Why the Right Investment Still Might Not Build Wealth

0:00Most people we talk to feel stuck. They'll tell us things like, I feel behind. I wish I had more time with my family or work is draining me. Is that some familiar? The truth is it's not that you don't want freedom. You just don't have a clear system to get you there. And without a system, what happens is three years from now, you're very likely to be in the same place that you are today. Your kids are going to be older and they won't care that your business was more successful. But just remember that you aren't there. That's why we built the passive income operating system. It's the exact framework we use to design financial freedom for ourselves and for our clients, not decades from now, but today. Now, the system isn't free, but the training that shows you how it works is and it's less than an hour. So go to infinitewealthconsultives.com, forward slash Pios, P-I-O-S, and take the first step to find back your time creating passive income and designing the life you don't have to retire for.

1:06Two people can only exact same product and experience completely different financial outcomes. So it's the same policy. It's the same product, same amount of money going in, similar cash value with 10 years, but completely different income. Now, why? The return advertised by the product is not the same as the return experienced by the investor. Right? The investors behavior creates what we call this. If you're an investor or want to be and you're ready to build passive income that exceeds your monthly expenses, you found the right podcast. Welcome to the infinitewealth podcast will recombine the wealth building principles of rich debt for dead with the power of the infinite banking concept to help you take control of your money and your future. Join us as we bring insights from experts and from Cameron, as well as real world strategies and proven tools to help you create financial freedom without relying on Wall Street. Let's get started. Welcome to the infinitewealth podcast.

2:07I'm Cameron Christianson, along with our co-host Anthony Faso. If financial products created wealth, then everyone with a 401k, a savings account, even a life insurance policy, a brokerage account would be wealthy. Because we absolutely know that that is not true. Two people can own the exact same product and experience completely different financial outcomes. So today, we're going to explore the real question, right? Which is not which product will make me wealthy, but the better question is what system will help me consistently create, control and deploy capital? And Cameron, that distinction is important, right? Because financial industry, it's built around products. We got mutual funds and newities and insurance, reats, retirement accounts. I mean, every product comes with a story about what it can do for you. Now, some of these products are useful, but none of them can substitute for a good financial process. Today, we're going to tackle money myth that financial products create wealth.

3:09We're going to explain what products can do, what they cannot do, and why people often confuse the container, the vehicle, holding their money with the actual source of their wealth. You know, and today we're continuing down our money myth series. And this myth is especially important because it shows up everywhere. Financial products, right? You hear it, financial products create wealth. And that sounds reasonable because we see investment returns, dividends, interest rates, tax advantages, and we see the account balances. And it's easy to believe the product itself is doing all the work. Yeah, right. But before you guys misunderstand us, we want to make sure that you guys understand what we're not saying is that any financial products are bad. A good tool in the right hands can be an incredible valuable. What we are saying is the tool is not the craftsman, and the product is not the plant. Exactly like a hammer. A hammer can help you build a house, right? But nobody would point to the hammer and say that hammer built the house, right?

4:14There was the vision of a blueprint. We had skilled labor materials, and we had a process. Now the hammer had a role, but it didn't create the result itself. Because the myth says this. It says, if I can just find the right investment policy, fund, account strategy, it's going to make me wealthy. And it is that belief that causes people to shop for products before people take the time and they understand the destination, what we're trying to achieve. Or they take the time to take a look at their cash flow, or they take the time to find out how much risk is involved. Or they look at the job that they need that product to perform. You know, I'm going to put, give an example that everybody can understand. And then Cameron, I'm going to give one specifically for you to understand just so we're on the same page, right? Thank you. Okay. Similar, right? If you walk into a hardware store and you go and buy the most expensive tool before deciding what you're actually building, right? The tool may be excellent, but excellent without purpose is still a mismatch.

5:19So it's kind of similar if you walk into your favorite store, Sally's beauty supplies, and you get, you know, the premium version of the Paul Mitchell products, but you're bald, right? You might have the best product, right? And we all know Paul Mitchell how excellent it is, but it's not going to work on you if you don't have hair if you can't put that product to work. Was that helpful, Cam? I was just trying to help out, man. Just trying to help out. Sally's, everybody knows Sally's is the only place to find the premium Paul Mitchell products. Yeah. Guys, oftentimes like when we're sitting now with somebody is, we'll see this myth conveyed to us in different ways. And it sounds like this is that I've got a 401k. He's got a 401k. And so we're all going to be wealthy at the end of the day, or they say, Hey, I own a single family rental or two and that's what's going to make me wealthy. Or they say, Hey, I'm getting 12% 15% year over year. That's what's going to make me wealthy. Or they say, Hey, I've deferred all the taxes until later in life, but I'm going to be

6:23in the lowest marginal tax bracket. And that's what's going to make me wealthy. And the last one that we hear all the time is, I've got some passive income. That's what's going to make me wealthy. Well, also, Cameron, how many times you hear people think, Oh, if I get a whole life policy, right, that's going to make me wealthy, right? Those are all products, right? Now, every one of these that you mentioned, Cameron, can be part of your building your wall strategy, but, but none of it is sufficient just by itself, right? A person can earn a high rate of return and still lose ground because they're overspending the panic, they're paying excessive taxes, they're over leveraged. Or my favorite one is repeatedly interrupting the component just curve. Now, a person can own real estate and still have negative cash flow. I mean, a person can own a whole life policy and never use it strategically. But what's that, man? Ownership is not the same as mastery, right?

7:27Buying a product is a one time event that happens and then it's over and done with, but building wealth, if we're doing this right, it's a process and it's going to happen throughout and over your lifetime. Anthony, let me ask you this is, why do you believe this myth is so attractive to people? Well, I would say because like a product, like it's visible, right? And it's easy to buy, right? The behavior, which is what we're talking about is harder. Discipline is harder. Increasing your income, living below your means, studying investments, right? And making good decisions over decades is not something you can outsource with just a simple signature. This is one of my favorite two, Anthony, is I think that the product also gives us someone or something else to blame, right? So if the result's good, we choose, we chose the right product. It's on me, right? But if the result is bad, it's not my fault. It's the market's fault. It's the advisor.

8:27It's the insurance company. It's the tenancy economy. Something failed us. But real, true financial progress or success requires ownership of those decisions, surrounding whatever product that you own. Totally agree, Cameron. And I would say another reason is I believe is marketing reinforces this, right? Financial products are often presented like the destinations, right? Retire with this account, create income with this fund or build generational wealth with this policy. But the product, the product is better understood more as a vehicle, right? It may help, it may help carry you there, right? But you still need to know where you're going. You still need to have a route there. You still need to have fuel and a capable driver to get you there. I did an interview earlier this week and I used this exact same analogy, right? As we've used this analogy that financial freedom is the destination. The infinite banking concept is the vehicle, your system for storing control and capital.

9:30And productive investments are the roads or the avenues that move you towards that destination of financial freedom. Well said, Cameron, I think the most important piece you said is, you know, or just a point, the driver is you. Yeah, right? Your income supplies, if you will, your financial education is your, is your GPS, right? Your habits determines whether you keep moving or constantly having to pull off the roads, right? No vehicle can overcome a driver who has no destination, right? And keeps draining the gas tank. Awesome. So the products don't create wealth by themselves, right? What really does? We would define a wealth creation as the ability to consistently create a surplus, right? Having more coming in than more spending, retaining control of that surplus and deploying it into productive assets, the generate income. Right. And I would say that there's four major activities in that sentence that you just mentioned, Cameron.

10:31Produce, retain, control and deploy, right? Now first produce, right? wealth begins with value creation, right? If you solve problems, you develop skills, build a business, serve others or provide labor, right? Before capital can compound, first capital has to be created. Mm. Right. If we don't have a capital, a 10% return on no savings is still zero. Right. A high return does not rescue the absence of extra or surplus cash flow each month. And that's why earning power and margin matter so much. Second, you mentioned retain. It's not only what you earn, but it's what you keep. Every raise gets absorbed in the lifestyle and some sort of upgrade. The household on the outside always looks wealthier. But on the inside, we're becoming more and more financially dependent. You know, I love that.

11:31I think is so true, right? And Nelson talks about that in his book, becoming your banker, where he talks about Parkinson's law that your expenses will rise to your income, right? You make more, well, then you're going to end up spending more having a nicer car, having a nicer home, having a nicer vacation. So you're a very good point, Cameron. But now retention, that also includes avoiding unnecessary leakage, meaning maybe avoidable interest expense, taxes, fees, poor decisions, right? And that lazy cash that's just sitting there that's losing purchasing power every day. Now, not all leakage can be eliminated, but the key thing is that it should be intentional. Now, third, control. Control means having access to capital and the authority to decide how and when it's going to be used, right? Money trap behind penalties, taxes, market, market conditions, or someone else's approval,

12:38a K the government, if you're having a IRA or 401k, right? Now, the haven't had somebody else's approval, that may have value on the statement, right? But that limits the opportunities at the moment when you need access to that capital. Yeah. Control is, if you've ever me speak at all, and heard us talk at all, that's one of the main reasons that we teach to banking is a properly designed whole life insurance policy creates a stable storage environment with contractual features and then also access through policy loans. We've really got the policy does not make the owner wealth lead just simply by owning it. It supports the behavior and a system that may help the owner keep working, keep their capital working towards maintaining access. Fourth is deploy is wealth grows when capital is placed in productive uses. Great example is your business, right? Cash flowing real estate, private lending, all the stuff that we talk about every single week,

13:40or other assets that are appropriate, you know, based upon what you know and what you understand. Cameron, the key word you mentioned is productive, right? Moving money is not automatically investing or even borrowing from a policy to fund consumption. Or I like to say the fund of liability, right? That policy loan mechanism itself does not magically transform a vacation or a vehicle or a lifestyle purchase into a wealth producing asset. Well said again, you referenced it early in the call, but man, I couldn't count the number of times somebody's called in and thought that they were on the right track just because they had a whole life policy in place, right? A simple way to think about wealth is that wealth is not a product plus time. Wealth happens when values created company by discipline savings. And then this gets multiplied when it gets sustained over long periods of time. Key thing here Cameron is that multiple occasion matters.

14:43Right? If any major factor is close to zero, the total return suffers. Right? A person can make a lot of money and retain none of it. Right? Another can save diligently, but leave everything idle. Right? Another one can chase an investment, but lack the discipline to stay with a sound process. So kind of in summary, what we're talking about is we need to produce, retain, control, and then deploy. Now I got a great example, right? That I've been looking for looking, looking forward to share because really what we're talking about is a difference between products don't, don't do not build wealth itself. So I want to share a story about two clients because I think it illustrates the difference between simply owning a whole life policy and actually practicing infinite banking. Just to be clear, owning the policy is not infinite banking.

15:45Infinite banking is a process of the ability of leveraging that policy to create wealth. So imagine two clients, they each have the exact same amount of money in a very similar policy. Right now, 10 years later, they have, they're going to have roughly the same amount of cash value. Okay? But the interesting thing is Cameron, their financial situation looks very different. The first client, now there were hesitant to use a policy, right? He didn't like, he didn't like the word loan. He didn't like the idea of paying interest to access his own capital. All right. So he did fund the policy, watch the cash value grow and essentially left it alone. And I will tell you that there's nothing wrong with that per se, or he built a valuable financial asset. Okay. But we compare it to the second client, he looked at the policy different. He saw the policy as cash value as capital he could leverage.

16:45So over those 10 years, he borrowed against his policy to help fund a down payment on a rental property and to purchase five vending machines. Then he used the cash flow from those assets to repay the loans. So this way, he could recycle the capital again and again. Now, if we fast forward to 10 years, both clients have the same cash value in their policies. Okay. But the second one also owns a rental property and the vending machine business. If you were to sell both of those today, he could net over $150,000. So he has roughly $150,000 more than that worth. Okay. But I don't think that's even the most important piece. Those two assets he used are now producing 3000 a month and pass of income. So it's the same policy. It's the same product, same amount of money going in, similar cash value with 10 years, but completely different income.

17:45Now, why? Because one person viewed the policy primary as a place to store and grow capital. The other viewed it as a place to store, grow and leverage capital to acquire cash flowing assets. Now, that's a distinction we want people to understand. Whole life insurance can be a great asset on its own, right? Now, but infinite banking is about how you use that asset. It's about controlling access to capital, leveraging against it strategically and putting that capital to work, acquiring assets that can produce additional cash flow. The policy didn't create the 3000 a month of passive income. What he did with it with the capital did. That's a great point, man. Great story. I think I took away two points from that one is the importance. Often gets overlooked, I think, in the financial industry is that when they're measuring products against one another, they often ignore the person and then also the system around it.

18:50And then the second part that I took away from that was that IBC, as you mentioned, that's a process. It's not a product. We've said that from day one. Whole life is an unbelievable platform used to implement the process of even a banking and confusing those two ideas is probably one of the biggest sources of disappointment in miscommunication in the IBC space that's out there. Well done. Well, you're coming in. How many times have you seen a client where they're just focused on the illustration? Right. What's that cash value going to be in 10 years, right? Because they're evaluating the policy as an investment and we're trying to tell people the policy is not investment. This is just where we're going to store our capital that's safe and liquid. And we're going to leverage against it for an investment. But Cameron, let's look at another story. All right. Suppose one investor earns 12% in an aggressive investment. Okay. But then panics and sales during downturns.

19:50Another earns a more modest return, but consistently contributes, stays liquid, avoid four sales, right? And that compounds for decades, right? Cameron, who is more likely to win? The return advertised by the product is not the same as a return experienced by the investor. Right. The investor's behavior creates what we call this behavior gap, a superior product on paper that looks really good on the spreadsheet. But in reality, it produces this inferior, disappointing outcome if when the owner does not know how to use it appropriately. Another reason that people get confused is that they ask one product to perform many different jobs. And so one thing that we need to do is we need to distinguish between capital storage from the actual investment. Perfect storage. Storage is where capital waits while preserving liquidity and stability, right? Investing is where that capital is exposed to risk in pursuit of growth or income.

20:56Those are our two different jobs. Yeah. Cash is accessible, but may lose purchasing power. Market investments often offer growth, but fluctuate and may not be ideal for short-term access. Properties and all that policies combine the best of both worlds, right? They provide contractual growth and access, but it should not be described as a higher return investment. It's strategic values often in how it supports the entire capital system. Right. It's like your pantry itself. Your pantry does not grow the food. It stores the food so it's available when you need it to prepare a meal. Likewise, a capital storage vehicle does not need to be the highest returning asset to improve the effectiveness of your overall strategy. Well said. Now, instead of asking, will this product make me wealthy? Ask what job does this product perform in my financial system?

21:57Hmm. I'm glad you asked, Anthony. We're going to give you guys seven questions that you guys can use when you're evaluating the scenario. The first question that you can ask is what specific job do I need this product to perform? The second question that you should ask is who controls the capital and the rules governing access? This one's rarely asked. Right. The third one is when and under what conditions can I use the money? Fourth one would be what can cause loss, interruption or an unfavorable outcome? Hmm. The fifth one is what fees, what interest, what taxes, what surrender charges or opportunity costs apply with this product. The sixth one is am I likely to use this product consistently and more importantly correctly over time? The last one is how does this product interact with my income, my emergency reserves, debt, insurance and investments? You know, I would take like a product. A product should earn its place in the system.

22:59It should not be purchased merely because it's popular tax advantage or projected to show a high return. Yeah. In comparison, should be to the point I made earlier job is specific, right? I'm comparing a whole lot of policy directly to some market based account on some sort of expected return, ignores the two tools, perform different functions and different risks and different guarantees, tax treatments, etc. Now, a listener may ask, but you know, but products do create returns. My investment grows my rental property cash flows and my policy received dividends, right? That's fair, right? Financial assets. Can absolutely produce returns or cash flow. The distinction I think is that the return is not the same as wealth creation again, the broader sense of the term. The product does contribute to wealth, but it does not select itself. It doesn't fund itself.

24:00It doesn't manage the risk that's coming along with it. It doesn't control the spending. It doesn't evaluate opportunities or determine what happens next. The owner to use Anthony's example, oh, the person in the driver's seat determines whether that return becomes lasting wealth or not. Now a farm can produce crops, right? But ownership of a farmland does not guarantee a successful harvest. You need soil, whether skill, capital, operations and stewardship still matters. Yeah. An objection that we get often is, you know, is IBC just another product pitch, this myth, right around IBC gives us an opportunity to be intellectually honest about infinite banking. If someone says buy this product and it's going to make you wealthy, that is incomplete and potentially harmful. And if I were to lean in a little bit more, I'd say just to flat out lie. Well, we try to be fair. I mean, obviously we big fans of infinite banking and whole life policies design high cash value, right?

25:04But everything has its pros and cons, right? And they need to be evaluated now. Whole life insurance. It does have some costs, right? There's some commitments. There's underwriting. This is a long term design. Now, and that early cash value may be a little less than what you put in the first couple of years, right? Especially if the policy is poorly designed or surrounded early and dividends are not guaranteed, right? Even taking a policy loan, there is going to be interest and unmanage loans can contribute to lapsing and possible tax consequences of the policy, right? It needs to be designed, but also properly managed is why it's important. Whoever you're working with truly understands infinite banking. Yeah. Well, it makes infinite banking powerful is not magic, right? If somebody's out there saying, Hey, you put the money in, you take a policy loan and magically you're going to be wealthy, right? Run for the hills. What makes infinite banking powerful? It's the coordination of habits that we're talking about here.

26:06It's the contractual features in the product, saving first, capitalizing system, maintaining access, using that money intentionally and then recovering or replenishing that capital so that we can use it over and over again. You know, Cameron, that's a good point that I don't think we give it enough emphasis. One of the advantages, I was speaking to a client a couple of weeks ago and they've had the policy for years. They were so thankful that they had the policy for many reasons, right? In part, it gave them a system to follow. So they had to they had to learn to save some money each day. So it helped them instill the discipline, but then also by them having access to that capital had allowed them, you know, to pay for some month for seen expenses, but also put into a cash flowing asset or something that that they were really looking to create to create passive income.

27:11Now the policy itself, the policy is a chassis, right? The banking behavior is the operating system, right? A product without a process is incomplete. Nelson in his book kind of uses that analogy, the grocery store analogy. And so I'll extend it here is like, if you guys think of your household like a grocery store, right? A store does not become profitable merely because it has shelves. The shelves organize the inventory and make the operation much more efficient and lets people know where they can find stuff. Profit comes from serving customers, managing margins, controlling expenses and replenishing inventory. Right. It can run that analogy of financial product is often like a shelf or a storage system, right? It can organize, protect or improve the movement of capital, but the economic activity, right? The value creation and product development. That is what creates wealth. That's why obsessing over shelf while ignoring the business is completely backwards.

28:13Right. People will debate endlessly product features down to the decimal point while ignoring that they have no monthly surplus. Right. They have no liquidity. They have no plan. They have no investment criteria. Yeah. Well said, Cam. And you know, let's make this practical, right? For let's give three people at different stages. First one, the beginner. If you're new to IBC, have consumer debt and are deciding where each dollar should go. Your first job is to create clarity and margin, understand where your cash flow is going, build appropriate reserves, protect your household and then fund a policy at a level you can sustain. Do not let enthusiasm for a product cause you to over commit. This is the easiest thing that you can do to get start on the wrong foot is by trying to put too much money into a system to early. And Cameron, how many times have you met somebody you read the book? Been listening to pockets. Oh, this IBC is awesome. But I want to put, you know, whatever the amount is, you know, let's just say 20 grand a year.

29:19They're like, Oh, great. Well, how much are you saving now? Well, I'm not saving anything right now, but I want to put 20 grand in there. If we were to allow them to design a policy to go from zero to 20,000, we are doing them a disservice. So part of our process, there's not only educating people about infinite banking, but going through a process so we know specifically what capital we can put in, we can put in that policy. So you're designing. So this policy we're designing for you is custom built for your financial situation, right? Now, and Cameron, for that person, the success may look like the habit of saving, right? Let's let's reduce that financial fragility and begin to capitalize the system. It doesn't mean chasing sophisticated investments, right? Before that foundation is ready. Yeah. Secondly, for those of you that we would call the experience investor,

30:21someone's new to IBC, you may maybe you already have some cash and some investments, but the capital is typically kind of scattered amongst varying investments or accounts. Your opportunity is to improve the flow of your money. Right? Where your capital is being stored between deals, how your liquidity is being maintained and then whether your financing needs support or interrupt this compounding. Right. Now that policy does not replace your investment skills. It can complement it by giving your capital to find storage and financing role, right? But your existing ability to identify productive assets or opportunities are crucial. Yeah. And third, the advance investor, right? If you guys are out there, you may have some strong cash flow. Maybe you have some mature policies, several asset classes, your focus shifts towards capital coordination and the risk management family governance, the state considerations and the transfer of assets and financial capability to the next generation. Now, at that stage, more products are not automatically better.

31:27Right? The question becomes whether each component advances the family's overall objectives and whether the next generation understands a process. Good point. Here's another one. Here's a, here's a simple exercise that you can do for all three of you that are out there. List every major financial product that you want. Take out a piece of paper, write it down, check an account, save these accounts, retire and recounts, brokerage accounts, insurance policies, real estate, any sort of business interests that you have and private investments get it all in one place. And then I would say next each one, write the job it's supposed to perform. If you cannot name the job, I'd say that's the warning sign. Right? If you have two products are performing the same job, inefficiently, investigators, right? If an important job has no tool assigned to it, that's a gap. Nice. Next, I want you guys to ask these four questions. What am I producing? What am I retaining? What do I control and where am I deploying capital productively?

32:31Those four questions are going to reveal more than asking which product has the best marketing story or whatever. Now, Cam, let's go and bring this home. Right? A financial products matter, right? The right product can reduce friction, manage risk, improve access, create contractual certainty or or it could help capital grow, but a product is a component, not the creator of wealth. Well, yeah, wealth is created by people who consistently produce value. They also retain a portion of what they earn. They maintain control and deploy it productively over time. Products should support that process right there. Do not ask a product to provide the discipline, education and judgment that only you can develop. Yeah. In regards to infinite bank and remember, the policy is not the finish line. It is not the investment and it's not a shortcut either.

33:33It's the tool that's used within a broader system that's designed to help you store capital, maintain access and then finance the assets and activities. They're going to move you forward towards your goal, financial freedom. Oh, see, the product is the tool. The process is a strategy, right? You are the wealth creator. Guys, if this, if this episode caused you love maybe just a little bit differently of the financial products that you share with someone who's searching for the perfect quote unquote, investment or account. And if you want to help understand how infinite banking concept might fit into your broader financial system, visit us at infinitewealthconsultants.com and schedule conversation with our team. And I would say that we should have a link in the show notes as well. Now, until next time, keep questioning the miss, keep building up your financial education and remember that financial freedom is not something you buy. It's something you build. Go make it a fantastic day. Take care.

34:33The opinions expressed on this podcast are solely those of the hosts and guests and do not constitute financial advice, always consult a licensed professional for professional decisions. Thanks for listening to the Infinitewealth podcast. If you enjoyed today's episode, be sure to subscribe so you don't miss future conversations on building wealth and creating passive income. You can learn more about infinite banking and get additional resources at infinitewealthconsultants.com. Until next time, keep investing with intention and remember, your financial freedom is within reach.