The third and most important step is to build or increase your family's Estate by repositioning your non-performing assets into guaranteed, no-risk, tax-free retirement income that you will receive for the rest of your life and pass on to your heirs.
ASSET REPOSITIONING
The third and most important step to Wealth Creation is to build or increase your family's Estate by repositioning your Non-performing Assets into guaranteed, no-risk, Tax-free Retirement Income that you will receive for the rest of your life and pass on to your heirs. Let's breakdown this sentence and look at each component to explain what we mean:
What are Non-performing Assets?
Non-performing assets include any assets that are not earning a rate of return equal to or greater than your lowest interest rate on your debt expense. Did you realize that the money in your Checking Account is probably earning 0-2% while you pay the same Bank 6-8% (or more) interest on a Home loan? That is Non-performing! This is how the Banks make money, but you know this is NOT how to make your money work for you.
Let's take this to another level. Did you realize that the equity in your Home is also an asset?
What rate of return does the equity in your home earn?
ZERO!
We teach our Clients that they should invest the equity in their Home in safe, liquid, guaranteed investments that perform!
I want to show you how your Debts could make you rich!
Retire as a Debt-free millionaire- using nothing more than the money you're currently earning!
What kind of investment is guaranteed, no-risk, and tax-free?
Investment-grade Life Insurance, called Indexed Universal Life.
Read below to understand more about how it works.
INDEXED UNIVERSAL LIFE
Indexed Universal Life (IUL) is an investment-grade life insurance policy that offers guaranteed, no-risk, tax-free retirement income that you will receive for the rest of your life and pass on to your heirs.
EQUITY HARVESTING
Why Separate Equity From The Walls Of Your Home?
Why in the world would you want to have the Equity removed from your home?
There are actually three primary reasons:
Ø LiquidityØ SafetyØ Rate Of Return
These three elements are also commonly used as the test of a prudent investment. When evaluating a potential investment, experienced investors will ask the following questions:
Ø How Liquid Is It? (Can I get my money back when I need it?)
Ø How Safe Is It? (Is it guaranteed or insured?)
Ø What Rate of Return Can I Expect?
Home Equity fails all three tests of a prudent investment. Equity has a Zero rate of Return.
If we allow home Equity to remain idle in the walls of our home, we give up the opportunity to convert idle "Make Believe Dollars" in the walls of your home into dollars that will grow and compound in separate Asset Accumulation Accounts. "Make Believe Dollars" are idle dollars that lose value while Equity invested into Asset Accumulation Accounts creates greater wealth.Since the Equity in the home has no relation to the home's value, it is in no way responsible for the home's appreciation.
Therefore, home Equity simply sits idle in the walls of your home. It does not earn any rate of return. Assume you have a home worth $100,000 which you own free and clear.
If the Home appreciates 5%, you own an asset worth $105,000 at the end of the year. Now, assume you had separated the $100,000 of home Equity and placed it in separate safe and conservative Asset Accumulation Accounts earning 8%. Your Asset Accumulation Accounts would be worth $108,000 at the end of the year.
You still own your Home, which appreciated %5. Also, since the Home Loan Interest is 100% Tax-deductible, the net cost of the money is only 3.6%. This produces a 4.4% positive return between the cost of the money and the earning on that money.
Home values fluctuate due to market conditions, not due to the home loan balance. When Homeowners reposition idle "Make Believe Dollars" in the walls of your home into real dollars in liquid, safe Asset Accumulation Accounts a Home Loan Payment is created. The payment is considered the Employment Cost.
What many people don't understand is when we leave Equity trapped in the walls of our home, we incur the same cost, but we call it a lost Opportunity Cost. The idle "Make Believe Dollars" in the walls of your home doing nothing could be put to work earning you something.
Unfortunately, paying off debt is not the same as creating and accumulating assets. While paying off the Home Loan saves us interest, it denies us the opportunity to earn interest with that money.
Those that understand interest - earn it and those that do not - pay it.
By diversifying you get more safety, security and liquidity, create an investment vehicle that will materialize your financial goals without restricting your current cash flow.
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