Our Top 5 Esoteric Money Strategies That Work (For the Right Person) SB1903

The Stacking Benjamins Show

Hosts Joe and OG explore five highly specialized financial strategies that, while often mis-sold to the general public, can provide signific

Key takeaways

• Permanent life insurance is best utilized for estate planning or converting term policies rather than acting as a primary savings vehicle.
• Municipal bonds are most effective for investors in extremely high tax brackets facing significant state income taxes.

Main topics

• Esoteric financial strategies
• Permanent Life Insurance use cases

Notable quotes

There's no free lunch, man.

Conclusion

Investors should approach complex financial products with skepticism a

Transcript preview

Speaker 4 (0:02) My plan is sound, mathematically sound. It cannot fail. It's perfect. Speaker 2 (0:07) Three months from now, I will be worth $50,000, independent for life. Speaker 4 (0:23) Live from Joe's mom's basement, it's The Stacking Benjamin Show. Speaker 4 (0:38) I'm Joe's mom's neighbor, Doug, and as a good neighbor, I gotta share. You ever wonder if you're that outlier who needs a strategy different from the norm? On today's show, Joe and OG dive into their top five strategies they wouldn't recommend most stackers use, but for the right person, it's the perfect fit. And good news for you, you won't have to wait a lifetime for the perfect money trivia to impress your friends because I'm bringing it to you today. You're welcome. This is a great one. I'll share halfway through this party on this very special holiday. That's right. This weird holiday calendar Joe's mom got me says it's good neighbor day. So let's party neighbor. And now speaking of party, here come two guys ready to help you rock a personal finance party, but also who could totally work on being better neighbors themselves. It's Joe and oh, judge judge. Speaker 3 (1:38) Hey there, stackers, and happy Good Neighbor Day to you. Neighbor Doug, happy Good Neighbor Day. I think we're great neighbors. Well, yeah, I know you do. I'm trying to come up with something good that we did to be very neighborly. It takes you a minute, doesn't it? It's a bad one. We got a great show, though, stackers. You know how we're going to be a good neighbor today? We are going to dig into all that financial nerdery. I remember early in my career, I'm like, what are some of those? cool concepts that work for the right person. Well, OG's got a list of five. I got a list of five. We're going to dive into those, but we got to meet the man, the myth, the legend. OG is here in the basement. How are you, brother? Speaker 1 (2:17) I am patiently awaiting the next day of rain, which has presently been almost 70 days in Dallas now. The record is 84. In a normal summer, Dallas has 20 100-degree days on a normal summer. So far in the month of September, we've had 17. So it's hot and dry. And everything's cool and wet, baby. Speaker 4 (2:42) Just absolutely waiting. Yeah, maybe don't make that little campfire in your backyard. Speaker 1 (2:49) Yes, no fires allowed. Even the mere thought of fire is forbidden. Speaker 3 (2:53) Right. Don't even think it. Well, we are thinking about great esoteric strategies on today's show. Who's going to have Speaker 1 (3:00) a campfire when it's 106 out anyway? That's something that Joe would do. That's Speaker 3 (3:04) how it cools Speaker 1 (3:04) off. That Speaker 4 (3:05) was Speaker 1 (3:05) on my picnic porch the other day with my solo stove. It's like, it's 106, Joe. I know, but I really wanted a campfire. Speaker 4 (3:11) It goes down Speaker 1 (3:12) to Speaker 3 (3:12) 88 at night. That's chilly. I did that once a couple of years ago. It was right after a rain. And I'm like, man, it's not humid. It's kind of nice out. Let's get the solo stove going. My buddy Mike was up for it, comes over. We set 12 feet from the solo stove. When you're sweating, Speaker 1 (3:29) it's probably a bad idea. Speaker 3 (3:31) Probably, probably not great. Well, what is a great idea is that you know when the right time and place are for these esoteric strategies. We're going to dive into it. If you're a financial nerd, you're going to love today's episode. Even if you're not a financial nerd, just knowing that these might be out of bounds for... a lot of people. It's going to be a fantastic, fantastic episode. So can't wait to get into it. First, we have a couple sponsors that help us deliver all this goodness to you for the incredible cost of free. We're going to hear from them and then OG and I with our top five esoteric strategies that work for the right person. Remember Superman? It's a bird. It's a plane. Superman. Now there's the equivalent for your money. It's a budgeting app. Cancel subscriptions, protects your privacy, and helps you build credit. Heck, it even tracks your net worth. It's the super app, FieldKit. You don't want to spend time managing your money. You want to live. So get FieldKit so everything's in one place and you stop staring at screens all day. Check it out at stackyourbenchmins.com slash FieldKit. Speaker 4 (4:34) Does it wear those sexy briefs, Joe? It does. Yes, very tight. All right, I'm in. Speaker 3 (4:42) Back in my early days of financial planning, buying life insurance was so difficult. And frankly, for a lot of people, it still is difficult. But the funny thing is, and not funny, haha, but just, I guess, ironic. We all know that we need life insurance and we don't want to overpay for it. We want to get on with our life. We want it to protect us. And then we want to do other things. Well, ethos makes getting life insurance fast. and easy. It's 100 % online. You get a quote in seconds. You apply in minutes and get this, you get same day coverage, no medical exam. You just answer a few simple health questions. You can get up to $3 million in coverage. Some policies are as low as $30 a month. As of March, 2025 business insider named ethos, the number one, no medical exam, instant life insurance provider. Ethos has 4.8 out of 5 stars on Trustpilot with over 3,000 reviews. If you're hearing my voice, you know who you are when I tell you you need life insurance. Protect your family with life insurance from Ethos now by going to ethos.com. It is little as 10 minutes. You can get your free quote and up to $3 million in coverage at ethos.com. Speaker 3 (6:01) You'll then get on with your life, but then you're protected, stackers. This is ethos.com.sb. Ethos.com.sb. 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Built Points. have also been ranked by top publications as the industry's most valuable point currency. Your housing payment's already your biggest expense. Make it your most rewarding. Find the card that fits your lifestyle and apply today at joinbuilt.com.sb. That's J-O-I-N-B-I-L-T.com.sb. Make sure to use our URL so they know we sent you. Terms and conditions apply. Subject to approval and eligibility, built cards are issued by Column N.A. Member FDIC, pursuant to license from MasterCard International Incorporated. Oh gee, I'm sure you're like me when you hear a client that comes in and goes, oh, I got this great idea that I saw on TikTok. You immediately go, oh no, oh Speaker 1 (8:00) no, no, no, no. Well, thankfully, nobody that I know actually takes advice from TikTok. Speaker 4 (8:06) Oh, geez, weeded them out long ago. Speaker 1 (8:09) Yes, except Joe. The TikTok crowd really is not our general market. Not Speaker 3 (8:17) who you're going after. What is interesting, though, even at FinCon, and as we record this, I just got back from this financial creator conference called FinCon, and this woman I was talking to, nice lady. I said, so what do you do? She goes, oh, I help people learn how to use cash value life insurance instead of a savings account to reach their goals faster. And I immediately went, nope, click. Just, it can work until it doesn't work. And when it doesn't work, you're going to wonder why the heck did I use life insurance to unravel my entire financial situation? So we've got five of those. You're not going to hear using cash value life insurance on one that works in my list. We might hear it in OG's. Steve, play the awesome British announcer guy. Speaker 1 (9:04) Number five. Speaker 3 (9:05) OG, you want to do these like a snake draft? Maybe you go first and then I'll go first the next one and we'll go back and forth. Speaker 1 (9:12) It's your rodeo, buddy. Let's do it. What's your number five? I didn't really rank these in order. However, I will say that the first one that's on my list is cash value life insurance. I thought that was the one we were going to match on. Speaker 3 (9:27) Well, it's Speaker 1 (9:27) funny. You might hear cash Speaker 3 (9:28) value life. I would say permanent Speaker 1 (9:29) insurance. I'm going to change it to permanent. Speaker 3 (9:31) You may or may not hear, I don't want Speaker 1 (9:33) to Speaker 3 (9:33) foreshadow, but you may or may not hear cash value life insurance using it on my list, but using it to replace your savings account, pay off your bills faster. You know, this idea of infinite banking. Speaker 1 (9:42) Yeah. You Speaker 3 (9:43) probably won't hear that on my list. Speaker 1 (9:45) No, definitely not. Doug? Speaker 4 (9:47) Hold on. If you've used permanent life insurance or cash value, aren't your troubles over? Like if you've used that insurance, you're not worried about your financial future. Speaker 1 (9:57) Well, I mean, what am I missing here? Yes, there's that. I see what Doug's saying. But I also think there's a little interesting side to that also, which is if you actually have this, you probably should be in a situation where all of your financial worries are taken care of. This is so far down the list of places to put money that quite literally everything else needs to be covered. I mean, the use case for permanent life insurance is... As a Speaker 3 (10:24) savings vehicle you're talking about. Speaker 1 (10:26) No, I'm saying the use case for permanent insurance, period, which has to be with a cash value because that's how permanent insurance works. You're basically pre-investing your premiums. Here's the thing. A 90-year-old who buys a one-year term policy, it costs a certain amount, right? They have the mortality table and they go 90-year-olds have X percent chance of passing away. And therefore, the insurance cost for a million dollar one-year term policy for a 90-year-old is X. Also, the cost of insurance and permanent insurance for a 90-year-old for a million dollars is also X. It's the same number. All insurance is the same cost. What happens and why this looks... somewhat attractive is because early on when you're 30, you're overpaying it by so much money that it goes into an account, whether that account grows with a fixed rate of return or a variable rate of return. But whatever, you're overpaying so much so that your premiums are flatlined throughout your entire life. Speaker 3 (11:27) It's to subsidize those later years. Speaker 1 (11:29) It's just basically saying, instead of paying, I'll make up a number, $100 a month for term insurance at 30, you pay $400 a month at 30 for your permanent. And the reason you pay $400 is because all that extra $300 gets invested for later so that you're still paying $400 a month when you're 90, not $82,000. Because that's how much it would cost to have a 90-year-old buy life insurance, right? So it's basically taking the whole math and just flatlining it to a single premium. But the only reason that that makes sense is if you have a life-altering event where you can't get coverage anymore. For example, you have term insurance and now you have, you know, heart issue or you have some uninsurable thing and you still need insurance. A lot of times companies will allow you to convert your term to permanent. without proof of insurability. So that's a good use case. And then the other use case is at the end of your life for estate planning purposes. And now to put this in perspective, you'd have to have a net worth or you and your spouse somewhere north of $30 million. And if you had that, then you're starting to decide what's worse. Do I want to pay Uncle Sam 55 % or do I want to pay the insurance company? And a lot of times the insurance premium is less than Uncle Sam. So... You say, well, a nine-year-old will go buy a $10 million life insurance policy to cover the tax bill. It's going to cost him $8 million. A ton of money. But that's way better than paying Uncle Sam $30 million. Speaker 3 (12:57) Yeah. Speaker 1 (12:58) So those are the two major use cases. Everything else, pretty much garbage. Speaker 3 (13:05) Yeah, it is some complex financial planning that you're getting into when you start to look at permanent life insurance policies. You can use a permanent life insurance policy. I think, oh, gee, sometimes. as a substitute because of the long-term care riders that are attached to those. So for some long-term care issues, maybe you're shrugging. Speaker 1 (13:23) No, I mean, all it is, is just putting lipstick on that same pig. It's just, once you start layering in other sort of products into other products, it's because the first one wasn't good enough to stand on its own. You know what I mean? Like it's not a feature for you. Insurance companies are not benevolent. Investment firms are not like, oh my gosh, you know, we should do this for the common good. No, they're all profit motive driven, period, full stop. That's how it works. So anytime you are, you know, bolting on something to something else, it's because the other thing is just not good enough to hold its own. I can tell you almost unequivocally, anybody who says to you, you need to get permanent insurance right now because you never know what your insurability is going to look like in the future. which is a common sales tactic to a 25-year-old couple who just had their first baby. Well, you should get this baby some insurance. You know, you never know. I mean, that is so effing slimy. If, you know, what was that movie where you could do anything you wanted for one day? Limitless? No, no, no. Limitless was the one where he takes the pill. No Speaker 2 (14:36) one Speaker 1 (14:36) crime was legal. Speaker 4 (14:37) Oh, yeah. Yes. Speaker 1 (14:41) So anybody who says that, you know, they've got a special condo laid out for them in the H-E double hockey sticks area of the afterlife. They Speaker 3 (14:49) have their own ring. Speaker 1 (14:50) There's like Speaker 3 (14:51) Dante's Rings of Hell. Yeah, they have life insurance. Slimy salespeople ring. Speaker 1 (14:59) Yes. Please don't do that. And don't fall for it. Speaker 3 (15:03) My number five goes a different direction, but, you know, there are tax-free benefits to life insurance. which could be attractive for the right person. There are also tax-free benefits for municipal bonds. Municipal bonds are number five on mine, OG, because I saw way too many people and still see too many people who go, oh, I got these because they're tax-free. Well, the problem with loaning money, what a municipal bond does. is you're loaning money to a municipality. You're loaning money to a city for public works projects. Could be the new library, the police station, the fire station. So a lot of good stuff. So you get this feel good. You're helping the city. Could even be paving roads. And as an exchange, you get many tax-free benefits of the municipal bond. The problem is, is you're exchanging this tax-free benefit for growth. And what I often saw, OG, was people that are buying municipal bonds who... seriously need growth in their portfolio and they're not in a high tax bracket and they're avoiding a fairly low tax in the big scheme of things that's not punching up the growth that they could get if they just went with a regular taxable stock-based exchange traded fund or mutual fund where they have a nice diversified position of owning the economy. So while the tax bite sounds attractive, I think this is a much more esoteric product using municipal bonds in a portfolio than people realize. Speaker 1 (16:32) Really works primarily for people that are in a very, very, very high tax bracket with also very high state taxes.