Everyday people who invest like the rich often get rich themselves.
EVG Research Team here, and if you’re simply putting away $500-1,000 a month to save or invest, you’re not doing as much as you can to retire wealthy.
The popular IRAs, 401(k)s, and pension plans make for easy, yet lazy, retirement plans. And they come with a giant opportunity cost that keeps you from compounding wealth. TAXES,
Even people who should know better aren’t taking full advantage of maybe the best wealth accelerator we share with them.
Recently we sat down with Paul, an financial expert, to tell us where many people are going wrong.
Paul, a financial expert: “Most people think of the ‘Bank of You’ as an alternative to retirement planning, using it as a regular checking account and borrowing from themselves.
“That’s very shortsighted. That is not part of the black box strategy of the rich.”
The “Bank of You” is a powerful investment strategy. It allows you to put unlimited money away tax-deferred, earn a conservative 6-10% annual return, and access some or all of your money with just a few days notice.
Essentially, it makes IRAs and 401(k)s look like a con game.
Yet if that’s all you use it for, you’re leaving a powerful asset untouched.
Paul, a financial expert: If you want to go beyond the “Bank of You,” this platform is a fantastic wealth accelerator. And the reason why is because it’s all about the arbitrage in terms of what you can earn with it.
Arbitrage is a funny word, but it’s one reason the rich get richer while middle class investments lug along.
Here’s an example to explain:
Say a middle class family has $100,000 in a regular savings account that earns 1-2% interest. If they borrow $50,000 from the account to spend or invest, then they will only earn interest on the $50,000 still in the account.
The rich find that unacceptable.
And that’s why they choose the “Bank of You”. The “Bank of You” still earns 6-10% return on the full $100,000 when you borrow from the account.
As an example, if you’re paying 5% interest on money that’s earning 10% interest, you’re still coming out 5% ahead.
That 5% spread between what you earn and what you pay is called the arbitrage.
Paul, a financial expert: Because when we start talking about an arbitrage, where you borrow low and get a high return so you’re earning a spread… It allows you to take one pool of funds, and it’s almost like you’re cloning it. And then you get to invest it in multiple places and you get compounding yields.
It’s like “cloning” because while you’re able to invest the $50,000 you borrowed and earn a return with it, you’re also still earning interest on the full $100,000. You’re getting two returns from essentially the same $50k.
This is called stacking investments. And that’s where wealth comes from.
Paul, a financial expert: What we’re actually doing is we’re placing (the $50k) somewhere else where you can invest, and you’re stacking one investment on top of the other without having to allocate additional funds.
Think of it like a 3-4 decker sandwich. Each layer of the sandwich is a different investment.
Paul, a financial expert: So this is the real secret sauce, and this is where the real heart of the black box of the rich is. What the rich have become very proficient at is they’re never happy with 6, 7, or 8, 9% returns.
But they make sure that they compound those. So once you stack one on top of the other you end up yielding 30%, 35%, 40% returns without getting that risk exposure of looking for that one grand slam that could all of a sudden go by the wayside and lose it all.
…and at the same time the rich are cloning their investments and earning multiple returns that add up to 30%, 35 or even 40%!
Paul has a real life example of how many people are stacking investments:
Paul, a financial expert: Let’s say you have $100,000 in your account and let’s say it’s earning 10%, but yet when you borrow $50,000 it’s only costing you 5%. So on that $50,000 your spread is 5%, you’re making a profit, so even if you take your money out and put it under a mattress, you’re still making 5%.
Now you go and invest it somewhere in one of these asset real estate investments and it’s paying me 10%. Well now that same money is earning 5% + 10% so now it’s earning a combined total of 15%.
What if we add another tier and take an equity position and we get a 7% premium. Which by the way the people have been earning are more like 10-20%. But let’s say you went as low as 7%. Now you have 5% + 10% + 7% – that’s 22%.
Here’s the part that’s mindblowing. Let’s take someone who’s 40 years old and you run this for 20 years.When it compounds at 22% that’s $2.6 million dollars – from $50 grand!
To begin stacking investments with an arbitrage and possibly generate 22%+ returns, I urge you to find out more about this right now. You’ll discover that elite financial information like above is the norm.
To find out more, read the book below. It’s less than 100 pages.