How does Infinite Banking boost my Emergency Savings?
Utilizing Infinite Banking for your emergency savings fund is fairly simple with not many downsides.
The Emergency Savings Fund
A normal emergency savings fund is usually stored in a bank account.
This means that year after year we lose out on the growth possibility because that money is sitting in a bank account.
This can be the difference between tens or even hundreds of thousands of dollars of lost earnings because our money is being stored inefficiently.
By utilizing a high cash value life insurance policy for our emergency savings, we are able to earn interest on our money in a much more effective way.
Earnings in a Bank vs Infinite Banking
So, what’s the difference?
The real difference is in the earnings over time. A bank account earns around 1 percent annually. And this is taxed!
Compare that to Infinite Banking which has been shown to grow at 4-6 percent or more tax-free and the difference become obvious. Over our lifetime, this can amount to a huge chunk of earnings potential.
If the difference is between a bank account and a life insurance policy, then the smart decision is to choose the most growth–the life insurance policy.
How Fast Can I Get My Money?
The only downside to this strategy is time. If this is money you need accessible within a 24 hour period, than this strategy will probably not work for you.
However, most of us use credit cards or other ways to access money quickly. An emergency savings fund is usually money we need, but can usually wait 5-7 days to access.
With Infinite Banking, we have to apply for our money. It takes a bit of time. As long as we have the ability to wait for our money in an emergency, then the growth is well worth it.
It does put a bit of a strain on our emergency savings. But even if we compromise and put half of our emergency savings in a life insurance policy, and the other half in our bank account, we are still putting more money into growth than we previously would have.
Every situation is different. But we can see how using a structured whole life insurance policy for our emergency savings can pay off in the long run.