Episode Transcript
[00:00:00] Speaker A: You are listening to the wealth without Bay street podcast, a canadian guide to building dependable wealth. Join your hosts, Richard Canfield and Jason Lowe, as they unlock the secrets to creating financial peace of mind in an uncertain world. Discover the strategies and mindsets to a financial future that you can bank on.
[00:00:22] Speaker B: Get our simple seven step guide to becoming your own banker. It's easy. Head over to Sevensteps CA and learn exactly the learning process required for you to implement this amazing strategy into your financial life. That's Sevensteps ca.
[00:00:39] Speaker C: We're going to do a summary of our very own book titled cash follows the leader.
It's a very nice book. If you don't have a copy, you should.
[00:00:54] Speaker D: In fact, you can go to cashfalls.com and grab a copy of it right now if you want.
[00:00:59] Speaker C: That's what you should do.
[00:01:01] Speaker D: But we're going to kind of, in the spirit of doing things in a linear fashion, we're going to begin at the beginning. We're going to start at chapter one. Shocker. Talk about some of the core aspects that come up in this book. It's probably one of the longest chapters of the book because it piggybacks a little bit of some of the things from our first book because obviously a reader or someone buying the book may not have a copy of the first book. So you do have to summarize a few of those pieces. But there's a lot of stuff in here. And I think, Jason, one of the key takeaways from the first chapter of the book is really about the importance and the power of control. And there is financial advantage that is created at the you and me level in your family economy, in your business economy, by being able to have a heightened level of control over your financial circumstances. So when it comes to your regular spending, your need for purchasing of goods, of services, of equipment, of investing in things, your need to take money from your regular brick and mortar bank account and put it out to work for you, for the things that you see fit and that transactional nature, how much control do you have over that? And then the ongoing accumulation of money, that it is uninterrupted. So the power of control and being in the driver's seat of your own money is a core tenet of the first chapter of the book.
[00:02:36] Speaker C: The financial system understands the value of control, that's for sure. That's why the financial system does such a great job convincing people to deposit their money and to leave it there.
And the financial institution gains control over the use and the motion of that money and that's a good thing if, like what you and I talked about yesterday, we recorded an episode yesterday where we emphasized the four characters in the financial play.
But what happens right now with the just, if we cover the majority of the general public, they're in an earn and spend cycle. So they earn money. They spend money. They earn money. They spend money. And the money that they earn gets deposited onto the books of someone else's bank. And the money that they spend gets deposited onto the books of someone else's bank. And so that placing a high degree of emphasis on control, what we're doing is we're sharing with the reader that the financial system values control over the use and the motion of your money. And so perhaps there's an advantage for you to gain control over the use and the motion of your money, and you can achieve a much different result financially and not just be in that earn, spend, earn, spend cycle for your entire lifetime, because what does that lead to for most people, it leads to a lot of stress, a lot of financial uncertainty, because they don't feel like they really have the ability to build and keep wealth because of high taxes, market volatility, a lot of debt, and really just not having a process to be able to, let alone gain control versus actually maintaining it once you have it.
[00:04:42] Speaker D: Yeah.
There's a car analogy of driving, and who's the one driving.
If you've been a passenger in a vehicle and you've ever been had that kind of, like, white knuckle death grip on the dash or on the handle beside the window, where you're just kind of holding on for dear life because you're concerned about maybe the driving habits of the person who's behind the wheel. Well, that person driving most people's financial life is the banking system. It's someone else's bank. And you're just holding on for dear life, and there's periods where you're not holding on, and you're just casually looking out the window at the scenery going by, but you're not in control of where the destination is. Right. And so we want to switch seats with the driver, and we want to put you in the driver's seat so that you get to determine the outcome of where the destination of that vehicle goes by maintaining the most amount of control. If you see something on the road ahead and there's a giant pothole or a crevice that appears that's going to a sinkhole, where your car is going to fall down into the depths, like, oh, I don't know, a massive market risk that shows up that takes out a global system financially like we saw in 2008, and we've seen various degrees of that during the COVID time frame where you want to be able to swerve the car, maybe you need to go off road for a little bit to maneuver around that giant pit that showed up. So that's the type of level of control that we want you to have financially by understanding the core fundamentals of how you can be in control. How the, the, the, the infinite banking concept that, thanks to Nelson's great work and him teaching us all the power of the tool, the usage of the thought process on who the banker in your life is, and you being in that position where you can take on the autonomy of making those powerful decisions as you move through your financial life.
[00:06:51] Speaker C: When you think about some of the things that people may hear out there about the process, the process of becoming your own banker, the infinite banking concept, and there's a lot of sensationalizing going on, and language like your dollar is doing two different jobs at one time, and that's just simply not true.
That's not how it works. Your dollar is doing one thing, it's residing with the life insurance company, and the life insurance company is controlling the use and the motion of that dollar, and they're putting it to work for the benefit of you and everyone else who co owns that company. And when you're implementing the process and you're requesting policy loan, it's because in the first chapter, we describe the attributes of the tool that's used to implement the process, which is a dividend paying, participating whole life insurance contract, or ideally a system of contracts. It's super important for people to understand what's really going on.
You and I have talked about this with our audience most recently. Cash value is not cash.
That's not money.
There's a reason that it's been named cash value.
That is the value of the equity that is contractually guaranteed to grow inside of that contract every single day. The actual money that you're paying in premium that you're repaying in policy loan s, that money goes into the money pool of the insurance company and is being deployed to multiply, whereas the contract has guarantees inherent with that contract that the insurance company itself is legally bound to.
And so it's just important to understand, when you hear these types of things out there in the marketplace, like the one that I just referenced among many others, that's just not the truth. That's not really what's happening. When you're requesting policy loan, you're using the life insurance company's money. You're a co owner of the insurance company, but you're not using your capital.
Your capital has already been deployed, it's already growing, it's multiplying. And the insurance company is responsive to the owners and has to satisfy all of those amazing contractual guarantees like daily cash value accumulation. And you pay no tax on the build up.
Ready access capital, meaning you can borrow against the cash value and get real money, which is the life insurance company's money, without interrupting any of your own cash value growth, which is just value. It's not real money.
[00:09:52] Speaker E: Become your own banker and take back control over your financial life. Hey, is this even possible? You may be asking, can I even do this? Well, you better believe it. In fact, it's easy to get going. So easy that we put together a free report. Seven simple steps to becoming your own banker. Download it right now. Go to sevensteps ca. That's seven steps ca. Now let's get back to the episode.
[00:10:22] Speaker D: And that's a clarifying statement that we have in the first chapter, is that you're borrowing from, you're not removing your capital, you're borrowing against exactly your cash value. The capital pool that is your equity, which is being accumulated on a daily basis from the contractual elements by the insurance carrier, is something you can tap into through the method of collateralization. No different than you can collateralize a house. Except that when you collateralize a house with a mortgage or a line of credit instrument, you got to jump through 1000 hoops to get it. They change the rules every once in a while. Those are typically at least on a line of credit. They're a demand loans. They can call them due anytime they want. And you have to make minimum scheduled or required interest or principal and interest payments at someone else's decision. That's who the banker is. The banker makes that decision, not you. So that's the person driving the car. In that scenario, when you're taking a policy loan, you're borrowing against that equity of the contract because your money, you've put it to work on a permanent basis for the rest of your natural life or the rest of the natural life of the body that is insured. So if you've insured your children, or a business partner, or a spouse, that capital is in constant motion. Now your original dollars are working for you as part of the contractual elements for the rest of time. The worst case scenario is that somebody dies. Well, by the way, that's always the worst case scenario. So with the policy, worst case scenario without the policy, still the worst case scenario. And you would much rather be looking at the value that's in that policy because of those contractual elements and at the guaranteed, instant, tax free estate that's created the day that you bind that contract with the life company.
[00:12:20] Speaker C: Yeah, and I was just speaking to a prospective policy owner. We just had a really great conversation and that person was implementing the process personally and corporately. And when I asked the individual and in this case the business owner, one and the same, they said, look, your company is valued at 3 million, you've got a policy that has a starting face amount of 3 million.
God forbid if the unthinkable happened and you die, your wife gets the 3 million and still owns the company.
Well, where's the money going to come from to pay the premium while you've got just north of 400 plus thousand flowing to the bottom line of the company?
Who's retaining that money right now?
Your company isn't retaining anything. Your company is also in an earn and spend cycle and then you've got money left over, surplus capital and it's got to be retained.
So who's retaining it right now? Well, you told me one of the big five banks that you do business with, that's who's retaining the money. So the premium is going to come from capital, not income, that's what we're going to flow into the policy. And then personally it was the very same discussion. But there's no sensationalizing going on. Your money must reside somewhere. So when it resides here and you get contractually guaranteed daily growth, no tax on the build up, you got ready access, capital on demand, on your terms, you've got a death benefit that triggers no taxes. You participate in the divisible surplus generated by the insurance company because you co own it and you trigger no taxable event on those dividends which when declared are contractually guaranteed to be paid, can never be repossessed, can't lose value.
Yeah, but dividends aren't guaranteed. The only dividend that isn't guaranteed is the one that hasn't been declared yet.
All previous dividends that were declared were guaranteed. And so it's really important to just be very clear and logical because once you understand all these attributes, then logically, how much of your capital do you not want residing there? Because you still have to go out and finance all these things that you need in your life, but you're just using the life insurance company's money to complete the transaction, and then it's all a matter of where your money is flowing to and who it's being put to work for.
That's it. And that was really sort of the key summary of that first chapter that we wanted to get across to everybody.
And we've got them in our chat window here because we loaded the first chapter into Chat GPT and we said, can you summarize this into key talking points for us? And the tool actually did a pretty good job summarizing that very first chapter.
[00:15:28] Speaker D: We've definitely adlibbed and gone off the rails on a little bit of it, but I'm going to do that for a moment, too, Jay, because you told a quick story about someone, and I recently met with somebody who actually attended our live family banking summit in Toronto. We had a large group of about 250 attendees. It was a fantastic event. And so this individual, they're just fairly new at their learning process.
They've gone through Nelson's book. They attended the summit. They were kind of brand new at that point. And having successful business, they're thinking about winding it down in the next kind of ten years.
57 years old, successful female entrepreneur, and has a bunch of grandkids. She's got, like, eight grandkids. And so she's already setting money aside and has committed, like, $50 biweekly for each of the grandkids to set it up. So she's got an resp for some of them, and she's got, like, a TFSA for a couple because there's a few that live in another country, et cetera. And so automatically we're going to look at redirecting that. So we're not changing what she's doing, we're just changing the warehouse where she keeps the money. And we're going to create an environment where now there's continuity well beyond her own lifespan. There's going to be something created that's going to outlive her by a vast amount. Just because the oldest grandkid is like, eight years old, the youngest is like a newborn, essentially. So we're going to be able to backdate a policy for her. And here's the interesting thing. She's done private lending.
She has several very good assets in place, and in the last number of years, they've sent large chunks of prepayment towards their primary mortgage. So they've really ratcheted down their primary mortgage. Well, they're about to have a private lending deal pay out. They have their original capital. They'll put it on a home equity line and pay that off to zero. They were going to take the remaining proceeds, plus a little bit of an inheritance that she's receiving. And prior to coming to the family banking summit, she was going to apply all of that down and pay off the mortgage to zero.
So that would gain them roughly $1,500 a month of payments back. But they would give all the money away to someone else, and then they would never be able to use the money again. So that inheritance that's coming from a previous generation would go to do one job, never to be used again. So now we've modified that. She's going to be able to backdate a policy. She'll be able to do two premiums fairly quickly, and she's going to immediately get $500,000 of death benefit, protecting her husband and a legacy event. You'll be able to run that same capital that would have gone directly to the mortgage into a policy that now creates a constant outcome and an instant tax free death benefit. She'll be able to access the life insurance company's money to still accomplish the objective of paying off the mortgage. So the mortgage will be gone from the third party, and the $1,500 payment they used to make will simply go back to the insurance carrier so that she'll be able to re access that payment for later usage. Like her retirement income.
[00:18:28] Speaker C: Yeah.
[00:18:29] Speaker D: Everything that she wanted to accomplish is still going to get accomplished, but now we're going to optimize the money that would have been not squandered, but it would have went away to someone else's bank permanently. Now she gets to harness that potential and create multiple outcomes of positive value by being in the driver's seat.
[00:18:52] Speaker C: Yeah, and speaks sharply to what Nelson often shared around understanding where your financial energy is flowing to and who that energy is being put to work for. And the energy he refers to as money. And the fact is that your money must reside somewhere. And that in the first chapter really sets the stage for a person's understanding that someone's going to be in a position of total and absolute control, and that it can be you, provided that you understand that there's a process that you can implement in your life to gain control, and most importantly, to maintain that control.
That you can utilize a tool to implement the process. And that tool is dividend paying, participating whole life insurance, ideally with a mutual company.
That the policy itself has a number of inherent contractual guarantees that are all designed to protect the policy owner, and that you're getting all of that guaranteed accumulation that's not correlated with the stock market, the economy, the political turmoil, the tax laws, the real estate cycles.
The list goes on and on and on. The insurance company itself is contractually guaranteeing outcomes that they're legally bound to, and the policy owner's sole responsibility is to pay the premium. And in exchange for that premium, you're plugging into a system that's been producing profits since its inception and you share in the divisible surplus generated in the form of dividends. That if you handle those dividends properly, because the policy owner's behavior is far more critical than the behavior of the insurance company, then you can put yourself in a position where all of this happens without triggering taxable events.
It's brilliant. So again, that was chapter one summary from our best selling book titled cash follows the leader. Head on over to cashfollows.com, get your copy and you'll see other summaries there.
[00:21:07] Speaker D: That we're going to record.
[00:21:08] Speaker C: Chapter summaries and it's a great book. I personally really like it.
[00:21:15] Speaker D: It's been very popular and definitely we're getting some great positive feedback from the book. And next we'll probably dig into chapter two, give you guys a little insight into what goodies we got for you in there. So go ahead, take a look at the video that just popped up down below. Continue your journey of learning as always, and thanks for tuning in.
[00:21:37] Speaker B: Thanks for listening to the wealth without Basery podcast where your wealth matters. You sure to check out our social media channels for more great content, hit subscribe on your favorite podcast player and be sure to rate the show. We definitely appreciate it. And don't forget to share this episode.
[00:21:51] Speaker D: With someone you care about.
[00:21:52] Speaker B: Join us on the next episode where we continue to uncover the financial tools, strategies, and the mindset that maximize your wealth.
