All Forum Posts by: Matt Ruttenberg

 The mortgage company usually sells your information to these companies, plus it's public record on the deed.  

Unless you're financially independent outside of the mortgage, then you might need a regular term policy instead of one that drops based on the mortgage balance.

Quote from @Antuan C.:

Hey folks,

I started a Whole Life Insurance policy almost three years ago for the purpose of investing in real estate. Lately, I have been thinking on cancelling my policy and put that money towards maximizing my 401k and opening a Roth IRA. I have read most posts here about infinite banking, but I'm still not convinced it's a good investment vehicle. My agent is a big believer of the infinite banking concept, she introduced me to it and I read the book but when I compare it against ROI of the stock market, it's almost a no brainier that the stock market is a better investment. Also in my first real estate rental I was not able to use a cash value as a down payment, that's a big downside for me.

I put 30k a year towards the premium. Here's my tabular values (only showing the first 30 years). Should I keep it, if so, what's the ROI you are seeing, perhaps I'm running my numbers the wrong way, but I get 2% ROI, that's very little. If I should cancel it, what other investment vehicle do you recommend me to place these funds.

I would love to hear your input.

Thank you so much folks.

 "Infinite Banking" or "Be Your Own Bank" strategies are 100% not a replacement for long term investment accounts.  It's a means to another investment.  Or, to supplement other investments.  So comparing them isn't a good idea, you'll drive yourself crazy.

What I mean by that is you'll never keep up with the stock market.  It's a way to grow assets, then lend against those assets on your own terms.  

This is all assuming it's designed properly.  Looking at the illustration you posted (I know this is from 2 years ago, so hopefully it helps others) it looks it's designed properly.  You can see that when looking at the Cash Value... almost the same as the premium.  

A well designed policy SHOULD have the following features:

- Net 0% or "working loan" option.  Being able to toggle between the two are also a good idea.

- Paying interest in arrears and not in advance.

- Highly rated company that has a good track ready of dividends or indexing rates (in an IUL).

Every little interest rate % you tack on to the loan can hurt you in the long run.  

The most ideal situation is to use the policy to purchase a property, then pay it off with a long term mortgage of some kind. Wash, rinse, repeat. Then in the long run, you can utilize it as an tax-free income stream to supplement your REI.

 Betterment is 4.75 I believe right now.

 I definitely wouldn't do it.  I'm assuming you're interest rate is lower than the current, let's say 4%.  If that's the case, then you'd be missing out on compound interest on anything you make over the 4%... not to mention that lump sum of taxes you would have still been earning interest on.

Think of a pre-tax retirement account as an interest free loan from the IRS... drag that out as long as possible.

Also, the tax deduction on the interest is another bonus for not paying it off yet.

I would at the very most, increase the payment.  But that still isn't wise from an arbitrage standpoint.

I would look at Vanguard, Fidelity, etc. Keep it simple. I agree with the UTMA/UGMA option. The 529 just started to allow turning it into a ROTH IRA after a certain amount years unused for school expenses, but it's still somewhat restrictive.

I'm not a huge fan of children in an infinite banking setting because there are too many rules involve for children.  Most companies don't allow them to get a better rating than Standard Non-Smoker, and it's not optimized the way they should be.  I would wait for you kids to go that route until they are older.

Believe it or not, children's mortality tables are terrible, which is why they won't rate Preferred ratings.

This is a great post @Jessie Dillon!  This is basically a Buy/Sell agreement with your business partners and is a great practice.  It's like the Will of a company.  And to extend this a bit further, a Disability policy could also be considered.

The policy takes place of having to buy out the heirs your late partner with liquid assets.  The term insurance is a cheap alternative to protect your business/partnership.

My company and I are looking to partner with hard money/private lenders in our footprint: OH, MD, NC, SC, PA, GA, FL, VA, IL, MN, MI, NY, AZ (more to come).  I personally live on Oahu, so bonus points if you live here and work remotely!

We're a 401k administration company and speak with quite a few business owners and entrepreneurs daily. We often administer plans with REI, and also build plans to help fund REI and other business ventures through loans against their plan.

Many of the business owners are also looking to get into real estate investing or are already into REI. Most aren't too knowledgeable about what's available in terms of hard money/private lending, BRRRR, etc. Once we're off the phone, they're usually pretty motivated to speak with someone.

If you're open to a conversation about a reciprocating partnership, please message me!

@Nathan Woods IUL can be a great long term funding option for future deals.  Takes time to build up efficiently, but if you treat it like a lending partner (lend > payoff > repeat), it can help magnify your purchasing power.  

The key is to make sure it's structured properly with the internal costs.  Keep the death benefit low to promote cash value growth.  Look for a net 0% loan rate, or "participating loan".  Paying interest in arrears is another subtle piece that can help maximize the cash value.

Feel free to reach out with other questions on the IUL.

@Rocco Talarico

I can help you with this if you like?  Another book btw to reference on the IUL side would be Look Before you LIRP.  It explains what a properly designed IUL looks like.  

Don't forget to look at the loan provisions on the tail end as well.  Need to find a net 0% loan.

Feel free to reach out if you want to chat.  I am licensed in NY, but not local to there.  Link to my site is below in my signature line.  Have a PDF on there that explains optimized policies.

I would have to agree!  The benefit of using a properly designed policy is primarily being able to utilize the cash value for real estate investments, investing in businesses, etc. outside of the policy.

In addition, it's a good idea to use it as a supplement to your 401k, IRAs, REI, etc. The tax benefits make it an even more attractive vehicle. However, I wouldn't try to compare it to traditional investments.

In short... it's a piece of the pie!