Private Financing Strategies
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The document discusses the advantages of self-financing through private banking strategies, emphasizing the importance of understanding how banks operate and how individuals can recapture wealth by managing their own financial systems. It highlights the ability to redirect interest payments to a personal banking entity, suggesting that doing so can lead to increased wealth, tax advantages, and enhanced asset protection. The author advocates for individuals to treat capital with respect and leverage private financing methods for better financial outcomes.
Private Financing Strategies
- 1. The Benefits of Financing Yourself! The “Why” and “How” of Incorporating Private Financing Family - Small Business - Organization
- 2. “The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks.” Lord Acton English Historian, 1834-1902
- 3. "Banks lend by creating credit. They create the means of payment out of nothing." Ralph M. Hawtrey Former Secretary of British Treasury, 1879-1975
- 4. You will either own your own bank, or, you will be the customer of someone else’s bank. You cannot take banking out of the equation. -R. Nelson Nash
- 5. How banks make money Paying and earning interest and how money moves
- 6. How Banks Work Example: $100,000 deposit and loan Depositor Borrower $2,000 $8,000 Interest a bank Interest a bank pays to earns on loans or depositors investment grade $6,000 bonds Bank Loans out depositor’s money charging greater interest to borrower, keeping the difference.
- 7. How Banks Work The Three Players Unfortunately, most people are either the: Depositor Borrower Bank Learn how to Recapture, Reuse and Recycle Your Money!
- 8. How do you use your local bank? Deposit money and the bank pays you interest • Checking / day-to-day operations • Savings $ Deposit $ • CD's % Interest % Borrow money and you pay the bank interest • Auto Loans $ Loan $ • Business Loans • Credit Cards % Interest % • Home Equity Loans Most Americans spend 24% - 34% of every disposable dollar in interest
- 9. Why do investors start banks? 0% - 2% 6% - 8% Interest a bank Interest a bank pays to earns on loans or depositors investment grade bonds Banks are a proven investment that gives fair returns with little risk • For every $1 deposited they can loan out $10 • The spread is used to fund operations and create earnings for shareholders
- 10. There is tremendous money in banking • Banks make, on average, between 200%-400% on YOUR money, through fractional reserve lending (1 to 15 leverage) • That includes overdraft charges and miscellaneous account costs and fees.
- 11. We finance everything that we buy… 1You either use someone else’s money 2 You pay cash = Lost Opportunity Cost
- 12. The way you finance your life always impacts your wealth. For better… …or for worse. Every financial decision we make, impacts every other financial decision. They are all tied together.
- 13. Capital is a responsibility and should be treated with great respect. You must also respect the concept of ECONOMIC VALUE ADDED +++ The continued profitability of your business could depend upon it….
- 14. Those who recognize that their own capital has a cost, have a system in place to RECOVER that cost. %%% Most of us spend our entire lives focusing on Rate of Return. Instead, we should be focusing on wealth transference….interest charges, taxes, inflation, and other associated costs and fees.
- 15. Directing Interest Payments Banking is about redirecting interest payments that you would normally make to a lending institution, to an entity that you own and control. And starting your own financing strategy permits you to move income off of the tax rolls, forever…
- 16. If, over your lifetime, you could redirect $250,000 of interest payments away from the Wells Fargo and Chase banks of the world… and deposit that money into your personal financing system… Would that inspire and motivate you to explore the opportunities that this strategy offers?
- 17. Do you understand Interest? “Those who understand interest earn it. Those who don’t pay it. …be the bank.” Robert Kiyosaki Author, Rich Dad Poor Dad
- 18. Your last loan…. • When was the last time you had to take a loan from the bank? • How much did you need to borrow? • What was the Interest Rate? • How much paper work did you have to fill out? • How long did you have to pay it back? • What happens if you miss a payment or two?
- 19. Creating your own financing option What would it mean to you?
- 20. Welcome Home to the Benefits of “Private Financing Strategies” You will learn: • Financial literacy 1st National of You • The importance of liquidity, use and control of your money • How to think and act like a banker • How to recapture money that was unknowingly or unnecessarily being lost Most Americans Wealth Creators borrow because borrow because they have to… they want to…
- 21. Your own alternative? If you had your own banking system you could: • Stop the transfer of your wealth to banks and finance companies • Capture some of the profits currently made at your local bank And enjoy… • Increased wealth • Asset protection • Tax advantages • Use and control of your money, and liquidity
- 22. If you owned your own bank, how much money would you want to have flow through your banking system? Money In Money Out Over time, the efficiencies associated with operating your banking system create: – Guaranteed tax-free retirement income – Tax-free death benefit – Creditor protection, and – 25+ additional benefits
- 23. What if you: • Controlled the interest rate? • Determined the payment schedule? • Borrowed because it actually made your retirement better and bigger? • Recaptured the principle and interest instead of giving it to financial institutions? • Grew your capital on a tax free basis? • Had total asset protection? • Could reduce your tax liability? • Could provide for your family for generations to come?
- 24. Creating Your Personal Banking System “Financing” as a Wealth Creation Strategy
- 25. “Everyone should have two businesses – the one that gives them a paycheck and the banking business.” R. Nelson Nash Author of the bestselling book - “Becoming Your Own Banker - The Infinite Banking Concept”
- 26. Your Own Personal Banking System The Capitalization Phase Be patient & Trust in the process How long will it take to build up your bank? You can begin borrowing from your bank within 30 days In approximately five to seven years the cash value of the policy will equal the amount of your deposits
- 27. Your Own Personal Banking System Those who embrace this concept will profit for generations to come… The good news is that the infrastructure for your Personal Banking System already exists, and has for more than 200 years… …but very few people know about it.
- 28. Your Own Personal Banking System The Capitalization Phase Be patient & Trust in the process Where will the money come from? • You can transfer assets from existing assets, savings, CD's, investments • You can re-direct current savings 40Ik's, savings accounts • You can use substantially equal periodic payments from IRA's
- 29. What would you need? Capital & A place to keep it • That has growth potential 1st National of You • Allows you advantaged access • That offers some protections
- 30. How To Create Your Infinite Banking System You will fund a dividend paying whole life insurance policy up to the MEC limit. The policy will be from a mutual life insurance company on an individual who you have an insurable interest (including yourself) WHY? A mutual life insurance company is already set up like a bank. It can perform all the activities of a bank except for checking accounts.
- 31. A dividend paying whole life policy will – Hold your deposits – Pay you interest on your cash values – Loan money to yourself or others – Pay dividends on the earnings of the life insurance company Additional benefits: – Tax advantaged growth – Asset protection – Death benefit
- 32. The Platform Your life insurance Whole Life Insurance Plan policy acts as a Cash Value PAYROLL warehouse. INVENTORY Until you need 1 Capitalization 2 Finance Yourself HEALTH CARE VEHICLES to use those It’s only limited by imagination… funds to finance your And your willingness to next purchase. employ your personal banking system.
- 33. The Platform Whole Life Insurance Plan Cash Value The costs associated with 1 Capitalization 2 Finance Yourself financing these items become deductible to your company… Pay Yourself Back 3 And, ultimately shift income from your company to your personal accounts. • 1099 interest income, but Pay Interest 4 no FICA or FUTA
- 34. The Platform How to make your transition to banking easy, transparent, and affordable: Whole Life Insurance Plan From a dividend-paying, mutual Life Insurance company No: • Buildings • Staff • Financial oversight • Government regulation • Compliance issues
- 35. Uses For Your Private Banking System Equipment Loans for your business Line of Credit Automobile Loans Fund an Equipment Leasing Company Loans to family members College funding Gifting for estate planning Real estate loans Vacations Home Remodeling Anything that you finance
- 36. No other bank, insurance product, or investment vehicle works as well.
- 37. You Can Create 5 Assets Death Benefit Perpetual Capital A Private Bank - – and Wealth to Use cash value to Future finance your Generations purchases. One Annual Premium Tax-Free Loans – Tax-Free Growth IRC 7702 on Your Capital
- 38. How to Finance a Car A Tale of Two Brothers Michael John
- 39. How to Finance a Car: A Tale of Two Brothers Both brothers decide to buy a new SUV and finance with the same terms: $30,000 Loan 6% Rate $580 for 60 Months Michael John Uses the local bank Uses his Personal to finance the Financing purchase Strategy
- 40. Michael Local Bank Income Statement Income Statement Income Income Principal and Interest Expenses Expenses Principal and Interest Balance Sheet Balance Sheet Assets Liabilities Assets Liabilities Michael’s Michael’s Auto Loan Auto Loan Net Effect for Michael Net Effect for Bank Michael is left with a $580 income for 60 months $30,000 principal depreciated car worth $4,799 Interest $5,000 $34,799 Total
- 41. The Bank of John John Income Statement Income Statement Income Income Principal and Interest Expenses Expenses Principal and Interest Balance Sheet Balance Sheet Assets Liabilities Assets Liabilities John’s John’s Auto Loan Auto Loan Net Effect for John Net Effect for John’s Bank John is left with a $580 income for 60 months $30,000 principal depreciated car worth $4,799 Interest $5,000 $34,799 Total
- 42. How to Finance a Car: A Tale of Two Brothers Michael John Michael is left with only a John keeps the car & all his depreciated car. money! Because he owns the Bank! $30,000 Principle + 4,799 Interest The Local Bank keeps all his + 5,000 Car Principle & Interest. $39,799 Total
- 43. So When You Finance Your Next Car, You Will Either… Increase Your Net Worth or Decrease It. You Have a Choice!
- 44. What would the ideal financial plan look like? Putting your Private Financing Strategy to work
- 45. One of the greatest drains on our financial resources is the interest we pay to finance our lifestyle: Qualified Bank Loans Retirement Plans Market Losses Credit Cards
- 46. The Money we transfer away is a lost fortune with two parts: $$$ • The actual number of dollars we transfer %%% • The future value of the transferred dollars
- 47. Controlling the amount of money we transfer away will dramatically increase financial security and wealth for retirement. How then do we save for retirement without loss while financing our lifestyle? $ $%% $$ % %
- 48. Most Americans have been • 401(k)s trained, taught, and • 403(b)s educated to build wealth • 412(i)s through government- • 457s promoted Qualified IRC • IRAs plans like: • Seps • Keoghs
- 49. Conventional wisdom and current planning methods tell us to save for 401(k) retirement using qualified plans that tie up our money. IRA That in turn sends us to the bank and credit cards to finance our lifestyle. Everyone does it this way but, is there a better way?
- 50. Benefits IRC 400 Plans IRC 7702 Creditor Proof Yes* Yes Contributions: Tax-deferred Yes Yes Growth: Tax-deferred Yes Yes Withdrawal: Tax-free No Yes Transfer: Tax-free No Yes Guaranteed Returns/Growth No Yes Competative IRR No Yes Unlimited Investment Options No Yes Enhanced IRR through Self-Management No Yes Collateral No Yes Virtually Unlimited Contributions No Yes Accessible: Provides Velocitization Opportunities No Yes Liquidity, Use and Control No Yes Disability Provision No Yes Self-Completion Provision (Death and Disability) No Yes Banking Purposes Allowed No Yes
- 51. Growth with Growth Taxed Growth Taxed Year No Tax at 17% at 27% 0 1.00 1.00 1.00 1 2.00 1.83 1.73 2 4.00 3.35 2.99 3 8.00 6.13 5.18 4 16.00 11.22 8.96 5 32.00 20.52 15.50 6 64.00 37.56 26.81 100% ROI 7 128.00 68.73 46.38 8 256.00 125.78 80.24 in a 9 512.00 230.18 138.81 10 1,024.00 421.22 240.14 Tax Free 11 2,048.00 770.84 415.44 Vs. 12 4,096.00 1,410.63 718.71 13 8,192.00 2,581.45 1,243.37 Taxable 14 16,384.00 4,724.06 2,151.02 15 32,768.00 8,645.03 3,721.27 Environment 16 65,536.00 15,820.40 6,437.80 17 131,072.00 28,951.33 11,137.40 18 262,144.00 52,980.93 19,267.70 19 524,288.00 96,955.11 33,333.12 20 1,048,576.00 177,427.85 57,666.30 Loss due to Taxes 871,148.15 990,909.70
- 52. POINTS TO CONSIDER 1. There are only two sources of income -- people at work and money at work. 2. If you knew, at passive income time, that you would be getting back every thing that you paid into a system -- tax free -- would you object to putting more money in it? 3. When you get paid for your work, you put all of it into “someone else’s bank” and then write checks from the account to buy the things of life. So, “someone else’s bank” gets all of your money. If you owned a banking system, wouldn’t you want to run all of your business through your bank?
- 53. POINTS TO CONSIDER 4. When government creates a problem (onerous taxation) and then turns around and grants you an exception to the problem they created (any tax- qualified plan) aren’t you just a little bit suspicious that you are being manipulated? 5. Tax-qualified retirement plans were all created under the guise of “giving you a break.” First, there were pension plans for corporate employees, then came HR- 10 plans for partners and sole proprietors, and finally, IRA’s for individuals. Now everyone “had an exception” to the IRS Code. If the government really wanted to “give you a break” -- all they had to do is cut out the taxes! Do you really think they want to do that?
- 54. POINTS TO CONSIDER 6. Wealth has got to reside somewhere. Where would you prefer to have it reside? Real Estate? The Stock Market? Or, free contract with other free persons (Life Insurance)? 7. You finance everything you buy. You either pay interest to someone else or you give up interest you could have earned elsewhere. There are no exceptions. 8. Your need for finance, during your lifetime, exceeds your need for life insurance protection. If you solve for your need for finance through life insurance cash values, you will end up with so much life insurance, you can’t get it past the underwriters. You will have to insure every person in which you have an insurable interest.
- 55. Understanding Taxes U.S. Supreme Court Justice “... few people know that the free bridge exists” Louis D. Brandeis (1916 – 1939) “I live in Alexandria, Virginia. Near the Court Chambers is a toll bridge across the Potomac. When in a rush, I pay the dollar toll and get home early. However, I usually drive outside the downtown section of the city and cross the Potomac on a free bridge. The bridge was placed outside the downtown Washington, D.C. area to serve a useful social service – getting drivers to drive the extra mile and help alleviate congestion during the rush hour. If I went over the toll bridge and through the barrier without paying a toll, I would be committing tax evasion. If I drive the extra mile and drive outside the city of Washington to the free bridge, I am using a legitimate, logical and suitable method of tax avoidance, and I am performing a useful social service by doing so. For my tax evasion, I should be punished. For my tax avoidance, I should be commended. The tragedy of life today is that so few people know that the free bridge even exists.”
- 56. Essential Characteristics of the Ideal Financial Plan
- 57. The Ideal Financial Plan Flow of Money 1 Must provide for a Positive Cash systematic and continuous Return Available flow of money into the plan (or it won’t get done). 2 There should always be a positive return on the money. 3 Money should be available when it is needed (to prevent the costs of indebtedness and to prevent missed opportunities.
- 58. The Ideal Financial Plan Flow of Money 4 There should be minimum taxes on Positive Cash the accumulation of money in the Return Available plan. Min. 5 There should also be minimum taxes Taxes on Accum on the distribution of money from the Min. plan (minimum tax whenever the Taxes on money may be used, and minimum tax on whomever ultimately receives Use the money). Control Distribution 6 Distribution should be easy and uncomplicated, and not subject to control by others (such as the imposition of penalties for using your money the way you wish, and in ways most valuable to you.
- 59. The Ideal Financial Plan Flow of Money 7The plan should contain contingencies Positive Cash for the normal occurrence of real life Return Available events (such as death, disability, Min. emergencies, opportunities, and Taxes on unforeseen factors that can take Accum Min. whatever wealth may have been Taxes on achieved). Use 8 should minimize the risk of loss of It Control Distribution the money. “What if” Flexible 9 should be flexibility to change Protection There the plan when and if necessary. Minimize Loss
- 60. The Ideal Financial Plan Flow of Money Positive Cash Return Available Min. Taxes on All of the this can be Accum accomplished by learning Min. Taxes on the principle of private Use family banking through Control Distribution dividend-paying whole life insurance. “What if” Flexible Protection Minimize Loss
- 61. Key Benefits 1. Dividend Paying Whole Life is the only financial product with a guaranteed, permanent, growing, tax-free death benefit and a guaranteed lifetime premium regardless of any health change. 2. The same dollars create the death benefit and the cash value simultaneously.
- 62. Key Benefits 3. The guaranteed continual growth of cash value provides full cost recovery. 4. The interest and dividends are not reportable as taxable income. 5. Cash values and dividends are liquid and contractually guaranteed to be available upon request. 6. It is the only financial product that can include a benefit to complete the plan if disability occurs.
- 63. Dividend paying whole life insurance is a 200 year old financial tool that should be the foundation for every solid financial plan!
- 64. Are these strategies a fit for you? • Business is profitable – excess/retained earnings or savings • You want to tax-efficiently shift income from the company to your personal accounts • You are comfortable with a capitalization phase of 1- 4 years – Good, Better, Best
- 65. Are these strategies a fit for you? • You are interested in creating a legacy for you and your family • You are willing to become a student of banking • You are tired of the banks making all the money • Call me at 678-889-8940 and let’s talk – Richard Young - Young Financial Group, LLC
Editor's Notes
- #34: Now, when the day comes that you want to stop working and start living off your savings, you will start using your policy differently than you did while you were in accumulation mode.On that day, you will stop sending premiums into your life policy, and start taking “policy loans”. Your policy will still receive interest or indexing credits, and there will still be costs of insurance – although, typically your agent will reduce your death benefit to keep those costs low.These “policy loans” that you use to create income, are different than taking a loan out from a bank. First of all, the best of these types of policies have a feature called “participating policy loans”. This means, that although you have taken a loan out, that money will still receive interest or indexing credits – as if the money were still in the policy.Also, the loan is designed never to be repaid by you. The loan is meant to be left to accumulate.How will this loan be paid back? The death benefit of your life insurance policy will repay the loan when you pass away. Don’t worry… your spouse or children won’t be left with a big bill. In fact, there is usually a good amount of life insurance left over for their needs as well. The specifics of this can be found in the life insurance illustration.