Leverage Your Money Like a Bank!

banks, direct deposit, paycheck, loan, penalty

Banks offer a “service” to employers allowing them to direct deposit their employee’s paychecks directly into their checking or savings account. This seems like a wonderful convenience and it is widely utilized as the norm. But, is it generosity of the bank in giving you this service to make your life easier? Contrary to how these services are advertised, there is a secret agenda. They want to get 100% of your entire paycheck before you do.

When you need money, you are required to go through the bank to gain access to it. They even offer you incentives for keeping a larger balance in your account (or they make you pay a penalty or fee if your account value dips below the line). They don’t do the same things with their own money. As soon as your paycheck is deposited into the bank, they can and will immediately take 90% of those dollars and loan them out to other people. They would use 100% if they could, but they are required by law to keep 10% in reserves.

To illustrate this point, let’s say you deposit $100k into your bank. They can immediately use $90k to add to the loans that they are processing for other people that day. They might credit your account with a paltry 1% or less and then charge the other individual 8% or more to use those funds on a mortgage, personal line of credit, or car loan. So, let’s run the numbers. The bank owes you 1% on your $100k if you leave the funds there for an entire year. If that was the case, they will credit your account $1,000 interest. On the $90k that they loaned to other people, they would collect the assumed 8% on $90k, which is $7,200. One might think that their rate of return is the difference ($7,200-$1,000=$6,200) divided by the original $100k. That would be a 6.2% rate of return.

Let’s think about this a little further. Whose money did they invest or loan to other individual? Was it the Bank’s money or your money? In short, the answer is your money! They invested nothing and received $6,200 for their efforts. To be fair, they did have an acquisition cost. They had to pay you 1% interest, or $1,000. So, let’s do the math on their return. They gave you $1,000 and they received $6,200, for a net increase of $5,200. That’s a 520% return on their investment!

Now, let’s say that when they gave your money to that other individual, those funds were used to purchase some goods or services. The person who sold the goods or services then deposits their sales proceeds or earnings back in to the banking system, which allows the bank to repeat that process again, and again, and again. What’s their rate of return now? Infinite! They turn your money up to 40 times annually making huge profits while they pay you a paltry 1% (if you’re lucky). How else do you think they are able to afford to build and maintain a brick-and-mortar structure on every other street corner staffed with friendly bank tellers and personal bankers (a.k.a. money collectors and strategic lending profit centers)?

It is the same in any area of the financial arena. Remember this – Stock Brokerage firms, Financial Services firms, Insurance Agencies, Banks, Credit Unions, and other niche Wealth Managers – all have the same agenda. These financial companies want to receive your money on a routine basis, they want to hold on to it for as long as they can, they want to charge fees to manage it, and give back as little as possible.

What if YOU could be your bank?  What if you could recapture the lost opportunity costs associated with those other financial institutions? We’ll show you how. Learn strategies that are off the shelf, and out of the box. Visit with a Wealth strategist at Paradigm life to learn how you can take control and leverage your own money like a bank for maximum personal profit.

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