Jim Oliver 0:00
But I looked at what our actual rate of return was versus what our platforms were telling our customers, their rate of return was. And now you would think those two things would be the same, but they weren’t. The platforms were telling my customers and me that they were getting 9.38% over the last 10 years. They were actually there kegger compound annual growth rate was a little over four, after fees, taxes, expenses, etc. It was then that I started to look at all of my clients and how much money or how they made their money, excuse me. And I found that there were two ways real estate in businesses. Now at the time, I didn’t realize. I mean, real estate is a business, right? So it’s real estate and businesses. And I started to study real estate and business ownership. And I shifted all of my focus to that, and how I was going to help my customers build wealth in real estate and businesses rather than in the stock market.
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J Darrin Gross 1:25
Welcome to Commercial Real Estate Pro Networks, CRE PN Radio. Thanks for joining us. My name is J. Darrin Gross. This is a podcast focused on commercial real estate investment and risk management strategies. Weekly, we have conversations with commercial real estate investors and professionals who provide their experience and insight to help you grow your real estate portfolio.
Today, my guest is Jim Oliver. Jim is the world’s foremost authority on the infinite banking concept and has dedicated his career to breaking the financial shackles that bind people in businesses to unnecessary taxes and interest expenses. And in just a minute, I’m going to speak with Jim about infinite banking.
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Jim Oliver 2:49
Thanks for having me. Darrin, I’m excited to be here and share with your audience today.
J Darrin Gross 2:54
Well, I’m looking forward to our conversation. Before we get started if you could take just a minute and share with the listeners a little bit about your background.
Jim Oliver 3:03
Yeah, absolutely. So I grew up in Los Angeles and went to school in the Midwest was a big change. And I decided because I grew up very poor, stood in line for government cheese, and lived in Inglewood, California, I decided that I was going to study money. So I went to school, became a financial planner, and set up shop in Denver, Colorado, and thought, Okay, this is great. And I studied everything I could find on money, and Wall Street, and everything that I can find like how to get rich in Wall Street. And after 15 years of doing that I didn’t say I was I was a quick learner Darren but I, I looked at our portfolio, and I had about $700 million under management. So we were doing pretty well. But I looked at what our actual rate of return was versus what our platforms were telling our customers their rate of return was. And now you would think those two things would be the same but they weren’t the platform’s were telling my customers and me that they were getting 9.38% over the last 10 years. They were actually there kegger compound annual growth rate was a little over four, after fees, taxes, expenses, etc. It was then that I started to look at all of my clients and how much money or how they made their money, excuse me. And I found that there were two ways, real estate and businesses. Now at the time, I didn’t realize. I mean real estate is a business, right? So it’s real estate and businesses and I started to study real estate and business ownership. And I shifted all of my focus to that and how I was going to help my Customers build wealth in real estate and businesses rather than in the stock market. I’ve been doing that 18 years
J Darrin Gross 5:11
no, I’m I’m interested in hearing more full disclosure here. I’m a son of a banker myself and I’ve learned a few things that just putting your money in the bank because I was told as a kid is not exactly the most prosperous way to, you know, take care of money. But so you were a broker then is that basically are a certified financial planner or what?
Jim Oliver 5:38
Yeah, I was fee-based financial planner, full service, you know, sit down, you guess a little bit I, you know, you I asked you questions, and you guess, and then I guess, and then we hope together that you’re going to build your wealth over a 20 3040 year period. And yeah, at all the all of the terms down, we had, you know, how much you needed to invest? How much time inflation and everything else and look at this and 40 years, you can quote, retire, which means to be taken out of service. And you shouldn’t run out of money based on the Monte Carlo method. That Yeah, I did that for 15 years. That’s all I you know, everybody was telling me that’s, that’s how people make money.
J Darrin Gross 6:28
No, no, it’s it’s to interest am I’m kind of curious, what was the lightbulb moment for you, that caused you to shift gears and, and then quit that?
Jim Oliver 6:42
Yeah, all of my clients that really, you know, that didn’t get lucky, right? They didn’t work at the right company at the right time, or, or something like that. All of my clients that didn’t get lucky, they built their wealth, with real estate, and business ownership. So why would we try to build somebody else’s wealth outside of that, and I really couldn’t find any good examples of somebody, middle income, upper middle income, you know, etc, that had built some great fortune in Wall Street. And it was a mentality of scarcity. And I like to think that I don’t live in that scarcity mindset. And and I think that I realized that the noise out there, that it’s designed to keep us in that scarcity mindset. So that was kind of the lightbulb moment.
J Darrin Gross 7:35
So when you when you realize this as a real estate and business ownership for kind of the path to actually creating wealth? What What did you where’d you go? What did you do? What did you do?
Jim Oliver 7:50
Yeah, that’s a great question, what I did is I started reading everything that I could get my hands on, going again, I was in Denver, at the time going to any real estate, seminar, course, anything that I could, could sign up for, and that I could attend. I started talking to my clients that built big real estate portfolios, or big businesses. I mean, I remember a guy that started a plastics business was a big influence on my next steps. And so I just started interviewing clients and interviewing people that had done it. And I just found, I just found a treasure of information. And then it came down to, it looks simple, might be simple, but simplicity is elusive. You know, it’s not it’s some of these techniques. And some of these systems are tried and true. But they take you know, they take work they take, they take education, so they’re gone from there.
J Darrin Gross 9:00
So what are some of the techniques and I assume that’s how we get to the infinite banking. Is that is that one of the, the concepts or the technique that people were using?
Jim Oliver 9:11
Yeah, I mean, I always ask people is, you know, Darren, if I would loan you $100 million today, and the or only obligation was to give the pay me $5 million of our $5 million of interest, one year from today. So you, you know, I’m going to give you 100 million today. And one year from today, you got to pay me $5 million of interest. Are you going to take the loan? Yeah, absolutely right, because you know what to do with the money. So let’s reverse that for a second. What if you made me the same offer and Darren, if you are making that offer, I’m I’m open to talking after the show. You loaned me 100 million bucks. I’m gonna go to the bank. The seller, and I’m going to get 80% loan to value. So I’m going to get another $400 million, I’m gonna buy $500 million of real estate, my standard, and we’re getting slightly better than this, but is 25% cash on cash. So I’m gonna make 100, I’m gonna make 25 million on because I got your 100 million in it right? And I’m gonna, and I’m gonna call you at the end of the year and I’m gonna say, hey, Darren, I’d like the fly out to Portland and buy lunch and give you a check. And we get together and you say, Jim, hey, do you want to pay any principal? And I say, No, see you next year. Right? That’s kind of how infinite banking works. And that’s what I discovered is people can find deals, I’m not saying it’s easy, but we can find deals, it’s putting the financing together, and it’s managing the debt. So how do we do that? Well, if we can control the banking function, which is what infinite banking concept does, then then we’re way ahead of the game. And what we what we do is we get alone, kind of, like I just said, we use a very special, specifically designed insurance contract that’s designed for cash value, it’s guaranteed, you have a right to borrow up to 100% of the cash value, right? With an interest only loan, and your money never leaves your account in this tax favored account. And the insurance company has to give you their money, kind of like I just said, Now it’s interest only. Now I can take that money, the insurance company’s money while my money is going, they’re growing tax free. And I can go and I can leverage that with the seller is what I would prefer, or a bank that wants to play with me. And I have control over that. More so than if I’m putting my money in, right. And so then as that that property starts to cash flow, I’m going to flow that money back to my insurance contract until my next deal. And then all of a sudden, I have multiple deals that are appreciating in value, cash flowing, I have money in my insurance contract that’s growing tax free, I have a loan against that, right. And when I have windfalls if I sell a property or whatever, I can put that money back into an insurance contract, but all of my cash flows back in there, which reduces my interest expense. And I just do it over and over and over and over again until the policy won’t hold the cash flow.
J Darrin Gross 12:52
Okay, so in a you mentioned, you’re kind of slow learner I challenge you on that because I know I’m a slow skier. But the basic concepts if I understand right, the the insurance contract is kind of the vehicle that provides the the in and out if I have a and I’m assuming these are life insurance policies is that
Jim Oliver 13:15
Yep, they’re especially like they’re they’re, they’re a combination of a paid up additions writer, which is like a one pay insurance policy, and a standard whole life policy. And the reason we use that is because there’s guaranteed growth in the whole life policy in the universal life, there’s not guaranteed growth. So it has to be a very specially designed contract. We write it right up to the mech line, which is the definition of life insurance over the mech line being too efficient means it doesn’t get all the tax benefits. So yeah, it’s a life insurance contract. But but it’s designed like a bank or corporation with design an insurance contract with Boley bank owned life insurance, or Kohli corporate owned life insurance is designed that way, not kind of how normally consumers buy life insurance.
J Darrin Gross 14:07
So so the policy is still underwriting your life presuming you’re, you’re healthy and in the premium amounts. track all that I’m assuming I mean, although it’s paid up policy, can you explain a little bit of that? I mean, so if we, if, if, if I had it, guess what, what’s a minimum amount that people usually start with to make this a viable option?
Jim Oliver 14:36
You know, it’s funny because when we think of buying insurance, we say, okay, we want a certain amount of death benefit, what’s the minimum amount that we could pay for that death benefit, right? But because of what we’re doing, then we people think differently on the funding level, so they don’t really think of it in minimums. They think of it in what cash flow. Do. I have Right now, either from my w two job, my properties or something else, that I’ll flow that money through the insurance contract first, instead of holding it in the commercial bank, I’ll hold it there until I need it for escrow for whatever it is, right? And so people start from 10 $20,000 a year to millions of dollars a year. In fact, let me let me give you an example. And then I’ll go back, there was another part of your question. I’ll remember here in a second, but we have a real estate investor in the Midwest that has about $120 million of real estate, that, by the way, they’ve done that in the last seven years. They, I mean, which is pretty amazing, right? And they’re escrows about $175,000 a month at the time, right? So what they they came back and they said, can I run that 175 per month through the insurance contract, then when I meet need money out for escrow, I’ll pull it out and and every month I just keep putting it back in. I said absolutely. So the difference for them is there’s a point around the fifth year maybe a little bit sooner, it just depends on your age and underwriting. But where every dollar you put in there, Darren, you have more than $1 to use. Right? So like in year 10, I might put if I put 40 grand and I might have 60,000 to use now if I’m running that, if that’s my escrow money, I just got a big discount, right? Because I got more money to use than I put in there. And so normally people buy life insurance where they’re letting it sit there it’s accumulating and again over 2030 years or whatever they say this is how much money I’m going to have. And then they say is that a good rate of return? Is that an adequate rate of return whatever it is, we’re using the money this is you’re exactly right this is just the place we park the money it’s the money pool it’s not infinite banking, that’s a process not a product Okay, so the insurance contract is it’s kind of like cogeneration the think about like up in your neck of the woods you know, you you might have a lumber lumber yard next to a paper mill your or something like that where you you know, you have wood and then you have paper and and they work together and so the insurance contract and then your behavior and the cash flowing assets. They all work together in concert. But now remember that the other question is you can buy here’s the cool thing. Okay, so I’m 56 I have some business partners that are all the way down to 24 that’s my youngest business partner. I can buy insurance on them because I have insurable interest I’m the owner and I’m the beneficiary they’re just the insurance they have no control over the policy but I can find bugs by cells I can you know I can I can make my business and my partners more secure and myself more secure what all while I’m becoming my own banker and controlling the bank banking function in my life.
J Darrin Gross 18:20
So that the vehicle is basically just a vessel quick in and out I mean you have maximum flexibility you put the money in you can take the money out up to 100% is that
Jim Oliver 18:30
Yep yeah and what here’s another thing because when we think of loans we think of approval processes or applications or anything there’s none of that they have to it’s a contractual right that you have to take that loan you literally sign a form and and and we we scan it to them and we literally can have your money I mean I’ve done it the same day but let’s just say by tomorrow.
J Darrin Gross 18:58
So, so Okay, so I get basically the the initial concept is the individual you you created in some sort of like a corporate structure as opposed to just a straight pay down or like a life insurance policy I mean, it’s more like this this vessel that has a maximum flexibility. So if I have a you know, income of 10 and I keep putting that in there eventually that that the the availability can grow beyond the 10 per month to where I can borrow more is that my tracking?
Jim Oliver 19:36
Yeah, absolutely. Because of and and it’s each year as you’re putting money in like so let’s just say that make the math easy, and I can think of the purse, the percentages in my head, if you put 100 grand then in by like the third per year, okay, so like by the third year you put 300 grand in, you’re gonna have a total cash value, but the way We look at it because it’s not sitting there, most of that money is probably borrowed out, is you put in 100 grand, maybe you have 107,000 to use in the third year, right? And it gets better every year. So we use it as a cash flow system, not an investment we’re setting letting the money sit there. So um, you know, this reminds me Darren that it’s it’s, it’s a it’s a mind shift. It’s a, it’s it’s changing our thinking it’s a different paradigm, but it takes a little bit of time for people to change that paradigm, because everybody thinks the life insurance, like other investments or savings vehicles, where you put money in there and let it sit, and then Okay, what’s my rate of return? It’s, it’s, it’s not that it’s, it’s really compared to like your checking account, because you’re gonna flow money in, you’re gonna flow it out. And in, in, basically, you’re like, collateralizing, your checking account, but your checking account in this example, is in a tax favored vehicle. So you can there’s literally, as long as you let Don’t let the policy lapse, you can never pay tax on it, again, on the growth or the access to it, there’s no tax on the death benefit to the next generation. So there’s legacy planning. And leverages, there’s a point in just a few years where you put in $1, and you have more than $1 to use.
J Darrin Gross 21:31
Gotcha. So so the leverage is not a an instant option, it’s, it’s, how long does it have to season before you can leverage that.
Jim Oliver 21:39
So like, I’ll give you an example, if you are a woman under 50, it leverages in the second year, I mean, it’s just crazy, because women live longer than men, right? If you’re, if you’re male, and you’re under, you know, probably 46 47, it’s gonna be right at 100%, maybe 99, you know, percent, some, I mean, right at 100 in the second year, and then the third and fourth year, it’ll start to leverage if you’re in your 60s, and I think our, we had a client that was 85, that started this when they were 78, or 80. On they unfortunately passed away. But if you were in your 60s, it might be the fourth or fifth year, maybe the sixth year before it starts to leverage. But again, if I’m in my 60s, and let’s say that I’m in poor health, but I have, I have a business partner, who’s in their 20s 30s or 40s, I can insure them or their spouse, I can insure my spouse if they’re healthier or younger, or you know, any of those things.
J Darrin Gross 22:53
Got it. And the the, I guess the it’s the end, I mean, if the the policy gets called because there’s a death, then I’m assuming the benefits are less whatever is outstanding, as far as the loan goes?
Jim Oliver 23:07
Absolutely, that’s what’s really cool is, if you wanted to turn this into an income stream, you could and you could take out all of the cash value over your lifetime. And then your heirs get what the policy minus they get the death benefit minus the loan balance. But think about this for a second. If you were going to say write insurance on a business partner, and, and the you know, the business partner dies, you get a tax free death benefit. So you know, there’s a lot of things, a lot of different planning things for everybody’s specific situation. But um, you know, I’ve used it in so many different ways in so many different businesses. And it works with every business, it’s just how does it fit for each business?
J Darrin Gross 24:01
Got it. So okay, so I understand that the basic concepts of the who, the the vehicle and the the opportunity to leverage, you know, after it’s seasoned in a new, you’ve got, quote more than the cash value that you’ve put into the account available to you. So, the in and out thing, if we could go over that one more time. So if, if I’m just again, round numbers, easy numbers, if I’m putting 100,000 a month in, and let’s say it’s, you know, 100,000 a year. So 10,000 in 100,000, you get to the the magical point of say three years, so you’ve got 300,000 in at that point, presumably it’s worth but 400,000 is that too much?
Jim Oliver 24:56
That’s probably a little bit high because we’re in a low dividend because we’re in so It’s a low interest rate environment, but
J Darrin Gross 25:02
It uses the cash I guess what I was trying to figure out. So, yeah, so that so let’s just say two or 300? Because I’ve got three times 300. Yes. But now I can leverage that 300 up to what 400? Are
Jim Oliver 25:15
you? Well, I mean, what I mean, there’s two different languages like there’s, there’s, I could take that 300. And then I could go use that as 20% down payment, go buy some real estate, have that real estate sub, because remember, we’re talking about just the way we design the insurance contract. And that’s just the the money pool, but where the real magic happens, is taking that money. And even if I was going to use, you know, I’m going to go to somebody who syndicates real estate, because i don’t i don’t i want to do it passively. I don’t know anything about it, let’s say whatever it is, I mean, it would work slower. But the way that I would do it, the way that you would do it there is that you would take that 300 grand, and then you would use that as a as a 20% down payment, and you wouldn’t go out and buy. Three, you’d go out and buy, what am I trying to say, but that was 20, what’s 20% 80%, you’d go out and buy one point million, or $5 million worth of real estate, let’s just say, right? Okay, and so then on that real estate, then I would expect to get 25% cash on cash. So I get $75,000. And that would flow back into my system. So let’s say the next year, I put in 100 grand, but I got the 75 to use again, right? And then I’m going to take that 175, I’m going to go buy $2 million worth of real estate or whatever it is. And then I’m just gonna keep on doing that over and over and over again. And pretty soon the cash flow won’t fit in the policy, and I have to have more policies. That’s why it’s important to have the know I mean, like, there’s only so much though right on one person, right? And so then you know, that’s where we, we expand out to partners and everything else, even people are running your property management, because you have insurable interest on them. So that’s how I would leverage it. Now, some people do take that money and they say, Okay, I’m going to take that 300 grand, and I’m going to give it to one of somebody syndicating real estate, and they’re buying assisted living facilities, and they’re going to pay me 20%, you know, over per year over three years, but nothing the first, whatever the deal is right? Then, then I can still draw that out with the cash flow, it just takes a little bit longer, because there’s no seller or bank financed leverage.
J Darrin Gross 27:51
Gotcha. And the the so so as long as you you know, you circulate money through this thing, you keep the policy paid up. The cash is available, or at least a large percentage of it is, and allows you to continue to go out and leverage and create more, is that kind of?
Jim Oliver 28:15
Yeah. So so what we’re kind of trying to do, this isn’t maybe an example that’ll help is, if you think about a mortgage, you know, just are your average everyday American who has a mortgage on their house, right? Let’s say they’re gonna buy a $300,000 house, it’s 5% 30 year mortgage and the payments 1600 bucks a month, right? I’m just making these numbers up. So when you pay that bank that 16 $100, what does the bank do with that money?
J Darrin Gross 28:49
They take most of it for interest and put a little against a principal.
Jim Oliver 28:54
Yeah, but what they do really is they just take that money and loan it right back out. Right, right. And so they’ll take your payment, my payment, the audience’s payments, and they’ll pull them all together and loan it out to somebody else. Now, again, we can’t do fractional reserve lending. But so so sometimes you will jump to that. I’m not saying that. But what the bank does, is they loan that money out every time you make a payment over and over and over and over again, because the asset is the loan. Right for the bank, you know, and you mentioned your dad was in banking, the asset is the loan, everybody that works at the bank, they’re trying to get deposits in so then they can loan those deposits out. Right. And that’s the I own part of a bank in South Dakota. And if we were at a board meeting, we’re not talking about I mean, we’re only talking about one thing, I mean, not really I mean we’re a lot of things but the one focus is our is our loan portfolio doing how our assets doing right and you know, then it’s who’s late was, you know, whatever it is, but but when what we’re doing is we’re turning that liability which most people think of. Most people think that when you deposit money at the bank, that it’s a asset, but it’s actually a liability for the bank, they make it an asset by loaning it out, but loan is the asset, excuse me, sorry.
J Darrin Gross 30:30
No, it is a flip the script kind of a thing when you you realize the value of it is, you know, an asset by lending it out as opposed to the liability of having it on your books or so, so, let me ask you this, I get the basic concept. And this is, is opposed to not having a life insurance policy and just having a mortgage or being limited to, you know, to your, to your own, I guess capital, you know, the ability to go out and raise capital or, you know, say I mean, if you, if you were to put the same amount of money into a savings account and wait until you had the or enough on hand to go buy another property you know, essentially as a similar scenario, the differences you wouldn’t have the protection of life insurance or the, the tax vehicle of a life insurance policy is that my my track and as far as a comparison?
Jim Oliver 31:30
And remember, at some point in time, every dollar you put in you have more than $1 $1 that you can go borrow, because the policy leverages the reason it leverages is because it never leaves that account and it’s accumulating right but and that’s that’s the way people think of life insurance my cash value is going up every year just a little bit by mumbo jumbo but we’re using that insurance company’s money while our money is sitting in there and growing. So it literally gets to where I put that 100 grand in and let’s say at year 10 I can take and go invest 150 grand because my policy is growing by that deposit and I’m and I’m taking and I have all the money borrowed out using it for real estate it’s you know this part of it Darren is a little bit harder easier to to see you know it’s more visual seeing the tracking than it is verbal and I’d be happy to give you some links to videos that we’ve done that literally draw this out so you can see the kind of the how it all works together and in we do have real estate examples in there that again are drawn out and you can see the math and and we we have people that I use 25% cash on cash I have some times people say to me, you know they’re at 27 or 28 or they’re 23 or 20 It doesn’t really matter it still works it’s you know again I’m just for an example I’m just trying to use him Yeah, just for illustrative purposes.
J Darrin Gross 33:12
Gotcha. So let me ask you this so the the the good news if I’m hearing all of this is basically that the you have the the benefit of a life insurance policy you have the ability to leverage the cash value in the policy to where you can go out and create more investments more equity more cash flow so what are the risk of this what’s the what’s the potential downside or something like this?
Jim Oliver 33:43
You know, the the downside really is kind of the same as like at a bank if they have the because of the posits if they’re just sitting there and they don’t use them, then the banks in trouble right now it’s not that harsh here because it would just gain gain that you know just would earn dividends and just kind of chug along like a normal life insurance contract that somebody might buy but it’s not going to give you all of the things that we’re looking at it’s not going to give you all of the freedoms to take over the banking function. So sometimes people just like anything else they they started and then they they don’t take their first loan they don’t go buy their first property they don’t go and and they’re the only risk there is now you have to fund insurance and and you’re not letting in your and you’re using your income to fund the insurance instead of using your assets to fund the insurance and that’s not really the system so that’s that’s a danger it’s it’s something that I would say that wouldn’t be as desirable. I mean it’s not like it’s gonna hurt you but but you’re then you got all this money in the insurance contract that you’re not you But it’s the that’s kind of rare what, what we try to do is when somebody starts, we send them videos, we send them articles and and they figure out what their imagination where their niches, right? So if you and I interview we’re coaching somebody on how to get into real estate, and let’s say commercial real estate, right? And I mean, you, you would say, okay here, here’s what you need the start the read, here’s what you need to listen to, I’m going to coach you, I’m going to do this, this this, and I’m okay now I want you to go evaluate 10 deals or whatever it is, right? I mean, you have a system. And so if that person at some point in time, 90 days, then says, Yeah, I’m not gonna evaluate any deals, well, then they’re not going to get the benefits that you’re trying to show them or buying commercial real estate. Right.
J Darrin Gross 35:54
Right. Right. Right. Now, then it makes sense. I, you know, so the downside is basically for if you don’t do if you don’t take advantage of that’s basically what it means. So let me ask you this question. Because I think that what we’ve certainly learned here in the last couple of years and the potential going forward, nobody knows exactly what’s going to happen. But there’s always a potential for like a change in a law or something. Are there any unique laws that this life insurance takes advantage of that potentially could? You know, change? And this the the ability to use this policy this way change?
Jim Oliver 36:37
Yeah, you know that? That’s a great question there in in the life insurance, whole life insurance has been around since the 1650s. In England, but over 250, around over 250, almost 300 years. In the United States. It was so it precludes they were pre existed. federal income tax, right. So. So that’s one thing, the last time that they changed the law was in 1988, during Defra, I don’t know if you remember those tax changes, but it limited how much money you could put inside the insurance contract for a given death benefit. And they and that was the the Internal Revenue Code 7702 is definite definition of life insurance. Everybody that bought an insurance contract before 1988, they were grandfathered. So if they change the law again, because I don’t know, they would really have no way of undoing all of this right, then you would be grandfathered. The other thing that protects us, in my opinion, is that there are so many people that are elected officials that do this, it’s kind of like the real estate laws, there’s a lot of there’s, you know, it’s that it’s very interesting how somebody can spend their whole life in public service and become a billionaire. But if you look at their portfolio, they invested in this, they invested in this real estate, this property, whatever it is, right. So in my opinion, they’re not going to go and change these laws, and hurt themselves. And then you have the insurance, the insurance lobby, which is very strong, can you imagine if they took away the tax deferred growth and the tax free death benefit inside of an insurance contract? Well, then a lot, then most people would not put money inside of an insurance contract. So if they didn’t do that, then there wouldn’t be any private protection, which means the government would have to protect everybody, again, a negative. And if you go back to before 1974, when the IRA was invented, or roll was introduced, people would put up the 50% of their savings in life insurance contracts, and just let it accumulate, because they could turn those life insurance contracts into the type of pension at retirement. The IRA really took all that money away from the insurance industry, and in and so they did that and people didn’t have private life insurance. It’s getting a lot more expensive for the rest of us.
J Darrin Gross 39:32
It’s interesting to see that history I forgot about the life insurance being kind of the vehicle pre IRA. So definitely, things can change. But like you said, the the fact that the policy makers are the ones that are typically taken advantage of these things, I think that’s some insulation from from change, it would make it punitive to do so. So that’s good. So in summary that is there, is there person you think this works best for?
Jim Oliver 40:08
You know, I think it works for everyone. I really like probably I see people get really excited about it that are real estate investors, business owners, entrepreneurs, you know that I’m not saying that somebody working a W two job doesn’t get it, they do. Okay. And we have lots of clients that are working w two jobs, we have a lot of doctors, you know, attorneys, things like that. CPAs. But it is, it is a paradigm shift for, for them kind of like, if you were looking to get into commercial real estate, it’s a paradigm shift for that w two employee. Now sometimes the most exciting people to work with are those w two employees that haven’t broken out of the rat race yet. And, and because they see this as a vehicle that can accelerate that, that for them breaking away.
J Darrin Gross 41:17
Gotcha. Hey, Jim, if we could, I’d like to shift gears here for a second, absolutely, by damn an insurance broker, and try and work with my clients to assess risk and determine what to do with the risk. And there are three strategies that we typically look at, we first look to see if we can avoid the risk. And if we can’t avoid it, then we look to see if there’s a way to minimize the risk. And when neither avoid nor minimize the risk our options, and we look to see if we can transfer the risk. And that’s what an insurance policy is. And I like to ask my guests, if they can take a look at their own situation. Could be their their clients, investors, tenants the market, however you would like to identify the risk and consider what is the biggest risk? And for clarification, like said, while I’m an insurance broker, I’m not necessarily looking for an insurance related answer. But if you’re willing, I’d like to ask you, Jim Oliver, what is the BIGGEST RISK?
Jim Oliver 42:29
I think the BIGGEST RISK is inflation. And I think that because the dollars in our pocket, are going down in value so fast, that if we have a bunch of dollars sitting around Fiat dollars, then we’re in trouble. I mean, if if you gave your kid $20, to put it in a savings account today, you’d be doing them a disservice. Because that $20 isn’t going to be worth very much as we go along. And my example of that is when I was a kid, we could buy about five candy bars for $1, right? Maybe a few more, and now you can’t even buy one. So if the dollars in my pocket are going down in value, how do I combat that? So my, you know, I could say taxes, but taxes are gonna go up and down. And I believe taxes have to go up based on our that, right? But inflation is really a stealth tax. Because the dollars are going down in value and every time the Federal Reserve prints money, then my value is going down, that’s a threat to me, that’s a risk to me. And the only way to that I know of to well, by the way, you could take all your money and put it in cryptocurrency and get out of the Fiat system, okay. And I’m not discouraging somebody to do that. And I’m not encouraging somebody to do that. Okay, but but you can get out of the Fiat system, which is one of the reasons that these cryptocurrencies these digital currencies exist, right? And then, but, but you could also you can buy assets, because if I own assets, that are appreciating in value that are that I have tenants and in customers that pay me to use my space, if it’s real estate, or if it’s a business, I can raise my prices, if it’s real estate, I can really raise my rent. I can keep up with inflation. So that’s the biggest risk, and that’s the answer and how to mitigate that risk.
J Darrin Gross 44:43
No, that’s a great answer. And I think in the years that I’ve been doing this, you’re the first one that’s actually said that and it seems so obvious. So I appreciate you sharing that with us. Absolutely. Jim, we’re gonna listeners If they’d like to learn more connect with you,
Jim Oliver 45:03
So you can go to Create tailwind dot com. The reason it’s create tailwind is most people are fighting a financial headwind, we show you how to create a tailwind right and push you faster in the airplane. So create tailwind all one word.com. Or you can go to our YouTube channel, which is create tailwind, and we’ve got video resources on there. They’re also on the website, too. There’s links to the videos, but those are the best ways to get ahold of us.
J Darrin Gross 45:37
Got it? Well, Jim, I can’t say thanks enough for taking the time to talk today. I’ve learned a lot. enjoyed it. And I look forward to doing it again soon.
Jim Oliver 45:48
Thank you there and thanks for having me. And I really enjoyed it too. Thanks for all the good work that you’re doing out there.
J Darrin Gross 45:54
Alright, thanks for our listeners. If you like this episode, don’t forget to like, share and subscribe. Remember, the more you know the more you grow. That’s all we’ve got this week. Until next time, thanks for listening to Commercial Real Estate Pro Networks. CRE PN Radio.
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