As anticipated, all the companies we utilize here at Create Tailwind to support individuals in building their Infinite Banking system are raising their dividends. This sounds like good news, right? However, have you ever wondered why some companies with lower dividends can outperform others with higher dividends? Is chasing the highest dividend the best strategy? (Answer: Absolutely not.)
Dividends are just one aspect of performance in a whole life insurance policy. There are other crucial factors to consider, such as expenses. It’s always the expenses that matter. Some policies have higher internal costs, which can lead to underperformance despite a higher dividend. It may seem counterintuitive, but companies with lower dividends can actually outperform those with higher dividends but higher expenses. Therefore, when determining which company is the best for our clients, we prioritize something even more important than current dividend performance: guarantees.
Remember, there’s no free lunch in life insurance. If I give you more in the beginning, I must take away more in the end. Conversely, if I take away more in the beginning, I can give you more in the end. If I offer a higher dividend, I must reduce guarantees, and if I provide higher guarantees, I need to be more cautious with dividend payouts over time. In the Infinite Banking Concept, it’s not just about the performance of the insurance contract; it’s about the performance of what we do with the money. For instance, how much interest are we recapturing? How much interest are we earning? How much passive revenue or cash flow can we generate?
Remember what Nelson Nash always taught us: Volume is more important than rate. We need more money flowing through our banking system and less money flowing through someone else’s. So let’s focus on maximizing our potential and building a strong financial foundation for the future.
In the realm of dividend investing and the Infinite Banking Concept, there is a fascinating dynamic at play. While dividends play a significant role in determining the performance of a company, they are not the sole indicator of success. It’s essential to look beyond the surface level and consider other crucial factors.
One such factor is the expenses associated with a life insurance policy. Some policies may have higher internal costs, which can eat into the overall performance and potentially hinder the ability to generate higher dividends. Therefore, it’s important to evaluate the expenses of a policy and understand how they can impact the overall returns.
When choosing the best company for our clients, we prioritize guarantees over current dividend performance. Guarantees provide a level of security and stability, ensuring that the policyholder’s financial future is protected. While a higher dividend may seem enticing, it often comes at the expense of guarantees. It’s crucial to strike a balance and carefully weigh the potential risks and rewards.
The Infinite Banking Concept emphasizes not just the performance of the insurance contract itself but also what we do with the money within that system. It’s about maximizing interest recapture, earning potential interest, and generating passive revenue or cash flow. By effectively managing and leveraging the funds within the system, individuals can create a strong financial foundation and take control of their financial future.
