Thursday, May 21, 2020

401k Employer Match - Food for Thought

"Any necessary change in your life will involve the way you think and your willingness to change the way you go about it." - Nelson Nash

I'm thinking about 401k's and the match some people receive from their employers and I wanted to share this thought with you.

If you stop to really think about it, the employer match to a 401k isn't "free".  It's certainly nice to think of it that way.

However, if you're thinking like a business owner, the truth is that is that match in a 401k plan is really part of the employee overall financial package.  It is part of your overall gross pay.

Some employers provide really great benefits and the trade-off is a lower salary.  It's no different with a 401k match.  The match is a benefit but ultimately it is part of your compensation package.

There is no free lunch.  Period.

Whether you choose to accept it is entirely up to you.

Think of it like a gift card.

Businesses love gift cards because many gift cards are never used.  Some get tossed without ever using the entire balance.  This is especially true with gift cards that may have an expiration date.  That's money the business can eventually re-purpose elsewhere.

When you don't opt to take advantage of the 401k match, that's part of your compensation package you're leaving on the table.

Just don't consider it free.  It's yours... if you want it.

The big question: is the match worth it?

Instinctively, yes....right?

If you understand and practice Infinite Banking, there's definitely more debate about the merit of the 401k match however.

After all, accepting the match means locking up your contributions until age 59.5.  That's money no longer in your control, prone to losses, 2-3% in 401k and mutual funds fees per year (smaller companies have the most excessive fees due to economies of scale), and ultimately a permanent tax lien upon withdrawal.

Also, that employer match potentially means you'll have more in your 401k account.

Great, you say but you will also have a higher probability of paying a larger % of taxes upon your withdrawal.  That match is essentially extra revenue for the IRS. 

(This is simply human nature to pursue self-interest, not conspiracy-- when Wall Street earns a guaranteed fee on every dollar you contribute for the life of the plan and the government is waiting to collect their portion, too, do you ever stop question their motive in recommending you be all-in on maxing out your 401k?)

Suddenly you begin to realize the match isn't really a 100% no brainer like conventional wisdom would want you to believe.

It's my experience that the prevailing convertional financial wisdom has a way of leading people into financial bondage instead.  This is what happens when society turns to government solutions instead of figuring things out on our own.

Government, banks, and Wall Street absolutely all have something to gain by your continued participation.  The wise consumer will look to protect their money from prying hands (fees and taxes) by looking at every dollar they save as their own personal property.

A 401k/IRA is bit of lobster trap if you ask me.  (Understatement of the year.)

If you decide there's no other choice than a 401k or IRA, it will be the best you can do.

But is it the only option?

Of course not.

IBC proves this because it is a private contract between two private entities, you and a mutual-based life insurance company (owned by you-the policyowner!).  When you capitalize your own pool of money within a dividend-paying Whole Life policy, you're actually choosing a tax-favored property that when used properly can help minimize taxation and grow wealth uninterrupted, even while you use the money elsewhere!

The more you learn about IBC the more you will actually be forced to think like a business owner.  Whether you run your own business or not, you must realize there are 2 businesses you should participate in.

The first business is currently what you do for income.  The other business should be the eternal business of banking.   You are already a bank consumer.  The difference is you shop at a bank you don't own or control.  Might as well understand how banking works so you can benefit from acquiring your own pool of money to build your wealth.

It's a pretty simple solution to life's biggest financial problem (the ability to save more than you spend) once you realize there is another option than a 401k.

Pop Quiz

1. How much money do you save each year?
2. How much do you spend on fixed expenses (car loans, rent/mortgages, taxes, vacations, tuition, etc) each year?

Are you saving more or spending more?

The average person spends 3.5x more than they save but they have been conditioned to focus on the smaller amount never realizing they have the ability to take control of the larger amount to create wealth.

Pick up a copy of Becoming Your Own Banker by Nelson Nash if you haven't already.  It is an essential starting point to guide you on a path of your own making, towards a financial lifestyle that you ultimately can control by eliminating the IRS, banks, and Wall Street from your life.

"Action is preceded by thinking.  Thinking is to deliberate beforehand over the future action and to reflect afterwards upon the past action.  Thinking and action are inseparable.  - Ludwig von Mises

Thank you,

John Montoya

Wednesday, May 20, 2020

IBC Mailbag: 3 Ways To Access Money from a Whole Life Policy

The following is an email reply to a new client requesting to access money for the first time.  This client emailed me requesting to "withdraw" money to pay off a car loan.

Hi ______,

So I’m going to be a bit of a nerd here because I want to be sure we are using the correct wording/terminology.

The best way to access funds is via policy loan because it doesn’t interrupt the compounding effect of the money in the policy and it is also a non-taxable event.

Withdrawing money physically removes your own money from the account and interrupts the compounding effect. 

I explain accessing money from a Whole Life policy this way to keep it simple:

There are 3 ways to access money

  1. The Sad Way
  2. The Dumb Way
  3. The Smart Way

The sad way is you pass away and the beneficiary gets the death benefit.  Let’s avoid that for as long as possible!

The dumb way interrupts compounding growth. 

The smart way, as mentioned, doesn’t interrupt the compounding growth of the cash values and is tax-free.

Utilizing the "Smart Way" allows you to be your banker.  You are essentially replacing the car finance company from the equation.  All the payments you would send to the car finance company will now be returned to your banking system (the whole life policy) where it will earn a guaranteed tax-free rate of return for the rest of your life!

All of this is possible by becoming your own banker through a dividend paying whole life insurance policy.  Why pay other financial institutions when you don’t have to?

So all that shared, it will take 3-5 business days upon request of the loan to see it in your checking account.  You’ll need to provide the insurance company with a voided check if they don’t have a checking account on record for you.  Also, I strongly recommend setting up a monthly draft for the policy loan repayment for at the least same amount you were sending the car finance company.  It's important to be an honest banker with our own money.  Please refer to the Grocery Store analogy in the Nelson Nash's book Becoming Your Own Banker.  I can help explain the analogy further if you like.

If I can assist with anything I’ve explained here, please let me know.  You can reach me here:

Thank you,


Sunday, May 17, 2020

The Best Place for Money: The Misunderstanding of Whole Life Policies

FOREWORD: Keep one thing in mind before you read my latest blog post.  Failing to understand the mystery of banking doesn't prevent it from actually working.  A banking system will work whether you "get it" or not.  Even from my own personal experience, the biggest hurdle to IBC is the paradigm shift in thinking.  I completely acknowledge IBC is the opposite of how we are taught to think about money.  Failing to fully understand how IBC works is a reason some people never get started with IBC which is a shame.  I've written this post for those who struggle to "get it".  

My parents raised me with a passport savings account and “cashed in” my Gerber Baby whole life policy surrendering it at age 18 so I’d have some additional spending money when I went away to college.  Most people are handed down the same sad lessons that seem like good common financial sense at the time. 

What we fail to learn about money is that the business of banking is the most essential and eternal business that exists.  There will always be a need for banking.  Unless we solve for our need to bank (access large amounts of capital on our own terms), we must rely on the traditional banking system to handle it for us.  Nelson Nash, creator of Infinite Banking, said we all should be in two businesses:  whatever we do for income and the banking business.  I believe he was right.  Alas, not even 12 years of mandated public schooling or higher education teaches us anything about the essence of banking.  Sad.

It’s rather ironic to me now.  We are taught at an early age to trust the bank with its perceived safety (FDIC is underfunded) and borrow from the bank (we are consumers after all, yet we shop at a bank we don’t own).

At what age do we begin to realize we are just borrowing back our own money – pooled together with other depositors? 

We are also taught we don’t need life insurance except to replace income and the narrative says life insurance is the worst place for money.  In actuality, the life insurance industry is a safer place for money than banks.  It’s telling that banks keep their tier 1 reserve assets in ultra-safe, ultra-liquid Bank Owned Life Insurance (BOLI) policies and turn around to recommend CD’s and mutual funds to us.

Beyond just replacing income in the event of premature death, properly structured whole life policies also provide an immediate and available source of capital which can be used for an “infinite” number of reasons for all of life’s milestones.

No need to ask bank loan officers or 401k administrators permission for a loan.  And IBC is all accomplished while earning a guaranteed and compounding tax-free rate of return.

As Nelson repeated over and over again during his lifetime, "Eliminating traditional banks from one’s life is the most stress-free way of living."

It’s a strange thing that IBC has worked for so long hiding in plain sight and without the layperson actually having to know very much of the inner workings of a Whole Life policy (contractually guaranteed and 170+ year history behind it) but it does require a leap of faith into the unknown.  This was true even for me when I started my 1st IBC policy, a tiny $2300 a year policy because I thought it sounded just a little too good to be true.

I think the worse thing about IBC is that it uses a Whole Life policy as the account of choice.  It’s too easy to get hung up on the life insurance death benefit aspect and not see that a Whole Life policy works better than any other place for money (see chart above).  This is because a Whole Life policy replicates a traditional banking system in the most essential ways.

Sometimes learning requires the use of imagination.  I'm sure you are aware Shakespeare wrote “all the world’s a stage”.  If we are to use our imagination and look upon the business of banking as a play, you’d recognize four characters in the play are the same as with Whole Life:

  1. Depositor (Saver) – someone needs to save the money which is what we call capital.
  2. Debtor (Borrower) – there’s always need for money (cars, college, taxes, medical expenses, investment opportunities)
  3. Admin (someone needs to run the business operation)
  4. Bank Owner (Policy Owner) – someone will profit from a person’s need for capital (might as well be you and me)

We are playing 3 of the 4 characters in this play anyway.  Might as well call a Whole Life policy what it truly is:  a cashflow management system.  

If having a death benefit throws you for a loop, please realize the death benefit of a Whole Life policy merely ensures that the money in the policy is tax-free as it grows, is used, and ultimately tax-free again when it passes on to the next generation.  Congress has made it so.  It is all perfectly legal.  In fact, as mentioned Whole Life policies have been around a longer than the Internal Revenue Code (created in 1913 and expanded ever since).

The employees of the life insurance company (as with a traditional bank) do all the work to make Whole Life function.  No luck, skill, or guess work on our part. 

Time, money, and discipline do the rest.  (and perhaps a little bit of faith in getting started at first!)

If Congress passed legislation calling IBC designed Whole Life a 7702 Account (…that’s the actual IRS tax code about tax-free life insurance cash values) making it as mandatory as owning health insurance, society would be better off. 

Actually, a better name for IBC would be to call it an HSA account because it does what a tax-free HSA account does but better… because IBC has the whole life engine to give cash uninterrupted growth, collateral capacity (ability to take loans and repay on a flexible schedule), and of course a death benefit to pay off any outstanding loans at death.

Banking interests will never allow such a law like this though for good reason.

After all, why would people borrow from a traditional bank if they knew they could borrow all the capital they needed from their own banking system on a tax-free basis while earning a compounded rate of return?  The need for traditional banks would evaporate in short time and so to all the major conflicts in the world...

To understand the essence of banking, watch this Youtube clip from the movie The International:
Entertaining movie, by the way.

Are you ready to be your own Banker now?

To learn more and even get your first IBC policy started, you can find me here:

Thank you,

John Montoya

Friday, May 1, 2020

IBC Mailbag: How Safe Are Life Insurance Companies?

The following is an email I sent to a prospective client with nearly $500,000 in bank CD's who was requesting assurances on the safety of his money if he purchased a contract (life insurance or annuity).

I’ve attached an article I’d like you to read about the solvency of the Life Insurance industry.  (Here's the link:

Regarding the FDIC, it has an interesting history if you study it.  It was created during the Great Depression to alleviate people’s fear for a “run on the bank”.  Banks don’t keep the money you deposit in a vault.  They lend it out right away to earn interest.  Furthermore, banks have the ability to create money out of thin air.  This is called Fractional Reserve Banking.  Banks basically keep no more than 10% of your money on deposit, lend the rest, and thru Fractional Reserve Banking can even create more money out of think based on your deposit.  (Sidenote: due to the pandemic the Federal Reserve has actually lowered bank reserves to 0% meaning they don’t have keep any of our deposits on reserve!)

Think of how mortgages are created.  Banks don’t actually have the money but a signature on a mortgage note creates that money out of thin air.  Then people pay interest to the banks on money that has never existed before.   This is the true definition of inflation (the creation of new money).  Most people confuse inflation with the price of things but that’s actually the end effect when there is too much money in the system which forces prices up over time. 

So FDIC is a government created agency to backstop banks in the event there is a run on the bank panic.  However, the FDIC is actually insolvent.  It has maybe only a $100 billion in assets and this amount insures over $10 trillion in bank accounts across the US.  That said, the government could have the Federal Reserve print more money for the FDIC to bailout people’s bank accounts so there is that.  But for assurances, think about a bankrupt government with an agency (FDIC) that does actually have enough assets to provide a full reserve (that is restore all your money in the event of a bank failure).

The point is that FDIC is sticker of confidence and FDIC doesn’t actually have the money.  The government could make a person’s account whole but if it actually came to that, the money would not be worth as much because of the mass inflation it would cause with all the money printing.  On the positive, people trust FDIC and government to back up a failed bank system and that’s a good thing.  Otherwise, everyone would be running to get their money out of the banks and that would be a very bad thing for the economy.  So it works but it’s built on a very flimsy premise of trust. 

You can read more about how Fractional Reserve Banking works by reading a book called The Creature From Jekyll Island.  Great book.  You can find a link to the book on my website here:

The life insurance industry in comparison puts the banking industry to shame because the life insurance industry operates as a Full Reserve system.

By law, all life insurance companies in the United States must maintain 100% solvency (more assets than liabilities) at all times.  Industry average per life insurance company is 105%.  That means if every life insurance company had to pay off what’s owed, it would still have money left over to continue business operations. 

Also, life insurance companies cannot create money out of thin air.  They are inherently a safer place for money because of this but because people don’t know how the life insurance industry is regulated by law to be a full reserve system, people don’t think of a life insurance industry as a place to park money when it absolutely should.

Since 100% solvency is required by law for life insurance companies to operate, there is no federal safety net like FDIC required for life insurance companies.  In fact, no one who has ever purchased an annuity has ever lost a dime.  That is a fact the life insurance industry goes to great lengths to ensure because the life insurance business is based on promises to pay claims and benefits.

All that said, each life insurance company has a state safety net of minimally $100,000 and as much as $300,000 that works just like FDIC does for banks.  Life insurance companies are regulated at the state level which is why the government safety net is determined by the state you live in.  When you purchase an annuity, you instantly have this safety net guarantee.

Hopefully this gives you some food for thought.  I’ve included an article from Forbes which discuss the safety of the life insurance industry here:

Please let me know if you have any questions about assurances or any other topic I can help answer.  You can reach me at

Thank you,