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The Infinite Banking Concept is one of the most brilliant financial strategies ever conceived. Although it has been around forÂ decades, it is one of the best-kept secrets in the world of personal finance. Frankly, I was amazed that I had not been exposed to it sooner than I was, but I am glad I finally discovered it.
The essence of the Infinite Banking Concept is that anyone can â€œbecome their own bankerâ€ by building a fund from which they can borrow money. As the fund grows, they can borrow more and more money from themselves rather than from lending institutions, but where it gets really good is that they pay the same interest that they would normally pay to the lending institution to themselves which further helps their â€œbanking fundâ€ grow. It will certainly challenge your traditional way of thinking about money, but keep in mind the traditional way we have viewed money hasnâ€™t kept many from experiencing a financial storm over the past several years.
You can implement the Infinite Banking Concept using a variety of financial instruments, from a simple savings account to a CD or a whole life insurance policy. In the book that explains the intricacies of the Infinite Banking Concept, Becoming Your Own Banker, Nelson Nash illustrates how using a mutually held, dividend-paying, whole life insurance policy can produce the best results. The reason that this vehicle works the best is that you not only see growth from paying yourself interest but since these policies pay dividends the money grows that much faster. Another advantage of using an insurance type instrument to build a â€œbanking fundâ€ is that you will have a death benefit, and as your fund grows, it could turn into quite a significant benefit, one that you can leave for your family or estate.
For those out there that shut down because I mentioned insurance or whole life insurance, let me reassure you, Infinite Banking is not about insurance, itâ€™s about learning a new way to bank. If you are currently paying interest to anyone but yourself, you need to take a closer look at this. Also, because it isnâ€™t about insurance as much as itâ€™s about banking, your insurance agent will most likely not understand the concept. In fact, the people who work for the insurance companies most likely wonâ€™t even be able to help you use your policy to do Infinite Banking because thatâ€™s now what they do.
The two primary benefits of Infinite Banking are paying less interest to financial institutions and less tax on the money you would pull out for retirement. Can you imagine a system that empowers you to grow your nest egg as you spend money? Those who use Infinite Banking to purchase cars, end up making money instead of losing money. I know itâ€™s hard to wrap your head around, but just envision not paying someone else interest, but rather paying yourself interest. What about a system that allowed you to tap into your retirement nest egg without a penalty or taxes? Again, the Infinite Banking System will help you accomplish that as well.
In life, if something seems too good to be true we tend to be skeptical. Rather than losing out by being a skeptic, I encourage you to be proactive and get a copy of the book, Becoming Your Own Banker, and learn what itâ€™s all about. Itâ€™s a simple read (86 pages) and the illustrations will help solidify the concept. I am confident you will be glad you did and I am. Feel free to post any questions in the comment section below and I will gladly respond. If I donâ€™t have the answer, I likely have a colleague who does and I will find it for you.
If you want to speak with someone about how you can implement the Infinite Banking Concept to radically enhance your personal or business financial position, contact me and I will have a financial educator contact you.