Would you like to be a millionaire when you retire?
Thanks to compound interest, investing $400 a month in your early 20’s will help you be a millionaire by the time you’re 67. However, if you wait until your 35, you’ll need to save $900 a month to reach the same goal!
One of the simplest ways to start taking advantage of things like compound interest is with an infinite banking concept. You can also use infinite banking to help you avoid high-interest rates and taxes. If you’re ready to learn how to save the right way for retirement, then this article’s for you!
What is infinite banking? Read on to find out!
Be Your Own Bank
When you’re stuck using traditional banking systems for loans like mortgages, or credit cards, you wind up overpaying in interest. Whereas an infinite banking concept or IBC gives you the ability to borrow money, without going into debt.
Instead of borrowing money the traditional route, you can borrow against your life insurance policy. To accurately execute an IBC plan, you’ll need to have a whole life insurance policy, not a term life insurance policy.
Then you’ll be able to borrow money for things like car loans, mortgages, and credit cards, without wasting money on high-interest rates. You’ll basically become your very own bank.
Why Whole Life Insurance and Not Term?
Whole life insurance policies stay in effect until the named insured (you), passes away. The reason you need a whole life policy to put the IBC into play is that it has a cash value. A portion of your premium for insurance policies that have a cash value go into an investment account.
Whereas if you have a term life insurance policy, you’ll just have the coverage without an investing account. The cash value of your whole life policy is separate from the policy’s death benefits.
Keep in mind that being your own banker isn’t the right move for everyone. Before you start making any changes, reach out to a financial advisor to review whether or not an infinite banking concept is right for you. Typically, the plan works best when you have a large amount of cash flow.
Protect Equity With an Infinite Banking Concept
Another advantage of implementing an IBC is that you’ll be able to avoid paying high taxes. All of the equity from your whole life insurance policy will be safe from taxes, as you give it time to grow. Using compound interest, your equity will grow much faster than it would in a traditional savings account.
Next, an infinite banking system also improves your liquidity and cash flow. You can easily take cash profits from different assets, like real estate property, and then re-invest the funds into your IBC.
Manage Your Money
After reading this article, do you think starting an infinite banking concept is the best choice for you? Perhaps you’re looking forward to helping your money grow, safe from taxes? Or maybe you’re looking forward to avoiding high-interest rates?
If you’re still not sure what the right move is for you, reach out to a financial advisor today to find out! The sooner you know what your options are, the closer you’ll be to achieving financial freedom. For more ways to be smart with your money, check out the rest of this site.