20: Beat Rising Prices with IBC
020 Beat Rising Prices with IBC
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John Perrings: [00:00:00] Are rising prices and inflation making you feel like you're constantly falling behind? What if the conventional financial advice to beat inflation is actually making the problem worse, locking your money away and reducing your financial flexibility when you need it the most?
In this episode, the first of a four-part series on today's biggest financial challenges, you'll learn why the typical approach to fighting inflation ends up just making inflation even worse for you. More importantly, I'll show you how improving your financial control and cash flow with The Infinite Banking Concept can help you truly solve the inflation problem for good.
This is StackedLife, the podcast that teaches you everything you need to know about The Infinite Banking Concept. Whole life insurance and the strategies that make it all work. And I'm John Perrings, an authorized Infinite Banking practitioner. I've implemented IBC for hundreds of clients and educated thousands more via my top rated podcasts and financial resources over at [00:01:00] StackedLife.com.
Today we're kicking off a series on the top financial challenges people are facing, and number one on that list for good reason is the rising cost of living and inflation.
Right now it feels like everything is more expensive. Food, gas, housing. It's all kind of threatening our household budgets from an economic perspective. Inflation is a hidden tax, so to speak. It doesn't really show up on your personal balance sheet, but you feel it every day as your dollars buy less and less.
Why Trying to Outpace Inflation Doesn't Work
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John Perrings: The conventional wisdom tries to teach us to solve this problem by "keeping ahead of inflation." And what "keeping ahead of inflation" usually means is just taking more risk to chase higher return rates that we can only hope are higher than the inflation rate.
People are told to funnel their money into brokerage accounts 4 0 1 Ks IRAs, all in the hopes of getting a rate of return high enough to outpace rising [00:02:00] prices. But this mindset creates a little bit of a dangerous trade off. Trying to keep up with everything,
you end up sending your money into vehicles, financial vehicles over which you really don't have any control. And not only that, but you take all the risk usually. Even worse, the strategy actually creates a compounded inflation problem for you today. When you send your money away to a 401k or wherever, you're not only exposing it to market risk and kinda locking it behind government rules and penalties, but you're also reducing your cash flow in the present.
You have less money to live on right now.
High prices are already squeezing you, and then you're kind of purposely squeezing yourself even more by sending your money away. It's kind of a double whammy. That money isn't really doing anything to improve your financial position today. It's just sitting there out of your control and you can really only [00:03:00] hope that it grows to what you need it to be.
By the time you need it, which ends up being a cycle that's constantly kinda working against you.
Infinite Banking
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John Perrings: So how do we address this differently? With The Infinite Banking Concept, it starts by shifting the focus from beating inflation, quote unquote, with risky returns to solving the problem with more income.
With IBC, we're strategically accumulating capital in a place that we control the cash value of a dividend paying whole life insurance policy. When your income comes in, you use it to pay a premium. That premium builds cash value, which is guaranteed by the insurance company to never go down.
It only goes up and you can kind of think of it like. Building equity in a house. You know, every time you make a mortgage payment, you build equity in the value of your house. Buying whole life insurance is kind of the same thing every time you pay a premium, you build equity in the value of the future death benefit, and this, [00:04:00] this is called cash value, but unlike your house, the values are guaranteed.
Safe Leverage with IBC
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John Perrings: Because the cash value is guaranteed and stable, it gives you access to a very powerful financial tool, which is called leverage in a very safe way. With whole life insurance, you can take a loan against your cash value from the life insurance company, kind of like a home equity line of credit, but unlike a home equity line of credit, you don't have to apply for it. You don't have to go through underwriting or justify why you need it. It's a contractual right that comes along with the whole life insurance policy.
All you have to do is pick up the phone, request the loan, and they send you the money. In addition, on the other side of the loan, there are no payback terms other than the interest rate of the loan. You can pay it back on your schedule or not at all, because the loan is ultimately secured by the death benefit.
Now remember, because we're borrowing against our cash value, not taking our cash value [00:05:00] out of the policy, the cash value continues to compound uninterrupted the entire time you're using the money from the loan. This gives you an incredible amount of control over the scenario that's allowing you to get your money doing two or more things at the same time.
Using IBC to Combat Inflation with More Income
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John Perrings: So how does this explanation, how does this help us with inflation? Well,
first, a really important thing to keep in mind is we're building a stable, accessible pool of capital or savings. This becomes our emergency slash opportunity fund. We have an emergency fund and an opportunity fund built into this. When an unexpected expense comes up that's maybe more expensive than we thought because of inflation, we can handle it without derailing all the rest of our finances or selling off assets, losing the growth on that at the wrong time.
And that's all good. And it's good because we're able to kind of roll with the punches, so to speak, but it's actually in the _opportunities _you can now take [00:06:00] that will make the biggest dent in the inflation problem. Instead of sending your money away to the stock market where it does nothing for your cash flow today, you can leverage your cash value to buy other cash flowing assets.
Which does what? Increases your income, which then reduces the relative impact on inflation in your life specifically. So what does that look like? I'll just give a couple examples here.
Practical Examples of IBC Producing Income
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John Perrings: You could use a policy loan to invest in real estate that generates monthly rental income.
You could buy a commercial note that pays you interest. You could buy amortized commercial notes that pay you higher interest payments. You could buy commercial notes that pay you interest and then give you equity in the assets acquired by the borrower.
You could buy some or all of a business that pays you an income. Those are some examples that come to mind, but let's just drill into one of those examples. Let's say you take a policy loan at 5% interest, so you owe the insurance company 5% [00:07:00] and you use that capital to buy a commercial note.
That pays you 8%. Well, if you think about this, if you can spend $5 to earn $8, that's a 60% rate of return. That's the power we're getting with leverage, and we're getting that in a very safe way with our whole life insurance policy contract. And it gets even better because there are ways to essentially refinance a note, get your principal back, and then buy another note, doubling your interest income because the interest from the first note is still coming in.
You can keep doing this over and over, stacking notes and increasing income, all with essentially the same money from that original policy loan.
But it gets even better than that because some of these notes will grant you equity in the asset acquired by the borrower of the money, paying you income in perpetuity. So now you can keep doing that over and over again. You're using the same dollars over and over again to create more and more cash [00:08:00] flow,
reducing the effects of inflation every single time, and this is partially where the name StackedLife comes from. We can recycle the same money over and over and over again, stacking new layers of equity and income on top of each other, blowing just about anything you could do in the risky stock market out of the water without all that risk.
This is how you truly beat inflation. You don't beat it by chasing risky returns and hoping you can outpace it. You beat it by systematically increasing your income. So the strategy is very simple.
3 Steps to Never Worry About Rising Prices
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John Perrings: First, stop sending your money to places outside of your control. Second, build your capital in a safe, accessible place like a whole life insurance policy. And third. Leverage that capital to systematically buy assets that increase your monthly cash flow, recycling your money over and over and over again.
This is how you get ahead. You build a financial system where your cash flow eventually grows large enough to support your lifestyle [00:09:00] entirely without ever having to worry about market crashes or selling off assets in retirement. So again, this was the first of four. I have three more coming, I hope.
Hope this was helpful. If you find these principles are resonating with you and you'd like to learn more about how they might apply in your life, specifically, head over to StackedLife.com, you can schedule a free consultation with ,me and I can take you through a short assessment to see if and how The Infinite Banking Concept might benefit you.
And if so, the next best step you can take.
