"How To Turn $500 Into $400,000 With COMPOUND INTEREST"
Summary
TLDRThis video explains the concept of compound interest, emphasizing how it accumulates by earning interest on both the principal and previously earned interest. The hosts, Darius and Carmen, explore how banks profit by keeping money in motion and how individuals can leverage the same principles. They discuss using dividend-paying whole life insurance as a savings vehicle to earn compound interest while still accessing funds, essentially creating a personal banking system. The video highlights financial discipline and understanding key products like whole life insurance to grow wealth over time.
Takeaways
- 💸 Compound interest is interest on both the principal amount and the accumulated interest, creating a stacking effect.
- 🤑 A penny doubled every day for 31 days can amount to over $10 million, demonstrating the power of compound interest over time.
- 🏦 Banks use compound interest by keeping money in motion, constantly lending and earning interest from loans, credit cards, and mortgages.
- 🔍 Whole life insurance offers a way to earn compound interest, as policyholders can earn interest on their cash value while still utilizing funds.
- 💼 Whole life insurance provides both a death benefit and a cash value that grows at a compounded rate, allowing for flexibility in personal finance.
- 🔄 The idea of 'money in motion' means that by continuously leveraging funds, like taking loans from life insurance policies, individuals can keep earning interest.
- 📊 Stacking interest rates involves using various financial products to earn interest on multiple fronts, similar to how banks operate.
- 💡 Paying oneself back with interest, instead of relying on traditional bank loans, allows for greater control over personal finances and interest accumulation.
- 💳 Most households are already paying interest on multiple items (e.g., mortgages, credit cards, car loans), and those payments help banks stack interest rates.
- 📈 Discipline and responsible money management are essential for successfully creating and maintaining a personal banking system that stacks interest over time.
Q & A
What is compound interest?
-Compound interest is when you earn interest on both the principal amount of money and the accumulated interest, resulting in 'interest on top of interest'.
Can you give an example of how compound interest works?
-A good example is the scenario of a penny doubling every day for 31 days. By the end of the period, the value would exceed $10 million, which shows the power of compound interest accumulating over time.
Why is the end phase of compound interest the most important?
-The end phase is important because the more money you accumulate over time, the more interest you earn on that larger sum, leading to exponential growth.
How can people earn compound interest like the banks?
-People can earn compound interest by investing in products like dividend-paying whole life insurance, which allows for compound interest accumulation while also giving access to the funds for other uses.
How does whole life insurance allow you to stack interest rates?
-Whole life insurance allows policyholders to access loans against their cash value while still earning interest on the full amount. This helps individuals stack interest by using the insurance company’s money for investments while their own money continues to grow.
Why is it important to keep money in motion?
-Money in motion is key to earning interest because when money is invested or lent, it continues to work and generate returns. This is how banks and investors generate wealth.
What are the benefits of becoming your own bank using whole life insurance?
-By using whole life insurance, individuals can create their own banking system, accessing loans from their policy and paying themselves back with interest, allowing for greater control over their finances and interest stacking.
What are the risks of using the stock market compared to whole life insurance for compound interest?
-The stock market is volatile, meaning you can lose money and potentially miss out on compound interest growth. Whole life insurance, on the other hand, offers a guaranteed return, providing more stability.
How does discipline play a role in stacking interest rates?
-Discipline is crucial when borrowing from your policy, as you need to pay yourself back with interest to maintain the growth of your wealth. Without discipline, the strategy may fail.
Why do banks primarily advertise credit products rather than savings accounts?
-Banks make more money from interest on loans and credit cards, so they advertise products with high-interest rates. Savings accounts typically have lower returns, which is why they are less frequently promoted.
Outlines
💰 Understanding Compound Interest
The video begins by explaining the concept of compound interest. Unlike simple interest, where you only earn on the principal, compound interest allows you to earn on both the principal and the accumulated interest. The presenters Darius and Carmen give an example of a penny doubling every day for 31 days to demonstrate how compound interest can grow exponentially. They emphasize that compound interest is not something exclusive to the wealthy and show how it can be leveraged for personal financial growth.
🏦 Whole Life Insurance as a Savings Tool
Darius and Carmen introduce the concept of using whole life insurance as a savings vehicle to earn compound interest. They highlight how whole life insurance allows for flexibility, providing both a death benefit and a cash value component that grows over time. The presenters emphasize that this cash value can be leveraged through loans while still earning interest, allowing individuals to utilize their money without halting its growth.
🔄 Stacking Interest Rates with Whole Life Insurance
The presenters discuss the advantages of using whole life insurance to stack interest rates. They explain how borrowing from your policy allows you to keep your money growing while still utilizing it. The banks do something similar by keeping money in motion, constantly earning interest. The key takeaway is that, by leveraging whole life insurance, individuals can replicate the strategies banks use to stack interest rates and grow wealth.
💳 The Power of Managing Loans and Interest
In this section, Darius and Carmen emphasize the importance of managing loans and understanding interest. They discuss how the average household often pays interest on multiple loans, such as mortgages, credit cards, and car loans. The key point is that by understanding how banks leverage our payments, we can use similar strategies to pay ourselves interest, ultimately stacking our own interest rates and keeping money in motion for financial growth.
Mindmap
Keywords
💡Compound Interest
💡Principal
💡Money in Motion
💡Stock Market
💡Whole Life Insurance
💡Cash Value
💡Leverage
💡Banking Process
💡Volatility
💡Direct Deposits
Highlights
Interest is a byproduct of money in motion, meaning that even when money sits in the stock market, it is still being utilized to generate interest.
Compound interest occurs when interest is earned on both the principal and accumulated interest, creating a powerful growth cycle over time.
A penny doubled every day for 31 days results in over 10 million dollars, demonstrating the exponential power of compound interest.
While achieving 100% compound interest daily is unrealistic in the current financial world, banks can still leverage interest in powerful ways.
Investing $500 a month at 5% interest for 30 years can grow to over $420,000, showcasing the long-term benefits of steady, compounded investments.
The most significant impact of compound interest comes towards the end of the accumulation phase, where the compounded amounts grow substantially.
Dividend-paying whole life insurance is used as a savings vehicle that allows for compound interest while retaining flexibility in accessing funds.
With whole life insurance, policyholders can borrow against their policy’s cash value, allowing them to continue earning interest while using the funds.
Interest rates are stacked on credit cards, mortgages, and other loans, which contributes to financial institutions' revenue by keeping money in motion.
Banks leverage customer deposits by lending them out and earning interest, while customers earn a smaller amount of interest on savings.
The key to generating wealth like banks is keeping money in motion, earning interest by investing or using financial products such as whole life insurance.
The discipline required when borrowing against whole life insurance involves paying yourself back with interest, similar to a traditional loan.
Whole life insurance offers guaranteed returns and protection from the volatility of the stock market, providing a more stable compound interest growth.
To build a successful banking system for yourself, you need solid money management skills and the ability to create cash flow.
Life insurance is not only for providing for your family after death but also serves as a financial tool for accumulating and growing wealth during your lifetime.
Transcripts
now the interesting thing to know about
interest is interest is a byproduct of
money in motion yes so yeah when we
think about
even putting our money in the stock
market even though we're letting it sit
there
on our end that money is still being
utilized that's how we
are able to earn interest because that
money is out working
yes it is we thought compound inches was
this mystical creature that only rich
people had
access to once you have it then you
don't have any control over the growth
and you have to wait for it to
accumulate
over time oh yeah my name is darius and
i am carmen and in this video we are
going to teach you how to stack
interest rates just like the banks so
that you can earn compound interest
for yourself now let's jump right into
this video right ladies and gentlemen
because this is jam-packed with
amazing information so first point what
is compound interest
let's just talk about that for for a
second what compound interest is
is let's say you have a principal amount
of money
and that principle is earning and a
certain amount of interest
now we put compound interest into this
process and you are earning interest on
the principal
and the accumulated interest all
together that's called compound interest
which is
interest on top of interest so anytime
you are earning money it's the
accumulated amount that you are earning
interest
on whereas typically you have a
principal amount and you just earn
interest
and there's no accumulation that you're
able to stack on top of that
so just want to make sure that we first
and foremost clarify
what compound interest is in the first
place yeah a good example of that would
be a penny doubled every single day
for the next 31 days do you know what
that amount is yeah would you rather
a hundred thousand dollars in cash or
penny doubled every day for the next 31
days
a lot of times ask that question one
more time i want to make sure that you
guys heard him
because that's a that's a nugget so
would you rather have a hundred thousand
dollars
in cash right now or would you rather
wait 31 days and have a penny doubled
every single day for the next 31 days
and you get that amount i want b option
b right
and a lot of people before thinking
about it they will say i want a hundred
thousand dollars
but a penny doubled every day that's
that 100 compound interest every single
day for the next 31 days is over 10
million dollars google it we're right
now that happens because of as it
relates to
time and the accumulation phase like
carmen was saying
we're able to get 10 million dollars now
preface that
nowhere in the world that we know of yet
can you earn 100 compound interest
we can't but the banks can yeah the
banks can and if you find out y'all
better holler at us on the comments when
we figure this out
so going back into compound interest
interest on top of interest
darius just gave an amazing breakdown a
penny doubled every day for
a month 31 days is over 10 million
dollars so when we learned that we woke
up and we said wait a second
how can we get this mystical creature
into our bank accounts
so that we can start doubling money just
like the banks yeah now
one uh more realistic way of looking at
it is
let's take uh some type of investment a
lot of people like to invest in the
stock market
say we invest 500 a month in the stock
market
every single month for the next 30 years
yes
at five percent interest that is over
420
thousand dollars now that's that's more
realistic right when we think of it over
a longer period of time
but here's the thing when it comes to
investing our money in like the stock
market
or putting our money up in a cd or
saving it
in a bank we come to that
portion we come to that portion where we
have to let the money sit
yes we have to let the money sit and we
have to wait for
time in order for it to accumulate yeah
now the most important thing about
compound interest
isn't the beginning phase well all of
it's important but
it's the end phase because when you have
the
interest on interest at the end
of the period that's when it really
grows like in the penny doubled every
single day yeah
yeah because really where compound
interest starts to take off is remember
we're talking about the accumulated
amount the more money that you
accumulate that's the more interest
you're earning
so like daria said compound interest
gets really sweet towards the end of the
accumulation phase because you have so
much cash on hand
yeah now if we want to talk about taking
control of
the amount of interest that we're
earning we have to first think about
the foundation where are we starting
where are we actually putting our money
now carmen and i we really enjoy the
product of dividend paying whole life
insurance
because what we're able to do is we're
able to use this as a savings vehicle
and we're able to earn
interest on the amount every single year
for the rest of our life and
we're also able to utilize those funds
while we still continue to earn
interest yes now let's break that down a
little bit because like darius said
if you earn compound interest in the
stock market in a savings account or a
cd
you have to take your money bag haul it
over to one of those vehicles and drop
it
and you can't touch it so the main thing
for us is when we realized that
we said wow if we're taking all this
money to these vehicles and we can't
touch this money for
30 years that's no fun we got to be able
to make more money
quickly so in this case when we found
whole life insurance and the flexibility
that it provides us we said wait a
second ding ding ding
this is where we need to put our money
so like darius said
with whole life insurance you pay your
premium and you you are able to have
access to two things
a death benefit and also let's call it
like a savings
uh vehicle which is a cash value that
that's typically what they call it is
cash value
and every time we pay our premium so
money is going to go to the death
benefit and some money is going to go to
the cash
now the cash is going to accumulate at a
compounded rate which is really awesome
and the best thing that we're able to do
is leverage
those funds to make money to
flip money to stack interest rates now
how in the world can we do that
is because the insurance company is
going to look at the cash value and
basically the death benefit of the
policy and say hey
darius and carmen have 20 000 worth of
cash in their policy
i can give you our 20 000 meaning the
insurance company
they will lend us their 20 000 which
allows our money to stay intact
earning interest now that is an amazing
nugget to know about whole life because
a lot of people just don't understand
you can get a loan
from your policy which still allows your
money to grow and you can continue to
flip
the insurance company's money i like it
thank you
really good yeah i hope you catch that i
hope you caught that
now the interesting thing to know about
interest is interest is a byproduct of
money in motion yes so when we think
about
even putting our money in the stock
market even though we're letting it sit
there
on our end that money is still being
utilized that's how we
are able to earn interest because that
money is out
working yes it is now this is the same
thing that it that happens when
we put our money in the bank we may not
be earning a huge amount of interest on
our money sitting in the bank but the
banks are earning
gobs and gobs can i say gobs
because they're able to keep the money
in motion and if you want to learn how
to earn a hell of a lot of money just
like the banks then click on the link
below to
join the nation and let us know in the
comments where else are you earning
compound interest when we think about
interest interest
is a result of money in motion because
let's think about it
whenever you invest your money that
money is out being used it's out being
leveraged whenever we invest in the
stock market that money isn't sitting
there in the stock market without being
used whenever we put our money in a cd
or even our savings account we earn a
small amount of interest but that money
is out being used that's how we're able
to
earn interest now with that said when it
comes to
utilizing whole life insurance getting a
loan from the bank and then
maybe allocating those funds for
something we would have spent anyway
we're able to
earn interest we are able to put that
money to work
now really quickly before we even jump
into that information
just think about it we need to put this
into perspective i feel like that's the
main thing that we're missing here is
how many of you own a home how many of
you own a car
how many of you have credit cards how
many of you
student loans whoo that's a good one
medical bills whatever it is
you are paying interest
from your mortgage your car your credit
cards
student loans and medical bills in some
cases
in personal loans whatever the case may
be all of that money
is in motion is in motion by us yeah
we're paying it
every single month i'm paying it he's
paying it you're paying it the guy
behind you paying it the one next to you
paying everybody's paying interest
so that's what we're talking about is
stacking interest rates because
right now in your household you probably
have four or five
different vehicles in which you are
paying interest on
i think it's like the average household
is paying interest on three items and
that's typically your house
a car and a credit card so think about
that that's interest that's just
stacking stacking stacking
now when all of us every single month
are paying our bills
that money is going to accumulate in the
bank and do you think that that money is
just going to sit in the bank
no they're going to continue to lend
that money out to everyone else who
needs
loans and houses and cars because
they're stacking
interest rates yeah and the cool thing
about it the cool thing for the banks is
the fact that
these large banks we're only using about
10 of them
yeah most people utilize about well all
of us collectively
the major banks are about 10 15 of them
yeah and
the banks are able to leverage all of
the
interest all the money that we're
spending
all of our cash flow that is coming to
them all of our direct deposits they're
able to utilize those
to keep money in motion for us so
yeah because our like terry said our
direct deposits are unsecured
loans i don't know if you knew that but
every time we put money in the bank
it's out because they're leveraging it
flipping money stacking interest rates
so we we want to hammer home on that to
make sure that you understand because
this whole video is talking about
compound interest
and how you can earn compound interest
just like the banks you got to
understand first and foremost how
they're doing it in the first place
they're keeping it in motion and
the best asset that the banks have
is us yes so why not be an asset for
ourselves and keep our own funds
in motion because we're out there
earning income we have
cash flow so why don't we utilize that
cash flow
get a loan from ourselves and pay
ourselves that interest
and then instead of getting another loan
from the bank
or waiting before that loan is paid back
we can reallocate those funds for
something else
that's how you stack interest rates on
top of each other now i really liked
what you said about
the we are the biggest asset for the
bank uh
because our loans are our assets to the
banks now think about it you know
the banks are always sending these nice
pretty letters in the mail or giving you
a call saying hey
you qualify for so-and-so zero
percentages you get this you get that
everybody gets interest rates so you
know
why do you think they're doing that
they're not doing it because well that
they are being friendly customer service
is huge but
the banks are a business at the end of
the day they have to make money so they
continue to offer their products and
services to us
so that we can continue to pay interest
go figure and one thing that we talked
about the other day was you know you
never hear
the banks uh or advertisements talking
about savings accounts
no the advertisements are for credit
cards mainly because that's
how they're there are making a killing
in the interest payments that are coming
back to them yeah they advertise the
things that have the highest interest
rates yes
which is smart you can't blame them
there's marketing it's a business you
got to do what you got to do
so if anything again it's all about
making sure that you understand how this
works
now let's loop it all home shall we
because we talked about how the banks
are stacking interest rates we mentioned
this thing called whole life insurance
so when we talk about whole life
insurance is the leverage that we talked
about if we have twenty thousand dollars
worth of cash
we are going to leverage that to get a
loan from the insurance company
instead of going to the bank and getting
some funds
because we are leveraging something
called a banking process where we are
becoming our
own bank we are utilizing our whole life
insurance policy
to be its own personal line of credit
for ourselves so anytime we need money
we're going to leverage it from our
policy and we're going to pay
ourselves back the principal and
interest that we would have paid to the
bank
right so when we think about the fact
that we don't have control control
over the growth we don't have control
over the growth when we utilize a
traditional
investment vehicle like a stock market
because when you put your money there
you're able to earn interest on
one thing or your portfolio or whatever
you guys want to
comment in the now now one thing when
you talk about the stock market we
didn't talk about the volatility of it
you know you really have to understand
what you're doing within the stock
market because you could put money up
and then you could lose it so there goes
the compound interest
effect because you are at risk yeah
so one thing that is to be clear with
whole life insurance is it provides a
guarantee yeah
the life insurance policy provides a
guarantee but the biggest risk when you
get a loan
is you amen you have to you have to pay
yourself back you have to pay yourself
back with interest because
when you borrow money from the bank you
pay them back with interest we have to
respect
our money yeah and like we said if we
leverage
cash from the policy the discipline
comes into play where we actually need
to pay ourselves back we're not just
willy-nilly gonna get this loan and
spend it
so again we need to be just as diligent
with our funds as we would with the bank
because again if you don't pay the bank
they're going to come pick up whatever
that they gave you in the first place um
be it your car
or your house so we need to treat
ourselves the exact same way when it
comes to this whole compounding and
stacking interest rates
now the other thing that we haven't
mentioned yet is stacking interest rates
within our own banking system
you know once we get one loan it doesn't
just stop there we're going to continue
to lend ourselves money because we would
have got
loans from credit card so to speak right
a personal loan
or or whatever it is to leverage cash so
we are just going to continue
to get loans from our policies and keep
money
in motion so that we can stack the
interest rates just like the banks would
yeah now we're making this sound very
very easy and
it's not complicated but if you don't
have discipline if you don't have the
proper money management habits if you
don't have
cash flow you can't create money without
having money in the first place so true
and what you have to really take into
consideration is your documentation
when we talk about stacking interest
rates we're talking about actually
utilizing the banks as a blueprint we
keep talking about the banks but they
have the perfect blueprint
how many of us are able to go to a bank
and they just give us money
without us filling out any paperwork or
without us
knowing on a monthly basis how we're
going to pay that money back yeah
we have to do the exact same thing we
have to be diligent
even more diligent when we start
creating our own banking system
than we are right now so we really
really have to be responsible and take
this thing seriously because
the potential is out of this world it
can be
and and what darius and i are talking
about too is when you think about loans
and you know leveraging money typically
i think people are thinking you know
thousands and thousands of dollars and
when we started our banking system it
was you know we were just starting on
our own
scale what we had available so it's
important to understand that you know
right now you could be paying maybe 100
in interest on a credit card or whatever
it is
but multiply that times 12 months
multiply that times two
years and that's just one credit card
how many credit cards do you own in your
possession
that money adds up very quickly and
that's a lot of money that we could
utilize
to make some really big damage or
headway within our own financial goals
yeah because again the compound interest
is about how you finish yes it's not
about how you start
you're able to accumulate the most money
in the end so the longer we wait the
less money
we are um going to be able to earn in
the future
yeah and so if anything we just want to
make sure that we're able to share this
information with you because once we
learned that we could earn compound
interest just like the banks and stack
our own interest rates and then create
our own banking system on top of that we
were like
mind blown so it should be very very
easy for you all to catch on
like we did and use something called
whole life insurance this amazing
product
that not only provides us the saving
capabilities with a guarantee of
compound interest but a death benefit
at the same time so it's really really
really really awesome once you start to
understand the financial products that
are at your fingertips and how to
utilize them to your benefits
because when we think about whole life
and or when we think about life
insurance in general
it's typically just i gotta die and then
my family's gonna get the money
but really there's so many amazing
things that you can do with life
insurance you just have to educate
yourself
and that's what the wealth nation
channel is all about
we thought compound interest
you say the freebie that it's been so
much um can you do that again because i
didn't
remember you just say that crazy so go
ahead and click on our
next video
[Laughter]
and make sure you check out our next
video where we talk about how compound
interest is failing you
and also remember to click on the
freebie so that you can get 52 ways
on how you can stack interest in your
favor and remember to
own your own lifestyle or someone else
will
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