Lara-Murphy Report – The Greatest Hits

The LMR Greatest Hits are articles selected from past Lara-Murphy-Reports financial news letters that are still relevant and popular today. Paid subscriptions are available – click here for more information.

Interest-Only Loans

From March 2018
The World Population Clock is currently registering 7.6 billion people on the planet. Among those 7.6 billion people, Forbes has identified only 2,208 individuals who are billionaires from 72 different countries. Based on this information our chances of ever becoming a billionaire are pretty slim —somewhere around 0.00002%. What’s more, the United States ranks third in the world, next to China and India, as the most populated country on earth and in 2018 registered 540 billionaires on its own home turf, again according to Forbes. One point of relevant curiosity is that our President, Donald Trump, is listed as number 69 on that list and is probably one of the most closely watched billionaires in the world. But then again, all billionaires are always under scrutiny. Their big incomes, wealth, and lifestyles are tremendously alluring to most of us.

An IBC Tax Strategy Part III

From August, 2017
In this third and concluding article about an IBC Tax Strategy, a strategy that I personally use, I would like to shift gears and steer our thoughts in the direction of some very important rules that govern life insurance policy loans. As individuals that practice IBC these discretionary guidelines with regards to policy loans should be fully understood, whether we are members of the general public, or financial professionals. This is the main reason that I reiterated several times in the preceding two articles that this particular tax strategy was not for novices, or those new to IBC.

An IBC Tax Strategy Part II

From February 2017
In this article I want to start by briefly reviewing some of the key components of the groundwork I initially laid out in Part I and then walk through some actual numerical illustrations that will help expand our understanding of this unique tax idea. As a reminder we are specifically discussing a tax strategy that calls for taking the cash flows that are already earmarked for paying your taxes and re-routing them through a correctly designed IBC policy that has the capacity to adjust to your particular situation and provide the freedom to not be dependent on outside bankers. As before, I want to emphasize that this idea does NOT reduce your tax liability—I am simply presenting options for people to redirect cash flows that would occur anyway.

An IBC Tax Strategy Part I

From January 2017
It’s been said that people would rather die than think. But I am going to see if I can incentivize you do just that by showing you a way to fund a large Infinite Banking Concept (IBC)-type life insurance policy, while using cashflows that are dedicated to paying your taxes. I should say upfront that this discussion will make sense immediately to business owners, but I hope that salaried individuals see relevance to their households as well. Now in order to provide this intriguing maneuver a fair disclosure, I will need to do it in two parts. In this first part, I will lay the groundwork, and then in next month’s article I will provide some numerical illustrations to show exactly what I mean.

The City of God, Part II

From December 2016
St. Augustine of Hippo is recognized as one of the great doctors of the Latin Church, yet he is equally admired and respected by the great reformers, such as Martin Luther and John Calvin. This mutual acknowledgment by the scholars of both sides of church doctrine is due in large part to Augustine’s centrality in Christian history and the development of Christian thought during the Middle Ages. The City of God, a compilation of 22 books written between 413 A.D and 427 A.D., is considered to be a timeless classic and among the world’s greatest theological works. Written in defense of the Christian faith during the collapse of the Roman Empire, Augustine was able to pour into these texts his entire life’s perspective on the ancient pagan religions of Rome, the arguments of the Greek philosophers, and the sacred wittings found in the canonical Bible. His conclusion was that there is a city with heavenly origins rising up alongside the kingdoms of the earth, one that transcends politics and world governments—a city that will never fail and never end. It is a city that has eternal foundations whose builder and maker is God.

The City of God, Part I

From November 2016
What is truth? Would we recognize it if we saw it, heard it or experienced it? Can we actually know the reality of the world? Would it be reasonable to say that if we could posses such knowledge that we would be in the possession of a great power? But where can this knowledge be found and if we should find, it how can we be sure, without a shadow of a doubt, that it is authentic? That it is the real truth.

Why Evaluating Life Insurer Financial Strength is Important

From October 2014
In the wake of the 2008 financial crisis following the crash of the stock and real estate markets, Americans witnessed 1,200 of the estimated 7,000 commercial banks in the country stagger financially. As expected the FDIC sprang into action to cover bank depositor’s funds, but what many people have never realized is that the FDIC literally ran out of money! The FDIC went $9 billion in the hole and these reserves were shored up only after receiving a loan from the U.S. Treasury. But that’s not all, in the midst of the catastrophe panicked investors of every stripe saw the typical money storehouses for retirement savings collapse with even one of the most financially sound money market funds (the Reserve Primary Fund)1 “breaking the buck.” Prompted by a flight to safety and to salvage poured huge sums of money into the insurance sector. Even the insurance industry’s foundational product, the slow and boring dividendpaying Whole Life contract, saw a resurgence it had not seen in decades. When at first it seemed like there was no place left in this entire country to put one’s money, the life insurance sector— the epitome of conservatism— was left standing, just like it always had for over two centuries.

Why Do We Use Money?

From May 2016
Although it’s a pretty basic question, it’s worth asking: Why do we use money? Once we think through the answer, it becomes clear just how awful our current monetary system is. For those wanting a comprehensive treatment, I refer you to our book (co-authored with Carlos), How Privatized Banking Really Works. I also refer you to our new podcast, the Lara-Murphy Show, and in particular episodes 15 and 16 where we discuss how governments historically have used inflation to cover their budget shortfalls.

Bank Owned Life Insurance Is On The Rise

From March 2016
First quarter 2016 numbers are just now closing, but analysts everywhere are still analyzing 2015 year-end results across all sectors of the global economy. The numbers don’t look too good. In fact they are downright anemic. However, there is one area that is remarkably robust. Bank owned life insurance (BOLI) assets and new purchases reached a new high of $156.2 billion in 2015, compared to $149.6 billion in 2014. Over 90% of this 4.4% increase in BOLI assets on the books held by commercial banks, savings banks and savings associations are in permanent cash value life insurance policies. For those unfamiliar with this terminology, that’s the kind of life insurance policy that covers you for the entirety of your life.

The Liquidity of the Life Insurance Industry

From May 2016
Highly profitable companies can run into financial trouble if they don’t have the liquidity to react to unforeseen events. Even companies with a stockpile of assets on their balance sheets will struggle with cash flow issues when markets crash if those assets are illiquid. In a moment of crisis, assets are of no value if they cannot easily be converted to cash in order to save the company.