Personal Finance Blog for Retirement and Investment Advice

What Nelson Nash and Infinite Banking Got Right

My introduction to Nelson Nash and the Infinite Banking Concept® was a major turning point in my life.

Up until then, I was a business-building consultant to financial advisors. The advisors I coached were always bringing financial products and strategies to my attention, and over the last 25 years, I’ve investigated more than 450 of them.

Unfortunately, most turned out not to be worth the paper they were printed on.

Finally, one financial advisor asked me if I had ever heard of Nelson Nash, and the book he wrote, Becoming Your Own Banker: The Infinite Banking Concept.

I had not, but it sounded very intriguing, so I called and talked to Nelson and ordered a copy of his book.

Nelson Nash brings his background as a forestry consultant and real estate investor, along with his life-long study of the Austrian School of Economics, to the table in his book.

When the book arrived, I started reading it cover to cover immediately. It made incredible sense to me, but sounded like it might be too good to be true.

So I gave it to my husband Larry and asked him to read it and see if he could poke any holes in it.

Nelson Nash, founder of the Infinite Banking Concept®

Nelson Nash, founder of the Infinite Banking Concept®

Larry said he could not, though we debated it for days.

Then we decided to give the Infinite Banking strategy a test drive to see if it was everything it was cracked up to be.

The Infinite Banking Concept® relies on dividend-paying, permanent life insurance – and more specifically, dividend-paying whole life insurance, which comes with more guarantees than any other type of permanent or cash-value life insurance.

Some years earlier, my husband and I had each purchased a dividend-paying whole life policy, and from time to time, we had borrowed against our cash value to cover unexpected expenses.

Unfortunately, however, the life insurance agent who sold it to us never impressed on us the importance of paying back our policy loans. We figured that since it was our money, and there was no requirement that we pay back the loans, why bother?

“Don’t Steal the Peas,” Nelson Nash admonishes…

It’s a reference to Nelson’s analogy that if you owned a grocery store, it’s very common to not pay anything for the groceries you take home for your family’s own use. After all, it’s your store, so you can do whatever you want, right?

But Nelson demonstrates how that’s like stealing from yourself, and shows how you could come out ahead by paying for those groceries.

It turns out that borrowing from your dividend-paying permanent life insurance policy works the same way. You do pay interest on your policy loans, but that interest ultimately benefits you, the policy owner, through a combination of guaranteed annual increases, plus any dividends the company pays.

What’s more, when you pay back your policy loans – which is like paying yourself back – you end up with all that money back in your policy to use again – to purchase cars, to pay for vacations, to start or grow a business, to pay for a college education… or anything else your heart desires!

The exception, of course, is that when you’re ready to start taking passive or retirement income from your policy, you generally don’t pay back those loans.

To find out how this process actually works, we tested it out for ourselves. We were due to trade in my car for a new one. I had enough in my dividend-paying whole life insurance policy to pay cash for the car.

So I called the company and filled out a short form that only asked two questions:

  • How much do you want?
  • Where do you want it sent?

Wow! It was so easy! No nosey credit application, no credit check, no nothing!

Get Your FREE Report!

Get instant access to our FREE 18-page Special Report, 5 Simple Steps to Bypass Wall Street, Fire Your Banker, and Take Control of Your Financial Future, plus a FREE chapter from Pamela Yellen’s New York Times best-selling book on the concept.

First Name:*
Last Name:*
Primary Email:*

We respect your email privacy

And in five days, the money was in my checking account. As a cash buyer, I was in the driver’s seat (pun intended), when it came to negotiating the best possible deal at the car dealership.

I did get a great deal on my new car. And – for the first time in my life – I received immediate title to my car.

Following Nelson Nash’s guidance, I immediately also set up an automatic repayment schedule with the life insurance company to pay back the loan – on a schedule of my choosing – not a finance company’s schedule.

I knew that if Larry and I had a tough time financially during the loan pay-back period, we could reduce or even skip some payments.

And if we did, there would be no black marks on our credit reports, no late fees, and no collection calls or dunning notices.

It was an amazing feeling of freedom and power. It’s hard to describe just how good it feels. When you “become your own banker,” you’ll understand.

But this story gets even better…

Once my car loan had been paid back in full, with an interest rate and on a schedule of my choosing, I realized that I had recaptured all the money I paid for the car, plus all the interest I had paid to the insurance company for the loan, back into my policy!

And now, I could turn around and take another policy loan to buy my next car, take a vacation, or whatever I wanted!

In the past, when I financed a car through a finance company, after I paid back the loan, all I had to show for it was a used car, worth whatever its trade-in value might be.

All the principal and interest payments went to the finance company, never to be seen again (at least by me).

That’s when I realized that saving up money in a dividend-paying whole life policy first, and then using policy loans to finance major purchases, beats financing them, leasing them, or even directly paying cash for them!

If I had saved up money in a savings account, when I had enough money in it to pay cash for a car, I’d have had to cash out my savings and then I’d be earning zip on that money!

That’s when I realized…

Infinite Banking Works Because You Finance Everything You Buy!

Nelson Nash opened my eyes to this important – but largely ignored – money truth.

You see, you either pay interest when you finance or lease things… OR you lose the interest and investment income you could have earned, had you kept your money invested instead.

Financing big-ticket items through a dividend-paying whole life policy solves the problem of constantly interrupting the growth of your money whenever you use or invest it. If your policy is from the right company, when you take a policy loan, the policy continues to grow as though you never touched a dime of it!

However, only a handful of life insurance companies offer policies with this feature, so be sure your policy is with one of them. Learn more about the companies that offer policies with all the features needed to maximize the power of the Infinite Banking Concept.

Do you have questions about how policy loans work, and how the interest you pay ultimately benefits you, the policy owner?

Get answers to all your questions in our Consumer’s Guide to Policy Loans right here.

As I mentioned, my introduction to Nelson Nash and Infinite Banking changed my life for the better. I call the concept “Bank On Yourself” and have written two New York Times best-selling books on the topic.

But Nelson Nash missed several critical with the Infinite Banking Concept®.

I’ll discuss what Infinite Banking and Nelson Nash missed in a future blog post.


Learn more about how the Infinite Banking Concept® works, and how it also lets you bypass Wall Street and grow your wealth safely and predictably – even when the market is tumbling.

Just click here to download my FREE Report AND get a FREE chapter of my book.


Who’s the Bozo Administering Your Retirement Plan?

When you have a plumbing issue, you call in a qualified plumber, right? When you need a medical procedure, don’t you want a qualified doctor? When you go to get your car fixed, aren’t you going to hand it over to a qualified mechanic?

So why would you turn your retirement plan over to an unqualified administrator?

Wait! You didn’t know that you’ve placed your hard earned retirement money in the hands of someone who very likely doesn’t know what they’re doing? It’s one of the common retirement planning traps I’ve been covering in this blog.

According to SmartMoney magazine, 90% of the country’s 401(k) plans are watched over by people who “need no special qualifications and no investing expertise or experience.” [Read more…]

How Hidden Fees Are Sabotaging Your Retirement Plan

In my first blog about costly retirement planning traps, I explained how conventional retirement plans put you in jeopardy of losing money you absolutely cannot afford to lose. Just because all the other lemmings choose to dive over the cliff, doesn’t mean you have to!

Now let’s look at the gremlins of conventional retirement plans that are decimating the nest egg you’re trying to build: FEES.

Do you even know how much you’re paying in fees each year for your retirement account? If you’re like most Americans, you don’t have a clue. The Employee Benefit Research Institute found that only half of 401(k) plan participants even noticed the fee information stuffed in the 14-page disclosure (that requires a magnifying glass to read and 3 years of law school to understand).

And almost no one makes any changes to their plan if they do read the fee disclosures.

Most folks just don’t think fees are all that important. Or, they think they’re unavoidable – sort of like death and taxes.

Wrong on both counts!

[Read more…]

The Movie You MUST See If Your Money is in the Market

You probably already know – or at least strongly suspect – that Wall Street is rigged. And not in favor of the little guys and gals like us.

But this blog post should lay any doubt about that to rest…

Let’s start with the movie you must see if you have any money invested in the market (or need a reminder of why you yanked it out in the first place).

The Big Short is based on the New York Times best seller by Michael Lewis. The main characters are played by Brad Pitt, Ryan Gosling and Steve Carell.

the-big-shortIt recounts the story of a handful of Wall Street traders who (ultimately) made a fortune by betting against the mortgages that caused the housing bubble… and subsequent crash and Great Recession. [Read more…]

Retirement Planning that Helps You Sleep at Night

Let me be blunt. If you’re like the vast majority of Americans, your retirement plan is about as good as the survival plan of that last lemming heading over the cliff!

For most of us, our “retirement planning” has been manipulated by our employers, Wall Street, and celebrity talking heads – all of whom have their own agendas that don’t seem to prioritize our financial security and well-being. And the vast majority of personal financial advisors have chosen to stick with conventional strategies without even questioning the less-than-stellar results they’ve given us over the years.

Risk, a four-letter word?When a “plan” proves that it isn’t getting the results it’s supposed to produce, doesn’t it make sense to come up with a different plan? (The answer is “Yes!”)

Over the next several blog posts, I’ll illustrate specifically how and why your conventional retirement plan is failing you and changes you can make that will let you build a retirement savings fund that is safe and secure – guaranteed.

Let’s start with the problems of conventional retirement plans. I know of at least six major pitfalls and traps and I’ll cover each one in detail. The first painful trap is RISK. [Read more…]

Why you need Dow 35,000 today

I have an important question to ask you…

When do you think the Dow will hit 35,000?”

Does that seem like a crazy or dumb question? After all, the Dow closed 2015 at only 17,425. It would have to more than double to get to 35,000. But it’s not a dumb question. I’ll explain why in a moment.

For the last five years, we’ve been tracking the Dow Jones Industrial Average and what that number means to you in your real life.

Sure, the Dow has gone up and down, and it’s gone up more than it’s gone down. But is it up enough to actually give you a return that justifies after all the sleepless nights and stomach-churning highs and lows?

Then there’s inflation. Has the market, as measured by the Dow Jones Industrials, even kept up with inflation? [Read more…]

Wealth Beyond Wall Street: Retirement Planning Solution or Scam?

Have you been hearing radio ads for something called Wealth Beyond Wall Street offering a free book if you call a toll-free number?

The promise sounds enticing: Use an index strategy to share in the upside of the stock market with no downside risk. If you’re wondering what that’s all about, I’m going to spill the beans in this review.

Wealth Beyond Wall Street is the brain child of marketer Brett Kitchen, and Ethan Kap, a financial advisor. They typically appear together in pictures dressed in black suits and black sunglasses, standing next to a classic Mustang. (Reminds me of the Blues Brothers every time I see it.)

Before Wealth Beyond Wall Street, they called it Safe Money Millionaire and the 101 Plan.

When you call their toll-free number to take advantage of their free book offer, you’ll also be offered a free consultation or “blueprint” from one of their advisors. [Read more…]

Has the Risk You’ve Taken in the Stock Market Since 2000 Been Worth It?

Take a quick guess – what do you think the average annual return of the S&P 500 Index has been since the start of the century almost 16 years ago?

Especially in light of the recent bull market, one of the biggest in history.

So what percent do you think the index has grown on average each year? Maybe 4%? 8%? 12%?

C’mon – humor me and take your best guess…

Okay… so over the last nearly 16 years, since January 1, 2000, the S&P 500 (which represents the broad market) has had an average growth rate of only 1.96% per year. [Read more…]

President Reagan’s Secret 702(j) Retirement Plan – What it Is and How it Works

The Palm Beach Letter is at it again! And that’s why we’ve been getting questions about “President Reagan’s Secret 702(j) Retirement Plan,” and how it compares to Bank On Yourself.

The 702(j) account has gone by other names, including the 770 Account, President’s Secret Account, Invisible Account and Income for Life.

First let me reveal exactly what the 702(j) Retirement Plan is, and then I’ll tell you what they got right… and what they got wrong.

The 702(j) Retirement Plan is yet another name that the Palm Beach Group gave to the Bank On Yourself method, which relies on a super-charged variation of an asset that’s never had a losing year in it’s 160+ year history. [Read more…]