If you want to know everything about the Infinite Banking Concept* then read on. Here in this article I want to get straight to the point, purpose, and the overall philosophies behind R Nelson Nash’s Infinite Banking Concept so that you can have a better idea of what it is and if it is something you want to continue to look into for you personally.
My disclaimer is this. Infinity banking is not for everyone. For some, it will be amazing, you will think it’s the greatest thing in the world as far as finances go, for some it will just make sense in conjunction with what you are doing, and for others it just won’t work well or just won’t make sense. All that is ok.
However, if you come into this with the mentality that this is a scam. You aren’t going to learn anything. It can be difficult, but if you don’t approach this with an open mind, and a mentality that not everyone talking about whole life insurance knows what they are talking about, then you won’t be giving this a fair shot. And you couldn’t be doing yourself a disservice in the long run.
If this does sound like a scam or snake oil, then someone is feeding you bull. In that case, blame the marketer not the system.
Becoming Your Own Banker: The Infinite Banking Concept
This all started with a book by R Nelson Nash that he wrote back in the 80′s called, Becoming Your Own Banker. This book was completely different from current financial thought, and has been slowly turning heads ever since.
The book talks mostly about financing and using life insurance companies to store money. There are a few reasons for this.
The first is your need for financing. We all need money to buy things. However, most people will store money in a 401k or IRA, and then take a loan from the bank. The other option is to just pay cash.
Both these scenarios limit you. Paying cash is the real issue, though. The reason? Long term growth and opportunity cost.
Opportunity cost is the cost we pay for using our money. Not just the cost of the dollars today, but also the cost of what we lose out, or what our money could have grown to. The Infinite Banking Concept, as Nash’s concept began to be known as, was a solution to this problem. How? The answer is making sure that our money is always growing, even when we are using it.
So, the solution was simple. When we are using our money, we pay interest on it. But that’s only half the problem, now we have to find a place to put our money where we can access it whenever we want (so 401k’s, IRA’s, and other government sponsored programs were out) and a place where our money is going to be safe and we won’t ever lose money (so stock, bonds, and mutual funds were out). That left us with a few options.
High Cash Value Whole Life Insurance
In other articles we discuss the benefits of this high cash value life insurance in conjunction with how to be your own bank, but here I just want to mention it. After some study, it becomes evident very quickly that whole life insurance, and especially if it is properly structured for cash value, beats any other safe investment out there.
Compare it to bonds, cd’s, a bank account, or any other investment where you won’t lose money, whole life insurance is going to win every time. And not just by a little, we are talking about more than twice the growth of most of these other types of safe investments.
This wasn’t the only reason Nelson Nash was promoting this type of vehicle for saving money, and I’ll get to those other reasons here in just a second, but it did make a pretty convincing argument about the quality of the money stored inside these life insurance companies, making a high cash value whole life insurance policy an obvious contender in the financial playing-field.
Infinite Banking As A Solution
Second to the strictly financial reasons for using Infinite Banking, Nelson Nash was seeing some other problems in the world he didn’t like. That of government and financial institutions using leverage and debt to make money.
This was a huge problem. R Nelson Nash was sick of government spending, banks using fractional reserve, and banks and investors speculating with other peoples money. This became another primary reason for using and promoting his new concept, the Infinite Banking Concept.
He was sick of it.
Infinite Banking and Fractional Reserve Spending
If you are unfamiliar with fractional reserve let me touch on this quickly.
Our current banking, and I’m talking about the corner banks and banks our country runs on, use fractional reserve spending. This mean that, for every 1 dollar you deposit in the bank, the bank will loan out 10.
Every dollar then is contributing to the overall problem of overspending and debt. This creation of money out of thin air, because there is nothing backing these new dollars, causes the inflation we see every year, and inflation is the silent thief that robs us of our money.
So, the normal question would arise of how to be your own bank. How can we stop contributing to the mess and put the power of banking into our own hands.
Not only was Infinite Banking a financial solution, showing us a better place to save money and how to access it, it also became a solution to the problem of government and bank spending.
For every dollar deposited with a life insurance company did not contribute to the problem. If we put our money with a life insurance company it will either be invested, or we will take it out and use it ourselves.
Either way that 1 dollar can only do 1 thing.
R Nelson Nash decided that if enough people would get out of the banking system, and put their money into life insurance companies, then the entire government banking system would have to be reevaluated and changed.
–Get Your Copy of R Nelson Nash’s, Becoming Your Own Banker PDF Here–
Infinite banking was no longer just a solution for personal issues, and a great way to build capital and gain personal financing, but it also became a way to take a stand against the banks, the federal reserve, and stand up against the problems that are tearing up our country and ruining our monetary system.
Learn More About Infinity Banking
Hopefully that gives you a solid introduction to this Infinity Banking, what it is, and how it all got started. There are so many angles that can be addressed, the government problems, how to put safety back into your financial life, tax advantages for business owners and investors, tax advantages of whole life insurance, and so many more.
This site is dedicated to giving you all of the information for this concept and how it works for the regular person. Most sites are dedicated to life insurance agents, this one is dedicated to the people.
Take a look around the site and find what you want to know. If there are questions you have that you can’t find answers to, send us an email or give us a call. We want this site to give you all the answers you want and need so that you can discover if the Infinite Banking Concept is right for you.
Until you understand it, you won’t know if it fits you.
If you want a free copy of our personally written book, “The Banking Effect,” feel free to send us an email or give us a call.