Heroic Investing
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Wealth Strategies & Infinite Banking with Joe Crane

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Gary Pinkerton plays an episode of the Veteran on the Move podcast with Joe Crane where he was interviewed. The conversation centers around the wealth strategy Gary has in his life and how he uses the concept of infinite banking to fund his real estate purchases. He explains his transition from the military service into entrepreneurship and real estate investing.

Announcer 0:04
Welcome to the heroic investing show. As first responders we risk our lives every day our financial security is under attack. Our pensions are in a state of emergency. A single on duty incident can alter or erase our earning potential instantly and forever. We are the heroes of society. We are self reliant and we need to take care of our own financial future. The heroic investing show is our toolkit of business and investing tactics on our mission to financial freedom.

Joe Crane 0:39
Navy veteran Gary Pinkerton shares his delve into entrepreneurship after he retired from the Navy hosting the heroic investing podcast and working as an insurance based financial planner coming up next on veteran on the move.

Announcer 0:55
Welcome to veteran on the move. If you’re a veteran in transition, and entrepreneur want to be or someone still stuck in that jail, trying to escape this podcast is dedicated to your success. And now your host, Joe Kramer.

Joe Crane 1:13
Here Gary Pinkerton, host of the heroic investing podcast in also with paradigm life. Thanks for being here today. Gary spent some time in the Navy before we get to talking about business and entrepreneurship. Take us back. Tell us what you did the Navy.

Gary Pinkerton 1:26
Sure. Thanks, Joe. Well, first, thanks to you and the audience, for putting up with me for a few minutes. It certainly is a pleasure and something I don’t do very often, in hosting a podcast, I think people assume that you get interviewed often. Certainly not the case for me. I’ve been running, you know, my podcasts that I’ll talk about, you know, a little bit later, maybe if we have a chance for about a year. But if we go way back, you know, I grew up in the Midwest, I grew up in Southern Illinois on a dairy farm. Late 80s, high interest rates, we ended up losing our farm. And it taught me a lot of well, it taught me that I didn’t know much about finance, actually. And I think it planted a seed trying to keep that farm alive. My father had really poor health. And I was doing it, you know, my sister and I were kind of running the whole thing. And in the end, it was me. And as the you know, as the farming industry started to wind down, I was looking for wherever I could, you know, make a buck. And we started all kinds of little businesses, my father and I and I learned, you know, I learned a tremendous amount from him. But I also learned the value of entrepreneurship, the value of getting paid for adding adding money in the world. But it was also a time where we were dirt poor. And as I was looking towards what was going to be in my future, the timing was just that. I mean, we lost basically everything when I was in my senior year in high school. And in a flurry of activity, I started putting out applications to anyone who would help me get out of the state of Illinois, quite frankly, or out of the farmland at least. And for reasons I still don’t understand that US Naval Academy accepted me, I headed off to to Maryland, and was a fish a small fish in a very big lake. And I survived the Naval Academy, I survived an engineering degree. And those are both things that I’m extremely proud of, because I came with, I didn’t understand what International Baccalaureate or advanced placement or any of those things were that people know about now in high school. And, and I, you know, just worked really, really hard there. And I had always been really interested in mechanical things I’ve always taken apart and put together things and it kind of led me to a mechanical, mechanical engineering degree at the Academy. And that got me interest in the under the radar or under the the magnifying glass of nuclear nuclear power people in the Navy. And they asked me to come to an interview, it sounded pretty exciting. It was certainly a career path that offered a lot of opportunities. And so I quite frankly, was down to the wire down to the last moment trying to figure out Marine Corps or submarines. And it’s not because I’m being interviewed by an awesome marine. That’s because I really loved the the camaraderie, the small unit atmosphere that was with both of those both organizations. Although I don’t think either organization, except for maybe me thinks that they’re like the other one, maybe look at the Marine Corps unit. And you look at a submarine crew, they’re very, very similar. They’re about the same size actually, for you know, a small unit. And we all we think we’re better than everyone else. We got this little chip on our shoulder and we work really, really hard. And family comes first. And so I think, you know, I didn’t mean to dive down into that, but that was really what I was thinking as I was graduating and becoming an officer. There was a little catch that I didn’t know about at the time and that is that if you if you interview with the admiral, the guy that I was interviewing with was Two people removed from Emmerich over. So quite a lineage there. But I didn’t know that when you get on the bus and go interview with these guys, if they accept you, you don’t get a choice. So they actually made the choice for me. But I have to say that I was still kind of conflicted and didn’t know which way I was, I was headed, headed off to the submarine force, that career path is similar to what we do on surface ships. You know, essentially you do two years, two to three years as a crew member of a submarine, as a junior officer, do a couple years on shore and just repeat that like, you know, four times. And so you’re a junior officer, and then your department head and you’re the executive officer and then commanding officer, and I had the, you know, extreme pleasure of commanding and an awesome crew on the USS Tucson, SSN 770, out in Pearl Harbor, and she had just come out of an overhaul period, had all the newest toys on it an awesome crew, we did a western Pacific deployment. And as I was coming off of that, those are all the really good things. Right. The the other side of it was that I was conflicted all throughout these years of being in the military, because it was unlike anything I’d ever really done before Joe, and you know, I’d always been kind of my own boss had always been able to add value and see the results of it. And there weren’t there wasn’t anyone saying that’s not how we do it here, you know. So there was parts of me that even at the Naval Academy, I had, I saw the sparks of entrepreneurship. And I don’t know if you’re a car guy, Joe, but there’s a guy named Reeves Callaway and he created the modified Corvettes in the 90s and 2000s. I think he’s still doing it, actually. But he came and visited this club that I was in at the Naval Academy and brought a Reeves Corvette and I was just I met a Callaway Corvette, and I was just enamored, and I had the opportunity to take him out for dinner. And he was, you know, he was asking me questions about are you going to stay you’re going to make this a career and, and, you know, he asked me what I what inspired me. And this is in my I was in this Amazon best selling book earlier this year, I was a contributor called the one thing that changed everything. And I talked about this episode and

Gary Pinkerton 7:07
and he inspired me to think entrepreneurship. But in the end, I really was caught up in the the drug of comfort and the drug of the Sure thing. And I stayed, I stayed in the military. And thankfully I did because I have some tremendous memories of all of that. And I was, I think my one of my best memories ever will be the things we did with a Tucson and, and so it was a great family experience. But those seeds were always there. And it really is what led me to, to find, you know, the financial services industry, it’s what led me to be an entrepreneur and run my own businesses. And there’s two sides, the side, excuse me, as I was finishing up command on my submarine, and, you know, having worn my family out, you know, I had seriously worn them out with all the moves. And I know, that’s a very common thing. But it was time to look for something different.

Joe Crane 7:57
Wow, there’s like, there’s like 10 things I wanted to revisit with you on all that. But we obviously don’t have time to do all that. So yeah, but before, before we started this interview with Gary, Gary interviewed me. And I can certainly identify, you know, I might be getting really good at interviewing people. But I’m much more uncomfortable being interviewed. It’s a completely different dynamic. So now you’re on the other side, and I’m the one that gets to ask the questions. So if I was gonna say if anybody listen to the show, Gary’s podcast is, is the heroic investing podcast. And so if you want to hear me being interviewed, about my personal venture into entrepreneurship, then go look up the heroic investing podcast, so you can hear me from a different perspective. So Gary, love the love the farm story. I mean, it set it up that way. I know so many people and even my own family, my my dad’s father, my grandfather was a farmer in southern Indiana and worked in the stone the limestone mills in southern Indiana. He was a cutter. And it’s, I just know so many successful people in the business world came from the farm, especially, you know, 50 and 100 years ago, the farm kids grew up, it’s a tough life. They worked their butt off. They work their way off the farm and go into business and become incredibly successful because they’ve had that that early to rise mentality and hard work ethic. ingenuity and resourcefulness that goes with what you get to do you know, to make the farm work and make the farm successful and nobody’s gonna nobody else is going to get up and do it for you. In the morning when the cows got to be milked. I can only imagine what what it was like growing up on a farm. I love my grandma grandpa cranes farm. You know love would have spent a lot more time there if I could have but You know, farm is tough. Now. It’s interesting. You see a lot of farms coming back these days, like a lot of the small farm concepts and buy local and all that I’m not quite sure. If, if what it looks like from a distance is really what it is in reality. But anyways, having gone through that I’m sure that was some dramatic life lessons at a young age. And yeah, I’ve always said the smartest guys in the military are the nuclear nuclear powered submarine officers, smart guys military with hands down, I, I’ve known so many of them. And every one of them is like wicked smart. In the selection process to get in there is, like you mentioned, some Admiral a couple places removed from recover. It’s, it’s a very selective process. So you know, good on you for getting in there. It’s a it’s a very select group to be to be a part of and associated with so. So talk through us a little bit about your transition out of the military, you ended up retiring from the Navy, that’s still a transition. So granted, you got the retirement check coming in. But the retirement check, you know, you’re probably making about a third of what you were making when you got out. So talk us through your transition and what that was like?

Gary Pinkerton 11:14
Yeah, so it was it was tough, because I was walking away, you know, that there’s not, you know, let me let me back up. So I think it is my impression, at least, that the Army and the Air Force approach is completely different. My boss, who was an admiral once explained this to me, and you know, doing the inter service, interest service positions that he had been in, that they identified very early on, unlike what the Marine Corps and the Navy, do, they identify very early on, hey, you’d be a great staff officer, once you start thinking about that, you know, and you’re going to be great in a cockpit, we’re gonna keep you there. And you’re probably be a flag officer or a general officer, so stay on that cockpit path, right. And they, they do a much better job of weeding people out. But in the Navy, in the Marine Corps, I would say we’re out shifting paths. So people are more better aligned with our path. For the Navy and Marine Corps, I think you’d agree that you’re either you know, you’re on the train, and you’re fighting to stay on the train, the fast moving train, until they, you know, not tap you on the shoulder and say, That’s it, you’re pretty much done. And, and so I was on that path. And you know, everyone around you, when you look at, you know, everything, you know, I’m now 2021 years in the military. And what I know is to keep my head down, work hard, convince my family to say yes, absolutely, we would love to move across the country again, and change schools and all that, because that’s how you say it on the train. And to start thinking about, you know, sticking your sticking one foot off the train and kind of dragging it along to see how it is it just wasn’t normal. And I was you know, in line for command of a squadron and I’d had a great you know, each job as it does in the Marine Corps, each job kind of creates your opportunities for the next one, my commands were started off extremely Rocky. But it turned out to be a great one. And it kind of set me up to vault into the next really good position. All the signs were that Gary, you should stay on this path. And the same things, you know, that I talked about in that book that at the Naval Academy kept me from getting out. You know, another thing is, so after five years, I had the opportunity to leave my first five years as an officer and I vividly remember this conversation with my wife, Sue, we had, you know, our first child, he was a one year old at the time. And I was, you know, facing another upcoming two and a half months away. And we were talking about whether I should sign a contract to stay back and you know, to go for another period. And she says, Well, you know, kind of in frustration, eventually she’s like, Listen, do it, if you want to do it, like if you enjoy it, but don’t think you’re doing it for us. Because Jake, and I don’t appreciate this, you know, this is not why we’re moving across the country and giving up all this stuff and not seeing our family member. And that was just another indication. And it was clear. If I was doing this, it was because Gary liked it. Gary wanted it because I thought it was the best for our family. But really deep down. For me what it was was, I was sure that my family and my kids weren’t gonna end up where, you know, at the time where I felt like, you know, my parents had been had to leave my sister. And I mean, I saw their faces, I knew that they wanted to provide more for their family. And the lesson I took from that was, don’t do that with your family, you know, make sure that you always provide for them, they can have everything they want. Well, now as I’m more mature and older, I start to realize that first, somebody who has a work ethic, who’s coming from the military or coming, you know, from being a first responder those people have inside them they have the motto that whatever is the Moxie to exceed to succeed, right so you don’t have to worry about you know, so I was tied into this comfort thing I didn’t need to be we have what it takes to survive and to excel out there because all those things we do we get up early. We outlast the other guy, you know, you should leave with the confidence that you’re going to walk around with success and whatever business you go to. So I got a little off track there, I think. But that’s what I was thinking on the transition was, you know, I was I was trying to, you know, kind of stay on the train, but also look at getting off the train. And, and why did I transition, it was really going back to some self reflection and realizing that, you know, back.

Gary Pinkerton 15:27
You know, back when I was a kid and running my own businesses, that’s when I was truly happy. And the only time that I could compare to that in the military was when, well, really my last two at sea jobs. So when I was executive officer, I had this Captain that was, you know, we were on another attack submarine. And he was just awesome, very confident guy. And he just let me run the whole ship. And it was just a great training to be commanding officer, he was an incredible leader, Frank itani. If you’re out there, and Listen, man, what a great a great dude. But I loved it because I was running my own little business, right. And then when I took command, clearly, I was doing the same thing. And those are the times that I really, really enjoyed it. So I knew what I wanted was a small unit, I wanted the ability to you know, just everything that you have, when you’re when you’re running your own company, you’ve got the ability to make changes, to see the results of that just to help out your people and see them prosper and maybe start their own company one day. So those were the things I really enjoyed. And were the reasons that I I started looking into, you know, real estate as a passive source of income to help, you know, kind of replace that active income, and just learn everything I could about entrepreneurship. But unlike you and some others that I think have transitioned out with a strong focus on entrepreneurship, mine was more initially focus on family focus on income replacement, those kinds of things. But I’m now learning a lot more about the more technical side of entrepreneurship.

Joe Crane 16:50
All right back talking with Navy veteran Gary Pinkerton, from heroic investing podcast in also paradigm life. So Gary, paradigm life has to do with the financial services business. And before the four we start the interview, you mentioned you’re involved in what’s known as infinite banking, I have to say, I’ve never heard that term. Can you explain what it is?

Gary Pinkerton 17:10
Sure, of course, thanks, Joe. So to take it back and tie this into what we were talking about right before the break. You know, one of the things that I got excited about was having passive income that would replace my earned income so that I could just use my retirement benefits. And my real focus was to kind of allow my wife to get out and pursue her career, she was in the health field, and she’s a nurse now and has kind of done numerous different things in that world. And but she hasn’t been able to do it full time. And so I was going to take care of the kids. And we have two awesome boys now teenagers. And we’re gonna let her kind of pursue her career. So I wanted, you know, freedom of Time, time to be back my family and stop pushing them kind of all around the country. And so real estate was going to be that for me, and really, it has been my wife and I have a couple dozen properties spread kind of across the US and in the Midwest, and places where cash flow is good. But as I was starting, that, I was looking for a way to kind of fund the downpayment, to not have so many of my own dollars in this investment. And I came across a concept called infinite banking. And it’s simply high cash value life insurance. But it really kind of goes beyond that. A friend of mine wrote a book about the Rockefeller way. And what he talks about in there is that the wealthy families in America and all families, if you go back to the world war two or before, they would store their family wealth and life insurance, they wouldn’t store it in banks, mainly initially, because banks were so insecure, and they would have crashes all the time. But the wealthy have never stopped doing that. And it’s about the tax free aspect of it. But essentially, you’re just growing family wealth and storing it in a place where it can grow tax free, while still providing a ton of protection from life insurance if things don’t go the way you want. But then you have full access to this money to be able to leverage it or borrow against it, if you will, to go do investments with it and you know, bring back more money, so to make money on that process. So I used it to fund my real estate, but it got me so inspired, that about you know, a more fundamental way for families to protect their their wealth to grow multi generation, wealth, that I essentially after two or three years of operating my policies I saw it was much bigger than just funding my real estate. And I made a choice to quit the Navy, achieve the you know, more time with family and achieve entrepreneurship. I started my own company and what I did is I partnered with the guy who introduced this to me and at this point was a huge mentor and friend of mine, Patrick Donahoe at paradigm life, and I work remotely in New Jersey, he’s out in Utah. I meet with clients every day trying to help them follow the path that I followed, whether it’s with or without real estate, that part is really kind of insignificant. It’s the more foundational piece of how to protect and grow efficiently. You know, family wealth and job, it’s okay. I’d like to mention a book that I worked on with Patrick, that he recently put out. Is that okay? Yeah, sure. So his book is called heads, I win tails, you lose. It’s an awesome book with an awesome title. But it talks about, you know, the combined knowledge of his and everyone we’ve worked with, over the past, you know, what he’s worked with over the past almost two decades, and what they’ve learned from history on how to, you know, protect and grow family wealth, and it’s a really great one, but I think you will, you will see it as a book that’s both engaging, but also a different look than what we normally talk about. Now. I mean, let’s face it today, it’s, it’s go to go to school, get good grades, get a job, build up some some college debt, and try to pay it off. While you know building a retirement and some 401k, you don’t understand. And that’s just never throughout history, except for the last 20 years in America really been an approach that’s, that’s made any sense. We think it makes sense now, but there’s a lot of baby boomers that are not doing that. Well. So rather than get off on a political political bent there, I think that it’s made a tremendous change in my life. And I believe in the lives of hundreds of clients that I have. It’s super inspiring to me, but it’s why I left the military. And I believe it’s a foundational piece and helping people build their own businesses, you know, have financing capital for their businesses. And I believe it’s a path to help people get to the stuff that eine Rand wrote about in atlas shrugged. If you haven’t read that one.

Joe Crane 21:46
Yeah. Yeah. Actually, it’s available. And you can the movies available on Amazon way, but yeah. Okay, so I want to dig into the weeds on this, because I’m real curious. SGI services, Group Life Insurance? Good. We’re all familiar with pretty inexpensive term life insurance.

Gary Pinkerton 22:07
Yeah,

Joe Crane 22:09
Term Life. Infinite banking, cash value, that’s probably some kind of whole life insurance policy is that that’s right, that was called

Gary Pinkerton 22:17
Yeah.

Joe Crane 22:18
So in my younger years, all the experts, all the books I’ve ever read about investing, if you want to buy life insurance, you buy term insurance, because it’s cheap. It’s inexpensive. And if you, if you buy the policy today, and you die tomorrow, you get full value of the policy. So I’ve often heard it, put this way, buy insurance, like you’re gonna die tomorrow, invest like you’re gonna live forever. Oftentimes, whole whole life insurance policies are kind of a mix or a blend of term and investing strategies and that kind of thing. So I’ve always been negative or down on the concept of any kind of life insurance except term, until recently, because I was in a business coaching group A while back. And I believe it’s the it was the coach, it was either the University of missing Michigan coach or the coach of the Green Bay Packers, but part of his compensation package, because they wanted to have an incentive in there to keep him around, you know, if we pay a bunch of money, and if we want you to leave, if you want to leave, we buy out your contract, whatever we wanted to every year, we wanted to have it to become more beneficial for you to stick around. And so one of the ways they did that very creative way was with some type of infinite banking instrument, like you’re talking about where the, the university or the Green Bay Packers organization would drop 500,000 or a million dollars into this whole life insurance policy on the coach. And he wasn’t able to use that money right away. He had to leave it alone. But the longer he stayed, the more money he got put into this cash value type policy. And it became a very good incentive for him to stick around. And it was a win win for him and it was a win win for the people that were you know, had hired him as a coach. And I think that’s along the same lines of what you’re talking about. I also back him as a brand new Second Lieutenant. Navy mutual aid Association has some products that are similar to this actually had one of those products because you had to get that to get the loan so I could buy my Marine Corps, uniforms and the $500 sword

Joe Crane 25:00
So I had one of those one of those products for a while just to get the loan. So I’m familiar with them. But I’ve always stayed away from all that stuff. Because it just went with a simple basic concept of you want a $250,000 life insurance policy. 10 bucks a month term life insurance. Boom, there you go. So explain how it works.

Gary Pinkerton 25:23
Yeah, of course, Why think, you know, that’s funny, you talk about Navy mutual aid, I still have my Navy mutual aid policy. And I’ve all been forgotten about it, because it stopped it started paying for itself years ago, I had it to be able to get my car loan when I graduated. And that thing’s now you know, 30 years old, and still growing. So life insurance predates you know, the IRS, it predates taxes in America, it predates the the Federal Reserve System. And it has been essentially changed in a minor method one time in 1987 1986 87 timeframe on a major overhaul the most recent major overhaul until 2018 of the tax code. And really what they did was they limited abuse, I would say, of growing money tax free. So if you think of the very, very wealthy families, they were permanently taking money, put it in a tax free environment, and never again, pay in taxes for generations. So if you think about, you know, you grow money. So for example, the Rockefellers, right, I mean, john D. Rockefeller put a bunch of money in life insurance before there was taxation in 1913. And then every generation after that was able to use that money that was in the family bank, and then when they passed away, it would replenish the death benefit would replenish that money, and it would pass to the next generations. And so they would, they were growing money in a tax free environment, permanently tax free environment. And they could, you know, have a million dollar life insurance policy that has a million dollars of cash in it, like who would pay a million dollars cash, for a million dollar life insurance policy, that’s an inefficient way to get life insurance, right. But if your goal is to store cash in a tax free environment and still get access to it, it’s a great vehicle. So you kind of have to turn life insurance upside down, to think about it that way. But it’s really about the protection, the guaranteed growth, and the tax free access of it, right. So it’s, it’s kind of like a Roth IRA, that doesn’t have all these limitations on it, you don’t have any, you don’t have to worry about 59 and a half, you don’t have to worry about mental, you know, limited amount of contributions, what you can use it for all the prohibited transactions, and none of that stuff applies. It’s simply

Joe Crane 27:35
Yeah, I was just gonna mention Roth, because you on a Roth IRA, you’re using after tax money, the money you put into, it’s already been taxed as income tax. And so you put it in the Roth, and whatever it earns, in the next 60 years, or however long you can depend on when you started, when you start pulling that money out. It’s tax free, because what you put into it was already taxed, therefore, it gets to grow unlimited. Right. And you can only put like, what are the limits? I’m not contributing to a rough? Like, what, five 550 550 500 a year in? Yeah, if you’re 19, or 20, put in 5500 a year. And that’s a pretty pretty big, pretty big chunk your salary. But as you get older, you know, the lead limited to 5500 for a reason, because they don’t want people to have too much tax free money on down the road.

Gary Pinkerton 28:29
Right. Right. Exactly. And I think that the coach, by the way that you were talking about is probably Jim Harbaugh from Michigan State or university Michigan. I mean, excuse me. Yes, yes, that’s a scenario. Yeah. And it’s a great, I would gladly if you send an email to Gary at Gary Pinkerton calm, so it’s just my name Gary and Gary Pinkerton calm, I’ll send you a copy of that article, if you’re interested. Also, I can get you a link to Patrick’s book that heads I win tails, you lose book, I think both would be very eye opening for you. But you know, to get to kind of circle back to how it works. And, you know, first of all, let me let me go out there and say that SGI is amazing. I tell all of my military clients that I have a lot of them. It’s an please never get rid of that, including the spousal benefit because it’s subsidized by the government. I can’t come anywhere near touching that and you learn that when you retire or get out of the military and you have an option to get veterans Group Life Insurance Vgi. That stuff is sold at market rates. And it’s super expensive. It’s over 10 times with SLI as n goes up annually. One of the other things that concept that Al Williams in the late 60s when he created by term and invest the difference. His concept there and Dave Ramsey talks about this a lot is that you’re not going to need insurance life insurance when you’re older, the kids will be out of the home homes paid off. And you know, I don’t see life insurance as a need product. I see life insurance as a want product.

Gary Pinkerton 30:00
I love the old joke of, hey, we’re all going to die, let’s just not do it for free. You know, I mean, you might as well get paid on, you know, on the fact that you pass away. And if you look at, you know, the policies that I put in place, you know, big picture, throughout your lifetime, you’re gonna make four or five, maybe 6%, tax free equivalent return. And so in a savings account, if you could earn 8% every year for your entire life and pay the taxes and fees, then that would be kind of the equivalent where you’re storing your money here. So, you know, if you think about that, if every member of the family for generations upon generations knew that they had this four to 5%, guaranteed growth, that’s actually higher than the average investor makes in the stock market, even this series we’ve seen recently. So it’s just a really good foundational, not too exciting, you know, you don’t you’re not on the roller coaster ride of the s&p, but it just kind of chugs along guarantees that it goes up every year, and provides a you know, a big foundation for from which to, you know, to borrow to start your next business or whatever does that help

Joe Crane 31:03
in so you’re, you’re putting money into it month, after month, after month, over several years. Can you just explain the basic structure of a typical posture, like it sounds 25, or 40, or whatever?

Gary Pinkerton 31:19
Sure. So what we, the way we design them is called high cash value. So there’s really two ways that you can put money into life insurance hold permanent life insurance nowadays, you can either put the money into the main life insurance policy, or you can do something called overfunding, where essentially, you’re sticking it’s, it’s something called paid up additions or paid of additional insurance. But essentially, you’re just stuffing cash into this thing. So the main life insurance policy kind of builds your bank in the vault, if you want to think of it that way. And then the paid up additions, or the overfunding, is your dumping money into the vault that’s going to sit there and grow tax free, with you know, kind of unlimited contribution rates. So we try to put as much into the pool as are the paid up additions, the the cash part as we can limit the amount going into the main life insurance. So my Navy mutual aid policy was just the base portion of the policy, it didn’t have this overfunding option. And when you design them that way, for example, I’m designing one for a client, I was designing one earlier today, he wants to put a quarter of a million in the gentlemen obviously has been a pretty successful entrepreneur for many years. But of that quarter million that goes in, he’s only putting 25,000 into the base portion. So you know, almost 10 times as much is going into the cash part. And when you design it that way, as opposed to the more traditional just annual or monthly contribution to the base, you have a ton of cash value available early. So one of the one of the critiques that you’ll hear is, gosh, you know, you won’t, you’ll make contributions for years, and you won’t even have as much in there as you have contributed for like 10 or 15 years. And access to the first parts of borrowing could be five years down the road. But if you compare that to, you know, the way I set them up, I borrowed against my policies, and most of my clients can do the same within the first two or three days of funding it and get access to 75 to maybe 90% of what’s in there. So it’s a bit you know, it’s a bit different paradigm.

Joe Crane 33:17
So if you look at the example where he puts two 250,000 in and only 25 grand funded the base portion of the policy. So yeah, what was the death benefit of the 25? grand, let’s say?

Gary Pinkerton 33:33
The 25 grand portion? Probably it’s the part that matters, the policy. Right? Right, so about 800,000, but the actual, it does some blending with some term insurance on there too at the beginning to allow us to do this and not lose the tax benefits that IRS change the tax change I mentioned in the 1980s. It limited the abuse. So you’re not allowed to put nearly as much over funding or cash on these policies. You can still do some extraordinary stuff, like I just mentioned in that example. But you’re not able to just totally over fund it. So

Joe Crane 34:09
so all of it is actually into 250,000. Yeah, in died the next day. The policy would have paid 800,000

Gary Pinkerton 34:17
No, it would have paid the 800,000 for the base plus the other insurance that was on there the term insurance blend. So that policy starts off at about 3 million. It depends on your age. Sure, but that guy was about 3 million. Okay. So if he doesn’t die, he’s got access immediately to 235,000 of the 250  25 excuse me of the 250. And if he does die, then he’s got 2 million or 3 million excuse me, tax free

Joe Crane 34:49
And of the 225,000 he has access to he has access to it as a loan.

Gary Pinkerton 34:54
Yeah. As a loan or physical withdrawal if something were to happen and you needed to do But it’s a tax free loan with no strings attached, and meaning that he determines the repayment plan, if any.

Joe Crane 35:12
And to some folks, you know, if if you don’t have this kind of disposable cash lying around, I mean, get the point here, but right sometimes if you’re, if you have a lot of cash and sometimes becoming rich has its own problems, right? You know, right. If you have a lot of cash, like, you can’t even the what’s the insurance coverage rate for typical bank now? Is it per account? It’s like, was it?

Gary Pinkerton 35:46
Oh, you’re talking about FDIC,

Joe Crane 35:48
the FDIC insurance on a typical bank?

Gary Pinkerton 35:50
It’s 250,000?

Joe Crane 35:51
Yeah. So if you’ve got like a million dollars cash, like, where do you put it? I mean, most of us don’t have that problem. But for somebody that just sold their company, you’re lucky. Okay, got a million dollars, literally, where? Do you walk in your bank and write on the check for a million bucks and say, I want to open my savings account?

Gary Pinkerton 36:09
Well, yeah, you’re spreading it around to a lot of banks, they’ll

Joe Crane 36:13
get a minimum, you got to come up with four different accounts, because 250 per bank, is what you would keep it that way the bank fails, you can still get your 250 back. Right,

Gary Pinkerton 36:23
yeah, plus, you’re giving up $100,000. In interest, you could be on an if it was in a place that it would, you know, would grow substantially. So but you know, that’s not for everyone. And those are certainly unusual policies, what I create them of that size, you know, more often is a couple thousand dollars a month that was otherwise go into the 401k. And I had no access to it. So you know, I reposition or maybe it was going into a brokerage account, but it’s just the family savings, doing a couple thousand a month, maybe I didn’t have a large lump sum of money I put in at the beginning. And in that case, let’s say you know, 2000 a month then 500 is going to the base portion of that main life insurance. And then the other 1500 a month is growing as that overfunded part, and it’s immediately available as soon as you put it in. So that’s just, uh, you know, you can do it all kind of at once. Or you can do it slowly over time. Or you can do a combination of both I, I, you know, designed these to fit the individual. They’re kind of handmade with the 10 insurance companies I work with to fit the specific individual and their goals.

Joe Crane 37:24
That’s interesting. Well, Gary, unfortunately, we’re Yeah, we’re getting close to over time. I mean, I’ve heard a lot about these kinds of policies just really, in the last six months, never paid much attention to them in the past. I think they’ve gotten a little fancier in the last couple of decades, but it’s definitely something, you know, look I’m looking at or just curious about as a different vehicle for certain scenarios. So that’s cool that you’re able to work remotely while you’re doing this in developing custom policies for folks. So it’s pretty interesting. So now that you, and we are pretty much at a time we’re going over a little bit. Now that you’re in this entrepreneurial world, and you’re you’re granted you’re working within within a company, but for the most part, you’re an entrepreneur on your own, calling your own shots. What kind of advice would you have for somebody that’s out there listening to the show, considering entrepreneurship as a viable alternative for after getting out of the military.

Gary Pinkerton 38:25
So I think the the asset that you should spend your money, every dollar that you have available that asset, and where you should devote that money is to your number one asset, and Patrick talks about this a lot in that book. But the number one asset is yourself right, your ability to earn money to add value to the world and get compensated for it. That’s the thing that offers the greatest benefit to your family and to your future. So building are spending your dollars on self improvement on you know, going to college, like you mentioned, using those resources that we have as veterans, just spend as much time as you can, working on yourself and I include a morning routine in that I you know, I follow the Miracle Morning. There’s just there’s so much information and available resources out there and podcasts and books nowadays. I would just you know, as you’re getting ready to transition, just focus on like you and I did Joe on on working on yourself and being introspective on really what you want to do. The other thing I would do is spend a lot of time asking friends and family what you do better than everyone else. Like find out what that one thing is your own unique genius that you already do better than everyone else. And the reason I say ask others is because you won’t, you won’t know it yourself because it seems so easy for you because it’s naturally a talent of yours. You’ll discard it, you’ll you’ll you’ll just think you know it’s not that important. But like I love personal financial management. I love teaching people I love talking with people and seeing them grow their own business and prosper. That’s where my passion And I wouldn’t do it 24 hours a day if I could. But I didn’t know that was my town until I had friends and family tell me that. So spend time seeking your own unique genius and, you know, improving your number one asset, which is yourself. That’s my advice, Joe.

Joe Crane 40:14
All right, Gary. Well, thanks for sharing your entrepreneurial venture. Appreciate it. It’s good to know you’re doing well. We look forward to your future success.

Gary Pinkerton 40:23
Well, thank you so much. And again, I know it’s a pleasure being on there. And if I can help anyone, again, just please reach out to me at my website that I mentioned. we’ll gladly do whatever I can.

Joe Crane 40:34
Right rock on. Right. These two veterans are

Gary Pinkerton 40:36
Yes, sir.

Joe Crane 40:40
As you can tell from listening to the veteran on move podcast, interviews are a great way to tell your story and spread the word about your business. If you would like to get booked as a podcast guest, I recommend interview valet you can check out interview valet at veteran on the move comm slash valet. Be sure to check out thrive fifteen.com, the world’s premier online education platform that helps entrepreneurs, aspiring entrepreneurs, and intrapreneurs learn how to start or grow successful business. Start your free 30 day membership by going to thrive fifteen.com use the promo code veteran. Thank you for listening to veteran on the move your Pathfinder to freedom. If you like the show, leave us a review on iTunes. Reviews are always really appreciated. So until next time, this veteran is Oscar.

Jason Hartman 41:37
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