PRIVATE RESERVE BANKING STRATEGY
Here's the problem, whenever we purchase anything with a credit card or borrow money to buy a car, we pay more interest to the bank or finance company then we earn on our own savings or investment.
For example, we typically pay interest rates of 7% to 15% on car loans and credit cards while we earn [less than] 1% to 2% on a savings account or hope to average 8% to 9% a year in the stock market with the risk of actually losing our money. So we pay much more to borrow money than we earn on the money we save or invest. And who's getting wealthy on our interest payments? --The bankers and the finance companies, of course!
So what can we do about it?
We can become our own banker and profit from our own borrowing. We can pay ourselves to borrow our own money. This is a banking concept called Private Reserve Banking. Private Reserve Banking is made possible by IRS Code section 7720 which allows you to put money into a "qualified" contract with a "legal reserve" insurance company and earn interest or dividends on the contract value without any taxation or reporting to the IRS.
These "qualified contracts" also allow you to borrow money out of the contract, the same as you would from any bank or finance company. However, before you can borrow money from "your" bank, you must first capitalize it in accordance with the tax law, by depositing money into the contract over a period of 4 to 5 years.
Some of the funding sources used to capitalize your bank might include money you currently save in an IRA, CD or money you are saving over the match amount in a 401k. Other sources may include bonus checks from your employer, tax refunds from the government, a gift or inheritance from relatives. Once your bank is sufficiently capitalized, you can borrow up to 90% of its capital value at any time without any delay and without any lending qualifications. You can simply take out whatever you need whenever you need it and pay it back with interest just as you would with any other loan or line of credit. The money you borrow can be used for any purpose and for as long as you want because you set the terms of repayment, including the interest rate YOU choose to pay your "bank". And you want to pay the highest rate you can afford, not the lowest. Because the more you borrow from your own bank and the more interest you pay on your loans, the more you earn for yourself.
For example, Mary's father set her up with her own "Private Reserve Bank" right out of college in the early 70s and she funded her "bank" with a $5000 graduation gift she received from her grandmother and 10% of her monthly income earned as an accountant.
Mary bought her first car in 1975 for $3100 with a loan from her own bank which she paid back to herself over 3 years at an interest of 10%. Since then, she has purchased 8 more cars--6 for herself and one for each of her 2 children. Even more remarkable was her ability to fund college education for her children who started their own future without student loan debt.
Mary has paid herself more than $300,000 of interest on her own loans and she continues to capitalize her bank with 5% of her monthly income.
And now after 40 years of personal funding and borrowing, she has more than $1,000,000 in her bank from which she plans to draw a tax free monthly income when she is ready to retire. And if there is any money left when Mary passes on, her family will inherit that money tax free.
It is also important to know that a Private Reserve Bank is legally protected from creditors and lawsuits and is contractually guaranteed by a "legal reserve" insurance company, which means that the money in your bank is safe and secure.
So ask yourself this...
Does it make good sense to pay more interest on the money you borrow than what you earn on the money you invest? Or does it make better sense to pay that interest to yourself and make a profit on your own borrowing?
Here's the problem, whenever we purchase anything with a credit card or borrow money to buy a car, we pay more interest to the bank or finance company then we earn on our own savings or investment.
For example, we typically pay interest rates of 7% to 15% on car loans and credit cards while we earn [less than] 1% to 2% on a savings account or hope to average 8% to 9% a year in the stock market with the risk of actually losing our money. So we pay much more to borrow money than we earn on the money we save or invest. And who's getting wealthy on our interest payments? --The bankers and the finance companies, of course!
So what can we do about it?
We can become our own banker and profit from our own borrowing. We can pay ourselves to borrow our own money. This is a banking concept called Private Reserve Banking. Private Reserve Banking is made possible by IRS Code section 7720 which allows you to put money into a "qualified" contract with a "legal reserve" insurance company and earn interest or dividends on the contract value without any taxation or reporting to the IRS.
These "qualified contracts" also allow you to borrow money out of the contract, the same as you would from any bank or finance company. However, before you can borrow money from "your" bank, you must first capitalize it in accordance with the tax law, by depositing money into the contract over a period of 4 to 5 years.
Some of the funding sources used to capitalize your bank might include money you currently save in an IRA, CD or money you are saving over the match amount in a 401k. Other sources may include bonus checks from your employer, tax refunds from the government, a gift or inheritance from relatives. Once your bank is sufficiently capitalized, you can borrow up to 90% of its capital value at any time without any delay and without any lending qualifications. You can simply take out whatever you need whenever you need it and pay it back with interest just as you would with any other loan or line of credit. The money you borrow can be used for any purpose and for as long as you want because you set the terms of repayment, including the interest rate YOU choose to pay your "bank". And you want to pay the highest rate you can afford, not the lowest. Because the more you borrow from your own bank and the more interest you pay on your loans, the more you earn for yourself.
For example, Mary's father set her up with her own "Private Reserve Bank" right out of college in the early 70s and she funded her "bank" with a $5000 graduation gift she received from her grandmother and 10% of her monthly income earned as an accountant.
Mary bought her first car in 1975 for $3100 with a loan from her own bank which she paid back to herself over 3 years at an interest of 10%. Since then, she has purchased 8 more cars--6 for herself and one for each of her 2 children. Even more remarkable was her ability to fund college education for her children who started their own future without student loan debt.
Mary has paid herself more than $300,000 of interest on her own loans and she continues to capitalize her bank with 5% of her monthly income.
And now after 40 years of personal funding and borrowing, she has more than $1,000,000 in her bank from which she plans to draw a tax free monthly income when she is ready to retire. And if there is any money left when Mary passes on, her family will inherit that money tax free.
It is also important to know that a Private Reserve Bank is legally protected from creditors and lawsuits and is contractually guaranteed by a "legal reserve" insurance company, which means that the money in your bank is safe and secure.
So ask yourself this...
Does it make good sense to pay more interest on the money you borrow than what you earn on the money you invest? Or does it make better sense to pay that interest to yourself and make a profit on your own borrowing?
