Compound Interest & Rule of 72 Biggest Wealth Killer High Cost of Waiting Unnecessary Transfers Opportunity Costs Be The Bank Eleven Ways to “Find” the Money The REAL Retirement Miracle

1. Financial Concepts

2. Financial Concepts
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Compound Interest & Rule of 72
Biggest Wealth Killer
High Cost of Waiting
Unnecessary Transfers
Opportunity Costs
Be The Bank
Eleven Ways to “Find” the Money
The REAL Retirement Miracle

3. Compound Interest
“The most powerful force in the universe is
compound interest.” 1 - Albert Einstein
"The person that understands compound
interest will earn it. The person that does not
will pay it!“ 2 –
Albert Einstein
richnow.wordpress.com Secrets of the rich revealed, Don’t ignore
The power of Compound Interest, Dec.6, 2006
2 Ibeatmybank.com/see_how_it_s_done.html
1

5. 72/ 6% =12 yrs
72/3%=24 yrs
72/12% = 6 yrs
What’s the MOST exciting double?

6. Save $1 million by age 67
You'd better get started soon.
The longer you wait, the more you'll have to put
away each month to reach your retirement
goals

7. Don’t Pay the High Cost of Waiting
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27 years old? $214 a month.
Age 37, …$541 mo.
Age 47,…. $1,491 mo.
Age 57, hefty $5,168 mo.
Wait until the last minute (age 62) and you'd
have to stash $13,258 mo. to reach $1 million
by age 67.
Don’t give up hope- we have an answer

8. Number 1 Wealth KILLER
Taxation
• Double a dollar 20 times
• It grows to…..
……….$1,048,576
• If you tax 30% on each double
• It grows to…..
…..$40,642
The Million Dollar Mistake!!!

9. Anybody see a trend here?
You Earn it
They Tax it
You Spend It
They Tax it
You Save It
They Tax it
You Die
They Tax it

10. Unnecessary transfers
• By recapturing unnecessary transfers the
dollars you were losing and to put these
dollars towards your accumulated money
and/or lifestyle money with no additional out
of pocket cost.

11. Opportunity Cost
• The interest you could have earned, had you
been able to avoid losing it or transferring it
away.
• A dollar paid in taxes unnecessarily not only
costs you that dollar but it also costs you what
the dollar could have earned had you not
given it away.

12. Be The Bank

13. The Most Powerful Bank in The
World

14. You Finance Everything!
You either finance by:
a. Paying interest to someone else –
a bank, lender, finance Co, credit card etc.
b. Or giving up interest you could have earned
otherwise.
When you pay cash the interest the money could
have earned is forfeited
This is Opportunity Cost

15. Typical Family
• Two cars, both cars are financed or leased
they often swim in credit card debt, and perhaps
home equity debt.
• They have a mortgage.
• Typical family spends about 34% of its income on
paying interest to creditors.

16. Typical Family
• At the same time they are contributing less than 5% of
their income to their savings plan and they have put
much, if not all, of that at risk.
• In other words, they are spending a lot more on
interest than they are saving.

17. Your Family Bank

19. Financing Cars
We all know that you lose money on buying cars
• Did you realize how much?
• Did you know there is a much better way?
• Over a lifetime the interest paid on financing cars
plus the opportunity cost lost on financing accounts
for a significant wealth transfer.
• (Lease or pay cash still have opportunity cost)

20. Financing Cars
So what’s the answer?
The answer lies not in what you buy but
how you buy it.

21. Financing Cars
An example:
• 40 year old couple purchases (one) new vehicle
every 4 years at a cost of $30,000.
• They expect to keep driving until age 80.
So, over 40 years they will buy 10 new cars.
Assumptions:
We are not factoring any money down or inflation but we know prices will go up.
We will assume they can earn 8% on their investments and an 8% opportunity cost.
We will use an 8% loan finance rate

22. Financing Cars
• If they continue to finance one $30,000 car every 4 years over the next 40
years they could transfer almost $300,000 in opportunity cost.
• The more cars you add to the equation, the greater the loss.
Over 40 years, the total cost is:
Principal
$300,000
Interest
$ 51,546
Opportunity Cost
$297,121
TOTAL COST
$648,667
Imagine of you could have every dime back plus interest

23. Become The Bank
Our Solution
• Start building an account that will allow you to
withdraw the money necessary to
• Pay cash for your next car and then pay yourself
back, paying yourself the principal & interest .
• You can “self-finance” everything.
• That $648,667 or more could be in your account
instead

24. Sad But True…
• People saving in qualified plans at work
( 401k, IRA etc.)
Do not have Liquidity, Use & Control of their
money and are forced to finance their car
Many Americans who finance their cars lose
more money in interest financing their
automobiles so they can get to work, than they
will accumulate in their lifelong savings accounts
at work.

25. First Bank of YOU
• Great College Plan
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•
•
•
College expenses taken out Tax Free
Not included in college aid grant formulas
Cash Value is owned by parents
Plan completion
• Business Owners
• Equipment
• No need to “qualify” for a loan
• Anything Financed

27. Twelve reasons why
You should build your personal ‘bank’
1. You can get to the money in your ‘bank’ whenever
you want it or need it . . . no penalties, no waiting,
no taxes and no application.
2. The government, your employer, or any other
outsiders have nothing to say about how you
operate your ‘bank.’
3. Your ‘bank’ is protected from creditors and lawsuits
(protections are not the same for every state so check with your state .)
4. You can borrow from your ‘bank’ for any reason and
you don’t have to qualify in any way.

28. Twelve reasons why
You should build your personal ‘bank’
5. When you borrow from your ‘bank’, the money in your ‘bank’
keeps growing as if you hadn’t borrowed a cent. . . your
money does double duty.
6. Your ‘bank’ allows you to recover the money you pay to
purchase cars, household furnishings, vacations, and other
big ticket items or to fund education, business start-ups or
any other costly expense, and deposit both interest and
principal you recover back into your ‘bank.’
7. Your ‘bank’ allows you to put all of the interest you would
normally pay to credit card companies, banks and other credit
grantors into your ‘bank’ where it compounds for your
benefit.

29. Twelve reasons why
You should build your personal ‘bank’
11. Your ‘bank’ lets you grow your wealth tax-free every year . . .
no sliding backward . . . no worries about stock market
crashes or real estate bubbles . . . just peace of mind about
your money.
12. Your ‘bank’ serves you without compromise while you are
alive and allows you to pay forward –tax-free to anyone you
choose – your legacy of wealth and wisdom.

30. Twelve reasons why
You should build your personal ‘bank’
8. Your ‘bank’ allows you to prepay the cost of future
health and long term care so the money you need as
you age is in your ‘bank’ when you need it most.
9. Your bank funds an inflation-protected income that
you do not have to work for and you can’t outlive.
10. You can use the money in your ‘bank’ when an
unforeseen life event throws you off the track.
Plus Living Benefits

31. Does This Work?
• This method is used by many Banks.
• To capitalize a portion of their banking system,
Banks purchase billions in insurance.
• This pool of capital is a MAJOR source of
working capital the bank draws on to fuel it’s
banking system.

32. Cash Value Life Insurance:
A Cornerstone Asset Of a Bank
November 24, 2008 By Barry Dyke
• Cash value life insurance is one of the most
important assets of a bank, particularly
America’s large banks.
• Banks purchase so much cash value life
insurance that life insurance of this type has
its own name
• BOLI (bank-owned-life-insurance).

33. Cash Value Life Insurance:
A Cornerstone Asset Of a Bank
November 24, 2008 By Barry Dyke
• Banks own so much BOLI that the banks could
be considered life insurance companies unto
themselves. According to the Federal Deposit
Insurance Corporation (FDIC) and the General
Accounting Office (GAO), BOLI is a
cornerstone of a bank and one most
important assets in the nation’s banking and
financial systems.

34. Cash Value Life Insurance:
A Cornerstone Asset Of a Bank
November 24, 2008 By Barry Dyke
In fact, according to the FDIC figures in June 30,
2008, Bank of America owned
$18.99 billion dollars of
Cash Value life insurance

35. From Wikipedia
Tier 1 capital is the core measure of a bank's
financial strength from a regulator's point of view.
It is composed of core capital,[1] which consists primarily of common stock
and disclosed reserves (or retained earnings),
[2] but may also include non-redeemable non-cumulative preferred stock.

37. Your Money Bucket
If you were filling a bucket
What would you do if your bucket had holes?

38. “FIND” money to Fund
YOUR Bank

39. Eleven ways to “find” money to
fund your plan:
1. Restructure debt
Cleverly reducing debt will allow you to use the
dollars freed up for your policy.
There are a half dozen ways to do this.

40. Eleven ways to “find” money to
fund your plan:
2. Reduce funding of your 401(k) or other
retirement plans
This brings them the guarantees, tax
advantages, life, living benefits and
flexibility provides that their traditional,
government-sponsored 401(k), IRA or pension
plan does not.

41. Eleven ways to “find” money to
fund your plan:
3. Rescue your IRA or 401(k)
Use IRS rule, 72(t), to transfer your money out of
a qualified plan, to fund your policy.
Avoid the premature distribution penalty
anyone younger than 59½.

42. Eleven ways to “find” money to
fund your plan:
4. Tap your savings
Consider opening a policy and moving some of
your current savings into it. Your policy can be
used as an emergency fund

43. Eleven ways to “find” money to
fund your plan:
5. Rethink that tax refund
Some people love getting a big tax refund check in the
mail every year. But that’s your own money you’re
getting back.
You’re giving the government an interest-free loan,
while getting a zero rate of return on your money.
Fast and easy to adjust your withholding,
immediately increase your monthly cash flow (in
some cases by hundreds of dollars a month), and use
those dollars to fund your policy

44. Eleven ways to “find” money to
fund your plan:
6. Get home based business tax deductions
Write off “business” expenses
Auto %
Cell, Internet Phone, Electric etc
Home Office
Travel
Entertainment Meals
More

45. Eleven ways to “find” money to
fund your plan:
7. Quote your home owners and Auto Ins
Consider raising the deductibles
Self insure inside your policy

46. Eleven ways to “find” money to
fund your plan:
8. Make lifestyle changes
• Like holding onto your car a few years longer
than you normally would and holding off on
buying a new one.
• It’s also easy to cut monthly costs through
simple changes like eating out less, and
bundling your Internet, cable TV, and phone
services

47. Eleven ways to “find” money to
fund your plan:
9. Convert existing life insurance policies
• Cash value from existing policies may be an
option. In some situations, taking a
withdrawal from the old policy and using that
to fund a policy may be an option.
• Careful analysis here: Giving up an old
insurance policy is not always in your best
interest.

48. Eleven ways to “find” money to
fund your plan:
10. Manage your home equity wisely
• Many people like the feeling of security that
comes with building up equity in their home,
or owning it free and clear.
• Some people make extra mortgage payments,
or refinance to a 15-year mortgage, even if it
makes them feel financially pinched.

49. Eleven ways to “find” money to
fund your plan:
10. Manage your home equity wisely
• There are hidden dangers
• Payments of principal you make into your
home do not make money for you
• The equity in your home is not liquid
• The equity in your home is not guaranteed (a
fact which came as a shock to many when the real
estate market crashed)
• There is no tax benefit to having equity in
your home

50. Eleven ways to “find” money to
fund your plan:
11. Make More Money
• Become a paid referral agent
• Just 2-3 referrals a year could fund a $3,000
year plan
• The Real Retirement Secret
Wait until the last minute (age 62) and you'd have to stash $13,258 a month
to reach $1 million by age 67.
A Team of 10 sales and you do one or two a month

51. Eleven ways to “find” money to
fund your plan:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Debt
Reduce Funding IRA/401K
Rescue IRA/401k
New Emergency Fund
Tax Refund
Tax Deductions
Save on Home Owners and Auto
Lifestyle adjustments
Convert Old Policies
Manage Home Equity
Make More
$100
$100
$100
$100
$100
$100
$100
$100
$100
$100
$100
$1,100

52. What’s a million pay?
$1,000,000
@ 4% per year $40,000
($12,000 tax… net $28,000)
or
@ 2% per year $20,000
($4,000 tax… net $16,000)

53. The REAL
Retirement
Miracle

54. Paid Referral Agent
One Personal a Month

55. Paid Referral Agent
One Personal a Month
One Agent

56. Paid Referral Agent
Top 5% of income in US
95% make less than 100,000 a year

57. Paid Referral Agent