In my 40+ years in the financial planning industry, I've seen numerous strategies come and go. As a Certified Financial Planner (CFP), it's my duty to evaluate new concepts and determine their suitability for various situations. One such concept that has piqued my interest is Infinite Banking (IB). After thorough research, I've found that Infinite Banking can be a valid approach for the right circumstances.

Understanding Infinite Banking

Infinite Banking, also known as Be Your Own Bank (BYOB) or the Rockefeller Waterfall Method, was popularized by the late R. Nelson Nash. Although it has been around since 1848, many people are still unaware of its potential benefits. At its core, Infinite Banking involves using cash value life insurance as a reservoir for liquid cash, allowing individuals to mimic the strategies that banks have employed since 1817 in Canada.

Why Consider Infinite Banking?

  1. Think Like a Banker: Banks are among the wealthiest entities globally. By adopting their strategies, we can create our own banking systems using cash value life insurance as a foundation.
  2. Control and Velocity: Infinite Banking allows individuals to control and protect their capital, promoting continuous movement and growth.
  3. Life Insurance as an Asset: Cash value life insurance is a tier-1 capital asset, not an expense. It provides a higher return than traditional savings accounts.
  4. Real Estate Synergy: Real estate investors can benefit significantly from Infinite Banking, as it offers continuous compounding on working capital.
  5. Financial Independence: By establishing a personal banking system, individuals can reduce reliance on traditional banks, thereby recapturing financing costs and enhancing financial independence.

The Role of Infinite Banking in Financial Planning

Infinite Banking can play a crucial role in a comprehensive financial plan. With up to 34.5% of income typically allocated to financing costs, it's essential for financial planners to explore methods to reduce or recapture these expenses. Infinite Banking offers a viable solution, enabling individuals and businesses to become bank owners rather than mere customers.

Addressing Common Concerns

  • Complexity: While some may find Infinite Banking complex, it's primarily a shift in mindset. Viewing life insurance as a savings account rather than an investment can simplify the concept.
  • Investment vs. Insurance: Infinite Banking is not an investment strategy but a financial system that leverages life insurance as a savings tool.
  • Privacy and Control: Infinite Banking offers greater control and privacy compared to government-sponsored plans like RRSPs and pensions.

Final Thoughts

Infinite Banking, when implemented correctly with the guidance of an Authorized Infinite Banking Practitioner, can be a powerful tool for financial growth and independence. It's not merely about earning a return on investment but about making strategic financial choices that align with long-term goals.

For those interested in exploring Infinite Banking further, I recommend reading "Becoming Your Own Banker" by Nelson Nash. This quick-read book provides valuable insights into the principles of Infinite Banking, empowering readers to make informed decisions. Want a free book? Ask here: https://www.dofinancial.ca/pages/contact-us.

In conclusion, Infinite Banking is a compelling concept that deserves consideration as part of a well-rounded financial strategy. By adopting this approach, individuals and businesses can achieve greater financial autonomy and success.