Wednesday, July 17, 2013

Creating Wealth Is Easier Than You Think: Learn To Overcome Parkinson's Law

Parkinson's Law says if you give a person a job to do and tell them it has to be done in three days, you can bet it will be done late on the third day. You can assign the same job to another person and allow 30 days for its completion, and it will take 30 days. Another example of Parkinson!s law is, “expenses rise to equal income.” In other words, when a debt is paid off, the freed up cash flow is quickly absorbed by a new definition of necessities and you are no better off than before.  


Once you have this ability to save more, the first logical question to be asked:  Where is the safest place I can save money that will give me access to it as I need it?  The second question should be: AND what other benefits can I get for parking my money there?  The answers to these 2 questions can be found by reading Becoming Your Own Banker by R. Nelson Nash or Pamela Yellen's Bank On Yourself.  

Accumulating wealth isn't rocket science (or theoretical physics if you're particularly extra nerdy), you just have to change how you've been taught to think about money.  How we think influences everything we get in life.  

Have a car loan or credit card debt you'll be paying off?  Did you get a raise at work?  There's a lot to be excited about.  I'm convinced you'll celebrate even more if you can add some long-term thinking into your planning.

To learn more about you can best overcome Parkinson's Law and start building wealth without risk, please consider purchasing the above mentioned books.  As an authorized Bank On Yourself Advisor, I can help answer your questions and fill in the details for a plan that's right for you.

John Montoya

Wednesday, July 3, 2013

Is A Whole Life Insurance Policy An Investment?

The answer is unequivocally no.

The agreement between the insurance company and the Whole Life policy holder is a contract, and therefore governed by contract law. The guaranteed values in the policy are guaranteed by contract. These guaranteed values do not earn interest inside the policy. They are there because that is what the contract dictates. By contract, therefore no market risk, so not an investment.

Dividends, however, are not guaranteed. The dividends are paid at the end of the year based on the performance of the insurance company. The mutual companies that I am familiar with have paid dividends through bad times and good, many paying better in poor economic times than in good. Yet, dividends are not guaranteed, and while market risk may factor in, the performance of the insurance company is not really dependent on market risk. If conditions are such that no dividends are paid, then the guaranteed values are still there, increasing by contract. Again, no risk of loss, and still a guaranteed gain.

That said, a Whole Life insurance contract is something that is economically more valuable than any other type of investment.  Owning at least one contract per household is the single greatest way to grow your net worth safely and securely without market risk for the rest of your life.  If you are savvy, you'll realize why you'd want more than just one.

I view my whole life policies as a warehouse for wealth which is what Nelson Nash, author of the self-published best-seller Becoming Your Own Banker, refers to it as. It is the only place one can put money that creates multiple economic uses of the same dollar and it does so with safety, liquidity, and total use and control over your money.  

In the proper perspective a Whole Life policy is a personal monetary system.  It's the financial engine through which your money can and should flow.  The challenge is fundamentally changing the way you think about how you currently bank!  

Everyone one of us is taught to channel our money through a traditional bank like Bank of America and Wells Fargo.  If you actually stop to think about the lifetime of wealth you funnel through the banks, you'll begin to understand your current financial predicament.  You give up control of your money so that it flows away from you your entire life.  Isn't it time to wake up and realize this is happening to you?

An Infinite Banking designed Whole Life policy way reverses the flow of your money from outward to inward.  

Focusing on rate of return is silly when you think about your money in the proper context because if you are like most people (let's face it, you are most people!), you are only focusing on the small amount you are investing (Most people confuse investing with saving.  There is an important difference. Investments lose value, savings don't).  You have your blinders on and you're forgetting the rest of your paycheck you bring home.

The first step is realizing that you finance everything.  When you pay cash, you are simply self-financing because you are giving up the ability to earn interest on your cash from that point forward to the rest of your life!  Once you eliminate the interruption on the growth of your money while also stopping the payment of interest to others, you will improve your financial situation greatly!

The first thing you should do is establish a foundation for your wealth.  A Whole Life contract because of it's guarantees is that foundation. It is not an investment that jeopardizes your principal.   The next step is understanding that you need a system for your money to reverse the direction of the flow of your money.  A Whole Life contract provides the solution there as well because it creates an asset that you can collateralize in a very tax-friendly way.

As Nelson likes to point out, there are only 4 rules you need to follow:
  1. Think long-term.
  2. Don't be afraid to capitalize. (The more you save, the more options you have)
  3. Don't steal from yourself. (Pay yourself back with interest)
  4. Stop working with banks. (They are the source of all financial problems)
Contact me to keep learning.  You can visit

Or if you would like to connect with me to answer questions right away, please call me at (925) 386-6639.

-John Montoya