What is the best way to finance a car, mortgage or the other things you need in life? It might not be the way you think. In fact, you might be surprised by our answer. Whether you like it or not, you pretty much finance everything you buy. You either borrow money from some source such as a bank or credit card and pay them interest or, you save and use your own money and give up earning interest, not just over a lifetime but over generations. Some people refer to this as opportunity cost.
Opportunity cost is an economic theory representing the value or potential a person could have received but passed up in pursuit of another option or alternative.
Think of when you finance an automobile, either by leasing or financing through a bank. You go into debt to pay for the car and then make car payments (pay the principal plus interest) over time—you give up the ability to grow your money.
If you pay cash, that might sound great on paper. You’ve worked hard to save your money and manage to avoid going into debt to finance a car. However, all that effort to save your money is lost once you spend it. You have to start from scratch and work hard to replenish it—you give up the opportunity to earn interest on your savings.
Watch the following video to learn how you can use dividend-paying whole life insurance as a financial management tool that allows you to finance life’s needs such as vehicles and mortgages, recapture interest and continue to grow your money, not lose it.
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