Hey everybody, it's Justin Gartman, a wealth coach here at Better Wealth. And today we are going to dive into a fun example of a story here of a guy that he wanted a policy to look at doing a fun side hustle of actually flipping golf carts. So he's going to look at how a practical example of taking the money in a policy, borrowing against it, leveraging it. to do something with. And in this case just happens to be, I know you've seen a lot out there about buying cars, but how about this about buying hundreds of golf carts actually. So this is what the guy was 50 year old. He was semi retired. So his name is Scott and he was a golf course superintendent. So picture this story. He had worked at a golf course his whole life, pretty much got out of doing that currently worked part. time doing a few things here and there. But on the side, saw that there's an investment opportunity for him where he actually buys the old golf carts that eventually any golf course decides, hey, here's the golf carts. We're going to get rid of these. We're going to get brand new ones, especially nicer golf courses. They want to keep the golf carts nice. So those are still plenty fine. You can buy those in bulk. He's going to buy those, fix them up if needed, and then sell them. So obviously... not something everyone out there should do. He had the connections. He knew what he was doing in that. And so that's what he wanted to do. And this is how his investment went. So how it can go for him is buy a golf cart around $3,000, have about $1,500 in maintenance, transportation to get the golf courts to you, store the golf carts because they got to go somewhere. So all in basically investment of $4,500 per golf cart. And then generally he was getting six to seven thousand dollars uh every time he would sell one of them so could be six could be seven in our examples and everything as we project out six thousand five hundred is what that's gonna be so quick example quick math here and keeping it pretty simple you buy ten golf cards that's forty five thousand dollars you just spent you sell them for a total of sixty five thousand well you made twenty thousand dollars in profit after paying to get them fixed up soar them and then sell them and all of that stuff. So that's what kind of the gist of what he was doing. And he liked that idea. And now obviously 10 golf carts, if you look at that, you may think that's a lot, but in the grand scheme of how many golf carts, a actual golf course has, that's not nearly as much as what he could buy. He could buy 20, 40, 50, if he really wanted to. And so his predicament that he was in, if you want to call it that is that he had some money sitting in cash but he liked his money sitting in cash he didn't want to have to use the money he just liked having it there knowing it's there it's an emergency fund and he had thought about knowing that i'm going to buy these golf carts it will take him a little bit of time to sell typically could take up to a year maybe slightly longer for him to sell out every single one of them um maybe not at 10 but if he decided to buy 30 it's just going to take him some time to do that and so he thought about getting a standard traditional loan a personal loan go to a bank be able to to get that but his problem was and why he didn't like that well he would have to pay monthly payments uh principal and interest back every single month and he may not be making a profit for by the time he gets him could be a couple months before he even sells one and then by the time he sells all of them he's going to be sending a lot of cash flow potentially even out of pocket to the bank there during that time he also thought about maybe maybe getting some type of business line of credit, but honestly, he was doing this. on the side. He wasn't wanting to start a business, have to show income from the business and all of that stuff. He just didn't want to go through the headache again. He's semi-retired. He likes this. It was simple for him to do. So he didn't want to have to go through all, all of that hassle is what kind of the way to put it now, is that a hassle for everyone? Sometimes it makes sense, but for him, uh, not something he wanted to do. Also, I know the option of a HELOC, you can borrow against your house. He didn't want to do that. He said, Hey, that's my house. I don't want to have that. I'd also like to be able to build something at the time. And so some of the cross us like the idea of life insurance, because at the end of the day, through discussions, it turns out he didn't have hardly any life insurance at all. And the more we discussed, he's like, yeah, I have a wife that if something happens to him, leave a legacy, leave a death benefit there, have kids be able to pass something on there. And so basically at the end of the day, what started off as he wants to get a policy because of hate. I can have a unstructured loan. I can borrow the money, not need to pay anything back until the end of the year to pay off the interest if you want to, or could let her let it roll into next year if you wanted to do that. but would have the unstructured loan, the flexibility to be able to pay it back when he wanted to and not be on the hook every month for that. And so that's what led him to life insurance. And then the more that he researched is a lot of people do find out, oh, there's other benefits as well. Obviously, you know, the death benefit because it is life insurance. But the more he thought about that, the more he liked that once he saw, oh, I can still get the cash value and have a growing death benefit. And then also. a creditor protection, all of the other good stuff there. He just liked the idea of that. So it wasn't necessarily just the one reason. So it led him to that. And then there are multitude of reasons ongoing there. And so at the end of the day, here's an example of what that would look like here. And so what he decided to do, because he was sitting on about $150,000 in just cash savings, some of that in a brokerage account, kind of in liquid places, not in his retirement accounts or anything like that because he didn't want to necessarily touch any of that so he started off with a 75 000 just dumping he's i'm gonna take 75 i'm gonna put it into the policy and then he's gonna wait until there's an opportunity because it's not like golf courses are getting rid of carts all the time he needs to have the cash when there's opportunity especially with his connections i tell those hey you can call me first and i'll take some of your inventory or all of it depending on what it would look like there so started with 75 just get the policy going have it in there And then each year he was already saving a good amount of money, but wanted to do 50,000. Part of that was some, he was already saving. It was just going in savings. But also part of that was he said, Hey, I like the idea of this. I want to build up a death benefit. So I'm willing to put a little more money towards this. And also he knew based on profits, based on what he thought he could do, he's going to be able to have not only some cashflow to get from the policy, but from the investment. that he makes in selling the cars, he'll be able to actually pay some of the premium back into the policy as well, as well as pay off the loan. So quick example here of our year two, actually, let's do the 10 golf cart route pays $45,000 for those borrowers against that. Obviously he has a loan balance there, so needs to pay back 47,000. So he borrows that and sell those throughout the year. And I show here, nothing being paid back at all until the next year. That's where you see this premium outlay now. Here, he's doing 75, funds at 50, borrows against that. So his cash value goes down. He's still earning though. That's his net cash value that is available. But remember, he's still getting a dividend and getting growth on everything that is in there. And so now next year, he pays back that 47,000 plus adds another 50, just like he was planning on doing already. And so he refills up his cash value there to 154,000. Now, as an example here, I didn't show him borrowing that. Again, technically you could, you pay it back. You can borrow it right back out of there. They have an opportunity, but just to show the numbers a little better, let's say he waits till the next year. Next year, his cash value is built up much more than that. He pays another 50. And in that year, he decides, you know what? I'm gonna get 25 golf cards. Pays 112,500. His total loan balance then is 118,000. But he knows, hey, add that amount. I can actually go out and make a good amount more. And so he doesn't just pay back the $112,000. He pays back much more than that into the policy there. And so if you look at that, that 25 times 6,500 made about $162,500 also paid back the interest there. So there is some cost to the interest, but those are pretty good profit margins for what you're doing. Now we're also projecting this out while some of them sell for less. Yes, and different things like that. But this gives you an idea of the possibilities for anything in business or real estate or crypto or whatever it is that you want to invest in. It shows the flexibility because I know a lot of times things that will work if you don't have a structured payment there. Things I've had clients use it for syndications. Maybe that syndication isn't cash flowing, but there's going to be a big payout at the end. They want to be able to leverage that and be able to then once a big payout comes, be able to pay it all back. Now, is there interest that's built up there? Absolutely. Should you plan on borrowing from the policy and never, ever paying back the loans? Absolutely not. That's not what I'm saying there. But the flexibility, the option is a great thing specifically in this situation and many other situations as well. Now, best case, you are paying off the interest every single year because that's going to keep it from compounding year over year against you and having a plan to pay it back. And that's what's the case with all of these people I'm talking about that are investing. There is a plan to pay it back. It's not a, hey, I'm going to do this and then hope that I get the money to pay it back. But if not, we're just never going to pay it back and let the loan compound. So that's definitely not what I'm advocating for. But in this case. He does pay it back. He pays it back. Plus pays the $50,000. And now all of a sudden at that point, even if he did nothing else with the policy besides continue funding it like he was planning to, that's now $268,000 of cash value with the extra growth from, Hey, we got it. We paid it back. We got it. We paid it back, paid off the interest there and all of that stuff that now enabled him in those two years, he didn't have to fund 50 out of pocket. He funded it from the investments, kept that money. and can do whatever he wants with it and travel with it can do different things because he's now using this a lot of times you can use this in its own ecosystem if you are someone like this where i'm going to use my money to invest i'm going to use that to help pay part of the premiums and then over time that's going to keep growing and compounding i'm going to have enough cash flow from whatever investments i'm doing to fund those premiums and that can just keep on building and building, especially over, I mean, we showed four years. say he did this for that 10 years if he wanted to and can do it like that. So again, that's a quick example of just the possibilities there of the flexibility of a policy and what it could look like. And then also at the end of the day to continues funding that wants to stop funding at age 61. At that point, he really wanted about half a million dollars of cash value just to have liquid on hand to help kind of go with his other investments and other portfolio. And also one of the growing death benefit. So he continues to get that. If we just zoom out to age 85, kind of life expectancy, that's now $2.6 million. They can go out as well as $2.2 million of cash value that's available. Hey, 85 years old, he wants to buy some more golf carts. He can do that. Now, will he do that? Probably not at that point. So more of a, we're leaving it to the family or can help out in retirement as a volatility, but for any of the other stuff that we talk about. So again, quick example there. Hope that's helpful to see some of the possibilities there that maybe you hadn't thought of in a policy. We talk about using it for investing, but can give some examples of, hey, what are people actually doing with a policy? What are we here at Better Wealth doing with the policy? And some examples to give you ideas exactly how you might be able to use it. So until next time, see you. Hey, everyone. It's Justin Gartman, a wealth coach here at Better Wealth. And if you are a high earning professional. an entrepreneur, or someone who just wants more control over your money, we are offering something called a clarity call. It's a one-on-one conversation with someone like myself where we are able to walk you through exactly how overfunded whole life insurance could help you build a safe, liquid, tax-advantaged foundation for your wealth. No pressure or fluff, just real clarity on whether this strategy is right for you. So click the link in the description below or tag, comment, and we'll walk you through exactly how we can possibly help you.
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