Private Reserve System

Private Reserve System — Capital Opportunity Analyzer — GHL Ready

Case Management

SAVED CASES

CASE NAME

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I need $100,000. Where should it come from?

Same opportunity. Two different ways to access the capital.

Capital Account

Savings · Checking · Brokerage · Mutual Funds · Equity

Use the capital itself

Capital Account

$100,000

Withdraw capital

→

$100,000

◆

Investment / Purchase / Opportunity

$100,000

Opportunity Return 9.00%

Projected first-year earnings$9,000

Capital Account After Purchase

Capital Used

$100,000

Opportunity Funded

$100,000

Private Reserve

Private reserve with loan access

Leverage the reserve

Private Reserve

$100,000

Crediting Rate 6.75%

Collateral supports

→

$100,000

Collateralized Loan

Loan Balance

$100,000

Fixed Loan Rate 5.00%

Liability

Borrowed funds

→

$100,000

◆

Investment / Purchase / Opportunity

$100,000

Opportunity Return 9.00%

Projected first-year earnings$9,000

Private Reserve Remains

$100,000

Collateralized Loan

$100,000

Collateral Supporting Loan

$100,000

Illustrated Credit on Collateral

$6,750

Capital Account Reconciliation ?

$100,000

Capital Account

Opportunity

$100,000

Net Economic Position

Private Reserve Reconciliation ?

$100,000

Private Reserve

−

Loan Balance

Opportunity

$100,000

Net Economic Position

Year 0: both strategies begin with the same $100,000.$0

Capital Account at Year 0

$100,000

Private Reserve at Year 0

$100,000

Private Reserve concept: the same $100,000 opportunity is funded without liquidating the $100,000 Private Reserve. The reserve is collateralized and continues receiving illustrated crediting while the separate loan is tracked as a liability.

Visual Timeline · Year 0 — Capital Funded

SOLD · YEAR 5

012345678910

Timeline ends at the opportunity sale.

Capital Account Economic Position

$100,000

Private Reserve Economic Position

$100,000

Private Reserve Advantage

$0 | +0.00%

Opportunity Exit ?

Sale proceeds restore capital and retire the collateralized loan.

Capital Account Replenished ?

PRS Opportunity Sale Proceeds ?

Loan Payoff ?

Net Proceeds Available ?

+$0 | +0.00%

Private Reserve Advantage After Sale ?You created 0.00% more economic value by using the Private Reserve concept.

Opportunity Amount

$100,000

Opportunity Return

9.00%

Private Reserve Crediting Rate

6.75%

Fixed Loan Rate

5.00%

1. Capital Account

Capital account assumptions used for the direct-capital comparison.

Client Name ?

Federal Filing Status ?

Opportunity Amount ?

Opportunity Return ?

Tax Bracket ?

Opportunity Type ?

Depreciation Method ?

Useful Life ?

Years

Residual Value ?

2. Private Reserve

Private Reserve assumptions used for the leveraged comparison.

Collateralized Loan Amount — Matches Opportunity ?

PRS Loan Rate ?

Private Reserve Crediting Rate ?

Loan Interest Tax Treatment ?

Tax note: Interest deductibility depends on the use of borrowed funds and the client's individual tax circumstances. This application should not determine tax deductibility; the advisor should coordinate with the client's tax professional.

3. One-Year Capital Comparison

Same opportunity. Two different ways to access the capital.

One-Year Result	Capital Account	Private Reserve
Opportunity Amount	$100,000	$100,000
Opportunity Return	9.00%	9.00%
Gross Opportunity Earnings	$9,000	$9,000
Loan Interest	—	($5,000)
Taxable Earnings	$9,000	$3,000
Taxes	($2,160)	($720)
Net Opportunity Earnings	$6,840	$2,280
Private Reserve Credit ?	—	$6,750
Total Economic Gain	$6,840	$9,790
Net Economic Return ?	6.84%	9.79%

Private Reserve One-Year Advantage

+$2,950|+43.13%

Additional economic value • Increase in net economic return

Same opportunity amount and same opportunity return. The difference comes from loan cost, illustrated tax treatment, and Private Reserve crediting.

What Created the Difference?

Loan Cost

($5,000)

Illustrated Tax Benefit From Deductible Interest

$1,200

Private Reserve Credit

$6,750

4. Long-Term Capital Comparison

Year-by-year comparison using the same assumptions as the visual timeline.

Year 10 Capital Account Position

Year 10 Private Reserve Position

Year 10 Difference

PRIVATE RESERVE 10-YEAR ADVANTAGE

+$0|+0.00%

Additional economic valueIncrease in economic position

Calculation Detail

Capital Account — Annual Opportunity Detail

Year	Starting Opportunity	Return	Gross Earnings	Tax Liability	Net Earnings	Ending Position

Private Reserve — Annual Earnings Detail

Year	Starting PRS Position	Starting Opportunity	Return	Gross Earnings	Loan Interest	Taxable Earnings	Tax Liability	Net Opp. Earnings	Reserve Growth	Net Economic Gain	Ending PRS Position

Private Reserve — Balance-Sheet Reconciliation

Year	Opportunity Before Tax	Tax Liability	Opportunity After Tax	Reserve Value	Loan Balance	Net PRS Position	Capital Account Position	PRS Difference