Here’s another fact about interest that most recognize but few master: It’s better to receive than to pay. That’s something banks know all too well. So why not learn some lessons from those fine financial institutions and apply some be-your-own-banker strategies to work for you? Here are three ways you can be your own bank.

Private Money Club

Steve Jobs once said, “The ones who are crazy enough to think that they can change the world, are the ones who do.” Chris Naugle is more than happy to have that description applied to him. Naugle, who spent years working on Wall Street before seeking a better way to generate personal wealth, founded Private Money Club two years ago with the goal of changing the way commercial real estate deals are done. The BYOB acronym that accounts for the company’s motto has nothing to do with bringing your own adult beverage to the table but instead lends itself to the “Be Your Own Banker” concept. 

In a national livestream event from Sundance Mountain Resort in Provo Canyon on Oct. 14, PMC launched a new app that provides a platform for members to consummate their own deals. Based on the Tinder concept, it’s described as a “dating app” for like-minded lenders and borrowers to connect. Members log in and swipe left or right on available opportunities that appeal to them, then connect with other interested parties to broker their own terms — essentially eliminating banks as the middleman. The money banks would have sucked out of any transaction for fees and interest can instead be spread between the consenting borrowers and lenders to sweeten their own margins.

PMC is a nationwide community that typically attracts two types of people: those that need money for projects and those that have money to lend. Naugle compares them to two sides of a coin: borrowers on one side and lenders on the other, with PMC acting as the middle edge, connecting the two sides together.

“The ultimate power in real estate is to be the bank,” Naugle says. “PMC is reinventing the way business courtships are typically arranged and providing savvy lenders a new way to increase their deal flow.” 

To learn more about PMC and if it may be right for you, visit PrivateMoneyClub.com.

Infinite banking concept

The term “infinite banking concept” was popularized in the 2000 book “Becoming Your Own Banker,” by Nelson Nash. Before Nash coined that term, however, well-known entrepreneurs such as J.C. Penney, Ray Kroc and Walt Disney savvily used the same tactics Nash championed to build their empires — or in Disney’s case, his Magic Kingdom.

According to the Disneyland Source Book, Disney couldn’t obtain the funding he needed to get his planned theme park off the ground in Anaheim, California, because banks didn’t share his vision. “I could never convince the financiers that Disneyland was feasible because dreams offer too little collateral,” Disney wryly said. 

Luckily, Disney had effectively built his own bank using whole life insurance, in addition to selling his second home, which helped him initially fund his “happiest place on earth.”

Building your own bank through whole life insurance doesn’t have to be a tortuous journey — like, some might say, riding the It’s a Small World attraction at Disneyland with its impossible-to-get-out-of-your-mind theme song — but it is the linchpin of the infinite banking concept, which puts the advantage of compounding interest to work for you. 

For example, let’s say your idea of being your own bank is to build up your savings so your big expenditures can be cash purchases rather than taking out a loan. Yes, you are able to use your money interest-free, which is definitely a plus. The flip side, however, is that you lose out on the interest you would have made by keeping your money in the bank (which is admittedly at a lower rate than what you’d pay on a loan). Continually using this method, however, requires you to once again build up your savings before you can fund your next project. What you lose out on over time is the compound interest benefit of your original sum of savings. In essence, your potential interest gain resets every time you deplete your savings for a new purchase.

The concept of infinite banking revolves around growing liquid cash value via a properly designed whole life insurance policy, then borrowing against it to pay for investment opportunities, major expenditures and emergencies. Deploying this strategy instead of typical bank loans offers the advantages of tax-sheltering, competitive but safe growth rates, additional protection benefits and the key benefit of the continuous compounding of your assets, even while they are being borrowed.

Infinite banking may not be for everyone, but it may be for you. To learn more, visit https://www.chrisnaugle.com/the-money-multiplier/.

The act of arbitrage

Imitation, as the saying goes, is the sincerest form of flattery. So, if the goal is to be your own banker, it’s only logical to emulate strategies that make banks so financially successful. One of those is becoming adept at the art of arbitrage.

What is arbitrage exactly? It’s the buying and selling of securities, currency or commodities in different markets to take advantage of differing prices. Banks, for example, take other people’s money, pay a nominal interest rate, then invest that money in different ways that offer a much higher rate of return. 

In everyday examples, eBay is filled with people attempting their hands at arbitrage. If you recognize the value of an antique lamp and pick it up for $10 at an estate sale, then turn around and sell it for $500 on eBay, then arbitrage has smiled kindly upon your transactional capabilities. Any commodity in which you have expertise that you can obtain and then turn around and sell elsewhere at a profit is arbitrage at its finest.

At its base level, successful arbitrage is buying low and selling high.

Whether it be through joining platforms that cut out the middleman, understanding infinite banking concepts or embracing the art of arbitrage, any steps that allow you to become your own bank, in dollars and sense, should pique your interest.

Doug Fox is a project manager at Stage Marketing, a full-service content marketing agency based in Provo.