Oftentimes, people first introduced to Infinite Banking Concepts make the mistake of thinking of it as a debt financing plan; and, if their debt is under control it does not apply to them. That is a huge and costly misunderstanding. Here’s just one of the reasons why.
We are consumers our entire lifetimes and we finance everything we buy. Everything. We finance with interest paid or with interest lost (that is, interest not earned on the money used to pay cash). Since compounding interest could be earned by keeping the money, but is not, it is called lost opportunity cost (a major factor in gaining or losing wealth and critical to understand).
It is generally understood that interest paid is an added expense to whatever is purchased, thereby depleting wealth. The lost opportunity cost factor applies here as a permanent compounding of lost growth on every dollar paid in interest. It compounds for them, not you.
Less understood are the dynamics of paying cash. So, let’s look deeper. First, the money must be saved to be able to pay in cash. In our possession it is capital. When the item is purchased, the earning power of our capital is transferred away and lost forever. The cash purchase gives up the wealth creating potential of our capital. (Yes, we will always buy things. The secret is in how we buy them.)
In its entirety, the cash transaction involves a time period to save; growing tax on the growing savings; lost opportunity cost on tax paid; lost opportunity cost on the spent capital; a time period to replace the capital for the next purchase (need); growing tax and opportunity cost on the growing replacement capital; and, inflation. Combined, that’s a powerful hit on wealth creation. In the parlance of economics, capital and time are scarce resources; crucial elements in wealth creation. Why would we treat them trivially?
No one ever truly quantifies the economics of purchase transactions large or small. That is an error. The enormity of the error exists even though it isn’t seen. Being unseen prevents it from being addressed; and, being unaddressed prevents one from seeking an alternative approach… one that creates the opportunity to increase wealth in proportion to what would have been lost.
The Private Reserve Strategy presentation will simplify, clarify and quantify a complex economic concept and demonstrate the solution to the problem: collateralization. Collateralization is at the core of why Infinite Banking Concepts can be a powerful wealth creating strategy for you. It can be utilized in many ways beyond financing purchases. We suggest it is a critical strategy for you to understand in order to make knowledgeable decisions.
Please contact us for a free web presentation. You just have to be in front of your computer with your phone. To eliminate barriers between you and knowledge, it is free and you will not be asked to buy anything.
President, Burrill Insurance and Financial Solutions, Inc.
PO Box 367, Auburn, CA 65604
P.S. You have a choice: chase returns on your money, with high risk, taxes, and related economic costs in the hope to overcome your financial costs; or, turn your financial costs into growing wealth. It really is that simple.
When all is said and done, each of us must live with our own results – regardless of where the advice we may rely on came from.
With that in mind, we promote personal financial empowerment as opposed to acting on the “conventional wisdom” of the moment. Moments change; sometimes disastrously, as we have witnessed in the last decade.
If that makes sense to you, you can learn more by accessing more informative videos and a free download of the EBook “How to Turn Your Financial Drainage Into Growing Wealth and a Secure Retirement.” Access is free. Just sign in below.