How The Rich Use Infinite Banking For Tax Free Wealth
Capitalism.com with Ryan Daniel Moran
Is There a Zero % Floor on the Bond Market?
The insurance company is basically backing this. They're hoping for that additional upside on top of the cap, but we get the benefit of no downside. If the market goes down, they actually buy a sophisticated, colored option strategy. The reason they're able to do it in a way that's attractive to the individual consumer,. That we can't replicate on our side is economy of scale.
Many of Ryan’s students have successfully built businesses that they have then sold for millions of dollars. When you’re suddenly endowed with that much cash, what do you do with it? It’s prudent to invest, but there are so many options... how do you know which are the best not only for the sake of security but also for the sake of continued growth of your assets? On this episode of Freedom Fast Lane, Ryan chats with Sam Prentice of Wealthpoint, a company that offers life insurance policies that are also assets in their own right. It may sound strange but once you hear this episode you’ll understand how it could be one of the smartest investment decisions you could ever make.
Imagine an asset with a limited downside that continues to grow even when you borrow against it.In this conversation, Ryan chats with Sam Prentice of Wealthpoint to find out what infinite banking is all about. Ryan is interested because he’s had some bad experiences with insurance companies before regarding this kind of policy and he wants to know the truth about how it is supposed to work and why it is a good tool for investing. Ryan does his best throughout the conversation to stop for clarification and to keep things simple so you’re likely to get a lot out of the episode. Be sure you listen.
What if you could have an investment that will never go south when the economy does?The type of insurance policy typically referred to as “infinite banking” is one that has incredible tax benefits but is also set up so that it earns better than average interest. But what happens if the markets go south? In that case, the policy will never lose money, plain and simple. So if interest rates drop into negative ranges the cash in this type of policy will remain safe. No worrying about losing money. And when the market turns around, your policy goes back into its steady climb. Ryan and Sam go into detail about how infinite banking policies work, on this episode, so don’t miss it.
Why is infinite banking called infinite banking?While today’s guest, Sam Prentice, doesn’t like to use the term “infinite banking,” he does explain why the insurance product he’s describing often bears that name. The insurance policies at the heart of these financial instruments are two-part investments. One is a “death benefit” of sorts that pays out like a typical life insurance policy, should you die. The other is an account that can be borrowed against, in the amount of the insurance policy. Funds borrowed can then be used to purchase other investments while the original policy itself earns interest at a better than average rate. It sounds too good to be true, but is a real thing. You can find out more on this episode.
What could go wrong in an infinite banking arrangement? What are the risks?When you hear financial tools like infinite banking discussed it can sound too good to be true. That naturally leads you to ask, “What is the downside?” Ryan was very careful to make sure that his guest, Sam Prentice answers that question clearly. Sam says there are 3 main risks to an infinite banking policy, the first one being that should the insurance carrier that holds the policy go under, your investment will be gone. But the chances of that happening are very remote according to Sam. If you’d like to hear the other two risks associated with this type of investment, you need to hear this conversation.
Outline Of This Great Episode- [0:22] Who is Sam Prentice and how Ryan has vetted him and his company.
- [2:20] Ryan’s definition of “infinite banking” and how it can be used for tax-free investing.
- [7:14] Why people use this approach to invest and save on taxes.
- [8:45] The tax benefits and 2 ways these accounts can grow.
- [11:40] How does the cash value of the life insurance policy grow?
- [16:57] Why is it called “infinite banking?”
- [24:20] Why diversifying over asset classes is key for building wealth.
- [31:10] Ryan’s simple version of this this vehicle works.
- [33:31] Leveraging this asset in a variety of ways at the same time.
- [37:18] At what point should you consider this sort of investment vehicle?
- [40:25] What’s the worst-case scenario for this financial instrument?
- [47:35] The best way for you to connect with Sam’s company.
- [50:01] Additional questions Ryan will be asking Sam in the future.
FOR GETTING STARTED: Consider the cash you have on hand to invest - and how you can best leverage that cash for wealth building instead of just saving. Once you’re ready to do more with the money you’ve earned you are able to consider the advantages of tax strategies and investment instruments like Sam and Ryan discussed on this episode.
FOR GREATER SUCCESS: Consider one of these “infinite banking” accounts as a way to not only have a tangible asset that banks will view very favorably when it comes to lending, but also how you can use the loan to invest in real estate and other assets that provide even more ability to build wealth.
Connect With Today’s guest: Sam Prentice- www.GoWealthpoint.com - Sam’s company
- www.GoWealthpoint.com/freedom
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