What’s the one strategy that I’ve been teaching my clients, but not you?
How can you get your investment money to pay you TWICE?
In today’s episode, I’m breaking my silence!
Join me (Chris Miles) as I share how you can earn an extra 3-4% a year ON TOP of the money you can earn from your investments or business.
Tune in now!
Watch the YouTube video on this HERE!
Chris Miles Bio:
Chris Miles, the “Cash Flow Expert,” is a leading authority on how to quickly free up and create cash flow for thousands of his clients, entrepreneurs, and others internationally! He’s an author, speaker, and radio host that has been featured in US News, CNN Money, Bankrate, Entrepreneur on Fire, and has spoken to thousands getting them fast financial results.
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Listen to the podcast here
The Strategy I’ve Kept Quiet From You
I’m excited about this episode because I’ve got a great show in store for you. A quick reminder, remember to check out our website, MoneyRipples.com. Check out anything we’ve got there available for you. If you have any other questions, shoot me an email at Chris@MoneyRipples.com. I’ve been waiting to do this show for months and the truth is that this is a strategy that I’ve mentioned here and there. I’ve even done some shows about it but not to this level.
The secret that I began doing over in 2021 is that I got pulled out of retirement for doing something a little bit on the side. It’s related to what we teach and it has a lot to do with what we teach. It’s a cornerstone, especially if you’re trying to create more passive income and you want to get your money working for you not just once but twice. The truth is I had to get some systems in place because I knew once I talked about it, it would get crazy.
The thing I promised myself and even my family was that I’ll try to keep myself still part-time. I’ve got better systems in place and things are working well. I felt that this is the time to do it. I want to teach you a strategy that I’ve been perfecting and developing for many years. This strategy is to help you figure out how can you get your money to pay you twice, whether you’re in business and you want to make sure you have this reserve of money to be able to pay you both through investing in your business and as a savings rate too.
Also, if you’re an investor and you’re saying, “I’ve got some money. I want to be able to invest but if I can make a few extra percent, maybe 3% or 4% extra percent on top of it, I’ll go for it.” Here’s what happens. Even the people that teach some of the strategies like what I teach, teach it from a crappy place like, “This is the answer for everything. This is what you put all your money into and try to retire from this. You create some supplemental retirement income from this.” That’s not what I’m teaching. I don’t teach you to accumulate money.
I talk about this all the time. It’s not about accumulation. It’s about acceleration. How do you create cashflow? This is one of the strategies that as you’re building your wealth, you’re trying to recreate more cashflow. This is one of those cornerstone pieces that are essential. This may not be for everybody. If you’re barely paycheck to paycheck, this is probably not a strategy that’s going to be great for you.
If you’re finding that you’re starting to have some surplus or you’ve got some money that you’ve been trying to put away for retirement or whatever it might be but you’re saying, “This isn’t working for me well,” then this is a great strategy to look at but most people don’t get it. Even people that know the strategy and sell it, don’t get it because their pocketbooks are too tied to it. This is their main profession and how they make their living.
I try to create so many streams of income that this is fun for me. I’m going to teach you something that’s been so fun. In 2021, I’ve rejuvenated because there was an investor, a very wealthy multimillionaire that said, “Chris, you’ve taught me this strategy and it’s been awesome. I didn’t think you were that smart but you’ve blown my mind. I’m a pretty intelligent guy. I know investing and money but you blew my mind. I need you to teach this to my people.”
You either use cash or borrow from somebody else. Either way, you will always be paying interest. Click To TweetI hummed about it for a few months. This was in 2017. Finally, I said, “I will do it. This will be fun. Let’s give it a shot.” I did and I loved it. Not only did I get about 100 some odd new clients in a matter of a few months but I fell in love with teaching the strategy. It’s been so hard for me not to teach you. Most financial advisors don’t get this and understand. If you ask them if they have heard it before, they don’t know how to make this work and make it to where it does pay them rather than cost them. Banks have been using this strategy for years. I remember seeing the numbers of Wells Fargo keeping 22% of the reserves here and even Washington Mutual. They were keeping 40% of the reserves during the Great Recession to keep their money here.
The vehicle we’re using is not so much the strategy. I’ll explain the strategy but the tool we’re using is high-cash, dividend-paying whole life insurance and not the traditional stuff you’ve been sold or been taught about. We have guys like Dave Ramsey that tell you, “Whole life is a waste of money.” He’s right about that because the way it’s been sold, it has been a waste of money.
It hasn’t been horrible but he had a good point because he’s like, “You throw this money in and may make a few percent rates of return. You should make more money in the stock market,” which technically is true. You should. Even though it’s a higher risk, it’s very possible. You’ll probably beat it in the stock market. I found a way where it at least matches the stock market but with less risk. I can’t guarantee anything.
The stock market might go crazy over a period of time but I’ll tell you. If you factor in everything, there’s a way to make it work but that’s if you don’t do anything with this. The real magic is how you get your money into whole life and then get it out immediately or in a very short period to go and invest with it too. Your money is making money in whole life and also outside of it.
Making Money Twice
Let me explain how that works. This is how you make money twice. The first thing you got to understand is that there are always two options when it comes to money. You can either use cash or borrow somebody else’s cash. If you’re going to be using money, you’re either using your own money or other people’s money. There’s no way around that.
It means you’re always paying interest. This concept blew my mind. I started learning about this and getting more advanced with this a little bit. Even though I’m saying more advanced, it’s not that it’s super complex. It’s quite simple but the problem is very few people are teaching in a way that makes it simple but it is quite simple. You have to remember that you’re always paying interest. If you borrow money, you’re paying interest because you’re paying to a bank or some lender but what if you pay cash or something? Let’s say you go into a dealership. Instead of borrowing and financing from your bank, you go and pay cash for that car.
You shouldn’t be paying interest rate but you are because here’s what’s happening. Let’s say you dropped $30,000 on a new car. It’s not even an average-priced car. It’s a decently-priced car. That cash you’ve used can no longer earn interest for you. It’s gone. You might have saved interest by not paying the bank but you can no longer earn interest. Depending on what kind of steward you are and what you can do with the money, it could be the costliest mistake ever. This is why sometimes paying off your house could be the costliest mistake you could ever be doing because that’s even a bigger nut to crack. That’s not only $30,000. It’s $300,000 or more depending on where you live.
No Two Interests Are The Same
For some of you, if you try to pay all cash to pay off your house, that’s also costing you more money than it could be saving you. Let me explain and go deeper. You have to understand that no two interests are the same. Let’s use a mortgage example. Let’s say you have a $200,000 mortgage and you’ve refinanced it. You’re paying 4.5%, which is the going rate. At a $200,000 mortgage at 4.5%, if you pay the minimum payment over the next 30 years, you would pay $164,000 of interest plus the $200,000 in principle you paid back.
You pay almost double the interest and the mortgage over those 30 years. I used to use this all the time. As a mortgage broker, I tell people, “This is going to cost you money. Watch out.” People are like, “I got to pay that thing off early.” Don’t you think the bank wants you to do that? The banks love when you pay off your house earlier. Why? It’s because they want you to do that and get their money back sooner because they can leverage ten times whatever you give them in principal.
That means you put an extra $1,000 down on your mortgage payment so they can loan out $10,000 legally and make money off your money. They want you to pay off your loans early because they’re still going to make the money in the interest upfront. The best way you can save interest on paying off a mortgage is by paying it off on day one. You’d save $164,000 of interest. If you tried to put a little bit of money towards your mortgage every single month or you do that Home Equity Line of Credit strategy like, “I’ll pay down my line of credit,” that takes forever too, despite what those numbers say.
I’m going to do a different episode on that one but that strategy doesn’t work that well either. You don’t save that much in interest but what would happen if instead of paying off your mortgage and saying, “I could cash out all the money and assets I have and get dirt cheap,” you pay off this $200,000? “I can sell off all my retirement plans or anything so I have that freedom.”
What if you didn’t use that $200,000 to save $164,000 in interest? What if you took that $200,000 and instead saved it? Let’s say that you only earned 3.5%, which is 1% less than your mortgage interest. You’re taking $200,000 and earning 3.5% over the next 30 years. The question is what’s the difference in interest? If it costs you $164,000 for 4.5% interest on a mortgage, what would you think you would earn on 3.5% on that same $200,000?
Many people I ask to come up with all kinds of numbers. It’s like the price is right. Some people get $1. Some people say millions. Others might say, “If it’s 4.5%, you’re paying $164,000. Then maybe at 3.5%, I earn $120,000.” Guess again. Here’s the secret. At 3.5% of that $200,000, you earned $361,358. In other words, you earned $200,000 more than what the mortgage costs you over those same 30 years and you still have the $200,000.
You earned $361,000 of interest at 3.5%. Even though at 4.5%, it costs you $164,000. Why? It’s because these interest rates are not the same. This blew my mind a few years ago when I learned it and it changed everything for how I did my strategy of which loans to pay off. Overall, I have a strategy for that. There are certain loans I don’t pay off because of this reason. With car loans, auto loans and student loans, I barely paid off my almost twenty-year-old student loan. I finally paid that off a few years ago because it was cheap money.
Using cash to pay off your house will cost you more than it could save. Click To TweetI was like, “I can leverage and make more money outside of it.” This is huge because, at 3.5%, I still earn $361,000. If you earned the same 4.5%, it’d be about $500,000 net that you’d create there. $500,000 is huge. It’s big numbers. This is key. It’s not the same interest. When you’re saving money, it’s compounding. It’s like a snowball that’s avalanching down the hill. It gets bigger and bigger as you roll it. Interest on a mortgage is simple interest, not compound interest. You’re paying down your mortgage. As long as you’re paying at least a penny of principal on your payment. Even if you’re not and you’re only doing interest-only payments, it’s simple interest. It is not compounding against you.
Especially if you put at least a penny towards the principal, if you’re paying at least a little bit of principal every month, what happens that over time the interest goes down just like you’ve probably noticed with your other loan payments? You’ve probably noticed that if you pay the minimum payments, more and more go source principal. If it’s slow in the beginning, more goes towards the principal over time.
The interest you’re paying goes down over time, whereas with company interests, the interest goes up over time. They’re not the same. There’s a huge relationship there. For those who are visual, you might want to watch the YouTube video to see this but the whole point of it is this. You don’t even have to earn the same interest rate to beat it. This is critical when you’re trying to use your whole life as a strategy. Here’s the cool thing. I use whole life for me as a supercharged savings account. I don’t use it as a retirement account, even though it could work that way and do awesome.
What I do is dump money in. In 2021, I dumped $40,000 into a new policy and put that money in there. Right from the beginning because I was able to cut costs so well, I’ll probably have about $32,000 in there right off the bat. Over $30,000, I could go and invest right away. The cool thing is when we dump money into this whole life policy, you can keep the costs down and this is critical. This is the point where I’ve been able to do things that even other whole life guys that claim to do infinite banking strategies and things like that don’t quite get it.
Their pockets are tied to this so much that they don’t want to cut back so much. Here’s the thing that I try to do every single time and some of you are even reading because of this. You read my show because of what we’ve done. I’ve had a lot of doctors, anesthesiologists, dentists and people like that follow me because of the strategy. That’s how they started to follow me. It’s because I would cut costs on this so much down to as much as I can go pretty much to where you can stuff as much into this policy to keep it tax-free and keep the costs low too allowing it to grow and grow faster.
If you run the numbers out, especially for 10, 20 or 30-plus years, the cool thing is it averages depending on your age and health rating. The worst case is maybe around 4% or 4.5%. The best case is probably a 5.5%-plus year tax-free net return. The stock market has been averaging about 7.5% per year. If you’re paying taxes on that, let’s say you’re paying even a quarter of that interest, that means you net about 5.5% per year, not including other fees and everything else. When you factor in fees and everything else, you might make 5% a year or so and that’s about it.
The cool thing is it’s guaranteed growth and tax-free, which is awesome. It’s protected from creditors and lawsuits. You could have $1 million in these things in most states. There is limited protection in other states but in most states, you can have $1 million in this thing and get sued and nobody can get to this money, which is huge, especially if you’re trying to build and grow wealth. If you keep it in a savings account or IRAs, even those things are exposed. Here, it’s protected from creditors and lawsuits, even if you go bankrupt. I’ve seen this to be true in my life.
Even when I had creditors after me, they wouldn’t even see this money because it’s private. It’s not on a credit report. You don’t see it. It’s guaranteed growth. You can get private loans from this with no credit check, nothing. It has no effect on your credit at all. This is the cool stuff we’re going to talk about. You can get access to it not just down the road.
Bank Financing
When I first learned of this strategy many years ago about the whole infinite banking strategy, I was told, “You fill this up for 5, 10, 15 or 20 years. The cool thing is you can go and finance a car with this. You can buy a car or borrow money from the policy to go purchase a car in cash just like you’re using cash but then you take the payments and pay it back to yourself. You’d make more money than you would if you finance the car.” There’s partial truth to that but here’s the thing. Based on the current interest rates, even as I’ve been going up, although it’s getting more tempting to do this strategy, it’s been more tempting for me to get bank financing.
If I can get a mortgage rate or a car loan rate cheaper, I’m going to do it. That’s a whole other conversation but there’s always a case-by-case of how you use this strategy-wise. You can go and do that. I’ve had friends and clients use down payments on a home using this. I had one that was in a bind. He didn’t have the cash on hand so he borrowed from his policy to put a down payment on a house because it wasn’t an emergency. It was an opportunity.
He bought it cheaply. I’m sure that house is appraised for a couple of hundred grand more over those last years since he had to buy it but he borrowed from his policy. He paid it back about a year or so later. The cool thing is when you borrow from a policy, there is no minimum monthly payment. You pay it back however you want. They charge interest, that’s true but you pay it back whenever you feel like it.
If you’re somebody trying to build a spec home or something like that or do a fix and flip, they might need 6 months or 1 year but if you borrow from the policy, you can pay it back when you get paid. I had a lady at a dental convention asked me. She’s like, “I did this with one of my policies. I borrowed $120,000. I did a project with my son where he did a house. We flipped it and then I made $150,000. I profited $30,000, which is awesome.”
“Should I pay it back to the policy? I already know where I’m going to put the money next.” I said, “You could but if you put in there for a month and pull back out, there’s not that much of a difference. Don’t do it.” Maybe pay some interest and that’s it. Go and reinvest it again if you want to do it and so she did. She went and reinvested her money again. That’s why it’s so cool. It’s almost like the HELOC strategy you have been hearing about all the time but it’s way better.
Unlike a HELOC strategy where HELOC doesn’t pay you anything, whole life will pay you the entire time. This is the trick because what happens is that when you put money in the policy, it’s earning compound interest tax-free. When you borrow against it, the money is still all there. I’ll give you an example. Let’s say you have $100,000 in a whole life policy. You borrow $50,000. You do pay interest to the insurance company like 5% or so, depending on the company. You might pay 5% on that loan on that $50,000 but you’re also earning tax-free dividends on the full $100,000. It’s still growing and compounding.
Banks love it when you pay off your house earlier. They want to get their money sooner to leverage it ten times more. Click To TweetIf one of the companies, for example, pays you 4.35%, what happens if I do that? No problem. It’s because of the whole compound versus simple interest thing, the compound interest beats, even if it’s a lower rate just like that example for a mortgage. Let me give you a real-life example here. Here’s an example where I had two properties. One was a single-family home. The other one is a duplex.
The down payment between those two properties was $95,000. Let’s say you borrow that $95,000. The cashflow on these two properties was $1,070 a month and that’s the net cashflow, the profit. Normally, most people would cash out $95,000 on their savings and then they go and invest it. They make $1,070 and then take $1,070 and build it back up slowly over time.
We’re doing the same strategy but not cashing out savings. If you tried to build that up slowly over time, you lost that power of compounding interest because there’s not as much money there. You liquidated your account so you have to slowly build it back up. What if you instead use a life insurance policy and borrowed $95,000? The $95,000 is still in there growing and compounding the full amount but you go, take the $1,070 a month and apply it back to your loan. You pay it back to yourself.
The net result is even compared to doing a savings account. I did a savings account that was paying you 0.2%. I compared it to you only earning 4% on your whole life and you still gained after ten years an extra $21,000. They said 22.5% extra rate of return on your money. What does that mean? That means you could buy a whole nother property in ten years from that money doing the same strategy you already do with your savings account but you banked extra money. You made money twice because you’re earning compound interest in the whole life insurance policy and you still earn the same cashflow on the properties too. You were able to have your cake and eat it too, two places at once.
That’s the key. That whole compound effect versus the simple interest effect is what makes everything better. If you lower the costs low enough, which most insurance don’t do very well, you can get that thing paying you like crazy, especially if you do that year after year. After twenty years, the numbers get crazy. You start to get tens of thousands of dollars more with that example. That’s the power I’m talking about. Instead of using your savings account to cash out and go invest, whether it be in your business or in investments to create passive income, instead you’re like, “Let’s go earn some interest here and net an extra 3% or 4% net return on my money and still earn the same interest rate outside of it.”
Some Cool Things To Do
It’s brilliant and it’s something that I’ve used. There are cool things you do too. I had a client who leveraged life insurance. He went to a bank for a loan to get a new office building. He is a chiropractor. He wanted to get a new office building. He needed about $375,000 to buy the building and then build it out. The bank was going to give him a loan. I said, “Ask them if they’ll do a lien against the cash value of your life insurance.” He did. He asked the bank and they said, “Sure. We’ll give you a rate at 3.25%.” It’s secured. They knew the money was there.
That’s why life insurance companies do it too. There’s no credit check because the money’s there. This type of money is like you would with a normal savings account. He did the same thing. They tied up the money and put a lien against the cash value of his life insurance. They gave him the loan at 3.25%. They only lien $310,000 of his cash value but he got a $375,000 loan at a dirt cheap interest rate. Here’s what is cool though. A year and a half later, he went back to the bank and says, “Can I refinance? We have the building built out and everything. There’s value there. Can we make the collateral, instead of my cash value?”
They said yes and kept the same interest rate and payment. He’s only paying $1,800 a month for this. It’s dirt cheap money for buying a building that he can even rent out and make more than that rent back. The building can pay him and it costs him nothing. He has the $300,000 and he can go invest however he wants again. That’s the power of this. It’s huge and cool.
It may not be for you if you’re paycheck to paycheck and you’re tight. This is where you need the other cashflow strategies I teach but if you’ve got some surplus and you’re like, “I want to know how to get my money working for me now. How can I get any kind of leverage I can,” this can be an awesome strategy. If you’re in horrible health, this may not be for you but if you’ve got family members, partners or people that have got better health, you might be able to get a policy on them and leverage their life like all the different companies have done where they’ve tried to pay out pension plans.
GE did this. GE used this to be able to fund their pension plans. They would buy on employees and pay their pension plan using the cash value of the policy but then when they died, the death benefit would replenish the fund and they would have more pension money. Walmart used to do this too but Walmart is profiting so much that people complained and sued them.
During the Great Depression, JCPenney paid their employees wages using cash value from their policies so they can use the money. It’s like savings but it’s tax-free, better protected and has a much better return. You’re not earning point nothing percent in a bank that you get taxed on. You are earning way more interest through the bank. It’s tax-free and is better protected. The question is, why wouldn’t you use it if you’re in that situation?
If you’ve got questions, feel free to reach out to me and ask me. Go ahead and email me at Chris@MoneyRipples.com and say, “Is this for me?” Let’s find out. If you’re even looking at somebody else and you’re like, “I’m looking at the strategy with somebody else,” run it by me. I’ve had somebody run it by me. I was like, “I could save you a couple of grand a year on this if you tweak it.” It was with the same company. That’s the crazy thing. He was using a company that I would have probably recommended but the guy was making it more commission-rich for the agent, not for the client.
If you want to even have it looked at and say, “What about the policies I’ve already had? Can I use it with this strategy? Can it work,” let me know. I hope you love this. I love teaching strategies. I hope this blows your mind. You may have to read it several times. Make a wonderful and prosperous time. We’ll talk to you later.