Banking on Yourself

Understanding Leverage

What Creates Balance in Leveraging

Interest and Dividends

Compounding interest creates a future value, example: How much will $300 be worth in 2.5 years if the interest rate is 3% compounded quarterly?

Every bank operates on this concept.

 FV = $300 × (1 + .03/4) ^ (4×2.5) = 323.27

A dividend is a payment made by a corporation to its shareholders, usually as a distribution of profits.

Knowing the performance of your investments is very important.

Leverage is the investment strategy of using borrowed money: more specifically, the use of borrowed capital to increase the potential return of an investment. Leverage can also refer to the amount of debt used to finance assets. So, if your cash is earning interest and a dividend and you loan it out for the same amount of interest now you have compounded or (doubled) your earnings.

When banking on yourself depending on the options you chose and the guarantees within your policy, minimum interest receive will be stated.

Objective

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Everything I just mentioned in this section of Banking on Yourself is part of Financial Freedom. Use the RED Links

You make an investment into a policy that provides an estate as a death benefit to your family. More importantly it provides interest and dividends on the sum total of all your deposits, less premium, and allows you to borrow against the death benefit amounts for investment purposes and you control what when and how these investments are done.

So, the lesson here is how to make investments wisely.

The banking information is to show you how Your Bank can do the same as the large banks, without their help or cost. Use retail banks for daily business transactions. Not to finance your assets for estate building.


Private Banking Will Change Your Financing Forever

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Earn Cash on Cash

Cash-on-cash return is a rate of return often used in real estate transactions that calculates the cash income earned on the cash invested in a property. For example, when an investor purchases a rental property, she might put down only 10% for a cash down payment. Cash-on-cash return measures the annual return the investor made on the property in relation to the down payment only.

If you are the lender of the 10% down, you just leverage your own cash.

Passive Cash Flow is earnings an individual derives from a rental property, a limited partnership or other enterprise in which he or she is not materially involved (not a job). As with non-Passive income (a job), passive income is usually taxable; however, it is often treated differently by the IRS and requires less of your time to earn.


Securing Your Assets

Minimum Estate

If you don’t have a large estate, then a death benefit insurance policy will suffice. Life insurance policies are used for: business key personnel, family security, and to pay taxes on inheritance. Ultimately, we want to minimize of federal estate taxes, and estate planning techniques are used to meet specific goals.


Providing Security

Death Benefit is the face amount on a life insurance policy, annuity or pension that is payable to the beneficiary when the insured or annuitant passes away. Alternatively, a death benefit may be a large lump-sum payment that is non -taxable to the beneficiary

Long Term Care refers to a continuum of medical and social services. Assigned to support the needs of people living with chronic health problems that affect their ability to perform everyday activities. Long term care services include traditional medical services, social services, and housing.

Critical Illness is a life-threatening condition, which is strictly defined.

Most critical illness policies provide for the payment of a lump sum benefit out of the death benefit proceeds.

Terminal Illness is an incurable disease that cannot be adequately treated and is reasonably expected to result in the death of the patient within a short period of time.

These security benefits can be drawn from the death benefit as needed with the proper assessment from your primary physician.

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Evolution or Revolution 2020 – Retail Banking by PWC

Powerful forces are reshaping the banking industry. Customer expectations, technological capabilities, regulatory requirements, demographics and economics are together creating an imperative to change. Banks need to get ahead of these challenges and retool to win in the next era. Banks must not only execute on today’s imperatives, but also radically innovate and transform themselves for the future.

Each bank needs to develop a clear strategy to deal with this transforming landscape. They need to create agility and optionality, to adapt to rapid change and future uncertainty. Yet, whatever the chosen strategy, success will come from successfully executing the right balance. The challenges are clear, even if the ultimate endgame is not.