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Whether you’re investing in stocks or real estate, you’re probably going to hear a lot about the importance of diversifying your portfolio. Portfolio diversity is a critical way to protect your investments from market risks and improve the likelihood that your total investment earnings will grow.
Real estate is one of the most lucrative asset classes, and it’s a great way for any investor to diversify their portfolio. You can diversify your real estate portfolio in the same way you diversify your securities: invest in different asset classes (different types of properties). Residential rental properties, vacation rentals, and fix-and-flip investments are real estate investments you can use for diversification. Even further diversification would be investing in multifamily properties, commercial properties, and REITs.
Several of our clients leverage Infinite Banking as a strategy for real estate investments. The time tested strategy provides investors a secure way to create their own bank, allowing them to use their dollar multiple times as they invest in properties over time.
Let’s look at Robert.
Robert is 28 years old, and he invested in a rental property. We created a plan for him that will allow him to quickly build equity, not only in the new property, but in his “bank” as well. Robert will pay the rental property off in 10 years. His next step will be to pay himself (his bank) back and leverage the cash value in his “bank” and the equity in the property to continue his real estate investment strategy.
As you can see in the illustration, Robert has almost doubled his original investment in 30 years. A large benefit with this approach is the cash value growth and loans used are tax favorable. Additionally, he is creating a secure tax-favorable retirement plan and generational legacy.
Contact our Infinite Banking specialists to help you design a strategy to fit your investment plans.