You’ve probably heard it said that you can get your investment money to pay you twice when you use your Max ROI Infinite Banking policy. But what does that actually look like? Does it really work that way? Or is it all a lie?
Our host, Chris Miles, will show you how that works in real life and how you can actually make your money work harder than merely using a savings account to invest. Tune in to see how!
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How Do You Earn Double Returns With Infinite Banking
Hello, my fellow ripplers. This is Chris Miles your cashflow expert and anti-financial advisor. Welcome to our show that’s for those of you that work so hard for your money, and you’re ready now for your money to start working harder for you today. You want that freedom of cashflow right now because you’re sick and tired of it. You want that freedom. You want that time freedom to be able to be with those that you love doing what you love. Most importantly, I know it’s not just getting rich for you. It’s about living a rich life because as you’re blessed financially, you have a greater capacity to bless the lives of those around you. That is a ripple effect I’m here to create in your life today.
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Today, I want to talk about infinite banking again. I usually want to bring this topic up maybe once a month at most. It does come up from time to time. I get a lot of questions from you that say, “Chris, how does this work? What does it look like when you’re using it?” We talked about the concept of being able to double dip on your money, where you can get your money to pay you in two places at the same time. Sometimes, for some of you, you got to see it to believe it.
I’m going to show you an example using my own numbers. I’m 46 years old. I’m probably older than some of you, younger than a few of you as well. I want to show you how this works, what it looks like, and how you can use it to combine with your investing to get you free faster. That’s the whole goal, isn’t it? Especially if you want to be free within 5-10 years, maybe it takes a little bit longer. If you’ve got at least five years or so to become financially free, this is a great strategy to use in tandem to get you there a little bit faster. It’s about creating money in two places at the same time.
Let’s talk about that concept in general. I’m going to show you a visual here that helps with that. Most people usually take their money, put into a savings account, and then from there, take that money and invest it, generate some cashflow, and then it comes back. Let’s say that you have an opportunity for a real estate deal. It’s a $30,000 down payment. It’s going to pay you $3,000 a year, about 10% cash-on-cash return as they call it. It’s a 10% return on your money or $3,000 a year from your $30,000. Normally what you would do is liquidate all that money out of your savings account, pay that, and then that $3,000 is all yours coming in to hopefully replenish your money.
Usually, because you don’t want to wait ten years to get that money back, you’re probably also adding money in. You might be still contributing to a 401(k), but you might have tuned in to this show and said, “401(k) sucks.” You’re going to say, “No, I’m going to take that money and take whatever savings I can to build that up.” You’re going to build up much faster. Let’s say you’re also putting away $30,000 a year to do this. That’s great and all but remember, when you’re adding that $3,000 a year, it barely makes a dent in your savings account. It barely makes you any money at all, especially if you’re making 0.0% on that money.
Here’s what you can actually do. When you understand this, you’ll start to realize how much more liberating and how much more freedom you have to do this. I get it, using a savings account and checking account, you’ve been trained to do that your entire adult life at least if not your childhood too. You’ve been trained to do that. It’s been comfortable. It’s easy and it’s true. It is easier. If I can do something very similar, that doesn’t take a lot more effort, and that definitely doesn’t take a whole ton more knowledge when you understand how simple it can be, you’ll start to realize it’s worth the thousands of dollars extra I can make. It’s well worth my return on my time and investment here.
Here’s how it works. When you’re putting money into a whole life insurance policy, granted there are costs that come out. Typically, this is what I recommend. You’ll see it here on the right-hand side. For years 1 and 2, all we’re going to be doing is building your savings account. How do you do that? Let’s say that we factor in a max of $30,000 a year. I’ll show you how it looks using my situation.
Let’s say you’re putting in $30,000 a year. You’re building towards savings. What you can do in those first two years is take money. Ideally, you have an emergency fund somewhere, sitting in an account and earning nothing. You’re seeing your bank account earning very little interest and you get tax on that interest that you do earn. What if we start taking that money out each year to go and fund the first few years of the policy? What you’re doing is moving the money over. It’s like transferring the money over. There are insurance costs to come out, but it doesn’t take all of your money.
Many people worry about this. They say, “I’m worried about having this payment.” Technically, when you put money into savings, you always have a payment. You do have a choice of what you can do. The way we set these infinite banking policies, you also have a choice. You have the ability to do more or less. You still have that flexibility. What we’re doing is we’re saying, “If you’ve got $60,000 sitting in savings for your emergency fund, maybe you have more.”
Nowadays, most of you should probably have at least $50,000 to $100,000 or more sitting in savings in case of emergencies. If you want to protect yourself and you want to have more peace of mind and better freedom there and especially if you’re in the IT industry where you’re a tech person in the tech industry, you should probably have a minimum of 6 to 12 months of expenses. In some of those industries, maybe 12 months is good.
If you don’t have that yet, great. This still applies. If you do have that money sitting around that you’re not touching, this money could be used to help fund the first few years. You don’t have to save money and put it away. You probably are still going to be saving money in a savings account even while you’re doing this. That’s great. You’re going to build the best savings while also moving this money over.
You’ll see that the majority of the cash goes over in those first few years. By year four, it’s already paying for itself. There’s a zero-net cost to this anyways. Years three onward, you already used your savings account from your emergency fund to help fund this the first few years. You kept adding to your savings. From year three onward, you’re going to start sending that money and putting it over into here to build this up versus keeping more money in a crappy bank that pays you nothing. You’re going to start doing that. That is when you’re going to start investing.
I get it. You can start investing in the first year. That’s very true. I’m just showing you a strategy that I’ve been using more lately with my clients that is a little bit safer during a recession. I want to make sure you have cash savings and not try to invest every dollar you have. It’s irresponsible and puts you in a freaked-out state if you don’t have any cash reserves in case something happens. You do want to make sure that before you’re investing, you have an emergency fund.
You can then start investing the money above that amount. That cash value builds, what you do is you now get a loan from the insurance company. You do not withdraw the money. You can withdraw your money from your life insurance. Instead, you’re going to get a loan from the insurance company. I’m saying that because insurance companies’ rates are cheaper than banks right now. You get a loan from the insurance company. The good news is you can pay back that loan however and whenever you want. Your deadline to pay it back is your death. There are no minimum monthly payments coming out. It’s not like a typical bank loan. It doesn’t show up on your credit. You’re borrowing a private loan from the insurance company.
You have to make sure that before you're investing, you have an emergency fund. Then you can start investing the money above that amount. Click To TweetWhy did they give it to you? Why do they give it to you for so cheap? Because they know it’s guaranteed. It’s guaranteed to make at least 3% to 4% interest. Therefore, they’ll give you a loan. Most of them are about 5.5% to 6% interest right now. You take that loan money that they give you. Remember, your money is still in there. Nothing has changed. You’re still earning interest on all the money in your savings account within the life insurance. You get this line of credit or this loan from the insurance company. You use that to then go and do your investment.
The cashflow that comes from that, you’re going to use that to pay down your loan or pay down your line of credit. It’s like you charged up a credit card and then all of a sudden, you got payments. You might start taking extra cash to pay it down faster, or you have a home equity line of credit maybe you borrow from. You did that to invest. You’d want to take the cashflow to pay down a home equity line of credit so it frees up more money.
The difference though with this and a home equity line of credit though that banks can shut down your line of credit whenever they want. Here, insurance companies don’t. You have more control here. What you’re doing is you can see here the flow. You get a loan, then it goes to investment, then you have the cashflow of $3,000 a month that goes to pay back towards that line of credit, and then pays it down.
What does that look like exactly? Let me show you. Here it is. These are the numbers that run on me if I were to get a new policy starting today. You can see right over here, $30,000 is going in each year. I’m only doing this for eight years and then, I let the minimum go in. Here’s the key thing. Do you see that $6,369? That’s the minimum I would have to pay for this policy. That’s my required premium. It’s that $6,300, but I can put in up to $30,000. I can always pay less but I can never pay more than $30,000. That’s my max. You could set your max to be whatever you want.
I don’t care about the death benefit as much. I care more about how much flexibility I have to be able to put money in. Even for me as a 46-year-old male, which males do die faster than females, meaning we’re more expensive, even for me. Guess what? That’s only about a fifth of the max that I need to put in. That means, in my situation if I want to put in $20,000 a year as a max, then I’m only required maybe put in a little over $4,000 a year. I want to put in $100,000 a year. I’m probably required to put in about give or take 23,000 a year. That’s it. I have this flexibility.
Notice right here. You’ll see in year three, I take out $30,000. I get a loan for $30,000. That’s what shows up as income right there. Notice that the total net cash value is right here. Notice the first year when I put in $30,000, $22,000. I put in $30,000, it goes up by almost $25,000 the next year. I take out $30,000. It’s still growing by a little bit because I’m putting in $30,000, but I’ve also pulled out $30,000. Notice, I still had a net gain. That’s cool.
My cash value is $48,000. Why do I have a net gain? Look right here to the right of that $30,000 loan is a loan balance. I’m taking that $3,000 a year, paying it back towards it. Was that due? That means I pay some principal and I pay some interest. I’m paying that loan back. Remember, I can make this whatever I want. If I do more, it pays it back. I could do it monthly. It’ll pay it back a little bit faster. There are all kinds of ways to do this.
I was showing if you paid $3,000 a year that you dumped on it once in a while, like once a year. It goes down to $28,000. Already, that’s why I’ve got more cash. I’ve got about $48,000 because I pay down the loan. I still have money to use. I could reinvest more money from that $48,000 the next year. Even the next year after that. I paid down a little bit more but look, I have a net gain. I made more than that $30,000 in that year. It’s the same thing as it keeps going.
Notice that the cash still keeps going up. As I’m paying the loan balance down, I’m still paying in $30,000 or just the savings part. I’m also paying $3,000 a year towards paying down that loan balance. What does that do? That keeps building up the cash more and more. Notice, after about thirteen years, it’s gone. Now, I’ve got $450,000. The crazy thing is that I paid a total of $332,000. That being said, notice that’s $332,000 including the money I was paying back towards that line of credit. Even if I pay $332,000, I still have $120,000 more after sixteen years that has been paid in interest.
That’s the power that double dip guaranteed. You would have to have a savings account paying you a very high return and then factor in taxes to make $120,000 of interest over that same period of time with that little bit of money. That’s why I do webinars. If you look online, we have webinars we’ve done on infinite banking and such.
We show you that you’ll make headily on the savings account and interest. Here, you make a lot more because of that whole time. That’s the total net cash value. I’ll go to where it says $195,000, but I have a $21,000 or almost $22,000 balance. That means I got almost $220,000 that’s paying me tax-free interest at a much higher return than the bank. That’s paying the interest. I’m paying interest but I’m earning more in compounding interest than what I’m paying on the loan. That’s how you make money twice.
Let me zoom out here. Understand these guys. I know there are a lot of numbers there. The key thing is this. You’re doing the same thing you would have done anyways. Taking the cashflow from the investment. You’re paying yourself. What you were doing is you’re paying the line of credit back so that we can earn more money and interest on our money. That’s how we’re able to double dip because we didn’t take any of our money out. It’s still earning that compounding interest.
If you have $200,000 and you borrowed $1,000 from the insurance company, you’re still earning interest on the full $200,000, tax-free and much more than 0.0%. Usually, it’s at least 4% to 5% net, even after the insurance costs and everything else, are tax-free.
That’s almost like stock market returns when you get taxed on it. Some people hope to make that and then not worry about the stock market. You can get returns similar, maybe not as high as the stock market, depending on the years, but you can get pretty good returns that are competitive with the stock market and you don’t have to worry about all the ups and downs because it’s not based on that.
If you’re worried about interest rates, good because guess what? Interest rates are going higher. It also drives up the interest you earn on your life insurance more. I’m running this based on low-interest rates, the lowest that this has been paying for decades. They’re already predicting it to go up in 2024-2025 because rates have gone up. You could be earning potentially more interest than what I had shown you. I could be possibly under-promising you, which is what I prefer to do anyways. That’s why I use this strategy too.
Number one, I’m keeping a lot of my money. I’m storing it in life insurance even more than I need. In fact, when I have my cash reserves where we keep $300,000 that we don’t touch because we would try to keep a big reserve, just in case the world does go crazy. With that $300,000, I keep $250,000 that’s the life insurance that I know is going to make more money. I’ve also got additional money that I can use to invest it too.
Of course, you can still keep investing in your savings. The truth is many of our clients, once they start earning more and more cashflow in their investments, they have more cashflow coming in than what they have in policies. They can go get additional policies as time goes on. They can get policies on their spouses, partners, or their kids. You can do all kinds of things to be able to get more policies as time goes on. You can even get multiple policies on yourself. You can have as many policies as you want as long as the death benefits aren’t too much based on your income. Usually, that’s at least twenty times your annual income.
Anyway, the point is this, this strategy can work great just knowing a few simple things. One, this is a great place to store your emergency fund money. The money that’s just sitting around anyways for emergencies. It’s a great place to store it. This is where I store my money because I know I can get to it in about a week. I still keep money in the bank for that overnight type of stuff or same-day type of poll. I keep the most money in this life insurance because I know I’m going to make way more money there than I will in the bank account.
Two, I can also use this money to start investing by taking the cashflow from the investment and instead of just paying to my savings account, I pay instead towards the line of credit that I got from the insurance company. That gives me money to reinvest again later anyways. At that moment, you can pull it right back out again if you chose to. You can do that. You have all this flexibility to be able to do those kinds of things.
When you start to use this method as you’re paying that line of credit, charging it up, paying it down, or however you want to do it, the great news is you make more in interest than what you’re paying the insurance company. That allows you to make money in two places at the same time. That is the power that you can do with this kind of strategy. That is how you double dip. I’m telling you, it’s pretty formulaic. It doesn’t have to be too good to be true because the truth is not only am I doing it, we’ve got hundreds of clients doing the same thing.
We’ve got some clients who are still waiting to try that first time. The best thing I can tell you to do is try it. Test it out. I’ve had people who test it out by paying off a $5,000-credit card. They were like, “I want to pay off that %5,000 credit card and then take that monthly payment I paid on the credit card and pay it towards here. I’m going to pay it whenever I feel like,” and just getting used to it. Even if it’s a small amount you start with, you find out it’s an easy process to do. It’s something that can make you more money than simply using your savings account. That is the power of double dip. That’s why I call this the tax-free supercharge savings account when we use infinite banking.
If you have questions on this, reach out to us. We have an infinite banking section on our website at MoneyRipples.com. Get more information there. You can even talk to somebody and run numbers with you. Go check that out today. Go and make it a wonderful prosperous week. We’ll see you later.