Today I’m going to share a unique alternative to getting a traditional loan or buying large ticket items with cash for real estate or even a car. In this video on the Family Bank a powerful investment option.
The number one purpose of any business is to bring value. What value do you bring to others, because people who bring value are in turn valuable. If you want to be memorable, become valuable and so I try to bring a ton of value with every YouTube video I make and share with you all, my subscribers. Then when someone is ready for a custom plan, I’m here to sit with you as a licensed financial professional to customize a plan based on your specific needs, hopes, and dreams and I never seek compensation and there is no obligation to meet with me. I am an optimistic, friendly, and positive person whose goal is to spread joy and knowledge and position people and families for a brighter future. You can wait for everything around you to change, or you can be the change. I don’t know about you, but I like to seize and be in control of the change because then you can ensure the change is a positive change. Personal development isn’t just for you, it’s also for everyone you come in contact with.
Now I have a lot of people I can meet with and share what I do with, the reality is that helping one person will NOT change my life. I figure I’ll be doing this for another 30 years so will there be others that I can meet with? For sure! Now for what I share with others, can it change their lives? The answer to that is for sure, yes! What we can potentially do for you can change your life and the life of your family.
So what am I talking about today, what’s this alternative to a traditional loan or buying with cash large ticket items like real estate or a car? This is a subject that falls under both wealth and real estate and it makes sense that at times the subjects cross over one another. What we call this solution is a Family Bank that we can help setup for you. You can try to get a loan from Wells Fargo or Bank of American or I can show you how to get a loan from the Bank of … and insert your last name here. That’s what we call in my business the Family Bank.
What I’m about to share is is a story of two rich men, the first is John D. Rockefeller who was the wealthiest American in history. He set up a well-structured estate and family trust and therefore kept the family wealth together. The Rockefeller trust owns and is the beneficiary of a life insurance policy on each heir. When the heir passes away, the trust pays to proceeds and eventually pays all policies for new family members. As of 2016, the Rockefeller family wealth that has lasted for 7 generations now and 170 heirs is at eleven billion dollars according to Fortune Magazine.
In contrast, the Vanderbilts or specifically Cornelius Vanderbilt was one of the wealthiest men in history, he just left all the money to the kids, to his children. The children and grandchildren then in turn spent ad gambled frivolously due to spoiling and entitlement. If you give people things, they don’t appreciate it, but if they earned it, then they appreciate it. In 1973 at the 120-person family reunion, not one person in the bunch was even a millionaire. Anderson Cooper the CNN Journalist whose mother was Gloria Vanderbilt, one of those Vanderbilt heirs and he had to find someone to introduce him to get the job he has now. Cornelius Vanderbilt did what most families do and this was the outcome, I am here to share what John D. Rockefeller did and how you can as well. Want to leave the Rockefeller or the Vanderbilt legacy for your family?
Ed Slott who’s an IRA Expert shared this quote on a PBS Broadcast. “If I could show you a way your family could be guaranteed to inherit your estate value today TAX-FREE, regardless of market conditions, interest rates, and how much you spend, would you be interested? Who wouldn’t want that?”
Well to backpack off of that what the Family Bank strategy does is show you how to grow your safe money free from income taxes, without any market risk, earning on average 5% to 8% or more, taking later on the distributions tax-free, would you be interested in that?
What Mr. Rockefeller did was set up one of these Family Banks. So what’s a Family Bank already and what are the benefits? You get Tax-Deferred Growth and Tax-Free Distributions, it can fund you if you become disabled, has consistent upside growth, gains are locked in, you can borrow against your family bank without interest, it’s a loan with no strings attached, it covers medical expenses and generates retirement income, you can designate who in your family that you want to lend the money do if you so choose to do so, the bank can be transferred to a spouse, children, grandchildren, or even a charity. It’s creditor proof and there are no rules or fees on the Family Bank like there are on 401k or 403b’s. There are no required distribution rules, these are backed by the strongest institutions in the world and are safe from scammers. Finally, it’s held in your family name, you may not have come from a rich family, but that rich family can come through you by building generational wealth.
“When times are bad, people just want return of capital and, when times are good, people just want a return on capital.” That quote is by Bobby Samuelson. The Family Bank strategy does both!
Other benefits of a Family Bank are a Personal Line of Credit, like a HELOC loan but it’s not tied to your home, you don’t have to go to the bank, a credit union, you don’t need a new credit card and it’s accessible even in the event of a catastrophic market downturn. Increased early cash access via tax-free loans, money in an advanced premium fund or premium deposit fund will earn higher than traditional bank accounts with 100% access if need be. More money in over less time and compounds quicker on greater amounts of invested capital.
Your Family Bank could be used like a true personal family bank. If you want to purchase a car, a home, or even a boat, don’t go to the bank or credit union, go to your Family Bank. If you want to help a family member fund their first year at Stanford University, don’t have them take out a high-rate student loan, take the money from the Family Bank. Need to supplement your Social Security Income? Take the needed amount in monthly distributions from your Family Bank. Why not? It’s all TAX-FREE!
So how can we convert $1 to create $2, $3, or more? By utilizing your tax-free loans from your Family Bank you can put it into your Business to increase revenue. Invest it in Real Estate, now I don’t believe right now is a good time to buy, but it’s a perfect time to sell and invest in to your Family Bank and then buy that property when the market drops. If you’re a Real Estate Investor or want to become a lender, you can lend and earn returns as the borrower pays you back with interest. You can become your one hard or soft money lender. If you’re a fix and flip investor of Real Estate, you can use this money on your project and then return it after and you never have to budget for the interest as you did on the HELOC.
So back to the original subject, when you pay cash for a big purchase, the compounding process is interrupted, basically, your money is no longer growing and making interest. The way we set up a Family Bank, however, when you take a loan out against your Family Bank account the compounding interest process continues as if you never touched the growing capital amount. Some things are hard to explain and illustrate unless we meet to go over them but that’s how the Family Bank works.
So let’s say you want to take $30,000 to purchase a home, not in California of course but in a positive cash-flowing, landlord-friendly state. To make it simpler let’s say we are buying a new car. Traditional Financing maybe something like $600 for 60 months(since we are in this case assuming you borrowed the money for your down payment or its typical options for a new car loan). If you pay cash then you are forking out the $30,000 outright and as mentioned before you would interrupt the compounding interest process. Finally, the third way is to take the $30,000 from the Family Bank.
So let’s break it down a little further to illustrate what this looks like with Pro’s and Con’s.
Traditional Financing on the new car means you get the car right now, and you have no big up-front investment depending on your credit if you get the costs down to $600 a month for 60 months or 5 years, that’s a total out of pocket of $36,000. The con is you don’t own the vehicle, right, the bank does until the loan is paid off, you will also be paying an additional 20% in compounded interest over the 5 years. You have to apply, qualify, take a hit on your credit report for yet another credit history query, which is why you want to make sure you have good credit and debt to income ratio or you would be denied the loan right off the bat. Adding an additional payment to your principal doesn’t reduce your monthly car payments, it will remain $600 a month for the duration of what’s left on the loan to be paid off with the fixed scheduled payment but on the flip side, you get hit on your credit if you miss a payment.
So what if we pay for the car with Cash? Well, the pro’s are you own the vehicle and you have no loans. And the con’s? The opportunity costs on the $30,000 if it had stayed in an account earning the compound interest over those 5 years and beyond because you aren’t getting that $30k back unless you sell the car and even then with the car depreciation value, that difference in the sale price money is gone. Delayed gratification, you had to save for 5 years to have acquired the cash to make the purchase, a self-imposed payment plan. The vehicle would have cost more than 5 years from now because of the cost of inflation, and the reality is that you most likely would have to save a little more because that same car 5 years from now will cost more to buy at the car dealer. If you left that money in a savings account at 0.01% interest, your money is sitting idle, not growing at all while you are waiting to deploy those funds into your future car purchase. The only time it’s going to grow is when you put more capital in.
So finally the third option, using your Family Bank. The pro’s are you own the vehicle like when you bought it cash, your vehicle still earned the market-like returns and compounding interest, meaning you can keep increasing your wealth all while still making the big purchase, no applications, credit checks, qualifications, repayment schedule, debt to income ratio issues or penalties, and credit hits because it’s your bank. The con, well there is just one, the decreased availability for your next purchase or investment until you restore the funds in your Family Bank.
To learn more and get a specific plan customized for you, reach out to me.
They say that if you want to keep a secret, put it in a book because nobody reads it, well if you do, I left a few titles to check out in the comments section below. I shared in a recent interview that reading is the best form of self-development. The authors spend years and research to put onto paper what can be a college or university course and often is. And often it only costs you $20 for a book to get all of that knowledge. What a deal! I want to also send a special thank you to Austin Harwood for breaking this down in a way that was easy to understand and share with others.
Thank you for watching to the end and please feel free to comment below or send me a message from the healthwealthandrealestate.com website on the “Get in Touch” link at the top of the page and please like and subscribe to the channel so that you don’t miss any future educational videos. My hope is that I brought a ton of value and I look forward to connecting with you to see what we can figure out together.