Private Reserve Account

• Private Reserve Account = A strategy designed to develop or improve the financial position of any person through collateralization.
• Collateralization = Having money to put up and use another's money, allowing uninterrupted compounding interest of your money. (Critical to building growth)
• A person finances most things that are bought (car, house, loan, etc.) A person either pays interest on these things or gives up the ability to earn interest. What you pay and how you pay are important considerations.
• The Debtor, The Saver, and The Wealth Creator

THE DEBTOR

• How You Buy - Has No Savings, Earns No Interest, and Pays Interest
• How You Borrow - Uses Future Earnings Collateral and Borrows at the Highest Market Rates
• How You Pay - Has No Options and Pays the Highest Market Rates to the Lender

The Problem: Obligation on future earning, loses capital to purchases and financing costs forever, debtor to the creditor, loss of control.

THE SAVER

• How You Buy - Saves to Avoid Paying Interest, Earns Interest, and Purchases with Cash (Loses Interest)
• How You Borrow - Reduces Collateral Position and Resets Compounding by Borrowing from Self and Puts the Money Back When Available
• How You Pay - Makes Payments to Own Account to Get Back to the Original Amount Borrowed, and Giving Up the Money Spent and Interest the Original Amount Could Have Earned

The Problem: Obligation on future earnings (Must have the money), must drain the tank to make purchases, must pay annual tax (leakage), Interrupt compounding of your money.

THE WEALTH CREATOR

• How You Buy -
• How You Borrow -
• How You Pay -
• Saves
• Compounds Interest
• Collateralizes Purchases

The Problem: None

Private Reserve Account - Characteristics

Advantages and Benefits: Tax deferred growth, tax-free distribution, competitive return, high contribution levels, deductible contributions, collateral opportunities, safe harbor, no loss provision, guaranteed loan option, unstructured loan payments, liquidity, use and control.

Choices (Your Private Reserve): Certificate of Deposit (CD), 401(k) Qualified Plan, Permanent Life Insurance, Margin Account on Stock Portfolio, Real Estate Equity (HELOC)

HOW?

• You collateralize a loan from a financial institution and secure the loan by pledging a portion of your Private Reserve.
• Any financial institution may be used. However, some are better than others due to payment structure. The goal of this strategy is to increase long-term efficiency by leveraging the fundamental differences between amortized and compounding interest.