TRANSCRIPT: Thinking Like a Bank – Sarry Ibrahim


CM: Welcome back, everyone. I am your host Charles Musgrove of the Answers That Count podcast. Thank you for joining us. We got another great show in tap today. And before we get started, please hit the subscribe button. Hit the like button, you’re going to love this show. We are joined today by Sarry Ibrahim. Sarry, good morning and welcome to the Answers That Count podcast. Tell us a little bit about what you do, how you provide services to your clients. I know you’re in the investment space, so you help people save money, allocate their investments correctly, and really a comprehensive look. And before you jump into that, I want to say welcome. I know you were up in Chicago, Illinois, and you told me that you looked outside your window this morning, and the temperature is a sunny 61 degrees. And I want to tell you, that’s about 20 degrees warmer than it is here in Northwest Florida. We’re in the panhandle of Florida and it was in the 40s this morning here. So welcome to the show. Thank you for joining us from Chicago and promote your business. Tell us a little bit about your company and what you do.

SI: Yeah. Well, thank you so much, Charles, for having me on the show. I appreciate it. And ironically, yes, Chicago is in the 60s today. Yeah. And a little bit about our company, I run a company called Financial Assets Protection. It’s a financial services firm, and we’re located in Chicago, and we help and service clients in all 50 states. And we do this primarily with one type of concept or use of a financial product. It’s called the infinite banking concept, also known as the bank on yourself concept. And this strategy helps business owners and real estate investors – that’s kind of our primary niche real estate owners and business owners, as well as full time employees grow safe and predictable wealth without having to worry about how the market does or having to worry about external factors that nobody has any control over.

CM: Right.

SI: So that’s what we kind of do. That’s what we do. That’s what we specialize in. I’ve been doing this personally for about six years now, since I got my master’s degree in about 2015. And then yeah, I love what I do right now. All our work is pretty much done over the phone or over Zoom. It’s all done virtually, about 99% of the time. Sometimes I drive to clients like 1% of the time, but mostly it’s on virtually. And yeah, it’s great helping clients more on the guaranteed fixed side of things. We don’t personally recommend any volatile investments or any risk taking. It’s more of a savings strategy rather than an investment option. We do work with outside referrals for investment options, and then we can kind of connect that with our solution. But that’s pretty much who we are and what we do and why you know, we’re on this show together today.

CM: Good deal. So, you are the concept is bank on yourself. So, it sounds like you do a lot of your savings or investments, are they in whole life policies? Is that the concept?

SI: Yeah, exactly. So, to kind of take a step back, there’s three types of life insurance. There’s Term Life, insurance, whole life, and universal. So, term – I’m not sure how much the audience knows about this -but terms a set period of time, it’s like 10 years, 20 years, 30 years, it has a start date, and it has an end date. It’s like renting a home. It’s just you’re only covered for that for that period of time. Whole life is for your whole life. It’s a permanent form of life insurance as a start date, but not necessarily an end date. It usually ends when you pass away or stop making payments of the policy. And the third type is universal, which is kind of like a combination of term and whole life, but for the purposes of understanding the infinite banking concept or the bank on yourself concept, it is the utilization of whole life insurance because of the cash value portion inside of it. So, that’s another distinction of whole life insurance is that has cash value inside of it, that grows and earns interest in dividends over time. And again, it’s not an investment option; it’s a savings option. It’s usually an alternative to savings accounts. So instead of just using like a regular savings account at a bank, and I don’t know what interest rates are now, like 0.01 percent, if that.

CM: They’re very low, right?

SI: Yeah, you can use a whole life insurance policy, and then connect that with other investments or other options you want. So, a lot of our clients are real estate investors. They would fund a whole life policy, grow the cash value in it, and then be able to borrow against that to leverage for real estate -either to buy out the real estate, in whole or in connection with other loans. So, they might use it as a down payment alongside the other loans they would use. So, a lot of different intricate ways of using these policies and different systems in place, but that’s the overall objective – kind of the general view of it is the utilization of cash value life insurance for savings and investment purposes on the outside, of course, not the actual policy itself as investment, but used alongside investments.

CM: Right. So, you you’re not saying that 100% of your savings or your assets should go into the whole life policies, but it’s used in conjunction with other investment vehicles as well. And some of those other investments may be in the in the stock market, in a business or real estate investments, or other things like that?

SI: Precisely, exactly.

CM: Now, you’ve got the concept of think like a bank, or that’s one of your tagline, so what do you mean by that?

SI: Well, as I was learning about this industry and doing my research, I learned that according to the FDIC, that banks have about 25% of their tier one capital. So, it’s kind of backup banks have different layers of capital, their tier one is their safest. That’s the core of their money. About 25% of that is located in a whole life insurance policy or different whole life insurance policies. And then that led me to start thinking more of why banks do that. Why do they have their cash, their tier one, their safest capital stored there; when they can essentially do whatever they want with that tier one capital, why is it stored there? And then that’s what brought me into learning more about the safeties and guarantees behind whole life insurance. So, banks, although they do take a lot of risks, they also have their core that’s protected somewhere safe and it’s usually in whole life insurance. And to kind of give a little bit more context on that, whole life insurance companies, a lot of them have been around for over 160 years, they’ve been providing dividends and interest and death benefits and policy loans during that time period, regardless of market conditions even during the Great Depression. Insurance companies weren’t really fazed by the Great Depression, or the Great Recession, or other market volatility or other market risks. So, they have a way of hedging market risk and it’s primarily based off of what they’re investing in, what the insurance company is investing in. About 40 to probably about 60 to 80% is made up of in the bond market and the other 20 to 40% is in private loans and mortgages that the insurance companies are involved in. So, the vast majority based on a safer side, and also the regulatory requirements and what insurance companies have to follow. So, they must have… insurance companies have to have I think it’s two times the amount of their overhead, all their liabilities, multiplied by two and reserves. So that means if they’re promising $100 million in death benefits, they need about $200 million in cash reserves to be able to maintain everything that happens if everybody die they would need to pay out all those claims, they would need to guarantee the policy loans they have for people. So, they have a lot of overhead as opposed to banks, which is the opposite, right? Banks loan out…If you went to the bank and deposited $100, they can turn around alongside everybody else’s deposit and then loan out 10 times that through fractional reserve banking whereas whole life insurance, insurance in general, is on the opposite side. So, banks think that their thinking process is to use insurance companies and use their money alongside their portfolio. So, a bank, for example, might borrow $100 million from an insurance company, leveraging their insurance policy, and then all their other depositors and then use that to loan out at higher interest rates. So, it’s an arbitrage play. They’re buying money from point A, and then selling it at point B, and then earning a spread in between there. And this is something that’s not exclusive to banks, anybody can do this. Small business owners can do this; real estate investors can do this. And this is why I founded the podcast Thinking Like A Bank. So we have episodes where we’re talking about this. We have financial planners on, passive real estate syndicators on, and different professionals on talking about how to leverage other people’s money, how to kind of take money from point A to point B and then earn a difference in between there. That’s kind of one of the ideas of thinking like a bank.

CM: Interesting. So, you’re looking at how the bank does their investments and how they capitalize their operations and applying that to your clients, the business owner or the individual.

SI: Exactly.

CM: So with all the all the talk recently, and we’ve seen what’s happened in the economy with the Fed pumping more dollars into the into the economy, what is your perspective on what that is doing to the value of the dollar?

SI: Oh, absolutely, it is definitely… it’s going to be a bigger reason for inflation are kind of a higher inflation rate. For sure. They’re printing more money, that the value of the dollar is going to go down over time and I think that’s another reason why it’s really important for investors and everybody, not just investors, to have their cash sitting somewhere that’s going to outpace inflation, that’s going to grow more than what inflation is, this way, you have a hedge against inflation, but also, you have to consider the risk side to it, too. So, if you go and you invest all your money, just somewhere that’s volatile, like some place in the stock market, and it’s not meant to give investment advice, but you have to think of the volatility also alongside so you don’t want to lose your money in the stock market, because you’re worried about inflation. You want to be able to actually grow your money over time. And typically, the infinite banking concept, if you do more research on it, it does outpace inflation over time. And it also creates the liquidity part to it too. So, one problem a lot of business owners have in real estate investors have is they question do I invest in real estate or do I save my money for the future? Well, if inflation is going up, why would I have my money sitting in a bank account, and then it kind of creates this dilemma of what do I do? Do I save my money or do I keep reinvesting in places and then taking on more risk with them in hopes of higher returns? Well, this concept can address both of those needs. You could save your money somewhere, grow it over time, earn interest in dividends on it, and then when you want to access it, you can access a guaranteed meaning that you never have to qualify for the loan. Because the policy itself is self-collateralized, meaning it’s collateralized with the policy, that only the policy. So if you go and you, for example, if you have, you know, $200,000 and a whole life policy, and you tap into and you borrow $100,000, the insurance company gives you a guaranteed $100,000 and then they don’t look at your credit score, they don’t look at any of your personal property or anything else, they just look at the policy itself. So, this gives you leverage now, and then you can typically take out the money in five to seven business days. So, it’s fast too. In relation to other types of lending, it’s a quicker form. And again, it’s guaranteed and you can do all this. And then while you borrow that money, your cash value is continuing to grow as if you never touched it. So, that $200,000, for example, in this example, is continuing to earn interest and dividends over time, even when you’ve accessed it $100,000 loan because you didn’t subtract from that loan, you borrowed against it from the insurance company. So, again, back to the inflation situation, this gives you an advantage of constantly using your money over and over again, while it is outpacing inflation.

CM: Interesting. So you’re looking at that the money that goes into those whole life policies that you can tap into the cash render value of that through a loan, so you’ve got immediate access to the cash, and then invest that in other investments that may be protected against inflation, or use it for emergency cash needs.

SI: Exactly, yes.

CM: So, we saw the stock market, I believe yesterday went to a record high of 40,000. So, your perspective – are we reaching the summit of the of the stock market and we’re going to see a correction in the near future? Or do you see that it’s got more life in it, that it’s going to we’re going to see the run up even go further?

SI: Yeah, that’s, you know, Charles, that’s a really good question. I do see it, especially after last year after I know, last year, March 2020, it took a slight dip for a few weeks, and then it’s been going up. I don’t know what’s going to happen. I but I do know that something will happen, some sort of bubble will happen, considering how low interest rates are now, the amount of debt that’s being pumped into the market, and other factors, I think that some bubble will happen. I just don’t know from where and I’ve heard this from other financial planners, other financial advisors, something I think in regards to debt and interest, the connection between there is going to result in a bubble. Again, back to the external factors situation is that when we are growing wealth over time, we it’s kind of difficult to guess on what’s going to happen next. So, the utilization, of course of… not to keep going back to Whole Life Insurance, but you know, this method helps prevent the guessing work of what will happen and what could happen. So, whether the market goes up or whether the market goes down, the whole life policy, cash value is not hindered by that, it’s not affected by that. But to your point of going up, of course, that there’s an opportunity there to leverage that for higher rates during that that peak, so you can use the policy during that time period, but then, of course not be locked into it when the market does go through a correction or go through a downturn.

CM: Right. So we see a lot of a lot of talk now about… we’ve just mentioned all the money that the Fed has put into the economy. And how strong is the dollar? It’s not backed by gold, it’s not backed by real assets. It’s backed by the faith of the of the US government. So, we’ve seen what’s happened recently with Bitcoin and other cryptocurrencies and the possibility that maybe more people… well I mean we’ve seen more people have shifted into bitcoin that’s been a really a hot asset and people are moving away from some of the traditional markets and the US dollar. Where do you see the future going with cryptocurrencies – bitcoin specifically?

SI: Yeah, that’s absolutely a good point. I definitely think that Bitcoin and other cryptocurrencies are for sure on the rise, you can tell by the value of Bitcoin right now. Last time I checked, it’s in the 40,000. It’s between 40,000 and 50,000, and I remember in 2017, it was like, you know, $2,000 so definitely a huge exponential growth just in one type of cryptocurrency, and I definitely see the trend with other ones. And then to make it even more intriguing is that you have large financial institutions in the news writing about how they are also utilizing, you know, they’re putting in you know, $500-$600 million into cryptocurrency. That’s also going to have a huge impact on it too. So, I think that large financial institutions could lead the way with cryptocurrency, which can be a good thing and a bad thing. But I definitely think overall, I think cryptocurrency is a huge… it’s probably one of the biggest jumps that are in the financial services world.

CM: Right. What do you do… Are any of the insurance companies that you’re dealing, whether they move into crypto or Bitcoin?

SI: One of the companies we work with, Mass Mutual, they recently bought, I think in the beginning of this year, they bought about $200 million of Bitcoin. So, I’m definitely seeing some movement there as far as asset allocation into cryptocurrency from an insurance company side, for sure. Yeah, I definitely see that. And then as far as volatility, I don’t know what could happen. Bubble wise or series downturn, I don’t know what could happen there. But yeah, I’ve been definitely seeing a lot more popularity more on the larger institutional side to which you which is massive.

CM: Right, I think that’ll that just helps make it more commonplace and more mainstream when you see the large companies. Elon Musk, I mean, he’s been one of the main proponents of Bitcoin and has really dropped driven the price up. So, I think that the more people like that, that invest in it, that move their treasury into or at least a portion of an end of Bitcoin, and other cryptocurrencies, you’re going to see that just become more commonplace.

SI: Exactly.

CM: So, what is your prediction for 2021 as far as the economy. Do you see us having a strong economy? Or do you see the there’s going to be inflation that’s going to start to hit in the latter part of the year that’s going to cause people to really panic and there to be an issue with the economy, job loss and so forth?

SI: Yeah, so for 2021 I think one huge indicator of a strong market overall, a strong economy is look at real estate. Real estate right now is booming. Every person I talked to who’s buying real estate right now has to put in more than what the asking price is. That’s because it’s definitely right now a seller’s market, and real estate is on the rise. And that’s a huge indicator right now of a strong economy. But what’s going to happen? I don’t know, maybe beginning 2022 next year, that could be a different story, especially to your point on inflation and interest rates. So, I definitely see you right now as strong. Unemployment, of course, still affected by COVID. Last year, I think it was like 35 million Americans lost their job as a result of COVID. So, there’s probably still some sort of lingering effects from that. And definitely, I think 2021 is heading in a positive direction. As far as 2022, I’m not sure what could happen there. Who knows? Probably more on the inflation side for next year. That’s what I think.

CM: Right. We see a lot of the states have implemented increase in the minimum wage so those are going to start to kick in ‘21. So yeah, I think the warning signs are still out on inflation. We’ve got a lot of lot of folks in the in the government that’s saying inflation is not an issue, and don’t worry about it. Jerome Powell has come out and said that right now inflation is not a is not a concern, but he’s keeping his eye on the possibility of inflation. But if you go to the gas pump, and you and you fill up with gas, you know that, that’s one place that that’s been inflated in the in the last few months. I know that more pain, at least $1 more per gallon for fuel. So that’s a form of inflation right there. So, you’re going to… that kind of ripples through your everyday living, where you’re the food that you buy, and everything that you purchase, most everything is affected by gas prices. So, wage prices are going to start to tick up as well. So, we’re going to see the things in our everyday living, that’s going to cost more, which is… that’s the definition of inflation. So, we’ll see what happens the latter part of ‘21, when this really kicks in. We’re looking at, I know, there’s discussion now on a $2 trillion infrastructure plan. So, that’s more money that’s being pumped into the economy. So, all that just is kind of pure definition that we’re putting more money into the economy chasing the same goods and services. So, that’s the definition of deflation and deflating the value of the dollar. So, we’ll see what happens in 2001. And, tell us Sarry, what do you see in…you said real estate prices are going up. Is that they’re in Chicago you’re seeing that?

SI: Yeah, I’ve seen that a lot in Chicago as well as I talked to people on the east coast. I see there too. And then of course, you know, West Coast, that’s probably always been to be, you know, higher values. But yeah, definitely I see more of… and it has to do with the interest rates because there’s more demand, there’s more opportunity to finance now, so that’s obviously going to increase the prices of homes because more people could qualify or more people could at least have the capital to buy or have access to capital, that’s obviously going to increase the value of properties.

CM: Right. And the real estate market and Florida has just been off the chain. It’s set records and in 2020, and the market is still going up in ‘21 where just like you said that people put their house on the market and they end up selling it for more than it’s listed for because there’s such a demand for that right now. And Florida seems to be an attractive place for people to leave the other states that have even been more restrictive in this COVID… the year of COVID and 2020, that we’ve seen a lot of people leave other states and come to Florida. Florida is a is a very popular state because of the sunshine and the open markets that we’ve had and the less restrictions that we’ve had related to COVID. So, we’ll see what happens in ’21 if that if that continues. But like you said, the real estate market has been a boom. And I think that’s a lot of that’s been driven by the low interest rates that we’ve had too that allows people to afford a higher a higher payment per month since interest is not as big a factor in that. But once you see interest rates starting to tick up, then that’s going to change pretty quickly.

SI: Exactly. Yes, I agree.

CM: Sarry, what else do you have to tell our viewing audience about your business and what you see for 21? And we’ll put a conclusion to the show.

SI: Yeah, I definitely I urge the audience to check out what the infinite banking concept is to kind of protect you from the losses to come if they are to come. I think some losses will come, but the concept will… and to kind of give a little bit more an idea of what the concept is, I will send the audience a free book. If they reach out to our website, I’ll send her a free copy of a book called Becoming Your Own Banker by Nelson Nash. And the book talks about what the infinite banking concept is. I also have another recommendation for books. This book called The Bank On Yourself Revolution by Pamela Yellen, the book talks about the same cons of the infinite banking concept, but it’s called the bank on yourself concept, the same thing, just the utilization of dividend paying whole life insurance. So, I definitely see more of a trend towards this area. I see a lot of people going more towards the fixed insurance side. That’s the whole life insurance and annuity side, because of the certainty and the guarantees alongside that. And then of course, the ability to leverage those vehicles alongside other investment opportunities. So, I definitely urge the audience check out the concept, the infinite banking concept. And I’ll send you a free copy of the book Becoming Your Own Banker if you reach out to us. I’ll send it to you via email.

CM: Good deal. What we’ll do is we’ll put your information in the description in the comments of the podcast on YouTube. So, that will allow them to reach out to you directly and get the free book and the other information. Sarry, thank you so much for joining us. It’s been a great show and remember, subscribe to the channel, hit the like button, and check out the information that Sarry…