Scott's First Investment Using Infinite Banking

In this episode, Scott talks about his first investment using the Infinite Banking Concept. Back in 2018, he utilized his specially designed, high cash-value, dividend-paying whole life insurance policy to finance a real estate flip.

Scott and Cameron also discuss the additional benefits of using Infinite Banking, such as tax-free growth, no payback terms, and the security of being in full control of your finances. This episode is a must-listen for anyone interested in innovative financial strategies and maximizing investment returns.

Tune in to learn more about Scott's journey and the powerful advantages of the Infinite Banking Concept!

Transcript

Hello and welcome in everybody to the Magnify Wealth podcast. I'm here with our host Scott Gannon. So what we are going to talk about today is the first investment Scott did while using the infinite banking concept to his advantage. So let me preface this. This is not a recommendation. This is not a typical return. What this is. What this is is in a historical account of what happened. That's all. So why don't you tell us a little bit about how this ended up on your plate? 

Let's, yeah, let's make this official. This is not investment advice of any kind. I am sharing a story of an actual experience that I had using the infinite banking concept. I was around. I can say it did happen. It's it. Of course. Of course. Back, I believe it was 2018, I think. I was a couple of years into the process. Maybe 2019, I can't remember for sure. I know that I was just socking cash away at first and not really knowing what I was gonna do with it. And then I had a very good friend of mine approach me. He was buying a mini home to flip. So he's a handy guy. and does repairs, but he was really having trouble coming up with the cash to do it. He said, he said, it looked like a good deal. The price seemed right to me. So I was like, yeah, I didn't even didn't even look at the property. I said, yeah, let's do it. 

He called me like literally two days before closing. And I said, yeah, I'll get the I'll get the money ordered. And yeah, we'll get this thing happening. So I'm the one that provided the cash. he was the, I guess muscle, if you will, or the know -how to fix it up. So the purchase price on this property was $37 ,000 and our estimated repairs was originally like 15 and ended up costing like 18 or something like that. I actually say something like that. It was about $18 ,000. but the idea here, the, the real message here is he was stuck and I had ready access to cash. Why? Because I had it stored properly in my dividend paying whole life insurance and all I had to do was order. 

So I think I ordered 50 at the time. knowing that it was going to probably cost a little bit more. And then I pulled another five out when we needed it. About two thirds of the way through the process. But the numbers I'm going to share with you, I'm just going to assume that I pulled all the money at the start just for easy math. And so we'll just share some numbers. So 37 ,000 plus 18 in repairs, that's a total of 55 in The interest on that at the time was about which comes out to a little under $700. So I rounded that up to $700 because we closed, and exactly 90 days later, we closed on the sale. So it was about $700 in interest. So just to kind of put this into perspective, we shared. a little better than 30 ,000 profit. My share was 16.5. So I used other people's money, the insurance company's money, to fund the 55,000 and shelled out $700 in interest. 

Now here's the cool part of this, is I didn't make any payments because I knew it was a flip. Now if I was buying a rental or something, sure, I'd use cash flow from that. to make my interest plus principal payments to pay back the loan. But on a flip scenario, generally, you're only in there from three to six months anyway. In this case, it was exactly three months. So I just borrowed the money and ignored it until the end. So it was like $55,700 that I owed. So the 16.5, it was the profit I got it. Of course, I got the original amount to the 55, paid that back and then So just to put this into perspective, had I used my own money. If any of your own 55,000, my own $55,000 just to run the numbers on that. That's approximately about a 30 % return. 

So this is a very unique kind of, wow, this is a great opportunity. And if we annual annualize that just multiply by four, three, three months versus 12. And that would be like 120% return annualized. if I had cash laying around doing nothing and I used it, then yeah, I would have done fine. But let's look at this from the infinite banking concept and the use of leverage. And those numbers are little. I'm just going to go back to my numbers here. So $700 of interest. So we divide that, divide 16 .5 by that. The reason being the only expense you had was 700. You did not, look, it wasn't your money. You never touched your own money. The only money out of your pocket was $700. Yeah, exactly. So the $55 ,000 was used and then put back. And for that, I paid $700. So $16 .5 divided by $700, that comes up to 2 ,357 % for three months. So a little better than 30%. But how about the annualized? 9428%. Now, does that happen every day? Absolutely not. 

But the key thing here is having ready access to cash gives you the opportunity to take advantage of opportunities. Great ones that fall on your lap sometimes. Exactly. I've used this word several times in interviews in the past. When does the deal of a lifetime happen? The deal of a lifetime happens when somebody has a great deal or great idea and needs And if you've got the cash, then guess what? You can be part of that deal of a lifetime. And yeah, sure. This would have been, if I could have added a couple zeros to that 37 ,000, this could have been a deal of a lifetime, but you know, it's still, it was still a pretty good deal for, for basically all I did was order money and, and pay it and then put it back at the end. So not a lot of work for, for basically a little, what was it? 15 eight profit. Wow. Sorry. You know what's. Really cool though. What's that now? After all that profit, there were some other little, there's some other benefits with using Infinite Banking.

Cause I mean, some of you could use your, like a line of credit to do something like this and use other people's money and get a great return. But there's, there's a few aspects that are a little bit different. We talked about not no payback terms. We talked about the fact that you were able to just wait till the flip happened and pay it back then. You don't get that with a line of credit. The other thing is you talked about being able to call them up and get the money right away. You did not have to apply. You didn't have to go through the bank's big cavity search that they do when it comes to the money. 

And finally, do you want to talk about the final benefit that actually, interestingly enough, makes the rate of return even better? Well, there's, yeah, I think you mentioned the payback term. So, so yeah, so just put it in perspective. Yeah. If you had an equity line credit or something, then, and you had enough room, 60 call 60 ,000 in room, then anybody could have done this. But what you wouldn't have gotten is you wouldn't have gotten steady growth during those three months. Now I can't remember it's been six, six years or so, how much it actually grew during those three, those three months. But my ready access to capital kept growing during those three months. One thing I can guarantee you, even though you don't remember the numbers, is that you got tax free growth every single day in there. It never went backwards. 

Exactly. So yeah, if you liken it to other investments or other, like obviously a savings account is supposed to stay still as well. But of course it's taxable and the interest is not that friendly. so yeah, I mean, a line of credit for sure like this, but this is, I mean, the big thing is the ready access on demand liquidity use and control. 

That's really what it is. You're in control. Nobody's going to say no to you. And then let's face it, although banks are in the business lending money, they also have the ability to call your, call your line of credit or change it. change the terms, anything. They're always in control there. Same as your money sitting in a bank account. Understand that when you hand over your money, I'm going off the rails here on this a little bit, but something I think is important for people to understand when you have your money inside of life insurance policy, you are the owner and if you have it structured properly, you're in control. It's like you say, you're the banker and the lender and the bank owner, so you get the dividends too. You're in every single position there. So, yeah, like nobody's going to, nobody's going to pull this back on you, but I mean, like it at the bonds, I mean, a bond can go down in value. This doesn't. So that right there is what is possible using the infinite banking concept to your advantage in your investment life. So again, this, this is the, you know, these investments don't come on your plate all the time. They don't always work, but. What happened here is a true story of how Scott used the infinite banking concept to, to magnify his return. Yeah. 

There's one, one more thing on this too, right? Like if you have money sitting, like let's just say you're invested in the whatever, say a stock market or something, and you want to pull it out for that, you know, the timing isn't always the best, not to mention it's, you know, what are you giving up on the, on the other side as well? it's just, there's real growth comes from taking advantage of opportunities, not just having your money sit still. This keeps your money moving. This is it. Awesome. Well, thank you guys. Thanks for tuning in and listen to both Scott's first investment while using the infinite banking concept. We will see you guys all next week. Have a great week.