Debunking Current Financial Systems


Debunking current financial systems


Rate of Return in the Market, vs. Compound Interest in Cash-Rich Life Insurance


I was originally all about putting my own money and client’s money into the market.  This is what I was taught for so many years at JPMorgan.  Again, the story that was being told to me and the story I was telling my clients is that you can earn 10% in the market.  This is what the talking heads on TV will tell you as well.  I took that story and bought into it. But after about a year or two I realized what I was telling clients wasn’t coming to fruition.  Clients were saying that they weren’t making money, and other clients were telling me they were actually losing money year over year, and I really started to dive deep into what the problems are in the market because up until that point I was just going with what people were saying in the industry.  I was told to tell my clients that “they were in this position for the long-term.”  And that just seem right to me.  I realized I had to find a better solution because of all this volatility that was harming clients’ portfolio. 


And here is what I actually stumbled upon. This 10% is an average rate of return.  At the end of the day, average doesn’t really mean anything, it is a pointless number because you have to minus out a bunch of different variables, such as taxes, fees and volatility. We see markets go up and we see markets go down.  With the vast amount of geopolitical struggles the world is facing, it is just a matter of time before the market takes a steep dive again. At the end of the day, we have what’s known as an actual rate of return, and this number isn’t marketed on investment portfolios or indexes because it is actually way less favorable. 


Over the years, what I’ve actually seen is most people are netting closer to 2-3%.  How can this be?  How can this number be so much less than what is marketed?  These investors are taking all the risk.  The folks who manage the money have all the funds, and there is no risk in the investment for them, and by that, I mean they get paid whether the market goes up or goes down.   All this risk for a meager 2-3% return.  What happens if you want to retire, and 2 years before retirement the market goes down? I really started to realize that you need to have some level of certainty in your investment.


There aren’t many investment vehicles where the investor doesn’t have the risk. We are going to prove this out mathematically that cash rich life insurance is a much better strategy, and we have the reverse scenario.  We have tax deferred growth with truly tax-free distribution. Fees are minimal, usually up to ten times less than in a market-based investment portfolio, which you see in 401(k)s and brokerage accounts among many others. And there is no volatility because there is guaranteed growth, year in and year out.  You never lose capital.  You can count on this truly uninterrupted compound interest to continue year over year. 


When you have that in your portfolio, there is more peace of mind, and there is more protection. For the most part, you can see a 5.5% net rate of return.   And that is powerful. A big theme and principal we focus on is paying yourself first. Robert Kiwosoki talks all about this and investing in assets.  And cash-rich life insurance is an asset that has true uninterrupted compounding, guaranteed growth, with tax free distributions.  This system is so valuable to investors over the traditional way of building wealth, and we are going to take a deep dive into how this system works.  It is truly the most effective financial instrument in the business.


Traditional Financing, vs. Cash-flow Life Insurance


Let’s begin by talking about the disadvantages of using conventional bank financing for real estate investing. 

  • Difficult approval process with any bank loan coupled with appraisals and costs
  • Credit reporting consequences for future loans thereby lowering leverage
  • Inflexible repayment terms for minimum payments and penalties for nonpayment
  • The bank can “call the loan” due and payable at any time, for any reason


Let’s talk about real estate property as leverage with additional bank debt in order to obtain a new opportunity and how this is not idyllic for several reasons.

  • The approval means of conventional and even home equity loans is exhaustive and burdensome.
  • Appraisals are mandatory which might not be available if the property isn’t completed.
  • Timing for getting approval has other issues entirely and the opulence of additional time isn’t always possible when pursuing real estate deals.
  • Finally, traditional banks charge administrative costs and other charges.
  • Your credit will also have an effect on financing costs and credit reporting results in stipulations when it comes to bank financing.
  • If you’re just starting out in real estate investing, more likely than naught you will be applying for loans individually as opposed to through an investment entity such as an LLC or corporation. This means that the amount of debt you have associated to your income and assets may affect your ability to get loans in the future.
  • Your ratio of debt obligations as a percentage of total accessible credit will also affect your credit report, thus making bank financing more costly as debt grows. One, way to account for this is to stay disciplined and pay down your debt.
  • Inflexible loan repayment arrangements as well as the possibility for the bank to “call the loan” should be an extra concern for every savvy real estate investor. You may find it hard to believe that your friendly banker could get up one day and decide to call your loans.


Banks are in this game, not to help you, but to make money, no doubt about it. They can cut you off on a whim without even a crisis. Their reasoning could be something as simple as trimming the fat.


Given the many disadvantages bank financing for real estate, using Cash Flow Life Insurance tells a different story entirely. 


This is the power of being your own “bank” instead of relying on a big financial institution with rigid repayment rules.  With life insurance, you can take tax free policy loans whenever you want, without a structured loan repayment schedule.  You don’t have to qualify.  No one can call your loan. You don’t need to apply for the loan.  It is your money and you can take it whenever you need to. You pay yourself interest instead of paying a bank interest.  You can use this source of capital to invest in real estate, and it is easy, flexible, liquid, and under your control at all times, not at the mercy of a bank.


Cash Value Life Insurance allows investors to become their own banker, meaning they can attain lifetime financing needs for real estate investing, rather than from traditional banks or other lending institutions.  This means the oppression under the current debt-based system can finally be broken. 


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