Build Wealth & Keep It...Like the Rothchilds

hello this is Fred Payne with private family banking partners thank you for tuning into our seminar today I'm going to share with you how to build wealth and keep it like the Rothschilds so wealth is not measured by how much money you make but its measured by how much money you keep and this principle is illustrated by the story of two men one of those is Cornelius Vanderbilt who made his wealth in the railroad business and the other man is Mayor Rothschild who was a banker now Vanderbilt died in nineteen in 1877 and he had amassed a fortune of a hundred and five million dollars that's Bill Gates kind of money in today's the economy in 1877 that was a huge fortune he left 1 million dollars to Central University and they renamed that University to Vanderbilt University which is probably why most of us are remember the name Vanderbilt at all and he left a hundred and four million dollars to his heirs 92 years later his heirs got together for a reunion at the college 120 Vanderbilt descendants gathered and interestingly enough there wasn't a single millionaire among them and so all of that money over those 92 years had been dissipated now let's contrast that with the story of the Rothschilds Mayor Rothschild died years before Vanderbilt did in 1812 and he had amassed a huge amount of money but not near as much as Vanderbilt had and instead of leaving all of his money to his heirs he left them a system for building family wealth he left them a banking system if you will and this is what that looked like number one the family's wealth was to be kept together in one family bank step number two the family could take a loan from the family bank anytime they wanted to but they needed to pay the loan back and then step number three was that once a year the family met together and shared their lessons learned what worked what didn't work how money grew how many didn't grow and if they didn't do these three steps they were out of the family bank and currently the Rothschild fortune is estimated to be somewhere between 1 and 100 trillion dollars nobody knows for sure it's so much the difference was he left a system for his family to operate within and so it's not just a time passing that causes money to dwindle away it's whether or not you have a plan and tonight we want to share with you a plan for building wealth now the average American he makes a million dollars in his lifetime but he doesn't keep it for example if a person earns $50,000 a year and he saves it all and if he could grow that savings at just 5% a year after 40 years he would have 6 million dollars so let's look at this little calculator annual income is $50,000 if you grow it at 5% you're gonna have 6 million dollars at the end of 40 years but one of the wealth stealers that we have to deal with in this world is taxes so let's assume that persons in the 28 percent tax bracket let's see what that does to our nest egg okay well we lost quite a bit of it it leaves us $36 after taxes of that 50,000 that we earned and now we have to spend money we have to buy groceries we have to pay for utilities we need transportation so let's say this person spends 90% of that after-tax money and see what happens to what he's got left wow that makes quite a significant difference doesn't it and this person we're gonna say is very conscientious they save 10% but you see over 40 years the loss of what could have been and what do we do we spend all of our time trying to cause that 10% that we might save most people don't save that much to grow and at some rate so that we can get ahead well obviously that's not gonna work most people think that to get ahead they must work harder they must stop spending or they've got to take on more risk well we can't work any harder than we do sometimes sometimes you get to the point where that's all one person can do so that's not the answer stop spending well we know that's not the answer because there are things that we must have as family needs that we must take care of that to take care of our family so we can't just stop spending and so that leaves us what we must then take more risk and we've been taught that this is the way to get ahead but really I think that that's something that is not really true that we've been taught over over the years so is there a better way yes there is let's look at three ways to view money we can view money as a spender we can view money as an investor or we can view money like a banker does the spender he views money as a way to get stuff okay we need to buy things and every purchase that the spender makes is going to cost him interest if you borrow and and pay for your spending that way you're gonna pay interest if you're like me and you save the money until you accumulate enough to buy what you need and then spend it well then what could have been what could have earned more money more interest more compounding we have to give that up either way we never build up any money let's let's take on the example of buying cars as one way that to illustrate this this point there's three ways that we can buy cars we can borrow cash from a financier or a finance company or a bank or credit union and and pay cars for the pay for the car that way giving up the interest paying interest for that we can save up money and then pay cash for the car or we can use the private family banking system to purchase our cars let's look at another graph here let's say the cost of the purchase of a car is $30,000 when we're younger maybe the car will cost a lot less than that as we grow older and a little more affluent hopefully we might pay more than that for a car but let's just say over the average of our buying cars in our lifetime that the average is $30,000 if we're borrowing let's say we pay 5.5 percent and we purchase a car every five years after 11 purchases over 55 years the borrower has spent three hundred and seventy eight thousand two hundred and thirty dollars the cash buyer he's been a little smarter maybe he's only spent three hundred and thirty thousand dollars because he hasn't paid any interest but what about the bank this is what we don't think about what did the banker do well he didn't make the car he didn't sell the car he didn't even buy the car he just acted as the middleman for the guy that's putting saving his money and the buying cash and the guy who's borrowing that same money usually and and paying interest for it what does he make let's look down here the banker makes three hundred and eighty thousand eight hundred and twenty dollars that's why people spend a lot of time and resources to build the bank because you're gonna make money no matter what whether you're a cash buyer or like I used to be or a borrower you're gonna come out ahead three hundred and eighty thousand dollars ahead and so the banker is this is who you want to be let's take a look at this another way let's say we talk let's talk about buying a twenty thousand dollar car the the borrower goes to the bank and he borrows twenty thousand dollars and then he pays off five thousand and those fifteen the first year then he pays off another five thousand and those ten the next year he pays off another five thousand and those five and then finally he pays the car off and he's back to zero what does he do then well it's time to go buy another car so he starts the process all over again borrowing paying back borrowing getting to zero and going down again and at the end of his career of buying cars what's he left with he's left with zero money and an old car well let's take a look at what happens to the cash buyer now he's a little bit smarter so he spends one year and he saves $5,000 the next year he saves another five he's got ten the next year he saves another five he's got 15 and finally he's got the $20,000 so what does he do he liquidates that $20,000 and now he's left with zero but he's got a new car and then what does he do well he better start all over again you see the car payments and really never go away because if he doesn't start saving that $5,000 each year and accumulating that each year so that he can have $20,000 for the next $20,000 car he's going to end up being a borrower either way you're on a race to zero what's he left at the end of his lifetime of buying cars zero money and an old car so let's take a look at what the private family banker what his system looks like you see the red and the blue that's the the borrower and the cash buyer the private family banker is building up and over this lifetime of purchasing cars he ends up with several hundred thousand dollars and an old car tonight we want to show you how you can do this for yourself let's take a look at the investor though remember we said we can look at it three ways as a spender as an investor or as a banker the investor these money as a way to buy investments he trades his money for something that he hopes is going to go up and value and he also hopes that when it does he's going to be able to find someone that wants to buy it at that increased value and every investment exposes him to another wealth stealer which is risk and every gain costs him taxes another well wealth stealer and so he's exposed to risk and taxes each time he's making a purchase imagine this if you start off with $100 hundred thousand dollars that you invest and let's say that investment goes up ten percent the first year and then the second year it goes down ten percent are you ahead or you back where you started well if it goes up by ten percent you have one hundred and ten thousand dollars and if it goes down by ten percent and while you've lost eleven thousand you're down to ninety-nine thousand so you're not back where you started what if you go the other way what if it loses ten percent the first year and gains ten percent the next year are you back to even well no if you lost ten percent you've got 90 and if you gain ten percent of that you've got 99 you still behind the eight ball so to speak that's the investment risk game okay if you lose ten percent you're gonna need to gain 11 percent the next year to be able to break even if you lose 40 percent you've got to gain 67 percent just to break even if you lose half like a lot of people I know did in in 2008 you've got to have a hundred percent gain in order to get back to even and I even have some friends that lost a hundred percent well what do they have to do to get back to even well they can't get back to even they lost it all they're broke they got to go back to work so that's the investment risk game and not only does risk hinder us from building wealth but so does taxes taxes destroyed our money's wealth let's take a look at this next calculator this calculator shows what happens if we can take $1 and double that dollar every year for 20 years after 20 years if we double just $1 it starts off slow but it picks up a lot of momentum after 20 years you've made over a million dollars okay but wait a minute we've got to pay taxes don't we yeah but there's nothing more sure than then death and taxes right so say we're in the in the 28 percent tax rate if we're in the 28 percent tax rate all of a sudden that million dollars is going to turn into something less let's take a look at what that is oh wow that took a big hunk out of what we made now we've got 51 thousand dollars what if we're in the 35 percent tax bracket look at look at this now that of million dollars becomes twenty two thousand dollars the government if you notice from the last slide makes less money - as we go up let's kick that that tax bracket up to two forty five percent and just notice this the government made twelve thousand now they're only making five and we've taken them even bigger here so raising taxes is not it's not a wealth builder is not the way to get ahead for the government and it hinders us from gaining wealth - let's take a look at how a banker operates though the banker views money as a way to make money every purchase is an opportunity to make a game and the banker always keeps his money working once it's purported that Albert Einstein was was asked to what was the the greatest force in the universe and rather than saying nuclear fission or gravity or something like that he's purported to have said the most powerful force in the universe is compound interest compound interest that's that's money making money all and making more money on the money it made it puts us on what I like to call the wealth curve it's money working overtime private family banking allows you to become your own bank without the time restraints of having to get a charger which takes decades sometimes without having to put up millions of dollars in security to do that without then having to build a building hire staff get deposits so that you can lend those deposits out and make money you can start your own bank without all of those circumstances coming into play and we can stay on that wealth curb for the rest of our life what happens to most of us and that wealth curve is we fall off the wealth curve that the the broken line shows what happens if we put our money in earning compound interest and it continues to earn for our lifetime just falling off of it one time to purchase a car or whatever look at the difference it makes over our lifetime and we fall off of that wolf curve multiple times you see every purchase costs us interest we either pay up and borrow the money from someone else or we give up interest that we could have earned on our money well what if we could use our own money without giving up the interest that it would earn you'd probably say you've got to be kidding that can't happen it's exactly what banks do banks take deposits they lend those deposits that money to others and charge them interest for it and at the same time they earn interest by keeping their money working continuously they create a pool of money put the money to work earning compound it and then they use that pool of money as collateral when they need cash that's what starting a private family bank is all about we'll show you how to create your own pool of money put that money in a place where it is guaranteed to grow compound it and then use that money whenever you need it by taking out a collateral loan when you need the cash if your money was earning 4% would it make sense to borrow money at 6% and to the bleed you'd say no I saw this question the first time and I said obviously no it's better to liquidate and and then and then make my purchase because I'm paying higher interest but you know that that's a false assumption let's look at this $20,000 car for example and we pay 48 months at 6% our payments are going to be four hundred seventy dollars a month the total outlay for that car over four years is twenty two thousand five hundred and forty six dollars if at the same time that money was in our savings and growing for those forty eight months at four percent we would have over that same period of time twenty three thousand four hundred and sixty four dollars well let's change that to that thirty thousand dollar car that that we're now purchasing and we're gonna finance it for sixty months for five years at 6% our payments five hundred and eighty dollars so our total outlay is thirty four seven ninety nine four thousand seven hundred ninety nine dollars we're paying in interest if that same money was earning at four percent over those same sixty months our future value would be thirty six thousand six hundred and thirty dollars so we actually are coming out ahead by borrowing the money and paying interest and and keeping our money working at four percent so what if you can take over your own banking function and say let's put let's make the loan interest rate five percent and we earn at a rate of 5% also well then you're gonna see that difference is fairly significant and that's what we can do as a private family banker it makes sense to do it this way so where do we put our money to do this well there's three places where we've been taught to put our money one of those places is we put our money in the stock market but we all know the stock market goes up the stock market goes down we've had crashes on the average about every eight years we saw the stock market lose in 2000 and y2k all we saw the stock market lose it during 9/11 we saw the stock market they lose again in 2008 so the stock market goes up and down and although you can make money when it's going up and when it's going down there really is a lot of risk involved and we've got to have some luck behind us so that we can time those up-and-down movements just right it's not a very safe place to put our money another place where we've been told that's a good place to put our money is in in real estate but those of us that live in Phoenix and those friends that I have that live in Las Vegas know that in 2010 that was not a good idea to have our money in real estate and a lot of people are upside down and their mortgages as a result of that the third place that we can put money is in financial instruments that have guarantees what are those kind of financial instruments well savings accounts have guarantees CDs have guarantees but if you're utilizing those right now it's like putting your money in your mouth under your mattress isn't it the other place where we can put our money as an insurance contracts insurance contracts are safe they're liquid they're guaranteed to grow and right now they're growing around 5% if we were to list the ideal objectives of where we wanted to put our money what would we come up with let's take a look at some of these with risk would we want to have something that had no risk involved with our money yes would we want guarantees absolutely would we like no penalties associated with our money in other words we can take it out whenever we want we don't have to wait till we're 59 and a half and we don't have to start taking it out if we're 70 and a half there's no penalties we can use it whenever we want to well yes that would be a good place to put your money how about liquidity use and control what do you like to be able to be able you would you like to be able to get to your money whenever you needed it well yes absolutely would you want to be protected from creditors and judgments yes definitely we'd want that how about leverage would you want to create the most amount of money the most amount of wealth using the least amount of money absolutely yes we would want that we would want it to be tax deferred would you want your money to grow without having to pay taxes until later well yes but maybe that's not such a good idea as we'll see in a minute when we want it to be tax free when we want our money when we distribute it to our heirs or for our own use would we want that to be taxed for free yes would we want our money to be available for collateral loans yes all of those things are important for us what do we want it to be tax deductible would we want a disability benefit would we want our wealth transfer to our heirs tax free all of the answers to those are yes well let's compare that with component those components with what we are already funding this chart shows your answers on the right and the green they're all yes but then it shows IRAs brokerage accounts real estate CDs annuities real estate and just look at the answers they're mostly knows a few maybes a couple of yeses for all of those things where that's what we want and yet we keep funding of these things instead of using our money and putting it somewhere where we can have what we want as far as tax free or tax deferred growth goes I saw a report from the GSA recently that said they were collecting 1.15 trillion dollars in taxes this year and the goal is that in five years they're going to collect 2.5 trillion dollars in taxes well I think it might be a good idea to pay our taxes now when we know what they are rather than wait till later when they're obviously planning on the tax being higher private family banking what is that well we use the same financial instrument that banks and big corporations people that know about money that know how many works we use the same instrument that they use to park their money in a place that's safe that's guaranteed to grow banks put their money in what is called Boley or bank owned life insurance most banks hold it and it's recommended to them by the FDIC you see permanent whole life insurance especially from a mutual company with participating dividends is a safe and liquid way to hold and use capital what we do at private private family banking partners is we cuss may customize your life insurance policy so that it gives you liquidity you have safety they guarantee the growth your money is protected from taxes it's protected from judgment and lawsuits also how can we do this well our special customized policies look like this here's three types of insurance the red line shows what term life insurance looks like you it buys the most death benefit for the least amount of money but after the term is over you're left with nothing and if you want to go for another term it's going to be more expensive so term insurance doesn't doesn't build up any cash for you the typical whole life insurance policy which is what we hear of from financial gurus that tell us that that's not a good place to put your money looks like what's illustrated in blue and for the first few years it doesn't grow much money either but after a couple of years it starts to grow some cash value and then it continues to grow cash value over its lifetime the private family banking optimized whole life policy is illustrated by the the green boxes there we optimize your policies so that it builds cash immediately that you can use immediately and it grows exponentially kind of like the wealth curve because when you put it in and you utilize our system it continues to grow compounding interest that's the difference between what we are recommending and the typical whole life policies that that some financial gurus say we should never use private family banking if you control your own banking system you can capture the interest that you've been paying to someone else this is what it looks like the average American spends about 20 percent of his income on automobiles and transportation about 30 percent goes to housing and about 40 percent goes to living and we try to save 10 percent at least that's what we're told to do the actual rates probably closer to about 6 percent for the average American well of that money that we're spending on autos housing and living about four and a half percent if parados is going to interest about 25 of the 30 percent that we spend on housing is going to interest and about five percent of what we spend on living is going to interest that's thirty four and a half percent spend on interest what if we could capture that interest that we've been paying to others the estate interest portion we make premium deposits or premium payments depositing that money into our policy or money pool and then we can use that and take loans and repay those loans to purchase cars we can instead of using credit cards we can use loans and pay back as if we were paying back a credit card and ultimately we're we're going to be able to take over our own mortgages my wife and I have been able to do that after just five years of the of putting our money into this system and so what does that do how would I say change if we could recapture the money that we're throwing away on interest it would look like this instead of just saving 10% in making that grow look at the return we're getting if we could just recapture the under interest that we're paying someone else or that we're losing by paying cash here's another way to illustrate that hey over over the years that green shows what we're gaining and what's going to interest payments if we put that interest payment on our side it's like it's like riding a tailwind instead of going into a headwind the benefits of private family banking it's a life insurance so it provides a death benefit for our heirs we can use it for major medical expenses like an HSA without any of the of the penalties or any of the requirements that that has we can use our policy as a disappered disability protection by using a rider we have guaranteed access to it so it can become our emergency fund we can use it as a college savings plan as a 529 plan is set up without the limitations or penalties that are associated with that we can use it for our retirement without the the penalties or limitations associated with that it's protected in the case of a lawsuit we have tax protected growth like a Roth and it's an estate planning tool also and so I want to encourage you that there's other ways that you can utilize this private family banking system to you can take over your debts you can build a retirement plan as I said pay for college find that's business built multi-generational wealth give us a call thank you for for listening to this this seminar I hope it's stirred some questions and and gotten you to think about things a little bit I'd be happy to give you a free uh financial analysis and the pointman takes about an hour give me a call at private family banking partners my phone number is 602 eight five nine five eight five eight thanks again for listening god bless

Channel: valerie paine

Views: 660,270

Rating: 4.6855102 out of 5

Keywords: wealth building, private family banking, Rothchild, Fred Paine, eliminate debt, protection from judgments, wealth curve, tax protected growth, Rothschild Family (Family), Wealth (Quotation Subject), fund retirement, finance business, purchase cars, multigenerational wealth, leaving an inheritance, keep money growing, protect your wealth

Id: gnKwC9SUFYM

Length: 35min 42sec (2142 seconds)

Published: Thu Mar 21 2013