Velocity Banking VS. Infinite Banking

[@deanh2664]

As someone who is practicing both simultaneously, I would say the one theme they both share that was not mentioned was controlling the volume of interest. Nelson Nash loved how policy loans worked for many reasons. One of which was the calculation of interest. He removed the power of amortization of the loan the banks had but was sure to pay them back to "himself" by structuring his own amortization schedule to recapture interest. Velocity banking is not about getting rid of your mortgage as fast as you can. It too is about controlling volume of interest. By running all income through the HELOC you are putting constant downward pressure on the balance. This process does not tighten cash flow as sending extra principal payments does. The byproduct of the process is principal of the HELOC being reduced which will pay the loan off faster. While rate risk and bank closing lines is a risk, it would help if a probability was assigned to these risks. Just like any financial decison, probability of risks helps the process along. A real risk I am seeing as someone who is capitalizing my policies is how the non-guarenteed columns of my policies will be regressing closer towards the guarenteed columns in this interest rate environment. Thanks for all the work you do. The information you offer is a great resource and one of the reasons I began my banking policies. For background I am a high school science teacher who picked up his insurance license recently because I believe in this concept as strongly as you do. Thanks and I look forward to more great content.

[@TheMoneyAdvantage]

Thank you for watching, and I am glad you find our content valuable! We prefaced this conversation by stating that we are not anti HELOC's. We have helped clients implement HELOC's in their overall strategy. We also do not consider it the best financial move to make extra payments to your mortgage regardless of whether you have a HELOC or a standard mortgage. The reason either loan is paid off faster is the extra payments that your making. If you would like the full report, you can go here and request it in the "Find Out More" section towards the bottom: themoneyadvantage.com/pay-off-your-house-is-velocity-banking-the-fastest-way/

[@TheMoneyAdvantage]

Great point about the probability of risk. When discussing risk, you have to also consider the impact of risk. You purchase insurance to cover things that have a high impact but have a low probability of occurring (premature death, house burning down). While dying prematurely or your house burning to the ground has a low probability, it has a high impact, and thus it would make sense to have life and home insurance. You do not go without insurance simply because something has a low probability of happening. When implementing financial strategies and tactics, you want to ensure the highest chance of success across the widest set of possibilities. The best way to make economic choices is not to bet on the future based on results from the past, but to test the performance of every choice against the widest range of possibility, from absolute best-case scenario to absolute worst, including the most probable scenario based on historical data. If we can identify strategies that out-perform all other alternatives across the widest range of possibility, then we still do not know how things will turn out (best case, worst case, or something in between), but we do know that our selected choices are superior to all others no matter what happens. In other words, we have maximized or done the best we could do. ~ Les McGuire With regard to the risk you mention of having your non-guaranteed life insurance policy values fall because of the low-interest rate environment, the most important part about whole life insurance is that it’s guaranteed, not that it has a high growth rate. In any asset, you have to sacrifice 1 to 2 out of the following 3 things: Safety, Liquidity, and Growth. The cash value inside a whole life insurance policy sacrifices high returns for safety and liquidity. Is cash value savings or an investment? The rule of thumb is this: if the account can lose value, it’s not savings, it’s an investment (themoneyadvantage.com/saving-vs-investing-what-is-savings/). Equity, whether you have no mortgage, a typical mortgage, or a HELOC, can drop in value so it's not guaranteed. Additionally, equity earns 0%. Cash value in life insurance, even without the dividends, is contractually guaranteed to not drop in value, and it earns a return. Life insurance should be your emergency/opportunity fund. A place to store cash in between deals. The beauty of the cash value in life insurance are the returns you make outside the policy (external return) in addition to the returns you get inside (internal return) of the policy. It's the fact that you can count on the money being there to seize opportunities and cover emergencies that make it so valuable.

[@deanh2664]

@@TheMoneyAdvantage Thanks for two thorough responses. I look forward to more high level content.

[@KumarKumar-kx4ct]

Great points 👍. Would you recommend starting of with VB to create a foundation for IB? Just trying to understand how VB and IB interplay in current interest rate situation.

[@isajthereable]

As always, great episode! My feedback is this: Consider the cogeneration benefit of the HELOC strategy for IBC. I began with the velocity approach and have been using it as an adjunct for IBC. As you know you can combine IBC with other things. Thanks for your time and effort!

[@TheMoneyAdvantage]

Yes! We prefaced the conversation by stating that we are not anti HELOC's. we have helped clients implement HELOC's in their overall strategy. Our aim with this episode was to counter the lack of truth in the marketing we were finding about the strategy of using a HELOC to pay off your mortgage.

[@davidmorgan5187]

Can you do Both? Velocity Banking and Infinite Banking?

[@TheMoneyAdvantage]

Yes, you can do both. We are not anti-HELOC. Securing a HELOC might be a prudent financial move to provide additional options when you need access to funds or want to put lazy money to work. For instance, you can use the home equity of your primary residence to purchase cash-flowing investment properties. We’ve even helped people use their equity to buy an investment property. We call high cash value life insurance the “AND Asset” for a reason. Infinite Banking isn’t meant to be your only financial strategy in your tool belt. It’s intended to complement and accentuate your investing strategy, boosting returns and accelerating your cash flow. themoneyadvantage.com/velocity-banking-vs-infinite-banking/

[@infinitevelocityCA]

Can the funds from a HELOC be used to fund an infinite banking policy?

[@infinitevelocityCA]

Income repays HELOC

[@TheMoneyAdvantage]

We cannot give advice, but once you remove the equity from your house, you are free to do whatever you want with that money. Whether you should do this is a whole different topic, and generally speaking, we caution against that. Each person's situation is unique and different, so there is not a one size fits all approach.

[@friskafrankproperties6468]

Rachel you need to learn to speak slower like the other two speakers to get the points clear to audience.

[@TheMoneyAdvantage]

Thank you for watching!