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Nelson Nash, the late founder of the Infinite Banking Concept, always talked about the importance of building a financial tailwind in order to overcome the cost of financing in your life. As a pilot Nash realized, when you fly into a headwind, your ground speed is greatly reduced if not completely annulled. You might recall a flight you have been on where the captain announces over the PA system he is going to avoid some headwinds by climbing or descending to a certain altitude. This makes sense because it will save time and reduce fuel costs. Bucking a headwind is not an efficient or economical way to fly.
The same is true in the financial world.
Bucking the headwinds of interest, fees, taxes and penalties will reduce the value of your portfolio and can even nullify your attempts in building financial sustainability.
In the airplane world certain planes are capable of flying up to certain altitudes. This is called the “ceiling” for that particular airplane type. For example, our Cessna 172 has a ceiling altitude of 13,100 feet MSL (above sea level). Flying her above 13,100 is:
Consequently, she becomes sluggish and less responsive as she approaches her ceiling.
This brings up something called density altitude. Density altitude is merely the air density at a certain height above sea level. As heat, humidity and altitude increase, the density of the air decreases. The less dense air makes it more difficult for a plane to fly because of reduced thrust, less lift, slower climb and poor propeller efficiency. When air density reaches a certain point, airports cancel flights because their runways are not long enough for planes to take off safely.
Market corrections, recessions and the like, are similar to high density altitude in the airplane world. It is hard to produce the financial momentum necessary to take off (let alone climb) due to poor performance during market corrections and recessions. Interestingly, most financial advisors and gurus will tell you to stay the course during times like these… even though you may have already surpassed, or are fast approaching, your abilities!
Operating an aircraft outside its operating abilities is asking for disaster. Without enough lift or proper thrust an airplane can’t fly. And with a slower climb an airplane will be unable to avoid headwinds which, under normal conditions, could have been avoided. The same is true in the financial world.
A tail wind is great when flying, but a headwind is wonderful for take-offs. Headwinds make take-offs easier and faster because it provides lots of lift. But once airborne, a headwind will reduce your ground speed and must be overcome by using more thrust (which increases fuel costs) or by seeking a tailwind which will actually push you along making the trip faster and more efficient.
Many complain about the financial winds of our time. Yet, positioning yourself to take advantage of the type of wind blowing is entirely up to you. Instead of bucking the winds harness them; make them work for you.
This is what participating whole life insurance can do for you. It can harness the financial winds of the time and make them work for you instead of against you. The Life Benefits Formula™ provides you the operating manual that defines your ceiling, i.e., what you can afford to comfortably pay in premiums every year. It further outlines how you can create a perpetual tailwind which Nelson Nash wrote about in Becoming Your Own Banker. Which means you don’t have to fret about the winds of the time when you learn how use them to enhance your position and objectives.
Dr. Tomas P. McFie
Most Americans depend on Social Security for retirement income. Even when people think they’re saving money, taxes, fees, investment losses and market volatility take most of their money away. Tom McFie is the founder of McFie Insurance which helps people keep more of the money they make, so they can have financial peace of mind. His latest book, A Biblical Guide to Personal Finance, can be purchased here.
