How to Build Lasting Wealth

 In Infinite Banking Concept®

In a previous post, we discussed developing a financial infrastructure and automated system to capture your wealth before it is exposed to Parkinson’s Law. Parkinson’s Law states, “When our income rises, our expenses will rise to meet or exceed the increase in income.” In other words, the more money we make, the more money we spend.

Setting up a “Wealth Capture Account” and automatically transferring 10-20% of money that enters your account is a great system that ensures you pay yourself first and combat Parkinson’s Law. Now, you have successfully created an infrastructure and automated system to thrive with your finances.

One of the major factors that impacts our wealth is what we spend our money on, but even more importantly, how we finance the things we spend our money on.

If you have ever read Rich Dad, Poor Dad by Robert Kiyosaki, you will recall that the wealthy spend their money on cash-flow-producing assets, like rental real estate and businesses, the middle class spend their money on doodads like cars, boats and vacation homes, and the poor spend their money on items necessary for survival, like food, clothing and rent.

It is extremely important to consider how we pay for major ticket items and fund investment opportunities to really see how this affects building and growing your wealth.

When it comes to bigger purchases, like a down payment for a home, buying cars, paying for college, funding unexpected emergencies and using money to capitalize on investment opportunities, we finance everything we buy, whether we pay for it with cash or borrow money from others.

Let’s look at three ways to finance large purchases or investments.



The Saver

The first way to finance large purchases or investments is to save money and pay cash for the item or investment. The reason that you’re still financing this purchase or investment is because of opportunity cost. By paying with cash, you’re giving up the opportunity to earn interest on the money if you didn’t spend it all on the purchased item.

In the diagram above, we can see that the saver in this particular example saved for three years, and then used all of his money to finance his purchase or investment. Then, it takes him another three years to save up the same amount of money. His opportunity cost is the lost interest he could have earned on his money (think compound interest) if he didn’t use it all to make the purchase.

For purposes of explaining the concept in a very understandable and uncomplicated way, I didn’t discuss the interest the person would earn during the accumulation time frame in the first three years, and then again for the next three years as he starts to rebuild his savings after purchasing or investing the money. I understand that the saver would earn interest during the savings build up phases but he losses the compound interest opportunity by spending it all after year three in each build up phase.



The Debtor

The second way to finance a purchase or investment is borrowing the money upfront and paying back the principal and interest to the institution that provided the loan. Keeping the diagram simple, we can see that the person borrowed the money in the beginning and then paid it back over the course of three years.

Financing purchases in this manner, the borrower pays interest and loses the opportunity to earn interest on the money paid towards interest. The lifestyle of this person is to buy things before he or she has the money to afford them, and works just to get back to zero balance.

In R. Nelson Nash’s book Becoming Your Own Banker, it is estimated that the average household spends 34.5% of money coming into the household on interest payments alone.

The total outstanding American consumer debt in the U.S. has risen to $3.34 trillion. That figure includes: $900 billion in  auto loans, approximately $901 billion in credit card debt, personal loans, and $1.2 billion student loan debt. There is approximately $8.17 trillion in mortgage debt, bringing the total debt to around $11.86 trillion dollars. Many dollars are paid in interest to third parties in the American economy.

We help our clients with a Cash Flow Analysis to determine the interest they are paying to third parties, and to look at strategies to minimize “cash flow leaks.”



The Wealth Builder

The Wealth Builder has a “Wealth Capture Account” where he automatically deposits 10-20% of his income. He understands that building wealth is a process, and looks at the initial start-up savings phase like an entrepreneur looks at the start-up phase of their business. The Wealth Builder understands the value of cash flow, leverage, velocity of money and compound interest growth without compounded fees, as well as commission growth and compounded tax growth eating away his wealth.

The Wealth Builder leverages his cash value as collateral to borrow money at a similar or lower interest rate he is earning in his account, producing cash flow and enjoying compound growth. He does this again as soon as he has paid back the first loan to purchase big ticket items or pursue another investment opportunity. By doing this over and over again, he increases the velocity of his money working for him. The Wealth Builder has control over his cash flow.

His account produces cash flow and enjoys uninterrupted growth as if he had never used the money. The Wealth Builder has his money grow predictably and guaranteed with no downside as he purchased big ticket items, paid for college, funded emergencies and capitalized on investment opportunities with loans he had access to by leveraging his cash balance.

Through the Infinite Banking Concept, we teach our clients how to utilize a customized vehicle in order to become a Wealth Builder. The vehicle we use as a “Wealth Capture Account” for our Wealth Builder clients is dividend-paying whole life insurance designed according to Infinite Banking Concept specifications.

Combining high cash value, dividend-paying life insurance with the  Infinite Banking Strategies provides a guarantee of principle (protecting the downside), guarantees on the growth (a competitive and predictable long-term return), liquidity (immediate access to money through policy loans), tax-free growth and distribution (under current IRS law), avoiding probate when a policyholder dies, tax-free death benefit to heirs, flexibility, no contribution limits like 401K, Roth IRAs, no distribution limitations and the safety of insurance companies (four layers of protection).

The wealthy elite, political elite, corporations, and banking and financial institutions have used high cash value, dividend-paying whole life insurance from mutual companies for over 160 years in order to predictably build and grow their wealth every year, regardless of stock market crashes, the Great Depression and economic recessions.

Yours in purpose and prosperity,

M.C Laubscher


The information, opinions, and financial data presented are for educational purposes only and are not intended as investment advice. No guarantees are made as to the accuracy of the information provided herein. Situations can change from day to day. Every investor should do their own due-diligence to determine which investments are best for them.

You must assume the responsibility and liability for all decisions that you make on the basis of the information herein contained. Valhalla Wealth Financial, makes no warranties, expressed or implied, as to the fitness and accuracy of the information provided or for the results obtained by using the information. Those making investment decisions based on any of the information presented should do so in the knowledge that they could experience significant losses. In no event shall Valhalla Wealth Financial/Laubscher Wealth Management LLC be liable for direct, indirect, or incidental damages resulting from the use of the information.

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