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Controlling The Banking Equation
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Controlling The Banking Equation

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Private Family Banking

Private Family Banking

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  • 1. Your Investments
    Controlling The Banking Equation
    Ron Doerksen - SUSTAINABLE FINANCES
  • 2. How banks make money
  • 3. The Process
    Seller
    House
    Car
    6%
    7%
    3%
    BANK
    YOU
    100K
    Dealer
    8%
    11%
    Visa
    House
    Remodel
    3%
    Debt
    Consolid.
    Contractor
    4%
    5%
    8%
    ______
    20%
  • 4. Getting In The Drivers Seat…
    By becoming the “bank” you recapture
    not only the cost of the purchase,
    but the interestnormally paid to the bank
    and other financial institutions as well.
  • 5. Capitalizing the bank
  • 6. Key Requirements
    Safety
    Liquidity
    Return %
  • 7. What Can We Use For A “Bank”??
    Let’s look at some options
  • 8. Grandma’s Feather Bed
    Safe: More or Less Liquid: Very ROR: Nope
  • 9. Certificate of Deposit
    Can You Bank On It?
    Safe: FDIC Liquid: Penalties ROR: Small
  • 10. Real Estate
    Money In YourWalls
    Safe: Less and Less Liquid: Not Very ROR: Hmm!
  • 11. “Personal Bank”
    This type of account offers the following:
    Tax Deferred Growth
    TAX FREE income
    Access to the money (liquidity, use and control)
    Safety
    Unlimited Contributions (no IRS involvement)
    Competitive rate of return
    Creditor Proof
    Passive Income (for the Golden Years)
    Ease of transfer at death
    No Probate
    Earns money even when loaned…..this is HUGE!
    Stock Market
    Presentation
  • 12. A product as old as dirt!
    InterestBearing
    Dividendpaying
    Permanent
    Whole life
    Insurance
  • 13.
  • 14.
  • 15. Business Owners
    The banking system is wonderful for personal use, but for business owners it even gets better.
    Reduce taxable income
    Reposition money from the business to personal on a tax advantaged basis
    It may be better than a qualified plan i.e. IRA, 401(k), profit sharing plan and so forth.
    Recapturing ALL the costs and interest associated with purchases used for your business.
    All without dramatically changing what you normally do in business!
  • 16. Business loan:
    Let’s look at a business loan for your business.
    You loan your business $100,000 at 12% interest.
    You are in a 35% tax bracket.
    This is an interest only loan for ease of illustration
  • 17. Traditional verses Infinite Banking
    • Traditional
    Borrower
    Depositor
    Bank
    LOAN
    REPAYMENT
    • IBC
    LOAN
    REPAYMENT
    Business
    Your “Cash Cow”
    LLC
    Sub-S
    YOUR BANK
    (INSURANCE POLICY)
    YOUR
    Family
    LOAN
    $ @
    12 %
    Loan $
    @ 6%
  • 18. Tax Reduction Strategy – Interest ONLY Loan
    YOUR BANK
    (Insurance Policy)
    Family Bank
    Business
    LLC
    S-Corp
    $100,000 @
    12% interest =
    $12,000 per year in interest
    $12 K
    $6 K
    Schedule B $ 12,000
    Investment income
    With IBC
    K – 1 is reduced by
    ($12,000)
    Increase taxes ($4200)
    $6,000 Interest Paid
    To YOUR BANK (Insurance Company)
    Schedule A ($6,000)
    interest expense
    Taxes reduce by ($4200)
    Tax Deduction ($2,100)
    “Opportunity Funds”
    $ 2,100.00 tax savings
    +$12,000.00 paid from LLC
    $14,100.00
    Deposited into your bank(s)
    Effect on 1040 ($2100) Tax Reduction
  • 19. Paying Cash
    Many business owners pay cash for equipment to avoid finance charges, which
    is the best alternative until the IBC method is understood.
    Question:
    If I was going to sell you stock in a company at $100.00 per share and then
    guarantee you that in 5 years it would be worth $40.00 per share,
    HOW MANY SHARES WOULD YOU BUY?
  • 20. Paying Cash
    Paying cash for depreciating equipment is like
    buying stock that is guaranteed to go down. Not only does paying
    cash take away opportunity, but in addition
    the equipment will go down in value……guaranteed!
  • 21. Your
    Family
    Bank
    The Alternative…
    BE THE BANK:
    Recapture the total purchase price
    Recapture and pay yourself the interest
    Deduct and depreciate the equipment
    Reduce your overall taxes
    Use the funds over and over again
    Redirect funds for retirement use
    Creditor proof your assets
    Be in control
  • 22. Two Businesses
    You should be involved in TWO businesses…..
  • 23. Two Businesses
    You should be involved in TWO businesses…..
    Whatever it is you do for a living….AND….
  • 24. Two Businesses
    You should be involved in TWO businesses…..
    FINANCING whatever it is you do for a living!
  • 25. Two Businesses
    You should be involved in TWO businesses…..
    And of two the banking is the most important to understand!
    “The key to wealth is the
    Banking business.”
  • 26. Again…..Do exactly
    What you would normally do
    in the course of Business
    But add the twist…..
    this time Be
    the Bank!