Velocity of Money Part 4

September 24, 2010

We just discussed how this first Defining Moment, that your money will never be worth more than it is today, motivates banks and why they live by it, but how does it impact your mortgage?

If you own a home and have a mortgage on it you are probably the proud recipient of a lot of junk mail. Much of this mail is from financial institutions who want to inform you that making additional payments on your mortgage is a good thing. For whom it is a good thing is not clear to most but for those who understand this Defining Moment it’s very clear.

We touched on this a little bit before but let’s take it a little deeper.  Let’s start with this question: would you like to make more house payments now with dollars that will never be worth more than they are today? Or, make more payments later when the buying power of that money is far less?

Let’s look at some math.  If your mortgage payment is $1,000 per month, do you want to make more payments now when your money has the buying power of $1,000 or make more payments later when the buying power of that money is $412 thirty years from now? (Which is the buying power of $1,000 with a 3% inflation rate for 30 years).

What you need to understand is that the value of your home is going to go up or down no matter what your monthly payment is as well as no matter what your mortgage balance is at the time.

To prove that point, if there are two identical homes side by side and one is paid for but the other is mortgaged, at any point, the houses are worth the same.  Neither the payment nor the mortgage have any effect on the value of the property.

But by making additional payments or paying cash up front for the house, you have used the most expensive buying power dollars you could to do this. At the same time by using today’s money to make additional payments you have made the banks and mortgage companies very happy. Remember they are in a win-win situation. So what do you do?

We’d highly recommend you read our Mortgage blogs when they’re posted…so that means you’d have to subscribe. There is one thing I know that WE can do for you right now.

We can prove, again not with concept or fancy theory but good ‘ol 8th grade math, that paying extra and sending more of your most value dollars to the bank ahead of schedule actually hurts you financially.

Big paradigm shift, we get it.  Call us crazy but we also can prove that a 30 year mortgage can actually pay off FASTER than a 15 year mortgage using the exact same budget for both…even with a higher interest rate on the 30 year. Read that again. This can be proven with math and no investments are needed to accomplish this fact.  It’s true and can be backed up with simple math.

So, we’ll do our part for free by showing you. You just have to challenge us and be willing to learn something new.

Kelly O’Connor – kelly.oconnor@mtnfinancial.com

303.578.9708

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The Velocity of Money #2

September 13, 2010

Do you remember the scene in the movie “Miracle” about the 1980 Olympic Hockey Team when coach Herb Brooks told the young men that today was NOT going to be the day that the Russian team would win?  It was a defining moment for that team.  Well, we talk about financial Defining Moments.

I don’t care how successful you are, if you do not understand how these financial Defining Moments effect you as you accumulate, preserve, and certainly as you distribute your wealth…well, then today they’ll probably beat you.

Defining Moment #1 is, “your money will never be worth more than it is today.” That sounds really simple and if you think about it, you’ll agree that EVERY financial institution masters this one lesson. Because of this, they also understand the phrase “the velocity of money.”

Money that doesn’t move or have velocity is like money that is stuffed in a mattress; it doesn’t create wealth or profits. To give you an example, the average bank in the United States spends a dollar about five and a half times. Have you ever thought how they do that?

Wouldn’t you love to spend YOUR dollar 5 ½ times?  Well, it’s simple.  First they TOTALLY embrace this Defining Moment.  You see, they take money, and it is not even their money, that is deposited in their bank and lend it to other people.

These people who borrowed the money make payments back to the bank and pay interest. The bank then takes those monthly payments and lends that money out again, over and over. This process continues repetitively about five times on each dollar they touch.

The collection of interest alone is very profitable for the bank. But they understand one rule that creates more profit for them than just collecting interest. They understand that MONEY WILL NEVER BE WORTH MORE THAN IT IS TODAY.

Due to inflation the buying power of a dollar decreases over time. The buying power of $1,000 today with a 3% inflation factor built in will have the buying power of only $412 in 30 years. The banks and lending institutions understand this clearly and they may even encourage you to make additional monthly payments on the money they lent you.

Wait a minute Kelly, I thought that I should pay extra to lower my interest expense?

Well, if you understand and, more importantly, apply Defining Moment #1, then maybe you should ask some questions.

More Financial Caffeine coming your way.

Kelly O’Connor – kelly.oconnor@mtnfinancial.com

303.578.9708

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The Modified Endowment Contract

April 29, 2010

A modified what? It’s called a Modified Endowment Contract (MEC) and was a creation of the terrible twins TAMRA (Technical And Miscellaneous Revenue Act of 1988) and DEFRA (Deficit Reduction Act of 1984).

It’s important you understand why the MEC was created, who created it, and how it can effect your money.  IRS Code, Title 26, Subtitle F, Chapter 79, Section 7720 is the description.  If you’re bored feel free to read it. Here’s the point.  The very fact they, the government, made the effort to craft and pass this type of restriction and limitation on what you could do with your money, keep in mind, it wasn’t like this prior to 1988, tells us one thing: it must be good in regards to taxation.

You see, prior to 1988 you could put virtually an unlimited amount of money into cash value life insurance and get all the benefits.  What benefits?  Here’s a list:

  • money grows tax deferred,
  • can be used tax free,
  • has a competitve rate-of-return (remember no fees and no tax),
  • has guarantees,
  • returns a tax-free dividend based upon company performance,
  • the money is credit proof,
  • you could contribute an unlimited amount of money,
  • you were unlimited in your investment options because you had
  • liquidity, use and control of the money,
  • it could be used as collateral,
  • it was estate tax-free, and
  • had disability protection – meaning if you became disabled the insurance company would continue to contribute your annual outlay (what 401k will do that one?).

Take a look at this pdf and line up the benefits you have with your money compared to how these policies are designed…click here.

The government didn’t like this; therefore, they decided to “further limit the perceived abuses by preventing policyholders from paying large single premiums to purchase life insurance and borrowing the cash value, tax-free.”  Heaven forbid we have some financial tools that they don’t have their hands ALL over.  The founding fathers of this country would be up-in-arms.  Folks, this type of policy, and the benefits associated with it, had been a LONG standing tool used by virtually all the wealthy families in the country…here’s a great book that describes this very thing, The Pirates of Manhattan.  I have no association with this book it’s just a good read.  Check this out, this is an article from November of 1999 in the Denver Business Journal.  They did a special publication called The Century Book. This publication dedicated one page for every year from 1900 to 1999 and covered something from Denver’s history for each year.  For the 1929 page they talked about the Crash and introduced you to Claude Boettcher – “Denver’s most famous investor”.  Anyone who has lived in Colorado for any length of time has heard of the Boettcher family.  This article mentions how he lost everything but waited for banks and stocks to drop so low that he borrowed $2,000,000 from his cash value life insurance to buy them all up (notice he lost his investments but he didn’t lose his insurance values).  I love the line right after the mention of this – “the reason he is still known to history. Most investors had no other resources to call on.”  Read it here.  The “Infinite Banking Concept” is NOT NEW!  It has been around for over a century.

In 1988, the government created a limit.  So think about this: who determines the minimum one can pay for a death benefit of, let’s say $500,000?  Come on, who determines the minimum you, the consumer, can pay for a death benefit of half a million?  The insurance company.  They decide what they can charge you and still make a profit.  This is called term insurance.  You pay the least amount and get one benefit – death benefit.  On the other side of the spectrum, who determines the MOST you can pay for that same $500,000 death benefit?  Most people say, “I do. I determine the most I’m willing to pay.”  Wrong.  The government.  The very fact that the government limits what you are able to do with your money tells you that it must be good in regards to taxes.  You know what, they’re right.  Of course they’re right. Taxes are their biggest concern.  If they aren’t getting them then you bet your $SS they’ll go out and find them.

It then begs the question as to why whole life insurance policies are still around then, right?  Well, you can still get all the above benefits, EVERY one of them, you just have to now capitalize the policy a little slower.  Before 1988, you could put, for example, $200,000 as a lump sum into a policy and get all the benefits.  Today, you have to spread that out over, typically, a five to seven year period.  The argument of “cash value life insurance is too expensive” is plain elementary.  Those supposed experts who make that claim are right if someone is using CVLI purely for protection…i.e., focused on one benefit.  Buy term and do something with the rest.  However, if you want to act and function just like a bank then you’d pay the most amount of money for the smallest death benefit to dance just below the MEC line and get ALL the benefits above on your money.  Read that sentence again. Around year five you’d have available every single dollar you put in.  This then becomes a pool of money that you can use to replace any financing or lost opportunity for paying cash.  It’s exactly what banks do.  Take a look at this graph (it’s nothing fancy as I created it, but the data is straight from the FDIC website). I broke down the top five banks and their holdings in cash value life insurance, in the BILLIONS, and more importantly, how they have increased their holdings over the past few years.

JPMorgan Chase is the only one who’s values went down between 2008 and 2009; however, their loan balances went up by almost the exact same amount.  They very well likely utilized this powerful tool to borrow from.  We’ll know at the end of this year when we see their numbers.  Folks, these are the top five banks in the country making double digit percentage increases in their cash value holdings!  Why?  Because they are masters of liquidity, use and control, and leverage.  I ask you, are you?

You can be.  It’s my job to teach you.

Kelly O’Connor – kelly.oconnor@mtnfinancial.com

303.578.9708

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How do you tell someone that their baby is ugly?

December 15, 2009

We run into this problem everyday. The majority of hard working people believe certain financial myths that require a conversation that is similar to telling someone their baby is ugly. The “conditioning” that has been experienced is frustrating, to say the least, but understandable…especially when you understand who has been doing the conditioning.

For example, and this goes out to all you Dave Ramsey and Suze Orman followers: why do banks offer you a lower rate on a 15 year mortgage than a 30 year mortgage?

Do you believe it is because they have your best interests at heart? If not, then why the discount? If the bank does not have your interest, the consumer, at heart then have you ever considered that maybe you should understand these reasons before you just accept what Ramsey or Orman say?

I sure wish they’d (Ramsey & Orman) take the time to understand because then maybe they wouldn’t lead so many people down a path of waste and wealth transfer. Speaking of wealth transfer, do you believe that Americans transfer more wealth than they accumulate? Come on now. Think of financing. Think of taxes. Think of, and wait for this one since NO ONE talks about it, think of….opportunity costs.

What are opportunity costs? Well, if you paid (or transferred) a dollar that you didn’t have to, not only do you lose that dollar but you lose what that dollar could have earned for you.

The answer to the first question will be the next post. I feel very certain that you haven’t considered the reasons for the discounted rate. As a matter of fact, there has yet to be an individual that I’ve met with, and I regularly meet with everyday-Joe’s to highly successful CFPs and CPAs, who has answered this question correctly.

So bring it on people. Give it your best shot. And if you say it’s because it carries less risk for the bank…you’re wrong.

Kelly O’Connor – kelly.oconnor@mtnfinancial.com

303.578.9708

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Why “the experts” confuse the average investor

November 17, 2009

We have clients in our office every day who love to ask what our opinion is of the market and what are effective strategies to invest and win. Well, we have our opinions but I thought I’d refer to a few experts out there in the financial world to see what they say we should be doing. First, what’s the “attitude” of investors? Let’s see what the numbers say.

The Chicago Board Options Exchange’s Volatility Index (VIX), which tracks the volatility of the market, has dropped significantly; on November 20, 2008, the VIX was 80.86; on September 11, 2009, it was 24.15. So, it appears the market is “calming down” and the investors are too. Not so fast though. There are those who anticipate we’ll need another 12-18 months to gauge the change in the market before any true confidence can be determined.

Randy Carver, a financial advisor with Raymond James Financial, says “We believe the market will move higher over the next couple years, perhaps significantly so, but is likely to go lower before it does” (italics added by me). He sure covered his butt didn’t he?

The Senior Vice President at Raymond James Financial, Sacha Millstone, says, “If you got out of the markets, you have to honestly assess why you did that. Find an asset allocation you can stick with through hell or high water.” Alright, so she feels people were uninformed or made poor decisions if they “got out”.

Uri Landesman, Senior Vice President at ING (they’re pretty big) said this, “[I] don’t blame investors for pulling out of the market, as there was no way to know how far down the market was going.” So we shouldn’t feel bad for getting out? Do we really ever know for sure how “far down” it’s going to go? We knew there would be those who said it was okay to secure your principal and there would be those who said we were stupid. There will always be a variety of opinions (hey, at least someone will be right) but let’s assume that confidence is back, the “doom and gloom” is gone, and people are ready to “get back in”, what then do we do with our money?

Uri Landesman (italics added by me): “…try technology bellwethers (ex: Microsoft, Intel). If you think we’re emerging from a global recession invest in the energy and materials sectors…Investors who aren’t sure about the state of the economy can try investing in the health care sector.” Well, no matter what, he’ll have some clients happy and others who “made the wrong choice”.

John Osbon (founder of Osbon Capital Management): “New waders in the market should invest in a mix of Vanguard Total World Stock Index Fund and Vanguard Total Bond Market Exchange-Traded Fund.”

Vahan Janjigian (chief investment strategist at Forbes): recommends Supervalu, Terex Corporation, and Tesoro Corporation. At least he provided some specifics but he does add the good old qualifiers of “if” and “could” when describing his reasoning.

Jeff Rubin (head of research at Birinyi Associates): “Stock selection is going to matter more instead of sector or some other type of selecting process (high dividend stocks, low P/E or what ever it is). As of now, I continue to stick to strength, such as Apple, Google, Goldman Sachs, JP Morgan Chase.” Okay, so the way of old is no longer. Got it.

Randy Carver: “We feel there is an opportunity in long tax-exempt bonds. We would avoid long taxable bonds, and we would add hard assets/commodities.”

Dave Ramsey (Fox financial pornographer): “Stick with your money markets for short term needs and go with a good mutual fund, like we say over and over, for your long term investments 5, 10, 20 years out.”

Sacha Millstone: “It isn’t about this or that particular investment. It is about a plan and a strategy and overall implementation.” Now I shouldn’t focus on product? These general platitudes have always confused me because my plan MUST pick particular investments and/or products in order to be implemented.

Robert Rodriguez (chief executive of First Pacific Advisors in Los Angeles): “[The economy] will be up and then down, up and then down. We will be far from normal for a very long period of time. People deploying capital will end up destroying capital.” That’s an interesting take. Now I’m really confused on what to do.

David Laibson (economist at Harvard University): “Investors expect that assets on which they personally experienced past rewards will be rewarding in the future, regardless of whether such a belief is logically justified.”

Jason Zweig (journalist for the Wall Street Journal): Responding to Laibson’s comment above said this: “[Buying] more of what has gone up, precisely because it has gone up, is to fall for the belief that stocks become safer as their prices rise. That is the same fallacy that led investors straight into disaster in 1929, 1972, 1999, 2007 and every other market bubble in history.”

How do you sum up all this information? This is only the tip of what we hear everyday on the radio and TV. Some say the economy is rising, some say it’s not, some say it’s flat. We’re told to invest and “suck it up”, we’re told that if we do we’re “destroying capital”, we’re told that we shouldn’t have gotten out, and we’re told we were foolish for doing so. We’re told specific stocks, don’t focus on specific stocks, focus on sectors, don’t focus on sectors, forget stocks and go bonds…AAARRRGGHHH!

An analogy just popped into my head that seems to wrap this all up quite well. It’s like standing on the tee box of a brand new golf course. There is no map of the course and no one has played it before. You’re surrounded by golf club salesmen who have played other courses but never played this one. Some of them have played for many years. Every one of them has an opinion about the wind and the obstacles ahead. Every one believes that their golf club is the right one IF all the factors come together properly (wind, swing, ball, layout of the hole, etc). So what do you do? Do you just pick the one salesman that you like the best and take a swing and hope it works? Dave Ramsey tells us that we should pick the one advisor that “makes us feel good” about our club choice (literally, he says that to us). No matter how hard I love my golf club, no matter how good it makes me feel, if I don’t have the right swing then it still doesn’t do what I want it to do…but at least it made me feel good, right Dave?

What about this choice? What if we worked on our swing first? Now, there’s a radical concept. Or, what if we walked the course FIRST to get an understanding of what we were hitting into? If all we did was ensure our swing was sound and then get a layout of the course, wouldn’t we be better off? Can you imagine what it would be like to NEVER care what the market is doing? Can you imagine what it would be like if you had access to capital that you could invest with a “product salesman” but they only made money IF they made you money?

I sure find it interesting…and so do my clients.

Kelly O’Connor – kelly.oconnor@mtnfinancial.com

303.578.9708

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How Financial Institutions Make Money

June 22, 2009

***Updated this post with “How Financial Institutions Make Money #2″…don’t forget to check it out.***

I’ve never illustrated exactly how banks make money.  You’d think most people would understand but the majority of those I meet with don’t.  They typically have the basics down but don’t take the whole strategy from point A to point B.

This actually takes me back to philosophy class in college.  Remember when you’d create a logical syllogism?   You’d make a few claims that work together to prove a conclusion.  Here’s a Banking Concept syllogism:

  1. The banking business is very profitable.
  2. Banks succeed by attracting depositors, maintaining use and control of the depositors money for the longest possible time, charge fees and interest on the funds their depositors borrow, and return the money to the depositors as slowly as possible.
  3. Financial tools exist for individuals and businesses to function and succeed exactly like a bank.
  4. Individuals and businesses have a choice to either deposit their money as the depositor at a bank or to deposit their money into the financial tools that allow them to act like a bank.
  5. Therefore, if individuals and/or businesses funneled their money into these specified financial tools then they could profit from their own money and transactions INSTEAD of the bank.

Seems simple.  It is. That’s what we teach everyday.  Don’t think it’s legitimate?  Then why do you see banks on every corner?  How could any other business, literally, be successful like banks?  Imagine if McDonalds was on each corner of a busy intersection throughout America.  Could they really all turn a profit?  Of course not…there’s not THAT big of a need.  So how can every bank on every corner make a profit?  By functioning in the matter described above.

Let’s go a little deeper.

Banks make money differently than you do.  They first have to attract money to build their success.  Please understand, they produce nothing.  They ship nothing.  They manufacture nothing.  They are completely dependent upon you and others to deposit money.  These deposits are the bank’s “raw materials” to operate their business plan.

Let’s imagine that two accounts are opened at the time of your deposit: one for you and one for the bank.  The bank is required to keep a small portion of your deposit on hand but is free to use the rest as it sees fit.  The primary function of the remaining money is used to loan out to others, maybe even yourself, and earn the interest on those loans.

I like how Don Blanton, author of Circle of Wealth, explains it:

“The homeowner, who pays the builder, who re-deposits the money back into the bank, borrows this money.  After receiving the money from the builder, the banker quickly reactivates this process.  Once a small portion of these funds has been placed in reserve (as required), the bank loans this money out again.  Let’s assume the next loan is for a debt consolidation. Now you should start to see why being the bank is so advantageous!”

He continues, “Let’s continue with the examlple.  The money for debt consolidation will eventually be returned to the bank as payments.  After keeping the required minimum, the money immediately goes right back into circulation!  This time it could be used to provide a customer with a car loan.”

“As the money is again deposited, it could be used for installment credit on a credit card issued by the bank.  Can you see the cumulative results of this process?  The bank gets one dollar to do the work of several by focusing on multiple uses of your deposits.”

We hear and see advertisements every day of financial institutions telling us to deposit our money.  They’ll even give us an iPod or a new sweet toaster oven.  They have only two hooks: easy access to money and the opportunity to compound interest.  The strategy they themselves employ and the strategy that they want us to employ are very different.  They concentrate on deposits that can generate multiple returns while you are invited to leave yours to compound and receive one benefit: interest.

Truly, how many people do you know that have actually gotten ahead financially because of what their money did for them at a bank as opposed to how many banks have gotten ahead financially because of what your simple deposits have done for them?

What if you could redirect your “deposits” into an entity that you own and control and could therefore function just like a bank?  Wouldn’t it only make sense that you’d benefit financially in the exact same way as banks do?

Don’t use the bank, be the “Bank” and do what the wealthy have done for ages.

Blessings,

Kelly O’Connor – kelly.oconnor@mtnfinancial.com

303.578.9708

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Cash Value life insurance is a horrible investment; however…

May 15, 2009

We’ve all heard it: Cash Value life insurance is a horrible investment.

Are you ready for this?  All those gurus and experts ARE RIGHT!

The problem, there’s a “however” that needs to be added to that claim.

It should read like this: Cash Value life insurance is a horrible investment; however, if it’s not used or designed for death protection and instead is designed to maximize the MEC (Modified Endowment Contract) rule, then there’s no better place to park money.

What?

Let’s take a look at what was possible prior to 1986 when the government realized that the wealthy individuals had a tool that was too good of a tax shelter…got to love the government.  Prior to 1986 NO ONE talked bad about life insurance.  Why?  Because you could put as much as you wanted, no limits, into a policy and the insurance company would underwrite you for a small amount.

For example: someone with a million dollars could put it into an insurance policy and the insurance company would underwrite them for maybe $100,000 in death benefit.  Why would the individual do this?  For many reasons: All the money in the policy was safe from lawsuits, litigation, and even IRS liens.  The money was totally liquid and they had available what they put in.  Let me say that again: this money was completely liquid and could be used at anytime with NO qualification necessary and NO IRS involvement. The money also had guaranteed growth.

Real life example: the Denver Business Journal in November of 1999 produced what they called “The Century Book”.  This special edition provided a 100 year history of Denver and highlighted something or someone for each year of the century.  When you come to the year 1929 the event covered was of course the Great Crash.  Also within that article was the story of one of Denver’s most wealthy individuals and at the time Denver’s best market player, Claude Boettcher.  The article says this:

“When he returned (he was traveling in the Soviet Union when the market crashed), he fired the messenger who brought him news of his financial ruin.  He had the courage to wait for stocks to drop more before he borrowed $2 million for his insurance policy and bought stocks and banks – the reason he is still known to history.”

How much death benefit do you think $2,000,000 in cash value would have to have?  Back then, very little.  Notice, when the market crashed he didn’t lose his cash value.  It’s guaranteed. It can’t be lost.  He was “financially ruined” but did that effect his ability to access his capital? Nope. What is the one factor that saved him financially? Having access to capital. If this tool was not in his portfolio then Claude would have been just another story of riches to rags.  But still to this day his wealth lives on here in Denver.  Now if he was Denver’s best market player why in the world did he have so much in cash value life insurance?  He was obviously one smart man.

In 1986, the government decided that it was not fair that the wealthy had such a great tax shelter tool and decided to create what is called the Modified Endowment Contract.  Basically, this rule added the risk to the insurance company by creating a minimum death benefit for the premium being paid to fund the policy.  If a policy owner goes over this MEC line then the majority of all tax advantages are wiped out.  The policy becomes a qualified plan with the IRS all over it…forever.  This new MEC rule limits what I can do with my own money…thanks Big Brother.

Let’s get back to the original MYTH.  Virtually all gurus and experts say that Cash Value life insurance is a bad investment.  Let’s first prove they’re right before we illustrate the proper use of the MEC line.

If I had a healthy, 30 year old client who was willing to fund a policy for $25,000 per year, how much insurance do you think that would buy?  Probably around $2,500,000 in death benefit.  Why would this be a bad choice?  For the exact reason Dave Ramsey and Suze Orman say:  your cash value sucks.  Now Dave says you have no cash value for three years…even with this type of policy he’s wrong; however, it would take 12 years of paying $25,000 each year before you’d have available in cash value what you put in.  Not a good option.  If you needed $2.5 million in death protection then buy term and invest the rest.

Here’s the “however”.  However, if the policy is NOT designed to maximize the death benefit and “dance” on the MEC line then what do we have?

Same example: this client is willing to fund a policy for $25,000 per year but we use it to purchase the LEAST amount of death benefit in order to have the most cash value available.  The death benefit is only $900,000 and he has over $17,000 available DAY ONE.  When he makes his year three payment of $25,000 his cash value grows by $29,000…already getting back more than he put in.  At the end of year four when year five’s premium is paid, his total cash value exceeds what he has paid into the policy…NOT twelve years.  Let me ask you this: if you save for five years to buy a car by using a money market at your bank (which is what Dave Ramsey recommends), how much would have in the account?  What you put in right?  Plus a very small amount of interest; however, the IRS takes their share of that every year.  If Dave Ramsey recommends this type of account for purchasing items how is a policy designed in this matter a bad thing?  Keep in mind, the IRS doesn’t get their share.  Shoot, you even have a growing death benefit just in case…at year five the death benefit is over $1.3 million.

Insurance people think we’re the stupidest insurance agents around.  Why?  Because we don’t get paid on the cash portion of the policy.  The commissions would be incredible if we did the first example but we aren’t here to sell expensive death benefit policies we’re here to teach individuals how to bank.  Our commissions are significantly reduced.  Why would an insurance agent turn someone down this path when they can attempt to sell a huge policy and make a ton of money?  We don’t consider ourselves insurance agents, we’re bankers.

So why would we want to fund a policy like this? My next post will be how to USE these funds to redirect debt or purchase vehicles, equipment, etc.  Over time, if you implement this concept, you will NEVER pay another dollar in interest to another entity, you will NEVER need to finance with a bank, and you will NEVER lose a dime.

Cash Value life insurance is a horrible investment; however, if it’s not used or designed for death protection and instead is designed to maximize the MEC (Modified Endowment Contract) line, then there’s no better place to park money.  You get back everything you put in, there is no risk of principle loss, there’s a guaranteed return plus a tax-free dividend, compounding growth, gains tax-deferred but can be used later in life tax-free, no government involvement (they already ruled on all this), creates an immediate tax-free estate, and most importantly, it’s liquid and you have complete use and control of the money (read that one again – what other tool, other than a bank account, can you claim this).

You can have everything you need and anything you want. Don’t use the bank, be the “Bank”. Do what the wealthy have done for ages.

Kelly O’Connor – kelly.oconnor@mtnfinancial.com

303.578.9708

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