiniteBankingisanalternativetotypicalfinancialplanningandadvice,anditworks.It'sadifferentwayofdoingthings.

InfiniteBankingstartswithwhereveryouarerightnow.Whetheryoufeellikeyou're"behind"onyourfinancesorhaveexperiencedgreatprosperity,itdealswithmoneyyouhavenow.

Ratherthantryingtopredictthefuture,thefocusisonOPTIMIZINGyourdollars,makingthemmoreefficient,andputtingwhatyouhavetothebestusepossible!


InfiniteBankingencouragespeopletoremainactiveandproductive,contributingtheirgiftsforaslongaspossible.Ratherthanretireatsomearbitraryage,weadvocatethatseniorscontinuetowork,startbusinesses,orvolunteeraroundtheirpassions.


CHAPTER 5:

Infinite Banking In ACTION!

InfiniteBankingguidesusinourfinancialdecision-makingandleadsusawayfromtypicalfinancialstrategiesandadvice.

Let'slookatfourspecificexamplesofInfiniteBankinginactionandseehowitleadsustonewthinkingandgreatercontrolanduseofourassets.

Example1:CollegeEducation

Typicalfinancialadvicetellsparentstostartsavingina529planorCoverdellaccount.Manyparentsstartwhentheirchildrenareborn.

Suchcollegesavingsplansandaccountsactually:

• Assistyourchildindisqualifyingforfinancialaid(bysavinginvehiclesthatmustbeclaimedonaFAFSA)shouldtheyhaveotherwisebeenqualified.

• Sufferthesameproblemsasother“typical”investments,intermsofhighrisk,lowreward,lowcontrol,andlimitedinvestmentoptions,oftenwithhighorunnecessarymanagementfees.

• Trapdollarsinaccountsthatcanonlybeusedforlimitedreasonswithstrictrules.(Whatiftheydecidenottogotocollege?InaCoverdell,thechildwillpaytaxesplusa10%penaltyonearningsiffundsarenotusedwithin30daysoftheir30thbirthdayforcollegeexpenses.)

• Drainmoneyawayfromtheparents'financialfreedom.(Rememberopportunitycosts?Yourchild'scollegeeducationwillendupcostingyoumuchmorethanyouthinkifyousaveforitthetypicalway!)

• Ugh–nowthere’reeven“age-basedplansforaggressiveinvestors”thatshareallthesameissuesandpotentialinstabilitiesastarget-datefunds!


SomeofpossibleInfiniteBankingsolutionsforfinancingacollegeeducationmightinclude:

OPTIONA:

• Savinginyourownoryourchild’swholelifepolicy(oftenatinternalratesofreturnofabout5%),

• Policycashvaluedoesnotcount"against"thechildwhenfinancialaidisdetermined.

• Fundscanbeborrowedtax-free,orwithdrawnandusedfortuition,housing,orothercosts(includingmentorships,apprenticeships,alternativeorinternationalprogramsthatmaynotqualifyfortypicaleducationloans).

• Whenfundsareusedascollateralforcollegecosts,theunderlyingsavingskeepgrowinginthecashvalueaccount.Thisgrowthhelpsoffsetthecostofthepolicyloans.

• Fundscanberepaidbyparentsand/orthecollegegraduateonascheduleofpolicyholder'schoice.

• Whiledollarsarebeingsavedforcollege,theyarealsodoingotherjobs,suchasprovidingprotection,emergencyfunds,andmore.

OPTIONB:

Amoreleveragedwaytousecashvaluesavingsfortheentrepreneurially-mindedmightbeto:

• Saveinyourownoryourchild’swholelifepolicy.

• Borrowagainstpolicyfundsforadownpaymentonatriplexorfourplexnearthechild’scollegeofchoice.

• Thechildlivesinoneunitwhilefindingroommatesandotherrenterstoturnwhatwouldhavebeenacollegeexpense–housing–intoaleveragedassetwithcash-flowandbuilt-inlessonsinbusiness,realestate,andresponsibility!


• Ratherthancomingawayfromcollegewithadiplomaanddrainedaccounts,thefamilynowhasanassetthatcancontinuetoproducecashflowandgainequity.

• Cashflowfromthepropertypaysbackthepropertydownpayment,and,eventually,themortgageandotherexpenses.

• Nowyouhaveacollegegraduateandanadditionalasset!

ADDITIONALOPTIONS:Withalittlecreativity,manyotherInfiniteBankingscenarioscanbeimagined,suchashelpingachildcreateabusinesstopayforcollege,orhiringachildinanexistingbusinesstohelpthemfundtheirowncollegeeducation,whileproducingatax-deductionforthebusiness!

Whateveroptionsyouchoose,werecommendchoicesthatwillallowthestudenttoparticipateintheirowncollegefundinginsomeway,perhapsthroughwork,repayment,decision-making,etc.Thisfostersindependenceandconfidenceratherthandependenceandentitlement.

Wealsoinviteparentstotakeanhonest,open-eyedlookattheopportunitycostsinvolvedincollege.Yes,youmaychoosetopayforcollege,evenprivatecollegeandadvanceddegrees,butyoushouldmakethosechoicesonlyafterunderstandingthewholetruthaboutwhatthosedegreeswillcostyou!

Example2:InvestingforIncome

Typicalfinancialadvicefollowsthe"accumulatenow,withdrawlater"plan.Theproblemwiththisis,asmentionedearlier,peopleliveoncashflow,notonnetworth.Andtypicalfinancialstrategiesforincomemaynotevenkeepupwithinflation!

Typicalfinancialadvicesaysto:

• Accumulateasmuchmoneyasyoucaninyour401(k)andotherinvestmentaccountsuntilretirement(orwhatevertimeyouwanttostarttakingdistributions.)


• Atthispoint,transitionmostorallofyourmoney(possiblyafterpayingthetaxman)into"income"investmentssuchasdividendstocks,higher-yieldbondsandannuities.

• Whiletheseinvestmentsaregenerallythoughtofas"secure,"dividendstockstookabigdiveintheGreatRecession,andthebondsthatpaymoreaggressivelyareoftennotqualityinvestments.

• Typically,you'readvisedtokeepaportionofassetsincashequivalentssuchascertificatesofdeposit,thoughrock-bottomratesareencouragingseniorstotakemorerisk.

• Drawdownassetsatarateof3-4%ofprincipal.(Yes,theformer"4%rule"isdown-sizingduetolowinterestrates.)Withdrawfaster,andyoucouldrunoutofincomeinretirement.

• Fundsintaxableretirementaccountsremainsubjecttofuturetaxesatanunknownrate,aswellasvariousqualifiedplanrules.Fundsoutsideofqualifiedplansareoftentaxedascapitalgains.

Theproblemswithtypicalincomestrategiesaremultiple:

• Incomemaynegativelyaffectsocialsecurityincome.

• Assetsmaynotholdvalue.

• Earningsarelow.

• Oftentimes,continuedtaxationandfeescontinuetochipawayatyourinvestmentsandyourcashflow.

However,perhapsthebiggestproblemwithtypicalfinancialstrategiesisthatthere'sno"fallback"planfordecreasingrates,risinginflation,ormajoremergenciesthatmightconsumesignificantassets.

It'snowonderseniorssaytheirgreatestfearisrunningoutofmoney!


That'sbecausethe"accumulatenow,drawdownlater"strategyisapoorplanwithnoemergencyexits.

Whenclientscometouswithtypicalinvestmentsandtaxableretirementaccountsintheirportfolios,wehelpthemstrategizehowtosequencetheirconsumptionofassetstominimizetaxationandputmoremoneyintheirpockets.

Peopletendtowithdraw"alittleatatime"fromallavailableassets,butthatisrarelyefficient.Byconsumingthetaxableaccountsfirstand/ormovingfundsoutoftaxableaccountsintotax-advantagedaccounts,investorscankeepmoreoftheirownmoney.

However,wedon'tsuggestusing"typicalinvestments"whenyourgoalissustainableincome.

Instead,werecommendinvestmentsandsavingsvehiclesthatoffersecurityofprincipal,healthyreturns,andflexibility.

Participatingmutualwholelifeinsurancefundedwithmaximumpaid-upadditionridersisnotonlyagreatwaytosavelong-term,butitisaproductthatcanofferadditionalbenefitstothosedesiringfutureincomeandadditionalassurance.

• Cashvaluedividendsofparticipatingmutualinsurancecompanieshavehistoricallyproducedhealthy,reliableincomeinretirement.Thisstrategycanprovideyouwithgreatersafety,stability,taxsavingsandflexibilitycomparedwithtraditionalincomestrategies,includingannuities.

• Dividendsarenottaxedasincome,theyareconsideredareturnofpremiumwhenwithdrawnuptobasis,andgrowthcanbeborrowedagainst.

• WiththeproperriderssuchasaWaiverofPremium,andaLong-TermCarerider,awholelifepolicycanalsoprovidedisabilityincomeorevenaccelerationofthedeathbenefitincasesofchronicorterminalillness.

• Becausetruemutualinsurancecompaniesareownedbythepolicyholders(asopposedtostockinsurancecompaniesownedbystockholders),theyplanandinvestforthelong-termratherthanjustthenextquarter.Thiscreatesstabilityandprofitabilityforpolicyholders.


Withtypicalstrategies,peopleshouldbeafraidofrunningoutofmoney.WithInfiniteBanking,youhavegreaterflexibilityandcontrol.

Example3:SavingMoney

Whenpeoplestartoutsavingmoney,someusebankaccounts,whichcanbeagoodwaytobuildanemergencyfund.Othersstartputtingtheirmoneystraightinto401(k)plansandotherinvestmentsinsideofaqualifiedplan.Herearetheproblemsandpitfallswiththesetypicalstrategies:

• Bankscurrentlyearnmuchlessthan1%...andit'staxable!

• Bankaccountsarenotnecessarilyprivateorsecure.Fromcivilassetforfeituretocybercrimes,identitytheft,liens,lawsuitsandgarnishments,therearecountlessexamplesofhowsomeone'sbanksavingshaveendedupinsomeoneelse'shands.

• Qualifiedplansmakepoorvehiclesforsavings.Theysubjectmoneytorisk,putitbehindataxwall,andtiedollarsupwheretheycannotbeused.

• Moneycanbeborrowedfromabankonlyifyou"qualify"fortheloan,andrulesforborrowingfroma401(k)planarestrictandforlimitedreasons.

• Investmentoptionsarelimitedinqualifiedplans.Typically,yourchoicesaretotakeriskswithsecuritiesorparkyourmoneyinacashequivalentearningnext-to-nothing.

• Regardlessofwhetherapersonsavesinaqualifiedplanorasavingsaccount,iftheydesirelifeinsurance,theywillhavetopayadditionallyforterminsurancethatwillexpireafteracertainperiodoftime.

• Terminsurancepremiumsmustbecountedasanopportunitycost,asthatmoneycannotbesavedorinvestedelsewhere.(Norisyourfamilylikelytoeverreceivethedeathbenefit.)


TheInfiniteBankingsolutionistosaveinahighcashvalue,dividend-payingwholelifepolicystructuredwiththemaximumpaid-upadditions.Wesay"save,"not"invest,"becauseinsuranceisnotclassifiedasaninvestment.Itismoreappropriatetocomparecashvaluetosafe,liquidinvestmentsthatcannotlosevalue.However,there'sreallynocomparison!

Usingthisstrategy:

• Whenheldlong-term,internalratesofreturnarecurrentlybetween3-5%(dependingonageandhealth).You'llhavegreaterreturnsandalsomoreprivacyandsecuritythanbanksprovide,withnodownsiderisk.

• Cashvalueisliquidandyoucanborrowagainstitanytimeforanyreason.(Itcanalsobewithdrawn,butwedon'trecommendwithdrawalsinmostsituations.)

• Cashvaluebecomes"all-purpose"savingsthat,likeaSwiss-armyknife,canbeusedformultiplepurposes...homerepairs,collegetuition,arentalpropertydownpayment,healthcarecosts,businessexpenses,anewcar,etc.

• Bybeingabletosaveinonelargeaccount(insteadofmanyothersmaller,single-purposeaccounts),youcanbuildliquidityandfinancialflexibility.

• Policyloanscanberepaidontheborrower'sschedulewhilethecashvalueusedascollateralkeepsgrowing,unaffectedbytheloan.

• Permanentinsuranceincreasesthepolicyholder'sestatevalueandcreateslegaciesforheirsandcharities.Thedeathbenefitgrowswithawholelifepolicyandprovidesadditionalvaluetotheestate.

• Incertainsituations,deathbenefitscanbeutilizedbythepolicyholderwhilestillliving,aspoliciescanbesoldonthesecondaryinsurancemarketordeathbenefitscanbeacceleratedaccordingtoridersincasesofterminalillness.

• Anadequately-fundedpermanentinsurancepolicywithaWaiverofPremiumridercanpotentiallyeliminatetheneedfordisabilityinsuranceortermlifeinsurance.


• Inmanystates,wholelifepolicycashvalueaccountsareprotectedfromliens,lawsuits,and(inallstates)fromthepryingeyesoftheIRS.

• Lifeinsurancepolicycashvalueisnotcountedasanassetforcollege,noraredividendsconsideredincomebytheIRS.

• Dividendscancreatereliablepermanentretirementincomeatratesofreturnfarbeyondbankproducts,withgreaterprotectionandprivacyofprincipal.(Althoughnotguaranteed,dividendshavebeenpaidbymutualinsurancecompaniesforover150yearsthrougheveryeconomicchallengeimaginable.)

TheBIGBonusofSaving:

Typicalfinancialadvicespeaksofsavingsintermsof"emergencyfunds,"andyes,emergencyfundsareVERYimportant!(TheyaresoimportantthatifyoudoNOThaveliquidfundstosustainyouforanumberofmonths,youshouldsavethatfirstandobtainterminsuranceasneededordesiredbeforeyoustartawholelifepolicy.)

Butthe"goal"ofInfiniteBankingisNOTtosimplyearn3-5%onyoursavings.

Savingmoneyisjustthefoundation...thefirststeptoputtingyourselfinapositionwhereyoucanputthatmoneytoworkthrough"real"investmentsorotherstrategies.

Savingisn'tjustforemergencies...it'salsoforOPPORTUNITIES!

Whenyouconsiderthevelocityofmoney...oneofthesecretsthatmakesInfiniteBankingsoeffectiveisthattheseopportunitiesarewherewealth-buildingcanstarttoreallyACCELERATE!

Toooften,peoplehavetheirsavingsandinvestmentstiedupin15differentplaceswheremoneyisinaccessible.(AnIRAortwo,a401(k),a529foreachchild,etc.)

Theydon'teven"see"opportunities,becausetheyhavenoliquiditytotakeadvantageofthem.


Whenpeoplebuilduptheirsavingsandliquidityandhavetheabilitytoinvestsignificantsumsofmoney,newopportunitieswillsuddenlystartcomingtheirway!Withouttheliquidity,theywouldhaveeithernotnoticedornotbeenabletotakeadvantageofopportunitiestoreliablyearnasmuchasdoubledigitreturns.

CASESTUDYA:NelsonNash,authorofBecomingYourOwnBanker,wasintheforestrybusinessbeforehewentintotheinsurancebusiness.Onedayhewasabletousehispoliciestotemporarilyborrowmoneyforthepurchaseoflandwithtimberatanexcellent,below-marketprice.Thetimberwascutandsold,andNelsonmadeanextremelyhealthyprofitoffofhisinvestment,ofmanytimestheinterestratethathispolicyalonewaspaying.Theopportunitywasmadepossiblebecausehehadaccesstothecapital!

CASESTUDYB:Aclientofourscametousforhelpwithanalyzingacommercialrealestatedeal.Itlookedlikeaverysoliddeal,asthepropertywasproducingalmost18%cash-on-cashreturn!However,usinghiswholelifepolicyforleverage,hewasabletopurchasethepropertywithmuchlessmoneyoutofpocket,therebyincreasinghiseffectiverateofreturnto111%!

Hisactualcashflowwasless,buttherateofreturnrosebecausehewasnowusingthelifeinsurancecompany'smoneyinsteadofhisown.(A"zero-down"dealwouldhaveaninfiniterateofreturn.)Thus,hewouldalsohavethecapacitytodomoredealsandearnmorereturnsatahigherrateofreturnthanusingonlyhisowncash.

CASESTUDYC:Wehaveseencashvaluepolicyloansusedforinvestmentsprovidingsteadyreturnsof12-14%.Now,12%isanexcellentrateofreturn,butwhenyoucanborrowagainstyourowncashat5%andearn12%,youareearninga140%rateofreturnonthemoneyyouareborrowingagainst.

Mostpeoplethinkthatborrowingat5%andearning12%wouldequala7%gain,butthatisnottrue!Youhavetothinkofitintermsofdollars(orwidgetsmayhelp.)Ifyouborrow5dollarsandtradeyour$5forsomeoneelse's$12,your5dollarshasearnedbackanamountequalto2-2/5timesitself-ahundredandfortypercentgainfromwhereyoustarted.


Ifyouareastoreownerwhocanbuyahammerfor$5andsellitfor$12retail,youhavemarkedupyourproductby140%ofitsoriginalprice.Whenwecanborrowmoneyatonepriceandearnitatanother,wearesimplymarkingupdollars.Thisishowbanksmakemoney...aLOTofmoney!

Anddon'tforget...whenyouusewholelifeinsuranceasalong-termsavingsvehicle,youalsoputadeathbenefitinplace.Notonlydoyoursavingsoutpaceinflationwhenheldlong-term,butanadditionalassetisalsoaddedtoyourestatethatcanbeused,forinstance,togiveasurvivingspouseadditionalincomeorassets.

Perhapsnowyouunderstandwhythewealthystillutilizewholelifeinsurancetobuildandkeepwealth,evenwhilemostinvestorsaretoldto"buytermandinvestthedifference."

Example4:RealEstate

Typicalfinancialadvice(fromSuzeOrmanorDaveRamsey)saysto:

• Savea20%downpayment

• Purchaseahome,witha15-yearmortgage,ifyoucanaffordtodoso.

• Orgeta30-yearmortgageandpayextraagainsttheprincipalsothatyoucanpayoffyourhomeearlyandsaveoninterest.

• In15-25years,youhaveafreeandclearhome.(Unlessyourefinance,asmanypeopledo....)

Onthesurface,thismakessense.

Butconsiderthealternative.Weencourageownershipofassetsasthesteppingstonefrombeing"comfortable"tobeingtrulyfinanciallyfree.

Seehowtypicalfinancialadviceactuallypreventspeoplefromexpandingtheirassetbase,comparedtoourstrategies.

Wesuggest:


• There'snoneedtowaittosavethe20%whilethrowingyearsofextrarentpaymentsdownthedrain.Purchaseahomewhenyoucanaffordtodoso,evenutilizinglow-down-paymentprograms.

• Geta30-yearmortgagewithlowerpayments.

• Ratherthanpayingextraagainstyourmortgageasyoucanaffordtodoso,SAVEmoremoneyinOTHERASSETS.Someoptionsmightbe:

• Ahighcashvaluewholelifepolicytostart(tobuildliquidity),or,whenyouhavesufficientfunds,investmentssuchascommercialmortgages,orrentalrealestate.

• In30years,youwillhaveafreeandclearhomePLUSadditionalhomesorothercash-flowinginvestments.

• Inthemeantime,youwillhavegreaterfinancialsecurityandcontrolofyourmoneybybuildingliquidityoradditionalassets.Payingdownprincipalputsmoneyoutofyourreachandcontrolwhileaddingnothingtothevalueofahome.

• Bysavingandinvestingonthesideratherthanstrivingtopayoffamortgageearly,youincreasebothyourassetbaseandyourfuturecashflow.

Theresultofutilizingsuchstrategies?Oneofourclientspurchasedherfirsthome-"Property1"-for$110kusinga3.5%downFHAloan.

Afewyearslater,shesavedmoneyforadownpaymentonhersecondhome,Property2,andturnedProperty1intoarentalproperty.

Alittleovertwoyearslater,Property1hadgainedfurtherappreciationandshewasabletosellitforaprofitofabout$95k.Withthetax-freeproceeds,shepurchasedanotherrentalproperty-Property3-aswellaspaidoffherconsumerdebt,boughtacar,andtookavacationtoEurope.

Twoyearslater,sherefinancedhersecondhome,Property2,andusedtheproceedsasadownpaymentonanewhome-Property4,turningProperty2intoasecondrentalproperty.


Lessthanthreeyearslater,shesoldthetworentalhomes-Property2and3-foragainofover$200k.Overhalfofthatmoneywasnotsubjectedtotaxesofanykind,asshehadlivedthehomefortwoofthelast5years.(Andshestillownedahome-Property4-thatshecouldeitherliveinorrentforpositivecashflow,ifshedesired.)

In12years,shehadcreatedwindfallstotalingabout$300k.

(Andwedidn'tevenmentionProperty5,anotherrentalthatshepurchasedwithapartnerwhileshestillownedProperty4.Thoughitlostequityinthedownturn,itcontinuedtoproducecashflow,andeventuallyitsvaluereboundedandevenrose.Shejustsoldthatfora$33kprofit.)

Andatthetime,shewasasinglemotherearningabout$55kperyearinher"dayjob."

Couldshehavesaved$300kfromhersalaryinthesameamountoftimefollowingtypicalfinancialadvice?Absolutelynot!Butbyutilizingmanycommon-senseprinciples(withtheassistanceofahealthyrealestatemarket),shewasableto

• Thinkprosperously,

• Seethebigpicture,

• Controlhermoneyandinvestments,

• Movemoneythroughassets,notjusttoassets,and

• Multiplydollarsandthejobsthattheydid.

Ifshewouldhavejuststayedinherfirsthomeandacceleratedmortgagepayments,shewouldSTILLbepayingoffherhome,andwouldnothaveenjoyedthosewindfallscreatedthroughownershipofadditionalproperties.

Asyoucansee,consistentuseofInfiniteBankingprinciplesisapowerfulwayofoptimizingyourdollars!

Whenwestopfocusingon"ratesofreturn"andfocusmoreonInfiniteBankingprinciples,wecanincreasetheVELOCITY-ormovement-ofourmoney.


YoucanseenowhowInfiniteBankingchangestheconversationandchallengesthequestionsthattypicalfinancialplanningandbigfinancialcorporationsareasking-andtryingtogetyoutoask:

"What'stherightratioofstockstobonds?"

"HowmuchdoIneedtosavetoretireat65?"

"WhatrateofreturnshouldIbeprojectingmyinvestmentstoearn?"

"HowcanImaximizemytaxdeferralsthroughqualifiedplans?"

"What'sthequickestwaytopayoffamortgage?"

InfiniteBankingturns"conventionalwisdom"onitshead.

InfiniteBankingdoesn'tjustfocusonhowmuchmoneyyouhave,butonhowmuchFREEDOMyouhavewithyourmoney.Canyouuseitifyouwish?Canyouborrowagainstit?Isittax-advantaged-nottax-deferred?Canyoupassitontoaspouseorchildreneasilyandwithminimalcosts?

Ratherthanencouragingyoutohandcontrolofyourdollarstoanadvisor,aninstitution,orthegovernment,wewantyoutohaveControl,Liquidity,UseandEquity.

NowthatyouarefamiliarwithInfiniteBanking,whatwillyouDOwiththisinformation?


CHAPTER 6:

So, What’s Next?

OncewewokeupfromourFinancialPlanningdream,weembracedanewdream:

TotelleveryonewhowilllistentheWHOLETruthabouthowmoneyreallyworks.

OnceyouunderstandtheTruthaboutoureconomicsystem,there'snogoingback.We’recommittedtohelpingpeopleavoidtheriggedsystemandbadadvicethatKEEPSusfromtruewealth.

Wecanandwemustlearntobuildbullet-proof,life-longwealth-inanyeconomy-withoutWallStreetinstitutionsandBigBanks.

Mostpeoplewouldratherdowhateverybodyelseisdoing-ordowhatthey'retoldtodo-thanresearchalternativewaysofthinkinganddoingthings.Butnotyou.

Ifyouarereadingthis,youareobviouslyanexception,andwe'dliketoTHANKYOU.

Thank-youforreadingthiseBook.Thank-youfortakingthetimeandefforttoexploreadifferentwayofthinkinganddoingthings.

Andnow,wehaveanimportantquestion....

WhatwillyouDOwiththisinformation?AreyouusingInfiniteBankingprinciplesandstrategiesnow(intentionallyornot)?InwhatwayscanyoualignyourfinancesmorecloselywiththeInfiniteBankingconcept?

Perhapsit'stimeforyoutoinvestigatefurther.Perhapsit'stimetotakeACTIONonwhatyoualreadyknowtobetrue.Whateverthecase,weencourageyounottoreadthiseBookanddonothing.Decidewhatyournextstepsare,andmaketimetodothem.


ThestabilityofourfamiliesandthehealthofoureconomyREQUIREthisinformationtocometolight.

IfyouwouldliketolearnhowyoucanimplementanInfiniteBankingsystemthatwouldgrowasubstantialamountofcashthatyouhaveaccesstoatanytimewithoutpenalties,isunrelatedtothestockmarket,andwillgenerateincomethatisnotincludedinyourtaxreturn,visitourwebsiteathttp://InfiniteBankingSimplified.comorfeelfreetoemailusyourquestionsatContactUs@InfiniteBankingSimplified.comorcallustoll-freeat1-844-443-8422.

IsisB.Palicio,LUTCF,MBA

PedroA.Palicio,MBA,Ph.D.

InfiniteBankingConcepts®AuthorizedPractitioners

Weareexpertsindesigninghighcashvaluedividend-payingwholelifepolicies.


About the Authors

IsisB.Palicio,LUTCF,MBAExecutiveVicePresident&COOUniversalWealthManagersLLCInfiniteBankingConcepts®AuthorizedPractitioner

IsishasbeenaFinancialProfessionalsince1996.

In2005,IsisandherhusbandPedroestablishedUniversalWealthManagersintheCityofCoralGables,asuburbofMiami,Florida.Itsmissionistoprovideitsclientsinsurancebrokerage

andfinancialadvisoryservicesofthehighestquality,basedonitstenetsofexperience,trust,integrityandobjectivity.

ShortlyafterPedrobecameinterestedintheInfiniteBankingConcept,Isisstartedworkingcloselywithhimtoeducate,coachandserveadiverseclientelethatincludesfamilies,businessowners,professionalsandhigh-net-worthindividualsthroughouttheUnitedStatesinthislife-changingconcept.ShegenuinelycaresabouteveryoneofourclientsandhasbecomeverypassionateabouttheInfiniteBankingConcept.

IsisholdsaMastersofBusinessAdministration(MBA)degreewithemphasisinFinancialPlanning.SheisfullybilingualinEnglishandSpanish.IsisandPedrohavetwodaughtersandsheenjoysworkingwithpeople,arts,crafts,travel,andreadingmysterynovels.BothPedroandIsisareveryactiveintheirbusinesscommunity.


PedroA.Palicio,MBA,Ph.D.President&CEOUniversalWealthManagersLLCInfiniteBankingConcepts®AuthorizedPractitioner

Pedrostartedinthefinancialservicesindustryin1994.

In2005,heandhiswifeIsisestablishedtheirowncompany,UniversalWealthManagersLLCintheCityofCoralGables,asuburbofMiami,Florida.Itsmissionistoprovideitsclients

insurancebrokerageandfinancialadvisoryservicesofthehighestquality,basedonitstenetsofexperience,trust,integrityandobjectivity.

Duringthe2008financialcrisis,Pedrocametotheconclusionthat“conventionalfinancialwisdom”wasbasedonfaultypremisesandtoproperlyservehisclientsandprotectthemfromthegreed,corruption,andirresponsibilityofWallStreetbanksandfinancialinstitutions,aparadigmshiftwasinorder.AfterstudyingindepththeInfiniteBankingConcept,herealizedthattheonlywaytocontrolyourfinancialfuturewastocontrolthebankingfunctionyourself.Sincethen,hehasbecomeanevangelistforthisconcept.

PedroisverywellversedintheInfiniteBankingConceptandpracticeswhathepreachesasheandhisfamilyownsseveralofthesepolicies.Hisexceptionalabilitytoexplaincomplexconceptsinsimpletermsallowshimtoeducate,coachandserveadiverseclientelethatincludesfamilies,businessowners,professionalsandhigh-net-worthindividualsthroughouttheUnitedStates.

PedrograduatedfromprestigiousColumbiaUniversity,inNewYorkCity,withBachelor’s,Master’sandDoctoraldegreesinEngineeringandAppliedMathematics,andwithanMBAwithemphasisinStrategicandFinancialPlanning,obtainingallhisdegreeswiththehighesthonors.HeisfullybilingualinEnglishandSpanish.

PedroandIsisareveryactiveinthebusinesscommunityandtheyhavetwodaughters.PedroenjoysprofessionalbaseballandbasketballandfollowscloselytheMiamiMarlinsandtheMiamiHeat.

Documents

The Financial Planning Fiasco - Infinite Banking Simplified · If you're tired of crossing your fingers and hoping that the stock market doesn't crash, but don't know what else to