Manage Your Assets like a Smartphone to Multiply Your Money
The 7th Principle of Prosperity is Multiply.
As in, to reach Prosperity, you must learn how to Manage Your Assets to make your dollars multiply on their own. When you do this, you create not only growth, you create efficiency. And this is how you keep your money working for you over the years.
So what does it mean to multiply your money? It means you must put your dollars to work doing multiple”jobs,” as opposed to doing only one or two things at a time. When you put money away into different accounts like a 401k, a 529 plan or ESA, and even IRAs seperate your money into different buckets and lock them away. This reduces efficiency and requires you to work even harder to fill each bucket up separately.
Instead, what if you managed your assets like a smartphone?
How to Manage Your Assets Like A Smartphone
For decades, phones could only do one thing: make calls. Over time, they’ve become increasingly efficient. After phone calls, you could leave voicemails. Then, you could text and take photos. Now, “there’s an app for that,” and you can do just about anything from the palm of your hand. Our entire lives are seemingly at our fingertips. Think about how much a phone is capable of:
- Calls and texts
- GPS
- Calendar management
- Making light, tracking steps, etc
- Taking photos and videos, AND can function as an entire editing studio
- Holding your entire music library
- Financial transactions of all kinds
- Calculating
- Loading video games
- And the list goes on….
And while you can go out and buy a separate calculator, flashlight, pedometer, GPS, camera, video camera, music player, planner, video game console, alarm clock… that’s often expensive and inefficient for the average person. It’s especially so if you’re only trying to duplicate the basic functions your phone can already do. You would waste money AND energy trying to duplicate efforts when your phone is already perfectly capable.
Multiplying for Prosperity
So what if you modeled your assets after the smartphone? Instead of aiming for each asset to do one thing, what if you could have one asset that basically did it all? That’s what whole life insurance can do.
Whole life insurance allows you to accomplish many financial objectives and feats more efficiently by putting all of your dollars in one place, yet many capabilities. It’s ideal to have your dollars be as flexible and capable as possible, rather than assigning them a singular purpose.
You want your money to be as smart as your phone.
How Many Jobs Can Your Life Insurance Do?
Let’s see whole life insurance in action. When you have a whole life insurance policy, here are the many jobs your dollars can do at once:
- Pay for premiums
- Build cash value
- Waiver of premium
- Guarantee a death benefit
- Be used for leverage (such as borrowing against your cash value from your insurance company or the bank)
- Increase the death benefit over time
- Add Paid-Up Additions (PUAs) over time
- Earn interest
- Compounding even when you utilize cash value via policy loan
What’s particularly interesting is that leverage piece. When you leverage your policy, you can do so for any reason at any time. This means your cash value is multi-purpose, so not only can it provide a death beenfit, it can also fund purchases while living. This can mean everyday financing as well as education, retirement income, and other purposes that people would typically open numerous “single-job” accounts for. And this is a pool of money that is ever-growing and replenishable because you’re leveraging it rather than withdrawing from it.
You can even increase the velocity of your money, because the cash value gives you ample ability to create cash-flowing opportunities for yourself. Many people use their capital to invest in assets, then use the cash flow to repay the loan, which then becomes income after the loan is paid.
The Many Jobs of Real ESTATE iNVESTING
Like whole life insurance, real estate is an asset that can put your dollars to work in more than one way. When you purchase investment real estate, you can immediately have your dollars doing up to 7 jobs:
- Purchasing and improving the property itself
- Mortgage payments
- Appreciation
- Depreciation (a tax advantage which offsets cash flow)
- Leverage
- Disposition (the ability to sell property in a tax-favored way)
- Cash flow
There are other cash flowing assets that can achieve many jobs, too. Laundromats, ATMs, and other industries can provide cash flow and other benefits. And here is where it gets interesting… What happens when you combine whole life insurance and cash flowing investments that also do multiple jobs?
Combining Whole Life Insurance with Cash Flowing Investments
If you really want to move and multiply your money (manage your assets), you’ll want to learn how to use your whole life insurance well. Namely, you’ll want to combine it with cash flowing investments for optimal success. Here’s what that would look like.
A. Use Life Insurance to Buy Property.
If you have been diligently paying your life insurance premiums, then congratulations! You’ve been growing your capital in a cash value account. After a few years of accumulation, you will likely have enough to leverage. This will probably look like borrowing a lump sum to make a down payment on an investment real estate property. Just make sure the property will provide adequate cash flow without too much overhead.
B. Use Cash Flow to Fund a Policy.
As rents rise, the loan for the down payment shrinks, and your mortgage payment feels smaller thanks to inflation, you’ll find yourself with increased cash flow on the property. This is the perfect time to consider what you’ll do with that “surplus.” You can, of course, choose to take it as income. Or, you can choose to put it back into your wealth-building process by storing it in a tax-advantaged account… like another whole life insurance policy!
Doing this will help you further increase your death benefit (AKA the legacy you’re leaving to your heirs) as well as the pool of capital you have at your fingertips. By growing your pool of capital, you’re giving yourself more options and opportunities to invest and otherwise enjoy your lifestyle.
Many wealthy individuals have multiple real estate investments and smaller life insurance policies to provide themselves with greater flexibility and a range of options. And while real estate and insurance aren’t the only options, they are excellent vehicles that follow our 7 Principles of Prosperity and help you accelerate your wealth.
Save Smarter, Not Harder
If you’re ready to realy accelerate your wealth, it’s time to start thinking about your assets like the multi-purpose tools they can be, rather than individual buckets to fill. By approaching your assets like a smartphone, you’re going to see results faster and find that you have far greater flexibility as the years go by.
Are you ready to get your “smartphone”? We’d be happy to help you purchase a life insurance policy that meets your unique lifestyle and objectives. Schedule a time to chat with our life insurance expert, Theresa, to kickstart your new policy.
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