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Book Summary: Become Your Own Banker – Unlock Infinite Banking Concept – By R Nelson Nash

This book is not about get rich quick. He talks about emulating the entities that hold all the wealth – “Banks.” This is a big deal because you can take advantage of tax-deferred growth, pay yourself interest, take advantage of tax write-offs, and see the power of compound growth over time. This strategy is very powerful and it is how the rich preserve wealth through the generations. I am a great believer in financial education and this book will help you in that endeavor. As always, I am not a financial planner and I always recommend that you do your own research. This summary is designed to help you with that investigation.

Why is this important to me?

This may not be important to you, but in my opinion it should be. Most people work hard to make money and then do nothing to preserve and build on it. Remember that your financial goal should be to have your money work 10 times as long as you do. I know this is an easy statement to make, but it requires diligence and education.

The flow of money is a key concept. It is flowing towards you or away from you; there is no way to stand still. That is why they call money – “currency”. Remember that if you pay cash for a car, you lose the earning potential of that money. Also, if you finance it then you pay interest to the bank. In both scenarios, money is moving away from you.

Infinite Banking will show you how to eliminate this problem.

This book is divided into 5 parts. I will refer to each part and delve 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” that people pay to buy things. Most people focus on the interest rate without really thinking about the volume of interest paid. Here’s a quick example: Let’s say you’re buying a house for $ 200,000 at 6% interest for 30 years. You end up paying $ 431,677. So basically the house costs you twice as much. If you observe the rule of 72, then your money should double every 7 years, then this is not a bad compensation. Here’s the killer. Let’s say you sell the house 10 years from now, you will still owe more than $ 167,000. Guess what, the banks know.

On average, you can calculate for the average person that about 30% of every dollar goes to interest in one form or another. Therefore, you should focus on “Interest Volume” and not the interest rate. Think about this: what if you could have bought that house with your “savings” and paid the interest yourself instead of the bank?

2. Dividend Life Insurance – Let me assure some of you that you listen to Dave Ramsey. His stuff is excellent and he hates whole life insurance as an investment. I disagree with him and I 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 money, exemption from judgment, and the money stays in the policy. This is the real secret. When you take out a policy loan, you still receive your dividend. Therefore, it is as if your investment continues to grow and you can write off the interest on the policy on your taxes. Everyone focuses on the rate of return using investment vehicles, but you have to look at all the pieces that make up the pie and I can tell you that nothing beats this concept. Why do you think Warren Buffet loves insurance companies and insurance vehicles for his investments?

Capital Accumulation – Like any business, you need to build it before it starts making money. You must do the same with insurance for the banking concept to work. If you think about a grocery store, you have to rent the space, hire the people, fill the shelves, advertise, and work the business. It takes time before the business starts spending money and you have a lot of risk. With the insurance vehicle as a financing component for Bank of YOU, you must build it for at least 4 years. Once you hit the 4-year mark, you can start using the money to buy things and pay the interest.

Human behavior: For the Bank of You concept to work, you need to make sure that you pay yourself the payments just as you would a bank. If you don’t, it’s like stealing. You really need to cement this concept in your head for this to work. You wouldn’t loot your grocery store, so don’t loot the insurance policy.

Compound Growth – For time reasons, I’m not going to go over all the numbers, but insurance as a vehicle investment outperforms any other type of investment like 401K, 529 plans, CDs, mutual funds, and other restrictive types out of the water. Most financial planners will disagree with this because they don’t understand ALL the benefits of insurance, not to mention that they may not be able to sell it to you … Tax-free compound growth really gets stronger. mid to late years. When you pay back the interest and the principle, the values ​​of the policies grow even faster. The real hook here is that you are now saving 34.5 cents of every dollar in interest because you are paying it to yourself. This interest then grows tax-free on the policy. One big advantage is that you get the policy loan money delivered to your doorstep and it is not taxable. This is so because it is a loan for you. When looking at other investment vehicles, you are encouraged to save the money and hope it is there. You must follow the guidelines on when you can access the money. If you do it too soon, you will have to pay penalties. I don’t know about you, but I don’t want people to tell me what I can and cannot do with my money.

I just mentioned the important factors in this great book. I can tell you that you can even put this strategy to work on steroids when you buy other cash flow-yielding investments. In the examples in the book, Nelson talks about buying cars and shows the power over time when you pay yourself the interest. Now consider if you buy a small business that is making money. It is set up to pay for the business with a good interest rate to pay for itself and NOW the payments are coming from OPM (other people’s money). I can tell you that the tax benefits and growth potential of this strategy are incredible. I have done this both with the purchase of other businesses and with the purchase of cash flow real estate. This really helps when you pay yourself because you get interest income and can charge you more interest.

Remember that interest income for YOU is taxed less than ordinary income. This is a great magnifying glass when considered over time. You can earn more money faster this way.

I hope you found this short summary useful. The key to any new idea is to include it in your daily routine until it becomes a habit. Habits are formed in just 21 days.

One thing you can learn from this book is EDUCATE YOURSELF. The concepts in this book are excellent and I recommend that you study them. If it makes sense to you, find qualified advisers to help you build wealth.

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