Podcast 211. Exploring Infinite Banking Strategies with Richard Canfield

Average Joe Finances:
0:02

Hey, Welcome back to the Average Joe Finances podcast. I'm your host, Mike Cavaggioni, and today's guest is Richard Canfield. So Richard, super excited to have you on. We're gonna talk about something really neat becoming your own banker, right? Because everybody should be their own banker in their life. We just talked about that a little bit offline, and I'm really excited to to hear your side and get into this. So welcome to the show.

Richard Canfield:
0:25

I'm happy to be here, Mike. I'm excited you have a great program. I think you provide a ton of value to your listeners and hopefully I get to be a part of the list of people that gets to do the same.

Average Joe Finances:
0:34

Awesome. Thank you so much for that. I really genuinely appreciate that. I think the show's gotten better as my beard's gotten longer, so just gotta keep that just gotta keep that going, ofcourse.

Richard Canfield:
0:43

Once you get to episode 1000, it's gonna be all the way down to your knees. You gonna be, everyone's gonna be like when's it gonna, you'll have to, you have to find an end point before you have to reset and grow the second beard, yeah.

Average Joe Finances:
0:52

I'm actually getting ready to trim it up a little bit just to make sure, I can keep it growing clean. But yeah. Anyway Richard, I wanna start this off the same way I start every podcast episode, and we wanna know more about you. So if you could share a little bit about yourself for our audience here. Tell us your story. Who is Richard Canfield?

Richard Canfield:
1:10

I'll do my best to keep it tight and I'll go like this. I'm from a very small town in an area called Alberta Canada. A lot of people would know about the Edmonton Oilers, so I grew up in that general region. I'm a Conor McDavid fan. Anyone who's a NHL hockey fan here. And, when I grew up in this small community, we lived on an acreage, about 10 acres surrounded by farms. So I grew up working like a farm hand, doing all the farm related activity. I understood working hard at an early age. And we actually had a service business as a family. I was the heir to the portable toilet kingdom of cameras, Alberta, is what I used to say. A prince to the throne, as it were.

Average Joe Finances:
1:44

I like that throne.

Richard Canfield:
1:44

Was the business that we were in. My dad had a septic truck and so he did that for, surrounding communities. Then that, that turned into my parents had a conversation one night, when some of the work was changing, the economy was shifting, and, my mom was gonna lose her position on this one job. And she says we're in the shit anyway. Why don't we just get deeper into that business? That's what happened. So that was how the transition happened and we ended up getting into these, this portable toilet industry and that just sped up and steamrolled from there. And so I spent the bulk of my youth. Working in the family business and so I even got to drive, we call it the honey wagon. I drove that to school. When I was a teenager and stuff. And and I would leave school and I would go right to work. So I learned about a lot about working hard, but we didn't realize and didn't understand at that point. Time in my life was about things like coaching. I. And how you could go get resources to, to create efficiencies and systems and, the whole like Kiyosaki Cashflow Quadrant scenario, we were definitely the S quadrant individual family. We weren't in the B quadrant and we were really just employed by our own business, and we were just running and running. And so I spent that. Whole part of my youth thinking about that was the way that businesses operated, and it didn't really seem like it was a lot of fun. And shooting forward to, to, leaving that environment. I went and got my electrical ticket. So I'm a recovering electrician by trade. My mentor Nelson Nash will talk about him in a minute. I was doing a speaking event at one of our conferences and he introduced me. He says Richard's been recovering as an electrician for almost 14 years. He's finally able to turn a light switch on. Thankfully I do turn the light switch on now, and I'm still recovering, but it was a great trade and I learned a lot there. I met a lot of people while I was in that environment getting started there. I was also still actively being involved in the real estate investment area. My parents and I had bought our first property when I was about 12 years old, and it was a sweeped house, up, down duplex. And I learned a lot about how much I didn't like managing tenants. How much tenants can destroy a property if you don't pick 'em very well. I learned that dogs named Goliath. Are actually dogs named Goliath and they can destroy a yard that you have to go and fix as a teenager. So I learned a lot of these things. I shingled my first roofs there. I moved more appliances and I care to count. I learned how to paint and fix, do drywall repairs. I did all that stuff in my early teens because of this one property. And when we finally sold that property, I had all the experience. But I didn't really have a lot of the money, and now I did get some out of the deal. We sold right before the market started to take off in our area, and I said, I'm never doing that again because I just saw this like negative baggage around it.

Average Joe Finances:
4:12

A quick question, was it also in your name? The duplex?

Richard Canfield:
4:15

Yeah, so I was one, I was on title as a beneficial interest to the property.

Average Joe Finances:
4:20

Nice. Okay.

Richard Canfield:
4:20

So effectively, yes, that's how my parents had set everything up. And when we sold the property, I said, I'm never doing this again, because I had all this kind of baggage that had built up, working hard. And then what I realized, we went to a seminar really a couple months later, and in that we learned about this concept of what we call virtual apartment building, where you could get. A, a property that was a condo conversion, it's all being taken care of, it's being renovated. It's, it's gonna go from like old to new. You could buy the unit and, you could basically stack units like this every once or two, twice a year or every couple of years. You buy another one might be in a different market environment, but because you're spreading out bunch of different markets, you have a little bit of diversification there from market cycles, et cetera. And then you would just continue doing that and they wouldn't really cashflow a great deal. But once you. Pay them off. You have this long-term cash flow. So it was a very long-term thinking model, but the key for me, that really got me as a young man who had just turned 18. I never have to meet a tenant. I never have to paint any walls. I never have to move an appliance. There are no Goliath dogs. There are no, none of these things that the experiences that were negative for me would be there. And so I immediately, shortly thereafter, selling that first property, we got into the next one and then the next one, and then the next one. And so we started building up Doug there while I was starting my electrical career. And then when I sold the next property that that first one that we bought, that was a virtual apartment building style, it was about three years later. I remember getting my first $15,000 check and I thought, okay, there is something after all to this real estate deal, and this is going back to about 2000 and. Maybe 2002, 2003, something like that. It's quite a while ago. And I realized I wanted to double down on that. So I really started getting into the real estate investment industry. Taking courses, meeting a lot of people, a lot of networking. Got involved in some real estate investment network groups and I had a lot of fun doing that. And of course that led me down a personal development track. And through that mechanism of going and doing all that work and spending all that money on those courses and meeting all the gurus, I came to realize that. What I'm meant to do in the world is really to be able to take information that I've aggregated and be able to share it with other people. So similar to the format of what your podcast does, not unlike your own journey, Mike, I think to some degree you just almost feel called and pulled to do that type of work. And so I found that was the case and know that'll lead us up to my part of the journey where we get to the process of becoming your own banker. But what was interesting is when I got this book, so the book called Becoming Your Own Banker, written by r Nelson Nash, I received that book in the summer of 2009. And it was recommended by a good friend of mine who I, who's a business partner of mine today, and we actually have our own podcast called Wealth Health Bay Street together, him and I. And when I received that book and I finally read it, what I realized is, this is the thing I've been looking for my whole life for at the time, being Canada, of course we do this, all over North America presently. But being in Canada at the time, the exchange rate was pretty abysmal. It cost me about 50, $55 to get a $20 book to my door. Okay? And after reading that book, what I realized is in 92 pages, I got a better financial education than the$40,000 I had spent in the 10 years prior going to all the courses and doing all the personal development. And I really got to thinking, I said, if that's true for me, how many other people would that be true for? Why am I putting all the money and giving all the gurus my money? If for this for what's in this book, I could have just learned things. I could have just shortcutted a bunch of things and I could have got myself on the right track right away. So I felt a little bit gypped, in my experience, and I didn't wanna discount anything I learned, of course. And learning is learning. There's nothing wrong with that, but I, it was just a pure realization to me that things could have just been so much better had I got the book first. Before all that other stuff. And so I immediately began to go into the discovery and the implementation phase. Cuz at that point in time in Canada, we didn't really know how we were gonna implement the process. So we had to go into that discovery and learn. And the end result is, and you asked me before we hit the record button, you know how the process of becoming our own banker, the infinite banking concept operates in north of the border versus south of the border. They're very much the same. There's not a big difference there. The differences are quite minor. And they're technical of nature. There's usually around our tax system, there's not a lot of difference as far as how you implement the concept and the way the concept itself works in general. There really is no, no functional difference. And so once we really understood that, we just went to work and got started. And so now I'm entering my 14th year of teaching this concept to families, business owners, real estate investors. And I'm having a heck of a lot of fun doing it. And we just launched our third book about the topic and we got a best Amazon bestseller status here last week when we did our book launch. So we're having a lot of fun with what we're doing. And all we're really doing.

Average Joe Finances:
9:05

Congrats.

Richard Canfield:
9:05

Is we're taking Oh, thank you very much. I appreciate that. We're taking the message that was instilled on me from Nelson Nash, who was the guy who developed this concept. He became my friend and my mentor, and he completely and totally changed my life. And there's not a single aspect of my life, Mike, that hasn't been positively impacted in some way, in some measure by getting to meet, know, and understand Nelson Nash and the concept that he created right down to my personal relationships. Everything has been positively impacted simply by getting to know who that individual was.

Average Joe Finances:
9:38

Yeah. No, that's awesome. So Richard, before I, we like dive a little bit deeper into infinite banking and talking about your mentor I was taking some notes as you were going and I'm curious as to what this virtual apartments were like. You described it and in my head I'm telling myself this sounds very much a real estate syndication, right? So are you actually going in as like a partner on these properties and you're completely hands off, but it's an actual physical property or is it really virtual? What does that look like?

Richard Canfield:
10:11

So the idea and of course when this was being presented, I remember it was like one of those you go to the dinner, they pay for dinner and they try to sell you something basically ideals. And it was a great dinner by the way. It was fantastic.

Average Joe Finances:
10:22

Time shares.

Richard Canfield:
10:22

Yeah. Yeah. They, the idea they had an image. Cause this was before PowerPoints were really good. It was really, the internet was still pretty crappy at that point. We're talking we're talking a long time ago. We're talking like 1999 is what we're back to. And they had an image of an apartment building and then they had Different condos in that building, but that had different v different looks about them. And then, imagine like a, like an image where it points off to a point in the map and it's hey, this one's over in this location, this one's over in this location. So really it was just having a condominium unit. In different buildings that were located in different geographic locations, at least across Canada. So you're spread out a little bit by city economy. So municipal provincial or state economy. And then, geographically across the board, because where I'm from in Alberta, it's very oil based. It's we're like the Texas of Canada essentially. And there, there's a cycle that happens there when the economy, when oil's up and down and it causes a boom bust cycle. It's pretty severe and often we're the economic engine that leads a lot of the country. However, that engine shuts down for a couple of years and then before it ramps back up again. And during those cycles, it has a real impact on market values. It has an impact on rents. And so You're always in some measure of that cycle. So having something outside of that cycle, that's at a different fa, different phase. So typically, let's say in the eastern section of the country, manufacturing is much higher. They have a more stable cycle. And when this, when this one goes down, that one tends to be in a superior position. So there's some stabilization in your portfolio that you can create through that mindset. Yeah. And that really.

Average Joe Finances:
11:54

It adds a lot of diversity.

Richard Canfield:
11:56

Yeah, exactly.

Average Joe Finances:
11:57

Yeah that's interesting. So cuz again, like when you first described it to me, it sounded like a real estate syndication, but at the same time it's so much different, right? Because yeah, you're getting a couple different units, but they're gonna be in different buildings and different towns in different areas. So you actually own that unit, right? But somebody else manages it and takes care of it. Is that how that works?

Richard Canfield:
12:16

Correct. So that was the key feature that really, no more Goliath to chase down exactly. The concept was that they would institute a rental pool scenario, and that rental pool would be wholly managed. You wouldn't really have to, basically it's, turnkey type property, obviously, when you pay for the management level, there's a cost of that. That, turns the screws on your cashflow a little bit. But the purpose of these buildings, for me upfront as a young man, wasn't to generate a huge amount of cashflow I have. I got 60 years of working potential that I didn't really need the cashflow. What I wanted was the asset to get it paid for. Over a 15, 20 year timeframe so that I would have this ongoing asset that would be there for me, and then I would just keep accumulating, was the concept. And now I've gone about, since I've learned a lot more in real estate, I've gone about doing things a different way. But the premise of that never really left my mind and it's simplicity. Now. Shoot forward today, literally I was having I, we bought another unit with that same company. It's in a. An area that's been much more impacted by market cycles, unfortunately. Tell you a little horror story. It's at one time at the market peak. It was appraised at 225,000. Today, I'd be lucky to get 30 grand for it. We paid 79. That's over a 20 year timeframe. Now it's in a very oil centric marketplace that has been very depressed and impacted in the last number of years from some economic aspect. The end result is I went and pulled land titles, titles on the property from about 150 units of 180 unit complex. I paid a VA to go and get the data and try to search those people out. I put a one page lead page together with a video saying, Hey, I want you to send me your proxies for the next meeting because I don't like what's going on. We're gonna do a hostile takeover of this condo board. And then that's what we did. And then it was been a long process. We're now in year three of trying to revive and bring that building back in a place. And we're literally just signing to hire a new rental property management company effectively today to try to bring that back up in a format. So the idea of the lack of work that was there. It was pretty good for the better part of 20 years, but the amount of work I've done in three years outweighs that 20 years in my opinion. So conceptually everything is good, but it doesn't mean it always, it's always gonna land home. So all I'm saying is that I think I'm given certain real estate experiences. Horror stories, if you will, so that I have the ability to share those with other people as the tales of the trenches. And the more that you can hear some of those as a real estate investor it doesn't mean that you're gonna experience the same thing, but when you have the context of what someone else has gone through, it can help you be more mindful as you go about making your future decisions. Cuz a lot of people get so amped up and excited about real estate, but then they have really good years. They're in that boom cycle, and as soon as the winds of change come about, that's when you start to re, you really get to recognize were you built for this or not? Do you have the stick factor and the sustainability to go through the hard times? Cuz hard times will show up.

Average Joe Finances:
15:15

Yeah that's super interesting. So no, I appreciate you going into so much detail with that for me, cuz I think it was it was something I never heard of before, so it was pretty neat to learn about that. Now let's get down to the meat and potatoes of what we're gonna talk about today, which is gonna be infinite banking, right? So now obviously, you got into real estate, you saw some of the good, the bad, and the ugly. And then, somehow it evolved into where you're at today, where you're now doing infinite banking, you became your own banker and you utilize that, to purchase more real estate. So if we could get into that a little bit, if you could tell me what is it that attracted you to this method, and then what did you actually learn from Nelson Nash?

Richard Canfield:
15:59

Lots unpacked there. Here's what I'm gonna do. Yeah, I'm gonna, I'm gonna get it this way. I'll ask a couple questions. So just, if you're listening just close your eyes for a second and picture this. Imagine that you have. 45 properties, but it doesn't matter if they're two, multi-unit buildings, or they're just a whole bunch of single family homes. Okay? You got 45 properties. They're all 100% paid for zero debt. You don't owe anyone else about them. You gotta pay your property tax and everything, but there's no debt on the properties, no incumbents, and they're all producing a great cash flow and you can access without any questions, no questions asked. You can go and access the equivalent of a home equity line of credit up to 90% of the current market value of those properties instantly. No, don't have to ask anybody's permission. You could just go and do it. And if you did access any of that money, you get to control at your schedule how you repay the money. And no banker can call you and say, oh, hey, we didn't get your interest payment this month, because you control the terms. Does that make sense? So just imagine that for a moment.

Average Joe Finances:
17:03

Yeah.

Richard Canfield:
17:04

Now, heaven forbid, God decides to call you home and you're no longer with us. You've graduated. All right. These 45 properties have to transition. Let's assume 17 of them are sold instantly. Mike, instantly, at the moment that you pass away, they're sold 100% tax free, no capital gains, and they're sold for their highest ever recorded. Market value and you don't even have to pay any real estate fees. Okay. How are we doing so far? Sounds pretty good. Too. Good to be true? You would say?

Average Joe Finances:
17:39

Yeah. Tell me more. How do you do that?

Richard Canfield:
17:42

How do you do that now? Now, the remaining properties, the other two, the other 28 properties are still there. They're still available. You can still access 90%. They're still producing a cashflow and they're automatically transferred tax free to the people that you selected in your will. With no additional transfers or tax payments. I'm talking about property, but I'm not talking about property the way that we think of when it comes to real estate. I'm talking about property in the way of contracts, whole life insurance contracts, and the story I'm sharing isn't even my story. It's a real true story of Nelson Nash, who wrote the book, become Euro own banker. He's the pioneer of this concept. He was an amazing individual. Just to have a conversation with him could have changed your life, in my opinion. He left us and he graduated in March of 2019. It's been four years since Nelson passed away. He was calling people from his deathbed. He knew he was going into a surgery. He was pretty sure he wasn't coming out. That's the kind of guy that he was. Now, when Nelson passed away, he had 45 life insurance contracts. 17 of those contracts or properties. On his life. So the day that Nelson left, 17 of them paid out a tax free death benefit. Does that make sense? Bypassed probate, bypassed all the stuff and they paid out at their highest ever value. Okay. So that's the highest appraisal of the real estate, if that makes sense. And the remaining policy contracts that he had or pieces of real estate, the other 28, they were on different bodies. Nelson wasn't. He was the owner, but he wasn't the insured individual. Does that make sense? See, you can get an insurance contract on anyone that you have a legitimate business interest in, an interest in that person being alive. If you have an interest in them being dead, it's gonna be hard to get the contract, but if you have an interest in them being alive, it's not that difficult. Okay? So he had acquired those on his children, business partners from the real estate business and his grandchildren, and he was working on his great-grandchildren. Okay, so when Nelson left, those 28 contracts are still enforced, and they automatically passed without taxation to the next person in line that he had selected to own those contracts. Usually it was the parent of a child or the grandparent of a child, et cetera, so that they would facilitate the management of that until such a time as they go, and then it can be transferred again. But those policies continue to grow in value. They increase in what's called cash value every single day. Uninterrupted, the ability to access capital, just like a home equity line is instantaneous, except you're not getting it from a traditional brick and mortar bank. You're getting it from the insurance company that you co-own. So when you take you, you pledge that policy as collateral, just like a house can be pledged and you access a policy loan, it is an unstructured loan. Unstructured meaning there's no requirement for a repayment. You as the policy owner, Have complete and total control over the repayment time method circumstance, that you wanna put that money back in, and as you put it back in, you get to use it again later. It's just if you pay off a home equity line of credit, another deal comes around, you wanna borrow 50 grand and you're gonna go put it on the next deal, you just do it. Same idea applies except you're changing where the money's located. Rather than putting your money and saving your money and borrowing money from a traditional brick and mortar bank, you can save and access your money from a mutual insurance company that you co-own. So when you take a policy loan, you co-own the lender. Any interest that you pay them, it goes into the big pool for the benefit of everyone else that's an owner. They're not responsible to anyone else other than their owners, which can include you through these types of steps. This is how you slowly and incrementally begin to take back control of your financing aspects of your life. When I say financing, Mike, I wanna expand on that a little bit. There's a lot of people who are debt free or, and they don't like debt and they don't want, they idea of a loan is a bad word. Loan is any a bad word if you're the consumer, but if you're a banker and you're a bank owner. Loan is a good word. Loan is an asset.

Average Joe Finances:
22:06

Yeah, absolutely.

Richard Canfield:
22:06

Every liability is someone else's asset. Once you really understand that you just wanna change positions with who the bank is. Right now, if someone is the banker in your life, there's always someone that has to perform the function. Banking is the movement of money from one place to another place in a relatively short period of time. That's what the transactional nature of banking is. But when you can harness and control that process for as long as humanly possible and over multiple generations, You're the one that ends up with all the money. That's what becoming your own banker is all about.

Average Joe Finances:
22:42

Yeah. No I love that, Richard, because so I was talking to you a little bit about this off camera. I do something called Velocity Banking, right? And we were talking about that a little bit. You described it when you were talking about the HELOCs on properties and everything. And it's in a similar fashion, I've turned my house into my bank, right? My house is my checking account. Now I'm not necessarily the bank. I'm the the teller or I guess you could say or the person who works at the bank, where the difference would be if you're doing it through your own insurance policy, you are the bank owner. Like you, it is your money, your bank, and you choose, how you wanna do it. I don't get the choice of my terms with my heloc, right? It's, Hey, you got 4% guaranteed for five years after that. It's variable. Good luck, so that's how that works. I really liked the way you described it because it's a lot simpler to digest, right? And it makes it a little bit, again, it's just more understandable and when I look at what I'm doing with Velocity banking, and this kind of makes me like. I really should put more money into my life insurance policy. So I've got more access to that so I could start borrowing from it as well. So that that's definitely awesome. Now, what does it actually mean, like when you say that you become your own banker you described it, right? You shared how some of these methods work. What do you do with something like that? Like when you become your own banker, what advantages do you have when you wanna go buy a piece of real estate or when you want to go, pay something down your current primary residence or anything like that. What are some of the benefits you get by being your own banker?

Richard Canfield:
24:18

Yeah. I there's a few different directions I can go with that. So here's what I'm gonna, here's where I'll take our conversation. So we're always dealing with borrowed money. Nelson talks about this right on page three of his book. You finance every single thing that you buy, you're either gonna pay interest to someone else to access their pool of money. You're always dealing with a pool of money, someone else's pool, or your pool. There's no exceptions. When you access someone else's pool, you know they had to build that pool. They're not gonna let you have access to it for free. You're gonna have to pay some kind of a toll taker interest fees, et cetera. In order to access their pool, you're gonna have to pay with signing a contract, a pledge of repayment, and you're gonna have to go through a bunch of Mickey Mouse paperwork just to get access to their big, fat protected pool of money. That's the way that it works. He who has the gold makes all the rules. You've heard that expression before. When you use your pile of money, you don't have to fill out the Mickey Mouse paperwork. But if you don't treat your pool of money as though it has a cost, the result is your money's gonna deplete. You're not gonna be replenishing it effectively, so you're gonna give up the interest potential of your money because of the way that you're using it and thinking about it. So you're either gonna pay up to someone else's pool or you're gonna give up what your pool can do. That's called opportunity cost. So you finance everything you buy. There are no exceptions. Once you fundamentally, truly understand that, Now we can build from that to start thinking how do we change the game to put you in the driver's seat for the best possible, most efficient outcome that cascades across the most generations. That's where insurance comes in. Not all insurance, and the way that you build and set up the insurance is critically important, but it's a tool. You know when you want to go buy real estate, you can go call for sale by owners. You can go on the MLS yourself and you can go and write a bunch of offers or you can get a realtor to go do a bunch of that stuff for you and you can create some leverage, right? So there, there's a variety of ways you can go about doing it, but probably having a real estate professional that's experienced in your market area that can guide you and do a lot of the legwork is often the most efficient, cuz it saves you time. So the vehicle in this case is the realtor that you would choose. All right. Insurance well-structured for high cash value is just a tool. It's a tool in your financial toolbox. Now, if Mike, have you ever used a chainsaw before?

Average Joe Finances:
26:46

Actually, once, once I used the chainsaw once. Yeah.

Richard Canfield:
26:49

Okay. They're a lot of fun. I'm a big fan of the chainsaw, but if you've got a chainsaw and you sharpen the blade, you got the right oil, gas mix in there, the chain is oiled up. It's all ready to go. Gas powered. You fire that bad boy up. Everyone can picture in their mind the sound that it makes, you rev it up a couple times. It's pretty interesting sound. It's got that gas smells going in the background. If I did that and then all of a sudden I just handed it over to some guy walking on the street. Who's never seen a chainsaw before? I say, here you go buddy. Good luck. Hope you get there. And I turn around and walk away. What's the probability, low, medium, or high, that person might wreck the tool?

Average Joe Finances:
27:25

I would say pretty high.

Richard Canfield:
27:26

Pretty high. What's the probability? Low, medium, or high? They might seriously injure themselves.

Average Joe Finances:
27:33

Probably about the same high. I would say medium because I, self preservation. I think you would know better than to go touching the chain or something.

Richard Canfield:
27:40

Yeah. There's certain intuitive things that are gonna, they're gonna kick in. But the reality is it wasn't the chainsaw's fault. The chainsaw didn't do anything. A chainsaw's just a chainsaw. It's the user that makes the difference on how the chainsaw operates, right? So if we don't understand what the tool's doing for us, or how the tool operates, Or how to use it, then the tool is meaningless. Okay? The tool in the hands of a fool is no tool at all. So what we focus our energy on, what Nelson taught us to do is that we focus on. Our understanding and our education so that we understand as an operator, how do we implement the tools, financial tools that we're given to their maximum efficiency. And that's all insurance is. It's just a tool. I refer to the type of insurance we use, which is participating, dividend paying whole life insurance where you are co-owner in the insurance company. I basically look at it as the Swiss Army knife of financial products. When you got a Swiss Army knife. You can get like the little mini one that comes with from they give 'em a giveaways at the liquor store or something when you go buy something. Or you can get like the Cadillac that's got like a spoon and a fork on it and it's got a three inch saw. It's got all these different features. We're talking about the one that's the Cadillac version. But if you look at the different knives that are on there, and if I had like a knife for whatever, cutting vegetables or cutting meat, and then I had my Swiss Army knife. Which one are you gonna choose to do the job? Probably the one that's meant for cutting the food at your table. But in a pinch. The Swiss Army knife's gonna do a pretty good job considering, so maybe it's not the best at all. Things. But it can do way more things than any individual tool can. Does that make sense?

Average Joe Finances:
29:13

That's a great analogy. I really like that Now, so Richard, I want to ask you about the other side of it. We were talking about, if you borrow from a heloc, you gotta pay interest. There's fees you gotta pay. I know when I took my HELOC out, and even when I raised the amount I had to pay, like these fees, just for the paperwork itself. Right now new appraisal probably you're not really dealing with that with the insurance side, but on the insurance side, you're paying a premium every month for, for the actual death benefit and other things. So what does that kind of look like compared to something like a HELOC where I'm not. I pay interest now, but if I'm not using it, I'm not paying for it. Now mind you, I do have a whole life insurance policy as well. I also pay for that separately, but I'm just, for my listeners, like what would you say is like the biggest benefit to having to pay that that monthly premium?

Richard Canfield:
30:05

Here's the way I would look at to me, it's best aligned with a long-term buy and hole piece of real estate. And your listeners will probably be very familiar with that from listening to your program. When we think about the plain vanilla long-term buy and hold real estate strategy, I'm gonna go buy a property, I'm gonna put a down payment, probably somewhere in the area of 10 to 20% down, depending on the market condition and the rules and how I can structure the financing. I'm gonna get some tenants and they're gonna pay for it. Every once in a while I'll have to fork out some maintenance and do this and do that, and there's some risk involved. But eventually that mortgage is paid for and every time that the payment gets made, some equity gets created, and hopefully if I've been good strategically at my purchasing, The market value is gonna go up over time. And so value goes up, mortgage goes down. What we have in the middle, as I refer to as the jelly and the sandwich, that's the equity, okay? There's this old commercial that we used to have in Canada. There was these, it was a bank commercial. There's these two little kids and they're up late at night in their pajamas and one kid's got a flashlight and the other brother, they're looking around in the living room and the little boy says to his older brother, says, what are we looking for? Equity? Dad said it's trapped in the walls. Okay. And so that's your long term buying.

Average Joe Finances:
31:18

Thats pretty good commercial.

Richard Canfield:
31:19

Yeah, it's a good commercial. That's your long-term buying hold piece of real estate. As the mortgage gets paid, you get access to some of the money. As the rental, as a value goes up, you get access to some of the money. However, you can only get that access. If the HELOC is in place, or if you got it set up and if you're allowed to keep it and you often have to go back and refinance, but on day one, when you buy the property, you don't really have any equity because the bank's already lent you the maximum amount. You're probably looking 3, 4, 5 years down the road before you can restructure that loan in some way. To get access probably to your original down payment capital. Does that make sense? And I'm not talking about the Brrr strategy, people doing flips and creating value on the buy. I'm talking about your. Plain vanilla buy and hold strategy. Make sense? So the same thing applies to getting a whole life insurance contract. When it's well-structured, the premium is the solution. So every time that you put premium in, you're creating equity. Whatever equity is created, you can instantly access 90% of it with no questions asked. No questions, okay? There might be a minimum loan amount from the life company, like we work with one where the minimum loan amount's 500 bucks. Great. I was on a call with a guy today. I said, if you deposit $500 tomorrow, you're gonna have, you're gonna instantly create a little bit more here from what you got. And you could probably take a loan of $600. It's a brand new policy. He's just getting started. He's a young guy. Just literally just getting his feet wet. But that's the key thing. So as, and then every single year, here's the difference with real estate. The market can go up and the market can go down. The rental market can go up and it can go down. And you've experienced those things, I suspect, and you've probably had a lot of people talk about it on your program.

Average Joe Finances:
32:56

Absolutely.

Richard Canfield:
32:56

I already shared a couple stories today. I can give you more if you really want, so you don't get to control the market. You and I don't get to control the next presidential election, by the way, that affects us in Canada pretty big. You don't get to control the CB DC's that they're coming out with or any of those. The gold price territorial conflicts happening in other parts of the world. Global strife. We don't control any of that. We have to make good, rational business decisions. With the insurance contract, none of that matters because guaranteed accumulation is built in from day one if it's structured right. Which means your equity is ever increasing day after day, year after year, and it cannot be stopped. The only thing that can stop it is the policy owner's behavior or somebody dies, and if somebody dies, there's a lot more money coming out than what you've put in, which is, by the way, my definition of an investment. The best investment is the one that pays the most when you need it the most.

Average Joe Finances:
33:56

Yeah. No, that's fantastic. All right, Richard. I wanna ask you one more thing before we transition this into the final round because you said something earlier that really caught my attention when you were talking about, what Nelson did near the end of his life with his passing, but his focus was on calling everyone else and making sure they knew what to do because. He had policies on other people. So how do you go about let's say that, so I, I have, my own policy, my wife has one. Let's say I wanted to open up policies on my kids in a similar way, but how do I go about doing it where I'm actually the owner of it and then I can pass it down to them, after my death similar to the way that Nelson did. Like, how do you structure something like that?

Richard Canfield:
34:42

Super good question. In fact we literally just did a Canada wide tour of our family banking conference, and what we do is we teach people about family banking and how to have a family banking meeting and integrate conversations about financial accumulation and wealth preservation and keeping all the money in the family. We're talking about a family aquarium where the money never leaves the family. That's what we teach people how to do.

Average Joe Finances:
35:06

That's what I'm trying to do with my kids. I wanna build something for them that, They can carry down to their kids and their kids.

Richard Canfield:
35:13

There you go. But bulletproof sustainability, that's what it's all about. And so as, so I'll use myself as an example. So I currently have 12 insurance policies. I'm opening a 13th one this year. I haven't made the decision yet, but I'm quite confident after what happened today that I'll probably be doing it in the next 30 or 45 days. And.

Average Joe Finances:
35:30

How many on yourself?

Richard Canfield:
35:32

Most of them are on me. I have two for each of my kids. I have a five and a seven year old, and then I have three on my wife. One of 'em is pretty small, but I have three on my wife and then the rest are on me, and so I'm the one that's the primary income earner, so I'm the one that needs, so just. Logically speaking, I'm the one that needs the most coverage. The family will be most impacted if something happens to me. Okay. So when we think about building or plan, building a plan, it, a lot of things go into that con that that, that construction, because it has to think about what's unique to you and your family, your goals and objectives, and also how's the structure set up? Who needs the coverage, et cetera. So a lot of people wanna go do it on their kids first. I'm like, okay, what happens if you're dead? How are your kids gonna deal with this? They're not gonna deal with it. Yeah. We need to solve a problem on you first. Okay. So I'm really glad to hear that you and your wife are properly covered. So when both of my kids turned. Basically with the 16 days of age policy application went in on both of 'em. Okay. And that's the earliest you can insure a child typically, at least in Canada. And I've since got another policy on each one of them, and I plan to get more in the future. I'm the owner of most of those contracts. My wife owns a couple, and if something happens to me, I have it set where my wife is the contingent owner on the kids' policies. So my policies pay out. My wife, I own one on her. She takes over ownership of it and the kids' policies automatically pass to her. If she goes well, then the kids' policies pass to them and a trustee looks after them until they're 18 years of age. Okay. And we select who the trustee is and then we'll have additional context in our will to explain what we want the kids to do with that. So I'll talk to you a little bit more about the idea of family banking. We have a family banking meeting now my kids are only five and seven. We only keep their attention for about 25 minutes. I make sure that my wife gets a treat that the kids are gonna wanna do and we align it with a family vacation. So we did it at spring break here. We were done in Vegas. We rented a house for a few weeks. It was great. We had a pool and everything was wonderful. At the last day. We have a family banking meeting and we spend the first. 10 minutes just talking about what are all the amazing things that we did when we were here. What are some of your memories? What are your takeaways from our event? Hey, why are we able to do something like this? And the kids say, because of the family bank, dad, boom. High five. High five. Big hugs. I say, okay, that's great, Nathan, Nora. Okay, now that we've come on the family vacation and we're gonna have our family banking meeting, when we go back home, what are some things that we need to make sure we do? As far as the family banking system says, oh, we have to put the money back in. Dad, high five. High five. Why is that? Why do we put the money back in so we can use it again later? My kids don't know about insurance policies. They don't know about rental property investments. They don't understand a lot of these other things, and they don't need to because they understand the fundamental basics of how we're gonna cycle money as a family, and we're gonna keep the money in the family. Now, we can expand on that as they get older, but for right now, Those are that's it. That's all I need to understand because everything else is dead simple. If you get those fundamentals in place and yeah. What we talked about in this family banking meeting is I started to bring up the idea of passive versus active income. Now, they don't see me. They know I got the podcast studio at home. They see me, standing on my walking treadmill, talking to you and having a good time. And I've got my computer and my headset and they come in, they check out the, what's going on down here every once in a while. But they don't know how that translates into money. It's hard for them to visualize. My wife, she makes these crazy art cool projects and outta wood and does all this fun wood crafty stuff, and then she sells that stuff. People show up at the door and they bring money to buy her cool stuff so the kids can actually see that. So we talked about that as being active income. And then I said, now kids, you know that Daddy's written a few books. So I brought a couple of the books and, so here's our book, cashflow As a Leader. I'm gonna do that. I'm gonna do a giveaway for your listeners on that, by the way. And our first book Canadians Guide to Building Without Risk. And we just launched Keep Taxes Away From Your Wealth. So I had the books there and I said, now kids, every single time one of these books gets purchased and someone buys them, that creates what's called a royalty. Now, that's a passive income. Daddy did all the work to write the book one time. Every time for the rest of time that this book gets sold, that produces a little bit of money. And that's called passive income cuz we did the work once and now we don't have to do the work again. So I use that meeting as an opportunity to educate the kids about something new and we're just gonna keep expanding on those concepts and then relating them back to the simplicity of keeping the money in the family. I'm gonna go one step further on this. Cause that when my kids are older, they're gonna need cars. They're gonna need, if they want an education, they can get it. But they're paying for the education. We're financing it, but they're gonna pay the family system back because every dollar they pay in, they're gonna get to use for their retirement. So they're incentivized to put it back in. Does that make sense? And they're less likely to drop outta school if they know they have to pay it back. Okay.

Average Joe Finances:
40:24

It's true. It's true.

Richard Canfield:
40:25

I want to create an incentive. I plan on maintaining ownership until I'm gone, and then my kids are gonna receive a death benefit from dad and there's gonna be an outstanding policy loan on their policies. They're gonna have instructions to pay those off first and refill the tank so they can reuse all that for the rest of their own life. Then take the remaining amount of money. Buy new contracts on every body that they can possibly insure. Okay. So they can keep that system going. So when they need a mortgage, when they wanna go buy property and they wanna go buy their first place, we're taking a policy loan to do that. A mortgage will be created with the family, it could be registered on title, and they can make payments. So if they want to go sell it, then they have to pay the family banking system back with the proceeds, just like a regular bank would. That's the way that we're gonna operate as a family bank and all the money will come back to home base so that it can be repurposed for another member of the family. As long as they can keep that cycle going.

Average Joe Finances:
41:25

That's amazing. That's really awesome. Not only did we talk about. Real estate, infinite banking, but also this financial literacy for your children which I think is so huge. I'm all about that. I even play the cashflow for kids game with my kids. They absolutely love it. No, I appreciate that. So Richard I would like to go ahead and transition this into the final round. It's where I'm gonna ask you four questions that I ask everybody that comes on the show and gives us an idea of how you are under pressure, which I'm pretty sure. I know how you're gonna be, so if you're ready to go, we'll get that party started.

Richard Canfield:
41:56

Lock and load.

Average Joe Finances:
41:57

All right, let's do it. Okay. So Richard, the first question is, what's the biggest mistake you've ever made in your finances investing real estate or business?

Richard Canfield:
42:08

Biggest mistake I ever made was being too trusting and not taking the extra time to do a bit more due diligence. I lost a few dollars on a few different projects that could have been avoided with a little bit of extra patience.

Average Joe Finances:
42:24

Sure, yeah. That is definitely a common response to that question. Yeah. So I've definitely heard that before, so I appreciate the transparency there. Sometimes, those mistakes like that become a great piece of education for us.

Richard Canfield:
42:36

I just chalk it up to an expensive seminar. I would've paid, I would've paid someone for the education anyway.

Average Joe Finances:
42:41

Yeah. Yeah. Perfect. There you go. Okay, so the next question, Richard, is what is something that you've learned that you wish you knew when you first started?

Richard Canfield:
42:52

That's dead simple. I wish I would've read Nelson. I wish someone would've given me Nelson's book when I was in my early teens, or at least when I was 18 years old. If I would've read that book first I can only begin to imagine what my life would be like today. It would've changed everything.

Average Joe Finances:
43:05

Absolutely, appreciate that. Okay, Richard, next question. You see these all kind of tie into each other but do you have any tips or tricks that you would recommend to someone that is just getting started out today?

Richard Canfield:
43:18

Yeah. I think that, the concept of being an honest banker is something that Nelson talks about in his book, and what that really means is it helps you understand what's called Parkinson's law expenses rise to equal income or a luxury once in ge enjoyed becomes a necessity. Nobody wants to have hand crank windows anymore on their car or all electronic. You got air conditioning in your seats and you got heated seats. Once you've had that, it's pretty hard to go backwards. So recognize how that creeps into your life and being an honest banker is if you were willing to give someone else your money for an extended period of time, let's say a car payment or whatever, a soon as you've made that payment or paid it off, don't stop making the payment. Just change who gets the money. Keep the money in the family and commit to that. And if you commit to that, what'll happen is your finances will balance to that and it'll create more capacity, more capitalization, and all of a sudden that buildup will turn into an opportunity fund that will cascade for you on an ongoing basis.

Average Joe Finances:
44:19

Yeah, that, that's awesome. That's really awesome. I appreciate that. Okay. And the final question, Richard, of the final round is, and I'll preface this with besides your own, but do you have a favorite business investing or real estate related book or podcast or both?

Richard Canfield:
44:37

Yep. I would say Who not How by Dan Sullivan. Dan Sullivan of Strategic Coach. I'm a member of Strategic Coach. Dan Sullivan is another individual. He's tremendously changed my life in my trajectory. He has a number of podcasts. One of my favorite podcasts is him with Peter Diamandes. Who's a very smart guy. He's a futurist. The podcast is called Exponential Wisdom, and they only record maybe about once a month or a little bit more sporadically. But you can learn about like future tech, ai, the implementation of different types of health, longevity, techno talk a lot about longevity. Peter Demanis plans to live to 700 years of age. Dan Sullivan's gunning for 147. My personal goal is 165 because I wanted to be higher than Dan Sullivan's. And so as far as I'm concerned, I'm only 25% through my lifespan and the type of technology that's coming out today and the way that we can think about it. From a perspective of what it means to you if you're alive today, and how that technology is improving in your own longevity. Once you can expand your horizons on what's possible, the types of things and actions you take today to lead you to that outcome change. And that's the type of stretched thinking that I've been able to receive from listening to their program.

Average Joe Finances:
45:51

That's awesome. I really appreciate that tha Thank you for sharing that with us. Okay. That is it for the final round. You survived. Pat yourself on the back. But hey, so I do have another question I want to ask you. And this is separate from all that, but this one's really important because I feel like we had a really great conversation. I learned a lot. Got a nice little page of notes down here. And I'd like to know because my listeners are probably also wondering this. Where can people find more information about you? Can you share your website with us Social media? Where can we listen to your podcast? Where can we find your book? That would be all awesome.

Richard Canfield:
46:25

Yeah. So first off is that, I'll happily give your listeners a, they can get a free copy of Cash Follow As a Leader by going to Cash follows.com. That's cash follows.com. You can download it right there. There's an ebook there. You're welcome to go purchase it on Amazon. And nice, simple place to go. Our recent book is a little bit more Canadian oriented, but I still, I do think there's gonna be a lot of value for Americans. It's called Keep Taxes Away From Your Wealth. And it talks about the difference between being, moving from like a self-employed to an incorporated category and how that can impact you a little bit. And as far as our podcast is concerned, it, it's pretty easy to find. We're Wealth Without Bay Street. Bay Street is the Canadian equivalent of Wall Street. And so we just thought that was fun. Tongue in cheek there. You go. And our podcast isn't really Canadian. It's really North American. We do help people in the States. We have an American company called Life, Eva. We're able to help people out, and so we are able to do that and facilitate those conversations. So simply reach out and if it's something, once you get a copy of Nelson's book you have a chance to go. Some of those resources would be really helpful. One last resource I would really recommend people check out is a few years ago we commissioned a documentary film on Nelson Nash. It's only 60 minutes long. You can go to Nelson Nash film. That's nelson nash film.com, and cast it up on the smart tv. Grab some popcorn, get your favorite beverage. Sit down with your spouse, especially with your spouse, sometimes in most households. There's one main primary person who does most of the financial stuff, and the other person's along for the ride, and they said, oh, you've got it, honey. You just take care of it. That's very common, and what I find is that Nelson is like the spouse equalizer, so if you just get your spouse and sit down in front of Nelson and you'll hear Nelson story, it goes a long way to help people understand how this type of a concept, this idea. Can be a positive influence in your life, and you can learn through his experience. To some degree. It doesn't teach you the ins and outs of Infinite Bank. That's not a purpose. The purpose is to recognize and understand the impact that this made for Nelson personally, and then how it showed up in his life and his family's life. It's a very heartwarming and touching I think thing to go through. One of the things you discover in there is how Nelson won the Blinking Lights Award. There's an organization called the Foundation for Economic Education. That's f e e.org. fee.org. Amazing organization based around the principles of Austrian economics and the President Emeritus. There Present currently Larry Reed. Amazing guy. We've had him on his podcast. He'd be a great guy for your podcast, by the way. And he was the one who delivered Nelson the Blinking Lights Award. It's meant to signify. During the Cold War in Poland, in Warsaw, there was an underground radio where they were broadcasting the principles of liberty and freedom to the oppressed people in Poland under that regime during the Cold War. And at one point in time, they would have to pack up and move every night to a different location because they were always after them. And one time they asked, they said, if you can hear us broadcasting the spirits of the Spirit of liberty, Link your lights and the entire sky of Warsaw lit up. That's how much people crave liberty and what can be provided. And so they created an award to honor people who distinguishly represent those ideals. And thankfully Nelson was blessed to receive that award before he passed away.

Average Joe Finances:
49:41

That's awesome. Thank you so much for sharing that and that extra tidbit there. That's fantastic. So for my listeners, definitely go check out the nelson nash film.com and I'm definitely gonna watch that. It sounds like it's gonna be a very interesting documentary and. And learn a lot more about what we discussed today. So Richard, I just, again, I wanna say thank you so much for taking the time outta your day to join me today. I know yesterday wa was crazy. I had a plumbing issue at the house. Literally, as we were supposed to start the podcast, I hopped on to tell you, Hey, we can't do this. I'm sorry. So I appreciate your flexibility for rescheduling with me to do it today, and I genuinely appreciate it. This was fantastic. Thank you so much again.

Richard Canfield:
50:20

You're very welcome. Glad to be a part of it and hopefully that's a ton of value to everyone listening in today.

Average Joe Finances:
50:25

Absolutely. And hey, I also wanna thank my listeners for joining me and our special guest, Richard Canfield, on the average Joe Finances Podcast. Go leave us a five star review and tell us what you liked about today's episode with Richard. Aloha from Hawaii and have a great rest of your day.