Join us in this episode as we discuss how your finances are like training for a battle.

It's common to use sports-based analogies like "offense & defense" when it comes to money but the typical mainstream financial plan often has tactical disadvantages on both ends from inadequate protection to chasing rates of return in risky investments that underperform.

When it comes to our financial future, we should train like we're going to war. This is where the Infinite Banking Concept provides the financial principles for tactical advantages for life long success.

(lively music)

- Hi everybody, this is John Montoya.

- And this is John Parings.

- We're authorized Infinite Banking practitioners

and hosts of The Fifth Edition.

(gentle music)

Hello everybody, this is John Montoya with John Parings.

Thank you so much for joining us for episode 53,

what we are calling, "The Art of War."

I'm actually kind of thinking of calling, it in my own head,

"The Karate Kid Episode," and the reason why is this,

we were having some fun before hitting the record button

and I was talking about, "The Karate Kid,"

and how I grew up watching this movie.

It's an iconic movie.

I think almost everyone has watched,

"The Karate Kid," at least once,

even my kids have watched this movie.

In fact, they're so gung ho about it,

they've been watching the new series

on Netflix, "Cobra Kai."

But anyway, most people have seen, "The Karate Kid"

and whether or not you have studied martial arts or not,

this is a movie that pretty much everyone

at least knows about.

And so for me, growing up watching, "The Karate Kid,"

which feels like 1000 times,

I had a sense of what that movie was all about

when it comes to martial arts

and this is kind of the lens that I use

when I think of IBC.

And I was thinking, well, Mr Miyagi, he teaches karate

and he teaches defense first

and that's really what karate's all about.

And well, wouldn't you know it, my colleague here,

Mr. Parings, 30 years expert in martial arts corrected me

and he told me that

"Well, actually karate isn't defense first."

And we started relating this to IBC and here we go,

we're gonna give you a way to look at IBC

where instead of thinking of it

in a defensive frame of mind,

we want you to look at it as a way to be on the offensive,

just like apparently the way it works in actual karate

as my favorite character on Seinfeld would say, Mr. Kramer.

But John, let me have you jump in here.

Where did I go wrong?

(john chuckles)

- Yeah, it's not so much where you went wrong

and it's just like everything else.

We learn things by relating them to other things,

you'll hear a lot of people talk

about playing offense and playing defense.

When it comes to your financial life

or in sales or in business.

And it's common because in America we watch sports

and so it's easy to kind of take those things

and relate them to something new

to give us a frame of reference.

But if we're using martial arts,

I look at the analogy a little bit differently

where, if you take the word marshall,

that actually relates to war.

And in war it's not really about defense,

it should always be offensive

and martial arts is part of that.

It should be about positioning yourself

to be able to do two things at the same time,

which is of course protect yourself but also attack.

And so, in true martial arts,

non-sports based types of martial arts,

there shouldn't really be a focus on trading shots

like getting hit to be able to hit a couple more times.

That's a sports based mentality.

So, in martial arts, if there's a threat and it's war,

it's like the final scenario,

it's like the consequences don't get any higher than that.

So you wanna be able to end a threat as quickly as possible

without being hurt

and every move you make has to support this.

So, we're constantly in a state of awareness

and a state of finding the correct positioning

so that we don't get killed, number one.

And at the same time, every move has to maintain this

for ourselves while we're reducing that

for the other opponent until we win.

And so that's kind of the way that I look at it.

And what I think is interesting is that,

well, let's put it this way if we relate it back to money,

if you have to only defend like in karate or martial arts,

whatever it is, MMA, it doesn't matter,

with a block if all you do is block, you're behind in time

and so it's a suboptimal move just to do a block.

So, Mr. Miyagi showed the paint the fence,

hammer the nail and doing all that stuff

and that was just to build in skill sets

but if you're doing that as your move,

you have to combine that

with something that's taking away from the other guy,

it can't just be a block on its own.

And so, money's the same way,

we have to have awareness on how money moves

and we have to be able to position money correctly,

so that we never put ourselves in financial danger

but then we're also prepared to move quickly

to take advantage of opportunities or like openings,

if you will.

And I think most people,

following the typical sort of financial advice,

if we used the war analogy,

they've been conscripted

into the financial institution's war.

It's somebody else's war and they're usually canon fodder,

They're not the ones that are actually reaping the rewards

of winning that war, they're the ones

that are helping the financial institutions win.

So it's kind of one of my coaches, Trent Fortner,

he has a great line of, are you positioning yourself

where you're going to have to react to the coming changes?

Because changes are always coming

but right now there's a heightened awareness around it

because of all the stuff that's been happening

in the last couple years.

Are you positioned to react to that?

Are you in a position to take advantage of those changes?

And that's, I think the big difference in that mindset

and that mentality of being able to make those moves

rather than just block, you're actually closing in.

And as you're blocking, you're setting yourself up

to take that next shot.

- So, as it relates to IBC then,

where can we be on the offensive?

Where do we learn the crane kick?

(parings chuckling)

- Yeah.

The crane kick is being liquid.

And because the number one rule of investing

is buy low, sell high.

Really everyone that I'm talking to, their current status

is they're just putting money

into whatever investments they can find

and that's either stock market investments.

People are telling people right now to keep buying

because the stock market's low right now.

Is it low? Or could it go lower? We don't know.

So people are telling people to buy in the stock market.

Real estate people are telling people

to buy real estate right now

and they're just looking for deals and buying it

no matter what the metrics are.

Whereas with IBC, since we're strategically capitalizing,

we don't have as much of a lost opportunity cost

to be liquid and be strong in cash.

And if you look at the really big investors out there,

a lot of them are holding onto just tons and tons of cash

right now, just ready.

They're the ones that are ready to make this happen,

if things get worse.

And to use your analogy that you've used before

and there's blood in the streets, the ones that are liquid

are the ones that are gonna be able

to take advantage of opportunities.

- Okay.

And what do you feel

with the way that you've learned martial arts?

Like what is the foundation?

Because when I think of IBC,

I think of that as the starting point.

So, for you being on the attack and it's got me thinking,

you're more like Johnny instead of Danny

or what was his name in the Karate Kid?

- Yeah, Daniel.

- Yeah. Was Danny right? - Daniel LaRusso

- Daniel LaRusso, yeah.

So, you're more like the bad boy,

Johnny versus Daniel LaRusso.

What is your foundation there?

And how does that relate it to IBC?

Help me understand it.

- Danny could have been the good guy

by the way, there's a YouTube video out there

that portrays Danny as actually the bad guy

in the whole movie, it's pretty good,

you should check it out.

- Bad guy, good guy.

(cross talking) - I've seen it.

- Bad guy, good guy, it is yeah.

- So bad guy, good guys, kind of a subjective assessment.

And so, it's really just about-.

By the way, bad guys always see themselves as a good guys,

so, we're always the good guy.

And it's just about being able to have the structure set up

to be able to go first and make the right decision.

And sometimes going first,

doesn't mean throwing the first punch,

it means waiting for the right opportunity

to throw the first punch

or waiting for the right opportunity to attack,

putting yourself in the right time and space

to make that so that you win.

So, it's setting yourself up to win

where ideally the other person

just doesn't even have a chance.

- Right.

And so I think what I heard there,

a really important word you said was structure, right?

If you have the right structure in place,

then you're set up to win, you're set up to take advantage.

But what happens is, for most Americans,

they don't have the right structure in place

because they haven't learned where to per capital.

They haven't learned where to really aggregate money

so that it's available on their terms

and so that they can have it and invest it

and have it working for them in a three dimensional way

versus a two dimensional way.

That's something that you've talked about

in previous episodes but that structure so important.

I think the traditional finance rules

that most people apply, which they don't really learn it

so much as they are conditioned to do a certain thing

because that's what most people do

but what happens is there's a certain lack of structure

that we see all the time with the people that we talk to,

who are yet to get started with IBC.

And what IBC does allow is,

basically the setup where they have the tool

to take control of their money,

take control of their finances.

And that's what I think of when you say structure,

it kind of hits home for me.

- I think that's a great way to put it.

It's like the guy in the gym,

who's always doing curl bi and tri's in the gym

but never does legs.

And then they show up

or they spend all this time learning how to throw a hook

but their legs can't hold their weight.

Their legs can't even take the pressure of the movement

that comes and they throw a hook

and they fall over on the ground

and then they just get stomped by all the friends buddies.

There's also stories out there

of people who can street fight,

just using that term, street fight

and those are guys who they don't play by rules

and they know how to win fights in the street.

But if you put one of those people in the octagon,

in a professional MMA fight,

where they actually have to follow those rules,

they probably would not win

because now they're playing by a set of rules

that they're not accustomed to playing by.

And so, they would go in there

and probably get smashed without any training.

So, if they just went right off the street, no training,

went into the octagon

and that's what the typical investor does.

They're going in and fighting an MMA match

and they don't even know what the rules are.

They'll find the UFC, they're making up the rules

and that's the big banks in this analogy.

- Well, on the MMA, Mixed Martial Arts, UFC,

what was created in the 90s

from my understanding, that was kind of initially at least,

there were no rules, is that correct?

- There were a few rules but yeah very, very few, yep.

- Okay.

But nowadays there are more rules, correct?

- Yeah, yep.

- Okay.

And so with finance, personal finance,

what type of rules are there?

Like what is the traditional rule set

that most people believe exist but aren't really so.

- A big one is that they just think

that the market's always gonna go up.

Right now you've got, you've got these kind of young people

who've been working for maybe 10, 15 years

and they've never experienced a down market

and so they don't even really realize that you can lose.

I get into LinkedIn and other forum conversations

all the time and people just constantly are telling me,

well, why would I put my money in a less risky asset

when I can put it into a higher risk asset

and make more money?

And it's like, what?

It's like, they just completely forget

that the risk part is there.

And it just kind of baffles me a little bit

but I guess some of the other rules are,

for example, like with a 401(k) not many people really know

what the rules are around the 401(k).

They just go in, they get their employment papers,

their HR manager tells 'em to sign.

Gives 'em the paperwork that has

a dozen options that they can choose from

and then they just pick one, super ambiguous

and arbitrary by the way,

they're like, okay, I'll take the medium risk one, I guess.

And then they just start dumping money in there

and they don't really know what the rules are

around what happens when it comes time to get it out.

So, those some rules.

I would say, they also don't realize

the rules around banking, read

and look up Carlos Laura's article about banking.

Did you know that back when they had the drive up

deposit window at the bank,

you'd put your money in that little container,

it gets sucked up through that vacuum tube

and the second it got into the bank's building,

you actually no longer had legal ownership

of that money that you put in there.

And so, I don't think people realize,

what's happening with ownership and who owns what

in their banks and brokerage accounts and all that stuff.

I don't think people realize who's in control

of the deals they're doing,

with some of these like real estate syndication deals,

they're seeing maybe they have some collateral

but I don't think they realize

the rules around what happens if that investment

doesn't work out, like what happens to that collateral?

How do you even get it?

So, those are a few things off the top of my head.

- Yeah.

And, I think what's interesting too,

is that even the perceived rules of how to get ahead

and build a net worth of what was created,

let's use the example 40 years ago

with the creation of 401(k) and IRA's,

that kind of set a blueprint if you will,

of how to save for retirement.

And what's interesting is that this experiment

with 401(k)s, IRA's, we're now coming to 40 years later,

how is this working out?

We're coming to this end result

where people are gonna go into retirement

and are retiring with their 401(k)s IRA's

and what we're seeing is, that they haven't saved enough

that there's too much volatility.

They can't create income from these retirement accounts,

basically all the things that they were told or promised,

what would happen if they did these things

really aren't materializing.

And so, I think, well, what about the 20 somethings

that are now entering the workforce?

They're entering this perceived playbook

on how to save for retirement

and it didn't even work for their parents.

It's not working for their parents and so-.

- That's a great point.

- What are they to do follow in the same footsteps,

knowing that if it didn't work for their parents?

That they should well,

lacking an alternative continue to go down that same road,

I would question have the rules changed?

Were they just flawed to begin with?

Or is that just the economic reality

that we have to experiment?

And this one didn't work out

but hopefully there's something else better out there.

I guess the way to put it is or the way to ask it is,

what are they missing?

And maybe IBC is that foundational piece

that they're missing, that's my conclusion

but what's your take on that?

- Well, another thing to think about with the rules is,

with any like MMA or football or boxing or whatever it is,

there are rules that get put out there

to protect the fighters but they're always there

and those rules are always created and looked at

through a lens of what's going to make the best fight

to bring in that money.

I don't think the financial industry is any different,

we're all told we're protected, like FDIC,

we we're told that our money in the bank is safe

but I don't think people realize how close

and how the FDIC they couldn't even really cover it

the last time in 2008,

they had to depend into some other sources

and who knows if they're gonna be able to cover it

this time?

So there are these kind of, I think fake rules in place

that we're told are there to protect us

but I think if people actually took a look

into how those things are structured,

they might have a different opinion about it.

And so, IBC I think we're creating a system

with our own rules,

it's okay to go out there and take some risk.

Like if you're that person that believes in high risk,

high return, great more power to you.

I don't ever try to stop people

other than maybe giving them some advice

on asset allocation kind of stuff.

But as long as you have a portion of your life,

that's guaranteed, then you can go out and take risk

in other areas, you don't have to worry about it

so much without like banking the whole farm on it.

So, I think with IBC we're in there

and because of the nature of it,

we're able to start creating our own rules around things

and we don't have to go into the MMA ring

and fight by their rules,

we can go out and fight by our own rules,

of course, following the law.

Those are rules that we have to look at as real

but it's like we can find opportunities

that don't necessarily follow the normal rules

of how we are being taught to use our money.

Oh, here's a rule that I just thought of,

how about the 4% rule that we talk taught about,

And when we talked about this in episode 52,

where we have a whole presentation on this

but everyone's taught,

try to get as big of a retirement account as you can

and then you have the 4% rule,

where you can withdraw 4% of your starting amount

in retirement for the safely for the rest of your life.

Well, that was the 4% rule 20 years ago

or however long that came out 15 years ago.

And now it's kind of agreed upon

that maybe that 4% rule is more like the 2.5% rule.

And then the other percent rule,

we all thought inflation was like around 3% to 4%,

well, guess what?

Now, we're finding out it's more like 9%

and that's the official statistics.

Start adding in food and energy to those numbers

and I think we'll start finding out

that the official inflation numbers are way higher than 9%.

So, how about those rules that we think we're playing by

that may not be there when we need it.

Back to your 20 year old on whose going on a tear here John,

- Go ahead.

- Back to your 20 year old. - I am at a loss for words.

My MMA fight has been debunked.

(john laughing)

- Yeah, you were talking about a 20 year old.

- First of all, their social security right now

is not making enough money

to meet its obligations right now.

So, we probably, you and I, John, in our 40s,

I think we're close to the same age, late 40s,

we probably will not get social security.

Imagine this 20 year old, 24 year old, 22 year old

coming into the job market now,

funding social security like what a joke!

That kid, there's no way he's getting anything out of that.

That sucks for a 20 year old!

- Totally.

My son just got his first job and he asked me,

"What's Medicare, why am I paying for that?"

And I just couldn't help but laugh.

Man, you will never see a dollar of that

and that's just Medicare, get used to it, son.

- Oh my God!

You're like, look up the definition of Ponzi scheme

and you'll see that that's exactly that.

- We did talk about that,

I brought that up 'cause he didn't know

what a Ponzi scheme was.

And I said, "Well, that's social security

and that's what you're paying into as well."

(john laughs)

- Right.

- Yep. Pretty simple.

- Pretty simple.

Yeah I think we try to use as many analogies

on this show as we can to just try to meet people

where they are and help them see things

from something that's easy for them.

And I think the good news about this is,

as opposed to like an actual warrior

who they have to have this mindset

of always attacking,

everything they do moves towards winning,

not just defending.

And so, they have to have that mindset

but then they also have to put in

thousands and thousands and thousands of reps of training

in order to make it so that they can actually do that

in a physical type of confrontation.

So, the good news is that if, when it comes to our money,

all you really have to do is, change your mindset.

And then you have to have some awareness

around now how can I actually implement this?

But it's not like it takes a long time

to learn how to rep it.

You can apply it much more quickly

than you can than as a real fighter,

you don't have to spend 10 years in training

to be able to do this,

you have to know some of the right people

to just find the right products and services

but once your mindset changes,

you can make this pretty quickly.

And then the other side of the coin

of the mindset change is,

you spend some time to change your mindset.

And like you're listening to this podcast right now,

dear listener and the next thing you do,

you're gonna turn on the TV or open up a newspaper

and all the status quo stuff is gonna be right there,

reinforcing itself for you.

And so it becomes a challenge to change your mindset

because everyone out there is the opposite of this,

it's pretty crazy.

So, you gotta find the right people to talk to

and make sure you're not getting reeducated

on playing by somebody else's rules.

- So, in other words, find a good (indistinct).

- All right, there you go.

Find yourself a guide, a teacher, an IBC practitioner.

- Oh yeah.

- That's what we are.

- There you go.

- All right.

Well, if you're looking for an IBC practitioner

while we hope that you do choose us.

You can always go to the infinite Banking Institute

and they have a whole list of practitioners

all across the United States.

So, don't hesitate to get started on IBC,

whether that's getting the book,

continuing to listen to more of our episodes.

Make sure that like a shark, keep on swimming forward,

you don't wanna drown in all the information

that's out there,

establishing a set of rules

that who knows may or may not work.

We have this IBC system,

the strategy based off a whole life policy,

that's been around for almost 200 years

and it is proven to work

and that's regardless of what rules may exist around it.

IBC just flat out works.

And whole life policies they're designed,

they're guaranteed contractually to work out,

even if you're not around to see it.

And there's so many benefits

that we cover in this podcast

that IBC provides you just gotta take the next step.

Be on the offensive as my colleague,

John Parings has educated me on

when it comes to martial arts.

So, take your ne next step forward.

You can go to the fifthedition.com.

You can book time with us or reach out

if you have a question,

we'll help you take those next steps.

- Awesome, that was a fun talk.

Thanks, John.