Recovering Lost Opportunity Costs
I know I keep harping on this but it’s worth another look at how taking a loan verses withdrawing cash is to your advantage.
Borrowing against your cash allows your ready cash to continue growing on it’s full value while you pay off the loan against it.
Life insurance companies allow you to borrow against your cash value in your insurance policies.
Businesses use this concept as well as farmers and individuals and its’ called Economic Value Added (EVA).
Withdrawing available cash is what most people would do to purchase something such as equipment or vehicles, if they had the money. And this is a costly mistake. The Infinite Banking Concept shows it's better to borrow against (not withdraw) the cash that you own and control so that you don't interrupt the dividend growth. This makes all the difference.
• $45,000 LOAN @ 5% over 5 Years, would Cost You $5,815.20 for the use of the money.
• $45,000 INVESTMENT Compounding @ 4% over 5 Years, would Earn You $9,968.55
• You GAINED $4,153.35 over the loan costs
Even though the loan interest charged is higher than the investment interest paid.
This makes borrowing against an asset more advantages than withdrawing the asset and starting over.