A viewer asked for a quick answer on how infinite banking works with stock investing. Infinite banking means using the cash value in a policy like a bank: you borrow against it, pay it back, and borrow again. A short video on using infinite banking with stock investing gives the quick version. The policy sets a bar, and any investment has to clear it.
Start with the cost. You can borrow against your cash value at a rate that depends on the company, often around 5% to 6%. Say you borrow $10,000 at 5%. That's $500 a year in interest. If you put the $10,000 in the market, you need a plan to earn more than $500 a year and pay that interest off. A loan reduces your cash value and death benefit while it's outstanding.
The compounding matters too. I want the market money to compound, but I don't want the interest on the loan compounding against me, so I pay it down. I also want the policy to keep compounding while the money is out. How much of that you get depends on the type of loan your policy has.
Here's where the bar goes up. A whole life policy has guaranteed growth, and those are gross numbers. After expenses I'd expect around 3% to 5%. I'm not going to pull money out of a policy earning a steady 3% to 5% and put it into something that earns less, or only slightly more, or that earns 6% with all of it at risk. The policy has no risk to the market in it.
The tax treatment raises the bar again. Cash value grows tax deferred, which means no yearly tax bill, and I reach it through loans instead of withdrawals, so I don't pay income tax to use it. Growth of 3% to 5% that you can reach tax free would take roughly 4% to 7% in a taxable investment to match, depending on your bracket. Anyone who wants you to move money into their investment has to beat that number, not 5%.
I'm a broker and not an investment advisor, so this is how I weigh a decision and not advice for your situation. The bar also lets me turn things down. If an investment can't beat what the policy already earns, after adding the risk, I pass on it.