Schedule Appointment »
317-912-1000
317-912-1000
There’s a financial reality that most Americans fail to recognize until it’s too late: every dollar sitting idle in your possession is actively losing value. This isn’t a matter of opinion or economic theory. It’s a mathematical certainty driven by forces that operate 24 hours a day, 365 days a year, regardless of whether you understand them or not.
The question isn’t whether your money is working. The question is: Who is it working for?
Inflation operates like a thief in the night, quietly stealing your purchasing power while you sleep. Yet, unlike a burglar who breaks into your home, inflation has been granted legal authority to rob you. The Federal Reserve, working in conjunction with the government, continually expands the money supply. This expansion doesn’t create more value in the economy. It dilutes the value of every dollar you’ve already earned.
Consider the data from the past 50 years. The average price of a new car in 1970 was $6,100. By 2020, that figure had risen to $37,851. That represents an annual inflation rate of 3.72%, not the 2% figure we’re often told to believe. A first-class postage stamp, which cost five cents 50 years ago, now costs 74 cents. That’s an annual inflation rate of 5.54%.
These numbers represent the real cost of allowing your money to sit idle while inflation works against you.
The brutal truth is this: if your money isn’t growing faster than inflation, you’re getting poorer every single day, even if your bank balance stays the same.
When you keep cash sitting in a checking account earning zero interest, or even in a savings account earning 1% or 2%, you’re not preserving your wealth. You’re actively destroying it. This destruction happens in two ways.
First, inflation erodes your purchasing power. A dollar today will buy less tomorrow, and even less the day after that. Second, you lose the opportunity to put that money to productive use. This is what economists call opportunity cost, but for most people, it’s a missed chance to build wealth.
Think about what happens when you pay cash for everything. Many financial gurus advocate this approach, claiming it will lead to financial freedom. But consider what actually occurs when you withdraw $10,000 from an account earning 4% to make a cash purchase.
If you had left that money in place and borrowed the $10,000 instead at 6% for two years, you payments would be $443.21 per month, with interest totaling approximately $637 over those 24 months. By withdrawing the money, however, you lost an estimated $831 in interest earnings that your money would have generated.
By avoiding paying interest, you lost more money. Your cash, which could have continued working for you, stopped generating returns the moment you withdrew it. If you had borrowed the money and kept your $10,000 invested, it would have continued earning for you while you used borrowed money to make your purchase.
Banks and financial institutions have understood this principle for centuries. They don’t keep their money idle. Every dollar deposited with a bank is put to work through loans, investments, and other financial instruments. Banks pay you a small amount of interest to use your money, then turn around and lend it out at higher rates, profiting from the difference.
This is called the velocity of money, and it’s the foundation of how wealth is built in our economy. Money that circulates creates value. Money that sits still loses value.
If banks profit by keeping money in motion, why would you allow your money to sit idle?
Free cash flow is money you can use, control, and manage without having to pay taxes on it every time it flows through your hands. The longer you have access to free cash flow, the more wealth you can generate.
Most Americans have their money locked up in accounts where they can’t access it without penalties, taxes, or both. They’re told this is “discipline” and that it’s “for their own good.” But what it really does is prevent them from taking advantage of opportunities and forces them to watch as inflation eats away at their future purchasing power.
Building wealth requires that you maintain control over your money while keeping it productive. This means you need a financial tool that provides:
The financial advice industry has trained Americans to accept certain “truths” that work against their interests. Consider these common pieces of advice:
“Max out your 401(k) contributions.” This locks your money away until retirement, subjects it to market risk, charges you fees every year, and guarantees you’ll pay taxes when you withdraw it. All while inflation erodes its purchasing power.
“Pay off your mortgage as quickly as possible.” This strategy ties up enormous amounts of capital in an illiquid asset while costing you more in lost opportunity than you save in interest payments.
“Keep an emergency fund in a savings account.” This guarantees your emergency fund loses value every year to inflation while earning minimal interest that’s taxable as income.
Each of these pieces of advice sounds prudent on the surface. But when you examine the math and consider the opportunity cost, they lead to wealth destruction rather than wealth creation.
Wealth doesn’t come from hoarding money. It comes from putting money to productive use. Just as blood circulating through your body creates health, money circulating through your financial life creates wealth.
When you go outside and run around the block, your body doesn’t produce more blood. Your blood pressure rises and your heart beats faster, so your existing blood can meet the increased demands of your body. The circulation speeds up to deliver oxygen and nutrients where they’re needed.
Similarly, you don’t need more money to build wealth. You need to increase the velocity of the money you already have. You need to put your money to work in ways that allow it to be in multiple places at once, generating returns while remaining accessible for other opportunities.
This is what wealthy individuals and successful businesses do. They leverage their assets and borrow against their cash value rather than depleting it. They keep their money working continuously, generating returns in one area while financing opportunities in another.
Participating whole life insurance provides a unique vehicle for maintaining control of your money while keeping it productive. Unlike qualified retirement accounts or traditional savings vehicles, a properly designed whole life insurance policy offers:
When you borrow against your life insurance policy, your cash value continues to earn all the contractually binding guarantees as well as any dividends the insurance company pays. This means your money is working for you in the policy while you’re leveraging it for other purposes.
This is the key to building wealth: keeping your money in motion without losing control of it.
Imagine someone who establishes a participating whole life insurance policy and funds it over time. As the cash value grows, they can leverage it to finance purchases, investments, or business opportunities. Unlike a withdrawal, which stops the earning potential of that money, a policy loan allows the full cash value to continue growing.
Had they withdrawn $50,000 instead of borrowing it, they would have lost a potential $79,166 in cash value growth over 20 years. By year 30, that lost growth could exceed $157,186. By borrowing instead of withdrawing, they maintain all that growth while still using the money. The interest cost is far less than the opportunity cost of depleting their cash value.
The systems and institutions that profit from managing your money have no incentive to teach you these principles. Financial planners earn commissions and fees by directing your money into products that benefit them. Banks profit by borrowing your money cheaply and lending it out at higher rates. The government benefits from keeping you dependent on Social Security and other entitlement programs.
None of these entities profit when you take control of your own money and become your own banker.
Building sustainable wealth requires that you understand how money works and reject the conventional wisdom that keeps most Americans running in place financially. It requires recognizing that money sitting idle isn’t safe. It’s actively being destroyed by inflation while simultaneously missing opportunities to grow.
The choice is yours. You can continue following the failed advice of the financial services industry, watching inflation steal your purchasing power while your money sits locked away in accounts you can’t access without penalties. Or you can take control, put your money to work, and build the kind of financial sustainability that creates lasting wealth and legacy.
Every day you delay in addressing this reality is another day that inflation works against you. Every month your money sits idle is another month of lost opportunity. Every year you follow conventional financial wisdom is another year you fall further behind.
The good news is that it’s never too late to change course. Whether you’re just starting your career or approaching retirement, the principles of keeping money in motion while maintaining control apply equally. The sooner you implement them, the more wealth you’ll be able to build and preserve.
Money that isn’t working for you is working against you. The only question is whether you’ll continue to let it work for someone else or take control and make it work for yourself.
The McFie Insurance team stands ready to help you understand these concepts and implement them in your own financial life. We’ve seen firsthand how these principles transform financial trajectories, and we’re committed to helping more Americans escape the failed systems that have left so many running out of money in retirement.
Your financial future depends on the decisions you make today. Choose wisely.
Tomas P. McFie DC PhD
Tom McFie is the founder of McFie Insurance and co-host of the WealthTalks podcast which helps people keep more of the money they make, so they can have financial peace of mind. He has reviewed 1000s of whole life insurance policies and has practiced the Infinite Banking Concept for nearly 20 years, making him one of the foremost experts on achieving financial peace of mind. His latest book, A Biblical Guide to Personal Finance, can be purchased here.
This free binder has the information to build your own Infinite Banking system.
