The Money Advantage Podcast

What do the 25,000 self-made $100M families in the US have in common? Discover the secrets to skyrocketing your career and achieving wealth and happiness with our special guest Emmy Sobieski, a CFA, Amazon #1 bestselling author of $100M Careers, and an expert in investing and entrepreneurship. https://www.youtube.com/live/5nmGpa0LKk8 Emmy's journey from humble beginnings recycling aluminum cans to running the top fund in the world is a testament to the power of embracing a growth mindset and celebrating milestones along the way. Transitioning from a corporate job to a startup isn't an easy feat, and Emmy shares her insights on how to navigate this change with strategy and balance. We also delve into the world of investing, as Emmy recounts her rapid success and the importance of staying humble in the face of market volatility. Join us as we explore the concept of positive serendipity and how to create a growth and open mindset to invite opportunities your way. We discuss the importance of taking big risks early in your career and how to "moonshot" your career and life. So if you want to learn the best path to $100M, the biggest mistakes, how long it takes to get to $100M, and how to be happy and wealthy... tune in today! What’s the Secret to Wealth?Emmy Sobieski’s Path to WealthPivoting from Investor to MentorThe 3 Cs of EntrepreneurshipThe Biggest Career MistakesConnect with Emmy SobieskiAbout Emmy SobieskiBook A Strategy Call What’s the Secret to Wealth? Most people would love a secret solution to wealth and abundance. If there was just one thing you could do that made it so simple. However, life rarely works that way. There’s no get-rich-quick scheme. There is, however, a secret. It’s probably not what you’d expect, and it’s that creating the best version of yourself is how you build wealth. You are your own secret weapon. By investing in your own skills, knowledge, health, and more, you can create wealth for your family for generations. This requires constant growth because you’ll never know everything. When you recognize this fact and commit to lifelong learning, your life can bloom in many ways.  [4:16] “I talk about it often, where I say you’ve got to moonshot your career. Too many people underestimate their own potential, myself included.”  By committing to yourself and the continued progress of your career, you can maintain and even build energy for what you do. Once you deplete your energy and excitement for something, it’s incredibly difficult to find that energy again. Emmy shares that she sees people take years or decades to get out of this low-energy funk. So you’ve got to follow your energy and nurture it wherever it takes you. Don’t make the mistake of thinking that once you “arrive” at your goal, there’s nothing left for you.  Emmy Sobieski’s Path to Wealth For Emmy, there was no decision about her career trajectory–things seemed to fall into place naturally. When she was a teenager, she collected aluminum soda cans to recycle them for money. By 16, she had saved up $1,800, and her dad helped her to open her first investment account.  Her dad gave her four companies to choose from, so Emmy chose to invest in United Artists, which was a movie theatre that sold more than just popcorn. This decision helped her to quadruple her money. So her dad gave her four more companies to choose from, and Emmy put her money into a company owned by her dad’s friend. This quadrupled her money again. Emmy’s investments were so successful that she ended up with half a million dollars in her 20s.  In her mid-20s, she lost this money and had to build it back up from scratch. Fortunately, she was successful in that endeavor, too. In 6 months she went from -$30k to $90k, while in grad school. Her friend suggested that people would pay her for that, and in 5 years, Emmy was running the number-one fund in the world.  Pivoting from Investor to Mentor There are 25,000 self-made $100 million families in the US. This is the basis of Emmy’s book, which helps people find the path and follow it. One model for success (and in Emmy’s estimation, the best path to $100M) is to follow the 3 Bs–you break into an industry, build equity, and break out to start your own thing. Emily went through this when she broke into tech after leaving the investing world. She broke into this new industry with enthusiasm to grow, and after being told she was too senior to work with blockchain, decided to begin her own coaching firm.  Around 2008, Emmy began coaching students and helping them understand their path to Wall Street and beyond. Often, these students were from blue-collar backgrounds, attending community college, or they were first-generation college students. Now, many of them are hedge fund managers, entrepreneurs, and multi-millionaires themselves.  Emmy also began to write down everything she knew about investing, not knowing if it would be book material or not, but feeling compelled to get that information on paper.  [32:30] “I believe that people are incredibly adaptable, and again that their potential is far higher than they ever give themselves credit for.” The 3 Cs of Entrepreneurship As Emmy coaches clients, what she doesn’t want is to build miserable rich people. Her goal is to help people make money and be able to enjoy life–this means having purpose, having balance, and having time and money freedom. In order to be both happy and wealthy, Emmy advises you to follow the “3 Cs method.” [38:40] “Do you have control over your calendar, your confidence, and your capital? Because too many people get rich, then all of a sudden they’ve got houses all over the place and they become kind of a servant to their houses.” In other words, people who become wealthy in a relatively short amount of time tend to spend it and lose control of their capital very quickly. Having lots of money is one thing, having control of your capital is freedom. When you control your calendar, you have the ability to do things you want to do, with the people you want to do it with. This is important for entrepreneurs because when you create your own schedule, it’s all too easy to work too much.  [39:12] “The confidence really has to do with your relationship with money… Because if you don’t have a growth mindset, and you still think it could run out at any moment, you know, you have this fear all of the time, then you’re not in control. You’re not in control of your own confidence and your own ego.” The Biggest Career Mistakes The number one mistake entrepreneurs make, in Emmy’s eyes, is that they do not moonshot their careers. In other words, people underestimate their value and their capacity, so instead of shooting for the moon, they shoot for something smaller.  The second mistake is not taking enough big risks early. This doesn’t mean blind risks, though, you’ve still got to be smart and calculated. Doing this early in your career when you can still handle the risk is crucial. When you’re more established in your career, you may find yourself with fewer opportunities for risk-taking, or less tolerance for risk.  Connect with Emmy Sobieski Find Emmy on LinkedIn EmmySobieski.com Get Emmy’s book, $100M Careers About Emmy Sobieski Emmy Sobieski—CFA, CBP—combines 25 years of experience investing in public and private companies. She has experience leading, scaling, and advising tech startups. Her book, $100M Careers: The 5 Fastest Paths to Wealth Beyond Your Wildest Dreams (2022), helped her to become an Amazon #1 bestselling author. Emmy is also a fractional Chief Operating Officer of Competitive Storytelling, which helps world-class founders share ideas and change the world. Emmy co-ran the Nicholas Applegate Global Technology Fund, the #1 ranked fund globally in 1999, up over 492% (according to Lipper). She has worked in executive, founder, and advisory roles at Web3, Fintech, Green Tech, Private Equity, and Hedge Fund startups. Book A Strategy Call Do you want to coordinate your finances so that everything works together to improve your life today, accelerate time and money freedom, and leave the greatest legacy? We can help!  Book an Introductory Call with our team today https://themoneyadvantage.com/calendar/, and find out how Privatized Banking, alternative investments, or cash flow strategies can help you accomplish your goals better and faster. That being said, if you want to find out more about how Privatized Banking gives you the most safety, liquidity, and growth… plus boosts your investment returns, and guarantees a legacy, go to https://privatizedbankingsecrets.com/freeguide to learn more.

Explore the power of whole life insurance dividends and how they contribute to long-term growth and efficiency. Learn about the benefits of infinite banking and how it combines financing and insurance. Discover the potential impact of generational wealth and creating lasting legacies. Uncover the significance of dividends in whole life insurance policies and the guaranteed rates. Dive into the efficiency and benefits of whole life insurance as infinite banking. Join the conversation about infinite banking and access a free guide on privatized banking systems.

If inflation is on your mind, you’re not alone. With three years of high inflation figures and your pocketbook saying it’s even higher every time you buy groceries, how will your money keep up? Can Infinite Banking overcome inflation and provide a long-term solution? https://www.youtube.com/watch?v=-6wZtPKGOHI Today, we discuss a listener question about how Infinite Banking can be used to combat inflation. We also discuss the five tenants of infinite banking, such as 'don't do business with banks,' how it can help in an inflationary environment, and how life insurance policies are interest rate driven. Finally, we explore stewardship and generational wealth, discussing the concept of 'human life value' and how clever insurance strategies can be leveraged to benefit future generations. How Does Inflation Happen?Can Infinite Banking Overcome Inflation?Inflation vs. Death BenefitOvercoming Inflation in a Tax-Free EnvironmentPremium Improves with InflationFamily Banking - The Next GenerationsBook A Strategy Call How Does Inflation Happen? [1:47] “Inflation is simply the increase of the money supply. And people argue about this all the time, but Milton Freeman said that only the government can increase the money supply, so the government is solely responsible for inflation.”  When the money supply increases too quickly, there’s an oversaturation of money compared to goods on the market. This raises demand for goods, while supply is low, and prices increase to account for that. When prices for certain products or goods increase, this tends to affect the prices of other correlated goods.  Can Infinite Banking Overcome Inflation? We recently had a very thoughtful question from a podcast listener that we wanted to address. It’s such a powerful question that we think you’ll benefit from reading it in his own words, as follows:  “Thanks for the content. I'm of the belief that inflation is not transitory (I'm 44 yrs old and I remember when a candy bar was $.50). I am a student of the Austrian School of Economics and only think that inflation will be exponentially worse as the U.S. monetary policy continues to stay the same (increasing the money supply) as that is their only option unless politicians want to be responsible which we know they won't be.   A method that has worked in the inflationary environment since 1971 when gold was dropped completely is to borrow money and pay it back in cheaper dollars (think 30-year mortgage on a house).   I love the thought of IBC in normal monetary times but I just can't wrap my head around how a death benefit (30 years from now (ideally)) will be worth much as prices continue to increase. And I think I would rather borrow from the bank and pay them back with the cheap dollars instead of doing that disservice to myself..... I just think that the dollar will only devalue more and more and I'm not understanding how IBC has any defense against that. Everything else is great about it in my mind.” As you can see, he’s put a lot of thought into this topic, and we’re excited to unpack it with you now.  Inflation vs. Death Benefit There are several reasons that your whole life insurance Death Benefit is still a powerful tool even with inflation. First and foremost, the whole life insurance dividend is interest-driven. This means that as the Federal interest rate rises and falls, so does the dividend. This also affects the guaranteed interest portion, too. This means that you tend to do better than in a savings account alone. Add this to the compounding effect of your cash value, and that slow and steady growth is going to be powerful. Remember, too, that with PUAs as your Cash Value grows, so does your Death Benefit. The two are intrinsically linked since the Cash Value represents the equity of your Death Benefit. You could start with a DB of $1 million and end up with several million by the time you pass, or your policy endows.  Remember, too, that the whole time you have your insurance, the banking function is all within your control, not the bank’s control. This can give you access to financing and opportunities you wouldn’t get from the bank. And when you die, your family receives a payout that they otherwise wouldn’t receive. If that date occurred within a few years of you buying insurance, that would certainly outpace inflation.  [19:05] “When you have a properly structured whole life insurance policy that is performing as efficiently as possible for you, one of the keys is to have your dividends purchase paid-up insurance. Which means that because of that feature, you have a continually rising Death Benefit.” Overcoming Inflation in a Tax-Free Environment You must also consider how taxes erode wealth. If all of your capital is tied up in tax-deferred assets, you may appear to have more money. Yet with every withdrawal, a hefty tax bill comes due. This can make your account dwindle much faster than anticipated. So what seems to beat inflation, doesn’t.  Contrast that with whole life insurance, which can be accessed tax-free while you’re living, AND passed the Death Benefit to heirs tax-free. The Net wealth transfer to your heirs could potentially be much more significant, even if it’s technically less because there are no taxes due.  Premium Improves with Inflation Our listener also mentioned something interesting in his question about paying for assets with “cheaper” money. For example, when you buy a home, the actual dollar cost of your mortgage stays the same for 30 years. Yet as money inflates, the value of those dollars decreases. So by the end of your loan, you’re paying with “cheaper” dollars.  This is true, and it also applies to everything—inflation doesn’t discriminate. Your insurance premium is also a fixed payment, which means that over time, it’s going to feel like less and less to you. However, the value of your asset is always increasing with interest and dividends. Mortgages and whole life insurance premiums are actually two of the best assets for this principle because they have fixed-level payments over a long period of your life. There are few other things that behave this way.  Family Banking - The Next Generations And, at the end of it, when you create this banking system with assets you control, you leave a legacy to your family at the end of the day. If you seek all your financing from the bank and save elsewhere, you lose that ability to transfer wealth. And that wealth can be used to seed the next generation’s policies.  [32:52] “So if you could purchase life insurance on yourself, have that leveraged up Death Benefit—so it’s more than you paid in—pay out to your kids, they use that [Death Benefit] to purchase as much life insurance as they can get. Then their Death Benefit that pays out to your now grandchildren is going to be higher than what they paid in premium. And if you just continue to use that capital to seed future generations' policies, there’s a tremendous advantage because the starting capital is going to be way higher each time.”  This gives your kids, your grandkids, and many generations in the future a pool of capital to access while they’re still young. You’re helping your family out into the future, and that’s thinking long-term.  [35:40] “Let me give a shout out to one of my buddies, Tony Fine. He used to always say money doesn’t cause character flaws, money exposes character flaws.” Book A Strategy Call Do you want to coordinate your finances so that everything works together to improve your life today, accelerate time and money freedom, and leave the greatest legacy? We can help!  Book an Introductory Call with our team today https://themoneyadvantage.com/calendar/, and find out how Privatized Banking, alternative investments, or cash flow strategies can help you accomplish your goals better and faster. That being said, if you want to find out more about how Privatized Banking gives you the most safety, liquidity, and growth… plus boosts your investment returns, and guarantees a legacy, go to https://privatizedbankingsecrets.com/freeguide to learn more.

Uncover the hidden cost of capital in your financial decisions. Learn about the benefits of having control over your debt and become your own banker. Discover how Infinite Banking reduces the cost of capital and allows you to optimize your financial decisions. Explore the concepts of always paying interest and opportunity cost. Understand the role of actuaries and underwriters in managing an insurance company. Learn about the investment strategies of mutual insurance companies and the stability they offer. Discuss the guaranteed values and dividends of a policy, as well as the costs of legalization. Emphasize the importance of understanding and evaluating the concept of infinite banking.

Simon Severino, a strategy advisor for F500 Boards from NY to Beijing, helps companies scale by discovering how to run their company more efficiently. From digital agencies to service and SaaS businesses, Simon's work results in sales that soar. He is the CEO and Founder of consulting agency Strategy Sprints, and Creator of the Strategy Sprints® Method that doubles revenue in 90 days by getting owners out of the weeds. His insights are sure to help you scale your business and stay at the forefront of your industry, whatever that may be. https://www.youtube.com/watch?v=mR35UW3Jwz4 Tune in as we interview Simon Severino to discuss how to double your revenue, so you can create more freedom, impact, and revenue every month. The Beginning of Strategy Sprints®Scale Your Business with the 9 Stages of a SaleFalling in Love with the Problem, Not the SolutionConnect with Simon SeverinoAbout Simon SeverinoBook A Strategy Call The Beginning of Strategy Sprints® Simon began his career in market strategy, and what inspired him most were the entrepreneurs and business owners that were truly passionate about that work. These are the people who, if Simon identified an area for improvement, would happily stay at work longer to solve the problem.  Still, Simon saw that there was room for improvement, so he put his head down for a year to create a methodology that would make sales much more efficient.  [6:19] “We focus on the B2B sales problems. So the length of the sales cycle, the complexity of the sales cycle. So that’s why our method is really for the high ticket B2B offers, that is. Consulting agencies, marketing agencies, PR agencies, recruiting agencies, financial advisors, attorneys–everybody who has a high ticket offer and needs just a few big deals, a few good clients per quarter.” Scale Your Business with the 9 Stages of a Sale In Simon’s Strategy Sprint® Method, there are 9 stages of a sale that you have to go through with your client to complete a transaction. These stages are:  Visualization Pains Importance COI Budget Concerns Decision Start Date SOW The first step, visualization, is what Simon describes as “closing the loop” between what you say and what’s landing with the client. This could mean providing a visual while you’re speaking to a client so you can bridge that communication gap. Doing this builds rapport with clients and helps them to trust you. The second step is about finding out your client’s pain points. What is frustrating them? Only then can you identify how to help them. [10:39] “It’s so interesting how so many people want to go straight to a product or a solution, when if you don’t have a problem you’re trying to solve, then there’s no solution that matches.” The next steps are to figure out how important this is to your client in the grand scheme of things. Then, determine the “Cost of Inaction” or COI. What will happen if your client doesn’t do anything? (We would call this opportunity cost.) After that, determine your client’s budget, address any concerns they have, and have them make a decision. You may have multiple decision-makers, so this can take time and coordination. Finally, you determine your start date and create a statement of work (i.e. a contract).  [13:25] “The number one enemy of sales is the status quo–’I can just do nothing.’” Falling in Love with the Problem, Not the Solution [28:55] “Whatever your offer is, if you fall in love with the solution, there will be a much better solution soon. Technical solutions always, always innovate.” In other words, by falling in love with solutions, you run the risk of being slow to adapt to new technology and advancements. By falling in love with the “problem,” you ensure that you’re always seeking new and even better solutions. This helps you to stay flexible and innovative. As a business owner, you want to be seeking innovation. Innovation helps you to scale your business and stay relevant.  We often use Kodak as an example of a company that was in love with their solution, rather than the problem. They fought hard for film cameras. Yet other camera and media companies have outlasted Kodak because they innovated their mission. They saw photos as a way to preserve memories, so going digital and innovating in that space wasn’t a problem for them. Now those companies are still around and innovating, while Kodak is just a memory.  Connect with Simon Severino Youtube: Simon Severino Access free resources or book a call with Simon’s team at strategysprints.com Get Simon’s book, Strategy Sprints About Simon Severino Simon Severino helps business owners in SaaS and services discover how to run their company more efficiently, which results in sales that soar. He is CEO of Strategy Sprints and Host of the top 2.5% podcast called "Strategy Sprints. " This CEO-to-CEO experience dives deep into practices that help you, the CEO of a small to medium business, scale your business and create more freedom, impact, and wealth every month. Simon created the Strategy Sprints® Method that doubles revenue in 90 days by getting owners out of the weeds. Simon is the CEO and founder of Strategy Sprints, which is a global team of certified Strategy Sprints® Coaches that offers a customized strategy to help clients gain market share and work in weekly sprints, which results in faster execution. He is also a Forbes Business Council Member, a contributor to Entrepreneur Magazine, a TEDx Speaker, a member of SVBS Silicon Valley Blockchain Society, and teaches strategy and growth in select business schools, including as a member of Duke Corporate Education. Book A Strategy Call Do you want to coordinate your finances so that everything works together to improve your life today, accelerate time and money freedom, and leave the greatest legacy? We can help!  Book an Introductory Call with our team today https://themoneyadvantage.com/calendar/, and find out how Privatized Banking, alternative investments, or cash flow strategies can help you accomplish your goals better and faster. That being said, if you want to find out more about how Privatized Banking gives you the most safety, liquidity, and growth… plus boosts your investment returns, and guarantees a legacy, go to https://privatizedbankingsecrets.com/freeguide to learn more.

Learn about the laws of the Infinite Banking Concept and how to capitalize and manage your own bank. Explore the history of banking and the process of saving and lending. Discover the advantages of using insurance companies to lend you money. Gain freedom by controlling your own banking function and creating a sustainable family banking system.

Every year, IBC practitioners and advisors convene at the Nelson Nash Think Tank.  Here, some of the best advisors in the Infinite Banking space remember the core truths of Infinite Banking, improve their understanding and ability to serve you, and "sharpen iron."   https://www.youtube.com/watch?v=-lRc64JVi0E Bruce attended the 2023 event earlier this year, and today, we'll share the highlights with you. So if you wished you could have attended and would like to be in the know about what matters most for you as an Infinite Banker ... tune in now! What is the Nelson Nash Think Tank?Preserving the Purity of Infinite Banking with the Nelson Nash Think TankOvercoming the Human Condition in FinancesThe Conversations and Speakers of Think Tank 2023Book A Strategy Call What is the Nelson Nash Think Tank? The Think Tank is an annual event hosted by the Nelson Nash Institute to talk about IBC and connect with like minds. Prior to 2009, which is when Bruce became involved with Think Tank, the event was your typical Mastermind type of event. People in the insurance industry with an interest in IBC would get together and share best practices for running a business.  In 2013, the IBC practitioners program came to be, and the event reached its “next level,” as Bruce recalls. The practitioners’ program is a way for advisors who are interested in the Infinite Banking Concept to become certified. This ensures that advisors who use IBC strategies (and advertise such) can be held to a higher standard. That way, clients who want IBC can work with a highly qualified IBC professional.  [6:21] “[Bruce] has attended what I would call probably the most elite… conglomeration of minds that are coming together and discussing Infinite Banking.” Preserving the Purity of Infinite Banking with the Nelson Nash Think Tank The IBC Practitioner program was designed by Nelson to ensure that advisors who were sharing IBC with their clients were upholding it to the highest standard. Otherwise, what Nelson noticed was that people would say they promoted it, only to have incorrect ideas about how IBC worked, which was damaging the perception of IBC.  In order to be a certified IBC practitioner, you have to go through a rigorous process that ensures you have a good understanding of the concept. So if you want to implement IBC specifically, you can actually work with a certified practitioner to be confident you’re getting what you want.  The process starts with an interview, where the NNI makes sure that applicants have the right mindset for IBC. This means you understand Austrian economics, you want to solve people’s need for capital, you understand that you finance everything you buy, and you see the benefits of life insurance on a large scale.  The next step to becoming a practitioner is to take a proctored exam. Once you pass, you then go through a mentorship program where you work with a current, certified IBC practitioner. Finally, you get to become a fully certified member, which culminates in receiving your certificate at the Think Tank. As you can see, it’s an incredibly thorough process. [15:43] “This, hopefully, enables people to find a person that was either trained directly by Nelson like I was, or by people that were trained by Nelson, to actually uphold the integrity of the actual Infinite Banking Concept, and not some of the things that are marketed as the Infinite Banking concept.” Overcoming the Human Condition in Finances [24:15] “Nelson actually is helping people overcome the human condition of how they handle money.” As human beings, there is a huge emotional aspect of finance that is hard to overcome. We’re only human, and we all have to face these deep-seated emotions we have about our money. What Nelson Nash has done with IBC and his institute is to help people overcome these emotions and find a sense of control and freedom. A good IBC practitioner will help you see the long-term effects of your money. For example, when you fund a policy, your advisor shouldn’t be pressuring you into a policy you’re unsure that you can afford. You don’t have to start with the biggest policy possible, and you shouldn’t if you don’t know how to fund it. You’ve got to think about Year 1 premiums, and every year after that too.  It’s also critical that you have good habits in place before you start your IBC policy. It’s human to spend what you have, but it’s not conducive to your banking system. Being able to make deposits and think critically about capitalizing your money is important. And starting a policy without those good habits isn’t necessarily going to help you get there. It takes discipline, and a good IBC practitioner can tell you that, and help you get there.  The ultimate goal of your advisor, whoever you choose, should be someone who helps you be a good steward of your money, and overcome that human condition.  The Conversations and Speakers of Think Tank 2023 There were many powerful discussions and speakers at the 2023 event, and all of it was really to contribute to the greater understanding of IBC within the community. The speakers helped life insurance agents reaffirm what they already knew, and get clearer on how to solve problems that are arising in the industry and the economy at large.  Some of the speaker topics covered over the event include:  [35:48] The power of holistic tax planning [43:17] Benefits of mutual insurance companies [45:39] The power of generational wealth and legacy [56:00] How can the IBC community make the industry better Book A Strategy Call Do you want to coordinate your finances so that everything works together to improve your life today, accelerate time and money freedom, and leave the greatest legacy? We can help!  Book an Introductory Call with our team today https://themoneyadvantage.com/calendar/, and find out how Privatized Banking, alternative investments, or cash flow strategies can help you accomplish your goals better and faster. That being said, if you want to find out more about how Privatized Banking gives you the most safety, liquidity, and growth… plus boosts your investment returns, and guarantees a legacy, go to https://privatizedbankingsecrets.com/freeguide to learn more.

Learn how controlling your financial environment can turn a financial drag into financial fuel. Nelson Nash emphasizes that the need for financing is greater than the need for savings. By eliminating the need for finance, you can shift that money into savings. The podcast also discusses the importance of developing good money habits and highlights the impact of financing costs on overall financial well-being. They introduce the concept of infinite banking and emphasize the importance of mindset change for financial success.

If you’ve paid any attention to the news recently, then you’ve probably heard about what’s happening with the Silicon Valley Bank. The news isn't good, and it's probably raising some questions. We’re here to unpack what you might be thinking about. Like, are we entering a banking crisis, and what does this mean for the greater economy? How does Infinite Banking compare? https://www.youtube.com/watch?v=kqOWPOdD8eY In this podcast, we'll examine the factors that led to the Silicon Valley Bank collapse, and how Infinite Banking can be a solution. Join us for a discussion of the state of banking, and how you can best prepare to weather any economic storm. Is This Normal?The Timeline of the Silicon Valley BankHow Do Banks Get Behind? Reserve Requirements for Banks and Insurance CompaniesInsurance Product vs. CashCould Life Insurance Companies Be Safer Than Banks? Bank-Owned Life InsuranceResources for Bank Failure InformationIs There a Banking Crisis? Book A Strategy Call Is This Normal? We want to start this conversation by sharing that boom and bust cycles are a natural part of any market when the free marketplace is working. This means there will be inevitable highs and lows for everything. Those who are savvy can learn to time the markets by paying attention, although no one does this perfectly 100 percent of the time.  What sets people apart is the assets they can control with certainty. And one of the many positives of Infinite Banking is that life insurance is not correlated to the stock market. So despite what’s happening in the economy, your cash value is safe and certain. This is the kind of protection that is not even guaranteed when all of your money is in the bank. It’s critical to build your foundation on something strong and within your control.  The Timeline of the Silicon Valley Bank To get a good understanding of what’s happening with the Silicon Valley Bank, it’s worth examining the timeline. At the time of this crash, Silicon Valley Bank was the 16th largest bank in the country and had been just 40 years old. The crash occurred because of large withdrawal attempts and is the largest crash since 2008.  On January 1st of this year, the bank had $91 billion of held fixed income securities or held maturities. They also had $200 billion in assets, mostly Venture Capital and tech assets. Out of the $91 billion, the bank’s unrealized loss was going to $15 billion if people pulled out of their maturities due to a need for increased liquidity. They knew they’d be in trouble for the reserve requirements.  On March 8th, the bank announced that they needed to shore up their balance sheet and raise $2 billion in capital. They proposed a sale of their bond portfolio at a $1.8 billion loss, but there were no interested buyers.  On March 9th, customers began to withdraw due to impending trouble, and the bank’s stock fell 60%. On March 10th, the Silicon Valley Bank failed to meet its reserve requirements, so the FDIC stepped in and seized control. The fear, it seems, stems from the reality that this was a huge bank that seemed like it could never fail. No one expected it to, so when it did, people got extremely nervous about their banks and their ability to meet their needs as well.  The problem is that when people are fearful and lose faith in the banks all at once; it creates a vicious cycle. Because the more people that pull their money out at once, the harder it is for banks to meet their reserve requirements and other obligations.  As Bruce points out in the show, this is also the first time such a large bank failure has occurred in the age of social media, and so the information is more readily accessible. While it’s good to be informed, this can also lead to a lot of fear because things spread like wildfire on social media.  How Do Banks Get Behind?  [8:50] “What happens here is we’ve been going from a very low interest rate, almost no interest rate, environment, to a relatively—what we think is high but is more normal—interest rate environment.”  What happened with the Silicon Valley Bank, specifically, had to do with rising interest rates. Once the interest rates rose, many people decided they needed liquidity and pulled money out of securities, or they pulled money out of the banks completely. This means that banks would have to sell securities at a loss if depositors decide they want their money back early. Another reason banks can get behind is if they invest heavily in startups and risky endeavors, and aren’t doing their due diligence. Silicon Valley Bank had a large portion of assets tied up in Venture Capital and startup investments. And while many VC investors can be incredibly successful, it’s by thoroughly vetting those investments and their viability. Of course, we can’t speak to SVB’s vetting process, and even the best due diligence can sometimes have negative results.  That being said, if investments don’t pan out, this can also cause banks to lose their reserves if they get hit over and over again. Reserve Requirements for Banks and Insurance Companies Generally, banks are only required to hold about 10% of reserves against their checking and savings deposits. This means that if they have $100,000 worth of deposits into checking and savings accounts, they’re only legally required to have $10,000 of that money in reserves at any given point. The rest they can use to loan money, invest, etc.  While this is fine for day-to-day operations, the trouble occurs when many people want to withdraw large sums all at once. This can happen due to a recession, or because people are anticipating a bank failure. The latter, however, tends to be the thing that speeds bank failure along. It becomes a race to see who can get their money back first, and completely.  Insurance Product vs. Cash [36:51] “Contrast this to life insurance companies. Every time premiums come in, they’re actually taking that premium and putting it into investments. But unlike banks, they actually don’t have runs on them like a bank would have them, because these deposits or premium payments are actually for a product. So you’re buying life insurance.” You can access cash value, of course, but insurance companies don’t run into issues of too much coming out at once because they have full reserves. They have to, in order to pay death claims at any time. (Insurance companies have a provision that allows them to delay funds up to 6 months if too much is flowing out, but this is incredibly rare.) The reserve requirement for insurance companies is about 8-12 percent of anticipated claims for the year. And yet, most insurance companies go above and beyond this requirement.  [37:46] “That reserve requirement with the top 10 mutual companies is about 7 percent higher than what they believe their mortality expenses and other expenses are going to be for any one given year.”  Some insurance companies even have 14% above the reserve requirement for their expenses. Insurance companies have to meet all of their financial obligations because they’re providing a product, so it’s critical that they keep their reserves well-stocked.  Could Life Insurance Companies Be Safer Than Banks?  [41:05] “I want to pose that we’re not saying that this is the case, but could life insurance companies be safer than banks? Here’s something that’s really interesting: bank failure is more common than life insurance company insolvency.” While we all require banking to some degree—checking accounts are necessary for debit cards and spending money, and even paying premiums—this does compel you to consider where YOUR cash reserves are safest. In addition to your personal monthly cash flow, it’s probably a good idea to have some money saved with the bank, for quick access without much fuss.  However, if you want to stockpile large sums of capital for your future use, there are many benefits to controlling your own banking function. In addition to having very safe and secure assets until you’re ready for them, you also get to grow your cash value at a rate that’s typically better than a bank savings account. It’s also a good long-term product that can last your family for generations with the right family mindset. And of course, there’s the option to leverage your cash value for opportunities without sacrificing any compounding ability.  These are all compelling reasons to have an Infinite Banking policy as your financial foundation, as a means of supporting any banking you do with an actual Bank.  Bank-Owned Life Insurance In a conversation about banks and life insurance, it’s worth mentioning that most banks own life insurance. This is insurance that the banks purchase on their key employees. They’re allowed to do this because they have an insurable interest in their key employees—if they were to die, it would be a loss to the company, and it could be costly to train a replacement.  Bank-owned life insurance is tier-one capital for banks because it’s safe and it’s liquid. Many banks that have BOLI have billions of dollars worth of life insurance.  [53:10] “What I think is fascinating is that the banking system uses permanent life insurance with the cash value for the purpose of fulfilling their tier one capital asset reserve requirements. Meaning that it’s a safe and stable asset that they rely on using because they know that there are guarantees built into it. And I think that really says something to have one industry using another industry’s product to make themselves more stable.”  Resources for Bank Failure Information Want to know more about what banks have failed, which banks are in good standing, and other important information? Check out this list of resources for your personal research: List of bank failures List of insurance company insolvencies Companies that rate financial institutions: A.M. Best

In this podcast, they discuss the concept of 'don't steal the peas' from the book 'Becoming Your Own Banker'. They explore the importance of imagination in Infinite Banking and how it can yield new results. The hosts also talk about the power of individuality in financial strategies, understanding fixed relationships, reaching the break-even point in a business, honesty in business, and building a life and business you love.