Originally from Mexico City, CEO and founder of Arceo Financial Group Edgar Arceo came to America to go into the ministry. While it’s not in the church, he's actually doing what he set out to do, which is to help as many people possible change their lives. The difference is that he ministers to their financial investment needs. Edgar says that before he could guide others in their finances he had to change his mindset. Then he gathered courage to open his own business. First he worked as a financial planner at other people's companies. That put him on a path, but Edgar found that he couldn't agree with the practices at those companies, so he set out on his own. As the owner of his own financial group, he helps all sorts of people get more out of their savings and retirement accounts through ethical, well thought-out plans. One tool he sometimes recommends is called a 770 account. Also known as the infinite banking concept, the 770 is named after the part of the IRS code (by the same number) regarding life insurance. It’s a really interesting investment instrument, and it means you can use it as a life benefit as well as a death benefit. In fact, there are so many benefits to this instrument you'll want to learn about all of them. LISTEN NOW
On this episode of Cash Flow Diary, J interviews Edgar Arcero, who is a former investment banker and won the Personal Banker of the Year Award. If you want to create and transfer wealth by becoming your own banker through the Infinite Banking Concept, then you need to discover the 770 account.
03:43 Edgar’s origin story
08:24 Making a difference
14:16 Arceo Financial Group
18:23 The 770 account
20:58 770 benefits
22:56 Apply for a one-on-one break though session / J’s episode insight
25:24 ‘No risk’
28:41 Be your own bank
36:59 Uninterrupted compound interest
37:43 How 770 applies to real estate
39:21 What to look for in a policy
44:51 Company ratings
46:55 Contacting Edgar
Main Questions Asked:
- What is your origin story?
- What gave you the courage to know you could make a difference running your own company?
- What tips do you give to an individual facing a “I’m quitting my job and starting a business” conversation?
- Tell us about the Arceo Finanical Group and your area of focus.
- Explain the concept of the 770 account and the tools you might use to execute that.
- What are the most typical situations in which this type of structure is beneficial for your clients?
- Explain what you mean when you say ‘no risk.’
- What do you mean when you say ‘you get to be your own bank’?
- How does being your own bank apply to real estate?
- What resources do you use to look up a company’s rating?
- What is your advice to someone wanting to start their own entrepreneur journey?
Key Lessons Learned:
- Entrepreneurs go though levels of transition that are part of the process.
- As entrepreneurs, estimate it will take twice as long as you think it will, and cost twice as much!
The 770 Account
- Referred to as the ‘Infinite Banking Concept,’ and named because of the IRS 770-2 code that talks about life insurance.
- Instead of trying to get the greatest death benefit for the lowest premium, Edgar tries to do the opposite, which is purchasing the lowest death benefit required by law, and pay the highest premium you can afford.
- This enables you to invest the greatest amount of excess cash in the policy beyond the true cost of insurance.
- Essentially, this is using your life insurance policy as a ‘living benefit’ rather than a ‘death benefit.’
- This is a steady conservative approach that guarantees a certain rate of return with no risk, and is tax-free.
- You can use this as your own bank.
- This isn’t about huge rates of return, and is not something you will get rich quick doing. It’s a long-term strategy of more than 7 years.
- Even if you don’t care about the death benefit, this is an amazing tool.
Be Your Own Bank
- If you start a life insurance policy, every time you have a cash value within the policy, you can use it as your own bank.
- The average American is saving 3-5%, but don’t pay attention to the 22% they are giving away to someone else.
- Involves mimicking banks on a small scale, e.g. a bank borrows your money at 1% but lends it to someone else at 7%. On $10K, the bank pays $100 but made a $600 profit on $100 investment, i.e. 600% rate of return.
- Where do the banks keep their money? A large portion is in life insurance policies.
- Next time you need to buy a car, you can get a loan from your policy and pay yourself back. The 7% the bank would be making from the policy is now what you are making from the policy.
- When you take a loan from your policy, e.g. you have a $20K policy and take a $10K cash loan, they keep paying the same interest and dividends as if you haven’t touched it.
- You are going to have a car payment anyway, you might as well pay it to yourself instead of paying it to your bank.
- Uninterrupted compound interest – Even though we are using the policy to finance things, the compound interest never stops within the policy.
What To Look For
- Not all plans are created equal so there are things you should look for.
1) Mutual life insurance company.
- Mutual means that when you buy a policy, you are like a shareholder.
- If they have a profit, it goes to the policyholders. Otherwise, it could take 20 years to break even.
2) Company that has an A or A+ reputation.
3) Non-direct recognition company.
- You can use this as your own bank.
- When you take money out of the policy to finance, they keep paying the same dividends.
- Try to find someone with the knowledge and experience in setting up this type of account, and get them to show you previous contracts.
- If they send you a policy and it will take you more than 10 years to break even, there is something wrong.
- Go with a broker that works with multiple companies rather than an agent who just works for just one company.
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Links to Resources Mentioned
E-mail: [email protected]
Becoming Your Own Banker (book)
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