"How To Turn $500 Into $400,000 With COMPOUND INTEREST"

Summary

This 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

00:00

💰 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.

05:01

🏦 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.

10:01

🔄 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.

15:03

💳 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.

Keywords

💡Compound Interest

Compound interest refers to earning interest not only on the initial principal but also on the accumulated interest over time. In the video, it is emphasized as a powerful financial tool that allows money to grow exponentially, as demonstrated by the example of a penny doubling every day for 31 days, resulting in over 10 million dollars.

💡Principal

Principal is the initial amount of money invested or loaned. In the context of compound interest, the principal is the base amount on which interest is first earned, and later, interest accumulates on both the principal and the interest. The speakers explain how compound interest builds from the principal, amplifying returns over time.

💡Money in Motion

The concept of 'money in motion' emphasizes that money should always be working or invested to generate returns. The video explains that interest is earned when money is actively being used, whether through investment in the stock market or placed in financial institutions where banks lend it out, earning interest for themselves.

💡Stock Market

The stock market is highlighted as a popular vehicle for earning interest, where individuals can invest funds that earn returns over time. In the video, they discuss the idea of consistently investing $500 a month in the stock market for 30 years, accumulating over $420,000 at a 5% interest rate.

💡Whole Life Insurance

Whole life insurance is presented as a financial product offering both a death benefit and a savings component with a guaranteed interest rate. The speakers discuss how they use whole life insurance as a savings vehicle, allowing them to earn compound interest and even borrow against the cash value without interrupting the interest-earning process.

💡Cash Value

Cash value refers to the savings component in whole life insurance policies. It accumulates over time, and policyholders can borrow against it while it continues to earn interest. The video explains how using the cash value allows them to finance other activities while still benefiting from compound interest.

💡Leverage

Leverage is the act of borrowing money to invest or finance other ventures, using an existing asset, like the cash value in a whole life insurance policy, as collateral. The video highlights how they use leverage to borrow from their insurance policy, keeping their own money invested and working for them while using the borrowed funds.

💡Banking Process

The 'banking process' refers to the method of using personal resources, such as whole life insurance, to create a personal line of credit. The video discusses becoming your own bank by borrowing from your insurance policy and paying yourself back with interest, allowing you to control your financial growth and stack interest.

💡Volatility

Volatility refers to the uncertainty and fluctuations in the value of investments, particularly in the stock market. The video mentions the risks associated with investing in the stock market, contrasting this with the guaranteed growth offered by whole life insurance policies, which are not subject to the same volatility.

💡Direct Deposits

Direct deposits are described as unsecured loans to banks, as the money individuals deposit is immediately used by the bank to generate profit. The speakers explain how banks benefit from keeping money in motion by lending it out, stacking interest, and why understanding this can help individuals create their own financial systems.

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