How Do You Become Your Own Bank? (Douglas Andrew)

[Music] [Music] patrick i'm writing a book called how money really works we put our money in a bank and they were only paying us like one percent so you can do four things with money you can spend it lend it on with it or give it away so when money is isn't a bank credit union or an insurance company it's in a lended position does that make sense yes okay why are they borrowing our money and paying us interest are they just a benevolent institution no what are they doing with our money they're borrowing our money a million bucks and paying us 10 grand now in 2008 they disclosed right off the bat they're taking 30 to 40 of their tier 1 assets and they're turning around with that money and guess where they're putting it right where i just told you right in the insurance company because the insurance companies are usually rated triple a the ones i put my money in a lot of banks are only rated triple b so they borrow our money at one percent put it into an institution rank six notches higher in safety and they're earning five percent how much more is five than one four no it's five hundred percent how so would you hire an employee for ten thousand that made you an extra fifty thousand sure that's called a five hundred percent return unemployment cost if you're a business owner would you buy a widget machine for 10 grand if that widget machine made you an extra 50 grand of course it's 500 not four percent you get it yes and they're doing it on opm other people's money all i tell my clients is you can bypass the middleman you can take your money increase the liquidity and the safety and the rate of return and you can be earning 10 tax-free so this is then the real business of the banks is what you're saying you're not making money on mortgages and some loans or what other things they might do which is part of their but really their biggest business is what you're describing patrick the banks could do far better if they did not loan one dime to the public but they can't get away with doing that or people would stop bringing money to deposit it into the bank but the bank can more predictably and safely borrow our money and put it into these types of instruments but it's also the velocity of money so i often ask my audiences why in the world would a bank or credit union who can borrow our money at one percent and they can turn around and earn five times that tax-free ever want to loan you or me a million dollars to go buy a home or something like that people go well be because they have to no there's no regulation that says they have to i mean if we didn't give them the money maybe they we we've stopped doing that right but that's not the reason so if i go to a bank and i borrow a million dollars to go build a house what am i going to do with a million i'm going to give it to the general contractor what's the general contractor going to do take his piece pay his subs and the suppliers what are all of them now going to do loan that million dollars back to the bank again it goes right back into the banks the banks get it back in a week or so at one percent or less if it's a check-in account they get it back again and they loan it back out again at five at 500 percent the average bank will loan out and receive back okay they'll do that 17 times they'll turn over the same money 17 times a year only 12 times a year in a recession chucky darn so see they can afford to take risks that if i uh lose my job and they have to foreclose they don't want to foreclose on my house but they've calculated that in there but if they can borrow opm other people's money at one percent and loan it back out again at five percent of five times 17 times a year on the same money that's called the velocity of money wow so this is this really starts to sound like a racket it's called the banking industry but it's not new this is the parable of the talents in matthew 25 in the in the new testament this has been around for millennia wow so you know you illustrated so well as far as you know the um the uh analogies that you you weave into it so that it's something tangible to us lay people you know that go out and work every day and uh and not see this you know this this sort of look behind the curtain yeah yeah so uh it's so when you start to look at okay so we got banks you know we got the government you know we see you know how literally i don't know that's gonna say it's totally malevolent but it seems like it's rigged against producers right you know that that the the system is you know that these people are locked in and they enslave the producers uh in the ways that they with inflation with taxes etc with the re-lending of your of your money uh you know because if i buy like you said if i borrow the money and i go build the house and something happens to me i'm at risk then it's next thing you know maybe i'm bankrupt in the house but they don't care because that money is trickled back to them over and over again 17 times yeah so where could i get into that business right well in a lot of my books i talk about how to become your own banker right okay i'll give you a little taste for example in my max funded insurance contracts let me use an example of an actual friend a client of mine who is a real estate developer okay what he does is he buys uh strip malls uh large apartment complexes that people want out of he will fix them up and then flip them to somebody he doesn't like to keep him and be a landlord so he has a pool of investors looking for fixed-up properties and he goes out and finds the distressed properties so where he keeps his working capital is where i do in my insurance contracts because it's very liquid you can access your money with a electronic funds transfer phone call okay so many times he might call and he'll say doug i need a million bucks out of my insurance contract to tie up an earnest money agreement on a 30 million dollar project i want to buy i go great uh how soon do you need it and if it's a week or so we can just do it normal but he says i need it tomorrow in the insurance contract he can get that electronically we can overnight it or whatever now he says send me the form it's one page he puts his name he puts his account number or policy number at the top he's going to sign it on the bottom he doesn't have to have a signature notarized unless it's going to a different bank account or address than on record and the one sentence the one question that he must answer is do you want to withdraw a million out of your insurance contract or would you like to borrow a million guess which box he checks borrow that's right yeah here's why if he withdrew the million the million that is and he's been averaging about 10 like me so if he withdrew it to do this and he didn't pay it back for a year he would relinquish a hundred thousand dollars of interest on 10 grand on that million right he didn't have to do that so he he keeps the full principal balance for uh for his rate of return and yet still has access to capital to be able to do his in other words let's say you went to a bank to borrow money and they said well uh you have a savings a cd here you can use that as collateral we'll loan you the money but see the banks will loan you at five and they'll only pay you one right no this is different with the insurance contract the insurance company says oh heavens yeah uh we'll loan you the equivalent of your cash value in here because and so you'll just leave it here and we'll keep crediting you with this indexed return and will loan you a million they guarantee to never charge you more than five percent with this particular company that he has and he's making 10 on it how much more is 10 than five five times well five no no no no no no no no no no no no no no no no no no no no no no no no no no no no no no no no no no no no no no no that's 100 more oh that's right okay so you double it yeah five percent he's pulling it out he doesn't have to write out a check to pay the interest the insurance company charges 50 grand at the end of the year and they credited him a hundred he made a net of 50 grand he made a net of five percent tax free on his money while he was using it on top of what he was doing so is this the best kept secret in the financial world oh yeah i mean you know what you were you were asking how can the little guy do it right last year he borrowed at five percent and earned 25 on the money that he borrowed because he didn't actually withdraw so he was earning 25 it only cost him five so he netted 20 tax free on his money while he was buying real estate so this is so it's literal when you say be your own bank you get to be you get to be in the business yourself of banking your own money rather than using these banks which are just you know do this to buy cars or anything or businesses this is where i have my working capital for my business and so yeah a lot of people don't know what they don't know and this is why i write the books and sometimes it goes over people's heads and even financial advisors don't get it most people when they came to me it was through the financial dimension is what i call it but patrick it's not just about the money so when i would sit down with people and i would uh tell them what i did okay i help people optimize assets but when we say the word assets what kinds of things do most people think of first money yeah yeah real estate stocks bonds mutual funds and those are just things those are just material possessions so they're the financial assets but then i would ask them what are the most important assets that you value that you cherish that you possess on this earth family family health uh values these assets involve people these are human assets they are our core assets so i put these under the foundational assets for abundant living it would include your talents unique abilities charitable foundations and so forth there's a third dimension of authentic wealth is what i call it it's our intellectual assets wisdom is a product of knowledge times experiences right and not just the good ones i've actually learned more from my bad experiences in life it would include your formal education reputation systems methods traditions alliances ideas and skills so these are the three dimensions of authentic wealth [Music]

Channel: Wealth Revealed

Views: 468,605

Keywords: chicago entrepreneur, financial coaching, home-based business, how to become an insurance agent, life insurance, living money smart, matt sapaula money coach, missed fortune, moneysmartguy, moneysmartmovement, network marketing, php agency, primerica, retirement planning, veteran entrepreneur, vetrepreneur, wfg, world financial group, money revealed, money revealed documentary, DOUGLAS ANDREW, Patrick gentempo, money documentary, money revealed episodes

Id: aNbhsk6Nzbw

Length: 11min 1sec (661 seconds)

Published: Thu May 27 2021