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292: How to Secure Your Crypto Wealth with Infinite Banking · Wealth On Main Street

• 0:00
  Speaker A: Foreign.
• 0:11
  Speaker B: Welcome to wealth on Main street, where conversations about growing your wealth are fun and entertaining. Wealth isn't just about money. It's the skills and the knowledge that we develop to pass on to future generations. Tune in each week to grow your mindset and your net worth at the same time.
• 0:36
  Speaker A: Everywhere you look right now, people are hyped about crypto. Buy xrp, stake this coin, ride the next bull run, and, and yeah, the, the gains can be insane. But here's the problem that nobody's talking about. If you don't have a strategy to actually control the flow of your money, and you've got the banks, you've got the taxman, and even the volatility of crypto itself are still running the show. And so most of what's being taught out there is just flat out wrong. People are told to buy, hold and pray, or worse, cash out at the wrong time and hand over a massive slice to government in taxes. People who understand that controlling the banking function in their lives is one of the most important things that they can do financially are using a process named the infinite banking concept. And from that place, they're controlling how they finance the things that they need throughout their lifetime, which can include assets like XRP or Bitcoin or things like that. And they can borrow against the tool that's used to implement the infinite banking concept, keep their crypto growing, still maintain tax free growth inside of their policies. But that's the conversation that nobody's having. And that's exactly what Rich and I are going to dive into today. And the distinction, Rich, as you and I both know, is the distinction between a process and a product and that it's not an either or. And so let's expand on that so that we can give people who are watching some real clarity.
• 2:18
  Speaker B: Yeah, and there's going to be, I mean, There's a bazillion YouTube channels and videos about every different type of cryptocurrency and probably the bulk of them are going to be mostly devoted to bitcoin, et cetera. And I personally have crypto, I do, and I'm happy that I have it. But I look at that as more of an investment. I don't. It's not how I'm solving all of my life's financial problems. And I've borrowed from my insurance policies, which are where I warehouse my capital so that I can go and acquire the secondary asset of, let's just say, Bitcoin or whatever else that I have. So I get to do the same thing that Anybody who wants to go buy crypto is doing, I just am using OPM other people's money, in this case the insurance insurance company to go and acquire it. So I've inflationarily protected my fiat currency dollars by paying a premium where when I pay that premium, I'm guaranteed through the contractual elements of that policy, once you understand them, that I'm going to have an increase in the value of that premium dollar through the method of cash value and a constant increase for every day for the rest of my natural life. And the worst case scenario is that I kick the bucket. Now, if you're anything like me, in my household, there's usually in a lot of households there's one person who's the primary financial partner may usually makes the bulk of the decisions or whatever and then there might be another person who maybe handles more day to day stuff or whatever or they might just be completely out of it and say, you know what, you take care of it. Okay, I've been doing this for a while. Jason, you've been this for a while. Is that a pretty common element in a lot of households?
• 4:01
  Speaker A: Yeah, 100.
• 4:02
  Speaker B: I would say it's much less common that we have. Both partners are equally involved in all financial decisions, right? Yeah, they might be on the same page, they might be an agreement, but there's one person that usually handles more of the day to day. They deal with the research. Oh, hey, we're going to do this financial thing, let's check in, let's get to agreement. Like that's more common. So if, you know, doing crypto related activities and wallets and long strings of numbers that you need, there is some complexity there. And that complexity on its own has risk. We've all heard about people who've lost wallets. We've all heard about people who, you know, put money into an exchange and that exchange went belly up. That's happened to a lot of people. And so there's a ton of risk involved in that. So it doesn't mean that it might not, you know, that it might not be a, a good or a bad idea to go and own some cryptocurrency. But if you don't have a knowledge base and you're not able to take that knowledge base and transfer it. So if Richard's got a couple of walls with a few different things in it and maybe it's stored in cold storage, it's in a safe location and I have really well written down keys on metal plates that I've engraved so they can't be lost or destroyed in a fire, like maybe you've taken some, some steps at securing that information. But if my partner, something happens to Richard and my partner doesn't know about that, how are, how on earth are they going to redeem that stuff? So you have additional risks that are there and a lot of people don't consider that in the process. And so, but if I used insurance policies to do that and when Richard kicks the bucket and a whack load of tax free money shows up when it's needed the most, which is at that time, and it solves immediate problems and challenges and it takes a lot of the stress off in a very stressful situation. And when my, my, my wife is going through all the details and all the things we left behind and what's in the will and Tom and all the necessary information because it's going to take several months to go through a lot of that stuff, dig through a safe, dig through safety deposit boxes and be like, oh hey, here's this metal plate with some keys. Oh yeah, right. Let's go to the guidebook that Richard left behind. Let's figure out how to do with all this crypto stuff, right? That is not going to be immediately liquid for people. And if the market is down and you need immediate liquidity in a situation like that, are you going to go and sell all the crypto assets immediately and convert that into fiat currency, which is probably what you don't want to do because that's not the reason why you have the crypto in the first place. Like there's a lot of elements there and I think that that's things that people don't recognize and understand. So when you want to implement a cohesive element here, you need a warehouse for capital that you're using day to day basis, which is fiat currency, whatever, whether it's American or Canadian dollars, I don't care. That's your day to day usage of capital, of money which the rest of the world agrees is money. Medium of exchange. If you want to own a future medium of exchange, Bitcoin, Ethereum, whatever you want to do, use this tool to go and acquire that tool and hey, stake your claim. You know, you're making a decision about this is what you believe the future is going to hold. But why wouldn't you do both things? I don't understand why anyone wouldn't, wouldn't augment their potential by having, having both elements working for them in tandem.
• 7:14
  Speaker A: Well, I'll tell you, I look at if, if a person said hey, you know, if I could borrow against my XRP or my Bitcoin or my cryptocurrency, if I could borrow against that and do that without triggering a taxable event, and I could go and do something financially, Logically, I ask myself, if I'm going to borrow against an asset, is my preference to borrow against an asset that cannot go backward in value or one that is volatile? Logically, the logical side of my brain reports back and says, well, borrowing against the asset that can't go backward in value is my own preferred option. And there's a reason why it's my own preferred option. Because when I borrow against that asset, and that asset in this case that we're describing is through the device of a dividend paying whole life insurance contract, ideally with a reputable mutual life insurance company, ideally a system of policies, those loans are unstructured and we're not triggering a taxable event, we're not interrupting the daily growth of cash value in the policy, and we're not reducing the assets value. And so those are all things to consider because again, it all boils down to where the fundamental understanding is of what the infinite banking concept is and what it's not. So when we hear people wanting to design strategies that integrate the infinite banking concept with real world assets like crypto, we have to make sure that the distinction of a process versus a product are crystal clear. Because we're not integrating the infinite banking concept. What we're doing is we are making a determination to acquire an asset, in this case cryptocurrency. How do we want to acquire that asset? Do we want to use leverage to acquire the asset, meaning a policy loan, do we want to use cash, depleting our savings, going and investing in the asset, do we want to trade for that asset? But to weave in the infinite banking concept, where the essence of the concept is ridiculously simple, and it is to control how you finance the things you need throughout your lifetime, which can certainly include investment. It's understanding the advantage of controlling how that transaction is financed versus integrating a concept with that asset. There are two very distinct things.
• 10:20
  Speaker B: When you say financed, you have to again clarify, because if someone's new here and they don't understand, like if you're using your cash resources, if you're just making a hundred dollar or two hundred or five hundred thousand dollars a month automatic contribution out of your savings account or your checking account to your crypto wallet, that's automatically purchasing, you're financing with cash, you're flowing money into your life and then you're flowing immediately out of your life so that you can't use it for that purpose. You're choosing a purpose for it, and it can only do the job of that one thing. And that you're, you're financing that in cash now because you're giving up some other potential of what that could do. You've got the potential, the crypto, but you might be giving up, you have now the potential loss of being able to go buy groceries with that thousand dollars. Right. So the thousand dollars could go buy groceries or can go to the crypto. You're making a decision and there's an opportunity cost that's still there. So it's still a financing decision. I don't think that's always clear for people who are just accustomed to running cash flow through their life.
• 11:19
  Speaker A: Yeah, that's a really good point. And the late Charlie Munger, he emphasized. Now, if you're not familiar with who Charlie Munger was, he was Warren Buffett's business partner. And both of them combined, being two of the world's most brilliant investing minds. And Charlie Munger said, he pointed out a few things that could ruin most people financially. And when he says most people, he's literally factually referring to most people. And two of those things are liquor and leverage. And one thing that he shared as it relates to leverage is, he said, leverage. Let's describe that. I don't want to presume that everybody understands what that means. When you borrow against an asset and you go and purchase a volatile asset, because people do borrow to invest in the stock market, that's leverage. And Charlie Munger would say, smart people don't do it and stupid people shouldn't do it. So just take a moment to think. But a quick pause here. So if what Rich and I are discussing is, is hitting home for you and it don't just nod along. This is where it gets real. Our team helps people just like you to develop a deep understanding of the infinite banking concept and understanding that, you know, the, the approach is different depending upon everybody's situation. And that the wrong move could cost you a lot of money and a lot of unnecessary taxes and, like Richard said, lost opportunities. Here's what I want you to do. Just click the link in the description book. A conversation with the right person on our team, it's not theory. This is not guesswork. It's a very tailored conversation. And do that now and then come right back because we're going to keep this conversation going. Leverage can be very dangerous, whereas in the implementation of the infinite banking concept. People understand that someone has to control the banking function as it relates to your needs. There are no exceptions. And so when you need the. Your need for finance is going to be extensive throughout the course of your lifetime and you're going to need the use of money. And so when you recognize that the infinite banking concept is a process and it's a process of putting you in control of how you finance the things that you need, the distinction here is that you're using a tool to implement the concept dividend paying whole life insurance, ideally a system of dividend paying whole life insurance policies, and you're borrowing against an asset that cannot go backward in value. So even if you put yourself in a dangerous situation, a volatile situation, and the lever goes the wrong way with whatever it was that you've invested in that asset that was used as collateral to get money from the life insurance company to go and complete that investment transaction, that asset is still increasing in cash value every single day without interruption. And nobody from the life insurance company is calling you to say, we're really sorry that your cryptocurrency vaporized and we need you to start repaying that loan that you initiated to go and buy that cryptocurrency. Nobody from the insurance company is calling you and saying that to you because.
• 15:13
  Speaker B: I don't know what you did with the capital because exactly.
• 15:16
  Speaker A: It's none of their business. And you're still in a position of total control because you control the repayment schedule of that loan. Is it devastating that your cryptocurrency vaporized? Of course it is. Nobody would wish that sort of, you know, financial headache on anybody. But the truth is, when you invest, you're subjecting capital to volatility unless you're investing in something that cannot go backward. And in the case of a life insurance contract, it never has been, never will be an investment. But if you park money in simple instruments that you know, certificates of deposit or guaranteed investment certificates, et cetera, yes, you can earn a nominal rate of return and not worry that you're going to lose your capital. But when you're dealing in crypto, the first person that got invited to that party was Mr. Volatility and he RSVP'd on the spot in another video.
• 16:16
  Speaker B: Jason, we talked about the risks of infinite banking. It's all behavior based. And here's a scenario where people who get wrapped up in the next best, hottest thing, the next best crypto, this or that, or they get on board because the market's you know, rallying right now, often by the time you hear it's rallying, it might be too late, just as an FYI for some people. But what, what you, if you, if you have access to, you have $100,000 in a policy that you can tap into and you're allowed to access 90% of it. So you can take 90 grand out. And if you use that and put it all down, it's like going to Vegas on the roulette table, spinning the wheel and say, here's my 90 grand. Let's hope we're going to bet it all on black. Like, you have to be really cautious with that. And if you did take everything out, no different than if you withdrew every dollar of your savings or every dollar of, you know, potential that you have, you would be putting your family at risk by making that decision. So if you borrowed all of it against the life company versus if you withdrew it all of your bank account, it's the same scenario. You're still putting yourself at risk. That's behavior based. And if you did that with no plan, no concept as to how you were going to repay the loan back, that would not be a smart idea. That's not making good decisions. So if you're putting it all on the Vegas roulette table and you're spinning it and you're just, you know, waiting to see what happens, but you put all your chips in that basket, that would be a dangerous scenario without having the right context and knowledge base. And so you have to make a measured decision. Is this a risky endeavor? Now, the fact that you still have a policy and it's still growing, great, your family's protected, but you also have a loan on there. And if you maxed out that loan and that loan is growing in interest, yeah, ideally the policy is still growing, but then all of a sudden, if you stop paying premiums, will the policy grow a little bit slower? Could the loan. Could you create a problem that's not an infinite banking or a whole life insurance problem? That's a you problem. That's a behavior problem.
• 18:13
  Speaker A: Sorry.
• 18:13
  Speaker B: Don't blame the company or the policy or anything else for your own, you know, shortcomings on making poor decisions. We're all make poor decisions. Hey, I'll put my hand up. I know I've made a couple of doozies along the way, but all of those have been learning lessons for me that have allowed me to dial in and get better at decision making. Better framework doesn't mean I'm not, I don't have some doozies out in the future. The future is untold. But I've learned a lot about how to think about the decisions I make to be more pragmatic and more specific on them, you know, from, you know, the last 20, 30 years of my life. So I, I would like to think that you've done the same thing if you're watching this right now. So whether you're going to use crypto or not, it doesn't matter what it is that you're purchasing. I don't care if it's your cell phone, if it's the next car, if it's paying off a debt, if it's a down payment on a house, if it's, you know, Tesla stock or whatever. The thing is that that's got you all wrapped up around what you need. It's a financing decision. The process of making the finance decision is the same. Money's got to come from either your bank account or it's going to come from another warehouse. A reservoir. Yeah, that reservoir is an insurance policy. And you're using insurance companies money, that's totally fine. The method that you go about doing that and then replenishing it. So if you use your savings account, the savings account drained to zero. Well you're going to want more savings, aren't you? Don't you got to rebuild it, you got to make some payments into the savings account. You borrow it from the policy, you go buy the cell phone, buy the car, pay off the debt, down payment on the house, replace the furnace, buy the bitcoin. All of these things are just activities that you're choosing to use money for. It's all the same, right? But you use the insurance company's money, opm the best way that you still need to replace the resource, which means you need to make a savings payment. You're going to replenish what you used. Whether you use your savings account or use the policy, it doesn't matter. Other than that the policy provides huge protection for your family, a whole bunch of tax free benefits and has constant motion and it's always growing because you're getting older.
• 20:21
  Speaker A: Yeah, yeah, it's all true. And when I just take another trip into logic and think through the fundamental truth, your money must reside somewhere if you know that as it relates to a dividend paying life insurance contract, which is not the infinite banking concept, remember the concept is a process, but as it relates to the tool dividend paying whole life is, if you recognize the fundamental truths, you can contribute almost unlimited sums. You are not seeing anything other than daily cash value growth. You pay no tax on that daily buildup. You have contractually guaranteed access to capital. You are in a position where you've created an instant promise to pay of a tax free windfall called a death benefit. And when you know the truth that you can gain access to capital on demand, on your terms without reducing the policy's value the asset without triggering a taxable event and you're in a position of total control over the repayment schedule of capital that you access to take advantage of high caliber opportunities. Logically, how much capital of yours do you not want residing there, knowing that from that very place you can go and achieve financial objectives that include investing. So here's the bottom line. Crypto on its own is risky. The the infinite banking concept on its own is powerful. If you implement it the right way, you can turn volatility into high caliber opportunity if you understand what to do. But this is not something you should try to do alone. One wrong move and the taxman wins. One wrong move and you're creating financial headaches, not financial wins. One misstep and the strategy collapses. The difference between success and regret comes down to whether or not you've got the right people guiding you. And that's why our next step is simple. Just click the link in the description book a conversation with the right person on our team. It's a chance to see how the infinite banking concept can radically amplify whatever your investing strategy is, including your crypto strategy. But finally give you control, confidence and clarity. And so don't wait for the next market swing to realize you should have acted sooner. Just book the call, get to clarity on the concept and let us help you get to work on taking control of of how you finance the things that you need throughout your lifetime and recapturing the interest that you would otherwise pay to someone else's bank or someone else's finance company. Rich this was awesome.
• 23:18
  Speaker B: Having fun exploring the infinite banking concept? Want to learn more? Well, add to your reading list. Check out all the incredible books that we have@wealthonmainstreet.com shop. That's wealthonmainstreet.com shop.