So I mentioned Indexed Universal Life (IUL from here on out) as a great way to “be your own personal bank” in the last article I wrote.  I wanted to take a minute and discuss that now. 

We all know debt is a very touchy, and should be avoided as much as is reasonable.  Banks make an awful lot of money collecting your interest.  Maybe, instead, you should pay cash, right?  But what about the interest you lost by not investing that money instead?  So what should you do?  I’m saying don’t borrow from the bank, don’t pay cash…  How about we start treating our personal finances like we were a business.  Let’s set up a capital fund and use the interest earned by that fund to pay for your new car. 

You have to realize that this setup, like anything good, takes some time and discipline.  No get rich quick schemes here.  You probably want to allow for a good 7 years or so to build up the capital.  Let’s have you put in $35,000 over the first 7 years.  I told you it wasn’t quick.  From then on, you’re going to continue to save for retirement in this same account, but now you’re only putting in $3,030 a year.    Now, in year 8, you purchase your first vehicle through this program.  Let’s assume you stayed pretty mild on the price and purchased a car for $10,500.  You could do this now, every 4th year until retirement.    At retirement, depending or your rate of return in this program, you could have a retirement of tax -free income of $50,000 per year.  Find me a bank auto loan program that will do that for you!

So when you look at the numbers, taking the time to capitalize your auto fund allows you to then consider your car payments each month as a retirement contribution.    Did you catch that?  We just turned your car payment into retirement income!

So, the next question, and the last one I’ll cover in this article, is: What is the best type of account to do this?  I feel that IUL’s are the best-suited account type out there to achieve this strategy.  Compared to the stock market they function better because of lower volatility.  You could lose your capital fund in the market and have to re-fund the base of your plan.  Compared to CD’s, which will give you that retirement amount for 5 years or so, an IUL will give you that money indefinitely, if constructed properly and perfectly funded.

A special thanks to Nelson Nash and his expertise in providing the groundwork for this program, and to Patrick Kelly and his efforts to use his writing abilities to share this wonderful cure for Americans’ financial woes.  It is incredibly powerful.  It has the ability to change your financial life and fix your retirement dreams.  It truly is something that can work for nearly everyone and doesn’t involve Wall Street and it’s fees and volatility.  There are lots of assumptions I made in the example numbers, so call an expert to discuss this program for your individual set of circumstances.  I am one of those experts you can call.  It just might be the most important financial phone call you ever make.

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