What is Arbitrage in Personal Finance?

if we can build in a situation where we know we're going to get five percent uh rates of return let's

say internal rate of return long term it's not about chasing the big return it's about making

sure that we're operating more efficiently and if we have a system that can help increase efficiency

then you don't have to worry about chasing those huge returns right because

most people think i got to get a 10 return but they're trying to take a small percentage of their

money to accomplish this big return and because of that their their their results flounder right but

if we could take um a bigger percentage of your money have it operate more safely and then build

an arbitrage with it and build in a two to three percent arbitrage on almost everything you do then

that's where good stuff happens right hey what's going on cash flow hackers it

is chris with life180 and for this video i'm going to talk to you about what is arbitrage

why does it matter and why do i talk about it so much now if you because if you've been watching

a lot of my content um you've probably heard me use this word about a gazillion times i use it a

lot it's one of my favorite words it's one of my favorite concepts and i think the reason it is is

i also use the term leverage a lot the importance of leverage the importance of using other people's

money uh this is one of the things that i think dave ramsey's and the susie ormonds and whatnots

of the world don't really get it um and and don't really understand or maybe they think you're just

not smart enough to understand the concept and implement it in your life with discipline

i uh tend to think more of you than that so let's get into this and we'll go from there so

um arbitrage before i get into anything let's talk about the definition of arbitrage and talk about

um well i guess there's a couple different definitions that i found when i really looked

it up the best one believe it or not that i found was on wikipedia and in wikipedia it says that the

definition of of arbitrage it is it reads out like this in economics and finance arbitrage is

the practice of taking advantage of a difference in prices in two or more markets striking the

combination of matching deals to capitalize on the difference right so when you think about it

this is why i love whole life insurance so much because what we have with a whole life policy

is when you save inside of a whole life insurance policy remember whole life is never ever ever ever

an investment it is a savings vehicle right it's a savings vehicle on steroids right because you're

going to have a much better return inside of a whole life policy long term than a savings account

and the great part about a whole life policy is that we know that in that savings account let's

say it's going to get four and a half to five percent long-term internal rate of return right

if we know that that's going to be the case then we can measure that right and when we know and we

can have a predictable result we can then use that as a foundational like kind of cornerstone to our

all of our financial decisions and all the money can flow through that now the beautiful part

is what i know to be true is that too many people chase big returns right they get into

the market they think that the best way to save for the future is think 30 40 years out

buy and hold and save in qualified accounts defer taxes do all these different things put

themselves in a situation where they're planning for an environment where they don't understand

um ultimately uh the environment and all the variables that they're planning for and if you

don't understand the variables in the environment that you're planning for you're never going to