The idea we’ve been exposed to about investing is that our money can only be in one place at a time, right? That’s all we’ve ever heard, but that’s not exactly true. Your money can work for you in two different places thanks to the Infinite Banking Concept. It’s a strategy that we’ve previously discussed with today’s guest, Dave Befort, but today we want to dive into how to truly harness the power of being your own bank.
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For the average person, more than one-third of every dollar they make goes to paying someone else with interest or a loan. The key is getting to a point where you’re keeping as much of the money you earn and leveraging those earnings to invest or use elsewhere. For many pilots, they make too much money to contribute to a Roth so once you’re maxed out that tax-free growth money, what pot can you put it in next.
That’s where this Infinite Banking Concept comes into play, and we’ll both share our reasons for using this strategy and provide the steps for making it a part of your financial plan moving forward.
0:00 – Intro
4:24 – The Infinite Banking Concept
7:59 – Why Dave does this
14:45 – The amount the average person pays towards debt
18:52 – Using this vehicle to replace a Roth
21:46 – Having access to your money
25:13 – Why should a pilot consider this?
32:49 – Why Ryan won’t invest in any fixed income again
35:57 – How do you get to a point where you’re putting all your money in here?
Learn more about Dave: https://maxperformancefinancial.com/about/
Read ‘Becoming Your Own Banker’ by Nelson Nash: https://www.amazon.com/Becoming-Your-Own-Banker-Infinite/dp/B001NZO1DS
Retire Pilots – https://retirepilots.com
Get your FREE Retirement Toolkit – https://bit.ly/3ZmZsaX
Pilot Tax – https://pilot-tax.com/
The Pilot’s Advisor Podcast is also on video. Watch & Subscribe on YouTube: https://bit.ly/3EIEBW2
(Note, this is an automated transcription. Please forgive any errors.)
Ryan Fleming 01:11
Welcome to another edition of the pilots advisor. We have a familiar face that is starting to show up from time to time here, Dave, Dave Baffert. Welcome to the show again,
Dave Befort 01:20
all right, thanks for having me again, man. We just jumped right in.
Ryan Fleming 01:23
So my wife went to a 20 year Air Force Academy reunion last weekend. And of course, I wanted to come and it kept getting asked by a lot of my buddies, hey, where are you at? You come on you showing up. But of course, I had to take care of the kids. So I didn’t get to go. And then the next thing I know she’s hanging out with you.
Dave Befort 01:42
Yeah, yeah. finally get to see Carrie after 20 years. So it’s funny man, how you see, you see people every day for like, four years, or my case five years with some people, because we were both management majors and and then you part ways, and you don’t see each other for 20 years. But yeah, man, it was, it was a lot of fun. Going back seeing a lot. I think over half our class showed up. And I’d say most of the people looked they were recognizable. Yeah, after 20 years, they look, they look pretty good.
Ryan Fleming 02:11
Well, I definitely have to have some name tags, because I thought about that. I’ve missed my reunions. But I know I’d go back and be like, seeing faces going I know that person but I don’t know if I could spit out their name right away.
Dave Befort 02:23
Well, I got the yearbook out like the week before I left and went flip through and try to put names to faces again.
Ryan Fleming 02:31
Well, you’re much smarter than I would have shown up and just you know, made a you know what, of myself on occasion. But But yeah, so if you guys don’t know, my wife, Carrie and Dave were graduates of the same year 2003 from the Academy. So they’re both back for the same reunion ran into each other, which I thought was pretty cool. So we’re recording this on a Friday morning. And every Friday I go have breakfast right before this. And there’s this place called Strickland’s and they have awesome breakfast. Okay. And, unfortunately, are thankfully I’m a little on the taller side because I do you know, I’m up to 240 probably at this point.
Dave Befort 03:11
Your BMI still okay being what 6465?
Ryan Fleming 03:15
Well, anyway, that what I ordered now, they don’t even ask me what I want. I call it the Fat Boys special. So just bringing up this lady, this waitress named Amanda, that’s there every Friday. And I go with Tracy Sweeney and some of the other guys. So it’s kind of a tradition now, which is pretty awesome. And why, um, you know, we’re in this. She saw me ordering the kitchen sink for I guess I don’t know how many weeks in a row. And she goes, Hey, I have something I think you might like. And I go bring it. Let’s check it out. And so now it’s kind of the tradition and I just call it the fat boy special. I don’t really know what it’s called. But it’s good.
Dave Befort 03:48
It’s just the kitchen sink with gravy on top now.
Ryan Fleming 03:52
There’s not gravy, but there’s pretty much everything else on there. Yeah, it’s it’s it’s, it’s very good, but it hurts. Yeah, not to get too graphic. It hurts and you like anything else in life? You normally have to pay the piper afterwards. Yeah. So well, you know, you can’t be in two places at one time. And unfortunately, you know, I was home with the kids doing soccer games and stuff while you and Carrie were out there having a good time at the academy. But there are ways I guess where your money can work for you in two different places. Hmm.
Dave Befort 04:28
Oh, wow. That’s a Yeah, that’s a good point. As soon as you say you can’t be in two places at one time. The first thought in my mind was what you can bet your money can be. Is that Is that what you actually thought? No, that’s exactly what I thought. So I’m glad you let into that. But yeah, there’s a there’s absolutely, usually you only get your money can only be in one place at one time. Right? That’s really all we’re exposed to our entire lives is you can either do this, or you can do that. What I love about this con stuff you and I have talked about so many times the Infinite Banking concept is it’s a way where you can have your money over here and have those same dollars over there. So how does that work? Maybe for people who haven’t listened to the previous episodes here is you create a, a specially designed life insurance contract. Where this is the first place my money goes, once it’s in there, it’s going to be earning uninterrupted compound growth for the rest of your life, even while you’re leveraging it to put to work, doing anything else you want to do with it, it’s going to be compounding in the background, while you’re leveraging it to go to buy that next car to go do whatever, maybe you you buy real estate investment properties, I talk to a lot of pilots. And that seems to be a pretty, a pretty common goal, for a lot of them is to own a few rental houses. So this is a way to put those dollars in two places at the exact same time. And I don’t know many other places you can do that. That’s what banking is all about is reselling, reuse, recycling the same dollars over and over and over and getting multiple uses out of them.
Ryan Fleming 06:18
Yeah, I think for so many years, I always talked about opportunity cost, you know, you could go and this is more like when we’re all in our 20s. But you could save and put that money away and let it work for you for the rest of your life. Or you could go buy that other round of drinks or shots for everybody in the bar, and then that money’s gone, gone forever. And so talking about making a little bit better choices with your money, you know, because the time factor is the biggest factor. So that whole opportunity costs, but then when you start talking about this, it’s a totally different story. Because you’re talking about putting your money somewhere where it’s going to work for you forever, but still being able to use it somewhere else, and you bring up banking, and you know, and I started reading The Creature from Jekyll Island. And it’s a
Dave Befort 07:06
scary read, man. It is it is that opening dialogue is amazing if the entire country just listened to, to the opening dialogue of that book, they would understand what’s going on in the banking system.
Ryan Fleming 07:19
Yeah, well, and I think as, as my life has gone on, you constantly try to get better, you try to get smarter. And I’m upset that I didn’t really discover this well into my 40s. And unfortunately, even as being a financial adviser since Oh, 809. I always, you know, poo pooed whole life insurance, well, then I realized, this is not what this is, and seeing the different tools for how to use it. And really how it can take your retirement planning and retirement income plan to a totally, totally different level, which is exciting to me and lower that standard deviation and have guarantees and so many things. But on a basic level, Dave, of course, so our listeners know, I just put him on the spot. We don’t even, we didn’t even say what we’re going to talk about, which I think make it a little bit more authentic, make it a little bit more fun. See, he’s shuffling already, because he doesn’t know what I’m gonna bring here. I
Dave Befort 08:15
don’t know what’s coming.
Ryan Fleming 08:17
But that but that makes it fun. And I think that more people are going to listen because of that. But Dave, what I want to ask about is you talk about the first thing you do with your money, and we’re going to talk about it on a very basic level, the first thing you do with your money is you run it through one of these policies, and then you take it to go do what ever you might do in life, can you break that down for us, and also really explain why you do that. Because as soon as you do that, your money’s going to be working for you forever. And then you can go do what you’re originally going to do with it. And the other aspect of that that’s wild, not only is your money being in two different places, but the internal rate of return on your money actually gets really stupid if you if you break it down and can can take your money and do better than what you’re borrowing it back at
Dave Befort 09:00
ya broad big question there. So why do I do it? I wanted to get involved in the business of banking. So one of my mentors Nelson Nash, who, who discovered this concept, and exposed it and evangelize that to you know, now the, I don’t know, 1000s, or maybe hundreds of 1000s of people who know it now. I don’t know if we’re up to the millions that we should be we will be but he really describes the process of banking. Now. That’s a process and banking occurs, whether you’re involved in it or not. So I say everybody should be involved in it. That should be your second job. You should be in two jobs. One that’s where you make your money and to the banking business, the process of banking has you need a product to actually do the process. In my 13 years of experience, the best product I’ve ever come across is specially designed whole life insurance policies. If there was a better product to perform the process of banking, I’d use it. There’s just there’s not in North America. Anyway, this is on the works in US and Canada. But why do I put my money there first, like you said, once I, once I put it there, and my premium creates cash value, that cash value is guaranteed to never decrease. And in fact, it compounds on itself every single year through guaranteed growth and dividends that the company pays out. So you got to use the right company, which fortunately, I know, you know, the right companies to use. But they pay dividends. And these companies have been paying dividends, how many companies do you know that have paid a dividend every year for 120, straight years, you know, through World Wars, through recessions, financial meltdowns, COVID, doesn’t matter. dividends were paid, which means my money was compounding. Now I put it there, because I understand opportunity cost, I hate the idea of taking my hard earned cash, my hard earned principle, and giving that away forever. And that’s something I’ve learned about, about wealthy people, wealthy families, I have the fortune of being mentored, really on a weekly basis for the last almost four years by a man who’s you know, would be considered a one percenter, he’s, he never spends the principle of anything. His his philosophy is, never lose your face value. So to me, that means everything I earn, from my act of you know, blood, sweat, and tears, I don’t want to lose that. So I’m gonna put that somewhere as much of it as I can. Of course, I’m not putting 100% That’s, it’s difficult to do that, you know, you can build up to that over time. But as much as I can want to put that somewhere where it’s going to be working for me forever. And now if I want to utilize it, I just leverage it. And I borrow from the insurance companies pot of money, and go do my alternative investing or even investing in the stock market. Like you can do both. You brought up food at the beginning of this. So I’m gonna use a food analogy, because you’ll understand it. So I like to call it you go to Panda Express. You ever been there?
Ryan Fleming 12:06
I’ve probably eaten at every place. I like. Carrie, Carrie loves to cook. And when we got married, I had no clue that she was such a good cook, but it works out so well. Because I like to eat. Yeah, she cooks and then I eat don’t say,
Dave Befort 12:22
All right, good. Okay, well, I don’t want to get off on tangent on food. This isn’t a food podcast. But I want to use a food analogy. I love Panda Express. Right? It’s terrible for you. But I love it. And when you go there, you get a combo plate and they say, Hey, do you want rice? Or do you want noodles, and I say I want both give me half and half, they don’t have that on the menu, you know, half and half. But if you ask for it, they’ll give you both, right, that’s what I consider this, this isn’t an asset, I can have my I can put my money here and I can put it somewhere else, I can get rice and noodles, I don’t have to choose just one or the other. There’s no mutual exclusion going on here. So that’s the power of it, when I don’t lose the opportunity cost of giving away my cash ever again, that’s going to work for me earning compounding in the background. Until the day I die, at which point my family gets millions of dollars tax free given to them. And then to I can leverage that and put it to work elsewhere and get multiple rates of return. I like the idea of multiple not just one.
Ryan Fleming 13:25
And wealthy families have been doing this for a long, long time. And that’s where I think it’s a little bit hard for me, knowing the way I grew up, I got into this industry, because I grew up very poor paycheck to paycheck. And so I constantly wanted to educate myself on a better way how to how to save my money, how to make my money grow. And to discover something like this later in life and how powerful it is. I don’t worry about what the vehicle is that we’re using to make it happen. I look at all the bells and whistles that it has and what it involves. And it’s so hard because there’s so many positive things about it. I’ve been trying to teach my clients about the overall strategy of retirement and how it plays into that. And then kind of digging back to the tactical side like we’re talking about now. But no, that’s my goal is to every dollar I make, run it through a policy and then go do what I want to do with it. Because there was something in Nelson’s book that really spoke to me, you know, you could read a book and I read a book and we all see different things, you know, different golden nuggets is what I like to talk about will pop out at you and that’s the value of reading a book over and over again is each time you read it, you might have passed over or glossed over something to your prior and then then it hits you that you know that golden nugget hits you. And one of the ones that that sticks out to me. They were talking about the average person and for the average person every single dollar they make 30 I think it’s 37% of it goes away paying somebody else with interest or alone or, you know, whether it’s a car payment, whether it’s their home mortgage, whatever it might be 37 cents on every dollar is gone.
Dave Befort 15:11
Yeah. That’s that’s hard to, to accept until you look at. I mean, look at your income and look at how much is going out in interest. If you have a mortgage. You know, and you started it within the last five years, the a whole lot of that is going towards interest, probably 80% of that payment, going towards interest to the bank. Yeah, car payments, the amortization schedule, which is what I mean, when I bought a house in June, right, we moved in and the amortization schedule came up. When I was going through all the paperwork at the closing table. And I just I flipped through it as fast as possible. I’d already looked at it, I didn’t want to see it again, because it makes my stomach hurt. It hurts. So yeah, it’s this all that all
Ryan Fleming 15:53
that interest upfront, not even barely touching the principal for years.
Dave Befort 15:58
For years. Right. So yeah, that’s, that’s a research that was done. You know, this book is 23 years old. So the book you’re referring to is becoming your own banker by Nelson Nash, the late Nelson Nash. But I’d say that probably, that statistic probably still rings true. For the average, the typical American,
Ryan Fleming 16:22
I would argue, and of course, I have no data to back this up. But with how much more credit card debt the average American has today, buying buying stuff before they can really afford it. I would argue that that number is probably higher today.
Dave Befort 16:38
Could be I think, yeah, credit card debt has has skyrocketed. Like we’ve probably hit a new high on the amount of credit card debt Americans hold. And I mean, I just talked to somebody a week ago. He’s somebody I used to be stationed with in the Air Force. He’s not a client, but he called me up because he knows what I do. And he talked about a, you know, he’s got a 29% credit card out that has, has been paying, you know, his wife had been paying the minimum balance on that for years and years. And it just came to his attention. And he’s like, Man, this, I said, your number one priority is get rid of that 29% That you’re that’s leaving your hands, you know, like you’re losing so much more money than you’re making anywhere else right now. So your number one priority is stop paying that interest. So we brainstorm some, some things that get him on the right track. And I think he’ll be okay. But yeah, that’s painful. When you see that that much money has gone to somebody else?
Ryan Fleming 17:42
Well, it’s very painful. And what I talked about as I tried to get, I’ll have clients, it’ll bring up Dave Ramsey, to me and what you just said, rings true of what Dave Ramsey talks about, go get rid of that high interest rate credit card first, right, but I want to get on my client, we’re not talking about people that are in massive credit card debt, trying to get on the other side of the hump. You know, we’re trying to take it to a graduate level where you don’t have credit card debt, and most likely, the only debt that you have now would be hopefully your home mortgage. But where do we take our resources and get them to work for us forever. And I got here, because it’s getting sickening to watch how much we pay in taxes. I mean, really bad. And if you have w two income, there’s no place, there’s nowhere to where to hide, okay, you’re gonna end up paying that money to the federal government. But where it gets different, where you have a choice is, are you going to take those assets that you invest and defer them for the next 2030 years, depending on your age, and pay an amount that you don’t know what the tax rates going to be? Or start making choices today? To never pay tax on that money? Again, like most people know that a Roth IRA is a beautiful thing, you know, that that’s good for them? Yeah, but most pilots also make too much money to contribute to a Roth. Right? So do not get into too many details. But if you’re, you know, if you’re you’re hitting all the Roth Money in Your 401 K, and then you don’t have a traditional IRA, and you can backdoor some money into a Roth, where’s our next pot of money for tax never money. And there’s, there’s not unless you’re starting to discover things like this. It’s like, well, if you had a Roth IRA, and you could put an unlimited amount of money into it, how much would you put in right and in my answer was everything but some people are like, well, you know, I put $20,000 in it, okay, well, whatever, whatever the number it is, it’s the principle behind it. And and something as powerful as this, I wonder, you know, some people are turned off by the vehicle that we might be using. But everyone no one has any trouble building up a bunch of cash in a savings account and letting it just sit at a bank. Right? They have no trouble doing that.
Dave Befort 19:59
They know though, inherit Hey, there’s something wrong with that. They’re just not quite sure what to do about it. And the reason you’re bringing up, you know, Roth and interest and taxes is because if you first put your money inside of a properly designed whole life insurance contract, that money is never going to be taxed again, you’re going to end up if you, you know, this is a long term strategy. But over your lifetime, you’re going to end up with far more cash value built up in there than you ever paid in premium, you’re gonna get everything you paid in, plus much more back over your lifetime. And that gain is all going to be accessible, completely tax free. And there’s no yeah, there might be limits to how much you can pay in premium. But they’re way higher than a rock, what can you pay in a Roth like six grand or something like that,
Ryan Fleming 20:53
what it changes with inflation, but 6500 this year, and if you’re ever 50 7500,
Dave Befort 20:59
you can easily put up to 30 for for most pilots, because of how much they make, they could easily put up to 30% of their income into a life insurance contract. And the insurance company will absolutely accept it. And it has nothing to do with the IRS code either, like life insurance predates the IRS by over 100 years. So this operates in spite of the tax code, not because of it, which is nice. So the difference between this and a Roth, other than one, you get to put in a whole lot more money into this, there’s really no contribution limits. There’s ways we can work around, you know, if you want to do 50% of your income, we can make that happen completely legally. But there’s no contribution limits in that regard. And you have access to that capital,
Ryan Fleming 21:46
you talk to people about this concept all the time on a daily basis. And I think that’s one of the hang ups is people think that if they’re going to pay money to an insurance premium that it’s gone like they’re like, like almost the same way it is when you put money in your 401k. Right? It’s quote unquote, gone because you can’t touch it to your 59 and a half, or retirement. But this isn’t like that at all. Right?
Dave Befort 22:10
No, no, it starts building cash value immediately. So you’ll have access to that cash value. Within a couple of weeks of funding your premium. I mean, I’m talking to a guy that you sent over one of your clients you sent over to me and we’re talking, he said, I want to have 50 grand available pretty soon to go buy a truck, but I don’t want to buy it, I don’t want to pay cash with it. I want to utilize, you know, a cash value loan to go buy that truck. So that cash is continues to earn for me in the background. So now we’re just designing a policy so that he can fund it. And within two weeks of funding it have $50,000 available that he can borrow against and go buy that truck.
Ryan Fleming 22:52
And so now rather than him financing the car, and paying interest to somebody else, or paying cash and losing the opportunity cost on all that cash for the rest of his life. We’ve taught him a way where he can let that money work for him for the rest of his life. And he can finance that vehicle himself and get paid that interest to himself.
Dave Befort 23:15
Yeah, yep. And you know he’ll he’ll borrow the insurance company’s money to go buy that truck with cash or he’ll own the title to the truck. And now he just pays back his loan. But every you know, he could pay it back on the same schedule he would have if he went got a bank finance loan. So let’s say it’s going to be 600 bucks a month. He just now pay 600 bucks a month back to him to his own loan. And guess what, as soon as he pays it back, that $600 is available for him to borrow out again.
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Ryan Fleming 25:13
So Dave, you flew with airlines for a little while and then decided to take a different path in the business world. And, and I understand that I think choices would be a little bit different if you didn’t have your own 401k. You know, or if you’re doing like the, you know, a SEP IRA or something like that, where it all be tax deferred. But I know you’ve made the decision to to almost exclusively use this concept with your your lifestyle and and your retirement planning. Can you give us a little background on on your thought process with all that like, like, obviously, any airline pilot out there, they’re going to continue to do their 401k, they’re going to continue to take all those be fun contributions that that their company gives them? I mean, it’d be stupid not to. But outside of that, why have you made the decision you’ve made? And can you give me an overall concept of what you see,
Dave Befort 26:01
outside of that the number one reason I made this decision is for control. I think as pilots, we’re all, we’re all basically control freaks, to a certain extent, right? I mean, if an aircraft if you’re sitting in coach, you’re dead heading or something like that, heading back from a trip, and the oxygen mask dropped from the sky and the aircraft noses over and starts screaming towards the ground, like, do you want to be sitting in that seat coach? Or do you want to be sitting at the controls, you want to be at the the controls, I think every any pilot worth assault would want to be in the cockpit, flying that thing, pulling that out of a dive and saving the day, right. That’s the way I feel about my money, I want to be in control of as much money as much of my capital as I possibly can be. Because when I’m in control, I have access to opportunities. And some of those opportunities for me have come in the form of career changes. So I left the Air Force in 2014, you know, the, the nest of Uncle Sam, you know, getting a paycheck every, every the first and the 15th, you know exactly what’s common, you know, your future, you know, you’re going to be taken care of. And I left that for corporate America, I did that for a couple years, transitioned to real estate, then transitioned a couple years later to flying and this business. And the reason I was able to make those transitions, is because I had access to my own capital. If I needed it to fall back on, you know, I knew my family wasn’t going to starve. I know I had enough to live on for a year if I didn’t make any money in the new endeavor.
Ryan Fleming 27:43
So you didn’t have to go ask ask a bank for a loan. Because when you have capital built up on a policy like this, you have all the control and you don’t, you don’t have to fill out any paperwork really, you just say give me my you know, give me a loan against my money.
Dave Befort 27:57
Collateral, I have this much available. I want this much. Put it my bank account. And don’t ask me any questions.
Ryan Fleming 28:03
So if you had you just bought a new house, and granted, is it a brand new house like a new build a new build? Okay, so good. So well, they’ll still they’ll still be projects. Like let’s say you have some project
Dave Befort 28:15
many projects, man, there’s there was no gutters on this house out of pay for gutters. I had to pay for curtains, and blinds. And that’s a business you should get into that business man. I gotta put a door on my office. Yeah, so.
Ryan Fleming 28:30
So all the little details. But if you knew that you had a bill coming up, that’s going to be $20,000. And you still have premium left, you know, or pu A’s, which, you know, if you don’t know what those are, keep listening over time. And we’ll we’ll teach you all these concepts. But you would definitely you’d run it through your insurance policy and then borrow collateral right back to pay the painter, the dog person the is that what you’re saying?
Dave Befort 28:55
Yeah, no doubt. I mean, I was in that situation recently, where I’ve got all of my policies, I pay the premium on all of them. I’ve repaid all the loans in the last year. So they’re all maxed out. I can’t put any more money into them. And now I’m, I’m continuing to pile money in somebody else’s bank right now. So I didn’t see that problem soon enough, because that is a problem in my eyes. I would agree. Yeah, I didn’t see that soon enough. So I was behind the eight ball, I had to go get four new policies for you know, for my kids, and create policies and pay the premium on those so that I could get that money in there before I had to take it out to go pay the guy for the gutters. And you know, the blinds and the closet organizer and all the stuff I’m going to have to pay for that. If I pay with the cash that’s sitting in somebody else’s bank that cash has gone forever. Yeah, and that idea makes me sick.
Ryan Fleming 29:53
So when you own a business, most people pay estimated taxes you know whether they do it quarterly monthly, what have you. And something that I’ve started doing is I just, you know, do as I say, not as I do type, I’m not doing that. I’m putting all my money into policy, and then when it comes time for the tax guy to come around, Now, granted, I’m gonna have to pay a little penalty, because I didn’t do estimated taxes. Yeah, but I’m gonna pay him out of my policy, and then just start refilling it again. And that way, my money’s always working for me.
Dave Befort 30:26
Oh, yeah, I’m the same, I don’t pay estimated taxes, I do quarterly payroll, because I’m an S corp. But anything above that I don’t do because the penalty is less than what I can make on my money right now. So I’m happy to pay the penalty, I extend my you know, my tax payment every year until you know, October, or whatever it is, until you finally have to pay for the previous year. And I’ll pay the penalty. Because it’s worth it to me to have access. And to keep my capital as long as possible,
Ryan Fleming 30:59
when I’m a little bit different, because I have so much of my money tied up in the market, because I know what the market is going to do long term. However, we obviously have to deal with that volatility. You know, and you put up the percentages, I mean, three out of every four years or four out of every five, how you want to look at it, the market is going to be up. So in most cases, if you hold your money as long as possible and let it work for you, you’re going to win. Obviously, there’s going to be years that you lose, you have your money invested in the markets down 20% like it was last year, well guess what I chalked up a big loss on on holding my money and not paying my taxes that year. But but the far majority of the time you’re gonna win. And so that’s, that’s something that I do a little bit to where I run all my money through a policy and then still invest it in the market.
Dave Befort 31:46
Yeah, well, it just allows you to be a better investor, in my opinion, because you can think more long term, if you have access it part of your portfolio consists of this, this type of asset, where you have access to this cash, you know, it’s there, whenever you need it, you can be a better long term investor, and not get so skittish, when the market starts dipping. And you’re like, Oh, I gotta get my money out of there. Or, Hey, I’ve got this big bill coming up, I need to liquidate some stocks for it. For those who invest with, you know, after tax money on on top of their, their pre tax contributions. This just allows you to be a better long term investor, because you can let that stock market ride. And you know, the roller coaster ride, because like you said, historically, it just keeps climbing over time. But you never know when that dip is going to occur. And if you need money at that time, well, hopefully you have money somewhere else that you can go to instead of having to take it out of the market. So that’s what I love about this, because it’s always available there for me for emergencies and opportunities.
Ryan Fleming 32:49
Well, absolutely. And there are two things that I thought of while you’re talking about this. And I know, you know, it’s almost like we’re sitting around just talking about our experiences, but it’s good. So other people can think about the thought process. I don’t think I’ll ever invest in any fixed income ever again. Because my fixed income portion of my portfolio is going to be this part of these policies, because it’s guaranteed to never lose value. And so what that does is it drastically lowers the standard deviation of your overall portfolio. And you talked about being a better investor, not only does it start solving for legacy planning, so that the government is not one of your major beneficiaries. But taking advantage of opportunities, you can let your money in the market just do its thing. And what I find is I’ve built up all this cash value that’s created a nice healthy death benefit. Should anything happen to me. So my, my family is protected. But oh, by the way, the market just had a 10 or 20% correction. I have all kinds of dry, dry powder on the sidelines right now, to take advantage of that opportunity.
Dave Befort 33:58
There you go. That is an opportunity. And if you didn’t have available capital, you couldn’t, you couldn’t, you know, buy the dip, as they say, right. So I know a lot of people a lot of my buddies during during 2020 When everything tanked. They were they were taking cash value loans and going by and buying individual stocks,
Ryan Fleming 34:18
that everything was 50 to 70% off it was a fire sale.
Dave Befort 34:23
Ryan Fleming 34:25
I was I was having some, you know, looking up and studying and and talking to some of the great investors that are out there. And it’s so funny because human behavior, when there’s blood in the streets, that’s when they run away. You know, they’re scared. There’s the there’s a lot of volatility in the market and they want to get away but what what some of the concepts where it is that’s when you make most of your money. You just don’t realize it. When there’s blood in the streets. That’s when you go by
Dave Befort 34:52
the mentor. I mentioned the one percenter he was he’s got an
Ryan Fleming 34:56
he’s got to be a one because we’re all 1% 1% or 1%, he’s got
Dave Befort 35:03
one 100% or whatever. But he’s he was an investment banker for he’s been in investment banking for decades. He said, There’s no market crashes, there’s only market panic. So, so true. Yeah, there’s only market panic. So if you don’t panic, you’ll be fine.
Ryan Fleming 35:23
Well, and the ones that really went out, are those that ignore their emotions, and they don’t they don’t make short term emotional decisions. And they wait, this is all this is like when there’s been a decent correction the last few months in the market, and all I see is opportunity. You know, I’m not looking at what’s happening right now I’m going up time to make some more money. So I’m gonna buy at a discount.
Dave Befort 35:47
Yeah, the only reason you see that opportunity is because you have available capital, you have access to capital, if you didn’t, you wouldn’t see the opportunity, because you wouldn’t be looking forward because it wouldn’t matter.
Ryan Fleming 35:57
So how do we get to the point where every single exam, an airline pilot, and obviously, I’m going to put my contributions into my 401k. And that’s going to come out before my money hits my checking account. But once that money that after tax money hits my checking account, how do we get to that point, where we are putting every single dollar that we earn through a policy first,
Dave Befort 36:20
this whole, becoming your own banker is a process, you know, first you start where you’re at, you start with something manageable, yet meaningful, and I help people determine what that number is, you know, that that premium amount, and then you get comfortable with that. And you see that, oh, I can do this. This is simple. It’s not complicated at all. And I really like it. Because I see the advantages, especially the long term advantages, every year, it gets better, then you you get more confident, and you start putting more money in there, you know, you get every year you get a pay raise, right, a new contract comes out, you get a big back pay, or you make captain or you switch airframes go to wide bodies, something like that. So you’re always going to have the opportunity to make more money. Now you got a plan for as soon as I get that pay raise, this is where it’s going. And you just add more policies, you can have as many policies, as the company will, will allow you to have based on your human life value, how much death benefit, they’ll allow you to have, right? How much insurance and then you get policies on your wife, on your kids. I got seven kids, they all have policies,
Ryan Fleming 37:29
I think it’s hard for some individuals to see that. Just because you’re putting money in a policy, that money’s not gone, you can actually put money in the policy and then still use it like weeks later.
Dave Befort 37:40
Anybody who’s been in the airline industry for any number of years. You talk to any of the older captains, you know, anybody listening to talk to the older captains, you’ve flown with? How many times have they seen disruption in the industry where their pay went down where they got furloughed? Something like that? Guess what happens if you get furloughed? You think the bank is gonna let you access the equity in your home? You think they’re gonna say, Sure, you can have a HELOC and borrow our money, you know, and pretend it’s yours. Even though you aren’t making enough money to pay it back? No, they’re not.
Ryan Fleming 38:14
Soon as you have a job, they won’t even give you a you luck.
Dave Befort 38:17
Oh, no, they’ll only give you banks only give you money if you don’t need it. So where are you going to get that cash to survive, and to weather the storm? While this is the perfect place? In my opinion, because that cash, it’s working for you. It’s earning for you. And it’s available for you whenever you need
Ryan Fleming 38:35
it is absolutely true. And just those comments, you said at the end there, I have so many different things I want to talk about. But as I always promised my listeners, I try to you know, pilots are busy people, I try to keep it between 20 and 30 minutes. And we’ve already gone over that. But all that tells me is Dave, I know your time is very valuable. But we’re going to have to keep having you back on the show from time to time to talk about some of these concepts. All right, man, my pleasure. And yeah, and I try to you know, I talk to a lot of my clients now and I say, I know that this is in your best interest, I just need you to be able to see it, I need you to educate yourself just enough to where it’ll finally hit you. It’ll be that it’ll be that aha moment. But it takes a little bit of reading and education and understanding how this works. Do you have any comments on that before we go,
Dave Befort 39:24
it’s caught not taught. So I’m not going to be the one to be able to sit down with you for hours and teach it to you. You have to catch it yourself. So read that start with reading that book becoming your own banker. Pretty soon we’ll have a landing page, you can direct people to some videos, some educational videos that will kind of give them a base level of knowledge and then schedule time with me. You know, let’s talk let’s see if this is good for your situation. And, and if so we can move to the next steps.
Ryan Fleming 39:53
Yeah, and it doesn’t matter on what level I mean, if you’re in your 30s That might be a different conversation than if you’re in In your 50s or 60s, and we’re truly looking at retirement planning or estate planning or any of those other things. It’s never too soon and probably the most, the earlier you start something like this, the better.
Dave Befort 40:12
Yeah, absolutely like anything in life earlier, the better but it’s never too late to start.
Ryan Fleming 40:18
The best time to invest is right now.
Dave Befort 40:22
Okay, years ago was the best. Right now is the second best.
Ryan Fleming 40:26
Well, thank you very much for your time. As always, we look forward to having you back on the show. And I want to I want to hear yours and some of your shows with some cool quotes. I want to hear
Dave Befort 40:34
one of them. Control your capital or somebody else.
Ryan Fleming 40:37
All right, take care. Have a good one partner