I was reading an article on www.MorningStar.com about retirement planning for business owners (article here) where they answered a question…
“Question: I’m starting my own consulting business. It’s slow-going, but I don’t want to neglect retirement planning while I’m getting my business off the ground. Do you have any thoughts on where to start? I started to research it but was put off by all of the choices.”
MorningStar answers with the generic answers, put money into your IRA then a solo 401k. The same advice you would expect anywhere, basically save some money.
It is very interesting to see how often the same information is just regurgitated over and over. The question I always ask myself is, “is there a better way.”
For the individual yes. However, for the business owner–it’s an even bigger yes.
As a business owner capital is king. You need capital to make things run, pay off bills, and build more capital.
So the IRA and 401k advice is good advice, if you don’t mind losing control of your money for 30 years.
Because for the business owner, the only other alternative is to not save any money, he needs it for his business.
The better way is to take a look at the Becoming Your Own Bank (Infinite Banking) system, don’t just take my word for it, here is why.
There are 4 steps that I want to run through here to show how effective this system can be.
1) Capitalization – so the first step in all this is obviously to capitalize your bank. Just like the IRA or 401k you need to put money into it. So let’s say for instance you decide to become your own bank, you would put the money into your whole life policy (the best place to have a private bank).
2) Borrowing phase – after capitalization you can begin to borrow from your bank. Now this is where you are going to have a difference. Now I know some people borrow from their 401k’s, etc, but a small business owner will most likely not have this option.
But with Infinite Banking we can put our money in a place where it will grow. Then, we can borrow out money against the current cash values in the policy. The money is borrowed against the funds in your policy, but it isn’t the actual funds, so the money still grows in your policy. We now are responsible for paying that money back, forcing responsibility for the use of our money.
3) Borrowing for your business – now this is where it really gets good. As a small business owner you are constantly making purchases. Well, now you can set your business up to borrow the money from you, and you borrow the money again the policy.
As your business pays you back with interest, you can now write off the interest as a business expense. Not a bad way to save some money on taxes.
And this is just one of the tax advantages a small business owner will have with Infinite Banking.
This also works with any personal investments.
4) Retirement – now you have done this over and over with your business, you have built up a nice little nest egg that you can draw from for your retirement. Your money has been compounding, you’ve been using your capital, and continually building up more and more savings–while basically capturing interest you would normally be paying to banks.
And when you die, you will pass money (death benefit) to your heirs tax free as well. It’s no wonder banks buy up so much money in life insurance policies.
So the advice to the small business owner is get involved in Infinite Banking, everything gets better with banking…