StackedLife - Authorized Infinite Banking

026 You don't need a master plan
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John Perrings: [00:00:00] You've heard about Infinite Banking and maybe you even want to implement it. You've done deep dives on it and you're thinking, okay, this sounds incredible. But then comes a question that stops a lot of people in their tracks, and that question is, what am I actually supposed to do once I have a policy?

That feeling of not knowing where to start, or even worse, being afraid to start because you, you're afraid you might start incorrectly, is one of the most common things I hear. And so today we're gonna address that head on and give you some ideas on. You know how to start thinking about some of these things.

By the end of this episode, you're going to understand why you don't need a master plan to start The Infinite Banking Concept. Why simply capitalizing is the strategy and exactly how to use a policy, whether you're a seasoned investor or someone who's never invested a dollar in their life.

This is Stacked Life, 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 [00:01:00] practitioner. I've implemented IBC for hundreds of clients and educated thousands more via my top rated podcast and financial resources at StackedLife.com.

Learning from Mistakes I've Made
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John Perrings: Alright. I wanna tell you a little something about myself because I think it matters here. I've made every single mistake you're probably worried about making, you know, it, just starting in my twenties as a, you know, working man, you know, I was a 401k guy, you know, fully bought in, um, you know, funding my 401Ks, doing the stock market thing, and, and then I got laid off from a tech job and had to liquidate the whole thing, paying all the penalties, all the taxes.

And that money was just gone in a way that I, I didn't expect, and I, and I of course, didn't plan for. And you know, another example, when my father passed away, he left the smallest estate and I came into a little bit of money. And, um, what did I do with all that? I, you know, I mean, it helped me get into this business, but I also, you know, bought some of the shiny new investments [00:02:00] that were in front of me.

You know, ones that I didn't fully understand. And a lot of those did not work out. I got lucky with some, like I did a little bit of crypto and, you know, had some good, had a little bit of success. I also had some, you know, failures in that, you know, I got into some of the crowdsourced investing and some of those things that, you know, didn't really work out. So the stuff that did work, it was really luck, not skill.

And then a couple things worked out okay, but I, I really just didn't know what I was getting myself into.

And the point of all this is. I know exactly what it feels like to make a decision out of that sense of urgency. We talk about fomo, fear of missing out and not knowing what to do and just doing something anyway. Right. And I, so I, and I, I know what that feels like.

And I also know what the consequences look like. And that's what I'm about to tell you I think really matters if you're looking at Infinite Banking, you're considering whole life insurance. I think this is a, a really important piece. And here's the big thing that I want to address right out of the gate.

[00:03:00] A lot of people learn about IBC, The Infinite Banking Concept. They learn about whole life insurance as a way to strategically capitalize. And rightly so, they get really excited about it. You know, they start thinking about all the things they could do, you know. Paying off high interest debt, paying down their mortgage faster, getting into real estate, and, you know, the possibilities start to feel endless.

And there's a good reason for that because they kind of are endless once you, you know, are strategically capitalized. But then what happens is a lot of times people will freeze because they, they don't really have a specific strategy mapped out yet. They're not. They're not really sure they know enough about real estate to get into it.

You know, they don't wanna start in the wrong way. And so a lot of times inaction is, uh, is the thing that takes precedence. So I'm here to tell you that, that the fear is largely misplaced. Um, it's really hard to mess up The Infinite Banking Concept, and the only way [00:04:00] you actually can mess it up, the only real way is by thinking in the short term. Everything else we can work with. And there's a lot of flexibility that goes into how we actually implement The Infinite Banking Concept in our life.

Understanding Strategic Capitalization
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John Perrings: So, let me back up a quick second. Just talk about what I mean by strategic capitalization because it's, it's kind of a fancy phrase, you know, and it, it really just means saving money in a place that gives you a strategic advantage. And,

if you think about it, before we can ever invest in anything, we have to capitalize first, right? You can't, you can't really shortcut that process. And sometimes it's not even a process. Anytime someone invests in anything, whether it's real estate, stocks, a business, they had to accumulate the capital somewhere before they deployed it.

And I, I say sometimes it's not a process because sometimes it just goes into a bank account. You know, that's the conventional way. The conventional way we, we capitalize is [00:05:00] just in a, a regular bank account. And when you capitalize in a bank account, your money is. Pretty much just sitting there, you know, not doing a whole lot, and then you have, then you pull the money out to buy your investment and now your money is really only working in that investment and you get whatever you get out of that investment.

When we capitalize with whole life insurance and. Build up cash value and then we deploy that capital. What we're doing is we're borrowing against our cash value using a policy loan. That's a provision built right into the policy agreement. You can call the insurance company anytime, initiate a policy loan.

No underwriting, no fixed payback schedule. The only payback term, so to speak, is the loan interest rate that the insurance company charges you. And this is just leverage, you know, most investors know about leverage. It's just using other people's money. Whole life insurance isn't the only place you can [00:06:00] get leverage, but it's one of the safest and easiest places to get leverage.

And the key point is that your cash value keeps growing even when you have a policy loan outstanding against it.

So as we're kind of talking about this idea that people really are unsure about what their plan is and they feel like they need to have some kind of a plan to do IBC, something that I wanna relay to you is that even if you never take a policy loan, even if you never deploy your capital into a single investment, you still have something.

You still have your money sitting in a rock solid, guaranteed cash equivalent asset. That earns very respectable growth for what it is. When you calculate a capital equivalent return, meaning you factor in taxes, fees, and all the rest of the stuff that you'd have to get in some other type of an investment to match what you get in whole life, you're probably looking at somewhere in like the 7% range.

You know, with whole life insurance and real terms, it's gonna be more like 3%-5%, but [00:07:00] that's net of all taxes, fees, commissions, et cetera. Three to 5% net is an excellent return for a cash equivalent asset that you can actually get to it's liquid and there's no strings attached. If you compare that to alternatives, you know, keeping your money in a big bank, you know, you're probably gonna get like 0.1% or something like that. Some of the high yield online accounts are paying pretty good rates. You know, they're starting to become a little more competitive to, the ranges that we see in a whole life insurance policy.

But of course those are all taxable. And then, you know, you have other things like CDs and bonds, but those come with terms. Your money's locked up for a period of time depending on what you buy with those.

Whole life insurance cash value is the foundation, and that foundation is really solid. So even if you're brand new and you haven't figured out your next move yet, you're not losing, right? You are building something very real.

Emergency Funds and Opportunity Funds
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John Perrings: Part of any good financial [00:08:00] foundation is an emergency fund. So I wanna talk about emergency funds for a second because I see people get into trouble because of a lack of emergency funds all the time. Many people have little to no liquidity at all, and when anything goes wrong, and something always goes wrong, at some point, their whole plan kind of gets blown up.

And so if you think about this, if your emergency fund is a pool of money that's kind of earmarked to just sit there, in the case of an emergency, is it best served to just, you know, sit in a bank account earning almost nothing? Or would you rather have it in a place that's doing multiple jobs at the same time?

It's growing tax deferred. You can get to it tax free,

all of that is created by that guaranteed future death benefit. It gives you chronic and terminal illness protection, potentially protected from creditors, depending on your state. And all the while it's positioning, even if you never did anything with The Infinite Banking Concept, it's still positioning you to [00:09:00] optimize your retirement income and is doing that all at the same time while it's just sitting there, you know, building and growing cash value.

And so that, that sounds like a pretty good emergency fund where it's not just sitting there idle, it's doing like six or seven jobs all at the same time. Now once we have our emergency fund, everything over and above that becomes our opportunity fund. And today we're talking about what to do with that money that we have for opportunities.

And I see, I see people either not knowing what to do or they're literally tripping all over themselves, investing in whatever's in front of them.

The Power of Being a Discerning Investor
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John Perrings: One of the golden rules of investing that everyone's heard of is "buy low, sell high." But right now as I kind of look around, you know, the stock market is at all time highs. Real estate is pretty much near all time highs. Pretty much everything is at a high point right now.

And yet people are still just kind of piling in, uh, because they feel like they have to do something, you know? And that's, [00:10:00] you know, it's like putting the cart before the horse. They, they wanna invest, invest, invest without taking the time to capitalize and find the right opportunity. And this is where IBC starts giving us a little bit of a superpower, which is:

discernment. You know, being a discerning investor is, is a quality, right? If you think about it like building a house, you don't start with the landscaping and the pool. You don't start, you don't build a house by starting with the roof, right? You start with the foundation because if you skip the foundation and

something goes wrong, all that other work gets torn up anyway when you have to go in and repair it. And so the discipline that we're talking about is simply to capitalize. We wanna resist that fear of missing out, and we need to understand that capitalizing is the strategy.

Capitalizing IS the Strategy
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John Perrings: You know Nelson Nash, who wrote the book Becoming Your Own Banker, which is the source material for all things Infinite Banking. He talked about "The Golden Rule," which is "he who has the gold makes the rules." [00:11:00] Which just means when you have cash, opportunities have a way of finding you. The best opportunities aren't on E-Trade or some investment app.

They're not things you can just log into and dump money into with no idea what's gonna happen. The best opportunities are the ones that are specific to you. Where, where you are, who you know, and, and what you understand.

Things like, you know, your uncle wants to sell his house and move to Florida. You could buy it without it ever even hitting the market. Or a colleague wants to capitalize a startup and needs a silent partner.

A piece of real estate and your neighborhood becomes available and you know it's undervalued. Those opportunities don't just show up on an app. They show up because you're you, and you have cash. So if you're, if you're sitting there thinking like, I don't know what my strategy is yet, that's okay. Because just capitalizing, waiting for the right time, you know, getting yourself into a position where you're the person with cash, that is the strategy. You don't have to try [00:12:00] to force things to make it work to your benefit.

Practical Uses Without Investing at All
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John Perrings: And here's another thing. There are a lot of ways you can effectively use your policy that don't even involve investing at all. The first example is debt elimination. You know, if you're carrying high interest credit cards or student loans, you can use policy loans to strategically pay those off.

You know, a big problem most people have with paying off debt is that because they're prioritizing sending money to creditors when they're done paying off the high interest debt, they don't have any money. And so if any bumps in the road come along after they've paid off that debt.

They're just gonna go right back into debt. So using IBC, you can strategically pay off the debt using your policy, and when that debt is gone, including the policy loan piece of it, you have a bunch of cash at the end of it.

Another area is large recurring expenses. We gotta remember the economic principle: "You finance everything you [00:13:00] buy."

You either pay interest to someone else when you use their money in the form of loans and credit, or you give up interest you could have earned when you pay cash. And you can never escape this economic principle, but you can improve on it and make it more efficient. By using your policy to finance. You know, if you buy a car every five years with cash, or when you pay your property taxes every year, go on vacations.

You know the numbers work out in your favor when you're cycling the same capital through your policy to pay for these recurring expenses. Another one is paying for college, right? That's a big one. Most people either go into debt or pay for college and that money is just gone forever.

What if instead you could be the banker. Your kids get the benefit of your capital to pay for college. Then they pay that back on a schedule that you designed in the family. All the while your policy's cash value is still growing.

By the way, when you think about that future value that that college [00:14:00] money could have been by retirement, you're talking about a significant amount of annual retirement income that you're just throwing away if you pay for college in the standard format. That's money that you could have had back in your life and use and enjoy during those retirement years.

And this is my whole life insurance is sometimes called the "AND" asset. Because you can have your whole life insurance policy and do all the other things you are gonna do anyway. This isn't an either or situation.

A policy is not a sacrifice. You're not giving things up just to buy your whole life insurance.

You can buy your whole life insurance and do all of those other things. You're building the foundation that makes all those other moves possible, and not only just possible, but more effective.

Thinking Long Range is Key, IBC or Not
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John Perrings: I recently did a talk to a couple hundred IBC authorized advisors at the annual Infinite Banking Think Tank about policy design. And the theme of this year's conference was Think Long Range, which is a key [00:15:00] principle. Reiterated many times in Nelson's book, Becoming Your Own Banker,

and that theme is appropriate to this episode because people who find the best success with Infinite Banking always think long range. A whole life insurance policy is an actuarial product or, or a math equation, built literally around you and your whole life. As in your entire life, that's where the name Whole Life Insurance comes from.

It's, it's not an account, it's an actuarial calculation that literally syncs with your lifespan.

So what this means is that the only way you can mess anything up having to do with whole life and Infinite Banking is to have short-term thinking, to have such a high time preference, meaning you're only focused on what you can do right now, that you blow up the long-term potential by trying to move too fast.

And a lot of times that's in the form of treating IBC like it's a hack.

As long as you're thinking long range, it really is hard to mess this up.

You Really Don't Have to Worry
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John Perrings: To close out here, don't worry [00:16:00] so much about having the perfect strategy before you start, or any strategy at all for that matter. Strategically capitalizing is the strategy. You'll never be in a worse position by having access to cash, and that's a timeless truth. And when you're sitting on a pool of cash that's guaranteed to grow, tax-advantaged, and accessible whenever you need it.

Your financial life becomes so much easier and so much more peaceful, full of options you didn't have before. And that's really what this is all about and what we're trying to build here.

So if you found these principles are resonating with you and you'd like to learn how they might apply in your life, specifically head over to StackedLife.com and book a free consultation with me right there.

We can talk about you, take you through a short financial assessment and find out if IBC would be a benefit to you and your life, and if it is, what's the next step you can take?