Have you ever encountered the word Infinite banking? Have you? After listening to this word for the first time years ago, I had multiple thoughts about what exactly it meant. Is it banking forever? If you're confused, just as I was, then this article is for you. Now let me brief you on what Infinite banking means. Infinite banking is a process by which an individual becomes his or her own banker.
Nelson Nash was the first one to introduce this word in his book “Becoming Your Own Banker” which talks about banking. So let me introduce the term IBC which stands for Infinite Banking Concept.
WHAT IS IBC
According to the Infinite banking concept, by Nash, for a loan, the cash surrender value(s) of life insurance policies act as collateral. The individual simply must call the insurance firm and ask to take out a policy loan.
So how will the Infinite Banking Concept (IBC) teach us to become our own banker?
By creating our own banking system using dividend-paying and life insurance.
By building our own bank by using available savings and income.
By learning how to capitalize and determine our plan.
By learning how IBC can help in financing our automobile purchases and finance our home.
By learning how to increase personal wealth by expanding our system to accommodate all income through banks.
By understanding how equipment finance concepts are employed for business.
As we learnt what IBC is all about, let’s see why we need IBC.
WHY DO WE NEED INFINITE BANKING?
Infinite banking works fine when the person banking on themselves has extremely strong cash flow. Life insurance policies as a whole can cost a few hundred dollars per month. On top of that, building up cash value within the policies can take a minimum of a couple of years, so an individual has got to be committed to infinite banking for it to figure.
One of the large things here is to undertake to "superfund", the maximum amount, as you can without tripping up the IRS rules around Modified Endowment Contracts.
Another precondition for infinite banking may be a high yield environment. Most whole life insurance policies invest in conservative investments like corporate and government bonds. Right now, these investments trail inflation which implies that policyholders are losing cash value relative to inflation.
Certainly, we have seen why we need IBC. Now let us see how IBC works.
HOW INFINITE BANKING WORKS
Do you know - $250 a month is all you require to form a $1 million pension account for yourself. And that we aren't talking about high-risk moon-shot investments. We are talking about a few conservative financial vehicles that don't place your money in danger. I know that sounds crazy... But that's only because most of the people haven't heard of IBC before. Wall Street has tried to hide this strategy for many years. Despite the very fact that top executives use this strategy themselves.
The IBC is one of the techniques that the rich use to generate generational wealth that keeps themselves, their children, their grandchildren, and their grandchildren's children financially independent, regardless of what happens with the economy or the stock exchange. What's more, the wealthy use this strategy to make their circle of relative’s banks. Relations can borrow money for education, home purchases, and investment deals. All without having a rigid repayment plan. That’s right. With this strategy, they will borrow money from their bank and never pay it back. But that might put a haul on their bank's growth. So, they constantly pay their loans back at interest. Wait, why within the world they might pay interest if they did not have to? Easy. That interest doesn't get absorbed away by a nameless mega-bank. It feeds into their family bank to form it to grow. That's how they stay financially independent for generations.
Think about that. Now believe the plight of the typical person today. Boom-and-bust financial markets, under-performing 401(k) plans, underfunded public pensions, rising costs of living, etc. It's not easy for the typical person to urge ahead, despite working 40-50 hour weeks and doing everything the "right" way.
As a result, many of us worry about saving enough money for retirement. The Insured Retirement Institute found that a whopping 73% of Baby Boomers don't think they need enough money to retire comfortably. That's where the Infinite Banking Concept comes in.
This is a technique so powerful that the political insiders and financial elite covered it up with advertising restrictions and regulations. But it's available to anyone. With the use of this strategy, you can take full control of your family's finances, privatize the banking function entirely and make money problems get away forever.
We can use this strategy for
Financing business, investments, or land purchases.
Financing your child's college education.
Financing travel or vacations.
To make a million-dollar pension account for ourselves, our spouse and our children.
But those are all short-term benefits. The true power of this idea is often unleashed if this strategy is implemented generationally. I am not kidding once I say that you simply can use the Infinite Banking Concept to make financial freedom for generations to come.
If you think long-term, you'll be able to eliminate the necessity to borrow money ever again. Your personal bank will warehouse all the capital your family ever must live the life of their choosing.
The Infinite Banking Concept will show you everything you would like to implement this secret strategy for yourself and your family. And remember, this strategy truly is for everyone. A million-dollar pension system can be created for just $250 per month. And plans are flexible. The more you put towards this strategy, the bigger your bank will become. But there are not any rigid minimums.
PROS OF IBC
Non-correlated asset
Improves cash flow and liquidity
Leverage
Personal family financing
CONS OF IBC
Cost prohibitive
Requires discipline
Must qualify
Not diversified
CONCLUSION
In Reality, this idea isn't easy to understand because it requires a paradigm shift in the way you view money. IBC isn’t magic. Yet once you comprehend the potential of a properly designed dividend-paying Whole life assurance policy, you'll value Nash’s vision. He has discovered a very conservative, time-tested method to accrue savings which can be deployed to required investment opportunities when they come along. IBC allows you to “Become your own banker” and effectively secede from the present system which is dominated by Wall Street and commercial banks. However, for those who persist with it, the rewards are nothing short of life-changing.
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