payment could be either in a 1% savings account (pre-tax) or in a 4.5 percent whole life policy that grows tax-free. After obtaining a conventional Fannie Mae loan for 80 percent of the purchase price, you borrow the down payment from the insurance company in the form of a completely unstructured loan. There is no qualification process. There are no repayment requirements. It takes just a few minutes to com- plete the process. By doing so, you have increased the “velocity” of your money since your capital is performing several vital jobs at once: 1 It serves as collateral for a loan on a rental property that provides passive income and a host of other benefits; 2 It grows tax-free with the annual crediting of guaranteed interest and dividends; 3 It provides a death benefit (insurance) that ensures your family can pay off the real estate bank loans if necessary if you pass away prematurely.
The house is sold at the end of 30 years without the use of a beneficial 1031 tax-deferred exchange. As a result, all taxes are already removed from the profits shown (capital gains and recaptured depreciation). It is often beneficial to make use of a tax-deferred exchange, but a direct sale was used in this example to go from all cash at the beginning to again all cash at 30 years. CONCLUSION As a savvy and disciplined real estate investor, Infinite Banking can provide a better option for storing your “safe dollars” in a tax-de- ferred manner earning well above bank rates. It also provides you with a guaranteed financing arm in which you have flexibility to control the terms and provides additional resources tax-free in the case of a premature death to provide for your family, pay off debt, and allow for your businesses to continue operat- ing. If the concepts discussed briefly here have at all resonated with you and are a fit for your investing goals, I urge you to take a deeper look at this 200-year proven approach to growing lasting, perpetual wealth. •
And since very little of your own money has been invested in the property, you are substantially reducing your risk of being sued (in most states), while freeing up your money for other high-return invest- ments. Putting substantial personal equity into any asset--especially one used by other people when you are not present--is not only inefficient, but it makes your asset a target for fraudulent lawsuits. Additionally, assume that a con- servative $107 net cashflow is used to either refill your savings account after it is emptied to make the down payment, or it is used to pay off the policy loan over 30 years (you can do it over any timeframe you choose). After 30 years, your savings account has grown back to $43,000, yet the scenario in which a policy loan was used and the $20,000 remained, it grows tax free inside the policy. That money has paid off the loan and the original $20,000 has grown to $77,000 over the same period. In the below example, it was a $34,000 mis- take to use cash.
30 Years Later
$107.36/mo at 0.75% 360 Payments $43,328
Paid Off 5% Loan $20,000
4.5% No Tax $76,954 Compounding
Gary Pinkerton is a wealth strategist, military veteran, entrepreneur, speaker, best-selling author and real estate investor. He has degrees in engineering
FUTURE VALUE CALCULATOR Present Value: 0.00
FUTURE VALUE CALCULATOR Present Value: 20,000 Monthly Payment: 0.0 Annual Int. Rate: 4.50% Months: 360
from the US Naval Academy (BS) and the University of Illinois (MS), commanded the attack submarine USS TUCSON in his 25 years as a Navy nuclear submarine officer, was a Pentagon division director for the Joint Chiefs, and a senior ethics professor at the Naval Academy before retiring as a Captain. Gary has extensive experience designing, owning, and helping others implement high cash value life insurance, real estate, and alternative investments. He is passionate about furthering entrepreneurship and helping American families achieve financial dreams, establish a lasting financial legacy, and reduce taxes. He lives in Florida with his wife, Sue and their two sons.
Monthly Payment: 107.36 Annual Int. Rate: 0.75% Months: 360
Future Value: $43.328
Future Value: $76.954
PAID OFF HOME
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