You can’t control the global economy. You can’t control the national or regional economy. You don’t even have control over your local economy. The only situation over which you have control is your household economy.
- Dwayne Burnell in his book "A Path to Financial Peace of Mind"
Also known as IBC, it is an alternative way to structure your financial life to achieve a better lifetime return. The concept was originally described in R. Nelson Nash’s bestselling book "Becoming Your Own Banker". We all need to dip into financing from time to time, particularly when there are large ticket items. When you finance these purchases, you are paying interest on those funds to a traditional institution, like a bank. Even if you are able to pay cash for these items, there is still a net loss because your money is spent and gone instead of earning you returns (known as opportunity cost).
As described in the books "Becoming Your Own Banker" and "The Case for IBC", IBC is the strategy - a way of life - Dividend Paying Participating Whole Life Insurance is the ideal vehicle, and you are the driver. Best selling author, and a mentor to many of us, Nelson Nash also recommends working with an Authorized Infinite Banking Practitioner that has completed an education through the Nelson Nash Institute. Graduates are trained to optimize Dividend Paying Participating Whole Life Insurance for the purpose of IBC and are adept at customizing the structure for your stage of life.
IBC redirects the current and future interest you will pay throughout your life back into an entity that you own and control. IBC creates a structure that allows you to self-finance and recapture your lifetime interest losses on everything, including:
IBC allows you to take control of your financial world. It changes where and how you access the capital for life’s major events and sets up a storage facility for you to build up your pool of capital for the next major event.
IBC is not a method to get rich quickly. It is based on solid long-term thinking and the principles of savings and preservation of capital. Intergenerational wealth takes time and discipline to build.
It is not an insurance product or something you buy directly as many people tend to think. Although it is best implemented with a properly designed insurance vehicle, IBC is the process and should not be confused with the product of a Whole life or other permanent insurance contract. It is the “method” that maximizes the potential of those contracts.
IBC IS THE MISSING LINK FOR PERSONAL FINANCE
As a private contract, IBC is not a government program or tax-qualified plan like an RRSP or TFSA or even an RESP. These all have a variety of rules and restrictions and specific characteristics that are unique to them. IBC can be used to strategically maximize any investment opportunity, but remains private.
THERE IS NO SUCH THING AS HAVING TOO MUCH MONEY IN THE BANK. YOUR WEALTH MUST RESIDE SOMEWHERE
It is not intended as a tax shelter. IBC can be used to reduce taxes legally through a Par Whole Life Policy, but it is not a tax specific program. When combined with well-designed cash value insurance, Canadians can achieve tax exempt growth. With education, and the application of that knowledge, it is possible for the average Canadian to have more control over their taxation - especially at retirement time. Having said that... Par Whole Life is a tax exempt product, the growth is tax-free, the use of your cash is tax-advantaged and can be tax-free. The death benefit is always 100% tax-free. IBC is not a replacement for your everyday checking account or an actual brick and mortar banking/financial institution. It can be used to fund these accounts, but it will not be linked up to a debit or credit card for daily transactions.
IBC is not a multi-level, or network-marketing program. It is a trademarked concept developed by R. Nelson Nash. Ultimately, it is not for everyone. Depending on your situation and phase of life, IBC might not be a fit. The only way to really know is to work through scenarios with an Authorized Infinite Banking Practitioner to ensure that IBC fits your financial goals.
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