How to Prepare for the Next Market Downturn Using Infinite Banking, Part I
The US economy will recover from the COVID-19 pandemic. It will recover from the bear market and it will recover from any ensuing real estate downturns. I’m not here to tell you when, but I know it will happen. I also know that in the next ten years, we are highly likely to see it drop again. Whether it’s caused by another global pandemic, killer hornets, or innovations that make oil obsolete, the economy and markets will ebb and flow. The question is, how will you position yourself now to take advantage of the inevitable drops?
We all know to buy investments low and sell them high. However, most people actually make emotional purchases when the markets, or real
estate, are high, then panic and sell when they’re low. That’s fine if you’re young and able to risk your investments, but for those who are looking at retirement, seeing a significant life’s savings suddenly evaporate can be devastating. There isn’t time to ride out a downturn and recover.
“I’m safe because I invest in real estate,” you might say. Awesome! But what if you make a bad investment or become upside down on a property because of a quick turn—or a pandemic? Unexpected shifts aren’t so bad if you’re a bank and can set the terms of your loan.
“Well, that’s a grand idea, but I don’t have millions, let alone hundreds of thousands, to start that process.” You may be surprised to find it doesn’t take much to start, and we’d love to show you how it works.
The beauty of compound interest is that it’s not about how much—it’s about how long. You may have heard the riddle about whether it’s better to have $1M up front or a penny that doubles every day for a month. The person who selects the penny will have $5,368,709.12 at the end of the month. We apply this principle when we teach people how to become their own banks using a properly structured dividend-paying whole life insurance policy.
Oh dear. I used the “I” word… insurance. But don’t stop reading! The misconceptions and misinformation flooding the internet have prevented too many people from protecting their wealth for too long.
We use insurance for banking purposes by teaching clients how to have discipline to pay themselves back, with interest, using a whole life policy. In doing so, their money doesn’t just grow, it compounds. Unlike indexed universal life, it’s not tied to the stock market and is insulated from market drops. Additionally, the money stored in the policy is readily accessible for any purpose. Want to flip a home? Awesome—use part of your policy to pay for it and pay yourself back when the house sells. Want to take advantage of airline stock dropping 70%? Great! Pull the cash from your policy, invest in the market, and pay yourself back when it grows, and you sell.
By starting your own banking system inside a policy, you will be positioned to have quick access to cash when opportunities arise. One of our clients was able to take advantage of a public auction to purchase a historic hotel by using his policy. He had the loan ready within days, not weeks, and capitalized on the opportunity for a significant real estate investment.
Even better, it does not take years to grow your money. The policies we set up are designed to be cash flow-positive within 2-3 years and typically break even around year seven. All the while, any portion of the money can be used for other investment opportunities or to finance the necessities of life. Not only that, but you can preserve your legacy by teaching the next generation to do the same thing. Infinite banking truly can be infinite when you pass on your wisdom and help future generations apply the principles that have sustained the wealthiest families in America for decades.
In the next article, we’ll go into greater detail about how and why infinite banking works.