I’m not sure if you heard or read this, but there’s a saying that ‘banks are robbing and using our own money to make money from us’. Legally! Yes! That’s one of the unfair things in this world. And that is true!
On this short article, I’ll share how banks make money from you and how that saying applies in real world and what can we do to improve and change our situation. How can you prevent the banks make money from you using your own money legally? Please continue.
How banks make money from you
In a nutshell, banks make money from credit interests, loan interests and other products(with interests) they offered to their customers. They also do other business and ‘investments’ that contribute to their earnings and sometimes they are also part of project bidding or other business that help them earn money.
But the most basic way how banks make money is from interests they charge from most of their products. And where did they get the money they loaned, credited and ‘borrowed‘ to the customers? From their own money! Yes that’s the harsh reality.
They use the depositors money(you and other people’s money) to give you credits, loan and other products with ‘sky rocketing interests’ and in that way they are making money from you and your own money. And that is legal!
Imagine this, you deposit your money into your favorite banks thru savings account. How much will you get as interest? Most of the time, only 0.025% here in the Philippines. And that is ANNUALY or per annum! Wheew! That can’t even beat inflation. Lol!
And again, they will going to use those money you saved or deposited to loan and credit to other people or businesses. They might also use that to invest in high yielding investments like mutual funds and stock market by their financial experts and investment gurus.
In return, they are making more and more money using you and your own money. Funny thing is, when you apply for a loan or credits on that same bank, they’ll charge you for ‘super-duper high interest‘! And what will you get? Again 0.025%! Tsk tsk. Too bad!
You should realize this now. Your bank is using you and your own money to make money legally. Don’t let it happen.
Don’t put your money in the banks unless it’s for emergency fund. Why? Because you can pull it out anytime in case of emergency. I’m talking about ATM savings account here. But again only for emergency fund. Emergency is for emergency, nothing more nothing less!
If you don’t have emergency fund yet, time to build one. Read and learn the ABC of building emergency fund here. You can also read how me and my wife completed our emergency fund here.
The best thing you can do
If your goal is to grow your money, savings account or time deposits is NOT the best option. Instead of saving your money in the banks, buy the banks! Be their partner and investor.
You ask how? Invest in the stock market and buy shares of those banks. Today, you can start investing in the stock market with just P5,000. If stock market is not for you, you can open and invest in mutual funds. Or if you really like to do business with the banks, you can open a UITF or unit investment trust fund and invest your money on your favorite banks.
These are best ways you can do to maximize the potential of growing your hard-earned money. You can check these previous articles that can provide you basic understanding of those investments I mentioned.
Remember that all investments carry risks. Before you start, make sure you understand each of them. Additionally, different people have different financial goals. The investment instrument that you’re going to use should be aligned with your financial goals.
Always remember that the rule of thumb is, never invest on the things you don’t understand. And of course, investing in yourself is the best investment of all time.
To our success, cheers!