The Money Advantage Podcast

How are whole life insurance dividends and interest rates faring in this low interest rate environment? Is today's long stretch of low interest rates a bad sign for whole life insurance in the future? https://www.youtube.com/watch?v=FYMHKtVtVKI Today, we're having a candid conversation about today's interest rate environment, the impact on bond rates and prices, and how that impacts whole life insurance dividends. If you want to know how your whole life insurance will weather any environment… tune in now! Table of contentsThe Role of Bonds on InsuranceHow Do Insurance Companies Invest?What About Policy Loans?Life Insurance Companies Invest ConservativelyHow Do Bonds Work?What a Portfolio of Bonds Means for Insurance CompaniesWhy You Shouldn’t Worry About Low Dividend RatesAdditional ArticlesBook A Strategy Call The Role of Bonds on Insurance Bonds play a significant role in the dividends you receive as a policyholder. This happens because life insurance companies invest heavily in conservative bonds. So rising interest rates should lead to higher declared dividend rates. Similarly, a falling Federal interest rate will likely result in a decreased dividend rate.  Are there long-term effects of a low interest rate environment? Well, not to spoil things completely, but life insurance has been around for a long time. It has survived many low-interest rate environments, paying dividends through wars, depressions, recessions, and much more.  We’re going to dive deeper into why this is, and how life insurance is still one of the safest choices for your money.  How Do Insurance Companies Invest? When you pay premiums, the insurance company doesn’t just throw that money into a savings account and wait. They actually put the money to work. Some of this money goes into securities, however, it’s a minuscule amount. Many companies have anywhere from 0.58% to 2.49% of their portfolio in common stock.  The much more significant portion of life insurance company’s investments is in bonds—either corporate bonds or treasury bonds. Bond investments often range from 60.2% to 75.5%.  Then, there are preferred stocks, which work similarly to bonds because it produces interest. Additionally, preferred stock means that stockholders get paid before anyone in the common stock gets paid. This means preferred stockholders have low liability. The range for preferred stocks is about 0.25% to 1% of the company’s portfolio. The next biggest investment in an insurance company’s portfolio is going to be mortgage-type investments. Companies allocate anything from 0% to 16.3% of their portfolio to mortgages. To reduce risk, they invest in high equity mortgages. Real estate investments, separate from mortgages, range from 0.33% to 1% of the investment portfolio.  What About Policy Loans? The last kind of “investment” life insurance companies make is contract loans. And these are the loans that insurance companies offer to policyholders. Contrary to popular belief, when you take a loan, you’re not taking a loan from yourself. The life insurance company is giving you the money because your cash value is backing the loan. This also means that when you pay interest, you’re paying interest to the life insurance company, not yourself.  Life insurance loans make up anywhere from 2% to 7.24% of an insurance company’s portfolio.  Policy loans, even in a low-interest rate environment, are great for insurance companies, and by extension you, as the policy owner. It all comes down to the way mutual companies are structured and the dividends they pay. In a low interest rate environment, with many loans fixed at about 5%, this is actually some of the greatest returns companies get during such times. Plus, they can take comfort knowing all loans are backed by cash value.  This is beneficial to you, the policy owner because you want your insurance company to do well. You partake in the profits of the company, so it’s a boon to you and all other policy owners. Life Insurance Companies Invest Conservatively The insurance companies have a lot of responsibility on their shoulders. They invest conservatively because they have contractual obligations to millions of people to pay out a death benefit. Permanent insurance, unlike term, is guaranteed to pay out so long as the policyholder keeps the insurance in force. This means there’s a higher standard that companies who offer permanent insurance must adhere to.  Mutual insurance companies specifically cannot invest recklessly because of this responsibility. There’s a lot of capital management happening behind the scenes, and to assume that a dividend is solely “return of premium” doesn’t capture the whole picture.  Not only is there a chief officer in charge of capital management at the life insurance company, but there’s also an entire team, an entire strategy, and structure. How Do Bonds Work? Bonds have an inverse relationship to interest rates and their value. The following is a hypothetical example to explain how bonds work. Say you buy a 10-year treasury bond at what’s called “par value,” or $1,000. You lock in the interest rate when you buy the bond. So say the interest rate is 1.5%, you’re going to earn that rate every year for ten years.  If the interest rate goes up while you own that bond, you still only earn 1.5%. While the rate of your bond hasn’t technically decreased, the value decreases because it’s technically underperforming. However, the inverse is also true, and this is the power of those bonds.  If the interest rate were to decrease while you own the bond at 1.5%, the inherent value of your bond increases. This happens because your bond is now earning more than the new bonds are earning.  Then, let’s say someone wants that higher-earning bond and they offer you more money for it. If, for example, you bought a bond at 6% and rates decreased to 5%, someone may offer you $1,100 for your bond. That offer is actually a 10% earning, which may be a 4% spread, but is a 66% increase from what you were working with.  In an environment that interest rates go down, current bonds are at a premium. What a Portfolio of Bonds Means for Insurance Companies Insurance companies determine profit by taking all the gains from investments and subtracting costs. Costs usually include death claims, wages, commissions, etc. Companies then take this profit, which is proprietary information, and declare a dividend. The higher the profit, the higher the dividend.  Unfortunately, one of the most difficult things that can happen is what we’ve seen in the last ten years or so. Not only did interest rates go down, but they’ve stayed relatively flat. So insurance companies are still getting yields on their bonds, but they’re not able to sell them. And this is one of the greatest sources of profit.  However, because bonds still earn that locked-in rate, companies are still doing well. This is why they declare a lower rate, so the financials can stay balanced in times where there isn’t as much profit. So while it may feel stagnant as a policyholder, this is the type of strategy that allows companies to thrive in the future.  Additionally, bonds are stable because of the way they continue to pay steady interest over the allotted time period. It may not be as exciting as the stock market, yet in a low interest rate environment, it is a “sure thing” for the companies. Why You Shouldn’t Worry About Low Dividend Rates While low dividend rates can appear scary at first, they’re actually more significant than you’d think. When you realize that low dividend rates are actually a proactive response by insurance companies, everything shifts.  Low dividend rates don’t necessarily mean the company is in bad shape, or that their investments aren’t doing well. On the contrary, low dividend rates allow companies to navigate low interest rate environments more conservatively. It’s a power play, which helps the company weather the low rate environment. Consequently, this allows them to come back even stronger when interest rates increase.  It looks, perhaps, like on the surface, the highest dividend rate is going to outperform a lower dividend rate. But what we often don’t look at is the insurance companies' responsiveness to the environment. Because lower whole life insurance dividend rates may push away new policies, however, companies are often lowering rates to protect the company for a future when the interest rate environment changes. These are companies who are thinking of the long game, as we hope people utilizing infinite banking are thinking about the long game.  Additional Articles https://themoneyadvantage.com/life-insurance-company-ratings-why-they-matter-right-now/https://themoneyadvantage.com/how-safe-are-life-insurance-companies/ Book A Strategy Call Do you want to coordinate your finances so that everything works together to improve your life today, accelerate time and money freedom, and leave the greatest legacy? We can help!  Book an Introductory Call with our team today https://themoneyadvantage.com/calendar/, and find out how Privatized Banking, alternative investments, or cash flow strategies can help you accomplish your goals better and faster. That being said, if you want to find out more about how Privatized Banking gives you the most safety, liquidity, and growth… plus boosts your investment returns, and guarantees a legacy, go to https://privatizedbankingsecrets.com/freeguide to learn more.

Want your charitable giving to make the greatest difference in the world? Today, we’re talking with Kris Putnam-Walkerly, author of Delusional Altruism, who advises philanthropists who want to achieve greater clarity, impact, and joy with their giving.  https://www.youtube.com/watch?v=cWVQF5___XQ&t=11s We’ll discuss why how you give matters, the 7 delusions of altruism, and how to create lasting change. If you’re a philanthropist, donor, or an everyday person who donates time, money, and experience to help create a better world… tune in now! Table of contentsDelusional Altruism: What Makes Philanthropy Effective or Not?Invest Like It’s Your BusinessHow Do Philanthropists Get in Their Own Way?How to Ask the Right QuestionsHow Can You Be Transformational in Your Giving?Links Mentioned: About Kris Putnam-WalkerlyBook A Strategy Call Philanthropy Coaching [7:08] “I also provide a lot of coaching and advising. So most of my clients now retain me as a private coach to help them navigate their philanthropic journey and help them get clarity on what they’re trying to accomplish. And help hold them accountable to accomplishing it. And really being a sounding board to them, because it can be a very lonely place to be. Either you’re the executive director, perhaps, of a foundation...but also for, perhaps, an ultra-high-net-worth donor...it can feel lonely because you can feel a lot of guilt with having all that wealth.” The reason it’s lonely, as Kris mentions, is that there aren’t many people you can have a conversation with about your finances. Either people are asking for that money, or they don’t validate your struggles because you have money.  Delusional Altruism: What Makes Philanthropy Effective or Not? [9:35] “Delusional Altruism is really about how donors of all sizes and types are generally genuine in their altruism. They really want to make a difference, change the world, want to help others; but are getting in their own way and are preventing themselves from having the impact that they seek….So part of the challenge with effectiveness is, it’s hard to be effective when you’re getting in your own way.” [10:05] “One of the challenges is a scarcity mindset, and this is when donors believe that maintaining a spartan operation for themselves or their grantees...somehow equates to delivering greater value in the community.” [11:00] “If you want a non-profit to be successful, just like a business, it requires investment in your growth and in your success.” [11:55] “I think a lot of people of wealth feel guilty. They feel guilty because maybe they inherited the wealth and didn’t earn it, and therefore don’t deserve it. Or maybe they made more money than they ever thought they’d make in their lifetime, sold a business, and suddenly have wealth... But the problem with that is it really holds funders back, from a mindset perspective. It often causes people to shrink, to kind of mask their talent and mask their ability to make a difference in the lives of others.” [13:04] Rachel: “The business in the first place is service to mankind and to the world. And you are not taking money from society; you are giving something that’s more valuable, and the exchange of that is that you are profitable.”  Invest Like It’s Your Business [18:50] Kris: “Is that how you invest in your business? Do you only allow one cent of every dollar to go to pay your staff salaries? [Or] to go to pay for your own business development? So why are we asking a non-profit, who’s trying to save people’s lives, why are you asking them to do [that]?” How Do Philanthropists Get in Their Own Way? [20:20] “I think fear really is the primary cause of the scarcity mindset. And there are lots of different ways funders feel fearful; which might surprise you because you assume that the donor is wealthy, and with wealth should come confidence.” [25:30] “Sometimes we...sort of stumble through our giving based on what’s presented to us—the appeals that arrive at our doorstep. But often people haven’t had a chance to really reflect and think as an individual or as a couple or as a family or a business, [about what the] issues are that [they] really care about.” [27:58] Rachel: “At the root of doing the most good, we have to first understand what do we truly value. And I love that you’re saying that that’s really important.” How to Ask the Right Questions [31:15] Kris: “Questions are really powerful, and I think if you ask the right questions, they send you down the right path. And if you ask the wrong questions, they send you down the wrong path. And one of the questions that I think people ask—and it’s really about ordering them—is they ask how to do something before they ask themselves what it is they’re trying to accomplish. Really what that means is they’re focused on the tactics of doing something before they’re thinking through the strategy... You can’t possibly know how you want to go about doing something unless you have clarity on your objective.” How Can You Be Transformational in Your Giving? [37:40] “I’ll share two things if I can. The first, very briefly, is just recognizing that as a donor you have more to give than money...It’s not just wealth, you also have your expertise, you have your volunteer time. You also have your ties and your communicate, your contacts.” [38:52] “So I think just thinking about bringing your whole self is part of being transformational. The second thing I’ll say is, and this gets back to strategy...it’s really having a shift in mindset around strategy and planning. And the mindset shift is instead of letting that unknown future paralyze you, to really let it free you.” Links Mentioned:  8 Things Every Philanthropist Can Do to Change the WorldPutnam ConsultingDelusional Altruism About Kris Putnam-Walkerly Kris Putnam-Walkerly is a trusted advisor to the world’s leading philanthropists. For over 20 years, ultra-high net worth donors, foundations, Fortune 500 companies, celebrity activists, and wealth advisors have sought her advice to transform their giving and catapult their impact. As a philanthropy advisor, speaker, and award-winning author, she’s helped hundreds of philanthropists strategically allocate over half a billion dollars in grants and gifts. Kris’s clients include the Robert Wood Johnson Foundation, J.M. Smucker Company, Charles and Helen Schwab Foundation, Heising-Simons Foundation, Annie E. Casey Foundation, David and Lucile Packard Foundation, Walton Family Foundations, Fujitsu, Blue Shield of California, and Avery Dennison Foundation, among many others.  A thought leader in transformational giving®, Kris has been named one of America’s Top 20 Philanthropy Speakers for the past three years. She is the author of Delusional Altruism: Why Philanthropists Fail To Achieve Change and What They Can Do To Transform Giving (Wiley, 2020) and Confident Giving: Sage Advice for Funders; a Forbes.com contributor on philanthropy; a global philanthropy content partner to Alliance Magazine; and the US philanthropy expert to the leading Dutch philanthropy media outlet De Dikke Blauwe.  Prior to forming Putnam Consulting Group, Inc., Kris was a grantmaker at the David and Lucile Packard Foundation and an evaluator at Stanford University School of Medicine. She holds a master’s degree in social work from San Francisco State University and a bachelor’s degree from Indiana University. She and her husband have five children and reside near Cleveland, Ohio. Learn more at putnam-consulting.com.  Book A Strategy Call Do you want to coordinate your finances so that everything works together to improve your life today, accelerate time and money freedom, and leave the greatest legacy? We can help!  Book an Introductory Call with our team today https://themoneyadvantage.com/calendar/, and find out how Privatized Banking, alternative investments, or cash flow strategies can help you accomplish your goals better and faster. That being said, if you want to find out more about how Privatized Banking gives you the most safety, liquidity, and growth… plus boosts your investment returns, and guarantees a legacy, go to https://privatizedbankingsecrets.com/freeguide to learn more.

If you're shaking your head at the state of the world right now, you're not alone. There are food shortages, supply chain disruption, medical mandates, unemployment, price inflation, and more of our freedoms at stake. https://www.youtube.com/watch?v=Zaew0MenJhU Yet, people are thriving, there's more opportunity than ever, and you will succeed if you live by this one truth.  To join the conversation… tune in now! Table of contentsThe Domino Effect of Supply ChainsIt’s Easy to Be Discouraged…Walking in AbundanceAn Abundance Mindset Causes SuccessEntrepreneurs Are the Real Movers and ShakersBook A Strategy Call The Domino Effect of Supply Chains Are the shelves at your local stores looking a bit empty? If so, you’re not alone. And while there may technically be food “shortages,” we’re not lacking food. What we’re actually experiencing is shortages along the supply chain. Lack of workers, for example, means that there are gaps in how food and other goods get distributed to stores. This is the same reason it’s taking longer to receive packages.  There’s no huge headlining problem, rather there are small structural pieces missing that are affecting the economy on a global scale. And these small pieces can have a massive domino effect. Because if a single piece of this supply chain is broken, everything that comes after that “break” is delayed or impacted.  If you’re looking for a great read for all ages—The Miraculous Pencil, a children’s book by Connor Boyack about free markets, really breaks down the global economic infrastructure.  It’s Easy to Be Discouraged… When you look at the state of the world and know that our freedoms hang in the balance, it can be devastating. It’s easy to feel discouraged by the news and media. However, it’s important not to let this mindset make you feel hopeless, or like you no longer have control.  I think we can walk in a state of abundance because here’s what I know: people are still finding tremendous opportunity in the midst of the state of the world. Walking in Abundance The big question is, are we going to walk in scarcity, or are we going to walk in abundance? And the choice may seem obvious, but it’s important to actively choose abundance. You have to live abundance to walk in abundance.  In a world like what we’re experiencing now, that means not walking in fear. It can also look like not hoarding supplies and food, and being confident that you will be provided for, as well as your fellow man.  Walking in abundance may also mean looking at your income, and determining how to maximize your income and your cash flow. How can you manage your resources so that you have increased access to and control of those resources? An Abundance Mindset Causes Success Actively cultivating an abundant mindset doesn’t just increase your odds of success. This mindset actively causes success. When you think abundantly—free of fear, free of limitation—you can see and seize opportunities that someone living in scarcity mode is simply unequipped to do.  If thinking this way doesn’t come naturally to you, don’t worry just yet. Fortunately, you can train yourself to think this way. It takes work, consistency, and time—but it is possible.  The whole spectrum of scarcity to abundance can all be boiled down to this idea of being in fear or being in faith. If you are in fear, it’s very easy to be controlled by other things, and not be in control. And scarcity always causes you to give up control. In today’s world, there are a lot of fears: fear of the virus, fear of the vaccine, fear of shortages, and job loss and mandates. We could continue the list for quite some time. The point is, when you act solely upon these fears, you allow the fear to control you. Choosing abundance means asking how you can act in faith, even when the world around you feels uncontrollable.  Entrepreneurs Are the Real Movers and Shakers Entrepreneurs, whether you realize it or not, make the world go round. It is entrepreneurs who innovate and breathe solutions and new life into the world. If you see the world abundantly, you have what it takes to be an entrepreneur.  I’m really excited at the opportunity for individual people to be able to take their unique lens of the world and be able to improve the world and improve other people’s lives. As we stay focused on that, we don’t have to participate in the scarcity thinking. Just because we’re living in the same world doesn’t mean we have to operate with the same lens. There’s a lot of fear around in the world but we can not just survive but thrive in the midst of that. And this will continue to be true, so long as we choose to see it. Book A Strategy Call Do you want to coordinate your finances so that everything works together to improve your life today, accelerate time and money freedom, and leave the greatest legacy? We can help!  Book an Introductory Call with our team today https://themoneyadvantage.com/calendar/, and find out how Privatized Banking, alternative investments, or cash flow strategies can help you accomplish your goals better and faster. That being said, if you want to find out more about how Privatized Banking gives you the most safety, liquidity, and growth… plus boosts your investment returns, and guarantees a legacy, go to https://privatizedbankingsecrets.com/freeguide to learn more.

How does the quality of your life relate to the health of your business? How do you free yourself from the constant demands of your business? If you have a cash-sucking business, there’s hope. It doesn’t have to be this hard. Joining us today for this conversation is Dr. Sabrina Starling, the Business Psychologist. with Tap the Potential. She’s an author, speaker, and coach who believes that work should support your life, not the other way around. And she's introducing her new book, The 4 Week Vacation.   https://www.youtube.com/watch?v=e84ovViK6yo If you’re not taking time off, on the edge of burnout, exhausted, struggling with team performance, stressed or cash-strapped… tune in now, and find out how making a 4-week vacation pledge might be your answer! Table of contentsFinding A-Players for Your BusinessBurnout, and the Need for The 4 Week VacationThe 4 Week VacationWhat’s in The 4 Week VacationContact Dr. Sabrina StarlingAbout Dr. Sabrina StarlingBook A Strategy Call Creating Freedom in Your Business [4:00] “When we have success, we struggle. When our businesses grow and they take off, they demand more and more of us. Being an entrepreneur is our greatest opportunity for personal development. Because we have to grow ahead of that business in order for that business to be where we need it to go. So what I take from that experience is that hiring and being in business has always been challenging. This is nothing new.” [7:50] “The book that I always wanted to write is The Four Week Vacation…. But before I could write this book, I realized I had to help them [entrepreneurs] with their hiring challenges. So I dug in and wrote How to Hire the Best, and I developed the How to Hire the Best system so that business owners could take their lives back….And that’s really what it takes to have a thriving business, and a business that’s going to continue to grow, that’s going to not rely on you, the owner, for the day-to-day operations of the business.”  [9:00] “When we design our businesses to give us freedom and generate profit and ongoing owner’s pay, then we have that opportunity to make strategic decisions with the wealth that’s being created; not just for ourselves, but for team members, and impacting the communities that our businesses are located in. So it’s really much bigger than just creating a business that gives you freedom. It’s really about creating a business that’s going to have an impact for all involved—and what I like to call life-giving businesses.” Hiring Top Talent [12:30] “I really think it is getting clear on the ‘why’ that we are in business. If we are in business to be perfectionists, then we can work 70 plus hours a week and we can be great perfectionists and really be good at it. If we are in the business to create freedom and opportunity for others, then we need to align our choices and actions with that.” [13:13] “When we’re in survival mode, psychologically, it’s very hard to access that creative part of our brain; it’s just not there. So creating a vision and a compelling why is really the most important thing. And the irony is that we tell ourselves we don’t have time to step back and get into that creative zone... Well, all the research shows that the less we work, the more effective we become.” Dr. Starling shares a few things you can do to step back and rest: take a lunch break, stop working at 5 PM, and don’t check emails and texts until the next day. Otherwise, you get burnout and overwhelm, and somewhere along the line your life stops being the one you’re trying to create.  Thoughts on Retirement [18:10] “When I titled my book The Four Week Vacation, I almost changed the title. Because as I’ve been talking about this book for years with people and entrepreneurs, I get pushback. Because I hear, ‘I don’t know what to do with myself if I take four weeks off.’ What is that about? And I think so much of it is that we’re so used to working hard that we’ve convinced ourselves that this is where we need to spend our time.”  [19:25] “When you start having that space, where that business doesn’t need you anymore, that’s where you have that opportunity to really ask, ‘What else? What else is there? What’s important to me?’ And I’m with you--I don’t want to retire. I just want more time for what matters most in my life. I don’t want my business dictating every moment of my day, and how my week runs.”  Finding A-Players for Your Business [24:40] “What’s interesting to me is that when we have A-players in a role that aligns with their strengths, and they get to use their strengths a lot on a daily basis, they will be 900 to 1200% more productive than a warm body. The other side of that is, you can hire an A-player who was an A-player in another business, bring them into your business, and put them in the wrong role, and you will see over time their performance and their motivation going down. Because they are no longer in a role that aligns well with their personality strengths.” [25:58] “You want to screen out the wrong people before they ever get to an interview with you, and screen in only the right people to be in an interview with you. Because our time is precious, and the hiring process is one of the most time-consuming processes when you follow traditional hiring practices. And those traditional hiring practices, by the way, set us up to mis-hire 75% of the time, for the very reasons that Bruce is identifying.” [36:30] “Part of the Tap the Potential solution that I teach is you run the business around the sweet spot. So the sweet spot—and this is from The Pumpkin Plan, also by Mike Michalowicz—is that intersection of your top clients and what they want most from you that aligns with your strengths. [It’s] what you can be the best in the world at; and the systems that you put in place to support what you’re delivering to those top clients… This means you know who your top clients are. You know who’s not a top client, who doesn’t fit that profile.” Burnout, and the Need for The 4 Week Vacation Dr. Starling shares with us data collected during the height of Covid-19, from 200 entrepreneurs.  [41:22] “84% are reporting that their mood fluctuates based on how the business is doing. 81% find it hard to switch off and not think about the business. 61% say it feels as though it takes increasing effort to accomplish simple tasks. So right there, these are core symptoms of burnout. At that point where we feel like, ‘I’m working harder and harder, and I’m not getting the result.’ That’s where we can slip from burnout into depression and other challenges in our lives. Because that feeling of hopelessness starts to set in.” [46:10] “Those who have more systems in place in their business are less likely to be burnt out.” The 4 Week Vacation In her research, Dr. Starling realized that many entrepreneurs had rarely taken more than four days off in their 30-40 years. She recognizes, though, that this is not why people go into business in the first place.  [43:10] “85% say the business cannot run effectively without them. 71% are not delegating activities that don’t require their expertise. The number one system that’s missing in these businesses, 98% report they’re lacking a system for attracting top-performing team members… 70% lack a system for onboarding new hires, and 81% lack a system for retaining top-performing team members.” [45:00] “We believe as entrepreneurs that we can work ourselves out of this dilemma. That we don’t need to ask for help; we don’t need someone who can guide us along the path. We’re going to figure it out ourselves because we’re self-made people….I would say to that, be willing to invest and recognize that part of creating the value that you need to create, and creating the margin that you need to have in your business, is looking at: How are you going to invest to develop yourself? And how are you going to invest to develop your team?” [47:50] “I’m on a mission to disrupt the traditional story of entrepreneurship that to be successful we have to grind it out and work 70 plus hours a week--and sacrifice our time and our health and our time with those who matter most to us, all for the sake of the business.” [48:15] “Work supports life, not the other way around. That’s the way to run your business.” What’s in The 4 Week Vacation As we wrap up, Dr. Sabrina Starling shares the sections of The 4 Week Vacation with us.  Part 1: The Psychology Behind Working LessPart 2: The “Tap the Potential” Solution (How to pull everything together) If you take one thing from Dr. Starling, let it be this: Identify what is important to you, and how you can live your life in alignment with that. Contact Dr. Sabrina Starling sabrina@tapthepotential.com1-3182648644Tap the Potential About Dr. Sabrina Starling Dr. Sabrina Starling, The Business Psychologist® is an author, keynote speaker, and coach.  Dr. Starling is a business coach specializing in helping entrepreneurs take their lives back from their businesses. She is also the author of the best-selling series "How To Hire The Best" and releasing this fall "The 4 Week Vacation®". Book A Strategy Call Do you want to coordinate your finances so that everything works together to improve your life today, accelerate time and money freedom, and leave the greatest legacy? We can help!  Book an Introductory Call with our team today https://themoneyadvantage.com/calendar/, and find out how Privatized Banking, alternative investments, or cash flow strategies can help you accomplish your goals better and faster. That being said, if you want to find out more about how Privatized Banking gives you the most safety, liquidity, and growth… plus boosts your investment returns, and guarantees a legacy, go to https://privatizedbankingsecrets.com/freeguide to learn more.

We all have money questions.  If you don’t, you just haven’t asked them yet. https://www.youtube.com/watch?v=jrsQ4Tzo7ao Today, we continue to answer questions from you—our audience, tribe, fans, those in a quest to control their money and financial future! You can view part one of this conversation here. There are some great ones here that might be on your mind too. So maybe you’ll get the answer you’ve been needing, so you can clear the hurdle and get one step closer to your goals… OR maybe it will prompt you to ask a question of your own… tune in now! Table of contentsWhat Should You Do With Extra Cash?How Can Debt Be Advantageous?Compounding InterestIBC Isn’t About Paying Off DebtCan You Withdraw Your Cash Value?Available Cash ValueLow Cash ValueWhat Happens if You Withdraw All Your Cash Value?What Happens if You Collateralize All Your Cash Value?Policy CollapseIs There a Difference in Dividends on Base Premium vs. PUA?Do You Get Your Cash Value When You Die?What Endowment MeansCan You Pay Premiums on a Monthly Basis?Book A Strategy Call What Should You Do With Extra Cash? In this instance, a listener named Matthew says he recently did a cash-out refinance. Now, he’s wondering what to do with the cash he has leftover.  Really, the answer depends: there’s no one-size-fits-all answer to this question (or in fact, many questions). The follow-up question that we would like to pose in return, is what is the purpose of your money? What do you want to accomplish with your money? You can approach this from the big picture as well as on a smaller scale, like what you want your money to do at this stage of your life.  If you’re unsure of what to do with extra cash and want to hone in on your money’s purpose, here are some clarifying questions: Does your money need to be accessible to you? Or is this money you are comfortable locking into an investment or other illiquid arrangement?Are you looking to create a cash-flowing asset that will create passive income?Do you wish to use this money for long-term growth? Or do you have a short-term opportunity?Is your emergency fund sufficient? Are you looking to take on some risk, or protect what you have? It’s also okay to wait and be patient until you know what you want to do—or an opportunity presents itself. A privatized banking system may be a good way to store cash long term while you wait. Or you may want to park your cash short-term. You may want to do a combination of many things. How Can Debt Be Advantageous? Another listener mentions their interest in IBC, yet is unsure what the advantage is of funding a whole life insurance policy just to take a policy loan? They offer an example of funding a policy with $40,000 of cash value and accessing $36,000 to make a purchase, such as a car. By their calculation, they’ve funneled $76,000 into a $36,000 car.  This is an extremely important question and one that “makes or breaks” people’s understanding of IBC. Because this can be hard to wrap your head around, and it may take some “unlearning” of what you’ve been told about life insurance. First and foremost, you can’t think of your life insurance premium as a “cost” to you. Instead, consider it savings that you can automate. Because the premium payments you make directly fund your cash value, which grows over time. It’s no different from paying money to the bank; or more directly, paying into your home and taking a home equity line of credit.  If you contribute $40,000 to your savings account, and then spend the savings, you’re not paying twice. You’re storing your money and then using it. A life insurance policy is another means of storing money, and a policy loan is another means of using that money.  The advantage of taking a policy loan, rather than a withdrawal from a savings account, is twofold. First, you have control. You can determine how fast, or slow, you pay the loan back. If you run into a lean year, you can make lower car payments if you want to (unlike a bank). You also own the car outright, rather than having a bank loan secured by the car.  Compounding Interest Secondly, you have the power of compound interest. Say you paid for your car in cash that you withdrew from your savings account. While you’re not paying interest, you’re also not earning it. On the other hand, when you borrow money against your cash-value account, your money stays where it is. As such, it continues to earn interest, which has a compounding effect. The interest you earn also earns interest, and it picks up speed. So while you may be paying interest on a loan, you are also earning compounding interest. Does this mean it always makes sense to take a policy loan? No. However, the cash value of your policy gives you many opportunities. To learn more about policy loans: Privatized Banking – Life Insurance Loans and Why We Use Them IBC Isn’t About Paying Off Debt The primary reason for IBC is not to pay off debt. If you’re looking to be debt-free, or pay off debt as quickly as possible, IBC may not work for you. And that’s okay. IBC is really about learning to leverage money and make it work in multiple ways at once. This will often mean carrying and managing debt, depending on how you use your policy, and for some people this is uncomfortable.  To learn the best way to pay off debt: Cash Flow Index: The Smartest Way to Pay off Debt Can You Withdraw Your Cash Value? We don’t talk about this often enough, but yes, you can take your cash value back. However, a few things happen when you do this.  First, the death benefit of your life insurance is reduced. This is because your cash value is a component of your death benefit. If you reduce one, you reduce the other. You also lose the ability to put that cash value back into your policy. Once you’ve removed it, you cannot put it back. You can only pay your future premiums. Thirdly, you lose the power of compounding interest. Your cash value will continue to compound, however anything you remove will not earn interest (unlike taking a policy loan, which keeps your cash value intact). Available Cash Value If you’ve taken a loan against your policy, it’s important to note that your cash value is the collateral. When the insurance company sends you your statement, they may indicate your “available cash value.” If you have an outstanding loan, your cash value may appear much lower because you cannot have a loan larger than your cash value. As you pay down this loan, your cash value will become re-available to you.  Low Cash Value If your life insurance policy is fairly new, you may look at your cash value and think it’s low. This is because of how life insurance contracts operate. At the beginning of a policy, the insurance company bears the risk because you haven’t paid many premiums—if you were to pass away, the company would owe the full death benefit, regardless of how much you have paid. As such, they keep more of the premium upfront, and less of it contributes to the cash value.  As time passes, the risk to the company decreases, and more of the premium contributes to your cash value. It’s common for your policy to “break-even” between the seventh and tenth year. In other words, this is when your cash value is equal to or greater than the premiums you’ve paid. It only goes up from there. And unless you withdraw, your cash value will never decrease. So if you’ve begun a policy, and your cash value seems low, give it some time. Soon you’ll have a larger cash value to access.  To learn more about balancing early cash value and long term growth: Privatized Banking: High Cash Value and Long-Term Growth What Happens if You Withdraw All Your Cash Value? Many life insurance companies will not allow you to withdraw all of your cash value, though it depends on the company. When you do withdraw up to this point, however, your policy can turn into what is called an extended-term policy.  What Happens if You Collateralize All Your Cash Value? To cover all our bases, we also want to address what would happen if you’ve maxed out your loan provision. There’s an important distinction between withdrawing your cash and borrowing against it.  And if you’ve taken loans out such that you cannot borrow anymore, don’t worry. Your cash value will continue to grow and earn interest. But beyond that, as you pay off your policy loans, what you pay off becomes available to you again immediately.  If you want more available cash value, you can either be patient and watch your policy grow, or you can pay down your loans.  Policy Collapse Having maximized loans can be dangerous in some scenarios. It’s possible, for example, that your loans accrue interest faster than it earns interest. If money stops flowing into your life insurance policy through premiums and loan payments, your policy can collapse.  This is a rare circumstance, however, it can happen.  Is There a Difference in Dividends on Base Premium vs. PUA? This is actually dependent on the product, rather than individual life insurance companies. However, the difference cannot be proven exactly, because the formulas each company uses to calculate dividends are proprietary information. If you extrapolate the numbers on your own, though, you’ll see that in some instances the dividends paid on the base premium was a higher percentage than that paid on the PUAs.  Other companies and products will pay the same percentage, however, they pay more Gross dividends on the base premium. This is because the death benefit factors into the equation, and there’s a higher proportion of death benefit on your base premium. Your PUAs will only buy you a very small fraction of death benefit, like dollars or pennies on the dollar.  Another factor that will affect how dividends are distributed is the construction of the policy. You can play with the ratio of your base premium to PUA,

What if your thoughts about the Bible and what it has to say about money were crippling you instead of helping you to flourish the way you’re meant to? Today’s guest is Rabbi Daniel Lapin, returning for another deep and powerful conversation about business, money, and the Bible. https://www.youtube.com/watch?v=ytZD5GkFlp4 He’s a rabbi, speaker, TV host, and author of seven books, including America’s Real War, Business Secrets from the Bible, and Thou Shall Prosper-The Ten Commandments for Making Money. In this episode, we explore and discuss some of the foundational principles behind his book Business Secrets from the bible and the timeless wisdom that connects faith, prosperity, and ethical business practices. Instead of avoiding the seeming conflict in our culture between God and money, Rabbi Lapin is known for uncovering and unpacking Biblical wisdom to guide today’s business leaders. Prepare to be challenged, changed, and grow… tune in now! Table of contentsBusiness Secrets from the Bible that Rabbi Lapin Shares:Welcoming Back Rabbi LapinWhy Business MattersRabbi Lapin's Retirement ParadoxThe Impact of InflationInvesting vs. Making Money in the First PlaceFaith and FinancesA Godly EconomyDoes God Want You to be Wealthy?Learn to Be of ServiceFrequently Asked QuestionsIs there a difference between biblical business principles across different faith traditions?What should I do if my current job conflicts with biblical business principles?Should I tithe or give to charity from business profits before paying myself?What are the main books Rabbi Lapin recommends for understanding biblical wealth principles?Previous Discussions with Rabbi LapinAbout Rabbi Daniel LapinBook A Strategy Call Business Secrets from the Bible that Rabbi Lapin Shares: Why wealth creation is actually a spiritual discipline - Discover how Rabbi Lapin connects biblical principles to modern entrepreneurship without compromising your faith. How to make money by giving, not taking - Learn the counterintuitive biblical approach that creates sustainable wealth through service. Why your synagogue or church beats networking events - See how authentic community and shared values create more business opportunities than traditional networking. The certificate of appreciation economy model - Grasp Rabbi Lapin's vision for how a godly economy actually functions in practice. How to answer "Does God want me to be wealthy?" - Get Rabbi Lapin's nuanced response that reframes the entire question around service and stewardship. Welcoming Back Rabbi Lapin [2:23] Rachel: “We believe alike when it comes to money. And it’s amazing to me, to be able to understand the roots of what everything means, financially, and how that connects to our Christian faith, how it connects to biblical principles.”  And a common journey is reconciling faith with finances—how can you be a good Christian and a good entrepreneur without those things being in conflict? Fortunately, as Rabbi Lapin shows us, there’s more overlap than you think. We’ve enjoyed having him as a guest several times before because he has a deep understanding of the bible and the financial wisdom within its pages.  [4:54] Rabbi Daniel Lapin: “We are not using our time today to try and surreptitiously convert people to faith. What we are trying to do, very forthrightly, is impact their bank accounts.” Why Business Matters We’ve talked about many of the Rabbi’s books on The Money Advantage, and today we’re discussing one of his older books, Business Secrets from the Bible. What’s great about this book is that it provides a strategic, spiritual approach to business. And the foundation of this approach is within the pages of the Bible. Understanding the business secrets from the Bible starts with recognizing that entrepreneurship and wealth creation aren't separate from spiritual life - they're expressions of it when done with the right heart and principles. Rabbi Lapin's Retirement Paradox The conversation begins with a few thought experiments, such as the one below: [13:15] “If retirement is such a good thing, what would happen if everybody in your world retired? According to the way many people think, people should say, ‘Well...God bless them, good for them. They’ve made enough money, they don’t need to work anymore. It’s great!’ And that would be great until you decide you want to go to a restaurant for dinner. And then you discover that nobody’s there because they’ve all got enough money, they don’t need your money.”  [14:18] “Without other people, you have nothing.” The Impact of Inflation Rabbi Lapin brings another thought experiment into the conversation. He asks you to imagine you found a duffel bag filled with a million dollars. And to your surprise, it’s addressed to you, as a gift from the white house. Your mind begins to fill with the possibilities of that money, and you call your friend to tell them. But before you can say anything, they tell you that they also received a million dollars from the white house. And you quickly come to learn that every single person got the same gift.  [17:40] “This is the mystique of money: if everybody got a million dollars, it is exactly the same as if no one got a million dollars. Really, nothing has changed.” Lapin takes it further and says if you don’t understand, think about what you would do with the money. Say you want a specific BMW, so you go to the dealership to purchase it, because you can still use the money, right? But before you can find a salesman, you’re in a line of 40 people, with only 6 or 7 of that particular BMW available. And the price of the BMW has also shifted to reflect this sudden infusion of cash in the economy.  These thought experiments serve to help people think differently about money and the economy.  Investing vs. Making Money in the First Place [21:00] Rachel: ‘What’s interesting is that making money in the first place might not necessarily be fair, but it is something that we need to apply ourselves to the principles of making money, which are biblical principles. You’ve already highlighted two of them: we have to be giving value to people, and it is a relationship business. You cannot make money if there are no humans to serve, and you cannot make money if you’re not providing value to them.” [22:44] Rabbi Daniel Lapin: “Money is essentially a spiritual commodity, not a physical commodity.”  In his book, The Holistic You, Lapin identifies the five aspects of our lives that are essentially indispensable. These aspects are our health, finances, family, friendship, and faith. And all of these aspects are a package deal, they’re all necessary for a successful life.  If we neglect one area, there are ramifications that affect other areas of our lives. Faith and Finances [28:24] “We make money not by taking, but by giving.” [29:22] “In my experience, very little business actually really results from networking clubs. Where business really comes from, and to some people is going to sound weird, is I go to Synagogue on Saturday morning...On any Saturday morning, at any Synagogue I’m speaking at, I’ll hear half a dozen business deals go down.” [30:55] “You don’t get a full grasp of money if you don’t have an understanding of faith.” [31:30] Rachel: “What’s really interesting is that we are people who need other people. We live in a society, we’re not isolated islands. And I know firsthand the experience of trying to make money. If you’re just focused on making money, you will never make any.” The more you serve people and their needs, the more you create community, the more reach and influence that you have. A Godly Economy In Rabbi Lapin’s “Godly Economy,” as he calls it, money signifies certificates of appreciation. And we give them to people who we appreciate for their service. When he and his sons helped a fellow man fix his roof, he gave them certificates of his appreciation. And when later the Rabbi went out to dinner with his wife, they offered certificates of appreciation for their meal. And those certificates can then be given to the next person and the next person.  [36:12] Rabbi Lapin: “This is what a Godly economy is like. This is why no socialistic, atheistic, tyranny has ever in the history of the world succeeded in building a functioning economy; because the economy works when we see ourselves as givers, not as takers.” Does God Want You to be Wealthy? What do you say to the person who believes that God doesn’t want them to be wealthy? [37:27] I might say something like, ‘Tell me, do you think God wants you to have a great sex life?’ And he might say, ‘I don’t know, what do you think?’ And I’d say, ‘Well I don’t know either, God hasn’t shared that information with me. But I’ll tell you what he did share with me, and that is that he wants a man and a woman to marry and be dedicated to one another, and to their children, and to live as a family. And it would not surprise me in the least if a good and loving God would reward your behavior in building a sincere family by giving you the greatest sensual pleasure that God made available to human beings. That wouldn’t surprise me at all. And so on your question of whether I think God wants you to be rich, he hasn’t actually told me about that. He hasn’t even told me if he wants me to be rich, let alone you. But what he has told me is that he would like you to be obsessively preoccupied with filling the needs and desires of all his other children. And it wouldn’t surprise me in the least that a good and loving God would react to you fulfilling his desire that you take care of his other children, with the incredible blessing of financial abundance.’ Learn to Be of Service [41:50] “Does God want you to be rich? That’s the wrong question.”

We all have money questions. If you don’t, you just haven’t asked them yet.  Today, we’re answering questions from you—our audience, tribe, fans, those in a quest to control their money and financial future! https://www.youtube.com/watch?v=ZiW3MeJiL7c There are some great ones here that might be on your mind too. So maybe you’ll get the answer you’ve been needing. Then you can clear that hurdle and get one step closer to your goals. OR maybe it will prompt you to ask a question of your own. Find out and tune in now! Table of contentsDoes it Make Sense to Fund a Policy with a Loan?Should You Pay Off Your Mortgage ASAP?Can You Borrow Against Your Death Benefit?Why Can’t You Simply Increase the Face Value of an Existing Policy?Is it Complicated to Prove Disability?What Insurance Companies Do You Suggest?What are the Interest Rates on a Policy Loan?Can I Do a 1035 Exchange Between Companies?What Are the Best Companies to Work with for Policy Loans?How Do Premiums Contribute to Cash Value?Isn’t a Dividend Just a Refund of Premium? Book A Strategy Call Does it Make Sense to Fund a Policy with a Loan? A YouTube viewer of our show asked us the question, “Does it make sense to take out equity from an investment rental to start a policy and then borrow from that policy to reinvest in other investments?” We believe that it makes sense to have a life insurance policy as a foundation for your finances. This is because it protects your income, provides liquidity, and shields your money from creditors. On the other hand, properly funding a whole life insurance policy requires consistent payments. Depending on your funding source, it may not be wise to fund a policy with a loan if you don’t have a strategy for paying premiums after that. This depends on your personal economy and your investing goals.  The other reason for caution is that it can take a few years for your cash value to “break even.” While you are able to take a life insurance loan right away, your cash value will not immediately equal your premiums paid. It will take time to build your policy to a point where you can make larger investments. However, when you do reach that point, it’s an excellent strategy to leverage policy loans for cash-flowing investments. Should You Pay Off Your Mortgage ASAP? This question comes from Lon, another viewer on YouTube. He shared with us a HELOC strategy, and ended with this hypothetical: “The other question that you really need to ask is: Is it really better to pay off my mortgage ASAP vs. using my available income for investing?” We agree that this is a great question to ask. The answer, again, is not black and white. There are two answers to this question: a mathematical answer, and an emotional one. Mathematically, it often doesn’t make sense to accelerate payments because you lose control. Contrary to popular belief, the less you owe on your home, the more control the banks have. This is true because, in the event that you cannot pay your mortgage, the bank is less likely to foreclose when you have a large loan balance. This is because there’s a chance the banks will be unable to make up the difference. On the other hand, if you’re only a few years away from owning your house, it’s easier for banks to foreclose. They can sell your property and have a much greater chance of making up the difference on the house.  This doesn’t necessarily mean you shouldn’t pay down your mortgage. However, it does illustrate the benefits of saving or investing your additional income, rather than putting it into the house. You can build equity in a life insurance policy, then use that to pay down your home. This is one way to maintain control of your home and your money. Then, there’s the emotional component. Sometimes, you just sleep better at night knowing that you're reducing your loan balance.  To learn more: 15 vs. 30 Year Mortgage: Myths About Paying Off Your Mortgage Can You Borrow Against Your Death Benefit? The short answer is, you cannot. When we talk about Infinite Banking, we’re talking about the ability to take a loan against your cash value. Cash value is a separate component of your whole life policy that grows based on your premiums and dividends. The first function of your premium is to cover the cost of insurance. This cost is the highest when your policy is new, because if the company has the most at stake if you were to pass away and they paid a death benefit.  Over time, however, this risk lessens because you’ve paid more premium. So more of your premium contributes to your cash-value account. You also have the potential to earn dividends, which will increase your cash value. This cash component is the only portion of your insurance policy that you can take a loan against. As your CV continues to grow, you’ll have a larger pool of money to borrow against.  Why Can’t You Simply Increase the Face Value of an Existing Policy? This is due to the actuarial science that goes into your insurance contract. It’s important to remember that your insurance policy is a contract. Once it’s in effect, both parties are beholden to the terms agreed upon. While this can be limiting, this is actually a great thing. For starters, insurance companies use actuaries to determine life expectancy based on age and health. In turn, this helps the insurance company give you the best premium rate for the face amount of your policy. Once it’s in the contract, this cannot change—including an increase in premium.  If you were to change any of these variables, including the death benefit, the math could potentially change dramatically, regardless of whether you’re maxing your PUAs. In fact, PUAs, or paid-up additions, are actually considered micro-policies that you purchase, rather than “extra payments.” Therefore, to change any part of this contract would be complicated.  You can, however, buy convertible term insurance up to your human life value and convert it to whole life insurance later. You can even convert it in portions, as your income increases. This allows you to lock in your insurability at a certain age and health status.  Is it Complicated to Prove Disability? On YouTube, Shakeel asked, “Regarding waiver of premium, how many hoops do I have to jump through to prove I am disabled?” Waiver of Premium is an insurance rider that allows you to waive premium payments in the event that you become disabled and unable to work.  We prefer to think of these not as “hoops,” but as stipulations of the contract. If you have a policy with a mutual company, that makes you a partial owner of the company. As such, you have a stake in the success of a company—and it’s important to the company’s success to do their due diligence in paying benefits.  Insurance companies have extremely precise definitions of disability, in order to have more control over who qualifies for a waiver of premium. This definition can vary from company to company, yet generally means that a person is completely unable to perform the duties of their job.  To prove this, insurance companies generally require two doctors to attest that you are unable to perform any job by any means. This is an optional provision that costs extra, so it’s up to you to determine if that’s worth it to you.  What Insurance Companies Do You Suggest? We highly recommend choosing a mutual life insurance company. This simply means that policyholders share in the profits of the company, rather than shareholders. Because of this, mutual companies are often much more conservative in their financial decisions. This is a benefit to policyholders because conservative decisions make them more sustainable. Companies that act in favor of shareholders are less conservative.  We also recommend seeking companies with strong finances and good customer service. Some whole life insurance companies don’t embrace the utilization of your cash value, and they do not set their customer service up to accommodate IBC. That doesn’t mean it’s not possible, however it does mean that the loan process can be more difficult.  Here is our criteria for life insurance companies: Privatized Banking: The Best Life Insurance Companies For the best synergy, look for an advisor team that aligns with your goals. They can help you make your policy work the way you envision, and act as an intermediary with the company as well. What are the Interest Rates on a Policy Loan? Interest rates are set by contract, and they can adjust each year. The insurance company sets the rate once a year, and if you take a loan you’ll pay the accumulated interest once a year. The sooner you pay back the loan, the more you save on interest.  To learn more: How Infinite Banking Loan Interest Works Can I Do a 1035 Exchange Between Companies? In general, you can do a 1035 exchange between products. It’s hard to say for certain without looking at the specific policy language.  To learn more about 1035 Exchanges: When Should You Use a 1035 Exchange with Life Insurance? What Are the Best Companies to Work with for Policy Loans? While we touched on this a few questions prior, another difference between many insurance companies is whether they are “direct recognition” or “non-direct recognition” companies. These companies differ in how they pay dividends on the cash value when that cash value has been collateralized.  For example, let’s say that you have $100k in cash value, and take a loan of $50k. A direct recognition company will pay the normal dividend rate on the $50k cash value that has not been utilized, and a different/reduced dividend on the portion that is collateral for your loan. The problem is that people want to compare dividends between companies, yet all companies apply the dividend rate differently. Instead, we recommend considering what you value in your strategy. However,

Want the most effective and radically simple marketing system in existence? Today, we’re talking with Mike Michalowicz, perennial best-selling author of Profit First, Surge, The Pumpkin Plan, FixThis Next, and his newest release Get Different. https://www.youtube.com/watch?v=4LENRtB7xGY If you want to scale your business and reach more people, here’s the answer you’ve been waiting for. Tune in now! Table of contentsWhy Marketing Blends Into the BackgroundThe Problem with Email MarketingHow to Break Through the HabituationUsing the DAD MethodHow to "Get Different"Overcoming the Fear of Being DifferentSuccessfully "Get Different"Get Different with Mike MichalowiczAbout Mike Michalowicz Book A Strategy Call We love having Mike Michalowicz as a guest because he knows and understands entrepreneurs like you! Mike has joined us before to discuss his books Profit First as well as The Pumpkin Plan, and now we’re excited to talk with him about his latest book, Get Different! This book is all about how to stand out and be different so that you can not only attract clients and customers, but attract the right ones for you. Marketing is like the lifeblood of any business, but it can be all too easy to lose your “edge.” Mike Michalowicz is here to share his ideas so that you can continue to innovate your marketing strategies. Why Marketing Blends Into the Background [2:50] “I discovered this concept called habituation, and how it works biologically is we have a thing called the reticular formation. It’s a neural network, both figuratively and literally; it's a net that sits at the brain stem, and as stimuli come in...its primary job is actually to disregard or ignore most things. It’s the way we maintain focus.” Without this reticular formation, anything and everything can distract us. Our brain uses this function to manage productivity and focus. Because the daily stimulation from things we experience with our senses is constant. Just imagine all the things you filter out as “normal” in your daily life.  [3:25] “So the job of the reticular formation is to ignore everything unless it meets one of three qualifiers. Threats get prioritized—our safety depends on it, so that’s the number one feature. The second...is opportunity. If there’s a known opportunity, we will pursue it. And there’s a third way through, and it’s the unknown or the unexpected because our mind then needs to open up and say is this something I need to consider as a threat or opportunity? Everything else is ignorable. And this happens on a subconscious level.” A great example Mike shares is how we filter through junk mail. It’s amazing how quickly people can rifle through their mail and pick out the garbage from the important pieces, with very little information. The only things that make us stop in our tracks are the things that stand out from what we’re used to.  The Problem with Email Marketing Now, more modern forms of marketing, like email, are facing the same problems. People have become so accustomed to certain practices that they can filter out “junk” in milliseconds. Mike reminisces about the first time he got an email with the subject line, “Hey Friend.” It was novel and created a sense of kinship. Then he opened it and realized it was a marketing message. As this continued to happen, it got easier to filter out emails that started with this as being “junk.” This is an experience that most people with an email address can relate to. And it’s therefore no longer a very effective way to market through email. The same goes for dozens of email strategies. Yet they’re still commonplace, and marketers still teach these methods to entrepreneurs.  As consumers, we all become habituated to certain marketing messages that our reticular formation has learned to filter out. It’s not a threat or opportunity, so it's unnecessary knowledge for our brain to spend time on.  [4:43] “Our job when we market our business, is to do something that is different than the norm. That’s the only way to pierce through this because if you are the norm, you are white noise, you are habituated, you’ll be ignored. The last little asterisk I want to put here [is that] I’m not saying you have to be outrageous...No. You simply need to do something that your market isn’t doing to get in front of your customers.” How to Break Through the Habituation [5:56] “There are two things. First of all, we have to overcome the biggest impedance to successful marketing for small businesses, which is our own fear. It’s ironic that we want to stand out without standing out. We want to be noticed without being noticeable...And therefore, what we have to realize is this...that we not only have a responsibility to market, but marketing is the ultimate act of kindness. You know, most people feel that marketing is bothersome...but the reality is if what you offer is superior to the alternatives...it’s your responsibility is to market.” The reason Mike offers is that if you don’t market, and someone receives an inferior product because they don’t see their options, that’s on you. But putting your content and your offerings out into the world gives people the ability to make an educated decision, and can help them choose the best possible service or product.  [8:00] “Here’s a lesson: whatever the best practices are for marketing in your industry, is probably the white noise, so don’t do that. I am a fan of best practices in all elements of business... but when it comes to marketing, it’s actually the best practices from other industries, that our industry isn’t doing, that we want to take in.” Using the DAD Method From this lesson, Mike Michalowicz offers the second step to break away from habituation. And that’s what he calls the DAD method. The first D stands for differentiate, and once you’ve done that, you have about ten seconds to make or break it with a prospect, because their brain is subconsciously working to categorize you as either a threat or an opportunity. This phase is Attract, where you present yourself as an opportunity.  [8:58] “Basically, whatever this prospect is, they have to feel that it is of service to them to stay engaged in this marketing piece, whatever it may be.” Then, the final stage is Direct. Mike defines this as the stage where you give the client “specific and explicit direction.” This is one action that you ask them to do—no more, no less.  [9:18] “Our goal in marketing is to move them to the final transaction, the sale...So you have to have a specific direction for them to take that moves them closer to the transaction, but you want to do it as efficiently as possible. So there’s a balance here. Make sure they feel safe every step of the way, while also moving them toward the ultimate transaction and not waffling around.” How to "Get Different" [10:45] “So when you look at your prospects, the first question you ask yourself is how are they currently being approached? Then we need to either break the medium or the method.” As an author, Mike recognizes that it’s common in his industry to send out email blasts to market book launches and events. At a certain point, though, the recipients of these emails filter them out subconsciously, because it’s a lot to take in. In this instance, the opportunity is to break the medium, which is sending an announcement via email. The new medium could be a billboard, or a radio show—it’s not outrageous, but it’s not what everyone else is doing either, so it commands attention.  In short, think about what your prospects is seeing in their day to day, and do something different.  On the other hand, you can look to break the method. Say you still want to email. Now, look at what those in the industry are doing, and make changes there. For example, Mike shares that he recently sent an “invisible ink” email. He made the text white, over a white background, and wrote directions to click and drag the mouse to highlight the text. The open rate for this email was higher than ever before.  [12:45] “Don’t do what the industry is doing, that’s the big lesson.” Overcoming the Fear of Being Different Most entrepreneurs ultimately struggle with fear: they see a new or innovative idea, and they’re afraid to replicate it because it seems farfetched or out of the box. And yet other people have done it with success. [17:23] “When you’re doing different, you’ve got to milk that cow for all it’s worth. And at a certain point, people replicate it. But they replicate generally slowly...There’s still that fear trigger...Usually people adopt things only when the early adopters are fully adopted into it. So different has a runway...of months or even years, before it becomes habituated because it’s been saturated.  Successfully "Get Different" Mike shares that the way to find ideas with potential success is through experimentation.  [21:30] “Traditional marketing teachings say have a plan. I found, actually, that’s a mistake. The marketing plan says here’s what I’m committing to, and if it’s failing to work, often the response is that you’re not doing enough of it...Which simply means roll out more bucks.” Instead, to experiment means to try things that will either work or not work. And if it doesn’t work, you try something new. It’s not about whether you’ve shelled out enough money. Instead, it targets the heart of the problem, which is: are people responding to your methods? [22:48] “Experiment frequently, do it as inexpensively as possible, amplify what works. That’s how you’re going to find what works. How to keep it going? Well, it’s rooted in kindness...It’s having that motivation to realize you’re being of service. And some people are so afraid of trying out new marketing, you can actually use random acts of kindness to get started.” By this,

Want to get an insider’s look at an IBC policy? When it comes to how the Infinite Banking Concept works, the magic is (mostly) in the paid-up additions or PUAs. https://www.youtube.com/watch?v=1_tJHiD61FU Let’s go to the IBC lab and talk about PUAs today. What are paid-up additions, and how do they impact your whole life insurance policy? If you want to understand just how valuable these three letters are, how they add access, growth, and flexibility to your policy… tune in now! Table of contentsWhat are Paid Up Additions?How Do Paid-Up Additions Enhance Your Life Insurance?The Difference Between Base Premium and Paid-Up AdditionWhich Earns the Most DividendsWhat are premium splits?When and How to Use PUAs EffectivelyCan You Start a Policy Today and Add PUAs Later?Book A Strategy Call What are Paid Up Additions? The acronym PUA stands for Paid-Up Additions, and they can significantly enhance growth, access, and flexibility in your life insurance policy. If you’re interested in setting up a policy for the purpose of creating an infinite banking system, it is essential to understand the importance of PUAs. As you may be able to guess, PUAs is additional coverage on your life insurance policy that you can buy. In other words, you’re adding additional life insurance coverage that is completely paid up and requires no further premiums. As you add PUAs to your policy, you’re thus incrementally increasing the impact of both your cash value and death benefit. Nearly any contract has the ability for PUAs; however, the mechanics can vary from policy to policy. The company, for example, also establishes how much additional coverage you can purchase within your contract–as well as when and how you purchase it. How Do Paid-Up Additions Enhance Your Life Insurance? Let’s think about this from a real estate perspective for a moment. If you bought a residential property, you’ve bought an asset. Whole life insurance is also an asset—as you pay premiums, you’re building up equity like you would in a home.  Then, let’s say you want to build an addition to this residential property in order to add value. In this instance, let’s say you add a $10,000 sunroom and have an appraiser check it out. If the sunroom is well done, your appraiser might tell you that your value went up by $40,000. The same happens when you purchase a paid-up addition. That $10,000 PUA could add around $40,000 to your death benefit, or the total coverage of your insurance policy. Not to mention that an increase in death benefit also positively impacts the efficiency of your cash value build-up. This is one of the reasons many people look closely at paid-up addition life insurance when they want more early access and stronger long-term growth inside their policy. Here’s where things get really interesting. Upon the appraisal of your residential property, you could then go to the bank and say, “Look, the value of my property has increased. I’ve paid for the addition out of pocket. Could you lend me money based on what I spent on the addition?” The bank could then lend you a portion, or the full value, of that $10,000 to create more value. Life insurance works the same way. The $10,000 is your premium for the PUA, and a portion of that is available to you as a loan against your cash value. In both scenarios, the $10,000 you pay increases the value of your asset by $40,000. This makes it easier for a bank or insurance company to lend to you because they know that even if you default on the loan, there’s additional value there as collateral.  The Difference Between Base Premium and Paid-Up Addition Base premium is the money you pay to obtain your life insurance coverage to begin with. The base premium that you pay is what largely contributes to your long-term growth, dividends, and death benefit. PUAs, on the other hand, will contribute more heavily to your early cash value accumulation and less to the death benefit. This difference is one of the reasons people look at PUA whole life insurance when they want more control over how quickly their policy builds usable value. This is because your base premium is designed to cover the cost of your insurance first, with anything leftover contributing to your cash value. This is because the risk to the life insurance company is greater in the early years. In other words, if you were to die in the first few years of the policy, the life insurance company would pay out your full death benefit regardless of how many premiums you have paid. The older you are, the more premiums you have paid, and the more your death benefit has been funded. This also means that as the years pass, more of your base premium will go toward cash value. The PUAs, on the other hand, buys a much smaller amount of additional life insurance coverage and can contribute more heavily to your cash value. So in the years where less of your premium goes toward cash value, PUAs can improve the cash value that is accessible to you. Which Earns the Most Dividends It’s important to understand that most companies pay the highest dividend on the base portion of the policy. The reason is that the base premium that goes into your policy has been committed for long-term growth.  Bring it back to the real estate example. Let’s say that the sunroom you built is 400 square feet, but the property you built upon was already 3,000 square feet. Most of the value of the property is in the original building. The sunroom increases the total value, but it doesn’t hold as much weight on its own. Likewise, the insurance company doesn’t give paid-up additions as much weight as the base premium when assigning dividends. What are premium splits? Often, when people refer to building a policy for early high cash value and long-term growth, they reference various PUA splits. This could be 40/60, 30/70, 20/80, 10/90, etc. What this refers to is the ratio of base premium to PUA. And there are often debates in the infinite banking world about which is best. We’d like to preface the discussion by saying that there truly is no right or wrong answer here. The best way to know the right split for you is to talk with your financial advisor. The truth of the matter is that it will depend on your income and financial situation, as well as what life insurance company you choose. It’s also important to consider your goals. You may want to build a portfolio of policies, each serving a different function. You can read more about building a portfolio of policies in our Infinite Banking 201 series. If you’re looking for early cash value, for example, you might want a bigger portion of PUA. On the other hand, if you’re more interested in long-term growth and dividends, you may desire a greater portion of base premium. As you look at your initial illustrations, remember that they only represent a snapshot in time. Dividend rates are likely to increase as the Federal interest rate rises. Therefore, it’s often not prudent to base your split on an initial illustration alone. When and How to Use PUAs Effectively Paid-up additions work best when they are added with a clear plan. Each insurer sets its own rules on how much you can contribute and when those contributions are allowed, so your policy design determines the windows of opportunity. This is especially important if you’re using PUA whole life insurance as part of a long-term strategy. Most carriers allow PUA contributions at your premium interval, i.e. monthly or once per year through a rider. Regular additions help strengthen early growth, and the cash value of paid-up additions begins compounding as soon as those funds are credited. Even modest amounts can build momentum over time. It’s also important to stay under the MEC limit, as exceeding it affects how loans and withdrawals are taxed. Coordinating PUAs with your base premium pattern helps keep the policy compliant and predictable. If you plan to borrow against your policy, ongoing PUA premiums can increase your cash value and expand how much you’re able to borrow in the future. Just remember: PUAs add new cash value—they don’t replace. The only way to restore previously borrowed against cash value is by repaying policy loans. Because PUA contribution options are set up when you start a new policy and differ by insurer, it’s important to review them with an advisor before the policy is issued. That way, your PUA rider is structured from the beginning to balance earlier access to cash value with long-term growth. Can You Start a Policy Today and Add PUAs Later? The short answer is, yes! However, you must create that ability when you design your policy. In other words, even if you don’t intend to buy paid-up additions at the beginning of your policy, you must include them in your policy design when you create the policy. Working with an IBC practitioner will be extremely helpful in this scenario because they can help you determine the ideal split. Many people only learn what paid-up additions are once they begin exploring how flexible a policy can be with the right rider in place. PUAs are available to policyholders if you purchase a rider on your policy that allows you to purchase a certain amount of PUA annually. If you don’t have that rider on your policy, you won’t have a provision that allows you to purchase PUAs. In addition, PUAs run on a schedule. When you have a PUA rider in place and you determine your premium and PUA split, that split identifies how much PUA you can purchase each year. Some insurance companies allow you to catch up on PUAs. For example, if your family hits hardship one year, you don’t have to buy any PUA that year. Your insurance company may allow you to purchase all or a portion of the PUAs you missed, in addition to your current year’s PUA. However, there’s often a time limit for catching up.

Would you like to make better investment decisions? https://www.youtube.com/watch?v=5sML_fmFh2s Today, we’re talking with Kent Ritter, full-time real estate investor and operator of Hudson Investing about scaling and diversifying your real estate portfolio. So if you want to expand your investing perspective… tune in now! Table of contentsHow Kent Ritter Got StartedMoving From Passive to Active InvestingTaxes in Active and Passive InvestmentsThe Pros of Multifamily Real EstateWhy it’s a Good Environment for Multifamily Real EstateHow Long Should You Hold Your Properties?Where to Invest in Multifamily Real EstateConnect with Kent RitterAbout Kent RitterBook A Strategy Call How Kent Ritter Got Started In 2010, Kent started as a partner in a boutique management consulting firm, before exiting in 2015. In that timeframe, he helped build the business to over $30 million in annual revenue, with 95 employees.  After the successful sale of the business, Kent was left with a decision. He had capital, now he had to decide what to do with that capital. He didn’t want to put all his eggs in one basket and certainly didn’t want to ride the stock market roller coaster. In his journey to diversify, he started looking at alternative investments before finally landing on real estate.  As he developed his real estate knowledge, he quickly gravitated toward multifamily properties. This love of multifamily properties helped him to move from passive investing through syndications to a more active role in his investments, and sponsoring his own syndications.  Moving From Passive to Active Investing Passive investing, in this context, is where you’re investing your own dollars into an existing deal—through a deal sponsor or syndicator. This person is finding and putting the deal together, and you’re joining by adding your dollars to the pool. The syndicator is responsible for the active elements, including finding the property, securing the debt, and determining any renovations.  Even as a passive investor, you’re part owner of that property, so you receive distributions from the profits. You also share in the appreciation at the time of sale. So passive investing in syndications like this really allows you to learn more about the experience, without the responsibility of putting the deal together.  As Kent built up his own base of knowledge, he was able to move into a more active role. In other words, finding the properties, creating a plan for value-add, and securing investors to help make it happen.  Taxes in Active and Passive Investments As someone who has invested passively and actively, Kent touches on the tax implications of multifamily real estate.  [7:59] “When you think about taxable income, you think about three buckets. There’s your...ordinary income, which is typically your active income, right? Your W-2 job...or from the property standpoint, the profits that the property is throwing off...Then you have your passive bucket, which would be your investments in things like rental properties...Then you have your portfolio income, which is like your stocks and your mutual funds...When you think about it from a tax standpoint, one of the biggest advantages of real estate is the ability to...pass through the depreciation.” In other words, being able to offset your gains by getting the depreciation helps you save money in taxes. And many times, you have carry-over losses. Those carry-over losses are different depending on whether you’re investing actively or passively. This is based on your investor status.  The IRS defines Kent as a real estate professional because all of his investments are in real estate, and that’s his income. So all three of those “income buckets” he mentioned can be offset by depreciation. Passive investors will partake in those deductions differently based on how their income is structured and where it comes from.  The Pros of Multifamily Real Estate From a pure investment standpoint, real estate is attractive because it’s not correlated to the stock market. So when you’re diversifying your investments, this means it won’t act in relation to what the stock market is doing. If you’re strongly positioned in “correlated assets,” having a non-correlated asset can be helpful. So if the market moves down, your apartment buildings won’t decrease in value.  Another selling point in real estate is the cash flow. While there are dividend-producing stocks, real estate offers more stability. You can get consistent rental income each month from real estate. [13:09] “Typically our cash flows, on a yearly basis, are anywhere from 7-10% annualized cash-on-cash return on your investment. So if you invest in fifty thousand, it would be somewhere between $3,500 to $5,000 a year that you could expect to receive in your share of the distributions of the profits of the company.” On top of the cash flow, there’s an appreciation component. When you create a lot of value through renovations and improvements to the property, you can expect an even better return on the sale of the property. Kent lists the final “pro” as the tax advantages you get from being a real estate investor. Why it’s a Good Environment for Multifamily Real Estate The demand for housing is incredibly high, while there seems to be a shortage of suitable options. Investors who can provide more properties, at good prices and with favorable living conditions, stand to provide a great service. This alone makes investing in multifamily properties a great choice.  Aside from the fact that people will always need a place to live, Kent mentions that people right now are renting for longer periods of time than ever before. And from a demographic standpoint, we’re seeing Baby Boomers downsize from their homes into apartments, so there is less upkeep. So two of the largest groups that have ever existed—boomers and millennials—are coming into rentals.  This is also a great time for appreciation, and Kent predicts that this will remain true for a few years. Primarily because interest rates are low, asset prices seem to be trending upwards. Right now, there’s massive rent inflation, as well as asset appreciation. Kent admits that in the last nine months, some of the assets he invests in have appreciated 30%.  How Long Should You Hold Your Properties? Kent’s syndication doesn’t hold properties long-term.  [21:22] “Our goal is to maximize the return for the investors, and you don’t do that by holding for ten years. The sweet spot that we found is somewhere around that five-year mark, and because of where the market is, we’ve been compressing that time to really more like three years.” For smaller properties, this is easier, because they can complete renovations and improvements on a faster time frame. That allows him to get in and get out quickly, to take advantage of this “hyper-competitive seller’s market.” The trick is to know your market and be willing to deviate from the business plan if it’s going to benefit your investors. Right now, Kent knows that there are great returns in the current market, so it’s not a bad idea to consider selling sooner to maximize profits.  [22:19] “We just had a property we purchased in October 2019, that originally was a five-year hold plan...and we sold it in 21 months because we were able to return a 25% IRR to our investors in that time.” Where to Invest in Multifamily Real Estate [23:18] “I’m based in Indianapolis, and we focus on the Midwest. So we have properties in Indiana, Ohio, and Kentucky right now. And then we continue to look in places like Tennessee and kind of out around, but staying core Midwest.” He cites his strategy as being able to “own his backyard.” Because he’s grown up in the Midwest, he is able to leverage his knowledge of the surrounding areas to make strategic plays. It also means he has local relationships that he can leverage.  There are “hot” markets, and there always will be, however, Kent’s strategy allows him to play to his strengths. And just because a particular market is “hot,” does not mean people elsewhere aren’t looking for housing. Dallas, Atlanta, Phoenix, and many of the major cities in Florida are hot right now. It’s just important to note that with a hot market comes stiff competition.  [24:15] “It’s not uncommon to have 20-30 people bidding on a single property. And in that environment, I think it’s very difficult to buy it at a good price.”  [24:30] “I think this is a general truism of real estate: you make your money when you buy. If you buy it at the right price, you’re going to be fine. It’s when you pay too much that you’re constantly chasing to try to catch up on that.” Connect with Kent Ritter hudsoninvesting.com/ Contact Kent, apply to be an investor, and more About Kent Ritter Kent is a former management consultant, start-up owner, and corporate executive turned full-time real estate investor and operator. Kent is the CEO of Hudson Investing, a multifamily investment firm that helps busy professionals scale and diversify their real estate portfolio. He has been featured on many shows including Best Real Estate Investing Advice Ever and The Real Estate Syndication Show providing impactful interviews and practical tips for investors.  Kent has achieved financial freedom, and now he is on a mission to empower others to do the same through multifamily investing. Book A Strategy Call Do you want to coordinate your finances so that everything works together to improve your life today, accelerate time and money freedom, and leave the greatest legacy? We can help!   Book an Introductory Call with our team today https://themoneyadvantage.com/calendar/, and find out how Privatized Banking, alternative investments, or cash flow strategies can help you accomplish your goals better and faster. That being said,