money trap 2

Avoid the Accumulation Trap: Keep Your Money in Motion!

“I want my money to be like a river, not like a pond.”
– Lisa Sasevich, Inc. 500 business owner

As we’ve said before, we’re tired of “investing” being equated with the stock market/ mutual funds! Wall Street is NOT the only option! We believe that typical planning based around stocks and bonds has failed, as we explain in a recent ebook.

We’re equally tired of “wealth” being equated with ACCUMULATION. Accumulation does NOT equal wealth and prosperity! If your primary goal is accumulation, you are actually stifling the movement of money, slowing it’s velocity, and limiting your cash flow.

Financial planning teaches us to “Accumulate first, then Disburse.” Save and invest to accumulate ample assets – generally in a 401(k) and other assets based largely in stocks and mutual funds. Then someday, when you accumulate “enough” money in your accounts, you can stop working, begin the distribution phase, and live off of your assets (or the interest your assets produce.)

In Busting the Retirement Lies, I detail why this thinking is so harmful and show other options. Today, I want to critically examine one piece of the formula: the idea that accumulating money should be our primary financial goal.

Accumulation is the goal of most investors. Everybody desires to have enough money, though there is much debate about how much is “enough.” People strive to accumulate an amount of money that means they will never have to worry about money again – or at least, they’ll never have to move in with their kids!

But we believe that the “Accumulate first, then Disburse” model is dangerously FLAWED.


First: It relies on guesswork and speculation.

How do you know you’ll have “enough” money? Well, typical financial planning relies on solid mathematical formulas… using  numbers that are nothing but speculation, generalization, extrapolation, and GUESSWORK!

How many people thought they had nearly “enough” to retire on and were derailed by huge losses during the Financial Crisis? How many people believe Dave Ramsey when he says—without proof—that they can expect about 12% returns from the stock market? Or how many people have already retired, only to discover that low interest rates or inflation have left them with less cash flow than they need or desire?

You can see the huge problems with making financial assumptions, which is exactly what “financial planning” does.

Second: CASH FLOW is what we actually live on.

As a matter of fact, the accumulate-first-then-disburse model leaves many people are AFRAID to spend their principle! We see this all the time—people accumulate perhaps even millions of dollars, but are afraid to USE their own money!

You’ve heard it said that “It doesn’t matter how much you make, only how much you KEEP.” But the truth is, It doesn’t matter how much you make, how much you keep, or even how much you save – it only matters how much you can SPEND after you’ve earned it and saved it!

If the purpose of accumulation is to provide income in later years, why not concentrate on strategies most proven to generate cash flow? Or if you do focus on growth, wouldn’t you want a stellar “exit strategy” to shift your assets from growth to income when the time comes?

Third: This strategy puts our money out of our own control.

Typical financial planning TELLS us to accumulate the biggest possible pile of money—money that isn’t in our control and that we’re told not to spend!

So we work hard and throw a portion of our income into 401(k)s, IRAs, perhaps a taxable brokerage account, and a 529 plan or two for our children’s education. Assets that can only be used for limited purposes at specific times. Accounts we can’t access without paying taxes, penalties, sales charges, perhaps even commissions and fees.

Meanwhile, the financial institutions and even the government benefit from the accumulation. They leverage it, or tax it, or collect fees for sending us quarterly statements letting us know how “our” money is doing. They may even keep a portion of it when we die by taxing our beneficiaries.

Fourth: Accumulation isn’t an effective wealth-building strategy.

Money Trap
It keeps money stuck, trapped, and inefficient.

Money is lot like water. It stagnates when it sits. It becomes unproductive, useless and goes to waste. You want to keep water moving and flowing!

The alternative to stagnation and the flawed “accumulate now, disburse later” idea is to USE your money by keeping it in MOTION!

Move money THROUGH your assets, not just TO them!

Just as LIFE depends on the movement of water… evaporation, rain for crops, flowing rivers for fish, water for drinking and usage… so PROSPERITY depends on the movement of money.

You may be aware that consumer spending – movement of money – makes up the MAJORITY of our economy. But we’re not trained to move money in our personal economies, we’re taught to accumulate it and let it sit in various types of accounts, sometimes unused for decades!

We’re taught to focus on the volume or size of our assets—not the VELOCITY of our assets! But increasing the velocity of our money is key.

Savvy business owners, corporations and bankers know how to keep money in motion. If banks acted the way we are taught to act, they would keep all of their deposits sitting in the vault unused! And they’d go out of business, unable to compete or turn much of a profit.

Of course, banks USE it, leverage it and multiply it, and generate enormous profits… much higher than what we imagine.

People think that when banks pay us 1% on our savings and allow us to borrow money at 4%, they are earning 3% on that transaction – 4% earnings subtract 1% cost. This is NOT correct. When a store owner buys a widget for $1.00 and sells it for $4.00, they are enjoying a 300% mark-up!

It is the same with banking. When the cost of attracting dollars is one-fourth the cost of loaning those dollars, banks are enjoying a 300% gain. (And that’s BEFORE they start creating money through the process of fractional reserve banking, which we’re NOT a fan of, but that’s another topic.)

Moving Money THROUGH Assets

Infinite Banking, a concept popularized by author Nelson Nash, teaches us to move money through assets such as whole life insurance. Moving money increases its velocity and accelerates wealth-building.

Want to buy a rental property or invest in a business? By leveraging your own money for a down payment or a cash-flowing investment, you can actually increase your returns! (This post on illustrates how this works, by investing OPM—”other people’s money”—you can accelerate the return on your own dollars.)

Will you need a car in two years? By saving the money in a cash value account then financing your own vehicle (either through the insurance company or through a bank, using the cash value as collateral), you get the car AND you get to keep your savings working for you, long after you pay back the car loan you make to yourself.

“Move it or lose it!”

You can let money “sit” and accumulate in your cash value account and you will experience safe, steady, modest growth. But the secret to accelerating wealth-building is USING your money! Follow the example of how banks make money and move money THROUGH your accounts.

Find reliable investments where you can generate double-digit returns. Pay off or avoid using high interest credit cards or equipment loans. Put a down payment on a second home you can rent out when you’re not using it. Buy income-producing assets rather than putting your money where you “hope” it will earn a good rate of return.

By using your money wisely—rather than just letting your banker or brokerage house use it—you can:

1. Grow Your Asset Base. Use money from one asset to purchase another asset, such as using cash flow from a bridge loan to pay life insurance premiums, or leveraging life insurance cash value for a down payment on a property.

2. Increase Your Cash Flow through Leverage. When you purchase a cash-flowing investment (perhaps a first deed of trust mortgage contract, a cash-flowing investment property or an equity investment in an apartment building, even loan a family member money at 10% so they can pay off their 19% interest rate credit card), you increase your spendable cash flow.

3. Build Wealth Safely and Soundly through Diversification. You can diversify away from the dollar into assets that will have value in any economy. Ownership, not accumulation, is the foundation for prosperity!

4. Decrease Taxes. By moving money from regular income to capital gains, you can lower your taxes.

5. Control Your Money. Prosperity is not measured by how much money you have, but by how much FREEDOM you have with your money. You can free your money from government control by only investing up to your 401(k) “match”—not the max level. You can free your money from the whims of the stock market by investing in non-correlated assets. You can increase control by simply saving more and increasing your liquidity… then by putting those dollars to USE.

Is YOUR Money In Motion?

Do you have money “sitting” in your savings account, whole life cash value account, or even under your mattress? If so, contact us to find out how to get your money working harder for you! We can help you accelerate your prosperity.

For more on our investment philosophy and the strategies we recommend, read Financial Planning Has Failed and learn about our 7 Principles of Prosperity™ through our complimentary Prosperity Accelerator Pack.

For more on keeping your money moving – MOVE is the 6th Prosperity Principle – See “Move Your Money to Accelerate Prosperity.”

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