There were challenges ranging from planning to aging to protection to legacy.

When I started looking into how to protect my kids from this type of life passage; the emotional, mental, financial struggle. I wondered about life insurance. I grew up in a mindset, where life insurance was a rip off and that there would never be a reason to afford that kind of wasteful expense. I honed in on guaranteed insurance, the kind that most people get later in life. I found out that people who got this kind of life insurance usually had more than one policy. It set me off on an educational and philosophical journey that became a career pivot.

Its use cases for cash flow, leverage, protection are intriguing.

I realized that some people treated this one type of insurance as an asset class. The massive mind shift it took to understand this did not happen overnight.

[Do not mistake asset class to mean investment class.]

It's the only asset class that stews in a tax-free bucket.

I would consider it a life savings account, more than an investment.

It's permanent life insurance with a savings component, and with a generational legacy piece. In terms you might understand, it's like buying a house with the goal to start earning equity. When you say goodbye to that house, you hope that you made more than you put in. If the market's up when you sell, and you funneled some money back into your property to plump it up, you likely did well. If you didn't add anything to it and you didn't sell at the right time, you might do ok.

With cash value life insurance, you're guaranteed to do better than the amount that you put in. If you put money back into the policy to plump up your savings, you'll do fantastic. If you use your equity to turbo-charge the value, you'll be fat and happy. When your family says goodbye to you, you will leave them a legacy far beyond the value of what you've put in and far beyond the value of the dollar amount. You'll have given them a way to celebrate you and life without you.

If someone has extra cash flow and, also, their own ideas for capitalizing their money this makes sense. Entrepreneurs. Real estate investors. This is great for people who are proactive about making their money make money.

I've learned that lazy money is a thing. If you don't what that is, it's because you aren't actively trying to make your money, make money. You might be relying on someone else to do that for you. I didn't know what I didn't know either. What I've learned is that there is a cost to lazy money. The amount of money you can make when you try to make your money grow is multiples more than when your money is lazy. All this means is learn all you can about money.

The example I have is this; an investment firm emailed me about an investment with a return of 20%. They said it was a 3 or 4 year fund. That means your money is locked up for that period, no liquidity. They targeted an IRR (internal rate of return) of 29%. I asked, "So you want me to divide 29% by 4years? That's 7.25/yr."

To this I went silent. Since being in this industry and being exposed to a high net worth network, I can tell you that 7.25 per year, IRR, ARR (average or actual rate of return) for one year means someone other than you are getting rich with your money. Period. You know the difference between a retail deal and a wholesale deal? That investment is for people who don't know any better. A typical retail consumer.

Why? 

Because access to money/equity, means control.

One thing is certain; this is the only place where compound growth in its true form happens in a tax free bucket. The true form being, uninterrupted compound growth that's not hindered by typical wealth erosion.

What is wealth erosion?

Interest fees. Advisor fees. TAXES. Inflation. Planned obsolescence.

TAXES. When you start studying how much of the money we make is shared with the government it's daunting. Start thinking about how many times your money gets taxed. It's incredible.

The money you make is barraged by constant costs imposed by the government and financial institutions.

You know this but really let it sink in. It's not the money you make, it's the money you keep.

It launched me into questioning our own family economics despite the years of work experience I had in banking, real estate and having our own investment portfolio.  I still didn't know what I didn't know.

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My Bookshelf

Some of the books that I recommend.

See my required reading list.

Links

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I am your advocate for sorting out how passive investments, cash flow and insurance are used as  tools for wealth.

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