A hearty welcome to Grandma’s Wealth Wisdom with your hospitable hosts, Brandon and Amanda Neely. This is the only podcast for strategies to grow your wealth simply and sustainably like grandma used to. Without further ado here are your hosts.

Amanda: Hi, I'm your host Amanda and welcome to Grandma's Wealth Wisdom where you help you build wealth grandma would be proud of.

Brandon: And I'm your other host, Brandon. This is the third in a series of episodes about FIRE, Financial Independence, Retire Early not about bonfires or that kind of thing but today we're going to be spilling the coals using a fire reference going back and forth about FIRE's perfect match again Financial Independence, Retire Early and the match to light that fire. [0:01:05.1]

Amanda: Yup, we love puns here. A couple of reminders before we light the match. First reminder in the original, Your Money or Your Life
for step nine, Joe, one of the authors, suggests using bonds as your savings vehicle for FIRE strategy. He's using a highly conservative approach. In the updated 2018 version, they expand the criteria for investing to include very conservative and balanced use of mutual funds, real estate and other investment vehicles but originally the concept is using bonds. The second reminder is that the goal of FIRE is to save up enough or have a business like rental properties with enough passive income or regular income coming in that you can live on just the growth of your big pile of money each year or live off just the amount coming in through your passive income and never or hardly ever touch the principle of your investment or in the case of rental properties never sell those properties. [0:02:11.2] You're able to do that indefinitely. Third reminder in the last episode, we listed a whole bunch of FIRE extinguishers; things that could squelch your potential to be able to build a FIRE. So you want to avoid those FIRE extinguishers, they could jeopardize your nest egg or your ability to meet your expenses. The list of extinguishers that we went through they are going to apply even if you don't subscribe to the FIRE movement; even if you want to retire some day. These FIRE extinguishers are things could still jeopardize your ability to do that.

Brandon: There are a lot of FIRE extinguishers out there. So go back to the last episode to check those out to make sure that as you're building your wealth or your financial independence that you don't have those extinguishers that could jeopardize that. [0:03:04.1]

Amanda: Yup. And then the final reminder is that this perfect match that we're going to be talking about today was a tool that half of all Americans were using back in grandma's day. Half!

Brandon:; It's Grandma's Wealth Wisdom.

Amanda: Right. It was the rock solid foundation of grandma's financial strategy and allowed her to rest easy knowing that she had a reliable plan.

Brandon: So in this episode, we're going to discuss the perfect match for FIRE. First we'll be going through the attributes of this match that can make it catch fire then we'll tell you what this asset class actually is. Now keep an open mind and stick with us. Here we go with the attributes. You have access to the funds to use without penalty. It's huge.

Amanda: Yeah, so if you are saving up in various other kinds of investment vehicles like we talked about in the last episode, there could be penalties if you access your money before you're 59.5 years old, those kinds of things. With this financial tool, you can access the money without those kind of penalties. We actually have done this ourselves. We have been using this tool for about five years now. We access the funds to pay off our student loans. We also access the funds when all of a sudden we had a flood in our business. We were closed for awhile, we were getting back up and running and we needed to pay our personal bills even though no money was coming in from the business. So we were able to access that and pay for our rent, for groceries, all of those kinds of things. Can you imagine the double whammy of going through an emergency like that and then on top of that getting something like a 10 percent penalty because you needed your money because of something happening like that?

Brandon: That would suck. Having a flood sucked but...

Amanda: Yeah, huge benefit to be able to have access to these funds without penalty. [0:04:59.9]

Brandon: Second attribute is compound annual growth including guarantees.

Amanda: Now with this financial asset, there are no ups and downs. There's just steady growth year after year, nice and consistent, almost boring. But not boring because ...

Brandon: ... it's consistently moving up.

Amanda: Yup, exactly. It's not like Brandon and I are guaranteeing anything with these kinds of things. There is actually companies that are over 100 years old that issue guarantees behind this financial vehicle and a guarantee is as good as the company behind it. So if you find the right company, the best companies, you know that the guarantee is pretty solid and you can be confident in your own future.

Brandon: This attribute pays taxes now so that you can use tax-free money in the future.

Amanda: Yeah, this is a good attribute of this asset class that when it's properly structured and executed, you do not have to worry about taxes going up in the future. [0:06:02.5] You've already done your patriotic duty; you've paid your taxes. It frankly doesn't become a concern if again you're executing it properly and if it's properly structured as well.

Brandon: There are hedges against inflation with this as well.

Amanda: Yeah, we talked about the price of a gallon of milk going up, the price of a gallon of gas going up, you know things like that – with this financial tool there are built in protections for when inflation is high.

Brandon: And another cool thing is the fees are front loaded in the front of course.

Amanda: So with mutual funds, other kinds of asset classes, your fees go up as you accumulate more cash like if you have a one percent asset under management fee, it will be higher if you have a million dollars than if you just have $10,000. With this asset class, the fees are front loaded which means the growth is more and more efficient each year. [0:07:07.3] It's gets better with time.

Brandon: That's really cool. This also has coverage if you get a chronic or terminal illness.

Amanda: In other words, if you get cancer or dementia or something like that benefits are included to help you cover the cost.

Brandon: What Roth or anything like that – if that would do that?

Amanda: Right.

Brandon: So that's a cool thing. You can and this I really like, take money out for the major expenses then you can pay it back to restock. So you can use this money and then pay it back to restock your retirement, right? So basically, you're able to recycle money over and over again which is confusing so Amanda explain that one to me.

Amanda: Not only like we have talked about having access to the funds and being able to use it before, the key about this part of it is that you are in control of your cash. [0:08:06.5] Not only can you take it out and buy that car but you can pay it back on your schedule. Maybe you want to make monthly payments just like you would to a normal car loan or maybe you want to just wait for a little while and pay it all back at once when you get an influx of cash. There's not going to be any kind of bank charging you late fees or coming to repossess your car if you miss a few payments or anything like that. You are in control not just of taking the money out and not having penalties that way but in terms of how you put it back and how you restock it and recycle it over time as well.
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Brandon: [0:09:15.4] And the last one is the most unbelievable in my opinion but it's true because again we've experienced it ourselves as clients. So you remember you've taken money out but you're cash continues to grow even while you take out a loan using the funds as collateral.

Amanda: Yup as Brandon said, we've seen this in our own account. We use the funds to pay off our student loans, to get through that flood in our business, yet we still saw the same growth that we expected had we not touched the money one bit. That's pretty cool if you ask me.

Brandon: Yeah, so we were able to take care of some of that debt and see our net worth grow up at the same time. [0:10:00.4]

Amanda: Mhh hhm.

Brandon: So what is this thing that has all of these attributes? Now keep an open mind here. If you choose to unsubscribe and delete this podcast because you already think you know that's between you and your wallet. We simply invite you to listen and consider. We ask that you at least keep an open mind for the few minutes that we have left in the episode. Chances are if you've considered FIRE, remember Financial independence, Retire Early, you're already open to alternatives to the mainstream financial advice out there. Perhaps because you've seen how the mainstream financial advice has turned out for your parents or maybe even yourself. Now this is one of those alternatives.

Amanda: Yeah, so this thing that we've been talking about, this asset class, is called – ready for this?

Brandon: I'm ready. Drum roll .....[0:11:00.9]

Amanda: Here we go. High cash value dividend paying whole life insurance with one of only select companies with the mutual non-direct recognition structure and financial strength to back up these types of plans.

Brandon: I mean that's a huge mouth full which is why I think various people have come up with the few nicknames for these types of policies and maybe you've heard of them. There is the infinite banking idea. There's cash flow insurance. There are a lot of other ones but our favorite is Bank On Yourself®.

Amanda: Now, listener, you should totally know that Bank On Yourself is a registered trademark and we're sharing it now with permission of the trademark owner yet the information in this podcast and all of our episodes on this podcast represent Brandon and my own opinions and not the opinions of Bank On Yourself or Pamela Yellen, the lady who coined the term. [0:12:09.7] The very nice lady that we respect and admire but these are our opinions and it's not her opinions or Bank On Yourself opinions.

Brandon: Yeah, you want to always say those things because you know the world we live in.

Amanda: And it's important.

Brandon: And it's important and we want to be upfront and really be so that you as the person who listens or if you were to become a client that you are 100% knowing the things that we do and what we are about.

Amanda: Yup.

Brandon: So we could talk for days about how these types of policies work but here are the top four things that you need to know about them.

Amanda: We could list like top 10 things, top 20 things, or whatever but we thought we'll start with the top four. So here we go. The number one thing that you need to know that this is not the kind of life insurance like Susie Orman and Dave Ramsey love to hate. [0:13:02.0] This is categorically different. This kind of whole life insurance is very different than the kind of whole life insurance they talk about.

Brandon: Again, we speak from experience because it really affected and helped us. The other thing is options are added to super charge the growth of the policy so you can use funds during your lifetime and still at the same time leave a legacy for future generations.

Amanda: Yeah, that's a nice number two most important thing to know, is that it has both within your lifetime and after your lifetime impact. The third thing is that for those who set up these kinds of polices for other like Brandon and me, our commissions are slashed 50-70% compared to what your typical life insurance salesmen would get. Even more compared with someone who does a one percent asset under management fee. In other words, we're not doing this for the money. [0:14:04.5]

Brandon: Yeah, we actually got into this to impact the future of our clients. We got into this because we wanted to change the world. We saw that there's poverty increasing amongst seniors and we wanted to do something about it. It wasn't so much about the income that we wanted to make.

Amanda: Right, and help seniors, yes, but also help those our age so that we're not in the same place when we're seniors.

Brandon: Right, people that are – eventually they are going to get there and maybe they could start early and think through early and if we can help them make better decisions that would be awesome.

Amanda: Now number four most important thing for people to know...

Brandon: Yeah, the most important thing for FIRE enthusiasts is that the life insurance companies using among other things top rated corporate bonds to grow your money and they are often able to hold – or they do hold them all the way to maturity so they can maximize the growth those funds. [0:15:09.4]

Amanda: Yeah, they often hold them all the way to maturity so they can maximize the growth of those bond funds. What does this mean practically? So if you were to go out and buy bonds just on your own like in the book, Your Money or Your Life, what they suggest as step nine. When you buy those bonds your money gets locked up. You get interest payments during the term of the bond but you can't use the original price you paid for the bond unless you sell it. With the life insurance company, they have these huge reserves of money and they can buy bonds and then hold those bonds all the way to maturity when the interest and the original price are paid in full. Meanwhile, as a policyholder, you get access to a portion of the original premium that you sent into the life insurance company. You can also access the growth of your policy. [0:15:59.5] You can actually use up to 90% of your cash value for anything that you want and still get the growth on the full amount.

Brandon: That's amazing.

Amanda: That's totally amazing. That doesn't happen if you just go and buy bonds on your own. The other thing that this practically means is that you shifted the risk from you and on to the life insurance company. I mean the definition of insurance is the transfer of risk. When you purchase bonds, there is still some risk. There is less risk than stocks but there is a chance that you could lose your original amount. When you work with a life insurance company with the financial strength to back up their contracts, you have transferred the risk to them plus there are extra safeguards in place in the unlikely event that the insurance company is unable to meet their obligations.

Brandon: So Amanda we're starting to get into the weeds here with all the details.

Amanda: Right, we should probably back up for a second. So we could talk about this for ages like I said we could have 25 things you should know but we wanted to share the four most important ones today. [0:17:05.1] If I were to add a fifth, I would simply say the fifth most important thing is to be very careful who you have set one of these policies up for you. It's something that takes a lot of training and you want to make sure there's accountability for the person you work with too. For us, Brandon and me, we are both Bank On Yourself authorized advisors which means we have been trained and we have accountability for how we design these types of plans for people but even if you don't work with us still be really careful. You can actually go to BankOnYourself.com and you can find a Bank On Yourself authorized advisor through their website. But if you would like to work with us and see how this type of plan might work for you and for your family that sort of thing within your lifetime and for future generations, all of that big picture and you want to do that with one of us all you have to do is go to GrandmasWealthWisdom.com and click "request a meeting". [0:18:04.8] That's it. You just go to there and click on "request a meeting", we'll start a conversation. We see ourselves as educators not salespeople so we try to take good care of you. It's an educational process. We're not trying to sell you anything; really just be there with you and show you what this really looks like for you.

Brandon: Now remember we're only talking about this strategy and helping others see if it could work for them because it again helped us so much. These types of policies have literally changed our financial picture and given us a ton of financial intelligence, integrity, and independence.

Amanda: Speaking of why we're only talking about this strategy because it helped us so much and about our personal story with money; in the next episode we’re going to get into Brandon's history with money. [0:18:57.5] I'm actually going to interview him, ask him questions about what was money like growing up, those kind of things and if you join us next time, you can find out why Brandon would eat cereal for dinner back when he was just a bachelor.

Brandon: Yeah, because it was easy maybe? I don't know that's one thing and there are other reasons.

Amanda: We're going to get deep into that.

Brandon: So don't forget to hit the subscribe button so that you get the next episode automatically.

Amanda: Auto-magically.

Brandon: Auto-magically.

Amanda: Yeah.

Brandon: There you go.

Amanda: And we of course invite you to leave a rating and review wherever you're listening to this episode.

Brandon: So until next time, keep building your wealthy simply and sustainably for your own future and the future of our grandchildren's generation.

The topics presented in this podcast are the general information only and not for the purposes of providing legal, accounting, or investment advice. On such matters place consult a professional who knows your specific situation.
All guarantees are based on the claims-paying ability of the insurer. Dividends are not guaranteed. The presenter(s) is not a licensed tax professional and this information is not to be construed as giving specific tax or planning advice. Tax laws are subject to change. Excess policy loans can result in termination of a policy. A policy that lapses or is surrendered can potentially result in tax consequences. Your results will be different from any discussed here, as each policy is custom tailored.

Bank On Yourself® is a registered trademark owned by Hayward-Yellen 100 Ltd Partnership and is used with permission of the trademark owner here. This information represents the opinions of Amanda and Brandon Neely of Business Activist Entrepreneur, L3C and not of Bank On Yourself or Pamela Yellen. Pamela Yellen and Bank On Yourself and its affiliates, directors, officers, and employees are not responsible for any errors and omissions, or for the results obtained from the use of this information and will not be held liable for any direct, special, indirect, incidental, consequential, punitive, or other damages related to the use of this information.
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