If the business owns the policy / policies, does the death benefit still get paid TAX FREE to the business account, and if so, how does the business account for it? A CAPITAL CONTRIBUTION?
Thanks for asking! In most cases, the income would be tax-free. Each situation is different, so you would need to discuss with your CPA to determine how you should account for it in your unique situation.
Borrowing at 5% and making 15% on the investment how is it a 200% return? I’m just now about to start my first whole life policy and I’m doing it specifically for infinite banking but this is the one thing I haven’t grasped yet.. is the interest rate you pay to take out to borrow the loan. Is it because even that 5% interest goes back toward my cash value? Or how does it work I’m still confused 🥺👀
Thank you for watching, and congrats on getting started with Infinite Banking! The 200% return is the spread in interest rates or arbitrage. You take the difference between the ending balance and the invested amount, divided by the invested amount, times 100 to find the percent return. If you invest 5 dollars and get 5 dollars, that is a 0% return on investment, because you just broke even ((5 - 5)/5 = 0/5 = 0%). If you get back 10 dollars, that is a 100% return on investment, because you got back twice as much as you invested, or you could say you doubled your money ((10-5)/5 = 5/5 = 1 = 100%). If you get back 15 dollars, that is a 200% return on investment ((15-5)/5 = 10/5 = 2 = 200%). Let me know if this helps!
@@TheMoneyAdvantage I would like to understand this part better too. Hmm... how are we getting to an ending balance of $15 if the amount invested is $5 please? If I borrow and invest $5, I'd pay $0.25 in loan interest and earn $0.75 in investment interest, wouldn't I? Ending balance would be $5.50 in that case? What am I missing please? I understand when you borrow against the policy you can now earn on it in two places, but wouldn't you need to make certain the return on the outside investment exceeds the interest rate being paid on the loan in order for it to make sense (similar to getting a HELOC)? Thanks!
@@grahamfitzpatrick7026 Return on Investment (ROI): a ratio that compares the gain or loss from an investment relative to its cost. Since you are not using your money, the only cost is the interest you pay. ($0.75 - $0.25)/($0.25) = 2 = 200% ROI. www.techtarget.com/searchcio/definition/ROI. Let me know if that helps.
@@TheMoneyAdvantage That certainly helps me see how you got the numbers. I think I am starting to get it now as well. As far as net worth goes, the principal going back and forth between the net cash value of your policy and your own cash in hand (via the loan and re-payments) is a wash going either direction so that's why you don't factor that in to the calculation? So do I still need to make sure that the interest rate on the investment exceeds the interest rate on the loan? Otherwise won't the ROI come out negative? Thanks!
@@grahamfitzpatrick7026 If you invest 5 dollars and get 5 dollars, that is a 0% return on investment (ROI), because you just broke even ((5 - 5)/5 = 0/5 = 0%). So yes, if you earn less than you are paying in interest, then your ROI would be negative. However, it depends on what you are using the policy loan for, and what your goals are.
Thank you for watching! At the bottom of this blog post you can get the details mentioned in this podcast: themoneyadvantage.com/family-banking-strategy/#h-get-the-moriarty-11-year-case-study. You can also book a strategy call with our team here: themoneyadvantage.com/calendar
Thank you for watching! The blog post for this video is not live on our website yet, but you can get access to the slides on the blog post from Part 1 (towards the bottom of the page) here: themoneyadvantage.com/family-banking-how-to-start-a-family-bank-with-john-moriarty/
I have a Whole Life policy but its not from a mutual insurance agency. As far as i can tell, all the insurance companies in my country are stockholder based, not mutual based. Therefore we get no dividends, only interest rate %. Can you tell me how this affects my policy and ability to borrow & what happens with repayments?
@@TheMoneyAdvantage What if our whole life policy is from a stockholder-based insurance company rather than a mutual insurance company? Can you make a video on that? I want to understand how this impacts my returns when I make repayments on loans.
@@edselgreaves6503 Unfortunately there is not a once size fits all answer here. We would need to see the specific contract for the product you have and get information from the company to determine that.
I would love a copy of these slides
Thank you for watching! There is an optin on this page for the info presented in this video: themoneyadvantage.com/family-banking-strategy/
I would like a copy of the slides please
Thanks for watching! You can get them here: themoneyadvantage.com/family-banking-strategy/#h-get-the-moriarty-11-year-case-study
Awesome video!!
Thank you for watching!
This is great content!
Thank you for watching!
If the business owns the policy / policies, does the death benefit still get paid TAX FREE to the business account, and if so, how does the business account for it? A CAPITAL CONTRIBUTION?
Thanks for asking! In most cases, the income would be tax-free. Each situation is different, so you would need to discuss with your CPA to determine how you should account for it in your unique situation.
Borrowing at 5% and making 15% on the investment how is it a 200% return? I’m just now about to start my first whole life policy and I’m doing it specifically for infinite banking but this is the one thing I haven’t grasped yet.. is the interest rate you pay to take out to borrow the loan. Is it because even that 5% interest goes back toward my cash value? Or how does it work I’m still confused 🥺👀
Thank you for watching, and congrats on getting started with Infinite Banking!
The 200% return is the spread in interest rates or arbitrage.
You take the difference between the ending balance and the invested amount, divided by the invested amount, times 100 to find the percent return.
If you invest 5 dollars and get 5 dollars, that is a 0% return on investment, because you just broke even ((5 - 5)/5 = 0/5 = 0%). If you get back 10 dollars, that is a 100% return on investment, because you got back twice as much as you invested, or you could say you doubled your money ((10-5)/5 = 5/5 = 1 = 100%). If you get back 15 dollars, that is a 200% return on investment ((15-5)/5 = 10/5 = 2 = 200%).
Let me know if this helps!
@@TheMoneyAdvantage I would like to understand this part better too. Hmm... how are we getting to an ending balance of $15 if the amount invested is $5 please? If I borrow and invest $5, I'd pay $0.25 in loan interest and earn $0.75 in investment interest, wouldn't I? Ending balance would be $5.50 in that case? What am I missing please? I understand when you borrow against the policy you can now earn on it in two places, but wouldn't you need to make certain the return on the outside investment exceeds the interest rate being paid on the loan in order for it to make sense (similar to getting a HELOC)? Thanks!
@@grahamfitzpatrick7026 Return on Investment (ROI): a ratio that compares the gain or loss from an investment relative to its cost. Since you are not using your money, the only cost is the interest you pay. ($0.75 - $0.25)/($0.25) = 2 = 200% ROI. www.techtarget.com/searchcio/definition/ROI. Let me know if that helps.
@@TheMoneyAdvantage That certainly helps me see how you got the numbers. I think I am starting to get it now as well. As far as net worth goes, the principal going back and forth between the net cash value of your policy and your own cash in hand (via the loan and re-payments) is a wash going either direction so that's why you don't factor that in to the calculation? So do I still need to make sure that the interest rate on the investment exceeds the interest rate on the loan? Otherwise won't the ROI come out negative? Thanks!
@@grahamfitzpatrick7026 If you invest 5 dollars and get 5 dollars, that is a 0% return on investment (ROI), because you just broke even ((5 - 5)/5 = 0/5 = 0%). So yes, if you earn less than you are paying in interest, then your ROI would be negative. However, it depends on what you are using the policy loan for, and what your goals are.
How do I get more information about doing this please
Thank you for watching! At the bottom of this blog post you can get the details mentioned in this podcast: themoneyadvantage.com/family-banking-strategy/#h-get-the-moriarty-11-year-case-study. You can also book a strategy call with our team here: themoneyadvantage.com/calendar
Rachel, so so good at explaining. Well done guys
Thank you! So glad you found this valuable. I definitely recommend part 2 as we dive into the numbers and actual policies.
Where can I access the slides?
Thank you for watching! The blog post for this video is not live on our website yet, but you can get access to the slides on the blog post from Part 1 (towards the bottom of the page) here: themoneyadvantage.com/family-banking-how-to-start-a-family-bank-with-john-moriarty/
I have a Whole Life policy but its not from a mutual insurance agency. As far as i can tell, all the insurance companies in my country are stockholder based, not mutual based. Therefore we get no dividends, only interest rate %. Can you tell me how this affects my policy and ability to borrow & what happens with repayments?
Thank you for asking! What country are you in?
@@TheMoneyAdvantage Malaysia
Unfortunately, we are not familiar with the products in Malaysia.
what type of policy was he using to pull money from?
Thanks for watching! Specially designed dividend paying whole life insurance from a mutual insurance company.
@@TheMoneyAdvantage What if our whole life policy is from a stockholder-based insurance company rather than a mutual insurance company? Can you make a video on that? I want to understand how this impacts my returns when I make repayments on loans.
@@edselgreaves6503 Unfortunately there is not a once size fits all answer here. We would need to see the specific contract for the product you have and get information from the company to determine that.
@@TheMoneyAdvantage okay I understand. Thanks.