Hedging Against Inflation – An Infinite Banking Strategy
Inflation is the rate at which the general level of prices for goods and services is rising and subsequently, purchasing power is falling. It can be caused by a variety of factors such as supply chain disruptions, labor shortages, and increased demand for goods and services. These factors have led to an increase in the Consumer Price Index (CPI) by 6.2% over the past 12 months as of October 2021. The CPI is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.
Inflation can have a widely significant impact on the economy, as many of us are seeing unfold before our very eyes these days. When prices of goods and services increase, consumers lose purchasing power which can lead to reduced spending and lower economic growth. According to the Bureau of Labor Statistics, in the past 6 months, the following has been largely affected:
- Cereals and bakery products have gone up 8.4%
- Meats, poultry, fish, and eggs have gone up 13.6%
- Dairy have gone up 4.3%
- Fruits and vegetables have gone up 10.7%
But what about in the Real Estate world?
- Lumber prices have gone up 114% since May 2021
- Iron & Steel prices have increased 45% & 78% since June 2020
These increases and others have led to higher construction costs, which have attributed to some of the higher new home prices (and your rehab costs – have you noticed?!). Companies also lose purchasing power and risk seeing their margins decline when prices of raw materials and other inputs increase.
Inflation can also lead to higher interest rates which can make borrowing more expensive for businesses and individuals.
A Counter Strategy to Inflation.
One financial strategy that is used as a hedge against inflation is the Infinite Banking Concept. This strategy provides a way to borrow money at a fixed interest rate while the value of the dollar is decreasing, or interest rates are increasing.
The Infinite Banking Concept is a concept that involves using a properly structured, dividend paying whole life insurance policy from a Mutual Insurance Carrier as a means of building wealth, while at the same time having guarantees, safety and liquidity options. It is a strategy that allows you to borrow against the cash value of your life insurance policy and use it on anything you please – ideally to save you money or make you more money. All the while you’ve borrowed against the your cash value, the principle balance is growing uninterrupted at a guaranteed growth rate initially set by the Carrier. Above and beyond that even, properly structured whole life from a mutual carrier entitles you to dividends, further compounding your growth.
Immediately after issuing a policy with this strategy in mind, you can borrow against the cash value. Imagine replacing the banking function in your life over time, slowly replacing higher interest rate debts, with a lower interest rate environment from your own policies. Imagine having the flexibility to decide the terms of that policy loan. Imagine having the Infinite Banking Concept playing a major role in your financial life to where your family now has a family bank to utilize throughout their life as well. The possibilities of this financial strategy are quite infinite.
Reach out to me today and I’ll teach you in greater detail what it is, how it works, and how you can create financial velocity that can literally last for generations.
---- Jason K Powers is a Multi-Business Owner & Real Estate Investor and Authorized IBC Practitioner. Using his unique experiences in real estate investing, Jason has mastered the art of integrating the Infinite Banking Concept with Real Estate Investing. He has taught hundreds of real estate investors how to begin funding their own deals, becoming their own bank over time, and creating a financial legacy that can last for generations.