Debunking the Myths: 8 Common Misconceptions About Infinite Banking

Hey guys, welcome to Wealth Wisdom Financial Podcast. Now you see both of us in my office. We'll probably switch it up and go into hers next time. Who knows? We're just having fun here. It's summer, you know?So now funny thing is. Infinite banking and the banking yourself concepts has been around

for a long time. However, lately there's been a lot of hype, I guess you could say a lot of, uh, movement in that because, I don't know, people are losing, they're they're no longer mortgage brokers or I don't know, something's going on, uh, where there's a lot more people doing podcasts, YouTube, we've been doing it. We're the OGS of this. We've been doing it for a while. And so what we really wanted to do today is address some of the misconceptions that are out

there. There's a lot of people who are probably saying things that Nelson Nash and would would he would turn over in his grave if he saw some of those things that were out there now. Pamela, she is still around, but she probably just shakes her head and probably is is off of social media and the likes because some of the things that are said about her, even I'm like, really?That's not even accurate. But yeah, she still around, but she is, you know, kind of not on the Internet

as much. So today we're going to ask some of those questions. But before then, why don't Ben, why don't you take us away? In a world where chaos seems to reign supreme, where uncertainty lurks around every corner and financial markets are now more unpredictable than ever. There's one place you can turn to to find clarity and control. Welcome to the Wealth Wisdom Financial Podcast. Hey, I'm

Brandon. And I'm Amanda. Join us as we dive deep in the world of personal and business finance to assist you in navigating through the chaos and building the financial future you deserve. We believe when conventional financial thinking doesn't get you where you want to go, you need wealth wisdom. So if you're ready to take control of your financial destiny. Tune in to the Wealth Wisdom Financial Podcast because in a chaotic world, your money shouldn't be. Subscribe now and never miss an episode.

OK, so here's how we're going to we set up this episode today. We went to an AI platform and we asked them, what are some common misconceptions of infinite banking?That's all we put in as a prompt, and they gave us 8 misconceptions. And we're gonna take turns talking about those misconceptions. So like I'll read number one and bring then you react to number one and then you read number two and I'll react to number two and we'll go through

it like that. We're gonna try to do this fast because eight could take a long time. So remember, we are improving here. We have not prepared. We might make mistakes. We might say something semi-incorrectly. Please give us grace. We're just having some fun here in the summer to bring you some impromptu kind of episodes. just got this list like a minute ago.

Here we go. The first one is, it's a get rich quick scheme. Many people mistakenly believe infinite banking promises unrealistic, rapid wealth accumulation. Brandon, you've got a minute. Go. Yeah. So I I do think that asI've heard Pamela Yellen do a lot on this and people would say, yeah, but she's just saying, you know, you can use this to then buy your cars and you'll be OK and you'll get wealthy. And I think that they are farther from the truth in that

regard in that. I don't know where I've see heard that or seen that, but, you know, using it to create other assets that will help grow your wealth is maybe a more a better way to think about it. Not just saying I'm going to use it to buy a car, depending on the interest rates, right? Uh, if it was a high interest rate car, using a policy loan is more important, but it's not just going to create wealth

if you're just. doing it to consume more stuff, but if you're using it for creating more opportunities for wealth in maybe real estate or in other areas, that's an important thing. It's not a get rich quick scheme because you actually have to think about how you're gonna deploy the fundsin a smart way that works for you. Not everybody should be in real estate. Maybe they need to be in Touro or they need to be in other areas that they know, right?But it's a way of building a good

foundation to then move forward. Yeah. Takes a long time to, to overcome and build that kind of thing. Yeah. There's no get rich quick schemes. If you're being sold one, it's likely a scam. Yep. Number two. Yeah. So in the,It's the

same as whole life insurance. That's what people say all the time. While infinite banking often utilizes whole life insurance policies, the strategy involves more than purchasing insurance. Is that true?Well, so one weird thing about how the AI says is it often uses whole life. I think true. Nelson Nash style, Pamela Yellen style, Infinite Banking and Banking Yourself, they always use whole life. It's just not the kind of whole life that our grandparents and great-grandparents would've owned. Or

even Dave Ramsey. Yeah, it's even some, it's it's had some specific modernizations to it that makes it more than just purchasing insurance. So I think that's a key part of it to remember is that it's not like the traditional,you know, 100 year old whole life insurance. It's kind of like, I like to use the phone. 100 years ago, the phone looked differently. We still, you know, we now have these smartphones that can still make calls. Like they have

that same basic thing, right?You can literally have a phone call on these, but they're dramatically different. There's, it's had a lot of modernizations, added things to it, just like that's, same things happened with whole life insurance. And that's what we call infinite banking or bank on yourself. Okay, number three here. It's only for

the wealthy. Some think infinite banking requires significant upfront capital, but it can be implemented at various income levels. What say you, Brandon?Yeah, I think first you need to have a good foundation of savings, right?And you could start a smaller policy, like a, a younger person maybe, or even older person, maybe $300, uh, that they can save for future them is what it is that they can afford, right?Uh, and so it's not, $300 may

seem like a lot for you. Or it may seem like, uh, a very little amount. So our first policies were $400 a month. That was what we could do at the time. Now we have bigger policies. We did not start there. If you would've told me, oh, all you need to do is put in 20,000 a year for the rest of your life, uh, back then I might've said, eh, I'm gonna wait on that. Now that's why we do a full comprehensive plan, because we wanna make sure that it

fits within where you're. at now and giving you a little bit of push to be able to grow into something, uh, so that way as your income grows, you're able to, to build. But it's not just for the rich, uh, and it's not just for just, uh, well, you know, the poor or whatever. We need to have a good balance there. Yeah, I would say, um, related to this, saying it's only for the wealthy, I would say,mindset is really important here. Because wealth isn't

just about money, right?If you have a wealthy mindset, you believe your future is bigger than your past, you believe that you can think creatively and make decisions yourself for your own financial future, rather than get, you know, bogged down in what other people think, then infinite banking, banking yourself is for you. If you can't get into those kind of mindsets,It might not be, no matter how much money you have. Yeah. So I'm going to ask this one. Since you are a CFP, this is going to be

a good one for you. Um, so infinite

banking, uh, as again, the AI said, it replaces all other investments. Infinite banking is often misunderstood as a replacement for diversified investment strategies rather than a complimentary tool. So maybe people on the YouTubes are saying, oh, this is the holy grail. Right. Of everything. I thought this one was mine. Yeah. I don't know, maybe, maybe So go ahead. Go back to our last episode. I talked about this a little bit in there. One of the things that I think too often it's

it's my way or the highway, right?Put all of your money into infinite banking or put all of your money into the market or put all of your money into CDs or, you know, whatever it might be. None of that could be true. You want to have diversification. You want to build strategically, not just all or nothing. And that's true of everything. So it can be a supplement to, but definitely does not replace all other investments #5. You ready for this one?The returns

are guaranteed. Many people overestimate the guaranteed aspects of the policy, not fully understanding the difference between guaranteed and projected values. This is one that came up in my CE recently, but go ahead. Oh, you might go in there. Yeah. So I like to look at worst case scenario and best case scenario, right?So why we use properly designed whole life is becauseis I like to make sure the guarantees it is going to last regardless of whatever happens, you know, in- As much

as possible. As much as possible. Based on the insurance company. Yeah. Um, short of zombies, right?Um, so I wanna make sure that the guarantees are good, uh, that regardless that we are okay because nothing in life, again, is guaranteed. You know, things can happen to us, uh, on our end, let alone the, you know, part of the insurance, right?we want to make sure that the contract will stand.

Now, this is where I don't like the, uh, IUL products is because they just show the non-guaranteed side and, um, what that straight line projection or stuff like that, that uh iskind of misleading. And so I want to be able to say, worst case scenario, how is this going to hold up if you do this? And they say, and it won't, right?And so I like the guarantees there. And then I like the, um, looking at the non-guarantees with the dividends and the other parts of the policy. Now, that's

what I I think is really important. Tell me a little bit about the CE way. Oh yeah, in my continuing education, we always have to do three hours, I think it is, of ethics education every year for anybody that talks to folks about life insurance. And one of those ethical things is making a very clear distinction, but that dividends are not guaranteed. And too often the way that folks talk about Infinite banking and banking yourself.

They make it sound like the everything's guaranteed and that just isn't the case. Well, that's another. But I actually what I love about it is because the dividends are not guaranteed, they can change. And as we've had lots of inflation, as interest rates go up, I can make more like I want that. That's that's great. Yeah. And I think that's also looking at other people's portfolios and things like that. We often buy things and we think,

oh, well, it's guaranteed. I'm like, well, no, in real estate it is not. and so thinking about that in other areas of your life, what is the guarantee and non-guarantee is really important too. So, um, number six, it's completely tax free.

While there are tax advantages, not all aspects of infinite banking are tax free. Is that true?False?What?Yeah, that's true. So there are lots of tax advantages when you're using whole life insurance, um, deferred growth, uh, at least under current law, right?Um, as the policy grows,get that guarantees and dividends, they go into the policy and help the policy grow. And that growth is not taxed every year like it would be in a savings account. The death benefit also famously tax-free to your

beneficiaries. It's protected in that way. However, it's income tax-free. It's not necessarily a state tax-free. And there are some times when people take withdrawals from their policy that could have tax implications. There are other times when we intentionally make the growth taxable whenever you touch it because of other specific

reasons. You want to ask lots of questions about taxes, understand what's going on there, talk to a tax professional, a CPA, an enrolled agent that can specifically give you tax advice. But for sure, understand what's happening tax-wise, what are the advantages of, and what could be the tax implications? How do you avoid them?Like that estate tax can be avoided, but you have to know, are you willing to pay that cost to avoid it?Or is it a remote possibility you

don't really need to worry about?Ask all those questions, think those things through, 'cause it's gonna be different for different people. Yep. That was me dancing around taxes. Yeah, right. And and again, knowing. And again, we are not tax people, but we know a lot about taxes. I I wish I didn't know so much. However, it is important to know as you build a comprehensive plan, how that's going to

impact you. And I ready for #7. Yeah, I just realized I was reading both the answer and the question at the same time. I got #7 for you. So the common

misconception is it's a new or unproven concept. And what AI says is that actually the principles have been around for decades, though popularity has increased recently. Part of why we did the last two episodes to talk about the increasing popularity. But maybe Brandon, take this opportunity to talk about that it's been around for decades. Yeah, life insurance, I mean, again, it's been around for a long, long time. It's really was to protect widows and

orphans. And then it became unpopular whenever 401ks and other things became popular. And we were like, yes, well, we can risk more here. We can do this more here. But the principles and the idea has been around for a long, long time and people have used it. That's why they made the MEC rules, because the rich were using it to make a lot of money and put it through a policy and then buy their assets. So they were doing it, uh, way, way back when.

And it just became more and more popular as people were like, wait, the banks are doing what?I could do that?Oh, I didn't realize I could do that. And they're starting to learn. And that's a good thing. We just wanna make sure that you have a, um, person that understands how the backend works. Kinda like a mechanic. You wanna have a good mechanic, not just, uh, Uncle Joe who maybe fixed a car once. Yep. Great. Ready for the last one?Number eight?Yeah, number eight. Let's go. Uh, it

eliminates the need for traditional banking. Now, the strategy doesn't completely replace the need for conventional banking services. That's what, uh, AI says, but- Yep. Let me talk about this. So, um, one important thing when you talk about infinite banking or banking yourself is that you're not opening a bank. We're not going, you know, to federal government and getting a bank charter, you know, or anything like our state government, none of that. This is a way to

to bank, right?The banking part is a verb, and you're actively taking over the banking function in your life. And we want to do that, particularly with things that are more long-term in nature or with debt, but we still use a bank for convenience. We've got a great episode about this as

part of our foundation series. We'll make sure we put it in in there using banks for their convenience and what are what's the cost we're paying for that convenience is a big eye-opener that then you can start to learn how to use banks in your favor, but also use make sure you're not using them

when it's not favorable to you. That's a very important reason that infinite banking and banking yourself even exist is seeing how, you know, even Mark Twain said a banker is a fellow that will lend you your umbrella when the sun is shining, but will demand it back when it starts raining. Paraphrase. He said it much better than I did. But that that's a Mark Twain, right?Like that idea of bankers being like a necessary evil has been around for a long time. Maybe not evil.

That's too strong of a word. But taking over some of the banking function in our lives can be really important. Watch It's a Wonderful Life. If you want a primer on what that looks like, maybe. Maybe you know that banker is a fellow who lends it when it's sunny and. takes it back when it's raining. Maybe people are starting to see a lot of storms out there or rain. Or we're just fed up with them getting like the bailouts and we don't. Yeah, or something along those

lines. And so that's why there's a rise in the interest of this is saying, hey, every time it's raining outside, they keep wanting it back. And is there a better way?And people are starting to ask. And then there's clever marketers out there saying, oh yeah, but there is. And so. SoIf you're ready to

combat some of these misconceptions, bring your own misconception to us, here what we would answer when I give you that opportunity. Here's how you make that happen. Ready to take the next step towards securing your financial future?Whether you're planning for retirement, saving for your dream home, or you just want to make your money work harder for you. The team at Wealth Wisdom Financial are ready to assist you, and now it's easier than ever to see how we might give you a boost

on your financial journey. Schedule a 15 minute discovery call with one of us today and let's discuss your questions and your financial goals together. Don't wait any longer. Your financial freedom awaits. Schedule your discovery call at www.wealthwisdomfp.com/call. We hope that you'll schedule with us. We look forward to talking with you soon.

Yeah. So as you're going through your understanding, we just wanna give you guys the tools to make smart decisions for your life, not just our life, right? Or the bank's life or somebody else's, but how is this Information going to impact you and your family and, you know, your your grandma, your kids, all those areas, grandkids, grandkids. These things that you're learning have huge implications that you may not even know yourself, right?I I think about that all

the time. But if you want to ally along the way and somebody who's like not just setting up a policy but having regular reviews with you, don't forget to reach out to us and hit that like and subscribe button. Remember the topics presented in this podcast for general information only and not for the purpose of providing legal, accounting or investment advice. And also if you are considering the banking yourself infinite banking concept, make sure that

you. Work with somebody who's going to ask you a lot of questions about your dreams and goals to make sure that the olicy fits for you. Live long and profit.