PRIVATE EQUITY BANKING—

The Path to Wealth Creation and Preservation

We’re all looking for smart financial strategies. Why is it that some people are winners in the money arena, and others are losers? How do the wealthy create their fortunes, retain them, and pass them on to heirs and institutions as a legacy? One way is by creating your own banking system and sheltering money in a cash accumulation contract.

What if I told you that you can keep your money free from taxation, grow it with guaranteed compound interest, and take out unstructured loans using that money as collateral, without touching your principal and interest. The magic here is that you have access to money based on your account value, can use it for any purpose, and pay it back if, when and how you desire. In some cases, the interest paid on your savings is greater than the interest charged on your loan. Did you hear that? You could get a loan with a net negative interest charge!

Our targeted goals for getting ahead may be within real estate, business, retirement, or debt elimination. In this first of a series of articles for our MnREIA friends, we will focus on using these accounts to benefit us as real estate investors.

We all know that it’s not how much money we make—it’s how much money we keep. And taxes can take a painful bite out of that amount. With traditional IRA’s or 401k’s, contributions are made with pre-tax dollars, but the contributions and earnings are taxable at the time of distribution, and typically have penalties for early withdrawal. To limit taxation to contributions, and avoid taxes on growth, people often trade the tax-

deferred status of traditional accounts for the benefits of a Roth fund. But what if you could access money without having to withdraw it, and not be limited by any restrictions on age or purpose of use? You can! Once post-tax contributions are held in a special type of product, they will never again be taxed. This holds true for you, as well as for those you pass that money on to.

By now you’re asking what this cash accumulation contract is, and why you haven’t heard about it. This contract is a special type of whole life insurance, known as a high cash value policy. WAIT! Don’t stop reading now! This is not the same kind of whole life policy that you may have heard negative things about. In fact, this product is sold by only a few insurance companies, and we choose only those which are well established,

have great ratings, and are top in the industry. These high cash value policies are structured to have a greater emphasis on the savings portion than the death benefit.

When it comes right down to it, what they offer is greater flexibility, earning capacity, and protection than other vehicles for holding cash. When structured properly, they combine an interest-bearing savings account, a line of credit without a required repayment schedule, a retirement plan to provide lifetime income, a generous death benefit which never terms out, and a vehicle for passing along wealth without taxation.

Interested yet? How about this. The money held in your policy is not only protected from taxation, but also from lawsuits and creditors. And what is your confidence level in banks right now? Recently, a report posted on the Social Science Research Network found that 186 banks in the United States are at risk of failure or collapse due to rising interest rates and a high proportion of uninsured deposits. Compare that with the safety of Mutual insurance companies, which conservatively invest for the benefit of their policy holders, not for the owners or stockholders.

A question raised has to do with health. Do these contracts require medical examinations? The answer is “yes,” and not everyone will qualify. However, the big picture is to consider not just yourself, but anyone else in whom you have “insurable interest.” Perhaps a spouse, a parent, an adult child, a business partner, or an employee. Creativity often solves the problem of accessing a policy, if you have a serious health condition.

Getting back to the focus on real estate investing. This is where things get really exciting! Investors typically have lump sums of money which go in and out of their bank accounts. Let’s say you have $120,000 in a savings account because you need access to that money for your projects. You are earning next to nothing in interest. You take out $80k to purchase a property, and $20k for rehab. The remaining $20k will cover carrying costs, incidentals, advertising, and anything over budget. When you flip the property 6 months later, you have a gain of let’s say $40k, plus a little interest on

whatever was left in the account.

Contrast this to your Private Equity Banking account. You have $120,000 in your cash savings account. To take on this project, you take out a loan from the insurance company. You are charged a small interest amount, but there is no need to fill out paperwork, supply documents, or be approved by the lender. You’re in control. When you complete the flip, you, can choose to repay the loan, or use it for your next project.

You not only have the net profit of $40k, but your cash has earned significant compounding interest the entire time, as it is never withdrawn from your account.

How cool is that?

Let’s talk strategies and see how we can help you! Contact Valerie or Bill Koski, independent agents with Koski Consulting LLC (MN License #40842492). Valerie’s personal cell is 651-245-5423, leave a message on our work cell at 651-219-9372, or email us at KoskiConsulting@gmail.com. Check out www.PrivateEquityBanking.com, our partner website, to find more information about this unique tool for wealth creation

and preservation.