Increase Your Returns on Real Estate and Other Investments
Where do you get your hands on the cash necessary for making investments in things like real estate? Common answers to this question are:
- Savings account
- Liquidating other investments
There is opportunity cost associated with these methods of acquiring the necessary cash to make investments. Let’s say you have $50,000 in 4-week T-Bills, earning 1.7% interest. You sell those treasuries and use the $50,000 for a down payment on a rental property. The opportunity cost is the 1.7% interest you’re no longer earning on that $50,000 in T-Bills.
There is a better place to store your cash that reduces the opportunity cost seen with the above methods:
Let’s say you had $50,000 of cash value in a whole life insurance policy. You could take out a guaranteed policy loan against that $50,000 to use for the down payment. The policy loan would be paid back from rental income (just like you would have paid yourself back that $50,000 in cash).
During the time you’re paying off your policy loan, the entire $50,000 of cash value is still accruing guaranteed compounding interest.
Your money is positioned (“stacked”) to perform two jobs at once! Congratulations, you are now providing your own banking services.
To see an actual financial illustration of a real estate deal, please watch the below video.
(Video Source: Truth Concepts)
Our mission is to help your family and/or business realize its full financial potential. We help identify areas where money is getting away from you in the form of opportunity costs (taxes, fees, inaccessible cash) and bring that money back under your control.