The Simplified Infinite Bank Concept

In a posting of the popular blog The Simple Dollar, the following suggestion is made about setting up and operating a bank on its own or the program gets paid first:

"First of all, you should establish a" major account "of some sort - this can be something as simple as a savings account at a bank or it may be an investment account where you put some risk on your" main account " I'll talk about the different options in a moment.

This "master account" is where you deposit all your income. Every penny you earn is deposited directly into your "main account."

Then once a month (or once a week or as you choose), an automatic transfer draws a smaller amount of money from that "master account" into your normal checking account. This is the money that he lives with, he uses to pay all his bills. "

Although this is a good publication designed to help people, it has not been able to fully explain the concept of the Bank in Itself. In fact, he suggests opening two standard bank accounts and earning interest on one (which would be taxed and would earn well less than 3-5%). You see, the real concept of Infinite Banking does not work that way. So as we decipher the code of how the rich invest their money, I'll try hard to clarify what the post quoted should have said all the time. Here goes...

As part of my initiatives to learn how to make money out of the conventional media, I came across the concept of Infinite Banking, which is sometimes also called Bank for you. I admit I was surprised that I had never heard of it ... ever. After reading at least 3 books, I decided to get in touch with a local life insurance agent who specializes in setting these policies in the right way. I questioned him with many questions about the subject and how it worked. It seemed too good to be true, but I decided to open an account and take the plunge. After three years, I would have opened one 10 years ago, even at birth if possible. At this point, most of you are probably wondering what the heck I'm talking about, so here's a little bit about what it is and how it works.

The concept is simple. All you have to do is open a specially structured whole life insurance policy. It has to be with a mutual-owned insurance company. You can not open it with any insurance company and there are only a few that offer this type of policy: most of them have never heard of. You should also look for a trained life insurance agent to set you up properly. You will have to pay a fixed amount on the policy for 7 years. For example, you may have to pay $ 2,000 a year for seven years. This is due to the IRS tax laws. As long as your policy is active, you will earn value each year by paying dividends. The returns at the time of writing this article can pay between 3-5%. Best of all, both profits and distributions are tax-free forever: that's right, I said, tax-free. They do not have deferred taxes like the IRA or 401 (k). In addition, you can hire a loan at any time and the loan should never be returned. If you choose to pay yourself, you can do so with a higher interest rate that returns to your account and then receives dividends. This allows your policy to act like a bank while generating your tax-free money.

Although the main reason for opening this policy is for investment reasons, you will also have the added benefit of a life insurance policy that will cover you for approximately 105 years. If at any time during this period you die, your beneficiary will receive the insurance. death benefit payment. What's even better is that all the money invested in your account goes back to your heirs or beneficiaries after your death. Several financial gurus are coming to the table and talking about how lifelong plans are a waste of money and they charge high fees. They are advising people to buy life insurance and invest the difference. The problem is that most people pay a little per month (maybe around $ 35), but do not die within the policy term of 20 or 30 years. So the policy expires without value and your entire investment is lost. For this fictitious policy, your loss would be $ 8,400 for 30 years. With a full life policy, you (not you but your heirs or beneficiaries) will recover all the money from the initial investment plus the dividends and other gains received. In addition, your death benefit will remain intact, so you will also receive this money beyond your original investment. Did I mention that you can have more than one policy open to you and your spouse? Some

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